EXHIBIT 2.1
CONFIDENTIAL TREATMENT REQUESTED
The symbol "[***]" is used throughout this exhibit to indicate that a portion of
the exhibit has been omitted and filed separately with the Securities and
Exchange Commission.
PURCHASE AGREEMENT
AGREEMENT ("Agreement") made this 14th day of April 2003 between Human
Pheromone Sciences, Inc., with offices located at 84 West Santa Clara Street,
Suite 720, San Jose, California 95113 ("HPSI" or the "Seller") and Niche
Marketing Group, Inc., with offices located at 35 Engel Street, Hicksville, New
York 11801 ("NICHE" or the "Buyer") (collectively referred to as the "Parties").
RECITALS
A. WHEREAS, HPSI is the owner, licensor and distributor of REALM(R) and
innerREALM(R) product lines worldwide;
B. WHEREAS, NICHE currently is licensed by HPSI to produce, promote,
advertise and sell REALM(R) and innerREALM(R) fragrances and toiletry products,
line extensions and new products in various identified Territories as more
particularly set forth in the LICENSE PURCHASE AGREEMENT between HPSI and NICHE
dated April 24, 2000, AMENDMENT TO LICENSE PURCHASE AGREEMENT dated June 23,
2000 and AMENDMENT TO LICENSE PURCHASE AGREEMENT, dated March 8, 2002
(collectively, "LPA");
C. WHEREAS, HPSI has, notwithstanding the LPA with NICHE retained sole
and exclusive rights to market, produce, promote, advertise and sell REALM(R)
and innerREALM(R) fragrances and toiletry products, line extensions and all new
products in the "Excluded Territories" as set forth in the LPA;
D. WHEREAS, NICHE is desirous of acquiring the assets and worldwide
ownership rights of HPSI in and to the REALM(R) and innerREALM(R) product lines
(the "Brands") including the associated trademarks, trade names, and trade dress
and all goodwill associated therewith, copyrights, fragrance solution technical
information, manufacturing and production techniques, fragrance formulas,
inventories, customer information, distributor agreements, and certain trade
secrets relating to the goods in the REALM(R) and innerREALM(R) product lines;
E. WHEREAS, NICHE is further desirous of acquiring conditional
permission of Seller to arrange for the manufacture of pheromones, an ingredient
used and identified with the product lines in the event Seller is unable to
timely do so without acquiring or compromising any proprietary rights or trade
secrets of HPSI relating to pheromone production technology, formulas, blending
or manufacturing techniques; and HPSI is willing to permit such manufacture
while at all times retaining ownership of such rights and secrets;
F. WHEREAS, HPSI desires to sell and transfer to NICHE the assets and
worldwide ownership rights of HPSI in and to the REALM(R) and innerREALM(R)
product lines (the "Brands") including the associated trademarks, trade names,
and trade dress and all goodwill associated therewith; copyrights, fragrance
solution technical information, manufacturing and production techniques,
fragrance formulas; inventories, customer information, distributor agreements,
and certain trade secrets relating to the goods in the REALM(R) and
innerREALM(R) product lines.
WHEREFORE, the Parties agree as follows:
1. Sale of Assets. Seller agrees to sell and Buyer agrees to buy from
Seller, the REALM(R) and innerREALM(R) product lines and all of Seller's right,
title and interest in the assets necessary to manufacture, distribute and sell
such product lines except as specified in Paragraph 7 hereto with respect to the
pheromones (collectively, the "Business") on a worldwide basis for an amount of
$1,886,000 (the "Purchase Price"), of which $420,000 previously was paid to
Seller by the Buyer as a prepaid royalty under the License Purchase Agreement
dated April 24, 2000, and the balance of the $1,466,000 as follows:
(a) $1,280,000 upon signing of this Agreement ("Closing
Date"); and
(b) $186,000, in equal monthly payments of $31,000 each
over a six-month period, commencing on the first day
of the first month following the execution of this
Agreement.
Included in such sale are all trademarks, trade names and trade dress associated
with the Business and all goodwill associated therewith; all copyrights in and
to any materials relating to the Business; the inventory described in Exhibit 3
hereto (the "Additional Inventory") the fragrance solution technical
information, manufacturing and production techniques, certain associated trade
secrets, formulas, blends, know-how, and all other information reasonably
necessary to permit Buyer to manufacture and distribute the REALM(R) and
innerREALM(R) fragrances and toiletry products, except as specified in Paragraph
7 hereto with respect to the pheromones; Seller's customer lists and distributor
information; and the exclusive and worldwide rights to market, produce, promote,
advertise, sell and distribute or have marketed, produced, advertised, sold and
distributed REALM(R) and innerREALM(R) fragrances and toiletry products and any
line extensions in the category covered by the trademarks, providing such line
extensions bear the name REALM in some format in the trademark or trade name.
Also included in such sale is all of Seller's right, title and interest in and
to all tools, dies, molds, graphics, promotional materials, packaging, patterns,
displays, and the mechanicals to all chromes, maps, brochures, kits, and sales
literature that were turned over to Buyer pursuant to the LPA (the "Inventory").
Buyer hereby acknowledges its receipt of the Inventory.
