SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
MARCH 12, 2000
OMNI NUTRACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
UTAH 0-18160 87-046822
(STATE OF OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
5310 BEETHOVEN STREET
LOS ANGELES, CA 90066
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 306-3636
N/A
(FORMER NAME AND FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
OMNI NUTRACEUTICALS, INC.
TABLE OF CONTENTS
FOR
CURRENT REPORT ON FORM 8-K
Page No.
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Item 5. Other Events . . . . . . . . . . . . . . 3
Item 7. Exhibits . . . . . . . . . . . . . . . . . 5
Signature . . . . . . . . . . . . . . . . . . . . . . . 6
<PAGE>
ITEM 5. OTHER EVENTS
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(a) Duncan Withdrawal
------------------
Effective on March 12, 2000 (the "Effective Date"), Mr. R. Lindsay Duncan,
the former Chairman of the Board of Omni Nutraceuticals, Inc., a Utah
corporation (the "Company"), and his spouse, Cheryl Wheeler, entered into an
Agreement dated March 11, 2000 (the "Withdrawal Agreement") with the Company,
pursuant to which (i) Mr. Duncan agreed to resign from the Board of Directors of
the Company (the "Board"), terminate his employment agreement with the Company
(the "Employment Agreement") and cease all further involvement with the Company,
and (ii) Mr. Duncan and Cheryl Wheeler both agreed to (A) vote their respective
shares of the common stock, par value $0.01 per share (the "Common Stock"), of
the Company (or give their written consent) on all matters on the same
proportionate basis as the remaining shareholders of the Company vote their
shares (or give their written consent) on such matters for a period of five
years from the Effective Date, and (B) appoint Andrew Vollero, Jr., currently a
director of the Company, as attorney-in-fact for each of them to vote their
shares of Common Stock (or give their written consent) as aforesaid.
Mr. Duncan's agreement to resign from the Board and terminate the
Employment Agreement was conditioned upon the occurrence of certain enumerated
events, circumstances or conditions, each of which occurred or was satisfied or
waived on or before March 12, 2000, including the following:
(i) The execution and delivery by the Company of an indemnity agreement
indemnifying Mr. Duncan and related persons for losses in connection with his
services to the Company (the "Indemnity Agreement").
(ii) In settlement of the remaining obligations owed Mr. Duncan under the
Employment Agreement, the extension of the exercise and expiration dates of all
of his existing stock options to purchase 1,003,029 shares of the Common Stock
to the seventh anniversary of the Effective Date.
(iii) The receipt by Mr. Duncan of $1,500,000 in net proceeds from the sale
of shares of Common Stock owned by Mr. Duncan at a price of $3.00 per share in
one or more transactions which were not required to be aggregated with sales
made by Mr. Duncan pursuant to Rule 144 promulgated under the Securities Act of
1993, as amended.
(iv) The execution and delivery by American Equities LLC and Corporate
Financial Enterprises, Inc. (collectively, the "Investors") of a term sheet
providing for the purchase by the Investors from the Company of 2,000,000 shares
of 5% Convertible Preferred Stock, Series A and warrants to purchase up to
500,000 shares of Common Stock for an aggregate purchase price of $2,000,000
(the "Term Sheet").
(v) The execution and delivery by each of the Investors to Mr. Duncan of a
General Release.
(vi) The execution and delivery by the Company and Mr. Duncan of a
Registration Rights Agreement (the "Registration Rights Agreement").
<PAGE>
(vii) The termination of the Voting Agreement dated October 8, 1999 by and
between Mr. Duncan and Klee and Margaret Irwin.
(viii) The execution and delivery by each of Klee Irwin and Mr. Duncan of
mutual General Releases.
All of the above conditions were satisfied or waived and Mr. Duncan
resigned from the Board and terminated the Employment Agreement effective March
12, 2000.
The Withdrawal Agreement is filed herewith as Exhibit 10.22.
The Indemnity Agreement referred to in clause (i) above, dated March 11,
2000, between the Company and Mr. Duncan is filed herewith as Exhibit 10.23.
The Term Sheet referred to in clause (iv) above, dated March 11, 2000,
between American Equities LLC and the Company is filed herewith as Exhibit
10.24.
The Registration Rights Agreement referred to in clause (vi) above, dated
March 11, 2000, among the Company, Mr. Duncan and Cheryl Wheeler is filed
herewith as Exhibit 10.25.
(b) Change in Management
----------------------
At a meeting of the Board held on March 12, 2000 (the "Board Meeting"), at
which the Withdrawal Agreement and the ancillary agreements executed and
delivered by the Company in connection therewith were approved, ratified and
adopted, the Board filled the vacancies created by the resignations of Mr. Santo
P. Panzarella as a Class III director and Mr. Jonathan Diamond as a Class II
director, with the election of Messrs. Christof Ballin and Albert Kashani,
respectively. Upon Mr. Duncan's resignation as a Class I director, the vacancy
created thereby was filled with the appointment of Mr. Martin Sumichrast. Each
of these individuals was appointed to serve in such respective capacities for
the remaining balance of his respective term of office until his successor has
been duly elected and has qualified.
At the Board Meeting, Mr. Louis Mancini's employment as President and Chief
Executive Officer of the Company was terminated by the Board and Mr. Klee Irwin
was appointed to fill the vacancy created thereby.
At the Board Meeting, the Board also authorized the termination of that
certain Settlement Agreement dated October 8, 1999, by and among the Company and
Mr. and Mrs. Klee Irwin, and the ancillary agreements executed and delivered by
the Company in connection therewith.
(c) Consulting Agreement.
---------------------
At the Board Meeting, the Board also ratified, approved and adopted a two
year Consulting Agreement entered into by and between the Company and Liviakis
Financial Communications, Inc. ("LFC") and, in connection therewith, authorized
the issuance of 1,200,000 restricted shares of Common Stock to LFC in
consideration of, and as a retainer and prepayment for, the consulting services
to be rendered to the Company by LFC. Pursuant to the provisions of the
Consulting Agreement, LFC will be entitled to receive a 2.5% finder's fee in
connection with any debt or equity financing for the Company from a source
introduced to the Company by LFC and a 2% finder's fee in connection with any
acquisition by the Company, or its nominee, of a candidate introduced to the
Company or its nominee by LFC. The Company also agreed to reimburse LFC for
extraordinary expenses incurred by LFC on behalf of the Company with its
permission.
<PAGE>
The Consulting Agreement referred to above between the Company and LFC is
filed herewith as Exhibit 10.26.
(d) Mancini Termination Agreement
-------------------------------
Pursuant to an agreement dated as of March 12, 2000, the Company and Louis
Mancini agreed to terminate all employment agreements with Mr. Mancini in
consideration for (i) payment of unpaid salary, vacation and sick pay in an
amount of $22,644.23; (ii) cancellation of all of Mancini's stock options
outstanding other than 50,000 previously vested options at $2.50 per share
provided they are exercised prior to December 31, 2000; (iii) forgiveness by the
Company of an outstanding indebtedness in the original principal amount of
$350,000 made to Mancini by the Company; (iv) waiver by Mancini of any and all
other compensation and/or benefits by the Company or any of its subsidiaries;
and (v) mutual releases between Mr. Mancini and the Company, R. Lindsey Duncan
and his spouse, Klee Irwin and his spouse and Andrew Vollero Jr.
The Termination Agreement referred to above is filed herewith as Exhibit
10.27.
(e) Liviakis Stock Transaction
----------------------------
Pursuant to agreements dated March 27, 2000 between certain accredited
investors introduced to the Company by Liviakis Financial Communications, Inc.,
the Company received on or about March 31, 2000 an aggregate of $1,200,000 in
financing in consideration for the sale of shares of its restricted common stock
at $3.00 per share. The shareholders obtained certain piggyback registration
rights in connection with that sale. Liviakis Financial Communications, Inc.
has agreed to obtain additional investors for up to $1,800,000 in additional
financing for the Company under those terms.
(f) Resignation of Martin Sumichrist
-----------------------------------
By letter dated April 10, 2000, Mr. Martin Sumichrist resigned as a
director of the Company. Mr. Sumichrist did not resign because of any
disagreement with the Company on any matter relating to the Company's
operations, policies or practices or otherwise any other matter required to be
disclosed by Item 6 of Form 8-K.
ITEM 7. EXHIBITS.
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(c) Exhibits. The following materials are filed as exhibits to this Current
Report on Form 8-K:
Exhibit Number Description of Exhibit
- --------------- ------------------------
10.22 Agreement dated March 11, 2000 among the Company,
R. Lindsay Duncan and Cheryl Wheeler
10.23 Indemnity Agreement dated March 11, 2000, between the
Company and R. Lindsay Duncan
10.24 Term Sheet dated March 11, 2000 between the Company
and American Equities LLC
10.25 Registration Rights Agreement dated March 11, 2000
among the Company, R. Lindsay Duncan and Cheryl
Wheeler
10.26 Consulting Agreement between the Company and Liviakis
Financial Communications, Inc.
10.27 Termination Agreement between the Company and Louis
Mancini
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OMNI NUTRACEUTICALS, INC.
Date: March 24, 2000 By: /s/Klee Irwin
----------------
Klee Irwin
President and Chief
Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
Number ----------- Number
- ------ ------
10.22 Agreement dated March 11, 2000
among the Company, R. Lindsay
Duncan and Cheryl Wheeler
10.23 Indemnity Agreement dated March 11,
2000, between the Company and
R. Lindsay Duncan
10.24 Term Sheet dated March 11, 2000
between the Company and American
Equities LLC
10.25 Registration Rights Agreement dated
March 11, 2000 among the
Company, R. Lindsay Duncan and
Cheryl Wheeler
10.26 Consulting Agreement between the
Company and Liviakis Financial
Communications, Inc.
10.27 Termination Agreement between the
Company and Louis Mancini
<PAGE>
EXECUTION COPY
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AGREEMENT
THIS AGREEMENT made this 11th day of March, 2000 by and among Omni
Nutraceuticals, Inc., a Utah corporation, (the "Company") and R. Lindsey Duncan
("Duncan") and his spouse, Cheryl Wheeler, both individuals residing at 1750
Chastain Parkway, Pacific Palisades, California 90272.
WITNESSETH:
WHEREAS, Duncan is currently employed as the Chairman of the Board of
Directors of the Company ("Board") pursuant to an Employment Agreement dated as
of June 30, 1998 (the "Employment Agreement"); and
WHEREAS, Duncan, a co-Founder of the Company, now desires to terminate any
further role in the management of the Company for personal reasons, relinquish
his voting rights and is agreeable to the termination of his Employment
Agreement, all upon the following terms and conditions.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confirmed, the parties hereto intending to be legally bound
hereby agree as follows:
1. Withdrawal from Management. Effective on the date on which all of the
-----------------------------
conditions set forth in Section 2 hereof to his withdrawal from the management
of the Company are satisfied or waived by Duncan in writing (the "Effective
Date") and subject to the remaining terms and conditions hereof, Duncan hereby
agrees to:
1.1 resign from the Board; and
1.2 terminate his Employment Agreement.
2. Conditions to Duncan's Obligations. Duncan's agreements set forth in
-------------------------------------
Section 1 hereof are conditioned upon the prior satisfaction on or prior to the
Effective Date (as hereinafter defined) of the following conditions precedent:
2.1 The execution and delivery by the Company of an Indemnity Agreement in
substantially the form of Exhibit A attached hereto and made a part hereof.
2.2 In settlement of the remaining obligations owed Duncan under the
Employment Agreement the extension of the exercise and expiration dates of all
of his existing stock options to purchase 1,003,029 shares ("Option Shares") of
the Company's common stock ("Common Stock") to the seventh anniversary of the
Effective Date.
2.3 The receipt by Duncan of $1,500,000 in net proceeds from the sale of
shares of Common Stock owned by Duncan at a price of $3.00 per share in one or
more transactions which will not be required to be aggregated with sales made by
Duncan pursuant to Rule 144 (as the same may be in effect from time to time,
"Rule 144") promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
2.4 American Equities LLC and Corporate Financial Enterprises, Inc.
(collectively, the "Investors") shall execute and deliver (i) the amendment to
the terms of that certain Lock-Up Agreement dated as of January 24, 2000
attached hereto as Exhibit B and (ii) the legally binding Term Sheet attached
hereto as Exhibit C.
2.5 At or prior to the Effective Date, the Company shall deliver to Duncan
an executed copy of an opinion of counsel to the Company in the form attached
hereto as Exhibit D.
2.6 Each of the Investors shall execute and deliver to Duncan a General
Release in the Form attached hereto as Exhibit E.
2.7 The Company and Duncan shall enter into the Registration Rights
Agreement set forth as Exhibit F attached hereto.
2.8 The Voting Agreement dated October 8, 1999 by and between Duncan and
Klee and Margareth Irwin shall have been terminated.
2.9 Klee Irwin and Duncan shall have executed and delivered to each other a
General Release in the form attached hereto as Exhibit G.
3. Covenants. The parties hereto hereby covenant and agree, as follows:
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3.1 Each party, and his and its respective heirs, legal representatives,
successors and assigns shall not, and each party shall cause his and its
respective affiliates (as such term is defined in Rule 405 promulgated under the
Securities Act) not to, commence, support or assert any claim, action, cause of
action, suit, investigation or other legal proceeding against any other party
hereto and his or its heirs, spouse, legal representatives, assigns, agents,
attorneys and employees arising from or attributable to any act, matter or thing
now existing or occurring. Nothing in this Agreement, however, shall be
construed or interpreted to prohibit Duncan, his spouse or his heirs, legal
representatives or assigns from asserting any claim, action, cause of action,
suit, investigation or other legal proceeding against the Company or its
affiliates, successors, assigns, agents, attorneys and employees arising from or
attributable to any alleged breach of this Agreement, the matters contemplated
hereby or the ancillary agreements and other documents executed and delivered in
connection herewith (collectively, "Ancillary Agreements"). Further, nothing
in this Agreement shall be construed or interpreted to abrogate or adversely
affect Duncan's, his spouse's or his heirs', legal representatives' or assigns'
right to participate as shareholders in any recovery obtained in connection with
any class action, suit or proceeding commenced against the Company or any of its
affiliates or management.
3.2 (a) The Company shall not, directly or indirectly, impede or impair the
transfer of Duncan's or his spouse's shares of Common Stock in a timely manner
in accordance with the provisions of all federal and state securities laws,
rules and regulations, including the Securities Act and Rule 144, and, in
connection therewith, after the Effective Date, based upon the opinion of
counsel referred to in Section 2.5 hereof, the Company shall confirm in writing
to the Transfer Agent that neither Duncan nor his spouse is deemed to be a
"controlling person" as defined in Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the rules and regulations
promulgated thereunder or an "affiliate" as defined in Rule 144 and that his
and his spouse's shares of Common Stock are not deemed to be owned by an
affiliate of the Company. In connection with the foregoing, on the ninetieth
(90th) day after the Effective Date, the Company and the Transfer Agent shall
issue one or more new certificates representing all of Duncan's and his spouse's
shares of Common Stock owned of record by him and his spouse on the Effective
Date without any restrictive legend in substitution for any certificates
currently registered in Duncan's name or in the name of his spouse, Cheryl
Wheeler, which may bear a restrictive legend. Immediately after the second
anniversary of the Effective Date (unless Duncan has taken any intervening
action such that he is then, and at any time during the period of at least
ninety (90) days prior thereto has been an affiliate of the Company, as defined
in Rule 144), or such earlier date or dates on which Duncan, or his assignee or
someone acting on his behalf notifies the Company or the Transfer Agent that his
(or such assignees') shares have been sold, or are proposed to be sold pursuant
to an effective registration statement under the Securities Act or the
provisions of Rule 144, the Company and the Transfer Agent shall issue one or
more new certificates evidencing such shares without any restrictive legends in
substitution for any certificates bearing any such legends.
