SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement ("Agreement") is made as of the 9th
day of July, 1997, by and among BIOMUNE SYSTEMS, INC., a Nevada corporation
("Biomune"), and ▇▇▇ ▇. ▇▇▇▇▇▇, an individual resident of the State of
California ("▇▇▇▇▇▇"), and ROCKWOOD INVESTMENTS, INC., a California
corporation doing business as ROCKWOOD COSMETICS, INC. ("Rockwood").
R E C I T A L S :
▇. ▇▇▇▇▇▇ owns all of the issued and outstanding common stock of
Rockwood and is the Chief Executive Officer and a Director of Rockwood.
▇. ▇▇▇▇▇▇ desires to sell all of the issued and outstanding shares of
stock of Rockwood (the "Shares") to Biomune on the terms and conditions
contained in this Agreement.
C. Biomune desires to acquire the option to purchase the Shares from
▇▇▇▇▇▇, as hereafter set forth.
D. The parties have entered into a non-binding letter of intent dated
June 19, 1997 ("Letter of Intent") which states their mutual intent to
consummate the transactions described therein. This Agreement, including the
Schedules and Exhibits forming a part hereof, is intended by the parties to be
the "Definitive Agreement" described in the Letter of Intent which is of no
further effect upon execution of this Agreement.
A G R E E M E N T :
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"APPLICABLE CONTRACT" -- any Contract (a) under which ▇▇▇▇▇▇ or Rockwood
(collectively sometimes referred herein as the "Sellers") has or may acquire
any rights relating to the Business, as defined below, (b) under which any of
the Sellers has or may become subject to any obligation or liability, or (c)
by which Rockwood or any of the assets owned or used in the Business is or may
become bound.
"BEST EFFORTS" -- the reasonable efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to attempt to assure
that such result is achieved as reasonably expeditiously as possible, without
initiating any legal proceedings or actions, or expending a material amount of
money.
"BREACH" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to substantially
perform or comply with, such representation, warranty, covenant, obligation,
or other provision, or (b) any claim (by any Person) or other occurrence or
circumstance that is or was inconsistent with such representation, warranty,
covenant, obligation, or other provision, and the term "Breach" means any such
inaccuracy, breach, failure, claim, occurrence, or circumstance.
"BUSINESS" -- shall mean and include the business of marketing and
distributing private label cosmetics, skin care, hair care and other personal
care products conducted by Rockwood, as well as all fictitious name
registrations and intellectual property, contract rights and interests, direct
and indirect, of Rockwood, in and under existing and pending arrangements and
agreements, including without limitation, the agreement between Andela Group,
Inc. ("Andela") and GNC (the "GNC Contract") to be assigned to Rockwood
pursuant to Section 6.3 hereof, the proposed operating agreements and
formation documents of Drive By ▇▇▇▇▇▇ ▇▇▇▇▇ Company L.L.C. ("Drive"), and
that certain proposed letter of intent between ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇"), and similar arrangements and agreements involving ▇▇▇▇▇▇ and/or
Rockwood relating to the business of Rockwood as described above. Except to
the extent included in the concepts relating to the Drive and ▇▇▇▇▇▇▇▇▇
projects, the Business shall not include other vitamins, nutritional food
supplements, manufacturing and/or independent distribution in which ▇▇▇▇▇▇
currently maintains an interest or which he may acquire or enter into prior to
the Second Closing Date.
"BUSINESS DAY" -- means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of Utah are authorized or required by law or other government action to
close.
"CLOSING" -- as defined in Section 2.3.
"CLOSING DATE" -- the date and time as of which the Closing actually
takes place. The First Closing Date and the Second Closing Date are as
defined in Section 2.3.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including:
(a) the grant of the Option;
(b) the delivery of the Option Price to Sellers in exchange for the
Option;
(c) the exercise of the Option;
(d) delivery of the Exercise Price and the Shares;
(e) the execution, delivery, and performance of the Employment
Agreement and the Consulting Agreement; and
(f) the performance by the parties of their respective covenants and
obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether express or implied) that is legally binding.
"CONSULTING AGREEMENT" -- as defined in Section 2.4(a)(ii).
"DAMAGES" -- as defined in Section 5.2.
"DISCLOSURE LETTER" -- the disclosure letter delivered by Sellers to
Biomune concurrently with the execution and delivery of this Agreement.
"EMPLOYMENT AGREEMENT" -- as defined in Section 2.5(a)(iii).
"ENCUMBRANCE" -- any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income, or exercise of any other attribute
of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins,
and wetlands), groundwaters, drinking water supply, stream sediments, ambient
air (including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL LAW" -- any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public
of intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged,
and used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing
the threat of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA" -- the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"EXCHANGE ACT" -- the Securities Exchange Act of 1934, as amended, and
any successor law, and regulations and rules issued pursuant thereto or any
successor law.
"EXERCISE PRICE" -- is the price payable under the Option to purchase the
Shares as provided in Section 2.3, below.
"FACILITIES" -- any real property, leaseholds, or other interests
currently owned or operated by the Sellers and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently owned or operated by any of the Sellers and, in each case,
used by or in or creating a liability forming a part of the Business.
"FDA" -- shall mean the United States Food and Drug Administration.
"GAAP" -- United States generally accepted accounting principles.
"GAAS" -- United States generally accepted auditing standards.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement.
"GOVERNMENTAL BODY" -- any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity
and any court or other tribunal); or
(d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.
"INTELLECTUAL PROPERTY ASSETS" -- as defined in Section 3.22.
"INTERIM STATEMENTS" -- (unaudited) interim financial statements of
Rockwood for the periods commencing April 1, 1997 and ending with the last day
of the third month of the most recently completed calendar quarter immediately
preceding the Second Closing Date (i.e., June 30, September 30 or December 31,
1997).
"IRC" -- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if (a) such individual is actually aware of
such fact or other matter or (b) a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the course
of conducting a reasonable investigation concerning the existence of such fact
or other matter, but excluding in such investigation the obligation to contact
any governmental body or customers or suppliers. A Person (other than an
individual) will be deemed to have "Knowledge" of a particular fact or other
matter if any individual who is serving, or who has served, as a director,
executive or senior officer, partner, executor, or trustee of such Person or
in any similar capacity has Knowledge of such fact or other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal or other
administrative order, constitution, law, ordinance, principle of common law,
regulation, statute, or treaty.
"MATERIAL" -- when referenced to the Business shall mean any amount of
$100,000 or more either individually or in the aggregate or any act, action,
or violation which will result in a liability, loss, claim or damage in an
amount of $100,000 or more either individually or in the aggregate.
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working
conditions.
"OPTION" -- the right, so long as the Option Price is timely paid, to
acquire from ▇▇▇▇▇▇, all of the Shares, as provided in this Agreement.
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past business practices
of such Person and is taken in the ordinary course of the normal day-to-day
operations of such Person; and
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority).
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) the articles of organization and operating agreement and
amendments thereto of a limited liability company; (e) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (f) any amendment to any of the foregoing.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other
entity.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"RELATED PERSON" -- with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, executive or senior
officer, partner, executor, or trustee of such specified Person (or in a
similar capacity);
(d) any Person in which such specified Person holds a Material
Interest; and
(e) any Related Person of any individual described in clause (b)
or (c).
(f) For purposes of this definition, (a) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse, and
(iii) the individual's children, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Exchange
Act) of voting securities or other voting interests representing at least 50%
of the outstanding voting power of a Person or equity securities or other
equity interests representing at least 50% of the outstanding equity
securities or equity interests in a Person.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT" -- the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"SEC" -- shall mean the United States Securities and Exchange Commission.
