ASSIGNMENT & NON-COMPETITION AGREEMENT dated as of January 4th, 2008 by and between RxELITE INC. and DR. ARIE GUTMAN
ASSIGNMENT
& NON-COMPETITION AGREEMENT
dated
as of
January
4th, 2008
by
and between
RxELITE
INC.
and
▇▇.
▇▇▇▇ ▇▇▇▇▇▇
TABLE
OF CONTENTS
|
1.
|
Non-Competition
Undertaking.
|
1
|
|
2.
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Assignment
of Rights
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2
|
|
3.
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Consideration
|
3
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|
4.
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Board
representation
|
4
|
|
5.
|
Representations
and Warranties of RxElite
|
4
|
|
6.
|
Representations
and Warranties of ▇▇▇▇▇▇
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8
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7.
|
Closing
|
8
|
|
8.
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Certain
Covenants
|
9
|
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9.
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Indemnification
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9
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10.
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Miscellaneous
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11
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ASSIGNMENT
& NON-COMPETITION AGREEMENT
THIS
ASSIGNMENT & NON-COMPETITION AGREEMENT (the “Agreement”)
is
made
and entered into as of January 4th, 2008, by and between RxElite Inc., a
Delaware corporation (“RxElite”),
and
▇▇. ▇▇▇▇ ▇▇▇▇▇▇, an Israeli citizen (“▇▇▇▇▇▇”).
WITNESSETH
:
WHEREAS,
▇▇▇▇▇▇ is an internationally known scientist, with many inventions, experience
and connections in the field of active pharmaceutical materials, and is
the sole
shareholder of FineTech Laboratories, Ltd., a company organized under the
laws
of the State of Israel (“Finetech”);
WHEREAS,
RxElite is a Delaware corporation currently doing business in the field
of
pharmaceutical products, and the shares of RxElite are traded on the Electronic
Bulletin Board;
WHEREAS,
RxElite
desires to secure ▇▇▇▇▇▇’▇ personal commitment to allow RxElite and Finetech to
benefit from his non-competition in the Prohibited Business over the Period
(as
hereinafter defined);
WHEREAS,
Finetech has assigned to ▇▇▇▇▇▇ certain rights to receive Royalties from
certain
Applicable Contracts (as
hereinafter defined),
and
the Parties hereto wish to terminate such assignment in such manner that
the
right to the Royalties shall revert to Finetech, all according to the terms
set
out herein;
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereto hereby agree as follows,
intending to be legally bound:
| 1. |
Non-Competition
Undertaking.
|
| 1.1 |
For
the Consideration as set out below, ▇▇▇▇▇▇ hereby undertakes as
provided
in this Aticle 1 below.
|
| 1.2 |
For
a period of one
(1) year
from and after the end of Employment (the “Period”),
▇▇▇▇▇▇ will not, directly or indirectly (whether as an owner, proprietor,
partner, shareholder, officer, employee, independent contractor,
director,
joint venturer, consultant, lender or investor), solicit or engage
in the
Prohibited Business (“Non-Compete
Undertaking”).
For purposes of this Agreement, the “Prohibited
Business”
means: offering to provide or providing any product or service
competitive
with the business of RxElite or its Israeli subsidiary RxElite
Israel Ltd
(collectively: the “Companies”),
worldwide. The Non-Compete Undertaking notwithstanding, ▇▇▇▇▇▇
may be a
securities holder in certain entities operating in the pharmaceutical
field, as follows: (i) securities of RxElite itself; and (ii) up
to 5% of
the securities of entities publicly traded on a national securities
exchange. To avoid doubts, the provisions of Section 2.3 below
will not be
deemed a breach of the Non-Compete Undertaking.
|
| 1.3 |
From
and after the Closing Date, ▇▇▇▇▇▇ shall not, directly or indirectly,
(i)
discourage any person from accepting employment with the Companies,
or
(ii) solicit the employment or services of any person who is employed
by
the Companies, or is otherwise engaged to perform services for
the
Companies (whether in the capacity of employee, consultant, independent
contractor or otherwise), or is offered a position by the Companies,
or
(iii) cause or attempt to cause such person as described above
to leave
the employment or service of the
Companies.
|
| 1.4 |
▇▇▇▇▇▇
acknowledges and agrees that the limitations imposed by Sections
1.2 and
1.3 as to time, geographical area, and scope of activity being
restrained
are reasonable and do not impose a greater restraint than is necessary
to
protect the goodwill or other business interests of the
Companies.
|
| 1.5 |
The
parties hereby agree that if ▇▇▇▇▇▇ violates the provisions of
this
Article 1, it will be difficult to determine the entire cost, damage
or
injury which the Companies would sustain. ▇▇▇▇▇▇ acknowledges that
if he
violates or threatens to violate the provisions of this Article
1, the
Companies may not have adequate remedy at law. In that event, the
Companies shall have the right, in addition to any other rights
that may
be available to them, to apply for injunctive relief in any court
of
competent jurisdiction, in order to restrain any or threatened
violation
by ▇▇▇▇▇▇ of the provisions of this Article 1 or to compel specific
performance by ▇▇▇▇▇▇ of one or more of his undertakings hereunder.
The
seeking or obtaining by the Companies of such injunctive relief
shall not
foreclose or in any way limit the right of the Companies to obtain
a
monetary judgment against ▇▇▇▇▇▇ for any damage to the Companies
that may
result from any breach by ▇▇▇▇▇▇ of the provisions of this Article
1.
|
| 1.6 |
Should
a final judgment of a court of competent jurisdiction declare any
term or
provision of this Article 1 to be invalid or unenforceable, the
parties
agree that the court making such determination of invalidity or
unenforceability shall have the power to reduce the scope, duration
or
area of the term or provision, to delete specific words or phrases,
or to
replace any invalid or unenforceable term or provision with a term
or
provision that is valid and enforceable and that comes closest
to
expressing the intention of the invalid or unenforceable term or
provision, and this Article 1 shall be enforceable as so modified
after
the expiration of the time within which the judgment may be appealed.
