EXHIBIT 10.6
MANAGEMENT AGREEMENT
This Agreement (the "Agreement") is effective as of July 14, 1999 (the
"Effective Date") by and among ONE WORLD NETWORKS INTEGRATED TECHNOLOGIES, INC.,
a Nevada corporation (or any affiliate of thereof) (collectively ("OWN"), and
BIOZHEM COSMECEUTICALS, INC. ("COMPANY") a Texas corporation, and made with
reference to the following facts:
A. Company owns and operates a business developing, producing and
exploiting cosmetics and related products (the "Business").
B. OWN has special expertise and experience in the operation,
management and marketing of companies engaged in businesses of the type operated
by Company.
C. Company desires to engage OWN to manage all aspects of the Business
and OWN has agreed to assume management responsibilities for the operation of
the Company for a period of five (5) years (the "Term") subject to the terms and
conditions set forth below.
NOW, THEREFORE, OWN and Company agree as follows:
1. DEFINITIONS. The following terms when used in this Agreement shall
have the meaning ascribed to them below:
"Books and Records" means Company's books of account, accounting and
financial records and all other records relating to and used in the conduct of
Company's Business or used in the preparation of reports and financial
statements of the Company.
"Capital Costs" shall mean all direct expenses associated with the
production, design and marketing of any product.
"Closing Date" shall mean the date all of the conditions set forth
herein have been satisfied.
"Company" shall mean BIOZHEM COSMECEUTICALS, INC., a Texas corporation.
"GAAP" means at any particular time generally accepted accounting
principles as in effect at such time. Any accounting term used in this Agreement
shall have the meaning customarily given in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP as
consistently applied and using the same method of valuation as used in the
preparation of Company's financial statements.
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"Initial Sales Threshold" shall mean total sales for the Company of at
least $400,000 for the period beginning October 1, 1999 through December 31,
1999.
"Management Fee" shall mean a fee of 40% of Pre-Tax Net Income, if any,
for each year during the Term.
"Manager's Reimbursement" shall mean the sum of Manager's Reimbursable
Overhead, Manager's Reimbursable Direct Expenses, Product Development Costs, and
Capital Costs.
"Manager's Reimbursable Overhead" shall mean the sum of all directly
identifiable expenses incurred by OWN in connection with performing its
management duties under this Agreement including, without limitation, brand
managers (to the extent not included in Manager's Reimbursable Direct Expenses),
and allocable overhead for services such as legal and accounting expenses. These
costs shall also include 50% of the legal costs incurred by both parties for
this transaction. Notwithstanding the foregoing, Manager's Reimbursable Overhead
shall not include any expenses associated with the services' of Own's senior
executives, or any rent or utilities.
"Manager's Reimbursable Direct Expenses". shall include all direct
expenses incurred by OWN in connection with performing its management duties
under this Agreement including, without limitation, costs of goods acquired or
produced, payments to third party vendors, marketing costs, all labor costs
associated with any personnel employed by OWN and dedicated to the Business of
Company or allocated to specific activities involving OWN's management of the
Company, the cost and maintenance of any equipment, supplies and software
dedicated to the services rendered by OWN hereunder.
"OWN" shall mean ONE WORLD NETWORKS INTEGRATED TECHNOLOGIES, INC., a
Nevada corporation.
"Product Development Cost" shall mean any marketing and advertising
costs incurred by OWN or for which OWN is responsible relating to the Company
and its business.
"Pre-Tax Net Income" shall mean net income determined in accordance
with GAAP without any deduction or provision for the payment of income taxes but
including the deduction of Manager's Reimbursement.
"Retained Rights" shall mean the rights customarily retained by the
Board of Directors of publicly held companies, including but not limited to the
right to sell, distribute, redeem or acquire additional securities of the
Company, the right to effectuate all filings of the Company required
documentation with the Securities and Exchange Commission, the right to approve
an acquisition of a business, the right to effectuate a sale of all or
substantially all of the Company (subject to the provisions contained herein),
the right to approve contracts for executives, and right to borrow and repay any
indebtedness or guarantee any indebtedness.
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"Term" shall mean, subject to the provisions of Section 14 hereof, a
period beginning as of the Closing Date and terminating five (5) years hence.