"SUBSIDIARY" -- with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to
elect a majority of that corporation's or other Person's board of directors or
similar governing body, or otherwise having the power to direct the business
and policies of that corporation or other Person (other than securities or
other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its
Subsidiaries; when used without reference to a particular Person, "Subsidiary"
means a Subsidiary of Rockwood.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment,
collection, or payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal Requirement
relating to any Tax.
"THREATENED" -- a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made or any notice has been given (provided, however, that if such notice,
demand or statement is given verbally, then same shall not be deemed given as
to Sellers or the Companies unless given to Sellers), or if any other event
has occurred or any other circumstances exist, that would lead a prudent
Person to conclude that such a claim, Proceeding, dispute, action, or other
matter is likely to be asserted, commenced, taken, or otherwise pursued in the
reasonably foreseeable future.
"TRANSACTION DOCUMENTS" -- means collectively this Agreement, the
Consulting Agreement and the Employment Agreement.
2. GRANT OF OPTION
2.1 OPTION TO ACQUIRE SHARES
Subject to the terms and conditions of this Agreement, at the Closing,
▇▇▇▇▇▇ hereby sells and grants to Biomune the Option to purchase the Shares.
The Option granted hereunder may be exercised by Biomune or may be assigned to
and exercised by its wholly-owned Subsidiary, Optim Nutrition, Inc., a Utah
corporation ("Optim").
2.2 OPTION PRICE; FIRST CLOSING DATE
The purchase price for the grant of the Option (the "Option Price") shall
be Four Hundred Twenty Thousand Dollars ($420,000). The Option Price will be
paid in cash quarterly in advance at the rate of One Hundred Five Thousand
Dollars ($105,000) per quarter, commencing with the First Closing Date, with
each subsequent payment to be made on or before the 5th Business Day of the
first month of each of the three (3) successive calendar quarters following
the First Closing Date; provided, that the Option may be terminated as
follows: (a) by ▇▇▇▇▇▇ (i) if Biomune shall at any time fail to make any
payment described above, or (ii) in the event of a material Breach by Biomune
of any of the representations and warranties set forth in Sections 4.6 through
4.9 hereof, or (b) by Biomune (i) in the event of the death or incapacity of
▇▇▇▇▇▇, or (ii) in the event of a material Breach of any of the
representations and warranties set forth in Section 3, below. Following
payment of each quarterly Option Price, Biomune may exercise the Option at any
time during the quarter to which such payment relates by giving written notice
of exercise to ▇▇▇▇▇▇ in the form attached hereto as Schedule 2.2 ("Option
Exercise Notice"). Upon execution and delivery of this Agreement, Biomune
shall deliver the first quarterly payment of the Option Price, in the amount
of $105,000 and shall deliver the other documents and instruments to be
delivered at such time. The Closing as described above shall take place on
July 9, 1997 ("First Closing Date") at the offices of Biomune's counsel, Suite
850 Key Bank Tower, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ at 10:00
a.m. (Mountain Daylight Time) or such other date, time and place as the
parties may mutually agree in writing hereafter.
2.3 EXERCISE OF OPTION; PURCHASE OF SHARES; SECOND CLOSING DATE
The exercise of the Option and the purchase and sale of the Shares
provided for in this Agreement will take place at the offices of Biomune's
counsel at Suite 850 Key Bank Tower, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇, ▇▇ the sixtieth day (or next succeeding Business Day, if such day is not
a Business Day) from the date of Biomune's Option Exercise Notice (such date
being referred to herein as the "Second Closing Date"), but in any event, not
later than June 30, 1998, provided, however, that the parties may mutually
agree on an earlier or later date. The Exercise Price shall be Five Million
Dollars ($5,000,000) cash, subject, however, to adjustment as provided in
Section 2.5(d) below.
2.4 CLOSING OBLIGATIONS ON THE FIRST CLOSING DATE
At the Closing on the First Closing Date:
(a) Sellers will deliver to Biomune.
(i) a fully executed counterpart original of this
Agreement, including the Schedules and Exhibits forming a part thereof;
(ii) a duly executed Consulting Agreement in the form of
Exhibit 2.4(a)(ii), executed by Andela and ▇▇▇▇▇▇;
(iii) a certificate executed by Sellers representing and
warranting to Biomune that, subject to the exceptions set forth in the
Disclosure Letter, each of their respective representations and warranties in
this Agreement are true and correct in all material respects as of the First
Closing Date, as if made on that date; and
(iv) a legal opinion of counsel for Sellers in the form of
Exhibit 2.4(a)(iv), from legal counsel reasonably acceptable to Biomune.
(b) Biomune will deliver to ▇▇▇▇▇▇:
(i) the sum of One Hundred Twenty Thousand Dollars
($120,000) in certified funds or by wire transfer, as elected by ▇▇▇▇▇▇,
representing the first quarterly Option Price payment of $105,000 and the
first month's consulting fee required under the Consulting Agreement;
(ii) a certificate executed by Biomune to the effect that
its representations and warranties in this Agreement are true and correct in
all material respects as of the date of the First Closing Date, as if made on
that date.
(iii) a duly executed counterpart original of this
Agreement, including all Schedules and Exhibits forming a part thereof; and
(iv) the Consulting Agreement executed by Biomune.
2.5 CLOSING OBLIGATIONS ON THE SECOND CLOSING DATE
At the Closing on the Second Closing Date:
(a) Sellers will deliver to Biomune:
(i) a certificate executed by Sellers representing and
warranting to Biomune that subject to the exceptions set forth in the
Disclosure Letter, each of Sellers' representations and warranties in this
Agreement are true and correct in all material respects as of the Second
Closing Date, as if made on that date;
(ii) certificates evidencing the Shares, duly endorsed for
transfer or accompanied by stock powers duly executed;
(iii) the Employment Agreement in the form of Exhibit 2.5
(a) (iii), duly signed by ▇▇▇▇▇▇; and
(iv) if the Second Closing Date occurs prior to May 15,
1998, the Interim Statements.
(b) Biomune will deliver to ▇▇▇▇▇▇:
(i) the Exercise Price as adjusted pursuant to Section 2.5
(d) below;
(ii) a certificate executed by Biomune to the effect that
each of its representations and warranties in this Agreement are true and
correct in all material respects as of the Second Closing Date, as if made on
that date.
(c) Biomune shall cause to be prepared audited financial
statements for Rockwood for the fiscal years ended March 31, 1995, 1996 and
1997, and, if the Second Closing Date occurs after May 15, 1998, for the
fiscal year ending March 31, 1998 (collectively, the "Audits" and each an
"Audit").
(d) The Exercise Price payable by Biomune upon exercise of the
Option on the Second Closing Date is subject to adjustment as follows:
(i) if the Audit for the fiscal year ending March 31, 1998
discloses gross revenues for Rockwood for the period covered by such statement
are less than $4,000,000, then the Exercise Price shall be reduced by an
amount equal to the difference between $4,000,000 and the actual gross
revenues for the period within the applicable audited financial statements.