Such
judgment shall not effect any other provision of this
Agreement.
|
| 2. |
Assignment
of Rights
|
| 2.1 |
Finetech
and ▇▇▇▇▇▇ have previously executed an assignment deed
effective as of
February 1, 2006 (the “Assignment
Deed”)
whereby ▇▇▇▇▇▇ was assigned all rights to receive a certain
share in the
sales of two Israeli companies (such share is herein referred
to as
“Royalties”),
as provided in the following agreements: (i) an agreement
dated October
26, 2003 between Finetech and the Israeli company Unipharm
Ltd. regarding
sales of Latanoprost (the “Unipharm
Agreement”),
(ii) an agreement dated January 9, 2004 between Finetech
and the Israeli
company Trima Israel Pharmaceutical Products Maabarot Ltd.
regarding sales
of Cabergoline (the “Trima
Agreement”
and together with the Unipharm Agreement, the “Applicable
Contracts”);
|
| 2.2 |
As
of the Closing and subject to receipt of the Consideration as set
out
below, ▇▇▇▇▇▇ hereby reassigns to Finetech all his rights under
the
Assignment Deed (such reassignment is herein referred to as the
“Assignment”).
Consequently, all rights to receive the Royalties under the Applicable
Contracts shall revert to Finetech, and the Assignment Deed shall
terminate as of the Closing. To avoid doubts, no
promise or guarantee is given or made by ▇▇▇▇▇▇ as to economic
value of
the Assignment or the actual Royalties amounts to be paid to Finetech
consequent to the Applicable Contracts.
|
2
| 2.3 |
During
past years, ▇▇▇▇▇▇ was granted/assigned the right to receive royalties
due
as a result of sales of products based on intellectual properties
developed/provided by ▇▇▇▇▇▇ and/or Finetech, as follows: (i) royalties
due on sales of Donepezil products by Unipharm Ltd. and its affiliates
(agreement dated 1998), and (ii) royalties due on sales of Rotinirole,
Latanoprost and Donepezil products by PAR Pharmaceutical, Inc.
and its
affiliates (agreement dated January 2006). The right to receive
the
aforesaid royalties is not included in the Assignment hereunder,
and this
right shall survive and continue to be valid to the benefit of
▇▇▇▇▇▇,
without any claim by either Finetech or RxElite.
|
| 3. |
Consideration
|
| 3.1 |
In
consideration for the Non-Compete Undertaking and the Assignment,
RxElite
shall pay to ▇▇▇▇▇▇ at the Closing an amount of US $21,054,592
in
18,632,383 unregistered shares of Common Stock of RxElite (the
“Shares”
and the “Common
Stock”
respectively), valued
at US$1.13 per Share.
|
|
The
Shares shall be unregistered under the US Securities Act of 1933
(the
“Act”)
and accordingly any disposition by ▇▇▇▇▇▇ shall require their registration
or an exemption from registration under said Act.
|
|
Once
issued, the Shares shall be validly issued, fully paid and non-assessable,
and free of any encumbrance or third party rights.
|
| 3.2 |
RxElite
represents that as of the date hereof and as of the Closing, the
outstanding share capital of RxElite, on a fully diluted as converted
and
as exercised basis, including all current, contingent or otherwise
promised securities of any kind, is 147,120,967 shares of Common
Stock
(exclusive of 11,771,033 ISOP options that were authorized but
not yet
allocated), and no other equity securities (or securities exercisable
or
convertible into equity securities), of any class, are outstanding.
RxElite undertakes to maintain the aforesaid throughout the period
until
the Closing, and during this period RxElite shall not promise or
undertake
to issue any such securities.
|
| 3.3 |
By
not later than the Closing, RxElite and ▇▇▇▇▇▇ shall execute and
deliver a
Registration Rights Agreement in customary form (the "Registration
Rights Agreement"),
whereby RxElite will provide certain registration rights with respect
to
the Shares, under the Act and the rules and regulations promulgated
thereunder, and under applicable state securities
laws.
|
| 3.4 |
RxElite
warrants and undertakes that, except as required in order to comply
with
applicable securities laws and the Registration Rights Agreement,
there
shall be no limitations on the right of ▇▇▇▇▇▇ to effect the transfer
of
any of the Shares, and neither RxElite nor anybody acting on its
behalf or
by its instructions shall stop or delay such transfers. During
the first
two years after the Closing, the Shares will be restricted shares,
meaning
that no transfers will be allowed, except to Permitted Transferees.
For
that purpose, “Permitted
Transferees”
are family members or Affiliates of the transferor; and “Affiliate”
shall mean an entity that, directly or indirectly, through one
or more
intermediaries, controls or is controlled by, or is under common
control
with, the transferor (for this definition, “control”
and its derivatives means the possession, directly or indirectly,
or as
trustee or executor, of the power to direct or cause the direction
of the
management and policies of an entity, whether through ownership
of voting
equity interests, as trustee or executor, by contract or credit
arrangements or otherwise). ▇▇▇▇▇▇ shall always be entitled to
transfer
some or all of the Shares to Permitted
Transferees.
|
3
| 4. |
Board
representation
|
| 4.1 |
RxElite
shall make best effort to appoint ▇▇▇▇▇▇ or his nominee as a member
of the
Board of Directors of RxElite (the “Board”)
and to renew such appointment from time to time, unless ▇▇▇▇▇▇
waives this
right. As a Board member, ▇▇▇▇▇▇▇ or his nominee (as the case may
be)
shall have the right to serve on any (or all) committee he deems
fit.
|
| 4.2 |
Until
the date such nomination to the Board takes effect, ▇▇▇▇▇▇ will
be invited
to all Board and Board committees meetings, shall have the right
to attend
each such meeting as a non-voting observer, and shall receive all
materials, information and privileges provided to the Board members.
|
| 4.3 |
▇▇▇▇▇▇
shall be included in any D&O insurance and undertaking provided by
RxElite to its directors and officers.
|
| 5. |
Representations
and Warranties
of RxElite
|
RxElite
hereby represents and warrants to ▇▇▇▇▇▇ as of the date hereof and as of
the
Closing Date (unless another date is expressly set forth below) that
the
representations and warranties set forth in this Article 5 below are and
will be
accurate, true and complete.
| 5.1 |
Existence
and Power.
