PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is executed this 27th day of
October, 1997, and made effective as of the 1st day of October 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 and has granted Biomune the option to purchase the
Shares in consideration of certain payments and performances by Biomune which
have been made as contemplated by the terms of that certain Securities
Purchase Agreement entered into by the parties on July 9, 1997 (the "Option
Agreement").
C. The parties desire now to set forth their definitive agreement
regarding the purchase of the Shares by Biomune.
A G R E E M E N T :
The parties, intending to be legally bound, agree as follows:
SECTION 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 ▇▇▇▇▇▇▇▇
(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 involving ▇▇▇▇▇▇ and/or Rockwood relating to the business of
Rockwood as described above and under the Royalty Agreement as defined below,
except as described in Section 6.4, below.
"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 2.6.
"CLOSING DATE" -- the date and time as of which the Closing actually takes
place as defined in Section 2.6.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by this Agr
eement, including:
(a)the exercise of the Option;
(b) delivery of the Purchase Price and the Shares;
(c) the execution, delivery, and performance of the Employment
Agreement; and
(f)the execution and delivery of, and 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.
"DAMAGES" -- as defined in Section 5.2.
"DISCLOSURE SCHEDULE" -- the Disclosure Schedule delivered by Sellers to
Biomune concurrently with the execution and delivery of this Agreement and
initialed by the parties, identifying with particularity exceptions to the
disclosures, representations and warranties contained in this Agreement. The
mere listing or inclusion of a copy of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item itself). The Disclosure Schedule will be arranged
in sections and paragraphs corresponding to the lettered and numbered sections
and paragraphs of the Agreement.
"EFFECTIVE DATE" -- October 1, 1997.
"EMPLOYMENT AGREEMENT" -- as defined in Section 2.6.1(d).
"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.
"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 3.20.
"INTERIM STATEMENTS" -- (unaudited) interim financial statements of Rockwood
for the period commencing April 1, 1997 and ended September 30, 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.
"LIABILITY" -- means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due),
including any liability for Taxes.
"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 held by Biomune, granted July 9, 1997, to acquire the
Shares.
"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" -- with respect to an entity:
(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.
"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 and the
Employment Agreement.
SECTION 2.EXERCISE OF OPTION AND PURCHASE OF SHARES.
2.1 EXERCISE OF OPTION. Subject to the terms and conditions of this
Agreement, at the Closing, ▇▇▇▇▇▇ hereby agrees to sell, transfer and convey
to Biomune and Biomune hereby agrees to purchase from Rockwood, all of the
issued and outstanding capital stock of Rockwood, comprising of ten thousand
(10,000) shares of common stock (the "Shares").
2.2 PURCHASE PRICE. The purchase price for the Shares is Five Million
Nine Hundred Sixty Thousand Dollars ($5,960,000), together with interest
thereon at the rate of five percent (5%) per annum from October 1, 1997
through the date final payment of the Purchase Price is made as provided
below (the "Purchase Price"). The date final payment is received hereunder
shall be referred to as the "Settlement Date." The Purchase Price will be
paid in cash as follows:
2.2.1 All payments made to ▇▇▇▇▇▇ under the Option Agreement totaling
$210,000, made prior to the Closing Date shall be credited against the
Purchase Price;
2.2.2 The operating profits of Rockwood for the months October,
November and December 1997 and January 1998, projected to be $450,000 in the
aggregate, shall be paid to ▇▇▇▇▇▇ as part of the Purchase Price;
2.2.3 The sum of $150,000 shall be paid at the time this Agreement is
executed as part of the Purchase Price; and
2.2.4 The balance of the Purchase Price shall be paid on January 5,
1998, provided, however, that Biomune may extend the Settlement Date up to and
including March 31, 1998 upon written notice to ▇▇▇▇▇▇. If the Settlement
Date is extended by Biomune hereunder, the Purchase Price will be increased by
an amount equal to but not exceeding the operating profits of Rockwood for the
calendar month in which the Settlement Date occurs and for the intervening
months between January 1, 1998 and the Settlement Date. If the Settlement
Date is extended by Biomune hereunder, Biomune will make an installment
payment of $105,000 cash on January 5, 1998 and will make available on
favorable terms a line of credit for the use of Rockwood in the principal
amount of $250,000.