(b) Damages, which would result from the breach of this Section, are
impracticable and extremely difficult to ascertain under the circumstances
existing as of the date of this Agreement. In the event the Company
intentionally or negligently delays or impedes the issuance, clearance or
transfer of such shares within five business days after a written request
therefor has been delivered to the Company together with evidence that the
relevant certificates have been delivered to the Transfer Agent with
instructions for reissuance, clearance or transfer (the "Certificate Request"),
the Company agrees to pay to Duncan or his designee an amount equal to the
greater of (i) $10,000 per business day, (ii) the product of (x) the last sale
price on the date the certificates are properly issued and delivered to Duncan
or his designee, less the last sale price on the date of the Certificate
Request, multiplied by (y) the number of shares represented by such
certificate(s), or (iii) the quotient of (x) the last reported sale price on the
day prior to the date of the Certificate Request, multiplied by the number of
shares of Common Stock issuable to Duncan or his designee in accordance with the
Certificate Request, divided by (y) 200 (the "Delay Damages"), for each business
day after the fifth business day following the delivery of the Certificate
Request to the Company through and including the day such certificates (without
legend or restriction) are delivered to Duncan or his designee at the address
set forth in such Certificate Request or are otherwise cleared or transferred;
provided, however, that the maximum amount of the Delay Damages that the Company
will be required to pay Duncan or his designee in accordance with the foregoing
shall be $750,000.00 per month. LIQUIDATED DAMAGES IN THE MAXIMUM AMOUNT OF
$750,000 PER MONTH REPRESENT A REASONABLE ESTIMATE OF DAMAGES. THE PAYMENT OF
SUCH AMOUNT AS LIQUIDATED DAMAGES FOR THE BREACH OF THIS PARAGRAPH IS NOT
INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE
SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES PURSUANT
TO CALIFORNIA CIVIL CODE SECTION 1671, 1676, AND 1677. THE LIQUIDATED DAMAGES
SHALL CONSTITUTE THE SOLE AND EXCLUSIVE REMEDY FOR THE COMPANY'S BREACH OF THIS
PARAGRAPH. IN THE EVENT THE COMPANY RESTRICTS OR DELAYS THE TRANSFER OR
CLEARANCE OF SUCH CERTIFICATES BY DUNCAN OR HIS DESIGNEE (WHETHER BY STOP
TRANSFER ORDER, UNREASONABLE DELAY OR OTHERWISE), THE COMPANY SHALL PAY TO
DUNCAN OR HIS DESIGNEE THE DELAY DAMAGES FOR EACH BUSINESS DAY OF SUCH
RESTRICTION OR DELAY. TO THE EXTENT NECESSARY TO EFFECT THE FOREGOING, THE
COMPANY AGREES (I) TO FILE IN A TIMELY MANNER AND KEEP CURRENT INFORMATION ON
FILE WITH THE SECURITIES AND EXCHANGE COMMISSION AS PROVIDED IN RULE 144(C) AND
(II) TO KEEP ANY REGISTRATION STATEMENT PURSUANT TO WHICH DUNCAN'S SHARES HAVE
BEEN REGISTERED FOR RESALE UNDER THE SECURITIES ACT CURRENT IN ACCORDANCE WITH
THE REGISTRATION RIGHTS AGREEMENT. THE PARTIES HAVE SET FORTH THEIR INITIALS
BELOW TO INDICATE THEIR AGREEMENT WITH THE LIQUIDATED DAMAGE PROVISION IN THIS
PARAGRAPH.
SIGNATURES
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OMNI NUTRACEUTICALS, INC. BY: /s/ Klee Irwin
R. LINDSEY DUNCAN /s/ R. Lindsey Duncan
CHERYL WHEELER /s/ Cheryl Wheeler
3.3 Until the fifth anniversary of the Effective Date, R. Lindsey Duncan and
his spouse, Cheryl Wheeler, hereby irrevocably agree to vote all of their
respective shares of Common Stock which they own of record on the record date
for a vote (or solicitation of consents) of the Company's shareholders, on the
same basis as the remaining shareholders of the Company vote their shares of
capital stock (or issue consents) on all matters on which the shareholders of
the Company are required or requested to vote (or issue consents), whether at a
meeting or by written consent. Accordingly, their votes will be apportioned in
the same ratio that the shares of other shareholders are voted (or consented to)
in favor or against or abstain on any matter on which the recorded vote (or
written consents) of the shareholders is taken (or solicited and obtained). The
foregoing voting agreement is being entered in compliance with the provisions of
Section 16-10a-731 of the Utah Business Corporation Code Act and shall be
personal to Duncan and his spouse Cheryl Wheeler only and shall not bind any
bona fide third party transferee of their shares. By their execution hereof and
in order to secure the obligations of R. Lindsey Duncan and his spouse, Cheryl
Wheeler, hereunder, each of R. Lindsey Duncan and Cheryl Wheeler hereby
irrevocably constitutes and appoints Andrew Vollero, Jr. as their true and
lawful attorney-in-fact to: (i) vote, in accordance with the foregoing voting
agreement, all shares of Common Stock which they may be entitled to vote upon
the election of directors and any other matter that may be properly presented
for a vote of shareholders at any annual or special meeting of shareholders of
the Company, and (ii) vote, in accordance with the foregoing voting agreement,
by means of a written consent of shareholders, all shares of Common Stock which
they may be entitled to vote upon the election of directors and any other matter
that may be properly presented for the consent of shareholders by written
consent in lieu of a vote taken at any annual or special meeting of shareholders
of the Company and (iii) execute, acknowledge, swear to and file in the name,
place and stead of R. Lindsey Duncan and/or Cheryl Wheeler any consent,
approval, or other documents to be executed by the shareholders in connection
with such votes. The Proxy granted hereby is irrevocable and shall be deemed
coupled with an interest in the above described voting agreement for the term
stated therein and it shall survive either of R. Lindsey Duncan's or Cheryl
Wheeler's disability and insolvency.
3.4 Duncan further agrees that he shall not seek to interfere in, or contact
the management of the Company (except as may be permitted under the Registration
Rights Agreement of even date herewith) or to hold office in the Company or
otherwise to influence the composition of the Board or the management of the
Company or its affairs, including, without limitation, by commencing or publicly
supporting any solicitation of proxies whose purpose is to change the management
of the Company, provided, however, nothing in this Agreement shall prohibit
Duncan from responding to requests for information from the Company or its
officers or directors.
3.5 Promptly after the Effective Date but in no event later than March 14,
2000, the Company will furnish to Duncan a letter from the Transfer Agent for
the Common Stock ("Transfer Agent") acknowledging the provisions of Section 3.2
hereof and concurring in the opinion of counsel to the Company referred to in
Section 2.5 hereof.
4. Releases.
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4.1 Notwithstanding the following release, all of the rights and remedies
created by this Agreement and the ancillary agreements executed and delivered in
accordance herewith are preserved. For and in consideration of the sum of $10.00
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and confirmed, each of the parties hereto, including
each individual consenting to this Agreement and their respective heirs, legal
representatives, successors in interest and assigns (collectively, the
"Releasor") hereby releases and forever discharges the other party hereto,
including each individual consenting to this Agreement, and his heirs, legal
representatives, agents, attorneys, employees, shareholders and assigns
(collectively, the "Releasee") of and from any and all actions, causes of
action, claims, charges, demands, remedies, obligations, liabilities, losses,
damages, penalties, assessments, diminution of value, costs and expenses
(including reasonable attorney's fees and expenses), known or unknown,
foreseeable or unforeseeable, present or contingent, arising at law or in equity
(collectively, "Claims") which the Releasor has or may in the future have
against the Releasee in any manner on account of any matter, cause or thing
arising prior to the date of this Agreement, including, without limitation,
Claims arising under the Employment Agreement.
4.2 This Agreement shall not be construed more strictly against either the
Releasee or the Releasor merely by virtue of the fact that the same has been
prepared by the Releasee or the Releasor or their respective counsel, it being
recognized that the Releasor and the Releasee have contributed substantially and
materially to the preparation of this instrument. THE RELEASOR ACKNOWLEDGES
THAT HE HAS THOROUGHLY READ AND REVIEWED THE TERMS AND PROVISIONS OF THIS
AGREEMENT AND IS FAMILIAR WITH SAME, THAT THE TERMS AND PROVISIONS CONTAINED
HEREIN ARE CLEARLY UNDERSTOOD BY HIM AND HAVE BEEN FULLY AND UNCONDITIONALLY
CONSENTED TO BY HIM, AND THAT HE HAS HAD FULL BENEFIT ADVICE OF COUNSEL OF HIS
OWN SELECTION IN REGARD TO UNDERSTANDING THE TERMS, MEANING AND EFFECT OF THIS
AGREEMENT.
4.3 The parties hereto hereby expressly waive and relinquish all rights and
benefits that they may hold against each other, afforded by Section 1542 of the
Civil Code of California or any other state laws of similar language or effect,
and they expressly understand and acknowledge the significance and consequences
of such specific waiver of Section 1542, which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Thus, notwithstanding the provisions of Section 1542, and for the purpose
of implementing a full and complete release and discharge of all their claims,
the parties expressly acknowledge that this Agreement is also intended to
include in its effect, without limitation, all claims which they do not know or
expect to exist in their favor, that the Releasor may hold against the Releasee,
or that Releasee may hold against the Releasor, at the time of execution hereof,
and that this Agreement contemplates the extinguishment of any such claim or
claims. The parties hereto understand and agree that this is a waiver of rights
and benefits that they may hold against each other under Section 1542, and that
this is a material term of this Agreement, without which the parties hereto
would not have given the consideration to each other stated herein.
4.4 The Company hereby acknowledges that Satterlee Stephens Burke & Burke
LLP ("Satterlee"), which has represented the Company on a regular basis, has
represented Duncan and his spouse in connection with the negotiation,
preparation, execution and delivery of this Agreement and the Ancillary
Agreements (the "Duncan Representation"). The Company hereby represents and
warrants that it has retained and has been represented by Miller & Holguin in
connection with the negotiation, preparation, execution and delivery of this
Agreement and such Ancillary Agreements. The Company hereby waives, and agrees
not to assert the existence of, any and all actual and potential conflicts of
interests which may be attributable to or which may arise out of the Duncan
Representation by Satterlee, including, without limitation, as a basis for
excusing the performance of the Company's duties and obligations under this
Agreement and the Ancillary Agreements.
5. Termination.
-----------
5.1 This Agreement shall terminate on the date (the "Termination Date") to
occur on the earlier of the following:
(i) the mutual written agreement of the parties hereto; or
(ii) the failure to satisfy the conditions precedent to Duncan's obligations by
the parties obligated to perform such conditions within ten (10) days after the
date hereof unless extended in writing by Duncan, in his sole and arbitrary
discretion.
5.2. In the event of the termination of this Agreement, with the exception
of the provisions of Sections 5, 6.2, 6.8 and 6.10 hereof, which shall continue
in full force and effect, this Agreement shall be of no further force and
effect, including, without limitation, the provisions of Sections 3.1 and 4, and
each of the parties hereto shall be entitled to assert any and all rights and
remedies, which they have had or may now or hereafter possess, at law or in
equity.
6. Miscellaneous.
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6.1. Press Release. The Company shall issue a press release on or promptly
-------------
after the Effective Date in the form annexed hereto as Exhibit H.
6.2. Expenses. The Company shall reimburse Duncan's costs and expenses,
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including, without limitation, all reasonable attorneys fees and expenses,
incurred in connection with the negotiation, preparation, execution and delivery
of this Agreement, the Ancillary Agreements and the transactions contemplated
hereby, not to exceed $30,000 in aggregate amount.
6.3. Notices. All notices, requests, demands and other communications
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hereunder shall be in writing and shall be deemed to have been duly given or
made as of the date delivered, if delivered personally, or one (1) day (which is
not a Saturday, Sunday, holiday or day on which commercial banks in Los Angeles,
CA are required or permitted to close (a "Business Day")) after having been
deposited with a courier, if sent by overnight courier or having been sent by
telecopy, if sent by telecopy (receipt confirmed), or three (3) Business Days
after having been mailed, if mailed by registered or certified mail, postage
prepaid, return receipt requested, as follows:
If to Duncan and his spouse, to: 1750 Chastain Parkway
Pacific Palisades, CA 90272
Facsimile No.: (310) 230-8759
If to the Company, to: Omni Nutraceuticals, Inc.
5310 Beethoven Street
Los Angeles, CA 90066
Facsimile No.: (310) 306-8279
, or to such other address, as either party shall have designated by like notice
to the other party hereto (except that a notice of change of address shall only
be effective upon receipt).
6.4. Applicable Law. This Agreement shall be governed by, and construed in
---------------
accordance with, the laws of the State of California without regard to its
choice of law principles.
6.5. Waivers; Gender, etc. The failure of any party hereto at any time to
-----------------------
enforce any of the provisions of this Agreement shall not be deemed or construed
to be a waiver of any such provision, nor in any way to affect the validity of
this Agreement or any provision hereof or the right of any party hereto to
thereafter enforce each and every provision of this Agreement. No waiver of any
breach of any of the provisions Agreement shall be effective unless set forth in
an instrument executed by the party against whom enforcement of such waiver is
sought; and no waiver or breach shall be construed or deemed to be a waiver of
any other or subsequent breach. As used herein, words in the masculine gender
shall include the feminine and neuter genders and vice versa and the meaning
ascribed to terms defined herein shall be applicable to both the singular and
the plural forms of such terms.
6.6. Assignment and Assumption. This Agreement and Duncan's and his
---------------------------
spouse's rights, interests or obligations hereunder may not be assigned (other
than by operation of law, final divorce decree or other domestic relations order
) by Duncan or his spouse without the prior written consent of the Company,
which shall not be unreasonably withheld; provided, however, so long as Duncan
continues to own shares of Common Stock he shall remain subject to the
provisions of Section 3 of this Agreement, and provided, further, however,
nothing in the foregoing or this Agreement shall affect or limit Duncan's or his
spouse's rights to sell, offer to sell, solicit offers to purchase, pledge,
transfer or otherwise dispose of his or her shares of Common Stock, except as
set forth in the Lock-Up Agreement, as amended, and the Registration Rights
Agreements attached hereto as Exhibits B and F, respectively. Prior to any
merger, consolidation or other business combination wherein the Company shall
not be survivor or the sale of all or substantially all of the assets of the
Company, the Company shall secure the agreement of the other party to any such
transaction to assume the Company's obligations hereunder and to be bound by the
provisions hereof.
6.7 Binding Effect; Benefits. This Agreement shall inure to the benefit of,
-------------------------
and shall be binding upon, the parties hereto and their respective heirs, legal
representatives and permitted assigns. Nothing herein contained, express or
implied, is intended to confer upon any person other than the parties hereto and
their respective heirs, legal representatives and permitted assigns, any rights
or remedies under or by reason of this Agreement.
6.8 Amendment. This Agreement may only be amended by a written instrument
---------
executed by all of the parties hereto.
6.9 Severability. Any provision of this Agreement which is held by a court
------------
of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
6.10 Entire Agreement. This Agreement (together with the other agreements
-----------------
and documents being delivered pursuant to or in connection with this Agreement)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
6.11 Headings. The headings contained herein are for the sole purpose of
--------
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
6.12 Execution in Counterparts. This Agreement may be executed in one or
---------------------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto.
6.13 Further Assurances. Each party hereto hereby agrees, to execute and
-------------------
deliver, and to cause their respective spouses to execute and deliver to each
other all such further agreements, instruments or other documents as may
reasonably be requested in order to implement the provisions of this Agreement.
6.14 Specific Performance. The parties hereby acknowledge and agree that the
--------------------
failure of the parties to perform their respective agreements and covenants
hereunder will cause irreparable injury for which damages, even if available,
will not be an adequate remedy. Accordingly, the parties hereto, each hereby
consent to the issuance of injunctive relief by any court of competent
jurisdiction to compel performance of such party's obligations and to the
granting by any court of the remedy of specific performance of his or its
obligations hereunder and in connection therewith the parties each hereby waive
any right to require any bond or other security to be paid or furnished by any
of them in connection with any application for such relief.
6.15 Representations and Warranties. Each of the parties hereto hereby
--------------------------------
represents and warrants to the other parties that the execution, delivery and
performance of this Agreement and the Ancillary Agreements contemplated hereby
to which they are parties is a legal, valid and binding obligation of such
party, enforceable in accordance with its terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to creditors' rights generally and to general
principles of equity. Duncan and his spouse each have the legal capacity and
the Company has all necessary corporate power and authority to execute, deliver
and perform this Agreement and such Ancillary Agreements to which they are
parties. The execution, delivery and performance by the Company of this
Agreement and such Ancillary Agreements to which it is a party have been duly
and validly authorized by all necessary corporate action.
6.16 Compliance with Law. Nothing contained herein shall require the
---------------------
Company or Duncan to take any action which would be a violation of applicable
law or the rules of the Securities and Exchange Commission, or fail to take any
action which failure would be a violation of applicable law. Notwithstanding
the foregoing or anything in this Agreement to the contrary, Duncan and his
spouse shall be entitled to sell their respective shares pursuant to Rule 144.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
/s/ R. Lindsey Duncan
R. Lindsey Duncan
/s/ Cheryl Wheeler
Cheryl Wheeler
OMNI NUTRACEUTICALS, INC.
By: /s/ Klee Irwin
Name: Klee Irwin
Title: President
<PAGE>
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into as of March 11, 2000 by and between
Omni Nutraceuticals, Inc., a Utah corporation (the "Corporation"), and R.
Lindsey Duncan ("Duncan").