RxElite is a corporation duly organized, validly existing and in
good
standing under the laws of Delaware, and has all corporate powers
and all
governmental licenses, permits, authorizations, consents and approvals
required to own its property and to carry on its business and operations
as now conducted or proposed to be conducted. RxElite has heretofore
delivered to ▇▇▇▇▇▇ true and complete copies of RxElite’s Certificate of
Incorporation and By-laws as currently in
effect.
|
| 5.2 |
Authorization.
The execution, delivery and performance by RxElite of this Agreement
and
all other documents and agreements to be executed by RxElite in
connection
herewith (the “Related
Documents”)
and the consummation by RxElite of the transaction contemplated
hereby
require no action by or in respect of, or filing with, any governmental
body, agency, official or authority in the United States on federal
or
state level.
|
| 5.3 |
Enforcement.
This Agreement and the Registration Rights Agreement and all ancillary
documents (collectively, the “Transaction
Documents”)
have been duly executed and delivered by RxElite and constitute
the valid
and legally binding obligation of RxElite, enforceable against
RxElite in
accordance with their respective terms including without limitation
the
issuance of the Shares to ▇▇▇▇▇▇ in accordance with the terms hereof,
except as such enforceability may be limited by laws governing
bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
other
similar laws, without limitation, relating to or affecting creditors’
rights generally.
|
4
| 5.4 |
Non-Contravention.
The execution, delivery and performance by RxElite of this Agreement
and
the other Transaction Documents, and the consummation of the transactions
contemplated hereby and thereby (including the issuance of the
Shares to
▇▇▇▇▇▇), do not and will not:
|
| 5.4.1 |
Contravene,
violate or conflict with, or constitute a violation of, any provision
of
any law (including federal and state securities laws and regulations
and
the rules and regulations of the NASD Over-the-Counter market (the
"OTC")),
regulation, judgment, injunction, order or decree, the Certificate
of
Incorporation or Bylaws, binding upon or applicable to
RxElite;
|
| 5.4.2 |
Conflict
with, result in a breach or violation of, or constitute a default
under,
or result in a contractual right to cause the termination or cancellation
of or loss of a benefit under, or right to accelerate, any agreement,
contract or other instrument binding upon RxElite or license, franchise,
permit or other similar authorization held by RxElite;
or
|
| 5.4.3 |
Result
in the creation or imposition of any Encumbrance on any of
the Shares.
|
| 5.5 |
SEC
Documents; Other Information.
RxElite has timely filed all reports, schedules, forms, statements
and
other documents required to be filed by it with the US Securities
and
Exchange Commission (“SEC”)
and with similar State agencies pursuant to the reporting requirements
of
the 1934 Act and applicable State laws (all of the foregoing filed
prior
to the date hereof, and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by
reference
therein being hereinafter referred to as the "SEC
Documents").
Except as modified by subsequent filings, as of their respective
dates,
the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC
Documents,
at the time they were filed with the SEC, contained any untrue
statement
of a material fact or omitted to state a material fact required
to be
stated therein or necessary in order to make the statements therein,
in
the light of the circumstances under which they were made, not
misleading.
|
| 5.6 |
Subsidiaries.
Other than RxElite Holdings, Inc., RxElite does not own directly
or
indirectly, any capital stock, equity interest or other ownership
interest
in any corporation, partnership, association, joint venture, limited
liability company or other entity.
|
| 5.7 |
Financial
Statements.
The Financial Statements and complementary information contained
and
referenced in the RxElite 10-QSB report for the quarter ending
on
September 30, 2007 (Collectively, the “Financial
Statements”)
have been previously delivered to ▇▇▇▇▇▇. The Financial Statements
were
prepared in accordance with Generally Accepted Accounting Principles
in
the US (“GAAP”)
applied on a consistent basis. The Financial Statements fairly
present the
financial position of RxElite as of the date thereof and its results
of
operations for the period then ended.
|
| 5.8 |
Absence
of Certain Changes.
Since September 30, 2007, to the knowledge of RxElite, except
as set forth in Schedule
5.8
and except
as disclosed on the Financial Statements, there has not been any
Material
Adverse Effect applicable to RxElite or the Common Stock, or any
event,
occurrence, development or state of circumstances or facts which
as of the
date hereof could reasonably be expected to have a Material Adverse
Effect
on RxElite or the Common Stock.
|
5
| 5.9 |
Stock.
Prior to the Closing, the authorized capital stock of RxElite consists
of
1,000,000 shares of Preferred Stock par value $0.001 each, of which
as of
the date hereof, none are issued and outstanding, and 200,000,000
shares
of Common Stock par value $0.001 each, of
which:
|
| 5.9.1 |
96,682,920
shares have been duly issued and are outstanding;
|
| 5.9.2 |
38,014,328
shares are reserved for issuance upon full exercise of warrants;
|
| 5.9.3 |
9,323,388
shares are reserved for issuance upon conversion of a convertible
note;
|
| 5.9.4 |
3,102,850
shares are reserved for issuance upon exercise of options previously
allocated under the RxElite Incentive Stock Option Plan (“ISOP”);
|
| 5.9.5 |
11,771,033
additional shares are reserved for issuance upon allocation and
exercise
of as yet un-allocated options under the ISOP;
|
| 5.9.6 |
All
of such outstanding shares have been validly issued, and ISOP was
duly
adopted. All resolutions regarding the issuance of securities (including
warrants and options) were duly adopted and carried
out.
|
Except
as
set forth above, at the date hereof (i) there are no outstanding rights
to
subscribe to any shares of capital stock of RxElite, (ii) there are no
securities or rights convertible into, or exercisable or exchangeable
for,
shares of capital stock of RxElite, (iii) there are no contracts, commitments,
understandings or arrangements by which RxElite is or may become bound
to issue
additional shares of its capital stock; (iv) there are no securities
or
instruments which grant to their holders rights or privileges superior
to those
attached to the Shares.
| 5.10 |
Intellectual
Property. RxElite
owns all right, title and interest in and to or is duly licensed
to use or
may freely use, all of the Intellectual Property presently
used in the
operation of its business as it is conducted or as expected
to be
conducted on the Closing Date, but excluding “off the shelf” licenses
pursuant to which such Intellectual Property is made available
through
regular commercial distribution channels on standard terms
and conditions.