2. GENERAL MANAGEMENT.
OWN is hereby engaged by Company to exclusively provide and perform for
and on behalf of Company all management services reasonably necessary for the
proper and efficient operation of Company and the Business during the Term of
this Agreement. Such services shall include, but shall not be limited to, those
items set forth in this Section 2 and in Sections 3, 4, 5 and 6 of this
Agreement. OWN is exclusively authorized to provide and perform for and on
behalf of Company all services required of OWN pursuant to the terms of this
Agreement in such a manner as OWN deems reasonable and appropriate in order to
meet the day-to-day requirements of the Company and the Business. In performing
such services for Company, OWN may advance or pay on Company's behalf all
necessary or appropriate sums pursuant to this Agreement, including but not
limited to Manager's Reimbursement and the Management Fee. OWN may subcontract
with other persons to perform any part of the services required of OWN
hereunder. OWN hereby accepts such engagement and agrees to furnish to Company
all such management services. Company acknowledges that OWN shall only be
required to spend the hours necessary or appropriate to perform its duties
hereunder and shall not be prohibited hereby from undertaking other activities,
whether in Company's service area or otherwise. Subject to the Retained Rights
and the fiduciary duties of the Board of Directors and officers of the Company,
the Company will cooperate with OWN's business arrangements and will not
interfere with OWN's efficient management of the day-to-day operations of
Company.
3. BOOKKEEPING AND ACCOUNTS.
OWN (or any outside entity which OWN shall supervise and direct the
performance of) shall supervise and direct the performance of the bookkeeping
and accounting services for and on behalf of Company, including but not limited
to, maintenance, custody and supervision of all business records, papers,
documents, ledgers, journals and reports, prepare or cause to be prepared
federal and state tax filings and all bills and statements for Company;
provided, however, it is understood that all such business records, papers and
documents are the sole property of Company, and shall be available for
inspection by Company at all times. Upon termination of this Agreement all such
business records, papers and documents shall be delivered to a party to be
jointly designated in writing by OWN and Company and while in the custody of
such third party OWN and Company shall have access thereto for inspection and
other business purposes. If OWN and Company do not designate a third party
custodian by the effective date of termination of this Agreement, OWN will serve
as such custodian. Company shall provide OWN with a complete copy of all such
documents, records, and papers at Company's expense upon termination of this
Agreement. Notwithstanding the foregoing, the officers of the Company, reporting
to the Board of Directors, shall be responsible for all financial reporting,
consistent with the Company's obligations as a publicly held Company.
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4. BILLING AND COLLECTION; ACCOUNTS.
OWN (or any outside entity which OWN reasonably believes is necessary),
shall supervise and direct the performance of, on behalf of and for Company, the
billing and collecting of all amounts due to the Company. It is expressly
understood that the extent to which OWN will endeavor to collect such charges,
the methods of collecting, the settling of disputes with respect to charges and
the writing off of charges that may be or appear to be uncollectible shall at
all times be within the sole discretion of OWN, and that OWN does not guarantee
the extent to which any charges billed will be collected. Company or its duly
authorized agent shall have the right at all reasonable times and upon the
giving of reasonable notice to examine, inspect and copy the records of OWN
pertaining to such fees, charges, xxxxxxxx and collections.
5. MARKETING AND NEW PRODUCTS.
(a) OWN shall be in charge of all marketing and distribution activities
on behalf of the Company. OWN shall be responsible for all sales activities
including determining which products to market, selling prices, target
customers, selecting distribution methods and procedures, and advertising
activities.
(b) The parties further acknowledge and agree that OWN shall have the
right to select and introduce any new products for inclusion under the Company's
label, and Company agrees to indemnify and hold OWN harmless relative to any
products OWN designates for inclusion under the Company's label or does not so
include. The Company further agrees that OWN shall be free to compete against
the Company, and nothing herein shall be construed so as to create an
affirmative duty or obligation on the part of OWN to supply the Company with a
new product or products, or any other business or line of business.
(c) In the event OWN identifies new products to b distributed by,
through, or on behalf of Company, OWN shall be entitled to an additional fee
equal to twenty five percent of the actual cost of the products in addition to
any other fees payable to OWN hereunder. Any new products introduced to Company
by OWN during the term of the Agreement shall revert to OWN after the Term;
provided, however, that after the Term, such products shall be deemed licensed
to Company on a non-exclusive basis on terms which approximate the then existing
economic relationship. The duration of such license will be equal to the terms
pursuant to which OWN has acquired the underlying rights to such products or
product.
(d) Company acknowledges that OWN has made no representations, either
express or implied, as to the relative success of any of OWN's activities
hereunder.