If the Second Closing Date occurs prior to May 15, 1998 and the Interim
Statements reflect gross revenues which would, on an annualized basis, be less
than $4,000,000, then the parties shall select a national bank having branch
offices in Los Angeles, California as an escrow agent (the "Escrow Agent"),
and Biomune shall deposit with the Escrow Agent the difference between the
annualized revenues of Rockwood shown on the Interim Statements and $4,000,000
(the "Escrowed Amount"), and deduct the Escrowed Amount from the funds paid to
▇▇▇▇▇▇ on the Second Closing Date. On or about May 16, 1998, upon completion
of the Audit, the Escrow Agent shall disburse the Escrowed Amount to Biomune
and/or ▇▇▇▇▇▇ based on the final Exercise Price as determined from the actual
gross revenues of Rockwood as shown on within the audited financial statements
for the fiscal year ending March 31, 1998. If the Escrowed Amount is
insufficient to cover the adjustment to the Exercise Price based on the Audit,
or if no Escrow was required based on the Interim Statements, ▇▇▇▇▇▇ shall
promptly after completion of the Audit, reimburse the remainder of the
adjustment to Biomune. Biomune shall conduct the Business of Rockwood in good
faith and consistent with reasonable commercial practices after the Second
Closing Date and prior to March 31, 1998 and ▇▇▇▇▇▇ shall be President of
Biomune during such time, consistent with the terms of the Employment
Agreement, or the final Exercise Price shall be deemed to be $5,000,000
without adjustment in respect of gross revenues;
(ii) if the Second Closing Date occurs after September 30,
1997, then the Exercise Price shall be increased at an annualized rate of five
percent (5%) from October 1, 1997 through the Second Closing Date;
(iii) all amounts paid as the Option Price prior to the
Second Closing Date shall be offset as a credit against the Exercise Price and
reduce the amount payable at the Second Closing; and
(iv) to the extent the liabilities of Rockwood exceed the
value of certain of its assets as provided in Section 6.6, below, then such
excess liabilities shall reduce the Exercise Price as provided in such Section
6.6.
2.6. EFFECT OF TERMINATION; RESCISSION.
(a) In the event Biomune terminates the Option at any time as
provided in Section 2.2(b)(ii), Biomune shall have no recourse against ▇▇▇▇▇▇
other than the return of the Option Price from the date of occurrence of such
Breach. Upon termination of the Option under such circumstances, this
Agreement shall terminate and no party hereto shall have any further
obligation to the other, except for obligations under collateral or separate
agreements that may continue in force thereafter, including, without
limitation, the Consulting Agreement.
(b) Upon termination by ▇▇▇▇▇▇ under Section 2.2(a) or by
Biomune under Section 2.2(b)(i), all amounts paid prior to the date of such
termination by Biomune shall be retained by ▇▇▇▇▇▇ and any payments in respect
of the Option then due but not made shall be made promptly by Biomune. Upon
termination of the Option under such circumstances, this Agreement shall
terminate and no party hereto shall have any further obligation to the other,
except for obligations under collateral or separate agreements that may
continue in force thereafter, including, without limitation, the Consulting
Agreement.
(c) In the event Biomune shall give ▇▇▇▇▇▇ its Option Exercise
Notice and there shall have been, prior to the Second Closing Date, a Material
Adverse Change at Biomune as defined in Section 4.9 hereof which is not a
Breach hereunder, ▇▇▇▇▇▇ may elect to rescind this Agreement and refuse to
sell the Shares to Biomune. In such event, Biomune shall have no recourse
other than to receive repayment of the full Option Price paid through the date
of rescission. Following such rescission and payments to Biomune, no party
hereto shall have any further obligation to the other, except for obligations
under collateral or separate agreements that may continue in force thereafter,
including, without limitation, the Consulting Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers each jointly and severally represent and warrant to Biomune
(subject to the exceptions, if any, set forth in the Disclosure Letter), as
follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Rockwood is a corporation duly organized, validly existing,
and in good standing under the laws of the state of California, with full
corporate power and authority to conduct its Business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts. Rockwood
is not qualified to do business as a foreign corporation in any jurisdiction,
except where the failure to so qualify would not have a material adverse
effect on Rockwood or the Business. Rockwood does not conduct business in any
country, state or province other than California, U.S.A., except for sales in
the nature of interstate commerce.
(b) Sellers have delivered to Biomune copies of the
Organizational Documents of Rockwood, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Sellers, assuming due execution by Biomune, enforceable against
Sellers in accordance with its terms, except as limited by bankruptcy or
insolvency laws or principles of equity generally. Upon the execution and
delivery by ▇▇▇▇▇▇, assuming due execution by Biomune, of the Employment
Agreement and the Consulting Agreement, the same will constitute the legal,
valid, and binding obligations of such respective parties, enforceable against
each such respective parties in accordance with their respective terms, except
as limited by bankruptcy or insolvency laws or principles of equity
generally. Rockwood has the requisite corporate authority, and Rockwood and
▇▇▇▇▇▇ have the capacity to execute and deliver this Agreement and the
applicable Closing Documents and to perform their obligations under this
Agreement and the applicable Closing Documents.
(b) Neither the execution and delivery of the Transaction
Documents nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Organizational Documents of Rockwood, or (B) any
resolution adopted by the board of directors or the shareholders of Rockwood;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body, or to the Knowledge of Sellers, any other
Person the right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal Requirement or any
Order to which Rockwood or any Sellers, or any of the material assets owned or
used by them in the Business, may be subject;
(iii) contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by Rockwood or that otherwise relates
to the Business of, or any of the assets owned or used by, Rockwood;
(iv) to the Knowledge of Sellers, cause Rockwood to become
subject to, or to become liable for the payment of, any Tax, other than as
will result from its loss of any currently favorable tax status;
(v) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any material Applicable Contract; or
(vi) result in the imposition or creation of any
Encumbrance upon or with respect to any of the material assets owned or used
in the Business.
(c) No Seller is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
3.3 CAPITALIZATION
(a) The authorized equity securities of Rockwood consist of One
Million (1,000,000) shares of common stock, no par value, of which Ten
Thousand (10,000) shares are issued and outstanding and constitute the
Shares. ▇▇▇▇▇▇ is and will be on each Closing Date, the record and beneficial
owner and holder of said Shares, free and clear of all Encumbrances. All of
such outstanding Shares have been duly authorized and validly issued and are
fully paid and nonassessable.
(b) There are no Contracts relating to the future issuance,
sale, or transfer of any equity securities or other securities of Rockwood.
To the Knowledge of Sellers, none of the Shares were issued in violation of
the Securities Act or any other Legal Requirement. Rockwood does not own or
have any Contract to acquire, any equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
business, except for a 75% membership interest in Drive.