To the knowledge of RxElite, there is no other item of Intellectual
Property that is necessary for the conduct of RxElite business
as
presently operated or as expected to be operated as of the
Closing Date.
To the knowledge of RxElite, the operation of its business
does not
interfere with, infringe, misappropriate or otherwise violate
or misuse
any Intellectual Property of any third party (“Third
Party Intellectual Property Assets”).
|
| 5.11 |
Licenses
and Permits.
RxElite holds all governmental licenses, permits, authorizations,
consents
and approvals that are necessary or useful for the conduct of its
business. All such Permits are valid and in full force and effect,
will
not be terminated or impaired or become terminable as a result
of the
transaction contemplated hereby and are sufficient for the operation
of
the business of RxElite as presently conducted or as expected to
be
conducted after the Closing Date.
|
| 5.12 |
Environmental
Matters.
Without in any manner limiting any other representation
or warranty set
forth in this Agreement with
respect to premises and facilities used or operated by
RxElite (each a
“Business
Facility”),
to the knowledge of RxElite, RxElite is in compliance with,
and has no
liability under any applicable environmental law.
|
| 5.13 |
Tax
Matters. RxElite
has timely filed (taking into account any applicable extensions)
all
applicable Tax Returns and reports for all years and periods
for which
such returns and reports were due to be filed by it prior to
the Closing
Date. To the knowledge of RxElite, each of such Tax Returns
as
filed was correct and complete.
|
6
|
With
the exception of a 2004 Audit, RxElite
is
not currently the subject of an audit, other examination, matter
in
controversy, proposed adjustment, refund litigation or other proceeding
with respect to Taxes by the federal and state Tax authorities
of the US,
nor has RxElite
received any notices from any Tax authority relating to any such
issue or
potential issue.
|
|
There
are no liens for Taxes upon any
assets or properties of RxElite,
except for statutory liens for current Taxes not yet due. RxElite
has not, as of the date hereof, entered into an agreement or waiver
extending any statute of limitations relating to the payment or
collection
of Taxes.
|
|
RxElite
has timely paid all Taxes and Tax liabilities in respect of periods
prior
to the date hereof and, to the knowledge of RxElite, has accrued
on its
Financial Statements an amount necessary to pay in full all unpaid
Taxes.
To its knowledge, RxElite
has complied with all applicable Tax Laws.
|
|
To
its knowledge, all
Taxes that RxElite is or was required to withhold have been duly
withheld
and, to the extent required, have been paid to the proper Governmental
Authority.
|
| 5.14 |
Compliance
with Laws; No Defaults.
To
its knowledge, RxElite is not (i) in violation of any statute,
law, rule
or regulation or any judgment, order, writ, injunction or decree
of any
court or Governmental Authority to which RxElite is subject, or
(ii)
subject to any claim asserted by any Governmental Authority that
RxElite
is in violation of any Legal
Requirement.
|
|
To
its
knowledge, as of the date hereof, RxElite is not in default under,
and no
condition exists that with notice or lapse of time or both would
constitute a default under, any contract or other instrument
binding upon
RxElite or affecting or relating to its business or any license,
authorization, permit, consent or approval held by RxElite or
affecting or
relating to its business, except as otherwise disclosed in this
Agreement
or in Schedules attached
hereto.
|
| 5.15 |
Legal
Proceedings.
There is no order in which relief is sought involving, affecting,
or
relating to RxElite or its business or the ownership, operation
or use by
RxElite of any of its assets or that would prevent, delay or make
illegal
the transaction contemplated by this Agreement, and there is no
litigation, action, suit, proceeding or governmental investigation
pending
or, to RxElite’s knowledge, threatened against (orally or in writing),
involving, affecting or relating to RxElite, the Common Stock or
the
transaction contemplated by this Agreement.
|
| 5.16 |
No
Undisclosed Liabilities.
RxElite is not aware of any liabilities, except for: (i) liabilities
reflected or reserved against in the Financial Statements, (ii)
current
liabilities incurred in the Ordinary Course of Business of RxElite
since
the date of the Financial Statements, (iii) liabilities arising
from
RxElite’s contracts, and (iv) liabilities imposed by applicable law.
|
| 5.17 |
Compliance
With The Foreign Corrupt Practices Act And Export Control And Antiboycott
Laws.
RxElite shall comply fully with all laws, rules, and regulations
applicable to it and the performance of its obligations under this
Agreement, including laws and regulations dealing with payments,
gifts,
and gratuities.
|
7
|
RxElite
has at all times been in compliance with all Legal Requirements
applicable
to it, relating to export control and trade embargoes. No product
sold or
service provided by RxElite during the last five (5) years has
been,
directly or indirectly, sold to or performed on behalf of Cuba,
Iraq,
Iran, Libya or North Korea.
|
|
RxElite
has not violated the antiboycott prohibitions applicable to it.
During the
last five (5) years, RxElite has not been a party to, is not a
beneficiary
under and has not performed any service or sold any product under
any
contract under which a product has been sold to customers in Cuba,
Iraq,
Iran, Libya or North Korea.
|
| 5.18 |
Books
and Records.
The books of account, stock record books, and other records of
RxElite,
are complete and correct and have been maintained in accordance
with sound
business practices. At the Closing, all of those books and records
will be
in the possession of RxElite.