RECITALS
WHEREAS, Duncan has performed a valuable service to the Corporation in his
capacity as Chairman of the Board of Directors of the Corporation; and
WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"Bylaws"") and/or Articles of Incorporation (the "Articles") providing for the
indemnification of the current and former directors, officers, employees and
agents of the Corporation, including persons who have served or are serving at
the request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Utah Corporations Code, as amended (the
"Code");
WHEREAS, the Articles, Bylaws and/or the Code, by their non-exclusive
nature, permit contracts between the Corporation and its current and former
directors, officers, employees and others with respect to indemnification of
such persons; and
WHEREAS, in recognition of his past services as a Director and in
connection with the termination of his Employment Agreement with the Company,
the Corporation has determined and agreed to enter into this Agreement with
Duncan.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confirmed, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. INDEMNITY OF DUNCAN. The Corporation hereby agrees to hold harmless
and indemnify Duncan, his spouse, heirs, legal representatives, attorneys,
agents and assigns (each an "Indemnified Party") to the fullest extent
authorized or permitted by the provisions of the Articles, Bylaws and the Code,
as the same may be amended from time to time (but, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
the Articles, Bylaws or the Code permitted prior to adoption of such amendment)
from any and all claims, liabilities, losses, damages, fines, penalties,
settlements, costs and expenses (including, without limitation, reasonable
attorneys' and accountants' fees and expenses incurred in the investigation,
defense or settlement of any claim), herein referred to collectively as
"Losses", incurred by an Indemnified Party in connection with, attributable to
or arising from Duncan's past services in the capacities set forth in Section
2(a) hereof or such Indemnified Party's services to the Corporation.
2. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 3 hereof, the Corporation hereby further agrees
to hold harmless and indemnify the Indemnified Party:
(A) against any and all expenses (including attorneys' fees), witness
fees, damages, judgments, fines and amounts paid in settlement and any other
amounts that an Indemnified Party becomes legally obligated to pay because of
any claim or claims made against him in connection with any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative (including an action by or in the right of the
Corporation) to which an Indemnified Party is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that an
Indemnified Party was a director, officer, shareholder, employee, attorney or
agent of the Corporation, was serving or at any time served at the request of
the Corporation as a director, officer, employee, attorney or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise (an "Other Entity") or otherwise was acting on behalf of the
Corporation or any Other Entity;
(C) against any Losses attributable to or resulting or arising from any
vote cast or written consent executed and delivered pursuant to any proxy
granted by an Indemnified Party in accordance with the the provisions of that
certain Agreement of even date herewith by and between the Corporation and
Duncan; and
(D) otherwise to the fullest extent as may be provided to an
Indemnified Party by the Corporation under the non-exclusivity provisions of the
Code and the Bylaws.
3. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 1 or 2 hereof shall be paid by the Corporation:
(A) on account of any claim against an Indemnified Party for an
accounting of profits made from the purchase or sale by an Indemnified Party of
securities of the Corporation pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law; or
(B) if such indemnification is not lawful, and in such case, only to
the extent such indemnification is not lawful.
4. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue so long as an Indemnified Party
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative.
5. PARTIAL INDEMNIFICATION. An Indemnified Party shall be entitled
under this Agreement to indemnification by the Corporation for a portion of the
expenses (including attorneys' fees), witness fees, damages, judgments, fines
and amounts paid in settlement and any other amounts that an Indemnified Party
becomes legally obligated to pay in connection with any action, suit or
proceeding referred to in Section 1 or 2 hereof in the event that an Indemnified
Party is not entitled hereunder to indemnification for the total amount
thereof, and the Corporation shall indemnify an Indemnified Party for the
maximum portion thereof to which an Indemnified Party is lawfully entitled.
6. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by an Indemnified Party of notice of the commencement of any
action, suit or proceeding, an Indemnified Party will, if indemnity is sought
under this Agreement, notify the Corporation of the commencement thereof; but
the omission so to notify the Corporation will not relieve it from any liability
which it may have to an Indemnified Party otherwise than under this Agreement,
or under this Agreement, except to the extent the Corporation is directly
prejudiced by such failure to so notify the Corporation. With respect to any
such action, suit or proceeding:
(A) the Corporation will be entitled to participate therein at its own
expense;
(B) except as otherwise provided below, the Corporation may, at its
option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to an Indemnified Party. After notice from the
Corporation to an Indemnified Party of its election to assume the defense
thereof, the Corporation will not be liable to an Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by an
Indemnified Party in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. An Indemnified Party
shall have the right to employ separate counsel in such action, suit or
proceeding, but the fees and expenses of such counsel incurred after notice from
the Corporation of its assumption of the defense thereof shall be at the expense
of an Indemnified Party unless (i) the employment of counsel by an Indemnified
Party has been authorized by the Corporation, (ii) an Indemnified Party shall
have reasonably concluded that there may be a conflict of interest between the
Corporation and an Indemnified Party in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel
reasonably satisfactory to an Indemnified Party to assume the defense of such
action, in each of which cases the fees and expenses of an Indemnified Party's
separate counsel shall be at the expense of the Corporation. The Indemnified
Party shall have the right to employ separate counsel for the defense of any
action, suit or proceeding brought by or on behalf of the Corporation or as to
which an Indemnified Party shall have made the conclusion provided for in clause
(ii) above; and
(C) the Corporation shall be liable to indemnify an Indemnified Party
under this Agreement for any amounts paid in settlement of any action or claim
effected without his written consent, which shall not be unreasonably withheld,
whether or not an Indemnified Party is otherwise entitled to indemnification
hereunder. The Corporation shall be permitted to settle any action except that
it shall not settle any action or claim in any manner which would impose any
penalty or limitation on an Indemnified Party, or any non-monetary obligation,
without an Indemnified Party's written consent, which may be given or withheld
in an Indemnified Party's sole and arbitrary discretion.
7. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all
expenses, including, but not limited to attorneys fees and expenses incurred by
an Indemnified Party in connection with each threatened or pending claim,
action, cause of action, suit, investigation, arbitration or other proceeding
upon receipt of an undertaking by or on behalf of an Indemnified Party to repay
said amounts if it shall be determined ultimately that an Indemnified Party is
not entitled to be indemnified under the provisions of this Agreement, the
Articles, Bylaws or the Code.
8. ENFORCEMENT. Any right to indemnification or advances granted by
this Agreement to an Indemnified Party shall be enforceable by or on behalf of
an Indemnified Party in any court of competent jurisdiction if (i) the claim for
indemnification or advances is denied, in whole or in part, (ii) no disposition
of such claim is made within thirty (30) days of request therefor, or (iii) the
Corporation should fail to comply with the provisions of Section 7 hereof. an
Indemnified Party, in such enforcement action, if successful in whole or in
part, shall be entitled to be paid also the expense of prosecuting his claim.
It shall be a defense to any action for which a claim for indemnification is
made under Section 1 or 2 hereof (other than an action brought to enforce a
claim for expenses pursuant to Section 8 hereof, provided that the required
undertaking has been tendered to the Corporation) that an Indemnified Party is
not entitled to indemnification because of the limitations set forth in Section
3 hereof. Neither the failure of the Corporation (including its Board of
Directors or its stockholders) to have made a determination prior to the
commencement of such enforcement action that indemnification of an Indemnified
Party is proper in the circumstances, nor an actual determination by the
Corporation (including its Board of Directors or its stockholders) that such
indemnification is improper shall be a defense to the action or create a
presumption that an Indemnified Party is not entitled to indemnification under
this Agreement or otherwise.
9. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on an Indemnified
Party by this Agreement shall not be exclusive of any other right which an
Indemnified Party may have or hereafter acquire under any statute, provision of
the Corporation's Articles or Bylaws, agreement, vote of stockholders or
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity.
10. SURVIVAL OF RIGHTS.
(A) The rights of an Indemnified Party under this Agreement shall
continue after an Indemnified Party has ceased to be a director, officer,
employee, attorney or agent of the Corporation or to serve at the request of the
Corporation as a director, officer, employee, attorney or agent of an Other
Entity shall inure to the benefit of an Indemnified Party's heirs, executors and
administrators and assigns.
(B) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.
11. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify an
Indemnified Party to the fullest extent provided by the Articles, Bylaws, the
Code or any other applicable law.
12. JURISDICTION AND VENUE.
(A) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself or himself and its or his property, to the non-exclusive
jurisdiction of any California court or federal court of the United States of
America sitting in the State of California, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
state court or, to the extent permitted by law, in such federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Should any party institute any
action, suit or other proceeding arising out of or relating to this Agreement,
the prevailing party shall be entitled to receive from the losing party
reasonable attorneys' fees and costs incurred in connection therewith, along
with all costs of defense, investigation, preparation, experts and collection.
(B) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it or he may legally and effectively do so, any objection
that it or he may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any of the
courts referred to in Section 12(a). Each of the parties hereto irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(C) The parties further agree that the mailing by certified or
registered mail, return receipt requested, of any process required by any such
court shall constitute valid and lawful service of process against them, without
the necessity for service by any other means provided by law.
WAIVER OF JURY TRIAL
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE
MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND
THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
13. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
14. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.
15. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
16. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid, if to an Indemnified Party, to his most recent address as set forth in
the Corporation's records, and if to the Corporation, to its principal executive
offices, or to such other address as may have been furnished to an Indemnified
Party by the Corporation.
17. INSURANCE. For so long as this Indemnity Agreement is in effect,
the Corporation agrees to secure and maintain in effect a Director's and
Officer's Liability Policy with a nationally recognized insurer with minimum
annual limits of coverage of five million dollars ($5,000,000.00), so long as
such policy is available to the Company on commercially reasonable terms. Such
policy shall name Mr. R. Lindsey Duncan and his spouse as additional insureds.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
OMNI NUTRACEUTCALS, INC.
By: /s/ Klee Irwin
Name: Klee Irwin
Title: President
/s/ R. Lindsey Duncan
R. Lindsey Duncan
OMNI NUTRACEUTICALS, INC. TERM SHEET
MARCH 11, 2000
This term sheet sets forth the principal terms and conditions of pursuant to
which American Equities, LLC, a California limited liability company and its
assignees ("American Equities" or "Investor") will purchase from Omni
Nutraceuticals, Inc., a Utah corporation (the "Company"), (i) an aggregate
amount of $2,000,000 of its 5% Convertible Preferred Stock, Series A (the
"Series A Preferred Stock"), and (ii) warrants to purchase up to 500,000 shares
of the Company's common stock. The parties shall amend that certain Stock
Purchase Agreement, dated as of January 24, 2000, by and between the Company,
American Equities, HealthZone.com and Corporate Financial Enterprises, Inc. (the
"Stock Purchase Agreement") to accomplish all of the following terms.
Issuers: Omni Nutraceuticals, Inc., a Utah corporation (the "Company").
Series A Preferred Stock 1. The Company will issue 2,000,000 shares
Issuance: of its Series A Preferred Stock to American
Equities against receipt by the Company of
$2,000,000 payable in immediately available
funds wire transferred for deposit in the
Company's account. The Series -A Preferred
Stock will be convertible into common stock
("Common Stock") of the Company initially
at a conversion price equal to $1.50 per
share of Common Stock, subject to adjustment
pursuant to customary anti-dilution provisions
as described below. This shall replace the
obligation of American Equities to purchase
additional securities of the Company as set
forth in Section 1.1 (d) of the Stock Purchase
Agreement, the provisions of which shall be
deleted in their entirety and the remainder of
the Stock Purchase Agreement shall be amended
to reflect the foregoing.
2. The Company shall issue to American Equities
a warrant to purchase up to 500,000 shares
of Common Stock at an exercise price equal
to $2.50 per share. Such warrant shall
contain customary anti-dilution and cashless
exercise provisions; and shall have the same
registration rights as the Series A Preferred
Stock. See "Company Warrants" below:
Exemption: The issuance of the securities to American Equities is intended
to qualify for the exemption from registration afforded by
Section 4(2) and Regulation D promulgated under the Securities
Act of 1933, as amended.
<PAGE>
PRINCIPAL TERMS OF THE SERIES A PREFERRED STOCK:
Dividends:
The Series A Preferred Stock will accrue cumulative dividends at the rate of
5% per annum, payable semi-annually in arrears every June 1 and January 1
(pro-rated for any period in which the Series A Preferred Stock is
outstanding for less one semi-annual period). Such payments shall be
payable, out of funds legally available therefore, if, as and when declared by
the Board of Directors, and at the Company's option, maybe payable in cash
or in additional Series A Preferred Stock, valued at $1.50 per share.
Conversion:
The Series A Preferred Stock will be convertible into Common Stock, at any
time and from time to time after six months from the Closing Date, initially at
a conversion price equal to $1.50. Such conversion price shall be adjusted
for stock or other equity dividends, subdivisions, split ups or
reclassifications of Common Stock, capital reorganizations, mergers or
consolidations, and other similar events, as well as certain issuances of
equity securities as described below in "Anti-Dilution" (such ratio, as adjusted
and in effect from time to time, is referred to herein' as the "Conversion
Price").
Anti-Dilution:
In the event that the Company issues any equity securities, including
preferred stock, Common Stock or securities exchangeable for or convertible into
Common Stock, or rights to acquire Common Stock (in each case other than the
Series A Preferred Stock or warrants issued pursuant to this Agreement, any
warrants and options outstanding on December 30, 1999, and up to 2,000,000
employee or other options granted after December 30, 1999 under the
Company's Long Term Stock Incentive Plan, as amended from time to time), at a
price per share of Common Stock (assuming immediate conversion or exercise
of any security convertible into or exchangeable for Common Stock) (the "Sale
Price") less than the higher of (i) $1.50, or (ii) the then fair market
value of the Common Stock, the Conversion Price with respect to the Series A
Preferred Stock will be reduced to the lower of (x) such Sale Price, or (y) the
product of the old Conversion Price multiplied by a fraction, the numerator
of which is the number of shares of Common Stock outstanding as of the date
prior to such sale or issuance, and the denominator of which shall be the
number of shares of Common Stock (on a fully diluted basis) outstanding
immediately after such sale or issuance. The Series A Preferred Stock shall
have customary anti-dilution rights in the event of any merger, sale,
recapitalization, consolidation or other similar event
LIQUIDATION PREFERENCE:
In the event of any liquidation or winding up of the Company, the holders of
Series A Preferred Stock will be entitled to receive, in preference to the
holders of any other series of preferred stock ranking junior to the Series A
Preferred Stock and the holders of Common Stock (whether now in existence or
created hereafter), an amount equal to $0.60 per share, plus accrued and
unpaid dividends. Any liquidation, dissolution or winding up of the Company,
either voluntary or involuntary, or any sale or disposition of all or
substantially all of its assets (a "Liquidating Event") shall be deemed to be a
liquidation or winding up for purposes of the liquidation preference.
Other Terms:
BOARD OF DIRECTORS:
ALBERT KASHANI will have the right to nominate and elect one-fifth of the
directors to of the Board of Directors, rounded up to the nearest whole
director. The Company will enter into an indemnity agreement with such director,
and shall reimburse such director for reasonable expenses incurred in attending
meetings or otherwise on behalf of the Company. The Company's present
obligation to use its reasonable best efforts to amend the Company's bylaws
in order to fix the number of directors at six (6) shall be terminated and the
voting provisions currently set forth in the terms of the outstanding shares of
Series A Preferred Stock shall be amended accordingly to conform with the
foregoing.
INCENTIVE STOCK OPTIONS:
The director appointed by the holders of the Series A Preferred Stock shall
receive such compensation as is usually and customarily granted to other outside
directors of the Company, but in no event less than a director's option to
purchase 75,000 shares of Common Stock, at an exercise price of $2.25 per share,
which shall be registered on a Form. S-8 within 30 days following the Closing
Date. The option will vest according to the following schedule:
% of Options Awarded Vesting Period
- ----------------------- ---------------
25% Upon being awarded
Remaining 75% In 12 equal monthly installments
calculated in arrears
commencing on the first month
after being awarded
Voting Rights:
On all matters not specifically outlined herein, holders of the Series A
Preferred Stock shall be entitled to vote together with the Common Stock as a
single class on all matters submitted to a vote of the holders of Common
Stock, as if such Series A Preferred Stock were converted immediately prior to
such vote. Consent of a majority of the holders of outstanding shares of
Series A Prefered Stock, voting as a single class, will be required to
approve any of the following: (i) any creation, authorization, sale or
issuance of any class or series of capital stock ranking senior to the Series A
Preferred Stock with respect to voting, liquidation or dividend rights, (ii)
any issuance of additional shares of Series A Preferred Stock, other than in
payment of dividends on the Series A Preferred Stock, (iii) any merger or
consolidation where the Company is not the surviving corporation (unless
provision is made in such merger or consolidation for the issuance to such
holders of Series A Preferred Stock of securities with substantially similar
rights privileges and preferences as the Series A Preferred Stock), (iv) any
sale of all or substantially all of the assets of the Company, (v) any sale
of capital stock of any subsidiary of the Company to any affiliate of the
Company, or to any affiliate of flee Irwin, (vi) any change in the relative
rights, privileges and. preferences of the Series A Preferred Stock, or
(vii) any spin-off of HealthZone Common Stock, reverse merger of HealthZone,
or any other similar transaction in connection with HealthZone which would
have the effect of impeding an initial public offering of the common stock
of HealthZone. It is intended by the parties that HealthZone will file a
registration statement registering the initial public offering of its common
stock in a firm commitment, fully underwritten public offering when, in the
opinion of the board of directors of HealthZone, such offering is appropriate.