3.4 FINANCIAL STATEMENTS
Prior to the First Closing Date or at such other time consented to by
Biomune, Biomune shall have arranged for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent
certified public accountants ("Auditor"), to prepare the Audits according to
GAAS, from the books and records provided to it by the Sellers, and deliver
the same to Sellers and Biomune. Such Audits shall include: (a) audited
consolidated balance sheets of Rockwood (including all majority-owned
Subsidiaries, such as Drive) pursuant to GAAP as at the end of the fiscal
years ended March 31, 1995, 1996 and 1997 and (b) the related audited
consolidated statements of income, changes in stockholder's equity, and cash
flows (including all majority-owned Subsidiaries, such as Drive) for each of
such fiscal years, together with the report thereon of the Auditor. If the
Second Closing Date is after May 15, 1998, then the Auditor shall also prepare
such an Audit for the fiscal year ending March 31, 1998. Prior to the Second
Closing Date, Sellers likewise shall have caused the Interim Statements of
Rockwood to be prepared pursuant to GAAP as at the end of the most recently
completed calendar quarter immediately preceding such Second Closing Date,
including the related unaudited consolidated statements of income, changes in
stockholder's equity, and cash flows as at that date, and shall have delivered
the same to Biomune. The Interim Statements and all books and records
provided to the Auditor in connection with its audit of the financial records
of Rockwood fairly present in all material respects the financial condition
and the results of operations, changes in stockholder's equity, and cash flows
of Rockwood and its Subsidiaries as at the respective dates of and for the
periods referred to therein, all in accordance with the usual and customary
business operations of, and accounting practices followed by Rockwood,
subject, in the case of Interim Statements, to normal recurring year-end and
audit adjustments. The Interim Statements and any prior year-end balance
sheets prepared by Rockwood reflect the consistent application of such
accounting practices throughout the periods involved.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other records
of Rockwood, all of which have been made available to Biomune, are complete
and correct in all material respects, and have been maintained in accordance
with sound business practices. The minute books of Rockwood contain accurate
and complete records, in all material respects, of all meetings held of, and
corporate action taken by, the stockholder and the board of directors of
Rockwood, and no significant meeting of such stockholder or the board of
directors has been held for which minutes have not been prepared and are not
contained in such minute books. At each Closing, all of those books and
records will be in the possession of Rockwood.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete and accurate list
of all leasehold interests in real property owned by Rockwood. Sellers have
delivered or made available to Biomune copies of the leases by which Rockwood
holds such interests. Rockwood owns no real property. Subject only to the
matters permitted below in this Section, all the leasehold interests in real
property and other assets (whether real, personnel, or mixed and whether
tangible or intangible) that Rockwood purports to own are reflected in the
books and records of Rockwood, including all of the properties and assets
reflected in the Interim Statements (except for (i) assets held under
capitalized leases disclosed in the Disclosure Letter, (ii) personal property
sold since the date of the Interim Statements in the Ordinary Course of
Business, and (iii) assets purchased or otherwise acquired by Rockwood since
the date of the Interim Statements, excluding personal property acquired and
sold since the date of the Interim Statements in the Ordinary Course of
Business). All material properties and assets reflected in the Interim
Statements are free and clear of all Encumbrances except, with respect to all
such properties and assets, (a) mortgages or security interests shown within
the audited financial statements or the Interim Statements as securing
specified liabilities or obligations, with respect to which, no default (or
event that, with notice or lapse of time or both, would constitute a default)
exists, (b) mortgages or security interests incurred in connection with the
purchase of property or assets after the date of the Interim Statements (such
mortgages and security interests being limited to the property or assets so
acquired), with respect to which, no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, and (c) liens for
current taxes not yet due.
3.7 NO UNDISCLOSED LIABILITIES
To the Knowledge of the Sellers, Rockwood has no material liabilities or
obligations except for liabilities or obligations reflected or reserved
against in the Interim Statements and liabilities, accrued, contingent or
otherwise, incurred in the Ordinary Course of Business since the date thereof.
3.8 TAXES
(a) Sellers have delivered to Biomune copies of, and Part 3.8 of
the Disclosure Letter contains a complete and accurate list of, all such Tax
Returns filed since December 31, 1992. Rockwood has paid, or has made
provision for the payment of, all Taxes that have or may have become due from
Rockwood pursuant to those Tax Returns or pursuant to any assessment received
by Rockwood, except such Taxes, if any, as are listed in the Disclosure Letter
and are being contested in good faith and as to which adequate reserves have
been provided in the Interim Statements.
(b) Except as disclosed in Part 3.8 of the Disclosure Letter, no
returns filed to date by Rockwood have been audited by any tax authorities of
any Governmental Body and Rockwood has not given or been requested to give
waivers or extensions (or, to the Knowledge of Sellers, is or would be subject
to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of Rockwood or for which
Rockwood may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on
the books of Rockwood are reasonably adequate (determined in accordance with
prior consistent accounting practices of Rockwood). To the Knowledge of
Sellers, there exists no proposed tax assessment against Rockwood except as
disclosed in the Interim Statements or in the Disclosure Letter. All Taxes
that Rockwood is or was required by Legal Requirements to withhold or collect
have been duly withheld or collected and, to the extent required, have been
paid to the proper Governmental Body.
(d) All Tax Returns filed by (or that include on a consolidated
basis) Rockwood are true, correct, and complete in all material respects.
There is no tax sharing agreement made by Rockwood that will require any
payment by Rockwood after the date of this Agreement.
3.9 NO MATERIAL ADVERSE CHANGE
Since the date of the most recent Audit or the Interim Statements,
whichever is later, there has not been any material adverse change in the
Business, results of operations, properties, assets, or financial condition of
Rockwood, and, to the Knowledge of Sellers, no event has occurred or
circumstance exists that would be likely to result in such a material adverse
change.
3.10 EMPLOYEE BENEFITS
Rockwood has or at the time of the Second Closing Date, will have, no
ERISA or similar or other qualified employee benefit plans.
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in the Disclosure Letter:
(i) Rockwood is, and at all times since September 30, 1996
has been, in material compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of the Business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) may constitute or result in a
material violation by Rockwood of, or a failure on the part of Rockwood to
comply in all material respects with, any Legal Requirement.
(b) The Disclosure Letter contains a complete and accurate list
of each Governmental Authorization that is held by Rockwood or that otherwise
relates to the business of, or to any of the assets owned or used by,
Rockwood. Each Governmental Authorization listed in the Disclosure Letter is
valid and in full force and effect. Except as set forth in the Disclosure
Letter, Rockwood is, and at all times has been, in material compliance with
all of the terms and requirements of each Governmental Authorization
identified or required to be identified in the Disclosure Letter. The
Governmental Authorizations listed in the Disclosure Letter collectively
constitute all of the Governmental Authorizations necessary to permit
Rockwood to lawfully conduct and operate the Business in the manner it
currently conducts and operates such Businesses and to permit Rockwood to own
and use its assets in the manner in which it currently owns and uses such
assets.
3.12 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in the Disclosure Letter, there is no
pending Proceeding:
(i) that has been commenced by or against any Seller that
relates to or may materially affect the Business of, or any of the assets
owned or used by, Rockwood; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions.
To the Knowledge of Sellers, (1) no such Proceeding has been Threatened,
and (2) no event has occurred or circumstance exists that could reasonably be
expected to give rise to or serve as a basis for the commencement of any such
Proceeding. Sellers have delivered to Biomune copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in the
Disclosure Letter. To the Knowledge of Sellers, the Proceedings listed in the
Disclosure Letter will not, except as disclosed in the Disclosure Letter, have
a material adverse effect on the Business, operations, assets or condition of
Rockwood.
(b) Except as set forth in the Disclosure Letter:
(i) there is no Order to which Rockwood, or any of the
assets owned or used by Rockwood, are subject; and
(ii) no officer, director, or to the Knowledge of Sellers,
any agent, or critical employee of Rockwood is subject to any Order that
prohibits such officer, director, agent, or critical employee from engaging in
or continuing any conduct, activity, or practice relating to the business of
Rockwood.
3.13 ABSENCE OF CERTAIN CHANGES AND EVENTS
Since the date of the most recent Audit or the Interim Statements,
whichever is later, Rockwood has conducted its Business only in the Ordinary
Course of Business in Rockwood's best judgment and there has not been any:
(a) change in Rockwood's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock of
Rockwood; issuance of any security convertible into such capital stock; grant
of any registration rights; purchase, redemption, retirement, or other
acquisition by Rockwood of any shares of any such capital stock;
(b) amendment to the Organizational Documents of Rockwood;
(c) damage to or destruction or loss of any asset or property of
Rockwood, whether or not covered by insurance, materially and adversely
affecting the properties, assets, Business, financial condition, or prospects
of Rockwood, taken as a whole;
(d)termination or receipt of notice of termination of the GNC
Contract;
(e) sale (other than sales of inventory in the Ordinary Course
of Business), lease or other disposition of any material asset or property of
Rockwood or mortgage, pledge, or imposition of any lien or other encumbrance
on any material asset or property of Rockwood, including the sale, lease, or
other disposition of any of the Intellectual Property Assets;
(f) material change in the accounting methods used by Rockwood;
or
(g) agreement, whether oral or written, by Rockwood to do any of
the foregoing.