Upon request, RxElite will make available to ▇▇▇▇▇▇ such books
and
records.
|
| 5.19 |
Accuracy
of Information Furnished. To
the knowledge of RxElite, no
representation, statement or information contained in this Agreement
(including the various Schedules and Exhibits attached hereto)
or any
agreement executed in connection herewith or in any certificate
or other
document delivered pursuant hereto or thereto or made or furnished
to
▇▇▇▇▇▇ or his representatives by RxElite, contains or shall contain
any
untrue statement of a material fact or omits or shall omit any
material
fact necessary to make the information contained herein and therein
not
misleading. At the request of ▇▇▇▇▇▇, RxElite will provide to
▇▇▇▇▇▇ true,
accurate and complete copies of the documents listed or described
in the
various Schedules attached
hereto.
|
| 6. |
Representations
and Warranties of
▇▇▇▇▇▇
|
|
▇▇▇▇▇▇
hereby
represents and warrants to RxElite as of the date hereof and
as of the
Closing Date (unless another date is expressly set forth below)
that
the
representations and warranties set forth in this Article 6 below
are and
will be accurate, true and complete.
|
| 6.1 |
Non-Contravention.
The execution, delivery and performance by ▇▇▇▇▇▇ of this Agreement,
and
the consummation of the transactions contemplated hereby do not
and will
not contravene, violate or conflict with, or constitute a violation
of,
any provision of any contract or undertaking binding upon
▇▇▇▇▇▇.
|
| 6.2 |
Enforcement.
This Agreement constitutes the valid and legally binding obligation
of
▇▇▇▇▇▇, enforceable against him in accordance with its terms, except
as
such enforceability may be limited by laws governing bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
other
similar laws, without limitation, relating to or affecting creditors’
rights generally.
|
| 6.3 |
No
Promise.
▇▇▇▇▇▇ confirms that there is no promise or guarantee by RxElite
or
anybody on its behalf as to the technical or commercial success
of RxElite
or as to the future value and/or marketability of its Common Stock,
and
there is no assurance or guarantee that forward-looking plans or
projections, or planned products, will materialize or achieve the
projected or expected results.
|
| 7. |
Closing
|
| 7.1 |
The
closing of the transactions contemplated by this Agreement (the
“Closing”)
shall occur at such time and place as the parties mutually agree
in good
faith. The date on which the Closing occurs is referred to in this
Agreement as the “Closing
Date.”
The Closing may take place by delivery and exchange of documents
by
facsimile or electronic mail with originals to follow by overnight
courier.
|
8
| 7.2 |
At
the Closing, RxElite shall deliver to ▇▇▇▇▇▇: (i) a certificate
representing the Shares; (ii) a certificate of the Secretary or
Assistant
Secretary of RxElite, certifying as to (a) the certificate of
incorporation and the bylaws (or similar organizational documents)
of
RxElite, (b) the incumbency of all officers of RxElite executing
this
Agreement and any agreement executed in connection herewith, and
(c) the
resolutions of the RxElite Board authorizing the execution, delivery
and
performance by RxElite of this Agreement and the transactions contemplated
hereby; and (iii) an opinion of counsel to
RxElite.
|
| 8. |
Certain
Covenants
|
| 8.1 |
Conduct
Of Business.
The business of RxElite shall not be conducted in violation of
any law,
ordinance or regulation of any governmental entity, except where
such
violations would not result, either individually or in the aggregate,
in a
Material Adverse Effect.
|
| 8.2 |
SEC
Compliance.
RxElite shall use best efforts to ensure that the quotation of
the Common
Stock on the OTC shall not be suspended or revoked by the SEC or
the
OTC.
|
| 8.3 |
Reports.
RxElite shall always be current in its public reporting obligations
pursuant to applicable United States federal and State securities
laws,
regulations and rules.
|
| 8.4 |
On-going
Updates.
RxElite will give ▇▇▇▇▇▇ prompt written notice of any material
adverse
development causing a breach of any of its representations and
warranties
under this Agreement.
|
| 9. |
Indemnification
|
| 9.1 |
Indemnification
by the RxElite.
RxElite hereby agrees to indemnify, defend and hold ▇▇▇▇▇▇ harmless
from
and against any losses, liabilities, claims, obligations, damages
(including diminution in value), strict liability, Environmental
Responsibility, fines, penalties, assessments, deficiencies, actions,
causes of action, arbitrations, proceedings, remediations, judgments,
settlements, violations or alleged violations of law, costs and
expenses
(including reasonable attorneys’ fees and all other expenses incurred in
investigating, preparing, or defending any litigation or proceeding,
commenced or threatened) (collectively, “▇▇▇▇▇▇
Damages”)
arising out of or resulting from:
|
| (a) |
a
breach of any representation or warranty RxElite has made in this
Agreement;
|
| (b) |
a
breach by RxElite of any of its covenants or obligations in this
Agreement; and
|
| (c) |
any
allegation by a third party of any of the
foregoing.
|
|
RxElite
will not be liable for indemnification arising under this Section
for any
▇▇▇▇▇▇ Damages unless the aggregate amount of such Damages for
which
RxElite would be liable exceeds $50,000, in which case RxElite
will be
liable for all ▇▇▇▇▇▇ Damages incurred by ▇▇▇▇▇▇ including such
$50,000,
up to the maximum liability amount as set forth
below.
|
9
|
The
maximum indemnification liability of RxElite (whether arising in
law or
equity, in contract, tort or any other theory of law) towards ▇▇▇▇▇▇
for
any ▇▇▇▇▇▇ Damages giving rise to such indemnification, shall not
exceed
an aggregate amount (for all ▇▇▇▇▇▇ Damages) of US$620,000 (six
hundred
and twenty thousand US Dollars); and ▇▇▇▇▇▇ hereby waives any excess
amounts of ▇▇▇▇▇▇ Damages. Furthermore, no claim for indemnification
may
be made after expiration of the survival period as per Section
10.1 below
(18 months following the Closing Date). The aforesaid limited liability
constitutes the sole and exclusive remedy for ▇▇▇▇▇▇ for any breach
by
RxElite of any and all representations, warranties and covenants
under and
arising from this Agreement. The aforesaid limitations shall not
apply in
the case of fraud or intentional misrepresentation by RxElite,
and shall
not apply to breach of the obligation to issue to ▇▇▇▇▇▇ the Shares
as set
forth in this Agreement.
|
| 9.2 |
Indemnification
by ▇▇▇▇▇▇.