REGISTRATION RIGHTS:
With respect to the Common Stock into which the Series A Preferred Stock is
convertible, holders of Series A Preferred Stock will receive one demand
registration beginning one year after the Closing Date and unlimited
"piggyback" registration rights, subject to reasonable underwriters'
marketing limitations. The Company shall pay all registration expenses (other
than commissions and selling expenses) associated with such registration.
The holders of Series A Preferred Stock shall not have the right to exercise any
registration rights so long as (i) the Common Stock issuable upon conversion
of the Series A Preferred Stock is then registered for resale under the
Securities Act of 1933, as amended, or (ii) such stock is then eligible for
unrestricted sale pursuant to Rule 144(k) or its equivalent. The Company shall,
on or before April 25, 2000 (the "Required Filing Date"), file a registration
statement covering the Common Stock underlying the Series A Preferred Stock and
the Warrants. Such registration statement shall be effective on or before June
22, 2000 (the "Required Effective Date"). If, for any reason, such registration
statement is not filed on or before the Required Filing Date, or declared
effective on or before the Required Effective Date, the holders of the Series A
Preferred Stock and Warrants shall be entitled to liquidated damages equal to
the greater of (i) 0.067% of the fair market value of the Common Stock into
which the Series A Preferred Stock is then convertible and the Warrants are then
exercisable for each day following the Required Filing Date and/or Required
Effective Date, or (ii) the product of (x) the number of shares of Common Stock
into which the Series A Preferred Stock is convertible and the Warrants are
exercisable on the Required Filing Date or the Required Effective Date (as
applicable), multiplied by the difference between the closing price reported for
the Common Stock on the Required Effective Date, and the closing price reported
for the Common Stock on the date such registration statement is declared
effective ("Delay Damages"). The Company shall pay all registration expenses
(other than commissions and selling expenses) associated with such registration,
and shall keep such registration statement effective and current for a period of
not less than two .years. No other securities will be included in the
registration statement other than the securities described above and securities
subject to outstanding piggyback registration rights without the written consent
of American Equities. American Equities and Corporate Financial Enterprises
shall waive any damages due as a result of the Company's failure to file the
registration statement referred to in Section 5 of that certain Registration
Rights Agreement, dated January 24, 2000, so long as such registration statement
is filed by the Required Filing Date and declared effective by the Required
Effective Date.
SECURITIES PURCHASE
The Series A Preferred Stock, Warrants and HealthZone Common Agreement:
Stock will be issued pursuant to a Securities Purchase Agreement drafted by
counsel to American Equities and acceptable to American Equities and the
Company, and their respective counsel. Such agreement shall contain, among
other things, customary and appropriate representations and warranties of the
Company, HealthZone and American Equities, covenants of the Company,
HealthZone and American Equities reflecting the provisions set forth herein
and customary and appropriate conditions of closing; provided, however, no such
conditions shall include any minimum financial or performance criteria required
to be met by the Company.
COMPANY WARRANTS:
As described above, the Company shall issue to American Equities 7-year
warrants to purchase 500,000 shares of common stock of the Company, at an
exercise price equal to $2.50.
Purchase Price Allocation:
The total purchase price of $2,000,000 shall be allocated and paid as follows:
Security Allocation Per Share
Series A Preferred Stock $1,900,000 $0.95
Company Warrants $100,000 $0.10
Expenses:
In the event that (1) the transaction closes or (2) the Company elects to
terminate the negotiations for any reason, the Company shall pay to American
Equities the sum of $15,000 to defray transaction costs incurred by American
Equities. American Equities' counsel will draft the legal documents. Each
party will pay its own legal fees.
Waivers/Consents:
The Company and Klee Irwin shall provide to American Equities an agreement,
satisfactory to American Equities, terminating all rights of the Company and Mr.
Irwin to "put" or "call" common stock of HealthZone to the other party, and
an agreement terminating that certain Settlement Agreement, between the
Company and Mr. Irwin. The Company shall provide to American Equities
satisfactory evidence of the resignation of Mr. Lindsey Duncan as an
officer, director or employee of the Company. In addition, the Company shall
secure any necessary or required consents of third parties to the
contemplated transactions, including, without limitation, the lender under the
Company's term loan, or any other lender who has the right to cause the
Company to apply the proceeds of the contemplated transaction to debt repayment.
Use of Proceeds:
The Company shall apply the proceeds of this financing received by the
Company to fund working capital requirements of the Company. None of the
proceeds shall be used to reduce the balance of the Company's revolving loan
unless such reduction shall create borrowing availability under such loan
equal to such reduction.
Lock-Up Agreement:
Mr. R. Lindsey Duncan and his spouse, Cheryl Wheeler shall have entered into
an .Amended and Restated Lock-Up Agreement in the form attached as Exhibit B to
that certain Agreement dated of even date herewith by and among the Company,
Mr. Duncan and Ms. Cheryl Wheeler.
Governing law:
CALIFORNIA
TARGETED CLOSING DATE:
On or before March 3 1, 2000 (the "Closing Date").
CONFIDENTIALITY:
Neither of the parties hereto or their respective affiliates shall make any
public disclosure of this document or the transactions contemplated hereby
except with the written approval of the other party hereto or except as may
be required by applicable law or court or administrative order or the rules of
any stock exchange, NASDAQ or the NASD. All information received by American
Equities concerning the Company or HealthZone and their respective businesses,
financial condition, prospects and affairs (unless already in the public
domain through no breach of any duty owed the Company or HealthZone) in
connection with the transactions contemplated hereby, shall be deemed
confidential proprietary information and may not be used by American Equities or
its affiliates or associates except in connection with an evaluation of the
proposed investment in the Company and HealthZone securities.
LETTER OF INTENT:
This letter is a binding agreement of the parties.
Agreed and Accepted:
OMNI NUTRACEUTICALS, INC., AMERICAN EQUITIES, LLC,
a Utah corporation a California limited liability company
By: /s/ Klee Irwin By: /s/ Reid Breitman
Klee Irwin, President Reid Breitman, President
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of March 11, 2000, between Omni
Nutraceuticals, Inc., a Utah corporation (together with any successors, the
"Company"), and R. Lindsey Duncan and Cheryl Wheeler (collectively, "Duncan").
Duncan owns or has the right to acquire 7,000,000 shares of Common Stock
(as defined) of the Company. The Company and the Duncan deem it to be in their
respective best interests to set forth the rights of the Duncan in connection
with public offerings and sales of shares of Common Stock.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
obligations hereinafter set forth, the Company and Duncan hereby agree as
follows:
SECTION 1. DEFINITIONS.
-----------
As used in this Agreement, the following terms shall have the following
meanings:
"Common Stock" shall mean the Common Stock, $0.01 par value per share, of
-------------
the Company.
"Commission" shall mean the Securities and Exchange Commission or any other
----------
Federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934 or any
-------------
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Information" has the meaning ascribed thereto in Section 6(i).
----------- -------------
"Inspectors" has the meaning ascribed thereto in Section 6(i).
---------- -------------
"Duncan" shall mean Duncan or any successor to, or assignee or transferee
------
of, Duncan.
"Duncan's Counsel" has the meaning ascribed thereto in Section 6(b).
----------------- ------------
<PAGE>
"Material Transaction" means any material transaction in which the Company
---------------------
or any of its Subsidiaries proposes to engage or is engaged, including a
purchase or sale of assets or securities, financing, merger, consolidation,
tender offer or any other transaction that would require disclosure pursuant to
the Exchange Act, and with respect to which the board of directors of the
Company reasonably has determined in good faith that compliance with this
Agreement may reasonably be expected to either materially interfere with the
Company's or such Subsidiary's ability to consummate such transaction in a
timely fashion or require the Company to disclose material, non-public
information prior to such time as it would otherwise be required to be
disclosed.
"Other Shares" shall mean at any time those shares of Common Stock which do
------------
not constitute Primary Shares or Registrable Shares.
"Person" shall be construed as broadly as possible and shall include,
------
without limitation, an individual, a partnership, an investment fund, a limited
liability company, a corporation, an association, a joint shares company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Prior Registration Rights Agreement" shall refer to that certain
--------------------------------------
Registration Rights Agreement, dated January 24, 2000, by and between the
---
Company and the Investors (as defined therein).
"Primary Shares" shall mean at any time authorized but unissued shares of
---------------
Common Stock or shares of Common Stock held by the Company in its treasury.
"Registrable Shares" shall mean any Restricted Shares owned by Duncan, but
-------------------
not to exceed 7,000,000 shares.
"Restricted Shares" means, at any time, with respect to Duncan, shares of
------------------
Common Stock then owned by Duncan, and includes: (i) Common Stock which may be
issued as a dividend or distribution; (ii) any other securities which by their
terms are exercisable or exchangeable for or convertible into Common Stock
issued; and (iii) any securities received in respect of, or upon exercise,
exchange or conversion of, the foregoing, in each case in clauses (i) through
-----------
(iii) which at any time are held by such Duncan, or any transferee of Duncan.
---
As to any particular shares of Restricted Shares, such shares shall cease to be
Restricted Shares when: (A) they have been registered under the Securities Act,
the registration statement in connection therewith has been declared effective
and they have been disposed of pursuant to and in the manner described in such
effective registration statement; (B) they are sold or distributed pursuant to
Rule 144; (C) they have ceased to be outstanding; or (D) provided Duncan is the
beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act)
of less than ten percent (10%) of the issued and outstanding shares of Common
Stock as of the date of the filing of a registration statement pursuant to which
Duncan would otherwise have the right to require such shares to be included in
such registration statement, if such shares could lawfully then be sold in an
open market transaction, without registration, and without restriction or
limitation as to the amount of such sales (other than pursuant to a lock-up
agreement).
"Registration Date" shall mean the date upon which the registration
------------------
statement pursuant to which the Company shall have registered shares of Common
-
Stock under the Securities Act for sale to the public shall have been declared
effective.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act or any
---------
successor rule thereto or any complementary rule thereto (such as Rule 144A).
<PAGE>
"Securities Act" shall mean the Securities Act of 1933 or any successor
---------------
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect from time to time.
"Subsidiary" means, with respect to any Person, any other Person of which
----------
the securities having a majority of the ordinary voting power in electing the
board of directors (or other governing body) of such other Person, at the time
as of which any determination is being made, are owned by such first Person
either directly or through one or more of its Subsidiaries.
SECTION 2. FORM S-8 REGISTRATION.
-----------------------
If the Company at any time proposes for any reason to register shares of
Common Stock under the Securities Act on Form S-8 promulgated under the
Securities Act or any successor forms thereto, it shall promptly give written
notice to Duncan of its intention to so register such shares and, upon the
written request, delivered to the Company within 10 days after delivery of any
such notice by the Company, of Duncan to include in such registration
Registrable Shares issuable upon exercise of options or warrants and which are
eligible for inclusion on Form S-8 (which request shall specify the number of
Registrable Shares proposed to be included in such registration), the Company
shall cause all such Registrable Shares to be included in such registration on
the same terms and conditions as the securities otherwise being sold in such
registration.
SECTION 3. PIGGYBACK REGISTRATION.
-----------------------
If the Company at any time proposes for any reason to register shares of
Common Stock under the Securities Act (other than on Form S-4, F-4 or S-8
promulgated under the Securities Act or any successor forms thereto), including,
without limitation, the registration statement to be filed by the Company
pursuant to the Prior Registration Rights Agreement, it shall promptly give
written notice to Duncan of its intention to so register such shares and, upon
the written request, delivered to the Company within 30 days after delivery of
any such notice by the Company, of Duncan to include in such registration
Registrable Shares (which request shall specify the number of Registrable Shares
proposed to be included in such registration), the Company shall cause all such
Registrable Shares to be included in such registration on the same terms and
conditions as the securities otherwise being sold in such registration;
provided, however, that, if the managing underwriter advises the Company that
-------
the inclusion of all Registrable Shares requested to be included in such
registration would interfere with the successful marketing (including pricing)
of the shares proposed to be registered by the Company, then the number of
shares proposed to be included in such registration shall be included in the
following order of priority:
<PAGE>
(i) first, the Registrable Shares requested to be included in such
-----
registration (or, if necessary (and other than as provided below), such
Registrable Shares pro rata among the holders thereof based upon the number of
--- ----
Registrable Shares requested to be registered by each such holder), along with
the Registrable Shares (as defined in the Prior Registration rights Agreement)
to be included in such registration pursuant to the provisions of the Prior
Registration Rights Agreement;
(ii) second, the Primary Shares; and
------
(iii) third, the Other Shares.
-----
Notwithstanding the foregoing, in the event that an underwriter does not
permit all of Duncan's Registrable Shares and the Registrable Shares of the
Investors, as defined in the Prior Registration Rights Agreement (the
"Investors' Registrable Shares"), to be included in such registration, then
Duncan and the Investors shall have the right to include an equal number of
shares in such registration statement.
SECTION 4. REGISTRATIONS ON FORM S-3.
----------------------------
Notwithstanding anything herein to the contrary, at such time as the
Company shall have qualified for the use of Form S-3 promulgated under the
Securities Act or any successor form thereto, Duncan shall have the right to
request in writing one registration on Form S-3 (or any successor form thereto)
of Registrable Shares within any 12-month period, which request or requests
shall: (i) specify the number of Registrable Shares intended to be sold or
disposed of and the holders thereof; (ii) state the intended method of
disposition of such Registrable Shares; and (iii) relate to Registrable Shares
having an aggregate gross offering price of at least $500,000.
SECTION 5. REQUIRED REGISTRATION.
----------------------
The Company shall, within 90 days of the date hereof (the "Required Filing
Date"), file a registration statement covering up to 7,000,000 shares of Common
Stock beneficially owned by Duncan. Such registration statement shall be
effective within 150 days of the date hereof (the "Required Effective Date").
The Company shall pay all registration expenses (other than commissions and
selling expenses) associated with such registration, and shall keep such
registration statement effective and current for a period of not less than the
sooner of (i) two years from the date of this Agreement, or (ii) the date on
which all the shares of Common Stock registered under such registration
statement have been disposed of pursuant to and in the manner described in such
effective registration statement, or (iii) provided Duncan is the beneficial
owner (as defined in Rule 13d-3 promulgated under the Exchange Act) of less than
ten percent (10%) of the issued and outstanding shares of Common Stock, the date
on which such shares of Common Stock become eligible for sale pursuant to Rule
144(k) or its equivalent, but in any event such registration statement shall be
kept current for at least one year.
SECTION 6. PREPARATION AND FILING.