6. ADMINISTRATIVE ACTIVITIES.
In addition to the activities described in Section 2,3,4 and 5 above,
OWN shall be responsible for all other administrative functions of the Company
including all personnel matters,
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compensation arrangements with employees of the Company, selecting outside
advisors and consultants to the Company, choosing vendors and suppliers,
selecting and negotiating banking relationships and all other normal and
customary activities associated with operating a business. Notwithstanding the
foregoing, OWN shall not take any action which would impair the collection of
obligations owing to it under the Loan (as defined below), or undertake any
other activity which would facilitate a default under the Note.
7. OWN'S COMPENSATION.
(a) MANAGER'S REIMBURSEMENT. OWN shall be entitled to withdraw for its
own benefit from the Company bank accounts (the "Company Accounts") the
Manager's Reimbursements. Manager's Reimbursement shall be calculated and paid
on a monthly basis.
(b) MANAGEMENT FEE. For its services to Company and for undertaking all
of its obligations hereunder to Company, OWN shall be paid on a monthly basis an
amount equal to the Management Fee, which may be paid on an estimated basis. The
Management Fee shall be calculated on a monthly basis at the end of each such
period during the Term; provided, however, at the end of each fiscal quarter
during the Term, the Management Fee due for the prior three (3) month period
shall be calculated and the amount due OWN shall be reconciled with the
estimated payments made during the prior three (3) month period. If the
estimated amounts previously paid to OWN exceed the Management Fee for that
period, OWN must repay the overpaid amount within the next thirty (30) day
period. If the Management Fee for such period exceeds the estimated amounts.
previously paid to OWN, OWN shall be entitled to immediately pay to itself from
the Company Account the difference.
(c) ADDITIONAL COMPENSATION WARRANTS. On the Closing Date and
continuing thereafter, Company will issue to OWN warrants (substantially in the
form attached hereto as Exhibit A), which warrants will contain cashless
exercise provisions and protection against stock split/reverses and will have a
term of five years from their respective date of issuance. The Warrants will be
issued as follows:
(i) 1,000,000 Class A Warrants to purchase one share of
Company's common stock at an exercise price of the lower of $.70 or the average
of the closing price as quoted on the principal exchange for which Company's
shares trade for the five (5) day trading period immediately preceding the date
of the execution of this Agreement;
(ii) Commencing on the first day of the first calendar month
following the Closing Date, Company shall calculate on a monthly basis, Pre-Tax
Net Income. For each $400,000 in cumulative Pre-Tax Net Income that is generated
by Company during the Term, OWN will receive 500,000 Class B Warrants to
purchase one share of Company's common stock at an exercise price of $1.00 per
share, up to a maximum of 22,000,000 Class B Warrants;
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(iii) 1,000,000 Class C Warrants to purchase one share of
Company's common stock at an exercise price of $1.00 upon the completion during
the Term of a strategic alliance, endorsement deal or product acquisition, the
result of which, in combination with other activities of Company, increase the
market capitalization of Company by at least $10,000,000, such determination to
be based upon a six (6) month average before and after said transaction of the
daily closing prices as quoted on the principal exchange for which Company's
shares trade;
(iv) 1,000,000 Class D Warrants to purchase one share of
Company's common stock at an exercise price of $1.00 upon the attainment during
the Term of the first two consecutive quarters of Pre-Tax Net Income of more
than $60,000 per quarter; and
(v) 1,000,000 Class E Warrants to purchase one share of
Company's common stock at an exercise price of $1.50 per share if Company,
during any consecutive six (6) month period (or less) attains gross revenues of
at least $8,000,000, provided that no Class E Warrants shall be issued if
Company does not have after tax net income from operations during such period;
and provided further, a maximum of 3,000,000 Class E Warrants its shall be
issued under this subparagraph (v).
(d) With respect to the Warrants to be issued as set forth in(c) above,
the parties further acknowledge as follows:
(i) The Board of Directors. has approved the issuance thereof
notwithstanding the potentially dilutive nature of the Warrants and the issuance
of the Shares of Common Stock underlying the Warrants; and
(ii) OWN shall be entitled, at its expense but with the
Company's reasonable cooperation to piggyback and demand registration rights as
set forth on Exhibit B.
(iii) Any dispute regarding the issuance of the Warrants shall
be subject to expedited arbitration under the rules set forth on Exhibit C.
(iv) The Company will instruct its transfer agent to reserve
for issuance 28,000,000 shares of Common Stock with respect to the Warrants.