2. Trademarks, Trade Names, Trade Dress and Copyrights. Seller
represents and warrants that: (a) Seller owns all right, title and interest in
and to the trademarks, trade names and trade dress and all goodwill associated
therewith, domain names, and copyrights (collectively, the "IP Rights") in the
countries or territories (the "Territories") identified in Exhibit 1 hereto, (b)
each of the United States trademark registrations of Seller identified in
Exhibit 1 is subsisting and, to Seller's knowledge, has not been adjudged
invalid, unregistrable, or unenforceable, in whole or in part, and is, to
Seller's knowledge, valid, (c) each of the foreign trademark applications and
registrations of Seller identified in Exhibit 1 is subsisting and, to Seller's
knowledge, has not been adjudged invalid, unregistrable, or unenforceable, in
whole or
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in part, and is, to Seller's knowledge, valid, (d) Seller timely has submitted
all filings, fees, and taxes and has taken such other measures as are required
to maintain the validity of each trademark application and registration and the
domain name registration identified in Exhibit 1 through the Closing Date; (e)
Seller has all authority necessary to enter into this Agreement and this
Agreement has been executed by an authorized signatory of Seller, (f) the
execution, delivery, and performance of this Agreement does not and will not
violate any law or any agreement or other instrument to which Seller is a party,
and (g) Seller will execute on the Closing Date a General Intellectual Property
Assignment Agreement of the IP Rights on behalf of the Buyer, substantially in
the form of Exhibit 2 attached hereto.
After the Closing Date, Seller timely and at its own expense will
execute and deliver or have executed and delivered to Buyer any confirmatory
assignment documents required to transfer "record title" to Buyer in all
relevant trademark or copyright offices where IP Rights exist and are identified
on Exhibit 1. It is the responsibility of the Seller to maintain the IP Rights
through the Closing Date and is the responsibility of the Buyer to do so from
the Closing Date forward. Seller represents and warrants that no action must be
taken to maintain the IP rights within ninety (90) days after the Closing Date,
except as set forth in Exhibit 1 hereto. To ensure the continuity of the IP
Rights, the Buyer shall reimburse the Seller for any reasonable costs incurred
by the Seller in connection with meeting any maintenance deadline for the IP
Rights occurring on or after January 1, 2003. Such reimbursement shall be made
at the later of thirty days after the Closing Date or thirty days after the
Seller has invoiced the Buyer.
3. Trade Secrets. Seller represents and warrants that the formulas,
manufacturing and production techniques, and all other know-how needed to
manufacture the REALM(R) and innerREALM(R) fragrances and toiletry products
being transferred are trade secrets and that Seller has taken reasonable
precautions to maintain the secrecy of such trade secrets. Seller further
represents and warrants that said formulas and the use thereof pursuant to the
specifications to be provided to Buyer by Seller under this Agreement do not
infringe the patent or trade secret rights of any third party.
4. Additional Inventory.
4.1 Seller represents and warrants that it is the owner of all
right, title, and interest in and to the Additional Inventory described in
Exhibit 3 hereto, except as explicitly set forth in subparagraph 4.1. Seller
previously pledged the Additional Inventory as collateral under a Revolving
Credit Agreement with Mid-Peninsula Bank ("Bank"). Seller represents and
warrants that simultaneous with the signing of this Agreement, Seller will pay
any and all amounts due and outstanding under such Revolving Credit Agreement
and will take all necessary steps to ensure that the Bank has released all
claims in or to the Additional Inventory prior to the signing of this Agreement.
On the Closing Date, Seller will deposit the Bank's Uniform Commercial Code
releases with Seller's attorney provided that Buyer has wire transferred
immediately available U.S. funds in the amount of not less than $1,280,000 to
Seller's attorney's trust account.
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4.2 Seller will bear the risk of loss, damage or destruction
of the Additional Inventory prior to the execution of this Agreement. Buyer will
bear the risk of loss upon execution of this Agreement.
4.3 Seller shall hold a lien on the Additional Inventory and
the products or proceeds thereof in the amount not to exceed the balance of the
Purchase Price owed by Buyer to Seller, until the Purchase Price is fully paid.
Seller shall not file any financing statement under the Uniform Commercial Code
based on said lien.
4.4 Seller will not charge Buyer for any pheromone components
contained in the Additional Inventory.
5. Open Purchase Orders. Seller warrants that it has no open purchase
orders for goods or services relating to the Business, other than for the
purchase of pheromones. Seller represents and warrants that it is and will
continue to be in compliance with the terms of any agreements with vendors of
pheromones.
6. Inventory not Purchased by Buyer. Annexed hereto as Exhibit 3A is a
list of Seller's remaining inventory that Buyer has elected not to purchase from
Seller (the "Remaining Inventory"). Seller shall have the right to sell the
Remaining Inventory to a third party. However, the Seller shall not have the
right to sell the Remaining Inventory products into the U.S. Department Store
Market. In the event that Seller reaches agreement with a third party to
purchase any or all of the Remaining Inventory , Seller shall give notice to
Buyer of the products, purchase price, terms or conditions of sale pursuant to
Paragraph 21. Buyer shall have one week to exercise a right of first refusal to
purchase such Remaining Inventory from the Seller at the price and upon the
terms and conditions negotiated by the Seller with the proposed unrelated third
party buyer. Buyer shall exercise the right of first refusal by written notice
pursuant to Paragraph 21. Unless otherwise provided for by the sales terms and
conditions, Buyer shall make payment for such product within thirty days of
shipment.
7. Pheromones.
7.1 Ownership of Pheromone Know-How. The final blending
proportions of the pheromones and formulas therefore constitute proprietary
information and remain the sole property of the Seller. Such proprietary
information specifically is not transferred to Buyer. Buyer represents and
warrants that it will not without authorization from Seller attempt to analyze
or reverse engineer human pheromone components nor any blends sold to Buyer for
use in REALM(R) and innerREALM(R) fragrances and toiletry products and any line
extensions containing pheromones provided by HPSI.