------------------------
If, and whenever, the Company is under an obligation pursuant to this
Agreement to effect the registration of any Registrable Shares, the Company
shall, as expeditiously as practicable:
<PAGE>
(a) cause a registration statement that registers such Registrable
Shares to become and remain effective for a period of two years or such earlier
period in which all of such Registrable Shares have been disposed of pursuant to
and in the manner described in such effective registration statement or,
provided Duncan is the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of less than ten percent (10%) of the issued and
outstanding shares of Common Stock, such Shares become eligible for sale
pursuant to Rule 144(k) or its equivalent, but in any event such registration
statement shall be kept current for at least one year;
(b) furnish, at least five business days before filing a registration
statement that registers such Registrable Shares, a prospectus relating thereto
or any amendments or supplements relating to such a registration statement or
prospectus, to one counsel selected by Duncan ("Duncan's Counsel"), copies of
----------------
all such documents proposed to be filed (it being understood that such
five-business-day period need not apply to successive drafts of the same
document proposed to be filed so long as such successive drafts are supplied to
Duncan's Counsel in advance of the proposed filing by a period of time that is
customary and reasonable under the circumstances);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
at least a period of two years or such earlier period in which all of such
Registrable Shares have been disposed of pursuant to and in the manner described
in such effective registration statement or, provided Duncan is the beneficial
owner (as defined in Rule 13d-3 promulgated under the Exchange Act) of less than
ten percent (10%) of the issued and outstanding shares of Common Stock, such
Shares become eligible for sale pursuant to Rule 144(k) or its equivalent, but
in any event such registration statement shall be kept current for at least one
year, and to comply with the provisions of the Securities Act with respect to
the sale or other disposition of such Registrable Shares;
(d) notify in writing Duncan' Counsel promptly of (i) the receipt by
the Company of any notification with respect to any comments by the Commission
with respect to such registration statement or prospectus or any amendment or
supplement thereto or any request by the Commission for the amending or
supplementing thereof or for additional information with respect thereto, (ii)
the receipt by the Company of any notification with respect to the issuance by
the Commission of any stop order suspending the effectiveness of such
registration statement or prospectus or any amendment or supplement thereto or
the initiation or threatening of any proceeding for that purpose (and the
Company shall use its best efforts to prevent the issuance thereof or, if
issued, to obtain its withdrawal) and (iii) the receipt by the Company of any
notification with respect to the suspension of the qualification of such
Registrable Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purposes;
<PAGE>
(e) register or qualify such Registrable Shares under such other
securities or blue sky laws of such jurisdictions as Duncan reasonably requests,
to keep such registrations or qualifications in effect for so long as the
registration statement covering such Registrable Shares remains in effect and do
any and all other acts and things which may be reasonably necessary or advisable
to enable Duncan to consummate the disposition in such jurisdictions of the
Registrable Shares owned by Duncan; provided, however, the Company shall not be
required to qualify to do business in any such jurisdictions;
(f) furnish to Duncan or other holders of such Registrable Shares such
number of copies of a summary prospectus, if any, or other prospectus, including
a preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Duncan or holders may reasonably request
in order to facilitate the public sale or other disposition of such Registrable
Shares;
(g) cause such Registrable Shares to be registered with or approved by
such other governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company to enable Duncan or other holders of
such Registrable Shares to consummate the disposition of such Registrable
Shares;
(h) notify on a timely basis Duncan or other holders of such
Registrable Shares at any time when a prospectus relating to such Registrable
Shares is required to be delivered under the Securities Act within the
appropriate period mentioned in subsection (a) of this Section 6, of the
--------------- ---------
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing and, at the request of Duncan or other holders of
Registrable Shares, prepare and furnish to Duncan or such other holders a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the offerees
of such shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
<PAGE>
(i) make available upon reasonable notice and during normal business
hours, for inspection by Duncan or other holders of such Registrable Shares, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by Duncan or
underwriter (collectively, the "Inspectors"), all pertinent financial and other
----------
records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to enable them
-------
to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information (together with the
Records, the "Information") reasonably requested by any such Inspector in
-----------
connection with such registration statement. Any of the Information which the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, shall not be disclosed by the Inspectors, unless
(i) the disclosure of such Information is necessary to avoid or correct a
misstatement or omission in the registration statement, (ii) the release of such
Information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, or (iii) such Information has been made generally
available to the public through no breach of any duty owed the Company. Duncan
agrees that he will, upon learning that disclosure of such Information is sought
in a court of competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential;
(j) use its best efforts to obtain from its independent certified
public accountants "cold comfort" letters in customary form and at customary
-------------
times and covering matters of the type customarily covered by cold comfort
letters;
(k) use its best efforts to obtain from its counsel an opinion or
opinions in customary form, naming Duncan as an additional addressee or party
who may rely thereon;
(l) provide a transfer agent and registrar (which may be the same
entity and which may not be the Company) for such Registrable Shares;
(m) issue to any underwriter to which Duncan holding such Registrable
Shares may sell shares in such offering certificates evidencing such Registrable
Shares;
(n) list such Registrable Shares on any national securities exchange on
which any shares of Common Stock are listed or, if shares of Common Stock are
not listed on a national securities exchange, use its best efforts to qualify
such Registrable Shares for inclusion on the automated quotation system of the
National Association of Securities Dealers, Inc. (the "NASD"), or such other
----
national securities exchange as the holders of a majority of such Registrable
Shares shall reasonably request and provided that the Company meets the listing
criteria of such exchange; and
(o) otherwise comply with all applicable rules of the Commission, and
timely file all reports required to be filed pursuant to the Securities and
Exchange Act of 1934, as amended; and
(p) use its best efforts to take all other commercially reasonable
steps necessary to effect the registration of such Registrable Shares
contemplated hereby.
Each holder of Registrable Shares which are being or have been registered
pursuant to this Agreement shall provide to the Company, upon the request of the
Company, such written information and materials as the Company may reasonably
request in order to effect or maintain such registration. Each holder of
Registrable Shares, upon receipt of any notice from the Company of any event of
the kind described in Section 6(h), shall forthwith discontinue the disposition
------------
of such Registrable Shares pursuant to the registration statement covering such
Registrable Shares until such holder's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 6(h), and, if so directed by the
------------
Company, such holder shall deliver to the Company all copies, other than
permanent file copies then in such holder's possession, of the prospectus
covering such Registrable Shares at the time of receipt of such notice.
<PAGE>
SECTION 7. EXPENSES.
--------
All expenses (other than underwriting discounts and commissions relating to
the Registrable Shares, as provided in the last sentence of this Section 7)
---------
incurred by the Company or Duncan in complying with this Agreement, including,
without limitation, all registration and filing fees (including all expenses
incident to filing with the NYSE, AMEX, NASD and other domestic or foreign
exchanges, as applicable), fees and expenses of complying with securities and
blue sky laws, printing expenses, fees and expenses of the Company's counsel and
accountants and fees and expenses of one legal counsel for Duncan, shall be paid
by the Company; provided, however, that all underwriting discounts and selling
-------- -------
commissions (but not non-accountable expense allowances) applicable solely to
the Registrable Shares and Other Shares shall be borne by the holders selling
such Registrable Shares and Other Shares, in proportion to the number of
Registrable Shares and Other Shares sold by each such holder.
SECTION 8. INDEMNIFICATION.
---------------
(a) To the extent permitted by law, in connection with any registration
of any Registrable Shares under the Securities Act pursuant to this Agreement,
the Company shall indemnify and hold harmless each holder of Registrable Shares
and any other Person acting on behalf of the holders of Registrable Shares and
each other Person, if any, who controls any of the foregoing Persons within the
meaning of the Securities Act, and if the holder is an individual, his heirs and
legal representatives, against any losses, claims, damages or liabilities, joint
or several (or actions in respect thereof), to which any of the foregoing
Persons may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or allegedly untrue statement
of a material fact contained in the registration statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Shares, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or, with respect to any prospectus, necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
or any violation by the Company of the Securities Act or state securities or
blue sky laws applicable to the Company and relating to action or inaction
required of the Company in connection with such registration or qualification
under such state securities or blue sky laws; and shall reimburse the holders of
Registrable Shares, such other Person acting on behalf of the holders of
Registrable Shares and each such controlling Person for any legal or other
expenses reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
-------- -------
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action (including any legal or other
expenses incurred) arises out of or is based upon an untrue statement or
allegedly untrue statement or omission or alleged omission made in said
registration statement, preliminary prospectus, final prospectus, amendment,
supplement or document incident to registration or qualification of any
Registrable Shares in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by the holders of
Registrable Shares specifically for use in the preparation thereof;
<PAGE>
(b) To the extent permitted by law, in connection with any registration
of Registrable Shares under the Securities Act pursuant to this Agreement, each
seller of Registrable Shares shall severally and not jointly indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
-------
8(a)) the Company, each director of the Company, each officer of the Company who
shall sign such registration statement, each underwriter, broker or other Person
acting on behalf of the holders of Registrable Shares and each Person who
controls any of the foregoing Persons within the meaning of the Securities Act
with respect to any statement or omission from such registration statement, any
preliminary prospectus or final prospectus contained therein or otherwise filed
with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, if such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company or such underwriter through an instrument
duly executed by such seller specifically for use in connection with the
preparation of such registration statement, preliminary prospectus, final
prospectus, amendment, supplement or document; provided, however, that the
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maximum amount of liability in respect of such indemnification shall be in
proportion to and limited to, in the case of each seller of Registrable Shares,
an amount equal to the net proceeds actually received by such seller.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in Sections 8(a) and
-------------
8(b), such indemnified party will, if a claim in respect thereof is made against
--
an indemnifying party, give written notice to the latter of the commencement of
such action. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided, however, that, if any indemnified party shall have reasonably
-------- -------
concluded that there may be one or more legal or equitable defenses available to
such indemnified party which are additional to or conflict with those available
to the indemnifying party, or that such claim or litigation involves or could
have an effect upon matters beyond the scope of the indemnity agreement provided
in this Section 8, then the indemnifying party shall not have the right to
----------
assume the defense of such action on behalf of such indemnified party and such
indemnifying party shall reimburse such indemnified party and any Person
controlling such indemnified party for that portion of the fees and expenses of
any counsel retained by the indemnified party which is reasonably related to the
matters covered by the indemnity agreement provided in this Section 8. The
---------
indemnifying party shall not be liable to indemnify any indemnified party for
any settlement of any claim or action effected without the consent of the
indemnifying party, which consent may not be unreasonably withheld. The
indemnifying party may not settle any claim or action brought against an
indemnified party without such party's consent unless (i) such indemnified party
is unconditionally released from all and any liability as part of such
settlement and (ii) such settlement does not impose any consent order,
injunction or decree which would restrict the future activity or conduct of the
indemnified party.
<PAGE>
(d) If the indemnification provided for in this Section 8 is held by a
---------
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or action referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim, damage,
liability or action as well as any other relevant equitable considerations;
provided, however, that, if the circumstances described in either proviso of
---- -------
Section 8(a) apply to the indemnified party, then the indemnifying party shall
----------
not be obligated to contribute with respect to such loss, claim, damage,
liability or action to the extent set forth in such proviso. The relative fault
of the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Company and the sellers of Registrable Shares agree that it
would not be just and equitable if contribution pursuant to Section 8(d) were
------------
determined by pro rata allocation (even if the holders and any underwriters were
--- ----
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
Sections 8(c) and 8(d). The amount paid or payable by an indemnified party as a
------- ----
result of the losses, claims, damages and liabilities referred to in subsection
----------
(d) of this Section 8 shall be deemed to include, subject to the limitations set
- --- ---------
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
SECTION 9. UNDERWRITING AGREEMENT.
-----------------------
Notwithstanding the provisions of Sections 5, 6, 7 and 8, to the extent
-------- - - - -
that the sellers of Registrable Shares shall enter into an underwriting or
similar agreement, which agreement contains provisions covering one or more
issues addressed in such Sections, the provisions contained in such agreement
addressing such issue or issues shall control; provided, however, that any such
-------- -------
agreement to which the Company is not a party shall not be binding upon the
Company.
SECTION 10. OBLIGATIONS OF DUNCAN.
-----------------------
(a) Each seller of Registrable Shares shall furnish to the Company such
written information regarding such seller and the distribution proposed by the
seller as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.
<PAGE>
(b) Duncan, by Duncan's acceptance of the Registrable Securities,
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement(s)
hereunder, unless Duncan has notified the Company in writing of Duncan's
election to exclude all of Duncan's Registrable Securities from the Registration
Statement, thereby waiving its rights to have his Registrable Securities
registered thereunder.
(c) In the event that the holders of a majority of Duncan's Registrable
Shares and the Investors' Registrable Shares (combined) being registered
determine to engage the services of an underwriter, Duncan agrees to enter into
and perform his obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of Duncan's Registrable Shares and the Investors'
Registrable Shares, unless Duncan notifies the Company in writing of his
election to exclude all of his Registrable Shares from the Registration
Statement(s), thereby waiving his rights to have his Registrable Shares
registered thereunder.
(d) Duncan agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 6(h), Duncan will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement(s) covering such Registrable Securities until Duncan's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 6(h), which the Company agrees will be prepared and filed with the
Commission as expeditiously as possible, and, if so directed by the Company,
Duncan shall deliver to the Company (at the expense of the Company) all copies
in Duncan's possession of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
(e) Duncan may not participate in any underwritten registration
hereunder unless Duncan (i) agrees to sell Duncan's Registrable Securities on
the basis provided in any underwriting arrangements relating to such
underwritten registration, (ii) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, lock-up agreements for periods
up to 180 days, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (iii) agrees to pay his
pro rata share of all underwriting discounts and commissions.
SECTION 11. EXCHANGE ACT COMPLIANCE.
-------------------------
From the Registration Date or such earlier date as a registration statement
filed by the Company pursuant to the Securities Act relating to any class of the
Company's securities shall have become effective, the Company shall comply with
all of the reporting requirements of the Exchange Act applicable to it (whether
or not it shall be required to do so) and shall comply with all other public
information reporting requirements of the Commission which are conditions to the
availability of Rule 144 for the sale of the Common Stock. The Company shall
cooperate with Duncan in supplying such information as may be necessary for
Duncan to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of Rule
144.
<PAGE>
SECTION 12. MERGERS, ETC.
-------------
The Company shall not, directly or indirectly, enter into any merger,
consolidation or reorganization in which the Company shall not be the surviving
corporation unless the surviving corporation shall, prior to such merger,
consolidation or reorganization, agree in writing to assume the obligations of
the Company under this Agreement, and for that purpose references hereunder to
"Registrable Shares" shall be deemed to include the common stock, if any, that
holders of Registrable Shares would be entitled to receive in exchange for
Common Stock under any such merger, consolidation or reorganization; provided,
--------
however, that, to the extent holders of Registrable Shares receive securities
------
that are by their terms convertible into common stock of the issuer thereof,
-
then only such shares of common stock as are issued or issuable upon conversion
-
of said convertible securities shall be included within the definition of
"Registrable Shares."
SECTION 13. NEW CERTIFICATES.
-----------------
As expeditiously as possible after the effectiveness of any registration
statement filed pursuant to this Agreement, the Company will deliver in exchange
for any legended certificate evidencing Restricted Shares so registered, new
stock certificates not bearing any restrictive legends, provided that, in the
--------
event less than all of the Restricted Shares evidenced by such legended
certificate are registered, the holder thereof agrees that a new certificate
evidencing such unregistered shares will be issued bearing the appropriate
restrictive legend. Notwithstanding any provision herein to the contrary, the
Company shall be required by the terms of this Agreement to deliver new stock
certificates without a restrictive legend in exchange for any legended
certificates representing the 1,000,000 Restricted Shares to be issued by the
Company to Duncan pursuant to that certain letter agreement with Klee Irwin
dated as of March 11, 2000 only after Duncan notifies the Company in writing
that he has sold, or has a present intent to sell, such Restricted Shares
pursuant to an effective registration statement filed pursuant to this
Agreement.
SECTION 14. NO CONFLICT OF RIGHTS.
------------------------
The Company represents and warrants to Duncan that the registration rights
granted to Duncan hereby do not conflict with any other registration rights
granted by the Company. The Company shall not, after the date hereof, grant any
registration rights which conflict with or impair the registration rights
granted hereby.
SECTION 15. TERMINATION.
-----------
This Agreement shall terminate and be of no further force or effect on the
date on which all the Registrable Shares have been registered under the
Securities Act and have been disposed of in accordance with such registration.
<PAGE>
SECTION 16. SUCCESSORS AND ASSIGNS; GENDER, ETC.
---------------------------------------
This Agreement shall bind and inure to the benefit of the Company and
Duncan and, subject to Section 17, the respective heirs, legal representatives,
----------
successors and assigns of the Company and Duncan. Words in the masculine gender
shall include the feminine and neuter and vice versa and the meaning ascribed to
terms defined herein shall be applicable to both the singular and plural forms
of such terms.
SECTION 17. ASSIGNMENT.
----------
Duncan may assign his rights hereunder to any purchaser or transferee of
Registrable Shares, whereupon such purchaser or transferee shall have the
benefits of, and shall be subject to the restrictions contained in, this
Agreement as if such purchaser or transferee was substituted for "Duncan" herein
and had originally been a party hereto. Within a reasonable time following such
assignment, the assignee shall provide to the Company a written notice of the
name and address of such transferee or assignee, and such other information as
the Company may reasonably request.
SECTION 18. SEVERABILITY.
------------
It is the desire and intent of the parties hereto that the provisions of
this Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated
by a court of competent jurisdiction to be invalid, prohibited or unenforceable
for any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 19. ENTIRE AGREEMENT.
-----------------
This Agreement and the other writings referred to therein or delivered
pursuant thereto, contain the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior and contemporaneous
arrangements or understandings with respect thereto.
SECTION 20. NOTICES.
-------
<PAGE>
All notices, requests, demands, claims, and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally, telecopied, sent by internationally-recognized overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(i) If to the Company, to:
Omni Nutraceuticals, Inc.
5310 Beethoven Street
Los Angeles, California 90066
Telecopier: (310) 306-4840
Attention: Chief Executive Officer
(ii) If to Duncan, to:
R. Lindsey Duncan
1750 Chastain Parkway
Pacific Palisades, California 90272
Telecopy:(310) 230-8759
All such notices and other communications shall be deemed to have been
given and received (a) in the case of personal delivery or delivery by telecopy,
on the date of such delivery, (b) in the case of delivery by
internationally-recognized overnight courier, on the first business day
following such dispatch and (c) in the case of mailing, on the third business
day following such mailing.
SECTION 21. MODIFICATIONS; AMENDMENTS; WAIVERS.
------------------------------------
The terms and provisions of this Agreement may not be modified or amended,
nor may any provision be waived, except pursuant to a writing signed by the
Company and the holders of at least a majority of the Registrable Shares then
outstanding; provided, however, that no such modification, amendment or waiver
-------- -------
that would treat any holder of Registrable Shares then outstanding in a
non-ratable, discriminatory manner shall be made without the prior written
consent of such holder. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
SECTION 22. COUNTERPARTS; FACSIMILE SIGNATURES.
------------------------------------
This Agreement may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement. A facsimile
counterpart signature to this Agreement shall be acceptable if the originally
executed counterpart is delivered within a reasonable period thereafter.
<PAGE>
SECTION 23. HEADINGS.
--------
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
SECTION 24. GOVERNING LAW.
--------------
This Agreement will be governed by and construed in accordance with the
domestic laws of the State of California, without giving effect to any choice of
law or conflicting provision or rule.