8. LOANS AND EQUITY PROVIDED BY OWN.
Upon the closing of this transaction, OWN shall loan to Company, to
cover operational cash flow problems, the sum of $50,000 ("Loan") for a one year
period in accordance with the terms of the promissory note and security
agreement attached hereto as Exhibit D and E, respectively. In addition, OWN
shall assist the Company and its advisors, and on a best effort basis and on
terms to be mutually agreed upon, in arranging for $200,000 in new equity. To
the extent that the Loan is not repaid at Maturity it may be repaid with common
stock of Company valued at $.37 per share, with piggyback registration rights.
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9. REPRESENTATIONS AND WARRANTIES OF COMPANY.
Company makes the following representations and warranties as an
inducement to OWN to enter into this Agreement and to manage the Business:
(a) ORGANIZATION. Company is a corporation which has been duly
incorporated and organized and is validly existing and in good standing under
the laws a of the State of Texas with corporate power and authority to own and
operate the Business and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where such qualifications
is necessary.
(b) AUTHORITY. Company has the legal capability and. authority to enter
into and carry out the transactions contemplated by this Agreement. Neither the
execution of this Agreement, nor the consummation of the transactions
contemplated herein violates, conflicts with or results in, or will violate,
conflict with or result in, a breach by Company of the terms, conditions, or
provisions, as applicable, of its incorporating documents or by-laws or of any
security interest, deed of trust, debt instrument or loan agreement, or any
undertaking, to which it is a party or by which it is bound, or any applicable
law, regulation, by-law, ordinance or order of any jurisdiction where Company
carries on the Business.
(c) CAPITAL STOCK. The authorized capital stock of the Company as of
the date hereof consists of 100,000,000 shares. of common stock, 7,778,971 of
which shares are issued and outstanding ("Common Stock") and 10,000,000 shares
of preferred stock, none of which is currently issued and outstanding. Except
for the Common Stock and the Warrants and options indicated on Schedule 1 (such
schedule, with the other Schedules, attached hereto, being hereinafter referred
to as the "Company Disclosure Statement"), the Company. does not have any stock
or securities convertible or exchangeable. for its capital stock or containing
any profit participation features, nor does it have outstanding any rights or
options to subscribe for or to purchase its capital stock or any stock
appreciation rights or phantom stock plans.
(d) LEGALITY OF BUSINESS. Company is conducting the Business in
compliance with all applicable laws, rules and regulations and orders relating
thereto.
(e) GOVERNMENTAL AUTHORIZATIONS. Company holds such licenses, permits,
consents, authorizations and orders of such governmental or regulatory
authorities as are necessary to carry on the Business and such licenses,
permits, consents, authorizations and orders are in full force and effect and
have been and are being fully complied with by Company.
(f) FINANCIAL STATEMENTS. Schedule 2 of the Company Disclosure Schedule
includes the Company's audited consolidated financial statements (balance
sheets, income statements and statements of cash flows) as of and for the fiscal
year ending September 30, 1998 (the "9/30/98 Statements") and the Company's
unaudited consolidated financial statements (balance sheets, income
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statement and statement of cash flow) as of and for the six (6) months ended
March 31, 1999 (the "3/31 Statements") (collectively, the "Financial
Statements").
With respect to the 9/30/98 Statements, the Statements are complete and
correct and have been prepared in accordance with GAAP applied on a basis
consistent throughout the periods indicated and consistent with each other. The
9/30/98 Statements present fairly the financial condition and operating results
of the Company as of the dates and during the periods indicated therein.
With respect to the 3/31 Statements, the 3/31 Statements are true,
complete and correct in all material respects and have been prepared in
accordance with GAAP applied on a basis consistent throughout the periods
indicated (except that the unaudited financial statements for the three months
ended March 31, 1998 do not contain the notes necessary to be in accordance with
GAAP and are subject to customary year-end adjustment). The 3/31 Statements
present fairly the financial condition and operating results of the Company as
of the dates and during the periods indicated therein.
The audited balance sheet of the Company as of 9/30/98 is hereinafter
referred to as the "AUDITED BALANCE SHEET" The unaudited balance sheet of the
Company as of March 3l, 1999 is hereinafter referred to as the `UNAUDITED
BALANCE SHEET."
(g) NO ADVERSE CHANGES. Since the date of the Unaudited Balance Sheet,
there have been no material adverse changes in the results of operations or
financial condition of the Business.
(h) Proceedings. There are no actions, suits, or proceedings, pending
or threatened, before any court or governmental authority or other
administrative agency or any administrative officer which, if successful, could
adversely affect the Business or Company's right to enter into this Agreement.