7.2 Provision of Pheromone Know-How. On the Closing Date,
Seller shall provide Seller's proprietary information with respect to the final
blending proportions of the pheromones and pheromone solution ingredients but
not the process of how to make the actual pheromones. On the Closing Date,
Seller also shall provide to Buyer a description of Seller's then-present
storage and safety procedures used in connection with the pheromones and
pheromone blends.
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7.3 Escrow of Pheromone Know-How. On the Closing Date, Seller
shall produce to Buyer (a) an executed agreement confirming that there is in
escrow with Ungerer and Tom Malone or another mutually agreed escrow agent a
copy of the current specifications for product formulas, a detailed
specification and description of the pheromone manufacturing processes and
procedures, quality assurance procedures, and the contact information of the two
(2) individuals having the greatest knowledge of how to source, manufacture and
blend the human pheromone components in commercial quantities and (b) an
affidavit executed by an executive of Fermic Laboratory, Inc. attesting that the
escrowed materials accurately reflect all of the information needed to produce
the current human pheromone components used by Seller in connection with the
Brands. Thereafter, Seller shall escrow and provide a similar affidavit with
respect to any material modifications in the information that has been escrowed.
7.4 Sale of Pheromones. With the sole exception of the
pheromone components contained in the Additional Inventory, Seller will sell to
Buyer and Buyer will buy the human pheromone components in the same blend as
currently used by Seller in connection with the Business at a cost not to exceed
$[***] per gram, FOB Seller's facility. Seller will not enter into any
agreement with any vendor that would artificially inflate the price of the
pheromones to the Buyer.
7.5 Supply of Pheromones to Buyer.
7.5.1 This is a requirements contract. Seller shall
use its best efforts to ensure that an adequate supply of pheromones will be
available to Buyer for use in connection with the Business. Since the lead-time
to produce pheromones currently is three months, Buyer will place a Purchase
Order for the pheromones with the Seller at least 90 days prior to the date the
pheromones are needed. Seller represents and warrants that it shall use its best
efforts to obtain pheromones and make them available to Buyer within 90 days'
receipt of a Purchase Order therefore. Buyer understands and acknowledges that
the lead-time to produce pheromones may change from time to time. Should the
lead time for production of pheromones be reasonably anticipated to exceed three
months Seller shall notify Buyer so that Buyer can adjust its purchase
quantities to meet its own product production schedules. Once Seller has
obtained pheromones pursuant to a Purchase Order, it may issue an invoice for
said pheromones to Buyer. Buyer will pay such invoice within thirty (30) days'
receipt thereof. Seller represents and warrants that all amounts shipped to
Buyer will be usable for the period as forecast by the Buyer. Buyer shall have
the obligation to advise Seller in advance of shipment the forecasted period of
use of the pheromones. After Seller has received pheromones pursuant to a
Purchase Order, Seller shall deliver pheromone blends to Buyer or its designee
within ten (10) days' receipt of a request from Buyer for the delivery of such
pheromone blends in quantities as designated by Buyer.
7.5.2 Until Seller receives a delivery request from
Buyer, Seller will hold at its own cost the pheromones that have been purchased
by the Buyer in Seller's facility or a qualified laboratory environment for
safety purposes, and will confirm to Buyer, at
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least quarterly, the quantity of pheromones being held by Seller or its designee
on behalf of the Buyer, the current address where such pheromones are being
held, and the current contact information for the two (2) individuals having the
greatest knowledge of how to source, manufacture and blend the human pheromone
components in commercial quantities. Buyer understands and acknowledges that all
stockpiled human pheromone components will be stored without blending. Seller
represents and warrants that all human pheromone components supplied to Buyer
shall be of uniform quality and that Seller shall use all reasonable care in
storing said components to prevent degradation, contamination or alteration of
the components. Seller shall provide to Buyer with each delivery of pheromones a
quality certificate identifying the pheromones being delivered and the purity of
said pheromones. The purity of all pheromones delivered by Seller to Buyer shall
be no less than 95%.
7.5.3 If Seller is unable to provide pheromones to
Buyer as contemplated in Paragraph 7.5.1 above, Buyer shall have permission to
purchase the pheromones directly from Seller's vendor or a third party supplier.
Seller shall fully cooperate with Buyer in locating a third party supplier(s),
and shall permit such third party supplier(s) to complete Buyer's supply
requirement of pheromones. In such event, the escrowed materials shall be
released to the third party supplier, following the execution of a
confidentiality agreement substantially in the form of Exhibit 7 hereto, solely
for the purpose of manufacturing or blending human pheromone components for sale
to Buyer to produce the Brands. After the first occasion when Buyer obtains
pheromones from a supplier other than Seller pursuant to the terms of this
paragraph 7.5.3, Buyer shall submit its subsequent Purchase Orders for
pheromones to Seller unless and until Seller again is unable to provide
pheromones to Buyer as contemplated in Paragraph 7.5.1 hereto (the "Second
Occasion"). After the Second Occasion, Buyer shall have no obligation to
purchase pheromones from Seller and may in its sole discretion continue to use
another supplier.
7.5.4 Product Line Extensions. In the event that
Buyer wishes to extend its product line to include additional products
containing the pheromones, Buyer shall give Seller a right of first refusal to
supply Buyer with such additional pheromones as it may require as a result of
the product line extension.
7.6 Buyer's Rights if Seller Ceases to Sell Pheromones. In the
event that Seller ceases to sell the human pheromone components, it shall give
Buyer at least 90 days advance written notice. Buyer's rights to obtain an
alternate supplier shall be governed by paragraph 7.5.3 above.
7.7 Insurance Policies to Be Carried With Respect to the
Pheromones and Brands.