▇▇▇▇▇▇ hereby agrees to indemnify, defend and hold RxElite harmless
from
and against any losses, liabilities, claims, obligations, damages
(including diminution in value), strict liability, fines, penalties,
assessments, deficiencies, actions, causes of action, arbitrations,
proceedings, remediations, judgments, settlements, violations
or alleged
violations of law, costs and expenses (including reasonable attorneys’
fees and all other expenses incurred in investigating, preparing,
or
defending any litigation or proceeding, commenced or threatened)
(collectively, “RxElite
Damages”)
arising out of or resulting
from:
|
| (a) |
any
breach of any representation or warranty ▇▇▇▇▇▇ has made in this
Agreement;
|
| (b) |
any
breach by ▇▇▇▇▇▇ of its covenants or obligations in this Agreement;
and
|
| (c) |
any
allegation by a third party of any of the foregoing.
|
|
The
maximum indemnification liability of ▇▇▇▇▇▇ (whether arising in
law or
equity, in contract, tort or any other theory of law) towards RxElite
for
any RxElite Damages giving rise to such indemnification, shall
not exceed
an aggregate amount (for all RxElite Damages) of US$620,000 (six
hundred
and twenty thousand US Dollars); and RxElite hereby waives any
excess
amounts of RxElite Damages. Furthermore, no claim for indemnification
may
be made after expiration of the survival period as per Section
10.1 below
(18 months following the Closing Date). The aforesaid limited liability
constitutes the sole and exclusive remedy for RxElite for any breach
by
▇▇▇▇▇▇ of any and all representations, warranties and covenants
under and
arising from this Agreement. The aforesaid limitations shall not
apply in
the case of fraud or intentional misrepresentation by ▇▇▇▇▇▇.
|
| 9.3 |
Indemnification
Procedure for Third-Party Claims.
Promptly after receipt by a party entitled to indemnification
hereunder
(the “Indemnified
Party”)
of written notice of the institution of any legal proceeding,
or of any
claim or demand, asserted by a third party (a “Third
Party Claim”)
against the Indemnified Party with respect to which a claim for
indemnification is to be made pursuant to Section 9.1 or 9.2
herein, the
Indemnified Party shall give written notice to the other party
(the
“Indemnifying
Party”)
of such Third Party Claim. The Indemnifying Party shall be entitled
to
participate in and to assume the defense of such Third Party
Claim with
counsel reasonably satisfactory to the Indemnified Party, and
after notice
from the Indemnifying Party to such Indemnified Party of such
assumption
of defense, and provided that the Indemnifying Party continues
to
diligently pursue such defense, the Indemnifying Party shall
not be liable
to such Indemnified Party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof.
Notwithstanding the foregoing, an Indemnified Party shall in
all cases be
entitled to control its defense, including the selection of separate
counsel (at the cost and expense of the Indemnifying Party),
of any Third
Party Claim if such claim: (i) may result in injunctions or other
equitable remedies in respect of the Indemnified Party which
would affect
its business or operations in any materially adverse manner;
(ii) may
result in material liabilities which may not be fully indemnified
hereunder; (iii) may have a significant adverse impact on the
business or
the financial condition of the Indemnified Party (including a
Material
Adverse Effect on the tax liabilities, earnings or ongoing business
relationships of the Indemnified Party) even if the Indemnifying
Party
pays all indemnification amounts in full or (iv) the anticipated
defendants in any such situation, proceeding or action include
both the
Indemnified Party and the Indemnifying Party, and the Indemnified
Party
shall have reasonably concluded that there may be legal defenses
available
to it which are different from, additional to or inconsistent
with those
available to the Indemnifying Party. No Indemnifying Party will
enter into
any settlement with respect to such Third Party Claim without
the prior
written consent of the Indemnified Party unless such settlement
(a)
requires solely the payment of money damages by the Indemnifying
Party and
(b) includes as an unconditional term thereof the release by
the claimant
or the plaintiff of the Indemnified Party and the persons for
whom the
Indemnified Party is acting or who are acting on behalf of the
Indemnified
Party from all liability in respect of the proceeding giving
rise to the
Third Party Claim.
|
10
| 9.4 |
Limitations
on Indemnification.
Without prejudice to the limitation provisions of Sections 9.1
and 9.2
above, and except in the case of actual fraud by a party hereto,
no party
shall be liable under this Agreement for special, punitive, exemplary,
consequential, or indirect damages, or lost profits, whether
based on
contract, tort, strict liability, other Laws or otherwise, and
whether or
not arising from the other party’s sole, joint or concurrent negligence,
strict liability or other
fault.
|
| 10. |
Miscellaneous
|
| 10.1 |
Survival.
The representations and warranties of the parties contained in
this
Agreement shall survive the Closing for a period of eighteen (18)
months
after the Closing Date.
|
| 10.2 |
Notices.
All notices, requests and other communications to either party
hereunder
shall be in writing (including facsimile, telecopy or similar writing)
and
shall be deemed given when
delivered:
|
|
If
to RxEliste, to:
|
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, CEO and President
|
|
|
RxElite
Inc.
|
|
|
1404
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
|
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
with
a copy (which shall not constitute notice) to:
|
|
|
▇▇▇▇▇▇
and ▇▇▇▇▇, L.L.P.
|
|
|
152
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
|
|
|
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇
|
|
|
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
|
|
|
Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
11
|
If
to ▇▇▇▇▇▇, to:
|
|
|
▇▇.