(i) EXECUTIONS. There are no judgments or executions of any kind
outstanding against Company which affect or could affect the Business.
(j) CONTRACTS AND LEASES. Company is not and but for a requirement that
notice be given or that a period of time elapse or both, would not be, in
default in any respect under the term of any of the contract, agreement, lease
or instrument to which it is a party nor is any other party to any contract,
agreement, lease or other instrument respecting the Business in default
thereunder.
(k) INVENTORY. Schedule 3 sets forth all inventory of the Company as of
6/30/99. At the Closing, the Company will have sufficient inventory to maintain
its operations in the ordinary course. All of the inventory in the schedule is
first class quality, marketable in the ordinary course, and fit for the purpose
for which it was intended.
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(1) EMPLOYEES. There are no collective bargaining agreements,
employment contracts or consulting agreements in place with any employees.
Company believes that there has been a satisfactory relationship with those
employees who are engaged in the Business. All obligations of Company, whether
arising by operation of law, by contract or by past custom, for payment directly
to its employees or sales representatives (including commissions and bonuses) or
to trusts or to other funds or to any governmental agency for salary or wages,
unemployment compensation benefits, contributions or taxes, social security
benefits, vacation and holiday pay, bonuses, deferred compensation and other
forms of compensation or any other benefits have been paid with respect to
obligations relating to periods prior to the date of Agreement. Set forth on
Schedule 4 is a complete list of all employees who are subject to any employment
agreements (whether written or oral) and the compensation owing pursuant
thereto.
(m) ACCOUNTS RECEIVABLE.
(i) Set forth in Schedule 5 is a list of all accounts
receivable of the Company as of the 6/30/99 ("ACCOUNTS RECEIVABLE").
(ii) All Accounts Receivable of the Company arose in the
ordinary course of business, are carried at values determined in accordance with
GAAP consistently applied and are collectible except to the extent of reserves
therefor set forth in the Unaudited Balance Sheet. No person has any Lien on any
of such Accounts Receivable, and no request or agreement for deduction or
discount has been made with respect to any of such Accounts Receivable.
(n) LIABILITIES.
(i) Schedule 6 sets forth a list of the principal amount owing
and each of noteholders of the Company's short term debt as of the Closing Date.
Prior to the effectiveness of this agreement, each noteholder, including Xxxx
Xxxxxxx and JCR Enterprises, Inc., shall convert their debt into shares of
Common Stock at a conversion price of thirty-seven cents ($.37). UCC termination
statements shall be filed with respect to any secured indebtedness.
(ii) Except for obligations incurred in the ordinary course of
business which are not material and not required under GAAP to be set forth or
reflected on a balance sheet or the notes thereto, the Company does not have any
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or other (whether or not required to be reflected in financial
statements in accordance with generally accepted accounting principles), which
individually or in the aggregate, (i) has not been reflected in the Unaudited
Balance Sheet, or (ii) have not been specifically described in this Agreement or
in the Company Disclosure Schedule and specifically identified herein or therein
as not being included in the Unaudited Balance Sheet, or (iii) has not arisen in
the ordinary course of the Company's business since the date of the Unaudited
Balance Sheet.
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(o) TAX RETURNS AND REPORTS. All federal, state, local and foreign
income, excise, property, sales, use, information, payroll and other tax returns
and reports required to be filed by Company (the "Tax Returns") have been timely
filed with the appropriate governmental agencies in all jurisdictions in which
such returns and reports are required to be filed, and all such returns and.
reports properly reflect the taxes of Company for the period covered thereby..
All federal, state, local and foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions which are
called for as due by the Tax Returns, or which are claimed to be due, or which
are otherwise due to any taxing authority from the Company (the "Taxes"), have
been properly withheld, accrued and paid, as required. There are no tax liens on
any of the properties or assets of Company except for liens for current taxes
not yet due and payable. There is no basis for any additional assessment of any
Taxes, penalties or interest with respect to Company. Company has not waived any
law or regulations fixing, or consented to the extension of, any period of time
for assessment of any Taxes, which waiver or consent is currently in effect.
Company has not received any notice of assessment or proposed assessment by the
Internal Revenue Service ("IRS") or any other taxing authority in connection
with any Tax Returns, and there are no pending tax examinations of or tax claims
asserted against Company or its properties, and the results of any prior
examinations have been properly reflected in the Financial Statements.
(p) ENVIRONMENTAL MATTERS. The Business has, at :all times,. been
conducted in compliance with all applicable federal, state, municipal and local
laws, regulations, orders, licenses, permits, governmental decrees, ordinances
or any and all other legislation or regulatory instruments with respect to
environmental, health or safety matters (collectively "Environmental Laws").