7.7.1 Seller represents and warrants that during the
term of this Agreement it will (a) include Buyer as an additional insured on its
Ocean Cargo Insurance Policy No. OC-96105800; (b) include Buyer as an additional
insured on its General Liability Policy No. 57CES0A1673; (c) maintain such
policies or policies having at least the same amount and extent of coverage; (d)
provide written notice to Buyer no less than thirty (30) days prior to the
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effective date of any amendment to or discontinuation of either such policy; and
(e) provide Buyer with evidence of coverage under such policies, such as
certificates of insurance or renewal, on or prior to the Closing Date and within
ten (10) days of each renewal of such policies.
7.7.2 Buyer represents and warrants that during the
term of this Agreement it will (a) include Seller as an additional insured on
its Commercial General Liability Policy No. 12 UEN UJ6325with The Hartford and
Chubb Group excess policy 12UENJ3461; (b) maintain such policies or policies
having at least the same amount and extent of coverage; (c) provide written
notice to Seller no less than thirty (30) days prior to the effective date of
any amendment to or discontinuation of either such policies; and (d) provide
Buyer with evidence of coverage under such policies, such as certificates of
insurance or renewal, on or prior to the Closing Date and within ten (10) days
of each renewal of such policies.
8. Accounts Due from Current REALM and innerREALM Distributors. Amounts
due to the Seller as of the Closing Date based on goods provided by Seller to
its distributors in Southeast Asia are not contained in the assets being sold
under this Agreement and are specifically excluded. Any such accounts receivable
shall remain the property of the Seller and collection is the responsibility of
the Seller. However, if any such distributor does not honor its liability to the
Seller, but continues to purchase REALM(R) and innerREALM(R) fragrances and
toiletry products from Buyer, Buyer will, upon written request from Seller
cooperate with Seller to facilitate the prompt payment by distributor to Seller
unless the distributor is able to offer irrefutable evidence that it does not
owe any such amount to Seller.
9. Representations and Warranties of Seller. In addition to the other
representations and warranties set forth herein and as an inducement to Buyer to
enter into this Agreement and to consummate the transactions contemplated
herein, Seller represents and warrants to Buyer that (a) Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of California, (b) Seller has full power and authority to execute and
deliver and perform this Agreement and (c) the execution, delivery and
performance of this Agreement by Seller have been duly and validly authorized
and approved by Seller's Board of Directors. No other corporate proceedings on
the part of the Seller are necessary to authorize the consummation of the
transactions contemplated by this Agreement.
10. Representations and Warranties of Buyer. In addition to the other
representations and warranties set forth herein and as an inducement to Seller
to enter into this Agreement and to consummate the transactions contemplated
herein, Buyer represents and warrants to Buyer that (a) Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
state of New York, (b) Buyer has full power and authority to execute and deliver
and perform this Agreement and (c) the execution, delivery and performance of
this Agreement by Buyer have been duly and validly authorized and approved by
Buyer's Board of Directors. No other corporate proceedings on the part of the
Buyer are necessary to authorize the consummation of the transactions
contemplated by this Agreement.
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11. Purchase of Products by Seller after the Closing. Seller shall have
the right to purchase REALM(R) and innerREALM(R) fragrances and toiletry
products from the Buyer for its personal needs only (local donations, personal
usage, personal gifts, etc.) and not for resale. Such purchases will be limited
to $1,000 annually, based upon the manufacturer's suggested retail price for the
United States, minus ninety (90) percent. Such products may not be commercially
sold, commercially distributed or repackaged by Seller.
12. Execution of Documents by Seller after Closing. After the Closing
Date, Seller timely and at its own expense will execute and deliver to Buyer any
confirmatory assignments, filings, or such other documents as are reasonably
necessary to permit Buyer to enjoy the rights conferred to Buyer under this
Agreement.
13. Advertising/Claims. In no event may the Buyer under any
circumstances make any direct or indirect pharmaceutical or therapeutic claims
for the Brands (including, without limitation, any claim of affect on bodily
functions or any claim of any biochemical or physiological change) which would
require regulatory approval by the United States Food and Drug Administration,
or equivalent agency outside the United States if it were marketed in the United
States (the "Restricted Claims"). Buyer shall not be liable for Restricted
Claims made without Buyer's authorization or approval by third parties who
purchase the Brands from the Buyer (collectively, the "Purchasers"). Buyer shall
advise Purchasers in writing prior to entering into any transaction with such
Purchasers that the Restricted Claims may not be made. If Buyer learns that any
Purchaser or third party has made or is making any Restricted Claim, it shall
demand in writing that the Purchaser or third party cease and desist from making
such Restricted Claim(s). If the Purchaser fails to comply with Buyer's demand
within sixty (60) days' receipt thereof, Buyer shall terminate any relationship
with the Purchaser pertaining to the Brands. In the event that a claim is made
against Seller or Seller is found liable by reason of Buyer's breach of this
Paragraph 13, Buyer shall indemnify and hold Seller harmless from the
corresponding claims, damages, litigation, judgments, costs and expenses,
including reasonable attorneys' fees and costs, subject to the terms of
Paragraph 16.1 hereto.
14. Assignment of Distribution Agreements. Seller has entered into a
Distribution Agreement with Fits Corporation K.K., a Japanese Corporation, on
September 14, 2000, as amended on March 12, 2001 and as further amended on
January 16, 2002 for the sale of REALM(R) fragrances in Japan. The agreement and
the amendments thereto, copies of which are attached hereto as Exhibits 4, 4A
and 4B, expires on September 14, 2003, unless extended in writing by the Seller
not less than sixty days prior to its scheduled expiration.