▇▇▇▇ ▇▇▇▇▇▇
|
|
|
33
N▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇
|
|
|
Telecopier:
▇▇▇▇-▇-▇▇▇▇▇▇▇
|
|
|
Telephone:
▇▇▇▇-▇▇-▇▇▇▇▇▇▇▇
|
|
|
with
a copy (which shall not constitute notice) to:
|
|
|
Primes,
Shiloh, ▇▇▇▇▇ ▇▇▇▇ - Law Firm
|
|
|
16,
▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇ ▇▇▇▇)
|
|
|
▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇
|
|
|
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇, Adv.
|
|
|
Telecopier:
▇▇▇▇-▇-▇▇▇▇▇▇▇
|
|
|
Telephone:
▇▇▇▇-▇-▇▇▇▇▇▇▇
|
|
|
Each
of the above persons may change their address or facsimile number
or
telephone number by notice to the other persons in the manner set
forth
above.
|
| 10.3 |
Amendments;
No Waivers.
Any provision of this Agreement may be amended or waived if, and
only if,
such amendment or waiver is in writing and signed, in the case
of an
amendment, by RxElite and ▇▇▇▇▇▇, or in the case of a waiver, by
the party
against whom the waiver is to be effective. No failure or delay
by any
party in exercising any right, power or privilege hereunder shall
operate
as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the existence
of any
other right, power or privilege. The rights and remedies herein
provided
shall be cumulative and not exclusive of any rights or remedies
provided
by law.
|
| 10.4 |
Expenses.
Except as otherwise provided herein, all costs and expenses incurred
in
connection with this Agreement shall be paid by RxElite or ▇▇▇▇▇▇,
depending on which such party incurred or directed the incurrence
of such
cost or expense.
|
| 10.5 |
Successors
and Assigns.
The provisions of this Agreement shall be binding upon and shall
inure to
the benefit of the parties hereto and their respective successors
and
permitted assigns. No party to this Agreement may assign, delegate
or
otherwise transfer any of its rights or obligations under this
Agreement
without the prior written consent of the other party hereto. Neither
this
Agreement nor any provision hereof is intended to confer upon any
person
other than the parties hereto any rights or remedies hereunder.
|
| 10.6 |
Governing
Law.
This Agreement shall be governed by, and construed and enforced
in
accordance with, the laws of the State of New York without regard
to any
provision thereof that would require the application of the law
of any
other jurisdiction.
Each party hereby submits to the exclusive jurisdiction of the
courts of
the State of New York, sitting in New York City.
|
| 10.7 |
Specific
Performance.
Each of the parties acknowledges and agrees that the other party
would be
damaged irreparably in the event any of the provisions of this
Agreement
are not performed in accordance with their specific terms or otherwise
are
breached. Accordingly, each of the parties agrees that the other
party
shall be entitled to an injunction or injunctions to prevent breaches
of
the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof, in addition to any
other
remedy to which it may be entitled, at law or in equity.
|
12
| 10.8 |
Counterparts.
Effectiveness.
This Agreement may be signed in any number of counterparts, each
of which
shall be an original, with the same effect as if the signatures
thereto
and hereto were upon the same instrument. Facsimile copies of signature
pages shall have the same legal effect as signed originals. This
Agreement
shall become effective when each party hereto shall have received
a
counterpart hereof signed by the other party hereto.
|
| 10.9 |
Entire
Agreement.
This Agreement, the Schedules and Exhibits hereto, and any other
documents
referred to herein constitute the entire agreement between the
parties
with respect to the subject matter hereof and supersede all prior
agreements, understandings and negotiations, both written and oral,
between the parties with respect thereto. No representation, inducement,
promise, understanding, condition or warranty not set forth herein
has
been made or relied upon by either party hereto.
|
| 10.10 |
Construction.
The parties have participated jointly in the negotiation and
drafting of
this Agreement. In the event an ambiguity or question of intent
or
interpretation arises, this Agreement shall be construed as if
drafted
jointly by the parties and no presumption or burden of proof
shall arise
favoring or disfavoring any party by virtue of the authorship
of any of
the provisions of this Agreement. The following rules of construction
shall apply to this
Agreement:
|
| (a) |
Any
reference to any federal, state, provincial or local statute or
law shall
be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
|
| (b) |
All
uses of “include,” “including” or words or phrases of similar import shall
be deemed to be followed by “without limitation.”
|
| (c) |
The
headings and titles herein are for convenience only and shall have
no
significance in the interpretation hereof.
|
| (d) |
Unless
otherwise provided, all references in this Agreement to “Articles” and
“Sections” are to articles and sections of this Agreement; and all
references to “Exhibits”, “Schedules” or “Annexes” are to exhibits,
schedules or annexes attached to this Agreement, each of which
is made a
part of this Agreement for all purposes.
|
| (e) |
Unless
the context otherwise requires, the words “this Agreement,” “hereof,”
“hereunder,” “herein,” “hereby” or words or phrases of similar import
shall refer to this Agreement as a whole and not to a particular
Article,
Section, subsection, clause or other subdivision hereof.
|
| (f) |
Capitalized
terms that are defined herein shall have the specified meaning
ascribed to
them in this Agreement regardless of whether any usage appears
before or
after the place where a term is
defined.
|
| (g) |
Terms
defined in the singular shall have the corresponding meaning when
used in
the plural and vice versa. Any definition of one part of speech
of a word,
such as definition of the noun form of that word, shall have a
comparable
or corresponding meaning when used as a different part of speech,
such as
the verb form of that word.
|
| (h) |
Unless
the context otherwise requires, references to agreements shall
be deemed
to mean and include such agreements as the same may be amended,
supplemented and otherwise modified from time to time, and references
to
parties to agreements shall be deemed to include the permitted
successors
and assigns of such parties.
|
13
| (i) |
Where
the character or amount of any asset or liability or item of income
or
expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes
of this
Agreement, the same shall be done in accordance with generally
accepted
accounting principles in the United States, except where such principles
are inconsistent with the specific provisions of this Agreement
or any
applicable law.
|
|
10.11
|
Severability.
Any part of this Agreement which is found to be void, invalid,
illegal or
unenforceable, shall be severed from this Agreement and ineffective
to the
extent of that voidness, invalidity, illegality or unenforceability.