3.14 CONTRACTS; NO DEFAULTS
(a) Part 3.14 of the Disclosure Letter contains a complete and
accurate list, and Sellers have delivered to Biomune true and complete copies,
of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by or for Rockwood of an amount or
value in excess of $100,000;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to Rockwood of an amount or value
in excess of $100,000;
(iii) each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or receipts of
Rockwood in excess of $100,000;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per
item or aggregate payments of less than $100,000 and with terms of less than
one year);
(v) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees, consultants,
or contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(vi) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership, and other Applicable
Contract involving a sharing of profits, losses, costs, or liabilities by
Rockwood with any other Person;
(viii) each Applicable Contract containing covenants that
in any way purport to restrict the business activity of Rockwood or any
Affiliate of Rockwood or limit the freedom of Rockwood or any Affiliate of
Rockwood to engage in any line of business or to compete with any Person;
(ix) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than direct
payments for goods;
(x) each power of attorney of Rockwood that is currently
effective and outstanding;
(xi) each Applicable Contract entered into other than in
the Ordinary Course of Business that contains or provides for an express
undertaking by Rockwood to be responsible for consequential damages;
(xii) each Applicable Contract for capital expenditures, by
Rockwood in excess of $100,000;
(xiii) each written warranty, guaranty, and /or other
similar undertaking with respect to contractual performance extended by
Rockwood; and
(xiv) each written amendment, supplement, and modification
in respect of any of the foregoing.
(b) Except as set forth in the Disclosure Letter, no officer,
director, or to the Knowledge of Sellers, any agent, critical employee,
consultant, or Representative of Rockwood is bound by any Contract that
purports to limit the ability of such officer, director, agent, critical
employee, consultant, or Representative to (A) engage in or continue any
conduct, activity, or practice relating to the Business of Rockwood, or (B)
assign to Rockwood or to any other Person any rights to any invention,
improvement, or discovery.
(c) Except as set forth in the Disclosure Letter, to the
Knowledge of Sellers, each Applicable Contract identified in Part 3.14 of the
Disclosure Letter is in full force and effect and is valid and enforceable in
accordance with its terms.
(d) Except as set forth in the Disclosure Letter:
(i) Rockwood is, and at all times since September 30, 1996
has been, in compliance with all material terms and requirements of each
Applicable Contract under which Rockwood has or has had any material
obligation or liability or by which Rockwood or any of the assets owned or
used by Rockwood are bound;
(ii) to the Knowledge of Sellers, each other Person that
has or had any obligation or liability under any Applicable Contract under
which Rockwood has or has had any rights is in compliance with all material
terms and requirements of such Applicable Contract;
(iii) to the Knowledge of Sellers, no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a material violation or breach of, or
give Rockwood or other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; and
(iv) Rockwood has not given to or received from any other
Person, at any time since December 31, 1996 any written notice or, to the
Knowledge of Sellers, other communication regarding any actual, alleged,
possible, or potential violation or breach of, or default under, any
Applicable Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any Material amounts paid or payable to
Rockwood under current or completed Applicable Contracts with any Person and
no such Person has made written demand for such renegotiation.
(f) The Applicable Contracts relating to the sale or provision
of products or services by Rockwood have been entered into in the Ordinary
Course of Business and, to the Knowledge of Sellers, have been entered into
without the commission of any act alone or in concert with any other Person,
or any consideration having been paid or promised, that is or would be in
material violation of any Legal Requirement.
3.15 INSURANCE
Paragraph 3.15 of the Disclosure Letter sets forth a true and correct
listing of all insurance policies and coverage thereunder currently in effect
with respect to the Business. Rockwood has insurance in amounts at least
equal to that required to comply with all insurance maintenance requirements
in any lease or Contract to which it is a party. All premiums payable under
such policies have been paid in full, no notice of cancellation of any such
policy has been received, and there is no existing default or event that, with
the giving of notice or lapse of time or both, would constitute a default
thereunder. There are no claims in existence or pending under such policies
and, to the best of Sellers' knowledge, except as set forth on said Exhibit
3.15, no circumstances likely to give rise to any such claim.
3.16 ENVIRONMENTAL MATTERS
To the best Knowledge of Sellers, Rockwood is and at all times has been,
in compliance with, in all material respects, and there has been no material
violation by Rockwood of, any Environmental Laws applicable to the Business.
3.17 EMPLOYEES
To the Knowledge of Sellers, no employee or director of Rockwood is a
party to, or is otherwise bound by, any agreement or arrangement, including
any confidentiality, non-competition, or proprietary rights agreement, between
such employee or director and any other Person that in any way adversely
affects or will affect (i) the performance of his or her duties as an employee
or director of Rockwood, or (ii) the ability of Rockwood to conduct its
Business.
3.18 LABOR RELATIONS; COMPLIANCE
Rockwood has not been nor is it currently a party to any collective
bargaining or other labor Contract. To the Knowledge of Sellers, Rockwood is
not liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for failure to comply with
any of the foregoing Legal Requirements.
3.19 INTELLECTUAL PROPERTY
(a) The term "Intellectual Property Assets" includes:
(i) the names "Rockwood Investments," "Rockwood Cosmetics,"
and any and all of Rockwood's registered or unregistered trademarks, service
marks, and applications used in the Business and identified on Schedule 3.22
(a) (i) attached to and forming a part of this Agreement (collectively,
"Marks"), but subject to the contractual rights of third parties, as indicated
in the Disclosure Letter;
(ii) all patents and patent applications, and inventions
and discoveries that may be patentable and related to the Business
(collectively, "Patents");
(iii) all copyrights in both published works and
unpublished works relating to the Business (collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential information,
customer lists, plans, drawings, and blue prints (collectively, "Trade
Secrets"); owned or licensed by Rockwood as licensee or licensor and related
to the Business.
(b) The Disclosure Letter contains a complete and accurate list
and summary description, of all Contracts relating to the Intellectual
Property Assets to which Rockwood is a party or by which it is bound. To the
Knowledge of Sellers, there are no outstanding or Threatened disputes or
disagreements with respect to any such agreement.
(c) Trademarks. Except as disclosed in the Disclosure Letter or
on the attached Schedules:
(i) no ▇▇▇▇ has been registered by Rockwood with the United
States Patent and Trademark Office or with any Governmental Body;
(ii) no ▇▇▇▇ has been or is now involved in any opposition,
invalidation, or cancellation and, to Sellers' Knowledge, no such action is
Threatened with the respect to any of the Marks;
(iii) to Sellers' Knowledge, there is no trademark or
trademark application of any third party that interferes with Business; and
(iv) Rockwood has not received any written notice or other
written communication alleging that any of the Marks used by Rockwood in the
Business infringes or is alleged to infringe upon any trade name, trademark,
or service ▇▇▇▇ of any third party.
(d) Trade Secrets:
(i) to the Knowledge of the Sellers, Rockwood has taken all
reasonable precautions to protect the secrecy, confidentiality, and value of
its Trade Secrets; and
(ii) to the Knowledge of the Sellers, Rockwood has the
right to use its Trade Secrets and no Trade Secret is subject to any
Proceeding or written adverse claim nor has Rockwood received written notice
or other written communication challenging or threatening its rights thereto.
3.20 DISCLOSURE
No representation or warranty of Sellers in this Agreement and no
statement in the Disclosure Letter omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
3.21 BROKERS OR FINDERS
Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement, and will indemnify
and hold Biomune harmless from any such payment alleged to be due by or
through Sellers as a result of the action of Sellers or their agents.
4. REPRESENTATIONS AND WARRANTIES OF BIOMUNE
Biomune represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND QUALIFICATION
(a) Biomune is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada, has all requisite power
and authority to own, lease and operate its properties and to carry on its
businesses as they are now being conducted, and Biomune is duly qualified to
do business and is in good standing in each jurisdiction in which the nature
of the business conducted by it or the ownership or leasing of its properties
makes such qualification and being in good standing necessary, except where
the failure to so qualify would not have a material adverse effect on Biomune.