2.3 ADJUSTMENT OF PURCHASE PRICE. The Purchase Price payable by Biomune
is subject to adjustment as follows:
2.3.1 If the Interim Statements reflect gross revenues of Rockwood
which would, on an annualized basis through March 31, 1998, 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 on the Settlement Date 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 amount of the Purchase Price payable to ▇▇▇▇▇▇. On or about
May 16, 1998, the Escrow Agent shall disburse the Escrowed Amount to the
parties based on the final Purchase Price as adjusted, determined from the
actual gross revenues of Rockwood for the twelve-month period ending March 31,
1998. Biomune may, at its sole discretion, have the books and records of
Rockwood audited for such period to determine such revenues. If the Escrowed
Amount is insufficient to cover the adjustment to the Purchase Price as
required by this Section, or if no escrow was required at the time of Closing
based on the Interim Statements, ▇▇▇▇▇▇ shall promptly after receipt of
notification of such deficiency, reimburse the remainder of the adjustment
amount to Biomune. If payment is not made promptly by ▇▇▇▇▇▇, Biomune may
offset amounts owed against amounts otherwise payable to ▇▇▇▇▇▇ under this
Agreement or the Employment Agreement. Biomune shall conduct the Business of
Rockwood in good faith and consistent with reasonable commercial practices
through March 31, 1998 and ▇▇▇▇▇▇ shall be President of Biomune during such
time, consistent with the terms of the Employment Agreement, or no adjustment
to the Purchase Price shall be required hereunder.
2.3.2 On the Effective Date and again on the Settlement 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 such date. Cash received from the collection of such accounts
receivable in the Ordinary Course of Business shall remain in the Business and
shall be applied to the payment of Rockwood's liabilities as follows: (i) to
the payment of any amount outstanding on the Rockwood line of credit with Far
East National Bank, (ii) to the payment of trade accounts payable as of such
date, then (iii) to ▇▇▇▇▇▇. Any liabilities of Rockwood, singly or in the
aggregate in excess of $10,000 that are otherwise due as of the Effective Date
that are not reflected or recorded within the Interim Statements or the Audit
for September 30, 1997, as the case may be, together with the uncollectible
portion of such accounts receivable and any bad debt for the period covered
thereby, shall be the sole and exclusive Liability of ▇▇▇▇▇▇ and Biomune may
offset such amounts against the balance of the Purchase Price or other
payments otherwise due ▇▇▇▇▇▇ under this Agreement or the Employment
Agreement.
2.3.3 If the aggregate operating profits for the months of October,
November and December 1997 and January 1998 are less than the projected
$450,000, then the balance of the Purchase Price payable by Biomune under
Section 2.2.4 will be reduced dollar for dollar by the amount they are less
than $450,000. If the aggregate operating profits for such period exceed
$450,000, the Purchase Price will be increased by such additional amount in
excess of $450,000. The adjustments required by this Section will be made on
the last day of the calendar month in which the Settlement Date occurs.
2.4 ROYALTIES. The License Agreement by and among Cypress Springs, LLC, a
California limited liability company and Rockwood dated July 1, 1997 (the
"Royalty Agreement"), will be amended effective the Settlement Date. Until
such date, Biomune will continue to pay ▇▇▇▇▇▇, or his assignee, the royalty
required to be paid pursuant to the Consulting Agreement dated July 9, 1997
among Biomune, ▇▇▇▇▇▇ and Andela Group, Ltd. (the "Consulting Agreement").
The Consulting Agreement is amended as of the Effective Date as provided in
Exhibit 2.4 hereto and shall terminate on the Settlement Date and be
superseded by the amended Royalty Agreement.
2.5 STOCK PURCHASE WARRANTS. As additional consideration for the Shares,
Biomune will ▇▇▇▇▇ ▇▇▇▇▇▇ stock purchase warrants for the purchase of a total
of 8,000,000 shares of Biomune's Common Stock as described below in the form
of the Warrant Certificates attached hereto as Exhibit 2.5 and by reference
made a part hereof. The shares of Common Stock issuable upon exercise of the
warrants will be subject to certain registration rights and the payment of the
exercise price may be made in a variety of methods, including "cashless"
exercise alternatives. The warrants will be exercisable for a period of five
years from the Settlement Date, subject to the vesting and performance
limitations as follows:
(1) 2,000,000 shares at an exercise price of $1.50 per share,
which shall become exercisable at such time as Biomune's annual revenues are
$7,500,000 as reported on its audited consolidated financial statements for
such fiscal year;
(2) 2,000,000 shares at an exercise price of $2.50 per share,
which shall become exercisable at such time as Biomune's annual revenues are
$10,000,000 as reported on its audited consolidated financial statements for
such fiscal year;
(3) 2,000,000 shares at an exercise price of $3.50 per share,
which shall become exercisable at such time as Biomune's annual revenues are
$15,000,000 as reported on its audited consolidated financial statements for
such fiscal year;
(4) 2,000,000 shares at an exercise price of $4.50 per share,
which shall become exercisable at such time as Biomune's annual revenues are
$20,000,000 as reported on its audited consolidated financial statements for
such fiscal year.