Such
voidness, invalidity, illegality or unenforceability will not invalidate,
affect or impair the remaining provisions of this Agreement. If
a court of
competent jurisdiction determines that the terms in respect of
which
covenants in this Agreement are to be entered are unreasonable
or
unenforceable for any reason, then this Agreement shall be reread
and
construed with such terms, as may be applicable, as determined
to be
reasonable by a court of competent jurisdiction and the Agreement
shall be
amended and construed accordingly
hereby.
|
|
10.12
|
Certain
Definitions
|
“Encumbrances”
means
any mortgages, pledges, liens, encumbrances, charges or other security
interests.
“Governmental
Authority”
means
any nation, province, state, county, municipality or any other political
subdivision of any of the foregoing, including (A) any court, governmental
department, tribunal, arbitrator or panel of arbitrators, authority,
agency,
body, board, bureau, commission, official or other instrumentality
of the United
States of America or any nation, state, province, county, city or other
political subdivision or similar governing entity, (B) any person or
entity
exercising executive, legislative, regulatory, judicial or administrative
functions and (C) any governmental, quasi-governmental or non-governmental
body
(whether executive, legislative, judicial or administrative) administering,
regulating or having general oversight over the business of
RxElite.
“Intellectual
Property”
or
“Intellectual
Property Assets”
means
all software, inventions, art works, patents, patent applications, processes,
shop rights, formulas, brand names, trade secrets, know-how, service
marks,
trade names, trademarks, trademark applications, copyrights, source and
object
codes, customer lists, drawings, ideas, algorithms, processes, computer
software
programs or applications (in code and object code form), tangible or
intangible
proprietary information and any other intellectual property and similar
items
and related rights owned by or licensed to RxElite or used in its business,
together with any goodwill associated therewith and all rights of action
on
account of past, present and future unauthorized use or infringement
thereof.
“Lease”
shall
mean any lease or rental agreement pertaining to the occupancy by RxElite
or the
use by RxElite of any space on any Real Property.
“Legal
Requirement”
shall
mean any national, federal, state, local, municipal, foreign, international,
multinational or other constitution, law, ordinance, principle of
common law,
code, regulation, statute or treaty or decision or order of any applicable
Governmental Authority.
14
“Liabilities”
shall
mean with respect to any Person, any liability or obligation of such
Person that
is required to be accrued on the financial statements of such
Person.
“Losses”
means
all damage, loss, liability and expense, including, without limitation,
penalties, interest, reasonable expenses of investigation and reasonable
attorneys’ fees and expenses in connection with any action, suit or proceeding
incurred or suffered by any of the Indemnified Parties arising out of
any breach
of any representation or warranty, covenant or agreement made or to be
performed
by Indemnifying Parties pursuant to this Agreement.
“Material
Adverse Effect”
with
respect to any Person shall mean any change or effect (or any development
that,
insofar as can reasonably be foreseen, could reasonably be expected to
result in
any change or effect) that could reasonably be expected to be materially
adverse
to the business, properties, assets, condition (financial or otherwise),
results
of operations or prospects of that person and its subsidiaries, taken
as a whole
and without limiting the foregoing, such term shall in any case mean
an effect
or change that adversely affects or impairs the value, ownership or operation
of
any asset by, or creates a liability for, an amount greater than
$100,000.
“Ordinary
Course of Business”
means
an action taken by a Person will be deemed to have been taken in the
Ordinary
Course of Business only if that action:
|
(a)
|
is
consistent in nature, scope and magnitude with the past practices
of such
Person and is taken in the ordinary course of the normal, day-to-day
operations of such Person;
|
|
(b)
|
does
not require authorization by the board of directors or shareholders
of
such Person (or by any Person or group of Persons exercising similar
authority) and does not require any other separate or special
authorization of any nature; and
|
|
(c)
|
is
similar in nature, scope and magnitude to actions customarily taken,
without any separate or special authorization, in the ordinary
course of
the normal, day-to-day operations of other Persons that are in
the same
line of business as such Person.
|
“Permits”
shall
mean all governmental
licenses, permits, authorizations, consents or approvals affecting, or
relating
in any way to, the RxElite or its business.
“Permitted
Encumbrances”
shall
mean:
|
a)
|
liens
for taxes, assessments and governmental charges due and being contested
in
good faith and diligently by appropriate
proceedings.
|
|
b)
|
servitudes,
easements, restrictions, rights-of-way and other similar rights
in real
property or any interest therein which are covered by title
insurance;
|
|
c)
|
liens
for taxes either not due and payable or due but for which notice
of
assessment has not been given; and
|
|
d)
|
undetermined
or inchoate liens, charges and privileges incidental to current
construction or current operations and statutory liens, charges,
adverse
claims, security interests or encumbrances of any nature whatsoever
claimed or held by any Governmental Authority that have not at
the time
been filed or registered against the title to the asset or served
upon
RxElite pursuant to law or that relate to obligations not due or
delinquent.
|
15
“Person”
means
an individual or a corporation, company, limited liability company, sole
proprietorship, joint venture, partnership, trust, estate, unincorporated
organization, association, or other entity.
“Real
Property”
shall
mean all real property controlled by RxElite.
“Records”
shall
mean information that is inscribed on a tangible medium or that
is stored in an
electronic or other medium and is retrievable in perceivable
form.
“Subsidiary”
shall
mean any Person which is owned or controlled by
RxElite.
“Tax”
or
“Taxes”
means
any
national, federal, state, provincial, local or foreign income, gross
receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability,
real
property, personal property, sales, use, transfer, registration, value
added,
alternative minimum or other tax of any kind whatsoever, including without
limitation, any interest, penalty or addition thereto, whether disputed
or
not.
“Tax
Return”
means
any
return, declaration, report, claim for refund or information return or
statement
relating to Taxes, including without limitation, any schedule or attachment
thereto, and including, without limitation, any amendment
thereof.
[signature
page follows]
16
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers effective as of the day
and
year first above written but executed on the dates set forth below.
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RxELITE
Inc.
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By:
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Its
Authorized Officers
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▇▇.
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Schedule
5.8
1.
▇▇▇▇▇▇▇ Convertibel Debt Agreement entered into December 31, 2007.