(b) Optim is a corporation duly organized, validly existing and in
good standing under the laws of the State of Utah, has all requisite power and
authority to own, lease and operate its properties and to carry on its
businesses as they are now being conducted, and Optim is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of
the business conducted by it or the ownership or leasing of its properties
makes such qualification and being in good standing necessary, except where
the failure to so qualify would not have a material adverse effect on Optim.
4.2 AUTHORITY
Biomune has all requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Contemplated Transactions. The execution and delivery of the Transaction
Documents by Biomune and the consummation by Biomune of the Contemplated
Transactions have been duly authorized by all necessary corporate action, and
no other corporate proceedings on the part of Biomune are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Transaction Documents have been duly executed and delivered by
Biomune and, assuming the due authorization, execution and delivery hereof by
each of the other parties to such agreements, constitute legal, valid and
binding obligations of Biomune enforceable against Biomune in accordance with
their respective terms, except as limited by bankruptcy and insolvency laws or
principles of equity generally.
4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) Except as set forth on Schedule 4.3, the execution and
delivery of the Transaction Documents by Biomune do not, and the performance
by Biomune of its obligations hereunder will not:
(i) conflict with, breach or violate its Articles of
Incorporation, By-Laws or any corporate resolution;
(ii) conflict with or violate any material Legal
Requirement or Order in effect as of the date of this Agreement applicable to
Biomune or any of its Subsidiaries or by which any of their respective
properties or assets are bound; or
(iii) result in any breach of, constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
give to any other entity any right of termination, amendment, acceleration or
cancellation of, require payment under, or result in the creation of a lien or
encumbrance on any of the material properties or material assets of Biomune or
any of its Subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
material instrument or obligation to which any of them is a party or by which
any of them or any of their respective properties or assets are bound.
(b) Except for requirements associated with its reporting
obligations under the Exchange Act, the execution and delivery of this
Agreement by Biomune do not, and the performance by Biomune of its obligations
hereunder will not require it to obtain any consent, registration, approval,
authorization or permit of, to make any filing with, or to give notification
to, any person, including any Governmental Body, based on any Legal
Requirement, Order or other requirement of any Governmental Body in effect as
of the date of this Agreement.
4.4 ARTICLES OF INCORPORATION AND BYLAWS
Biomune has heretofore furnished to ▇▇▇▇▇▇ a complete and correct copy of
the Articles of Incorporation and the Bylaws of Biomune, as amended or
restated to date, and Biomune is not in violation of any of the provisions of
such documents, all of which are in full force and effect.
4.5 CAPITALIZATION
The authorized capital stock of Biomune consists of 500,000,000 shares of
common stock, par value $.0001 and 50,000,000 shares of preferred stock. As
of June 30, 1997, Biomune has issued and outstanding approximately (i)
22,966,542 shares of common stock, which are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights, pursuant to
its Articles of Incorporation or By-Laws or any agreement to which Biomune or
any of its Subsidiaries is a party or is bound; and (ii) 63,473 shares of
preferred stock as follows: 59,973 shares of Series A Preferred Stock and
3,500 shares of Series C Preferred Stock. The preferred stock of each of the
two outstanding series is convertible to shares of common stock and has
certain rights and preferences as described in Biomune's annual report on Form
10-K for the year ended September 30, 1996, incorporated herein by this
reference.
4.6 CERTAIN PROCEEDINGS
There is no pending, or to Biomune's Knowledge, Threatened Proceeding
(including, without limitation, before the SEC or the FDA) that has been
commenced against Biomune and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions or that, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on Biomune.
4.7 ABSENCE OF LITIGATION
Except as set forth in Biomune's SEC Reports as defined below, there is
no claim, action, suit, litigation, proceeding, arbitration or investigation
of any kind, at law or in equity (including actions or proceedings seeking
injunctive relief), pending or, to the Knowledge of Biomune, threatened
against Biomune or any properties or rights of Biomune (except for claims,
actions, suits, litigations, proceedings, arbitrations or investigations
which, individually or in the aggregate, would not reasonably be expected to
have a material adverse effect on Biomune), nor is there any judgment, order,
writ, injunction, decree or award of any Governmental Entity or arbitrator to
which Biomune is subject that has had or to Biomune's Knowledge could
reasonably be expected to have a material adverse effect on Biomune.
4.8 REPORTS; FINANCIAL STATEMENTS
Biomune has delivered to Sellers true, correct and complete copies of
(a) Biomune's Annual Report on Form 10-K for the fiscal year ended September
30, 1996, (b) Quarterly Reports on Form 10-Q for the quarters ended December
31, 1996 and March 31, 1997, and (c) Current Reports on Form 8-K filed since
March 31, 1997 (collectively "Biomune's SEC Reports"). Each of the financial
statements included in the SEC Reports: (a) has been prepared in accordance
with GAAP, and (b) fairly presents, in all material respects, the financial
position of Biomune as of the respective dates thereof and its results of
operations and cash flows for the periods indicated in accordance with GAAP.
Each of Biomune's SEC Reports complies in form in all material respects and in
content in all respects with all applicable Legal Requirements, contains no
misstatement of a material fact and does not omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which it was made, not misleading.
4.9 ABSENCE OF CERTAIN CHANGES OR EVENTS
Except as disclosed in the Biomune's SEC Reports filed with the SEC since
March 31, 1997 to the date of this Agreement, there has not been any material
change in the financial condition, results of operations or business of
Biomune that would have a material adverse effect on Biomune (a "Biomune
Material Adverse Change"). Between the date of this Agreement and the Second
Closing Date, there shall not have been a Biomune Material Adverse Change,
whether or not disclosed in Biomune's SEC Reports.
4.10 BROKERS OR FINDERS
Biomune and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and
will indemnify and hold Sellers harmless from any such payment alleged to be
due by or through Biomune as a result of the action of Biomune or its officers
or agents.
4.11 INTENT
Biomune will be acquiring the Option and the Shares (collectively the
"Purchased Securities") for its own account, and Biomune has no present
arrangement (whether or not legally binding) at any time to sell any of such
Securities to or through any person or entity; provided, however, that by
making the representations herein, Biomune agrees to hold any of the Purchased
Securities for any minimum other specific term and reserves the right to
dispose of the Purchased Securities at any time in accordance with federal and
state securities laws applicable to such disposition and any restrictions
imposed on such transfer by this Agreement or the instruments and documents
executed in connection with this Agreement. Biomune understands that the
Purchased Securities must be held indefinitely unless such securities are
subsequently registered under the Securities Act or an exemption from
registration is available.
4.12 SOPHISTICATED INVESTOR
Biomune is a "sophisticated investor" (as described in Rule
506(b)(2)(ii) of Regulation D), and Biomune has such experience in business
and financial matters that it is capable of evaluating the merits and risks of
an investment in the Shares. Biomune acknowledges that the Purchased
Securities are speculative investments and involve a high degree of risk.
4.13 NOT AN AFFILIATE
Biomune is not an "Affiliate" (as that term is defined in Rule 405 of the
Securities Act) of Rockwood and no officer, director or significant
shareholder of Biomune is an officer, director or Affiliate of Rockwood. The
parties acknowledge that following the First Closing Date, ▇▇▇▇▇▇ will be
appointed President of Biomune under the Consulting Agreement.
4.14 DISCLOSURE; ACCESS TO INFORMATION
Biomune has received all documents, records, books and other information
pertaining to its investment in Rockwood that have been requested by Biomune.