2.6 CLOSING DATE. The execution of this Agreement and the delivery of the
Purchase Price under Paragraph 2.2.1 and 2.2.3 shall occur on October 27, 1997
(the "Closing Date"), with an effective date of October 1, 1997 (the
"Effective Date"). At the Closing on such date, the following shall occur
[provided, however, that the parties agree that the delivery of the documents
described in subparagraphs 2.6.1(b) and (c) below may occur as soon as
reasonably possible thereafter]:
2.6.1 Sellers will deliver to Biomune:
(a) two counterparts of this Agreement, duly executed by
Sellers;
(b) a certificate executed by Sellers representing and
warranting to Biomune that subject to the exceptions set forth in the
Disclosure Schedule, each of Sellers' representations and warranties in this
Agreement are true and correct in all material respects as of the Closing
Date, as if made on that date;
(c) certificates evidencing the Shares, duly endorsed for
transfer or accompanied by stock powers duly executed, which certificates
shall be held by counsel for Sellers, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, until the final
payment of the Purchase Price has been made as provided in Paragraph 2.2, above
(it being agreed and understood that the holding of such Share certificates is
for the purpose of perfecting a security interest in and to the Shares as
collateral for the final payment of the Purchase Price due hereunder, such
security interest to be released and the Share certificates delivered to
Biomune upon receipt of such payment);
(d) the Employment Agreement in the form of Exhibit 2.6.1(d),
duly signed by ▇▇▇▇▇▇; and
(e) the Interim Statements.
2.6.2 Biomune will deliver to ▇▇▇▇▇▇:
(a) two counterparts of this Agreement, duly executed by
Biomune;
(b) the payment required under Paragraph 2.2.3;
(c) 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 Closing Date, as if made on that date.
(d) audited financial statements for Rockwood for the years
ended September 30, 1995, 1996 and 1997 (collectively, the "Audits" and each
an "Audit"); provided, however, that if the Audit for the 12-month period
ended September 30, 1997 is not complete upon the Closing Date, then the
Audits shall be delivered as soon thereafter as practicable, and in any event,
within sixty (60) days thereof.
2.7 DEFAULT. If for any reason Biomune shall fail to make the final
payment of the Purchase Price under this Agreement, then (1) the Shares will
be returned to ▇▇▇▇▇▇, (2) ▇▇▇▇▇▇ will retain all cash payments made through
the date such default shall occur as liquidated damages, (3) all obligations
and covenants of the parties under this Agreement or any of the Transaction
Documents shall terminate, and (4) the parties will take back any of their
respective property or business that is in the possession or control of the
other parties to this Agreement at such date and shall have no further duty or
obligation hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS. ▇▇▇▇▇▇ and
Rockwood each, jointly and severally, represent and warrant to Biomune
(subject to the exceptions, if any, set forth in the Disclosure Schedule), as
follows:
3.1 ORGANIZATION AND GOOD STANDING. 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 and no such qualification is required. Rockwood does not
conduct business in any country, state or province other than California,
U.S.A., except for sales made in the nature of interstate commerce. Sellers
have delivered to Biomune copies of the Organizational Documents of Rockwood,
as currently in effect.
3.2 AUTHORITY; NO CONFLICT.
3.2.1 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, the same will constitute the legal, valid, and binding obligation
of ▇▇▇▇▇▇, enforceable against him in accordance with its 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 the Transaction Documents and to perform
their obligations thereunder.
3.2.2 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.
3.2.3 Neither ▇▇▇▇▇▇ nor ▇▇▇▇▇▇▇▇ 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.
3.3.1 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 the 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.
3.3.2 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 as set forth in Section 3.3.2 of the Disclosure Schedule.
3.4 FINANCIAL STATEMENTS. Biomune has 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 years ended
September 30, 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. Sellers have
caused the Interim Statements of Rockwood to be prepared pursuant to GAAP as
at September 30, 1997, 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 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 the Closing, all of
those books and records will be in the possession of Rockwood.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. Section 3.6 of the Disclosure
Schedule 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 Schedule, (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, which have arisen after March 31, 1997 in
the Ordinary Course of Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of law).