On March 22, 2001, Seller entered into a Distribution Agreement with
Fits Corporation K.K., a Japanese Corporation, for the sale of its innerREALM
fragrances in Japan. The agreement, a copy of which is attached as Exhibit 5
hereto, expires on March 22, 2004, unless extended in writing by the Seller not
less than sixty days prior to its scheduled expiration. Fits is currently in
violation of this agreement since it has not fulfilled its minimum annual
purchase requirements of the innerREALM product since inception; formal notice
of such violation has not been made by the Seller to Fits.
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On April 17, 2002, Seller entered into a Distribution Agreement with
Natural Science Company, Ltd., a Korean Corporation, for the sale of REALM and
innerREALM fragrances in Korea. An amendment to the agreement was made by e-mail
on January 17, 2002. The agreement will expire on April 17, 2005, unless
extended in writing by the Seller not less than sixty days prior to its
scheduled expiration. The agreement and the e-mail amendment are incorporated
hereto as Exhibits 6 and 6A.
In accordance with the terms of these agreements, Seller is not
prohibited from the assignment of these agreements to any successor in interest
to the Brands. Accordingly, as part of this Agreement, Seller will assign all of
its rights, duties and obligations as set forth in each agreement above to Buyer
upon execution of this Agreement. Buyer agrees to accept such assignment and to
expressly assume all of Seller's obligations under said agreements. Buyer's
assumption of the obligations of Seller to perform under these agreements shall
be effective upon the date of execution of this Agreement, and nothing contained
herein shall have the effect of causing Buyer to have assumed or be responsible
for any financial obligations of Seller that arose under such agreements prior
to or on the date of execution of this Agreement; regardless of whether such
pre-Closing Date obligations arose in the ordinary course of business or as a
result of any breach or default by Seller.
15. Force Majeure. Seller shall be released from its obligations under
this Agreement in the event that governmental regulations, act of God, war,
riot, fire, strike or other labor dispute, epidemic or other causes beyond the
control of Seller, render performance by the Seller impossible or impracticable.
16. Indemnity. 16.1 Buyer will at all times indemnify, defend and hold
harmless Seller from and against any and all claims, damages, litigation,
judgments, costs and expenses, including reasonable attorneys' fees and costs
(including those incurred in enforcing this provision), caused by or arising out
of any act or omission of Buyer including any alleged defects in the product,
excluding any defects relating to the pheromones purchased from Seller, or any
breach by Buyer of its representations or warranties under this Agreement.
16.2 Seller will at all times indemnify, defend and hold
harmless Buyer from and against any and all claims, damages, litigation,
judgments, costs and expenses, including reasonable attorneys' fees and costs
(including those incurred in enforcing this provision), caused by or arising out
of any acts or omissions of Seller, including any alleged defects in the
pheromones purchased from Seller, or any breach by Seller of its representations
or warranties under this Agreement. Specifically included in such
indemnification obligations from Seller to Buyer are claims pertaining to damage
caused by virtue of the properties of the pheromones obtained from Seller.
Specifically excluded from any indemnification obligations from Seller to Buyer
are any claims pertaining to Brands or product line extensions in which the
formulas and blends transferred herein have been altered, the concentrations of
pheromones used in the products are other than as recommended by Seller, or
there has been a misapplication or misuse of the product.
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16.3 Promptly following receipt by an indemnified party of
notice of the commencement of any action or legal proceeding or the written
assertion of any claim or demand with respect to an indemnified matter or any
claim or loss with respect to an indemnified matter, the indemnified party shall
notify the indemnifying party in writing (the "Claim Notice"). The indemnifying
party shall at its own cost and expense, assume the defense of such indemnified
matter within thirty (30) days following receipt of the Claim Notice. The
indemnifying party may, in its sole discretion, defend, settle or compromise any
indemnified matter upon reasonable prior notice to the indemnified party
provided that (a) such indemnifying party shall be solely liable in respect of
losses arising therefrom (whether by payment of any judgment, settlement, amount
or indemnity hereunder), and (b) shall secure a complete and unconditional
release from any claimant of the indemnified claims against the indemnified
party with a waiver of the provisions of California Civil Code Section 1542; and
(c) such indemnifying party shall not settle any such indemnified claims against
the indemnified party or to the extent it involves remedies other than monetary
damages without the prior written consent of the relevant indemnified person,
which consent shall not be unreasonably withheld. The indemnifying party shall
give reasonable notice to the indemnified party of any proposed settlement and
shall provide a copy of any executed settlement agreement.
17. Guaranty. As a direct inducement to enter into this Agreement under
the terms and conditions set forth herein, including Seller's consent to accept
Niche Marketing Group, Inc. as the Buyer, Northern Group, Inc. hereby personally
guarantees each and every act, payment, covenant, representation, warranty and
required performance as called for by Buyer including all provisions of a
continuing nature or which survive this Agreement, and any amendments or
extensions hereto. In addition, Guarantor represents and warrants to Seller that
(a) Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of the state of New York, (b) Guarantor has full power
and authority to execute and deliver and perform its obligations under the
Agreement and (c) the execution, delivery and performance of this Agreement by
Guarantor have been duly and validly authorized and approved by Guarantor's
Board of Directors. No other corporate proceedings on the part of the Guarantor
are necessary to authorize the consummation of the transaction contemplated by
this Agreement.
18. Waiver; Modification. No waiver or modification of any of the terms
of this Agreement shall be valid unless in writing. No waiver by either party of
the breach or defaults of this Agreement shall be deemed a waiver by that party
of any other breach or defaults.