SECTION 25. JURISDICTION AND VENUE.
------------------------
(a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself or himself and its or his property, to the non-exclusive
jurisdiction of any California court or federal court of the United States of
America sitting in the State of California, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
California court or, to the extent permitted by law, in such federal court.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Should any party
institute any action, suit or other proceeding arising out of or relating to
this Agreement, the prevailing party shall be entitled to receive from the
losing party reasonable attorneys' fees and costs incurred in connection
therewith, along with all costs of defense, investigation, preparation, experts
and collection.
(b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it or he may legally and effectively do so, any objection
that it or he may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to the Agreement in any of the
courts referred to in Section 25(a). Each of the parties hereto irrevocably
-------------
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) The parties further agree that the mailing by certified or
registered mail, return receipt requested, of any process required by any such
court shall constitute valid and lawful service of process against them, without
the necessity for service by any other means provided by law.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
OMNI NUTRACEUTICALS, INC.
By: /s/ Klee Irwin
Name: Klee Irwin
Title: President
/s/ R. Lindsey Duncan
R. Lindsey Duncan
/s/ Cheryl Wheeler
Cheryl Wheeler
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"), effective as of January 24, 2000 is
entered into by and between Omni Nutraceuticals, Inc., a Utah corporation
(herein referred to as the "Company") and LIVIAKIS FINANCIAL COMMUNICATIONS,
INC., a California corporation (herein referred to as the "Consultant").
RECITALS:
WHEREAS, Company is a publicly held corporation with its common stock traded on
Nasdaq NMS; and
WHEREAS, Consultant has experience in investor communications and financial and
investor public relations; and
WHEREAS, Company desires to engage the services of Consultant to assist, consult
and represent the Company in investors' communications and public relations with
existing shareholders, brokers, dealers and other investment professionals as to
the Company's current and proposed activities.
NOW, THEREFORE, in consideration of the promises and the mutual covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Term of Consultancy. Company hereby agrees to retain the Consultant to
---------------------
act in a consulting capacity to the Company, and the Consultant hereby agrees to
provide services to the Company commencing immediately and ending on the second
anniversary of the date hereof ("Termination Date"). Company may terminate
Consultant's services prior to the Termination Date at any time following 30
days written notice of termination to Consultant ("Company's Early Termination
Date"), subject to the Remuneration provisions of Section 4 herein. Consultant
may terminate the provision of services at any time following the first
anniversary of the effective date hereof following 30 days written notice of
termination to Company ("Consultant's Early Termination Date"), subject to the
remuneration provision of Section 4 herein.
2. Duties of Consultant. The Consultant agrees that it will generally
----------------------
provide the following specified consulting services through its officers and
employees during the term specified in Section 1.:
(a) Advise and assist the Company in developing and implementing appropriate
plans and materials for presenting the Company and its business plans, strategy
and personnel to the financial community, establishing an image for the Company
in the financial community, and creating the foundation for subsequent financial
public relations efforts;
(b) Introduce the Company to the financial community;
(c) With the cooperation of the Company, maintain an awareness during the
term of this Agreement of the Company's plans, strategy and personnel, as they
may evolve during such period, and advise and assist the Company in
communicating appropriate information regarding such plans, strategy and
personnel to the financial community;
(d) Assist and advise the Company with respect to its (i) stockholder and
investor relations, (ii) relations with brokers, dealers, analysts and other
investment professionals, and (iii) financial public relations generally;
(e) Perform the functions generally assigned to investor/stockholder
relations and public relations departments in major corporations, including
responding to telephone and written inquiries (which may be referred to the
Consultant by the Company); preparing press releases for the Company with the
Company's involvement and approval or reviewing press releases, reports and
other communications with or to shareholders, the investment community and the
general public; advising with respect to the timing, form, distribution and
other matters related to such releases, reports and communications; and
consulting with respect to corporate symbols, logos, names, the presentation of
such symbols, logos and names, and other matters relating to corporate image;
(f) Upon the Company's approval, disseminate information regarding the
Company to shareholders, brokers, dealers, other investment community
professionals and the general investing public;
(g) Upon the Company's approval, conduct meetings, in person or by
telephone, with brokers, dealers, analysts and other investment professionals to
advise them of the Company's plans, goals and activities, and assist the Company
in preparing for press conferences and other forums involving the media,
investment professionals and the general investment public;
(h) At the Company's request, review business plans, strategies, mission
statements budgets, proposed transactions and other plans for the purpose of
advising the Company of the investment community implications thereof; and,
(i) Otherwise perform as the Company's financial relations and public
relations consultant.
3. Allocation of Time and Energies. The Consultant hereby promises to
-----------------------------------
perform and discharge faithfully the responsibilities which may be assigned to
the Consultant from time to time by the officers and duly authorized
representatives of the Company in connection with the conduct of its financial
and investor public relations and communications activities, so long as such
activities are in compliance with applicable securities laws and regulations.
Consultant and staff shall diligently and thoroughly provide the consulting
services required hereunder. Although no specific hours-per-day requirement
will be required, Consultant and the Company agree that Consultant will perform
the duties set forth herein above in a diligent and professional manner. The
parties acknowledge and agree that a disproportionately large amount of the
effort to be expended and the costs to be incurred by the Consultant and the
benefits to be received by the Company are expected to occur within or shortly
after the first two months of the effectiveness of this Agreement. It is
explicitly understood that Consultant's performance of its duties hereunder will
in no way be measured by the price of the Company's common stock, nor the
trading volume of the Company's common stock. It is also understood that the
Company is entering into this Agreement with Liviakis Financial Communications,
Inc. ("LFC"), a corporation and not any individual member of LFC, and, as such,
Consultant will not be deemed to have breached this Agreement if any member,
officer or director of LFC leaves the firm or dies or becomes physically unable
to perform any meaningful activities during the term of the Agreement, provided
the Consultant otherwise performs its obligations under this Agreement.
4. Remuneration. As full and complete compensation for services described
-------------
in this Agreement, the Company shall compensate LFC as follows:
4.1 (a) The Shares. For undertaking this engagement and for other good and
-----------
valuable consideration, the Company agrees to issue and deliver to the
Consultant one million two hundred thousand (1,200,000) shares (the "Shares") of
the Company's common stock, par value $.01 per share ("Common Stock"). The
Shares shall be issued and delivered to the Consultant immediately following
execution of this Agreement and shall, when issued and delivered to Consultant,
be fully paid, non-assessable, and a pre-payment for the provision of services
In accordance herewith.
(b) Non-returnable, Non-apportionable Portion of the Shares. The Company
---------------------------------------------------------
understands and agrees that Consultant has foregone significant opportunities to
accept this engagement and that the Company derives substantial benefit from the
execution of this Agreement and the ability to announce its relationship with
Consultant. Accordingly, eight hundred thousand (800,000) shares of the Shares
shall constitute payment for Consultant's agreement to consult to the Company
and are a nonrefundable, non-apportionable, and non-ratable retainer. If the
Company decides to terminate this Agreement prior to the Termination Date for
any reason whatsoever, it is agreed and understood that Consultant will not be
requested or demanded by the Company to return any of the 800,000 shares.
(c) Pro-ratable Portion of the Shares. Four hundred thousand (400,000)
-----------------------------------
shares of the Shares shall constitute payment for Consultant's agreeing to
continue to consult the Company during the second year of the term and are a
retainer which is apportionable and pro-ratable to a limited extent, as follows:
If at any time during the second year of the Agreement, Company gives Consultant
a properly noticed Company's Early Termination Date, Consultant shall return to
Company the proportionate amount of the 400,000 shares that corresponds to the
period remaining of the second year after the noticed Company's Early
Termination Date, except that, if less than 90 days remain of the second year at
the time the Company gives Consultant the notice of Early Termination,
Consultant may retain the entirety of the Shares. If at any time during the
second year, Consultant elects an Early Termination Date, Consultant shall
return to the Company the proportionate amount of the 400,000 shares that
corresponds to the portion of the second year remaining following the properly
noticed Consultant's Early Termination Date.
(d) The Shares issued pursuant to this Agreement shall be issued
in the name of Liviakis Financial Communications, Inc. and shall not be
transferable until the earlier to occur of (i) the second anniversary of the
effective date hereof or (ii) the Company's Early Termination Date or (iii) the
Consultant's Early Termination Date.
4.2 Upon issuance of the Shares, Company shall cause to be issued a
certificate representing the required number of Shares and a written opinion of
counsel for the Company stating that said Shares are validly issued, fully paid
and non-assessable and that the issuance of them to Consultant has been duly
authorized by the Company. Company warrants that all the Shares issued to
Consultant pursuant to this Agreement shall have been validly issued, fully paid
and non-assessable and that the issuance of them to Consultant shall have been
duly authorized by the Company's board of directors.
4.3 Consultant acknowledges that the Shares have not been registered under
the Securities Act of 1933, as amended (the "Act") and accordingly are
"restricted securities" within the meaning of Rule 144 of the Act. As such, the
Shares may not be resold or transferred unless the Company has received an
opinion of its counsel reasonably satisfactory to the Company that such resale
or transfer is exempt from the registration requirements of the Act.
4.4 In connection with the acquisition of Shares hereunder, the Consultant
represents and warrants to the Company as follows:
(a) Consultant acknowledges that the Consultant has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning an investment in the
Shares, and any additional information which the Consultant has requested.
(b) Consultant's investment in restricted securities is reasonable in
relation to the Consultant's net worth, which is in excess of ten (10) times the
Consultant's cost basis in the Shares. Consultant has had experience in
investments in restricted and publicly traded securities, and Consultant has had
experience in investments in speculative securities and other investments which
involve the risk of loss of investment. Consultant acknowledges that an
investment in the Shares is speculative and involves the risk of loss.
Consultant has the requisite knowledge to assess the relative merits and risks
of this investment without the necessity of relying upon other advisors, and
Consultant can afford the risk of loss of his entire investment in the Shares.
Consultant is (i) an accredited investor, as that term is defined in Regulation
D promulgated under the Act, and (ii) a purchaser described in Section 25102 (f)
(2) of the California Corporate Securities Law of 1968, as amended.
(c) Consultant is acquiring the Shares for the Consultant's own account for
long-term investment and not with a view toward resale or distribution thereof
except in accordance with applicable securities laws.
5. Financing "Finder's Fee". It is understood that in the event Consultant
-------------------------
introduces Company, or its nominees, to a lender or equity purchaser, not
already having a preexisting relationship with the Company, with whom Company,
or its nominees, ultimately finances or causes the completion of such financing,
Company agrees to compensate Consultant for such services with a "finder's fee"
in the amount of 2.5% of total gross funding provided by such lender or equity
purchaser, such fee to be payable in cash. This 2.5% will be in addition to any
fees payable by Company to any other intermediary, if any, which shall be the
subject of separate agreements negotiated between Company and such other
intermediary. It is also understood that in the event Consultant introduces
Company, or its nominees, to an acquisition candidate, either directly or
indirectly through another intermediary, not already having a preexisting
relationship with the Company, which Company, or its nominees, ultimately
acquires or causes the completion of such acquisition, Company agrees to
compensate Consultant for such services with a "finder's fee" in the amount of
2% of total gross consideration provided by such acquisition, such fee to be
payable in cash. This 2% will be in addition to any fees payable by Company to
any other intermediary, if any, which shall be the subject of separate
agreements negotiated between Company and such other intermediary. It is
specifically understood that Consultant is not and does not hold itself out be a
Broker/Dealer, but is rather merely a "Finder" in reference to the Company
procuring financing sources and acquisition candidates.
5.1 It is further understood that Company, and not Consultant, is
responsible to perform any and all due diligence on such lender, equity
purchaser or acquisition candidate introduced to it by Consultant under this
Agreement, prior to Company receiving funds or closing on any acquisition.
However, Consultant will not introduce any parties to Company about which
Consultant has any prior knowledge of questionable, unethical or illicit
activities.
5.2 Company agrees that said compensation to Consultant shall be paid in
full at the time said financing or acquisition is closed, such compensation to
be transferred by Company to Consultant within seven (7) business days of the
execution of the financing of acquisition closing document. Payment of said
compensation, will be a condition precedent to the closing of such financing or
acquisition, and Company shall execute any and all documents necessary to effect
said compensation.
5.3 As further consideration to Consultant, Company, or its nominees, agrees
to pay with respect to any financing or acquisition candidate provided directly
or indirectly to the Company by any lender or equity purchaser covered by this
Section 5 during the period of one year from the date of this Agreement, a fee
to Consultant equal to that outlined in Section 5 herein.
5.4 Consultant will notify Company of introductions it makes for potential
sources of financing or acquisitions in a timely manner (within approximately
three (3 ) business days of introduction) via facsimile memo. If Company has a
preexisting relationship with such nominee and believes such party should be
excluded from this Agreement, then Company will notify Consultant immediately
within two (2) business days of Consultant's facsimile to Company of such
circumstance via facsimile memo.
6. Expenses. Consultant agrees to pay for all its expenses (phone, mailing,
--------
labor, etc.), other than extraordinary items (travel required by/or specifically
requested by the Company, luncheons or dinners to large groups of investment
professionals, mass faxing to a sizable percentage of the Company's
constituents, investor conference calls, print advertisements in publications,
etc.) approved by the Company prior to its incurring an obligation for
reimbursement.
7. Indemnification. The Company warrants and represents that all oral
----------------
communications, written documents or materials furnished to Consultant by the
Company with respect to financial affairs, operations, profitability and
strategic planning of the Company are accurate and Consultant may rely upon the
accuracy thereof without independent investigation. The Company will protect,
indemnify and hold harmless Consultant against any claims or litigation
including any damages, liability, cost and reasonable attorney's fees as
incurred with respect thereto resulting from Consultant's communication or
dissemination of any said information, documents or materials excluding any such
claims or litigation resulting from Consultant's (i) communication or
dissemination of information not provided or authorized by the Company or (ii)
breach any warranties set forth in this Agreement.
8. Representations and Warranties. Consultant represents that it is not
--------------------------------
required to maintain any licenses and registrations under federal or any state
regulations necessary to perform the services set forth herein. Consultant
represents, warrants and agrees that, to the best of its knowledge, the
performance of the services set forth under this Agreement will not violate any
rule or
provision of any regulatory agency having jurisdiction over Consultant or any
SEC rules or regulations or federal or any state securities laws (collectively,
"Securities Laws"). Consultant represents, warrants and agreesthat, to the
best of its knowledge, Consultant and its officers and directors are not the
subject of any investigation, claim, decree or judgment involving any violation
of any Securities Laws. Consultant further represents, warrants and agrees that
it is not a securities Broker Dealer or a registered investment advisor.
Company represents, warrants and agrees that, to the best of its knowledge, that
it has not violated any rule or provision of any regulatory agency having
jurisdiction over the Company. Company represents, warrants and agrees that, to
the best of its knowledge, Company is not the subject of any investigation,
claim, decree or judgment involving any violation of any Securities Laws.
9. Legal Representation. The Company acknowledges that it has been
---------------------
represented by independent legal counsel in the preparation of this Agreement.
-
Consultant represents that it has consulted with independent legal counsel
and/or tax, financial and business advisors, to the extent the Consultant deemed
necessary.
10. Status as Independent Contractor. Consultant's engagement pursuant to
-----------------------------------
this Agreement shall be as independent contractor, and not as an employee,
officer or other agent of the Company. Neither party to this Agreement shall
represent or hold itself out to be the employer or employee of the other.
Consultant further acknowledges the consideration provided hereinabove is a
gross amount of consideration and that the Company will not withhold from such
consideration any amounts as to income taxes, social security payments or any
other payroll taxes. All such income taxes and other such payment shall be made
or provided for by Consultant and the Company shall have no responsibility or
duties regarding such matters. Neither the Company or the Consultant possess
the authority to bind each other in any agreements without the express written
consent of the entity to be bound.
11. Attorneys' Fees. If any legal action or any arbitration or other
-----------------
proceeding is brought for the enforcement or interpretation of this Agreement,
or because of an alleged dispute, breach, default or misrepresentation in
connection with or related to this Agreement, the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees and other costs in
connection with that action or proceeding, in addition to any other relief to
which it or they may be entitled.
12. Waiver. The waiver by either party of a breach of any provision of this
-------
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by such other party.
13. Notices. All notices, requests, and other communications hereunder
-------
shall be deemed to be duly given if sent by U.S. mail, postage prepaid,
addressed to the other party at the address as set forth herein below:
To the Company:
Omni Nutraceuticals, Inc.
5310 Beethoven St.
Los Angeles, CA 90066
Attention: Chief Executive Officer
To the Consultant:
Liviakis Financial Communications, Inc.
John M. Liviakis, President
495 Miller Avenue
Mill Valley, CA 94941
With a copy to:
Hasse Molesky Law Offices
Lizbeth Hasse
530 Jackson Street, 3rd Floor
San Francisco, CA 94133
It is understood that either party may change the address to which notices for
it shall be ad-dressed by providing notice of such change to the other party in
the manner set forth in this paragraph.