3.8 TAXES
3.8.1 Sellers have delivered to Biomune copies of, and Section 3.8 of
the Disclosure Schedule contains a complete and accurate list of, all such Tax
Returns filed since Rockwood's 1992 tax year. 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
Schedule and are being contested in good faith and as to which adequate
reserves have been provided in the Interim Statements.
3.8.2 Except as disclosed in Section 3.8 of the Disclosure Schedule,
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.
3.8.3 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 Schedule. 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.
3.8.4 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 March 31, 1997, 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. At the Settlement Date, Rockwood shall have no
ERISA or similar or other qualified employee benefit plans.
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
3.11.1 Except as set forth in the Disclosure Schedule:
(i) Rockwood is, and at all times since March 31, 1997 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.
3.11.2 The Disclosure Schedule contains a complete and accurate list
of each material 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
Schedule is valid and in full force and effect. Except as set forth in the
Disclosure Schedule, 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
Schedule. The Governmental Authorizations listed in the Disclosure Schedule
collectively constitute all of the material 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.
3.12.1 Except as set forth in the Disclosure Schedule, there is no
pending Proceeding:
(i) that has been commenced by or against ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇
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 Schedule. To the Knowledge of Sellers,
the Proceedings listed in the Disclosure Schedule will not, except as
disclosed in the Disclosure Schedule, have a material adverse effect on the
Business, operations, assets or condition of Rockwood.
3.12.2 Except as set forth in the Disclosure Schedule:
(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 July 9, 1997, Rockwood
has conducted its Business only in the Ordinary Course of Business in
Rockwood's best judgment and there has not been any:
3.13.1 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;
3.13.2 amendment to the Organizational Documents of Rockwood;
3.13.3 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;
3.13.4 breach, termination or receipt of notice of breach or
termination of the contract between Rockwood (as assignee) and General
Nutrition Centers ("GNC") known as the "GNC Contract";
3.13.5 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;
3.13.6 material change in the accounting methods used by Rockwood; or
3.13.7 agreement, whether oral or written, by Rockwood to do any of
the foregoing.
3.14 CONTRACTS; NO DEFAULTS.
3.14.1 Section 3.14 of the Disclosure Schedule 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.
3.14.2 Except as set forth in the Disclosure Schedule, 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.
3.14.3 Except as set forth in the Disclosure Schedule, to the
Knowledge of Sellers, each Applicable Contract identified in Section 3.14 of
the Disclosure Schedule is in full force and effect and is valid and
enforceable in accordance with its terms, except to the extent it has been
performed or completed.
3.14.4 Except as set forth in the Disclosure Schedule:
(i) Rockwood is, and at all times since July 9, 1997 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 July 9, 1997 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.
3.14.5 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.
3.14.6 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. Section 3.15 of the Disclosure Schedule 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 INVENTORY. The inventory of Rockwood is as shown on the Interim
Statements and the Audits. All such inventory, whether or not reflected in
the Interim Statements or acquired since that date in the Ordinary Course of
Business, consists of goods of a quality and quantity usable in the Ordinary
Course of Business by Rockwood, except for obsolete items and items of
below-standard quality, and all such inventory is maintained on the books and
accounting records of Rockwood at its proper value consistent with past
business and accounting practices of Rockwood.
3.20 INTELLECTUAL PROPERTY.
3.20.1 Rockwood owns no patents or patent applications. For purposes
of this Agreement, 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 3.20.1
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 Schedule;
(ii) all copyrights in both published works and unpublished
works relating to the Business (collectively, "Copyrights"); and
(iii) 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.
3.20.2 The Disclosure Schedule 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.
3.20.3 Trademarks. Except as disclosed in the Disclosure Schedule 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.
3.20.4 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.
3.21 DISCLOSURE. No representation or warranty of Rockwood or ▇▇▇▇▇▇ in
this Agreement and no statement in the Disclosure Schedule 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.
3.22 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.
3.23 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable of
Rockwood are reflected properly on the books and records of Rockwood, are
valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Interim Statements and/or the Audits (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of Rockwood.