19. Entire Agreement. This Agreement including Exhibits represents the
entire understanding between Seller and Buyer; it represents the culmination of
negotiations over an extended period of time and is intended to be the final
written fully integrated agreement between the parties. It shall not be modified
or amended unless in writing signed by all parties or its subsidiaries. This
Agreement supercedes and replaces any previous agreements between the Buyer and
Seller or any of their affiliates, including but not limited to the LPA dated
April 24, 2000 (and the Amendments of June 23, 2000 and March 8, 2002), except
as to any pending obligations or liabilities between the Parties as of the
Closing Date which shall survive until paid or performed. In addition, all
provisions contained in such prior agreements, which by their terms are
expressly deemed to survive, will survive and bind the respective Parties and
their Guarantors.
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20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of California as an agreement made and
performed in that state. In the event any legal action or other proceeding is
commenced to enforce any provision of this Agreement or as a result of the
breach, default or misrepresentation in connection with any provision of this
Agreement, the successful or prevailing party shall be entitled, in addition to
any other relief to which the party may be entitled, to recover reasonable
attorneys' fees and costs of litigation incurred in such action or proceeding.
21. Notices. Notices by either party to the other shall be given by
fax, if possible, and by registered or certified mail, return receipt requested,
with proof of delivery, all charges prepaid, or by a recognized domestic or
international overnight mail provider (Federal Express, etc.). Notice shall be
effective upon receipt. All statements, and notices shall be sent to the
respective addresses of Seller and Buyer as follows:
To Seller:
----------
Human Pheromone Sciences, Inc.
Attention: Chief Executive Officer
84 West Santa Clara Street, Suite 720
San Jose, CA 95113
(408) 938-3025 facsimile
With a copy to:
--------------
William B. Clayton, Jr., Esq.
Clayton & McEvoy, P.C.
333 West Santa Clara Street, Suite 950
San Jose, California 95113
(408) 293-4172 facsimile
To Buyer:
---------
Niche Marketing, Inc./Northern Group, Inc.
Attn: Robert Crames, CEO; Charles Famoso, CFO
35 Engel Street
Hicksville, New York 11801
(516) 681-3632 facsimile
11
With a copy to:
---------------
Catherine M. Clayton, Esq.
Paul, Hastings, Janofsky & Walker
75 East 55th Street
New York, NY 10022
(212) 319-4090 facsimile
To Guarantor:
-------------
Maurice Reissman
Vice Chairman and COO
Northern Group
35 Engel Street
Hicksville, NY 11801
(516) 681-3632 facsimile
22. Arbitration. Should a dispute arise between Seller and Buyer
pertaining to the performance of any party, or the interpretation of any term of
this Agreement that dispute shall be subject to binding arbitration pursuant to
the Commercial Rules of the American Arbitration Association. If brought by
Seller, the arbitration shall be conducted in Nassau County, New York. If
brought by Buyer, the arbitration shall be conducted in Santa Clara County,
California. Nothing in this Agreement shall prevent any party from seeking
extraordinary relief to compel or prevent actions, activities or conduct of the
other party in breach of this Agreement. Judgment upon any award of the
arbitrator may be entered in a court of competent jurisdiction.
23. Confidentiality. Neither Seller nor Buyer shall, without the
approval of the other, make any press release or other public announcement
concerning the transaction contemplated by this Agreement, except as and to the
extent that any such party shall be so obligated by law, in which case the other
party shall be advised and the parties shall use their reasonable efforts to
cause a mutually agreeable release or announcement to be issued; provided, Buyer
hereby consents to Seller issuing a press release with respect to this Agreement
promptly after the execution of this Agreement.
24. Severability. If any provision of this Agreement is declared by a
court of competent jurisdiction to be invalid, illegal, or unenforceable, such
provision shall be severed from this Agreement and the other provisions shall
remain in full force and effect.
25. Payment of Taxes. Buyer shall pay all sales, use, value added, or
other taxes, federal, state or otherwise, which are levied or imposed by reason
of the transaction contemplated by this Agreement, except taxes arising from
income of Seller with respect to this Agreement.
26. Survival of Provisions. Notwithstanding the expiration or
termination of this Agreement it is agreed that those rights and obligations
which by their nature are intended to survive such expiration or early
termination shall survive, including, but not limited to acknowledgement of
ownership/title, indemnification, and confidentiality.
12
27. Contract Expenses. Each Party shall bear all of its expenses,
including attorney fees, in connection with the negotiation of the documentation
of this Agreement.
28. Terms of Payment. Each Party shall deliver all amounts due to the
other Party by check or wire transfer, as agreed by the Parties.
29. Turnover of Intellectual Property Files and Schedule. On the
Closing Date, Seller will provide Buyer with the trademark, trade name, trade
dress and copyright files in Seller's possession, and a listing of the
trademarks, trade names, trade dress and copyrights associated with the Business
and all applications and registrations therefore, prepared by Seller's
intellectual property counsel, Ladas & Parry. Such turnover shall not in any way
be deemed a waiver of the attorney client privilege.
30. Accounts Payable/Receivable between Buyer and Seller. All accounts
receivable and payable between the Buyer and the Seller other than those arising
from execution of this agreement, and all of Sellers and Buyer's payment
obligations under the LPA have been settled prior to the execution of this
Agreement.
31. No Finder. Neither Seller nor Buyer nor any person acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary, for or on account of the transactions contemplated by
this Agreement.
32. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be considered an original instrument, but
all of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the Parties
hereto and delivered to each of Seller and Buyer. In order to facilitate the
Close, the Parties agree to accept facsimile signatures exchanged between
counsel for the respective Party, with the original signatures to be delivered
to counsel by Federal Express or other overnight carrier.
"Seller" "Buyer"
HUMAN PHEROMONE SCIENCES, INC. NICHE MARKETING GROUP, INC.