14. Choice of Law, Jurisdiction and Venue. This Agreement shall be governed
--------------------------------------
by, construed and enforced in accordance with the laws of the State of
California. The parties agree that San Francisco County, CA will be the venue
of any dispute and the state and federal courts of competent jurisdiction
sitting in such County will have jurisdiction over all parties, subject to the
Arbitration Clause of Section 15 of this Agreement.
15. Arbitration. Any controversy or claim arising out of or relating to
------------
this Agreement, or the alleged breach thereof, or relating to Consultant's
activities or remuneration under this Agreement, shall be settled by binding
arbitration in California, in accordance with the applicable rules of the
American Arbitration Association, and judgment on the award rendered by the
arbitrator(s) shall be binding on the parties and may be entered in any court
having jurisdiction as provided by Paragraph 14 herein. The provisions of Title
9 of Part 3 of the California Code of Civil Procedure, including section
1283.05, and successor statutes, permitting expanded discovery proceedings shall
be applicable to all disputes that are arbitrated under this paragraph.
16. Complete Agreement. This Agreement contains the entire agreement of the
------------------
parties relating to the subject matter hereof. This Agreement and its terms may
not be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement as of the
date first above written by their representatives, thereunto duly authorized.
"Company" OMNI NUTRACEUTICALS, INC.
By: /s/ Klee Irwin
Name and Title: Klee Irwin, President
"Consultant" LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By: /s/ John M. Liviakis
John M. Liviakis, President
TERMINATION AGREEMENT
This Termination Agreement (together with all Exhibits, amendments and
supplements thereto, the "agreement"), made as of March 12, 2000 by and between
Louis Mancini ("Mancini") and Omni Nutraceuticals, Inc., a Utah corporation (the
"Company"). Mancini and the Company are sometimes referred to herein
collectively as the "Parties".
WITNESSETH:
WHEREAS, between approximately October 15, 1998 and March 12, 2000 Mancini
had been employed in various capacities, most recently as the President and
Chief Executive Officer of the Company; and
WHEREAS, Mancini and the Company both desire to provide for the orderly
termination of Mancini's employment by the Company.
NOW, THEREFORE, in consideration of the following covenants and agreements
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and confirmed, the Parties hereby agree as follows:
1. Effective Date of Termination of Employment. Mancini's employment with
---------------------------------------------
the Company is hereby mutually agreed to have been terminated, effective as of
March 12, 2000, and in connection therewith, any and all employment agreements,
=
whether oral or written, are hereby terminated and have no further force and
effect (the "Termination").
2. Termination Terms. In connection with the Termination, the Parties agree
------------------
as follows:
2.1 Payment of Unpaid Salary, Vacation and/or Sick Pay. Prior to or
---------------------------------------------------------
concurrently with the execution and delivery of this Agreement by the parties,
the Company agrees to pay Mancini the gross sum of $22,644.23reflecting all
accrued but unpaid salary plus accrued but unpaid vacation pay due Mancini
through March 12, 2000 and the sum of $694.17 representing the aggregate amount
of unpaid claims due Mancini under the Company's Exec-U-Care Medical
Reimbursement Insurance Plan.
2.2 Stock Options. All of Mancini's stock options outstanding as of the
--------------
date hereof are hereby cancelled and of no further force and effect other than
for fully vested options ("Options") to purchase 50,000 shares (the "Option
Shares") of the Company's common stock ("Common Stock") at an option exercise
price of $2.50 per share, provided that such Options are exercised on or prior
to December 31, 2000 at which time they will expire and be of no further force
or effect.
<PAGE>
2.3 Loan Forgiveness. All remaining outstanding indebtedness (including
-----------------
principal, accrued interest and other charges) under a loan in the original
principal amount of $350,000 made to Mancini by the Company at the time of his
original employment by the Company is hereby forgiven in full.
2.4 Waiver. Except as provided in Sections 2.1 through 2.3 and Section 3.4
------
hereof, Mancini hereby irrevocably and unconditionally waives any and all rights
to receive any further compensation and benefits from the Company or any of its
subsidiaries, divisions, parents, affiliated corporations, directors, officers,
shareholders, employees, successors, and assigns, including, without limitation,
all severance benefits and payments, salary, bonuses, commissions,
reimbursements, stock options, awards, grants or any other stock-based
compensation, club dues, automobile allowances, life and other insurance and, to
the full extent permitted by law, all medical, health, welfare and retirement
benefits.
2.5 Releases. Mancini and the Company, R. Lindsey Duncan and his spouse,
--------
Klee Irwin and his spouse, and Andrew Vollero, Jr. will execute and deliver to
each other mutual general releases in the forms attached as Exhibits A, B, C and
D, respectively.
3. Covenants of Mancini. Mancini hereby covenants and agrees with the
----------------------
Company that:
3.1 Confidentiality. He shall keep the terms of the Termination and all
---------------
other non-public information regarding the Company, its products, customers,
suppliers, business plans and other proprietary information confidential and
shall not disclose such information to any third party, including, without
limitation, any Company employee, customer, supplier, vendor, consultant,
adviser, banker, or other person who has or may have in the future any business
dealings with the Company or any of its subsidiaries, divisions, parents,
affiliated corporations, directors, officers, shareholders, employees,
successors, and assigns, except as may be required by the Company, by law or
under valid court or administrative order or decree; provided, however, that he
shall give prompt notice to the Company of the receipt of any such order or
decree to permit the Company to seek to have such order or decree vacated.
3.2 No Disparagement. He agrees that shall make no written or oral
-----------------
statements disparaging the Company, its products, or any of its subsidiaries,
divisions, parents, affiliated corporations, directors, officers, shareholders,
employees, successors, and assigns.
3.3 Nonsolicitation. Until the second anniversary of the date hereof, he
---------------
shall not solicit for employment or otherwise employ, or assist in the
solicitation or employment of, any current employee of the Company or its
subsidiary, HealthZone.com. Notwithstanding the foregoing, Mancini may solicit
for employment any current employee of the Company or HealthZone.com whose
employment with the Company or HealthZone.com has been terminated for at least
three months prior to such solicitation, subject to the terms of any agreements
between the Company and any such terminated employee.
<PAGE>
3.4 Cooperation. He will cooperate fully, at the Company's expense, with
-----------
the Company and its auditors and counsel in connection with any claim, action,
suit, investigation or other proceeding asserted or commenced by any court,
governmental agency or body or other third party relating to any of the matters
which comprise this Agreement or any other matters related or attributable to
the affairs of the Company while he was employed by the Company; including,
without limitation, making himself available during normal business hours, upon
reasonable advance notice and reimbursement of his fees and expenses as
hereinafter provided, to meet with and respond to questions of representatives
of the Company and others, including, without limitation, the Company's auditors
and counsel, which responses will be complete and truthful to the best of his
knowledge; and preserving and making available to the Company and its counsel
copies of all personal correspondence, memoranda, files, agreements or other
documents (whether in written or electronic form) in his possession or control
which in any way relate to his management of the Company's affairs and the
performance of his duties and, in connection therewith, he hereby waives any
right to assert the attorney-client privilege, as to any Company attorneys, in
respect of any such correspondence, memoranda, files, agreements or other
documents to the extent any such correspondence, memoranda, files, agreements or
other documents will assist the Company in the defense of any such claim,
action, suit, investigation or other proceeding. In consideration of such
cooperation, the Company agrees to reimburse Mancini the sum of $150 per hour
for the time he actually spends assisting the Company and for his reasonable
out-of-pocket expenses he actually incurs in making himself available for such
cooperation; provided, however, that prior to incurring any such out-of-pocket
expenses, he shall obtain the consent of the Company.
4. Covenants of the Company.
---------------------------
4.1 No Disparagement. The Company and its subsidiaries, divisions, parents,
----------------
affiliated corporations, directors, officers, shareholders, and employees shall
not make any written or oral statements disparaging Mancini or his efforts as an
officer, director and/or employee of the Company or its subsidiaries.
4.2 Piggy-Back Rights. If the Company at any time proposes for any reason to
-----------------
register shares of Common Stock under the Securities Act of 1933, as amended, on
Form S-8 promulgated under the Securities Act or any successor forms thereto, it
shall promptly give written notice to Mancini of its intention to so register
such shares and, upon the written request, delivered to the Company within 10
days after delivery of any such notice by the Company, of Mancini to include in
such registration the Option Shares for inclusion in such Form S-8 (which
request shall specify the number of Option Shares proposed to be included in
such registration), the Company shall cause all such Option Shares to be
included in such registration on the same terms and conditions as the securities
otherwise being sold in such registration.
5. Miscellaneous.
-------------
<PAGE>
- ------
5.1 Expenses. Each of the parties hereto agrees to pay his and its own costs
--------
and expenses, including, without limitation, all attorneys fees and expenses,
incurred in connection with the negotiation, preparation, execution, delivery
and performance of this Agreement and the transactions contemplated hereby. If
any legal action is brought for the enforcement of this Agreement, or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Agreement, the successful or prevailing party shall be
entitled to recover such party's reasonable attorneys' and other costs
(including all investigatory, expert and court costs) incurred in such legal
action, in addition to any other relief to which such party may be entitled.
5.2 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given or
made as of the date delivered, if delivered personally, or two (2) days (which
=
is not a Saturday, Sunday, holiday or day on which commercial banks in Los
Angeles, CA are required or permitted to close (a "Business Day")) after having
been deposited with a courier, if sent by overnight courier or having been sent
by telecopy, if sent by telecopy (receipt confirmed), or three (3) Business Days
after having been mailed, if mailed by registered or certified mail, postage
prepaid, return receipt requested, as follows:
If to The Company, to: Omni Nutraceuticals, Inc.
5310 Beethoven Avenue
Los Angeles, CA 90066
Attn: President
If to Mancini, to: Louis Mancini
1110 San Ysidro Drive
Beverly Hills, CA 90210
With a copy to: Alexander C. McGilvray, Jr., Esq.
Clark & Trevithick
800 Wilshire Blvd., 12th Floor
Los Angeles, CA 90017
or to such other address, as any party shall have designated by like notice to
the other parties hereto (except that a notice of change of address shall only
be effective upon receipt).
5.3 Applicable Law. This Agreement shall be governed by, and construed in
---------------
accordance with, the laws of the State of California without regard to its
choice of law principles.
5.4 Waivers, etc. The failure of any of the parties hereto at any time to
--------------
enforce any of the provisions of this Agreement shall not be deemed or construed
to be a waiver of any such provision, nor in any way to affect the validity of
this Agreement or any provision hereof or the right of any of the parties hereto
to thereafter enforce each and every provision of this Agreement. No waiver of
any breach of any of
<PAGE>
the provisions Agreement shall be effective unless set forth in an instrument
executed by the party or parties against whom enforcement of such waiver is
sought; and no waiver or breach shall be construed or deemed to be a waiver of
any other or subsequent breach.
5.5 Assignment. Neither this Agreement nor any rights, interests or
----------
obligations hereunder may be assigned (by operation of law or otherwise) by any
party hereto without the prior written consent of the other party hereto, except
that the Company may assign any and all of its rights and remedies and delegate
any and all of its obligations under this Agreement to any affiliate, subsidiary
or any entity owned or controlled by it, provided such affiliate, subsidiary or
entity agrees in writing to be bound by the terms hereof, and such assignment
does not relieve the Company of its obligations hereunder.
5.6 Binding Effect; Benefits. This Agreement shall inure to the benefit of,
-------------------------
and shall be binding upon, the parties hereto and their respective successors
and permitted assigns. Nothing herein contained, express or implied, is
intended to confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights or remedies under or by
reason of this Agreement.
5.7 Amendment. This Agreement may only be amended by a written instrument
---------
executed by each of the parties hereto.
5.8 Severability. Any provision of this Agreement which is held by a court
------------
of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
5.9 Entire Agreement. This Agreement (together with the other agreements and
----------------
documents being delivered pursuant to or in connection with this Agreement)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof,
including, without limitation, that certain Memorandum dated June 9, 1999, by
and between the Company and Mancini.
5.10 Headings. The headings contained herein are for the sole purpose of
--------
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
<PAGE>
5.11 Execution in Counterparts. This Agreement may be executed in one or
---------------------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto.
5.12 Further Assurances. Mancini hereby agrees, at his sole cost and
-------------------
expense, to execute and deliver, all such further agreements, instruments or
other documents as the Company may reasonably request in order to implement the
provisions of this Agreement.
5.13 Specific Performance. The parties hereby acknowledge and agree that the
--------------------
failure of Mancini and/or the Company to perform their respective agreements and
covenants hereunder will cause irreparable injury for which damages, even if
available, will not be an adequate remedy. Accordingly, Mancini and the Company
each hereby consent to the issuance of injunctive relief by any court of
competent jurisdiction to compel performance of such party's obligations and to
the granting by any court of the remedy of specific performance of his or its
obligations hereunder and in connection therewith Mancini and/or the Company
each hereby waive any right to require any bond or other security to be paid or
furnished by Mancini and/or the Company in connection with any application for
such relief.
IN WITNESS WHEREOF, the Company, by its representative thereunto duly
authorized, and Mancini have each executed this Agreement effective as of the
date first above written.
OMNI NUTRACEUTICALS, INC.
By: /s/ Klee Irwin
Klee Irwin
/s/ Louis Mancini
Louis Mancini
<PAGE>
EXHIBIT A
MUTUAL GENERAL RELEASE
----------------------
This Mutual General Release ("Release") made this 12th day of March, 2000,
is entered into by and between Louis Mancini ("Mancini") and Omni
Nutraceuticals, Inc. ("Company"). Mancini and the Company are collectively
referred to as the "Parties."
The Parties enter into this Release with reference to the following facts:
A. Between approximately October 15, 1998 and March 12, 2000, Mancini was
employed by the Company in various capacities, most recently as the President
and Chief Executive Officer of the Company; and
B. Mancini and the Company now desire to negotiate an orderly termination of
Mancini's employment with the Company and have entered into an Agreement of even
date herewith (the "Termination Agreement") regarding the terms of his
termination of employment.
NOW, THEREFORE, in consideration of the following covenants and agreements and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confirmed, the Parties agree as follows:
1. Release by Mancini. Except as to the obligations to be performed by
--------------------
the Company under the Termination Agreement, and except as expressly provided
herein, Mancini, individually, and on behalf of his heirs, legal
representatives, and assigns, does hereby release and forever discharge the
Company, its subsidiaries, divisions, parents, affiliated corporations,
directors, officers, shareholders, employees, successors, and assigns, of and
from all claims, demands, obligations, liabilities, damages, costs, fees,
expenses, actions, causes of action, suits at law or equity of whatever kind or
nature, known or unknown, suspected to exist or not suspected to exist,
anticipated or not anticipated, which have arisen, are now arising, or hereafter
may arise out of or in connection with Mancini's employment by, and any right
to acquire shares in, the Company.
<PAGE>
2. Release by the Company. Except as expressly provided herein and as to
-------------------------
the obligations to be performed by Mancini under the Termination Agreement and
as to any alleged kickback to Mancini relating to the Inholtra brand of product,
the Company, on its own behalf and on behalf of its subsidiaries, divisions,
parents, affiliated corporations, directors, officers, employees, successors,
and assigns, does hereby release Mancini, individually, and his heirs, legal
representatives and assigns, of and from all claims, demands, obligations,
liabilities, damages, costs, fees, expenses, actions, causes of action, suits of
law or equity of whatever kind or nature, known or unknown, suspected to exist,
anticipated or not anticipated, which have arisen, are now arising, or hereafter
may arise out of or in connection with Mancini's employment by the Company,
Mancini's management of the affairs of the Company while so employed and
Mancini's acquisition of shares in the Company in accordance with the provisions
of those certain Options referred to in the Termination Agreement.
3. Indemnification by Company. In the event any person or entity asserts
----------------------------
against Mancini any claim, demand, action or cause of action (collectively
"Claims"), irrespective of whether a lawsuit is filed, which in any way is based
upon or relates to Mancini's acts or omissions as an officer, director or
employee of the Company, the Company agrees to defend, indemnify and hold
Mancini harmless from any and all losses, damages or other obligations relating
to such Claims to the full extent provided in the Company's Articles of
Incorporation and Bylaws and by applicable law. The foregoing indemnification
covenant on the part of the Company is expressly intended to cover any and all
claims heretofore or hereafter brought by Health & Vitamins Express, Inc. in
connection with its existing lawsuit against the Company, Mancini and others.
4. Officers and Directors Liability Insurance. The Company hereby covenants
------------------------------------------
to Mancini that, as soon as practicable after the date hereof, Mancini shall be
named as an insured under a directors and officers policy of liability insurance
for all periods during which Mancini has been an officer and/or director of the
Company with a current limit of at least $5,000,000, which current limit the
Company agrees to continue to maintain, so long as such policy is available to
the Company on commercially reasonable terms.