3.24 PRODUCT WARRANTY. To the best of Rockwood and ▇▇▇▇▇▇'▇ Knowledge,
each product manufactured, sold, leased, or delivered by Rockwood has been in
conformity with all applicable contractual commitments and all express and
implied warranties, and Rockwood has no Liability (and there is no basis for
any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against any of them giving rise to any
Liability) for replacement or repair thereof or other damages in connection
therewith, subject only to the reserve for product warranty claims set forth
on the face of the Interim Statements and/or the Audits (rather than in any
notes thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of Rockwood. No product
manufactured, sold, leased, or delivered by Rockwood is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms
and conditions of sale or lease. Section 3.24 of the Disclosure Schedule
includes copies of the standard terms and conditions of sale or lease for
Rockwood (containing applicable guaranty, warranty, and indemnity provisions).
3.25 PRODUCT LIABILITY. Rockwood has no Liability (and there is no basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against it giving rise to any Liability)
arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold or delivered
by Rockwood.
3.26 GUARANTIES. Rockwood is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BIOMUNE. Biomune
represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND QUALIFICATION.
4.1.1 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.
4.1.2 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.
4.1.3 Biomune has previously announced the spin-off of its
Subsidiary, Volu-Sol, Inc. ("Volu-Sol"). Volu-Sol has filed with the SEC a
Registration Statement on Form 10-SB and Biomune has filed a preliminary
information statement on Schedule 14C for the purpose of effecting the
spin-off effective September 30, 1997.
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.
4.3.1 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.
4.3.2 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 September 30, 1997, Biomune has issued and outstanding
approximately (i) 30,000,000 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) approximately 40,000 shares of Series A Preferred Stock and
approximately 2,500 shares of Series C Preferred Stock. The preferred stock
of the two outstanding series is convertible to an aggregate of approximately
8,500,000 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. As of September 30, 1997,
there were options and warrants outstanding under the stock option plans of
Biomune and certain agreements with consultants and others for the purchase of
a total of approximately 13,000,000 shares of common stock, exercisable at
prices ranging from $.375 to $6.00 per share.
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 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, March 31, 1997, and June 30, 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").
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 Shares for its own account and
Biomune has no present arrangement (whether or not legally binding) or intent
at any time to sell any of such Shares to or through any person or entity.
Biomune understands that the Shares must be held indefinitely unless they 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 DISCLOSURE; ACCESS TO INFORMATION. To the best of its Knowledge,
Biomune has received all documents, records, books and other information
pertaining to its investment in Rockwood that have been requested by Biomune.
4.14 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.
4.15 OTHER INFORMATION. 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:
4.15.1 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
4.15.2 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.
4.16 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:
4.16.1 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 Shares; or
4.16.2 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 Shares.
4.16.3 Any projections, forecasts or similar financial information
provided by Rockwood or ▇▇▇▇▇▇, other than the Audits, has been prepared
solely for internal planning purposes to assist the parties in evaluating the
potential impact of the Rockwood purchase on Biomune's income and earnings.
The assumptions upon which the projections are based are or may become subject
to change without notice to the parties. They represent the current belief of
▇▇▇▇▇▇ concerning the factors which may affect the results of operations and
other data presented in such projections. The projections and the stated
assumptions are "forward-looking statements" within the meaning of that term
as defined by Section 27A of the Securities Act and Section 21E of the
Exchange Act. These an all other forward-looking statements included in the
materials provided to Biomune by Rockwood are based on information available
to it as of their respective dates and neither Rockwood nor ▇▇▇▇▇▇ assumes any
duty or obligation to update any such forward-looking statement. The parties
acknowledge that actual performance results could differ materially from the
results contained in the forward-looking statements.
SECTION 5. INDEMNIFICATION; REMEDIES.
5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, covenants, and obligations in this Agreement, the Disclosure
Schedule, any supplements to the Disclosure Schedule, and any other
certificate or document delivered pursuant to this Agreement shall terminate
and be of no further force and effect on the Settlement 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 from ▇▇▇▇▇▇ and
Rockwood shall survive for a period of two (2) years following the Settlement
Date (subject to any applicable statutes of limitation or any extension
thereof).
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS. Subject to the
provisions and limitations of this Article 5, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, 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:
5.2.1 any Breach of any representation or warranty made by Sellers in
this Agreement, the Disclosure Schedule, the supplements to the Disclosure
Schedule, or any other certificate or document delivered by Sellers pursuant
to this Agreement;
5.2.2 any Breach by Sellers of any covenant or obligation of any
Seller in this Agreement; and
5.2.3 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 Rockwood (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:
5.3.1 any Breach of any representation or warranty made by Biomune
in this Agreement or in any certificate delivered by Biomune pursuant to this
Agreement;
5.3.2 any Breach by Biomune of any covenant or obligation of Biomune
in this Agreement; or
5.3.3 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.