Company has not been notified by any governmental body or agency of any
potential or threatened violation of Environmental Laws applicable to the
Business. Any hazardous substances used by Company in the Business have been
transported, used and disposed of in accordance with all Environmental Laws.
With respect to real property leased by Company or used by Company in the
Business ("Real Property"), there are not now nor have there ever been
underground storage tanks or other vessels located on, or under the Real
Property and there have been no spills, releases, deposits, emissions, or
discharges of hazardous substances, on or near the Real Property. Company is not
required to hold any license, permit or approval under any Environmental Laws
relating in any way to the Business. For the purposes of this section,
"hazardous substance" shall mean any hazardous wastes, substances, materials,
toxic substances, hazardous air pollutants or toxic pollutants, as those terms
are used in the RESOURCE CONSERVATION AND RECOVERY ACT, the COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980 ("CERCLA"), the
HAZARDOUS MATERIALS TRANSPORTATION ACT, the Toxic Substances Control Act, the
Clean Air Act And The Clean Water Act, or any amendments thereto, or any
regulations promulgated thereunder, or any "PCBs" or "PCB items" (as described
in 40 C.F.R. Section 761.3 any "asbestos" (as defined in 40 C.F.R. Section
763.63).
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10. COVENANTS OF COMPANY.
During the Term of this Agreement, subject to the Retained Rights and
the fiduciary obligations and duties of the Board of Directors and the Company's
officers, the Company covenants and agrees with OWN as follows:
(a) To cooperate with OWN and follow all proper directives, policies,
procedures and guidelines established by OWN relating to the conduct of the
business.
(b) To deposit into the Company Accounts all funds, in whatever form,
received by Company in connection with the Business.
(c) Not to incur any debts over $50,000, enter into any agreements, or
incur any expenses, make any commitments relating to the Business, or otherwise
incur obligations unless approved by OWN or undertaken pursuant to guidelines
and procedures established by OWN.
(d) After the $200,000 equity raise contemplated hereunder, not to
issue any stock in the Company or rights to acquire any stock, options,
warrants, or securities convertible in to the stock of the Company without the
prior written consent of OWN.
11. COMPANY ACCOUNTS.
OWN shall have the right to designate two employees of the Company
and/or OWN who will be signatories to the Company Accounts. All checks must be
signed by the Company's CFO. A signature of the CFO and of' OWN's designee will
be required to transfer to disburse funds over $2,500. Notwithstanding the
foregoing, in the event that there arises at any time, or from time to time,
situations where current obligations exceed the Company's financial ability at
that time to pay all such obligations as they mature, the allocation of any
payments to third parties and to OWN shall be subject to the exercise by the
Board of Directors of their reasonable business judgment and their fiduciary
obligations to the Company's shareholders.
12. BOARD OF DIRECTORS.
Concurrently with the closing of the transaction contemplated by the
Agreement, Xxxxxx Xxxxxxx and Xxxx Xxxxx, Xx. will resign from the Board of
Directors of the Company. The vacancies created thereby will be filled, as soon
as practicable, by two new outside directors acceptable to OWN and the remaining
directors. At any subsequent time, OWN shall have the right to designate two (2)
additional nominees, and the Company shall be obligated to cause the directors
to increase the size of the Board to seven members and shall appoint the two
persons designated by OWN to fill the vacancies so created, and such directors
shall serve until the next meeting of shareholders of the Company at which
directors are elected. Upon termination of this Agreement, all directors elected
by or through OWN, if any, will resign effective immediately. OWN and Company
will effectuate amendments to Company's articles of incorporation or bylaws to
require
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unanimous board approval for aspects of business relating to OWN's ability to
transfer profits or effectuate a sale of all or substantially all of the
Company.
13. MISCELLANEOUS AUTHORITY AND DUTIES OF THE PARTIES.
Each of the parties agrees to cooperate fully with each other in
connection with the performance of their respective obligations under this
Agreement, and the parties agree to employ reasonable efforts to resolve any
dispute that may arise under or in connection with this Agreement. Subject to
OWN maintaining the confidentiality of Company's confidential information,
Company shall provide to OWN full and complete access to Company's premises, and
to Company's charts, books, and records, in order that OWN can perform its
functions hereunder.