/s/ William P. Horgan /s/ Charles Famoso
CEO Chief Financial Officer
13
The undersigned, as Guarantor, has read the terms and conditions of the within
Agreement (consisting of thirteen (13) pages) executed by and between Niche
Marketing, Inc. as Buyer and Human Pheromone Sciences, Inc., as Seller, agrees
to be bound by its terms and to Guarantee the performance of Buyer as that term
is understood in the Agreement.
"Guarantor"
NORTHERN GROUP, INC.
/s/ Charles Famoso
Chief Financial Officer
14
EXHIBIT 1
Schedule of IP Rights
Trademarks:
Country Trademark Next Action Date Registration #
- ------- --------- ---------------- --------------
Argentina REALM 1/18/06 1588848
Australia REALM 4/22/03 601014
Austria REALM 7/16/03 148236
Bahrain REALM 5/25/07 TM 22074
Benelux REALM 4/22/03 526497
Brazil innerREALM 12/07/09 819907812
Brazil REALM 3/19/06 817216367
Canada REALM 5/06/09 427052
Canada innerREALM 1/25/15 522135
Chile innerREALM 12/16/08 529947
Chile REALM 12/16/08 529948
China REALM 1/13/05 724588
Colombia innerREALM 3/17/08 206640
Colombia REALM 2/22/11 236040
Czech Republic REALM 4/23/03 179752
Denmark REALM 6/25/03 4612/93
France REALM 4/28/03 93466101
Germany REALM 4/27/03 2103368
Greece REALM 5/03/03 113948
Hong Kong REALM 4/24/14 10904/1995
India REALM 11/20/03 736472 (Application)
Ireland REALM 4/22/10 156581
Israel REALM 11/10/11 95421
Italy REALM 4/23/03 660258
Japan REALM 3/29/06 3130208
Kuwait REALM 2/24/07 32835
Mexico REALM 4/28/03 451414
Norway REALM 11/10/04 165353
Oman REALM 12/11/06 14834 (Application)
Paraguay innerREALM 4/21/08 202395
Paraguay REALM 4/20/08 202331
Portugal REALM 7/19/04 291345
Qatar REALM 12/12/06 16084 (Application)
Saudi Arabia REALM 12/17/06 553/93
Singapore REALM 4/22/03 3031/93
Slovak Republic REALM 4/30/03 172759
Republic of S. Africa REALM 6/22/03 5213/93
South Korea REALM 6/22/03 291084
Spain REALM 4/26/03 1758010
Sweden REALM 2/11/04 255260
Switzerland REALM 4/23/03 411547
Thailand REALM 4/27/03 244276/KOR12812
Taiwan REALM 11/31/03 617801
United Arab Emirates REALM 3/9/07 14129
United Kingdom REALM 4/22/10 1532964
United States REALM 12/13/04 1867411
REALM 9/23/07 2099664
innerREALM 6/30/08 2169749
Men's Bottle Dev 12/20/04 1868809
Men's Bottle Device 5/13/07 2061700
REALM Roulette 11/24/08 2205136
Women's Bottle Dev 12/27/04 1870296
Women's Bottle Dev 10/14/07 2105624
Uruguay REALM 12/28/10 294630
Venezuela REALM 7/10/05 P178185
Trademark Customs Deposits:
United States REALM 12/13/04 1867411
United States REALM 5/21/06 1975469
Copyrights:
United States REALM Men's Cologne Package Not App. VA 789-745
United States REALM Women's EDT Package Not App. VA 789-744
Copyright Customs Deposits:
United States REALM Men's Cologne Pkg. Not App VA 789-745
United States REALM Women's Cologne Pkg. Not App VA 789-744
Domain Names:
realmfragrances.com
EXHIBIT 2
GENERAL INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT
This Agreement is made as of this day of April 14, 2003, between Human
Pheromone Sciences, Inc., a corporation organized and existing under the laws of
the State of California, located at 84 West Santa Clara Street, Suite 720, San
Jose, California 95113 (hereinafter referred to as the "Assignor") as the owner
and registered proprietor of the trademarks, trademark customs deposits,
copyrights, copyright customs deposits, and domain names in the United States of
America and in various foreign jurisdictions as set forth on the attached
Schedule (hereinafter referred to as the "IP Rights") and Niche Marketing, Inc.,
a corporation organized and existing under the laws of the State of New York,
having an address at 35 Engel Street, Hicksville, New York 11801, United States
of America (hereinafter called the "Assignee").
WITNESSETH:
WHEREAS, Assignor and Assignee entered into a Purchase Agreement dated
April 14, 2003, (hereinafter referred to as the "Purchase Agreement");
WHEREAS, Assignor is the owner of the IP Rights set forth on the
attached Schedule, and
WHEREAS, Assignee desires to acquire all right, title and interest in
and to the IP Rights together with the goodwill of the business with which the
IP Rights are used and which is symbolized by the IP Rights;
NOW, THEREFORE, in consideration of the Purchase Agreement and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. Assignor, by these presents, hereby sells, assigns, transfers and
conveys unto the said Assignee, its successors and assigns, all of
Assignor's right, title and interest, including, any and all common law
rights, in and to the IP Rights together with their corresponding
registrations and applications and with the goodwill of the business of
the Assignor connected with the use of, as well as symbolized by, the
aforesaid IP Rights, including, the right to sue and prosecute prior
infringements in court and administratively, the Assignee therefore
having the right, from today on, to consider itself the sole owner of
the IP Rights, to use them as IP Rights of its own or else to dispose
of them as best suits its interest, without giving rise to any claim
whatsoever in this respect on the part of the Assignor in any event or
at any time.
Page 1
2. Assignor hereby agrees to execute specific confirmatory assignments and
other supplementary documents (as may be required) in favor of the
Assignee, for each of the countries in which there are IP Rights
recited on the attached Schedule in order to effectuate recording of
the assignment of the aforesaid IP Rights on the Registry of the
countries recited on the attached Schedule.