4.15 MANNER OF SALE
At no time was Biomune presented with or solicited by or through any
leaflet, public promotional meeting, television advertisement or any other
form of general solicitation or advertising.
4.16 EXCLUSIVE RELIANCE ON THIS AGREEMENT
In making the decision to purchase the Purchased Securities, Biomune has
relied exclusively upon information included in this Agreement or incorporated
herein by reference, and not on any other representations, promises or
information, whether written or verbal, by any Person.
4.17 ACCURACY OF UNINCORPORATED DOCUMENTS AND OTHER UNINCORPORATED
MATERIALS
To the extent Biomune has received documents or other materials, other
than as expressly incorporated herein by reference, Biomune acknowledges the
following with respect to such documents and materials:
(a) Such documents and materials and any projections contained
therein may be incomplete, may contain errors or misstatements, and do not
purport to adequately describe the transactions contemplated by this Agreement
or the status of the development of Rockwood's Business and business
opportunities. Biomune agrees that such documents and materials cannot be
relied upon in making a decision as to whether to purchase the Purchased
Securities and acknowledges that there can be no assurance that any of the
projections contained therein will be accomplished by Rockwood; and
(b) Biomune has been advised and fully understands that any
summaries, projections, forecasts or estimates included in such documents and
materials, including those relating to product development schedules and
projections, possible revenues, income, profitability of Rockwood or an
investment therein inherently involve uncertainties and may be affected by
circumstances in the future which cannot be reasonably predicted and are
beyond the control of Rockwood.
4.18 NO REPRESENTATIONS
None of the following have ever been represented, guaranteed, or
warranted to Biomune by Rockwood or any of its employees, agents,
representatives or affiliates, or any broker or any other Person, expressly or
by implication:
(i) The percentage of profit or amount of or type of
consideration, profit or loss (including tax write-offs or other tax benefits)
to be realized, if any, as a result of an investment in the Purchased
Securities; or
(ii) The past performance or experience on the part of Rockwood
or any Affiliate or their associates, agents or employees, or of any other
Person as being indicative of future results of an investment in the Purchased
Securities.
5. INDEMNIFICATION; REMEDIES
5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Letter, any supplements to the Disclosure Letter,
the certificate delivered pursuant to Section 2.4(a)(v), and any other
certificate or document delivered pursuant to this Agreement shall terminate
and be of no further force and effect on the Second Closing Date, except that
the representations and warranties of Sellers set forth in Sections 3.8 and
3.9 shall survive until the expiration of the applicable statutes of
limitation or any extension thereof, and the representations and warranties of
Biomune with respect to its investment intent and materials received shall
survive for a period of two (2) years.
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Subject to the provisions and limitations of this Article 5, Sellers,
jointly and severally indemnify and hold harmless Biomune and its officers,
directors, Affiliates and Controlling Persons (collectively, the "Indemnified
Persons") for, and will pay to the Indemnified Persons the amount of, any
loss, liability, tax, penalty, interest, claim, damage, other than
consequential damage, expense (including costs of investigation and defense
and reasonable attorneys' fees) whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any Breach of any representation or warranty made by Sellers
in this Agreement, the Disclosure Letter, the supplements to the Disclosure
Letter, or any other certificate or document delivered by Sellers pursuant to
this Agreement;
(b) any Breach by Sellers of any covenant or obligation of any
Seller in this Agreement; and
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ (or any
Person acting on their behalf) in connection with the Contemplated
Transactions.
5.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BIOMUNE
Biomune will indemnify and hold harmless Sellers, and will pay to Sellers
the amount of any Damages arising, directly or indirectly, from or in
connection with (a) any Breach of any representation or warranty made by
Biomune in this Agreement or in any certificate delivered by Biomune pursuant
to this Agreement, (b) any Breach by Biomune of any covenant or obligation of
Biomune in this Agreement, or (c) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Biomune (or any
Person acting on its behalf) in connection with the Contemplated Transactions.
5.4 TIME LIMITATIONS; MINIMUM CLAIMS BASKET
(a) Neither Sellers nor Biomune will have any liability (for
indemnification or otherwise) with respect to any representation or warranty,
or covenant or obligation, unless on or before the expiration of the period
set forth in Section 5.1 the party making a claim notifies the other party of
such a claim specifying the factual basis of that claim in reasonable detail
to the extent then known.
(b) Nothing set forth herein shall relieve either Biomune or
Sellers from their obligations and liabilities arising under any Closing
Document delivered hereunder, including, but not limited to the Employment
Agreement and/or the Consulting Agreement, to the extent such Closing
Documents require any party thereto to take further actions or make further
payments following either Closing Date.
(c) Notwithstanding any conflicting or inconsistent provisions
hereof, no party shall be liable in damages, indemnity or otherwise to the
other party in respect of the inaccuracy or breach of any representations,
warranties, covenants or agreements herein (excluding liabilities, Damages or
obligations arising under Section 6 below or under any Closing Documents as
described in Section 5.4 (b) above which shall be recoverable regardless of
whether the claim exceeds the amount set forth below) except to the extent
that the Damages to the aggrieved party caused by such inaccuracy or breach
exceed the sum of $10,000.
5.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an Indemnified Person or Seller
(such Person or Seller being referred to herein as an "Indemnified Party")
under Section 5.2, 5.3 or 5.4 of notice of the commencement of any Proceeding
or other claim against it, such Indemnified Party will, if a claim is to be
made against another party to this Agreement (hereinafter an "Indemnifying
Party") under such Section, give notice to the Indemnifying Party of the
commencement of such claim, but the failure to notify the Indemnifying Party
will not relieve the Indemnifying Party of any liability that it may have to
any Indemnified Person, except to the extent that the Indemnifying Party
demonstrates that the defense of such action is prejudiced by the Indemnified
Party's failure to give such notice.
(b) If any Proceeding referred to in Section 5.5(a) is brought
against an Indemnified Party and it gives notice to the Indemnifying Party of
the commencement of such Proceeding, the Indemnifying Party will be entitled
to participate in such Proceeding and, to the extent that it wishes (unless the
Indemnifying Party is also a party to such Proceeding and the Indemnified
Party determines in good faith that joint representation would be
inappropriate), to assume the defense of such Proceeding with counsel
reasonably satisfactory to the Indemnified Party and, after notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such Proceeding, the Indemnifying Party will not, as long as it
diligently conducts such defense, be liable to the Indemnified Party under
this Section 5 for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently incurred
by the Indemnified Party in connection with the defense of such Proceeding.
If the Indemnifying Party assumes the defense of a Proceeding (i) no
compromise or settlement of such claims may be effected by the Indemnifying
Party without the Indemnified Party's consent unless (A) there is no finding
or admission of any violation of Legal Requirements or any violation of the
rights of any Person and no effect on any other claims that may be made
against the Indemnified Party, and (B) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Party; and (ii) the
Indemnified Party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to
an Indemnifying Party of the commencement of any Proceeding and the
Indemnifying Party does not, within thirty (30) days (or such shorter period
within which a response to the Proceeding is due in order to comply with the
applicable rules of such Proceeding, as said period may be extended) after the
Indemnified Party's notice is given, give notice to the Indemnified Party of
its election to assume the defense of such Proceeding, the Indemnifying Party
will be bound by any determination made in such Proceeding or any compromise
or settlement effected by the Indemnified Party.
(c) Notwithstanding the foregoing, if an Indemnified Party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the Indemnified Party may, by notice to the Indemnifying Party,
assume the exclusive right to defend, compromise, or settle such Proceeding,
but the Indemnifying Party will not be bound by any determination of a
Proceeding so defended or any compromise or settlement effected without its
consent (which may not be unreasonably withheld) therein.