Notwithstanding any other provisions contained herein, OWN shall not be
liable to Company, and shall not be deemed to be in default hereunder, for the
failure to perform any of OWN's obligations to be performed or provided by OWN
pursuant to the Agreement if such failure is a result of a labor dispute, act of
God, or any other event which is beyond the reasonable control of OWN.
14. TERM OF AGREEMENT.
(a) This Agreement shall remain in effect for five (5) years after the
date hereof (the "Term") unless mutually terminated or terminated as provided
herein.
(b) Either OWN or Company may terminate this Agreement if (i) on
January 1, 2000 the Initial Sales Threshold has not been met and, if the
election to terminate is to be made by Company, all advances to Company under
the Loans have been repaid; or(ii) on January 1st of each subsequent year, sales
from the previous calendar year fail to exceed the sales from the prior calendar
year.
(c) Unless otherwise terminated during the Term, or unless either party
gives the other party one hundred twenty (120) days advance written notice of
its intention not to renew, the Term shall automatically renew for successive
one year periods following the expiration of the Term. If either party gives a
non-renewal notice, they will meet to discuss whether there is any other basis
to continue the relationship.
15. DEFAULT; REMEDIES ON DEFAULT.
(a) Except as otherwise provided herein, upon the Default of a party,
in addition to all other rights and remedies, the non-defaulting party may
terminate this Agreement upon delivery of thirty (30) days prior written notice
to the other party. A "Default" shall be deemed to occur as set forth below in
Section 15(b).
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(b) In the event of a party's commitment of a breach of any material
term, covenant, or condition of the Agreement ("Material Breach"), no Default
may be declared by the non-breaching party and no remedy provided hereunder may
be undertaken until an arbitration in accordance with Exhibit C shall have been
undertaken.
(c) OWN agrees that until such dispute is resolved, OWN will continue
to provide Company the services as required by this Agreement.
(d) Subject to the arbitration requirement, the various rights and
remedies herein provided shall be cumulative and in addition to any other rights
and remedies the parties may be entitled to pursue under applicable California
law. The exercise of one or more of such rights or remedies shall not impair the
rights of either party to exercise any other right or remedy at law or in
equity. Termination of this Agreement shall not release or discharge any party
from any obligation, debt or liability which shall have previously accrued, and
remain to be performed as of the effective date of termination. IF THE PROCEDURE
SET FORTH ON EXHIBIT C IS UNAVAILABLE, THE PARTIES HEREBY CONSENT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF
CALIFORNIA, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. THE PARTIES
ACCEPT THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE
OF FORUM NON-CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
16. CONFIDENTIAL INFORMATION AND TRADE SECRETS.
Each party hereto recognizes that due to the nature of this Agreement,
the other party will have access to Information of a proprietary nature owned by
such first party including, but not limited to, any and all computer programs
(whether or not completed or in use) and any and all operating manuals or
similar materials, policies and procedures, and methods of doing business
developed by the other. Consequently, each party acknowledges and agrees tees
that they respectively have a proprietary interest in all such information and
that all such information constitutes confidential and proprietary information
and is the trade secret property of each such party. Each party hereby waives
any and all right, title and interest in and to such trade secrets and
confidential information of the other party, and agrees to return all copies of
such trade secrets and confidential information related thereto to the other, at
the other's expense, upon n the termination of the Agreement.
Each party further acknowledges and agrees that the other party is
entitled to prevent its competitors from obtaining and utilizing its trade
secrets and confidential information. Therefore, each party agrees to hold the
other party's trade secrets and confidential information in strictest confidence
and not to disclose them or allow them to be disclosed, directly or indirectly,
to any person or entity other than those persons or entities who are employed y
or affiliated with OWN
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or Company, as the case may be, without the prior written consent of the other
party. Each party shall not, either during the term of this Agreement, or at any
time after the expiration or sooner termination of this Agreement, disclose to
anyone other than persons or entities who are employed by or affiliated with the
other any confidential or proprietary information or trade secret information
obtained by either of them, except as otherwise required by law.
Each party acknowledges and agrees that a breach of this Section 16
will result in irreparable harm to the other which cannot be reasonably or
adequately compensated in damages, and therefore each party shall be entitled to
injunctive and/or equitable relief to prevent a breach and to secure enforcement
thereof, in addition to any of the relief or award to which such party may be
entitled.