3. Assignor hereby agrees to execute the necessary Registrant Name Change
Agreement in favor the Assignee or to take any other necessary measures
to effectuate recordal of the assignment of the domain name(s) recited
on the attached Schedule at the appropriate domain name registry.
4. Assignor, at the request of Assignee and at Assignee's expense, further
agrees to cooperate and assist Assignee in any legal requirements
relating to the status, validity, or enforceability of the IP Rights,
including, providing Assignee with any information regarding use of the
IP Rights in connection with the prior manufacture, promotion, sale,
and advertising of any products bearing the IP Rights.
5. Any and all representations and warranties made by Assignor to Assignee
with respect to the IP Rights are set forth in the Purchase Agreement.
6. Assignor agrees to thereafter recognize Assignee's sole and exclusive
ownership, right, title and interest in and to the IP Rights. The
Assignor shall not directly nor indirectly challenge the ownership by
the Assignee of the IP Rights, not claim adversely to Assignee any
right, title and interest in and to the IP Rights and the Assignor
agrees to furnish, upon the request of the Assignee, a written consent
in support of any applications which may be filed by the Assignee.
7. This assignment shall extend to and be binding upon all successors,
licensees and assigns of the parties hereto.
8. In the event the IP Rights are infringed by a third party and either
the Assignor or the Assignee wishes to proceed against the infringing
party, the other party shall assist the party taking the action. Each
party, upon written request to the other, shall join in an action or
actions of opposition, cancellation or infringement without incurring
any further obligation. The cost incurred by such action shall be
undertaken by the requesting party. In those jurisdictions where joint
action is not possible or advisable, the requesting party having no
rights, either by registration or at common law, shall request the
party with the rights, in writing, to bring an action against any third
party infringer. The requesting party shall undertake all costs and
indemnify the requested party for any counterclaim or costs imposed as
a result of said action.
9. In the event of any conflict between the terms and conditions of this
General Intellectual Property Assignment Agreement and the Purchase
Agreement, the Purchase Agreement will control.
Page 2
IN WITNESS WHEREOF, the said Assignor has hereunto set its hand and
affixed its corporate seal as of the day and year first above written.
HUMAN PHEROMONE SCIENCES, INC.
/s/ William P. Horgan
Title: CEO
IN WITNESS WHEREOF, the said Assignee has hereunto set its hand and
affixed its corporate seal as of the day and year first above written.
NICHE MARKETING, INC.
/s/ Charles Famoso
Title: Chief Financial Officer
NORTHERN GROUP, INC.
/s/ Charles Famoso
Title: Chief Financial Officer:
Page 3
EXHIBIT 3
Inventory Schedule Realm & innerRealm
02/28/03
Available Quantities
--------------------------------------------------------------------
Item Number Total At Niche At CEI At HPSI
---- ------ --------------- ---------------- -------------- -------------
REALM Men
50ml Cologne FG - Chinese 92026000 1,177 1,013 164
50 Ml. Cologne WIP(red no label) 92022070 4,214 4,214
50ml bottles red 2002210105 19,271 19,271
50 ml Caps 2002210201 21,033 21,033
50 ml Pumps 2002210302 32,300 32,300
R/M 50 ml Liner 92022151 10,875 10,875
R/M 50 ml Packer 92022155 1,500 1,500
R/M Oil 9202230001 2 2
REALM Women Prod.
R/W 50 ml EDT FG Japenese 91025000 3,024 2,976 48
50 ml. EDT WIP(red no label) 91022070 11,858 11,858
50 ml Bottles red 1002210105 24,192 24,192
50 ml Caps 1002210205 22,500 22,500
50 ml Pumps 1002210302 4,300 4,300
R/W 50 ml Shipper 91022110 155 155
R/W 50 ml Liner (Note 1) 91022151 11,600 11,600
R/W 50 ml Packer 91022155 1,850 1,850
EDT Oil 9102230001 68 68
innerREALM
I/R 40ml EDT FGJapanese 91245000 9,762 9,762
I/R 40ml EDT FG Chinese 91246000 1,024 1,000 24
40 Ml. EDT FG 10124000 110 110
75 Ml. EDT FG 10128000 614 614
75 Ml. EDT Tester 99128000 111 111
EXHIBIT 3A
Inventory Schedule Realm & innerRealm
HPS To Retain
02/28/03
Item Number Quantity
----- ------ --------
REALM Men
R/M 50 ml FG Shipper 2002211001 60
R/M 50 ml Shipper 92022110 72
REALM Women Prod
R/W Refills Roulettes 10012000 867
R/W 4.6ml EDT 10035000 180
R/W 15ml EDP WIP 10055090 7,270
R/W Internet Special Set 80040000 10
R/W 15ml EDP Tester 99050000 1,496
R/W Roulette WIP 10011090 766
R/W Refill caps, Roulettes 10011102 10,000
R/W Platforms, Roulettes 10012109 3,600
R/W 15ml EDP Packer X 3 10055155 2,500
R/W 50ml EDT Shipper 48pk 91022110 155
innerREALM
I/R Shower Sponge 60030164 2,852
I/R Vial on card 10120000 6,350
I/R Roulette in Pouch 1012100001 200
innerREALM tablecloths 48824000 3,700
innerREALM overlays 48827000 3,700
I/R Refill Caps, Roulette 10122102 11,116
Internal Corporate Use
R/M 7.25 oz Candle 20186000 11
R/M 50 ml Cologne (red) Japanese 92025000 1
R/W 7.25 oz Candle 8