5. California Civil Code Section 1542 Waiver. With respect to each of the
-------------------------------------------
matters released by each party to this Release, each such party waives all
rights under the provisions of Section 1542 of the California Civil Code and any
similar rights in any state or territory of the United States or under any
similar statute or regulation of the United States or any of its agencies.
Section 1542 of the California Civil Code reads as follows:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."
6. Consultation with Counsel. Each of the Parties acknowledges and
---------------------------
represents that he or it has been given an opportunity to consult with, and has
-
been represented by
<PAGE>
and has consulted with, an attorney of his or its own choice in connection with
the execution of this Release, and has relied upon the advice of such attorney
in negotiating and executing this Release.
7. Claims Not Previously Assigned. Each of the Parties represents and
---------------------------------
warrants to each of the other Parties, respectively, that he or it has not sold,
assigned, transferred, conveyed or otherwise disposed of any claim, demand,
cause of action or other matter which is the subject of his or its release as to
such other party, respectively, set forth above.
8. Binding on Successors. The provisions of this Release shall inure to the
---------------------
benefit of, and shall be binding upon, the Parties and each of their respective
heirs, legal representatives, successors and assigns.
9. Assumption of Risk of Differences in Fact. Each of the Parties
-----------------------------------------------
acknowledges that if the facts with respect to which this Release is executed
are found hereafter to be different from what such party now believes those
facts to be, that party accepts and assumes the risk of such possible
differences and agrees that this Release shall be, and shall remain, effective,
notwithstanding such differences.
10. Counterparts. This Release may be executed in multiple counterparts
------------
which taken together shall constitute the Release of the Parties.
11. Acknowledgment. Each person who signs this Release represents and
--------------
warrants that he or it: has carefully read and fully understands this Release
and its final and binding effect; has been afforded sufficient time and
opportunity to review this Release with advisors or attorneys of his or its
choice; has had an opportunity to negotiate with regard to the terms of this
Release; is fully competent to manage his or its own business affairs and to
enter into or sign this Release; has signed this Release knowingly, freely, and
voluntarily; and that the only promises made to induce him or it to sign this
Release are those stated herein.
12. Attorneys' Fees and Litigation Costs. If any legal action is brought
---------------------------------------
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover such
party's
<PAGE>
reasonable attorneys' and other costs (including all investigatory, expert and
court costs) incurred in such legal action, in addition to any other relief to
which such party may be entitled.
Dated: March 12, 2000 /s/ Louis Mancini
Louis Mancini
Dated: March 12, 2000 OMNI NUTRACEUTICALS, INC.
By: /s/ Klee Irwin
Klee Irwin, President
<PAGE>
EXHIBIT B
MUTUAL GENERAL RELEASE
----------------------
This Mutual General Release ("Release") made this 12th day of March, 2000,
is entered into by and between R. Lindsey Duncan and his spouse, Cheryl Wheeler
(collectively, "Duncan") and Louis Mancini ("Mancini"). Duncan and Mancini are
collectively referred to as the "Parties."
The Parties enter into this Release with reference to the following facts:
A. Between approximately October 15, 1998 and March 12, 2000, Mancini
was employed by Omni Nutraceuticals, Inc. (the "Company") in various capacities,
most recently as the President and Chief Executive Officer;
B. Mancini and the Company, now desire to negotiate an orderly
termination of Mancini's employment with the Company and have entered into an
Agreement of even date herewith (the "Termination Agreement") regarding the
terms of his termination of employment; and
C. Duncan is a shareholder and was formerly employed as the Chairman of
the Board of Directors of the Company.
NOW, THEREFORE, in consideration of the following covenants and agreements
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and confirmed, the Parties agree as follows:
1. Release by Duncan.
-------------------
Except as expressly provided herein and as to the obligations to be performed by
Mancini under the Termination Agreement and as to any alleged kickback to
Mancini relating to the Inholtra brand of product, Duncan, individually and on
behalf of his respective heirs, legal representatives, and assigns, does hereby
release and forever discharge Mancini, individually, and his respective heirs,
legal representatives and assigns, of and from all claims, demands, obligations,
liabilities, damages, costs, fees, expenses, actions, causes of action, suits at
law or equity of whatever kind or nature, known or unknown, suspected to exist
or not suspected to exist, anticipated or not anticipated, which have arisen,
are now arising, or hereafter may arise out of or in connection with Mancini's
employment by the Company.
2. Release by Mancini.
--------------------
<PAGE>
Except as expressly provided herein, Mancini, individually, and on behalf of his
heirs, legal representatives and assigns, does hereby release Duncan,
individually, and his respective heirs, legal representatives and assigns, of
and from all claims, demands, obligations, liabilities, damages, costs, fees,
expenses, actions, causes of action, suits of law or equity of whatever kind or
nature, known or unknown, suspected to exist, anticipated or not anticipated,
which have arisen, are now arising, or hereafter may arise out of or in
connection with Mancini's employment by, and any right to acquire shares in the
Company.
3. California Civil Code Section 1542 Waiver.
----------------------------------------------
With respect to each of the matters released by each party to this Release, each
such party waives all rights under the provisions of Section 1542 of the
California Civil Code and any similar rights in any state or territory of the
United States or under any similar statute or regulation of the United States or
any of its agencies. Section 1542 of the California Civil Code reads as
follows:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."
4. Consultation with Counsel.
---------------------------
Each of the Parties acknowledges and represents that he or it has been given an
opportunity to consult with, and has been represented by and has consulted with,
an attorney of his or its own choice in connection with the execution of this
Release, and has relied upon the advice of such attorney in negotiating and
executing this Release.
5. Claims Not Previously Assigned.
---------------------------------
Each of the Parties represents and warrants to each of the other Parties,
respectively, that he or she has not sold, assigned, transferred, conveyed or
otherwise disposed of any claim, demand, cause of action or other matter which
is the subject of his or her release as to such other party, respectively, set
forth above.
6. Binding on Successors.
-----------------------
The provisions of this Release shall inure to the benefit of, and shall be
binding upon, the Parties and each of their respective heirs, legal
representatives and assigns.
7. Assumption of Risk of Differences in Fact.
-----------------------------------------------
Each of the Parties acknowledges that if the facts with respect to which this
Release is executed are found hereafter to be different from what such party now
believes those facts to be, that party accepts and assumes the risk of such
possible differences and agrees that this Release shall be, and shall remain,
effective, notwithstanding such differences.
8. Counterparts.
------------
This Release may be executed in multiple counterparts which taken together shall
constitute the agreement of the Parties.
9. Acknowledgment.
--------------
<PAGE>
Each person who signs this Release represents and warrants that he or she: has
carefully read and fully understands this Release and its final and binding
effect; has been afforded sufficient time and opportunity to review this Release
with advisors or attorneys of his or her choice; has had an opportunity to
negotiate with regard to the terms of this Release; is fully competent to manage
his or her own business affairs and to enter into or sign this Release; has
signed this Release knowingly, freely, and voluntarily; and that the only
promises made to induce him or her to sign this Release are those stated herein.
10. Attorneys' Fees and Litigation Costs.
----------------------------------------
If any legal action is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party
shall be entitled to recover such party's reasonable attorneys' and other costs
(including all investigatory, expert and court costs) incurred in such legal
action, in addition to any other relief to which such party may be entitled.
Dated: March 12, 2000 /s/ R. Lindsey Duncan
R. Lindsey Duncan
Dated: March 12, 2000 /s/ Cheryl Wheeler
Cheryl Wheeler
Dated: March 12, 2000 /s/ Louis Mancini
Louis Mancini
<PAGE>
EXHIBIT B
MUTUAL GENERAL RELEASE
------------------------
This Mutual General Release ("Release") made this 12th day of March, 2000,
is entered into by and between Klee Irwin and his spouse, Margareth Irwin
(collectively, "Irwin"), and Louis Mancini ("Mancini"). Irwin and Mancini are
=
collectively referred to as the "Parties."
The Parties enter into this Release with reference to the following facts:
A. Between approximately October 15, 1998 and March 12, 2000, Mancini
was employed by Omni Nutraceuticals, Inc. (the "Company") in various capacities,
most recently as the President and Chief Executive Officer;
B. Mancini and the Company, now desire to negotiate an orderly
termination of Mancini's employment with the Company and have entered into an
Agreement of even date herewith (the "Termination Agreement") regarding the
terms of his termination of employment; and
C. Klee and Margareth Irwin are shareholders and Klee Irwin was
formerly employed as the President and Chief Executive Officer of the Company.
NOW, THEREFORE, in consideration of the following covenants and agreements
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and confirmed, the Parties agree as follows:
1. Release by Irwin.
------------------
Except as expressly provided herein and as to the obligations to be performed by
Mancini under the Termination Agreement and as to any alleged kickback to
Mancini relating to the Inholtra brand of product, Irwin, individually and on
behalf of his respective heirs, legal representatives, and assigns, does hereby
release and forever discharge Mancini, individually, and his respective heirs,
legal representatives and assigns, of and from all claims, demands, obligations,
liabilities, damages, costs, fees, expenses, actions, causes of action, suits at
law or equity of whatever kind or nature, known or unknown, suspected to exist
or not suspected to exist, anticipated or not anticipated, which have arisen,
are now arising, or hereafter may arise out of or in connection with Mancini's
employment by the Company.
2. Release by Mancini.
--------------------
<PAGE>
Except as expressly provided herein, Mancini, individually, and on behalf of his
heirs, legal representatives and assigns, does hereby release Irwin,
individually, and his respective heirs, legal representatives and assigns, of
and from all claims, demands, obligations, liabilities, damages, costs, fees,
expenses, actions, causes of action, suits of law or equity of whatever kind or
nature, known or unknown, suspected to exist, anticipated or not anticipated,
which have arisen, are now arising, or hereafter may arise out of or in
connection with Mancini's employment by, and any right to acquire shares in, the
Company.
3. California Civil Code Section 1542 Waiver.
----------------------------------------------
With respect to each of the matters released by each party to this Release, each
such party waives all rights under the provisions of Section 1542 of the
California Civil Code and any similar rights in any state or territory of the
United States or under any similar statute or regulation of the United States or
any of its agencies. Section 1542 of the California Civil Code reads as
follows:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."
4. Consultation with Counsel.
---------------------------
Each of the Parties acknowledges and represents that he or it has been given an
opportunity to consult with, and has been represented by and has consulted with,
an attorney of his or its own choice in connection with the execution of this
Release, and has relied upon the advice of such attorney in negotiating and
executing this Release.
5. Claims Not Previously Assigned.
---------------------------------
Each of the Parties represents and warrants to each of the other Parties,
respectively, that he or she has not sold, assigned, transferred, conveyed or
otherwise disposed of any claim, demand, cause of action or other matter which
is the subject of his or her release as to such other party, respectively, set
forth above.
6. Binding on Successors.
-----------------------
The provisions of this Release shall inure to the benefit of, and shall be
binding upon, the Parties and each of their respective heirs, legal
representatives and assigns.
7. Assumption of Risk of Differences in Fact.
-----------------------------------------------
Each of the Parties acknowledges that if the facts with respect to which this
Release is executed are found hereafter to be different from what such party now
believes those facts to be, that party accepts and assumes the risk of such
possible differences and agrees that this Release shall be, and shall remain,
effective, notwithstanding such differences.
8. Counterparts.
------------
This Release may be executed in multiple counterparts which taken together shall
constitute the agreement of the Parties.
9. Acknowledgment.
--------------
<PAGE>
Each person who signs this Release represents and warrants that he or she:
has carefully read and fully understands this Release and its final and binding
effect; has been afforded sufficient time and opportunity to review this Release
with advisors or attorneys of his or her choice; has had an opportunity to
negotiate with regard to the terms of this Release; is fully competent to manage
his or her own business affairs and to enter into or sign this Release; has
signed this Release knowingly, freely, and voluntarily; and that the only
promises made to induce him or her to sign this Release are those stated herein.
10. Attorneys' Fees and Litigation Costs.
----------------------------------------
If any legal action is brought for the enforcement of this Agreement, or
because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the successful or
prevailing party shall be entitled to recover such party's reasonable attorneys'
and other costs (including all investigatory, expert and court costs) incurred
in such legal action, in addition to any other relief to which such party may be
entitled.
Dated: March 12, 2000 /s/ Klee Irwin
Klee Irwin
Dated: March 12, 2000 /s/ Margareth Irwin
Margareth Irwin
Dated: March 12, 2000 /s/ Louis Mancini
Louis Mancini
<PAGE>
EXHIBIT D
MUTUAL GENERAL RELEASE
----------------------
This Mutual General Release ("Release") made this 12th day of March, 2000,
--
is entered into by and between Andrew Vollero, Jr. ("Vollero") and Louis Mancini
("Mancini"). Vollero and Mancini are collectively referred to as the "Parties."
The Parties enter into this Release with reference to the following facts:
A. Between approximately October 15, 1998 and March 12, 2000, Mancini
was employed by Omni Nutraceuticals, Inc. (the "Company") in various capacities,
most recently as the President and Chief Executive Officer;
B. Mancini and the Company, now desire to negotiate an orderly termination
of Mancini's employment with the Company and have entered into an Agreement of
even date herewith (the "Termination Agreement") regarding the terms of his
termination of employment; and
C. Vollero is a shareholder and a director of the Company.
NOW, THEREFORE, in consideration of the following covenants and agreements and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confirmed, the Parties agree as follows:
1. Release by Vollero.
--------------------
Except as expressly provided herein and as to the obligations to be performed by
Mancini under the Termination Agreement and as to any alleged kickback to
Mancini relating to the Inholtra brand of product, Vollero, individually and on
behalf of his respective heirs, legal representatives, and assigns, does hereby
release and forever discharge Mancini, individually, and his respective heirs,
legal representatives and assigns, of and from all claims, demands, obligations,
liabilities, damages, costs, fees, expenses, actions, causes of action, suits at
law or equity of whatever kind or nature, known or unknown, suspected to exist
or not suspected to exist, anticipated or not anticipated, which have arisen,
are now arising, or hereafter may arise out of or in connection with Mancini's
employment by the Company.
2. Release by Mancini.
--------------------
Except as expressly provided herein, Mancini, individually, and on behalf of his
heirs, legal representatives and assigns, does hereby release Vollero,
individually, and his respective heirs, legal representatives and assigns, of
and from all claims, demands, obligations, liabilities, damages, costs, fees,
expenses, actions, causes of action, suits of law or equity of whatever kind or
nature, known or unknown, suspected to exist, anticipated or not anticipated,
which have arisen, are now arising, or hereafter may arise out of or in
connection with Mancini's employment by, and any right to acquire shares in, the
Company.
<PAGE>
3. California Civil Code Section 1542 Waiver.
----------------------------------------------
With respect to each of the matters released by each party to this Release, each
such party waives all rights under the provisions of Section 1542 of the
California Civil Code and any similar rights in any state or territory of the
United States or under any similar statute or regulation of the United States or
any of its agencies. Section 1542 of the California Civil Code reads as
follows:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."
4. Consultation with Counsel.
---------------------------
Each of the Parties acknowledges and represents that he or it has been given an
opportunity to consult with, and has been represented by and has consulted with,
an attorney of his or its own choice in connection with the execution of this
Release, and has relied upon the advice of such attorney in negotiating and
executing this Release.
5. Claims Not Previously Assigned.
---------------------------------
Each of the Parties represents and warrants to each of the other Parties,
respectively, that he or she has not sold, assigned, transferred, conveyed or
otherwise disposed of any claim, demand, cause of action or other matter which
is the subject of his or her release as to such other party, respectively, set
forth above.
6. Binding on Successors.
-----------------------
The provisions of this Release shall inure to the benefit of, and shall be
binding upon, the Parties and each of their respective heirs, legal
representatives and assigns.
7. Assumption of Risk of Differences in Fact.
-----------------------------------------------
Each of the Parties acknowledges that if the facts with respect to which this
Release is executed are found hereafter to be different from what such party now
believes those facts to be, that party accepts and assumes the risk of such
possible differences and agrees that this Release shall be, and shall remain,
effective, notwithstanding such differences.
8. Counterparts.
------------
This Release may be executed in multiple counterparts which taken together shall
constitute the agreement of the Parties.
9. Acknowledgment.
--------------
Each person who signs this Release represents and warrants that he or she: has
carefully read and fully understands this Release and its final and binding
effect; has been afforded sufficient time and opportunity to review this Release
with advisors or attorneys of his or her choice; has had an opportunity to
negotiate with regard to the terms of this Release; is fully competent to manage
his or her own business affairs and to enter into or sign this Release; has
signed this Release knowingly, freely, and voluntarily; and that the only
promises made to induce him or her to sign this Release are those stated herein.
<PAGE>
10. Attorneys' Fees and Litigation Costs.
----------------------------------------
If any legal action is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party
shall be entitled to recover such party's reasonable attorneys' and other costs
(including all investigatory, expert and court costs) incurred in such legal
action, in addition to any other relief to which such party may be entitled.
Dated: March 12, 2000 /s/ Andrew Vollero, Jr.
Andrew Vollero, Jr.
Dated: March 12, 2000 /s/ Louis Mancini
Louis Mancini