17. INDEMNIFICATION.
(a) INDEMNIFICATION OF OWN. Company shall indemnify, defend and hold
harmless OWN, its agents, representatives, employees, officers, director, and
representatives from and against any and all losses, liabilities, claims,
damages, deficiencies, and expenses, including interest, penalties, court costs
and reasonable attorneys' fees ("Losses") which may be incurred by or suffered
by such. persons or entities and which arise out of or result from any breach of
any representation, warranty, covenant or agreement of Company contained in this
Agreement or which related to the operation of the Business prior to the date
hereof, or to the operation of the Business after the date hereof unless arising
from OWN's gross negligence, .willful misconduct or any breach of its
contractual or fiduciary duty.
(b) INDEMNIFICATION OF COMPANY. OWN shall indemnify, defend and hold
harmless Company, its agents, representatives, employees, officers, directors,
and representatives from and against any and all Losses which may be incurred by
or suffered by such persons or entities relating to the breach by OWN of any: of
its obligations under this Agreement or the gross negligence or intentional
misconduct of OWN in the performance of its duties hereunder.
18. CONDITIONS PRECEDENT.
At the closing of this transaction, OWN shall receive:
(a) An officer's certificate certifying, among other things, that the
representations and warranties are true and correct as of the closing; and
(b) An opinion of counsel to the Company, in form and substance
satisfactory to OWN and its counsel.
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19. ASSIGNMENT.
This Agreement and the rights and obligations created hereunder shall
not be assigned or subcontracted by Company, either voluntarily or by operation
of the law, without the express prior written consent of OWN. Any assignment
without such consent shall be null and void. In addition to its rights to
delegate its duties hereunder as set forth above, OWN may only assign, transfer,
pledge or hypothecate this Agreement and OWN's rights, interests and benefits
hereunder to any entity which has beneficial ownership of a majority of OWN's
outstanding equity securities or to any entity in which OWN owns such beneficial
ownership.
20. GOVERNING LAW.
This Agreement shall be governed by and construed under the laws of the
State of California.
21. WAIVER.
The waiver of any covenant, condition or duty hereunder by either party
shall not prevent that party from later insisting upon full performance of the
same.
22. AMENDMENT.
No amendment to the terms of this Agreement shall be binding on any
party unless in writing and executed by the duly authorized representatives of
each party.
23. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the parties in
connection with the subject matter hereof; and supersedes all prior agreements,
whether written or oral, and whether explicit or implicit, which have been
entered into before the execution hereof.
24. NOTICE.
Any notice or other communication required or which may be given
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed or sent by facsimile, or sent by certified, registered or express mail,
postage prepaid, and shall be deemed given when so delivered personally,
telegraphed or telexed or sent by facsimile, or if mailed, two days after the
date of mailing, as follows:
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If to OWN:
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx. CA. 90024
With a copy to: Xxxxx Xxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxx. 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Esq.
If to Company: Biozhem Cosmeceuticals, Inc.
00000 Xxxxx Xxxxxxxx, Xxxxx X
Xxx Xxxx Xxxxxxxxxx, XX 00000
With a copy to: Xxxx Xxxxxxx
Biozhem Cosmeceuticals, Inc.
00000 Xxxxx Xxxxxxxx
Xxxxx X
Xxx Xxxx Xxxxxxxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxx, Esq.
Two Memorial City Plaza
000 Xxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
25. MISCELLANEOUS PROVISIONS.
(a) PARTIAL INVALIDITY. If any one or more of the terms, provisions,
promises, covenants or conditions of the Agreement or the application thereof to
any person or circumstance shall be adjudged to any extent invalid,
unenforceable, void or voidable for any reasons whatsoever by a court of
competent jurisdiction, each and all of the remaining terms, provisions,
promises, covenants and conditions of this Agreement or their application to
other persons or circumstances shall not be affected thereby and shall be valid
and enforceable to the fullest extent permitted by law.
(b) HEADINGS, TITLES. The headings appearing herein are for convenience
and reference only and shall not be deemed to governed, limit, modify or in any
manner affect the scope, meaning or intent of the provision of this Agreement.
(c) BINDING EFFECT. Subject to the provisions contained herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and upon their respective successors.
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(d) COVENANTS AND CONDITIONS. Each covenant hereof is a condition, and
each condition hereof is as well a covenant by the parties bound thereby unless
waived in writing by the parties hereto.
(e) APPROVAL AND CONSENT. Whenever in this Agreement an approval or
consent is required by one of the parties, the same shall not be unreasonably
withheld.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date.
ONE WORLD NETWORKS
INTEGRATED TECHNOLOGIES, INC.
By: /s/ Xxx Xxxxx
Its:CEO
BIOZHEM COSMECEUTICALS, INC.
By: /s/ Xxxx Xxxxxxx
Its: CEO
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