5.4.1 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.
5.4.2 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.
5.4.3 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 5.4.2 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.
5.5.1 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.
5.5.2 If any Proceeding referred to in Section 5.5.1 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.
5.5.3 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.
5.5.4 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.
SECTION 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. As of the Effective Date, Rockwood has no
defined benefit plan and the interests of the participant in such earlier
plans as may have been maintained by Rockwood have been transferred 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
had previously been entered into in the name(s) of Andela, ▇▇▇▇▇▇ or some
other Related Person or Affiliate of any of the Sellers have been duly
assigned to and assumed by Rockwood prior to the Second Closing Date.
Attached as Schedule 6.2 to this Agreement is a list of such agreements and
the dates of their assignment to Rockwood.
6.3 COVENANTS OF BIOMUNE.
6.3.1 Biomune shall pay the balance of the Purchase Price and make
the other payments required hereunder when due.
6.3.2 At the Settlement Date and immediately thereafter, Biomune
shall have available to it a minimum of $5,000,000 in working capital. For
purposes of this Agreement, "working capital" shall mean cash and marketable
securities less debt and excess accounts payable over accounts receivable.
6.3.3 The Biomune audit for the fiscal year ended September 30, 1997
shall have been completed and shall include all appropriate adjustments,
write-offs, reserves, etc., prepared in accordance with GAAP, consistently
applied.
6.3.4 The spin-off of Volu-Sol shall have been completed and all
inter-company accounts relating to Volu-Sol shall have been settled.
6.4 EXCLUSIONS FROM BUSINESS. The parties understand and agree that
▇▇▇▇▇▇ has developed or acquired business interests outside Rockwood,
including, but not limited to some business activities that may be similar to
the Business as conducted by Rockwood. Such activities include Rockwood
Vitamins LLC, the proposed acquisition of ▇▇▇▇▇▇▇ International and Focus 21
and any other similar businesses engaged in manufacturing, marketing,
distributing and promoting vitamins, health and personal care products,
cosmetics and nutritional supplements. It is agreed that these interests are
not part of the Business and, for purposes of this Agreement, the same are
therefore excluded from the Rockwood Business acquired by Biomune as a result
of its purchase of the Shares.
6.5 AGREEMENT REGARDING ALLOCATION OF CERTAIN EXPENSES. Following the
Effective Date, ▇▇▇▇▇▇ shall reimburse Biomune for certain overhead expenses
(including personnel, rent and other expenses) allocated to businesses owned
or controlled by ▇▇▇▇▇▇ which are not affiliated with Rockwood.
6.6 CORPORATE GOVERNANCE MATTERS. At the Settlement Date, the Board of
Directors of Biomune will be expanded to nine (9) persons, ▇▇▇▇▇▇ shall be
named as a member of the Board of Directors of Biomune and he shall have the
right to nominate up to two (2) additional members of the Board of Directors.
The nominees of ▇▇▇▇▇▇ will also be named to the Board of Directors, provided
they meet the qualifications for directors contained in the Organizational
Documents of Biomune and otherwise comply with applicable statutory and
regulatory requirements for such position. ▇▇▇▇▇▇ and his nominees to the
Board of Directors will comply with the personal reporting requirements of
Section 16 of the Exchange Act and other provisions of the federal securities
laws and the rules and regulations promulgated thereunder. Matters involving
incurring new debt, the issuance of equity and other securities of Biomune,
public disclosures, financial controls and directions to auditors, and the
resolution of legal claims involving Biomune, shall be made after consultation
with ▇▇▇▇▇▇ and after his consent, which shall not be unreasonably withheld
and which shall be undertaken consistent with state corporation law and the
Organizational Documents of Biomune. As President of Biomune, ▇▇▇▇▇▇ will be
a co-signer on corporate bank accounts, consistent with existing corporate
policies and systems, as supervised by the Audit Committee of the Board of
Directors of Biomune.
6.7 LEASE. Rockwood will submit lease proposals for office space under
the names of both Biomune and Rockwood. If for any reason Biomune fails to
make the final payment of the Purchase Price, Rockwood will assume any such
lease as its sole obligation.
SECTION 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: ▇▇▇ ▇. ▇▇▇▇▇▇
11845 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.:(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Biomune: Biomune Systems, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO
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 SCHEDULE. A single disclosure in the Disclosure Schedule,
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 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: Chief Executive Officer
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ INVESTMENTS, INC.
a California corporation d/b/a
ROCKWOOD COSMETICS, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Its: President