(d) Sellers and Biomune hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
Indemnified Party for purposes of any claim that an Indemnified Party may have
under this Agreement with respect to such Proceeding or the matters alleged
therein, and agree that process may be served on them with respect to such a
claim anywhere in the world.
5.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim may be asserted only by written notice to the party from whom
indemnification is sought. Except for equitable remedies, the remedies
provided in this Agreement constitute the sole and exclusive remedies for
recovery against the parties based upon the inaccuracy, untruth,
incompleteness or Breach of any representation or warranty or covenant
(excluding the investment representations given by Biomune) contained herein
or in any certificate, disclosure schedule or Closing Document furnished in
connection herewith.
6. OTHER AGREEMENTS OF THE PARTIES
In addition to the other terms and conditions contained in this
Agreement, the parties agree as follows:
6.1 DEFINED BENEFIT PLAN
Prior to the Second Closing Date, the Rockwood defined benefit plan will
be terminated and the participant of such plan will have rolled his interest
thereunder into a plan for which neither Rockwood nor Biomune nor any of their
Affiliates shall have any liability or responsibility; and
6.2 ASSIGNMENT OF CONTRACTS
All Contracts relating to the Business which have previously been entered
into in the name(s) of Andela, ▇▇▇▇▇▇ or some other Related Person or
Affiliate of any of the Sellers shall have been duly assigned to and assumed
by Rockwood prior to the Second Closing Date.
6.3 PROVISION OF INFORMATION
As long as Biomune owns the Option, Rockwood covenants to prepare and
furnish to Biomune quarterly and annual financial statements and such other
reports and financial information as Biomune may reasonably request, together
with a discussion and analysis of such statements in form and substance
substantially similar to those that Biomune would be required to include on a
consolidated basis with its own reports filed with the SEC for the period(s)
covered by such statements and reports.
6.4 COVENANTS OF BIOMUNE
(a) Biomune agrees to use its Best Efforts to obtain all
necessary consents and approvals that may be required in order to effect the
exercise of the Option, including any approvals required in connection with
the obligations of Biomune under the Employment Agreement.
(b) Biomune shall use its Best Efforts as soon as reasonably
practicable and prior to the expiration of the Option to raise no less than
$5,000,000 in public or private equity capital.
6.5 EXCLUSIONS FROM BUSINESS.
The parties understand and agree that ▇▇▇▇▇▇ may from time-to-time
develop new businesses and acquire interests in or control of businesses that
may be similar to the Business as conducted by Rockwood on the First Closing
Date. Notwithstanding anything herein to the contrary, ▇▇▇▇▇▇ shall not be
obligated to place any new development of products or methods, or any acquired
or newly-formed business, whether or not similar in nature to the Business as
conducted by Rockwood, under the control of Rockwood, and that notwithstanding
the fact that such development, formation or acquisition may occur prior to
the Second Closing Date, such interests may be maintained and operated by
▇▇▇▇▇▇ separate and apart from Rockwood or Biomune after the Second Closing
Date. To the extent, however, that after March 31, 1997, ▇▇▇▇▇▇ shall have
developed or acquired (including without limitation Drive or ▇▇▇▇▇▇▇▇▇), or
shall develop or acquire such new businesses or projects within, or shall have
assigned or shall assign the same to Rockwood, making them part of the
Business, then following the Second Closing Date, Biomune shall cause Rockwood
to pay to ▇▇▇▇▇▇ a royalty equal to 5% of the gross revenues produced by such
new businesses and projects.
6.6 ASSETS AND LIABILITIES OF ROCKWOOD
On the Second Closing Date, the assets of Rockwood, including cash and
deposits, reserves for doubtful accounts and accounts receivable, will exceed
the liabilities of Rockwood and shall be sufficient for the payment of any
liability accruing to Rockwood prior to the Second Closing Date. Following
the Second Closing Date, Biomune shall operate Rockwood in good faith and
shall use its Best Efforts to collect the accounts receivable as they exist at
such date. Cash received from the collection of such accounts receivable in
the Ordinary Course of Business shall remain in the Business and Biomune shall
apply the same to the payment of Rockwood's liabilities as follows: (a) to the
payment of any amount outstanding on the Rockwood line of credit with Far East
National Bank, (b) to the payment of trade accounts payable; and (c) to
▇▇▇▇▇▇. Any liabilities of Rockwood, singly or in the aggregate in excess of
$10,000 that are otherwise due as of the Second Closing Date that are not
reflected or recorded within the Interim Statements or the Audit for March 31,
1998, as the case may be, shall be the sole and exclusive liability of ▇▇▇▇▇▇
and Biomune may offset such amounts against payments otherwise due ▇▇▇▇▇▇
under the Transaction Documents.
7. GENERAL PROVISIONS
7.1 EXPENSES
Except as otherwise expressly provided in this Agreement, Biomune will
bear the expenses of all of the parties reasonably incurred in connection
with the negotiation, preparation, execution, and performance of this
Agreement, the Audits, and the Contemplated Transactions, including all fees
and expenses of agents, representatives, counsel, and the Auditors.
7.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Biomune determines.
7.3 CONFIDENTIALITY
Biomune and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Biomune and Rockwood
to maintain in confidence, and not use to the detriment of another party any
written, oral, or other information obtained in confidence from another party
in connection with this Agreement or the Contemplated Transactions, unless (a)
such information is already known to such party or has been obtained from
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by
legal proceedings.
7.4 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (with electronically generated
confirmation of receipt) at the facsimile number specified in this Section
prior to 4:30 p.m. (Salt Lake City time) on a Business Day, (ii) the Business
Day after the date of transmission, if such notice or communication is
delivered via facsimile (with electronically generated confirmation of
receipt) at the facsimile number specified in this Section after 4:30 p.m. and
earlier than 11:59 p.m. (Salt Lake City time) on such date; (iii) the Business
Day following the date of mailing if by a nationally recognized overnight
delivery service or certified mail (in each case with receipt requested), in
each case to the appropriate address set forth below (or to such other address
as a party may designate by ten (10) days advance written notice to the other
parties); or (iv) upon actual receipt by the party to whom notice is required
to be given. The address for such notices and communications shall be as
follows
If to Sellers: Rockwood Investments, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Biomune: Biomune Systems, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Durham, Evans, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
7.5 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of California, County of Los Angeles, and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred
to in the preceding sentence may be served on any party anywhere in the
world.
7.6 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents,
and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
7.7 WAIVER
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim
or right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.
7.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by all
parties hereto.
7.9 DISCLOSURE LETTER
A single disclosure in the Disclosure Letter, and those in any Supplement
thereto, are sufficient to qualify all of the representations and warranties
to which such disclosure relates regardless of whether such disclosure
specifically refers to all applicable representations and warranties affected
by such disclosure.
7.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without
the prior consent of the other parties except that Biomune may assign any of
its rights under this Agreement to Optim, but shall remain fully liable to
Sellers for all obligations and liabilities of Biomune hereunder, including,
but not limited to, those under Section 6 hereof, and the Consulting Agreement
and the Employment Agreements, to the same extent as if such assignment never
occurred. As used in this Agreement, the term "Biomune" shall be deemed to
include, collectively, Biomune and Optim. Subject to the foregoing, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
7.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
7.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references
to "Section" or "Sections" refer to the corresponding Section or Sections of
this Agreement. All words used in this Agreement will be construed to be of
such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
7.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
7.14 GOVERNING LAW
This Agreement will be governed by the laws of the State of California
without regard to conflicts of laws principles.
7.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
[The remainder of this page is intentionally left blank.
The next page contains the signatures of the parties.]
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BIOMUNE SYSTEMS, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Its: President and CEO
ROCKWOOD INVESTMENTS, INC.
a California corporation d/b/a
ROCKWOOD COSMETICS, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Its: President
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
