Exhibit 10.1

 

between

 

MusclePharm Corporation

 

and

 

BioZone Holdings, Inc.

 

and

 

biozone laboratories, inc.

 

dated as of

 

April 21, 2016

 

   

 

  

TABLE OF CONTENTS

 

1 PURCHASE OF BIOZONE SHARES 1 1.1 Sale of Stock. 1 1.2 Instruments of
Conveyance. 1 1.3 Consideration. 1 1.4 Payment of Purchase Price. 1 1.5
Guaranty. 4       2 TARGET PRICE ADJUSTMENTS 4 2.1 Net Working Capital
Adjustment 4 2.2 Deferred Maintenance and Missing Equipment 6 2.3 Equipment
Buyout Adjustment 6       3 THE CLOSING 6 3.1 Closing. 6 3.2 Payment of Closing
Payment. 7 3.3 Transfer of BioZone Shares. 7 3.4 Gel Pack Purchase Order. 7 3.5
Accounts Payable Payment. 7       4 REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDER AND COMPANY 7 4.1 Organization and Qualification of Company. 7 4.2
Subsidiaries; Names; Capital Stock; Officers and Directors 8 4.3 Authority of
the Shareholder. 8 4.4 Effect of Agreement. 8 4.5 Financial Statements. 9 4.6
Undisclosed Liabilities. 9 4.7 Absence of Certain Changes or Events. 9 4.8
Deposits 10 4.9 Tax Matters. 11 4.10 Title to BioZone Shares; Title to
Properties; Absence of Liens and Encumbrances; Leases. 11 4.11 List of
properties, Contracts and Other Data. 11 4.12 Litigation. 13 4.13 Labor Matters.
13 4.14 Patents; Trademarks; Intellectual Property Rights. 14 4.15 Assets. 14
4.16 Insurance. 15 4.17 Trade Notes and Accounts Receivable; Trade Notes and
Accounts Payable; Inventory. 15 4.18 Licenses; Permits; Authorizations. 15 4.19
Compliance with Applicable Law. 16 4.20 Pension and Employee Benefit Plans. 16
4.21 No Noncompetes. 16 4.22 Assets Relationship to Business of the Company. 17
4.23 Environmental Matters. 17 4.24 Books and Records. 18 4.25 Condition of
Assets. 18 4.26 Product Warranty; Company Liability. 18 4.27 Disclosure. 19

 

BioZone Share Acquisition Agreement  ii

 

 

5 REPRESENTATIONS AND WARRANTIES BY BUYER 19 5.1 Authority of Buyer. 19 5.2
Disclosure. 20       6 TRANSACTIONS PRIOR TO THE CLOSING DATE 20 6.1 Access to
Information. 20 6.2 Conduct of the Company’s Business Pending the Closing Date.
20 6.3 Notice of Breach. 22 6.4 Exclusivity; Non-Circumvention. 22 6.5
Reasonable Best Efforts. 23 6.6 Authorization from Others. 23 6.7 Public
Announcements. 23       7 TRANSACTIONS AFTER THE CLOSING 23 7.1 Access Agreement
and Assignment 23 7.2 I.R.S. Tax Lien. 24       8 CONDITIONS PRECEDENT TO
OBLIGATIONS OF BUYER 24 8.1 Accuracy of Representations and Warranties. 24 8.2
Performance of Agreements. 24 8.3 Officers’ Certificate. 24 8.4 Shareholder’s
Certificate. 24 8.5 Secretary’s Certificate. 25 8.6 Employment Agreements. 25
8.7 Manufacturing Agreements. 25 8.8 Administrative Services Agreement. 25 8.9
Resignations. 25 8.10 Stock Certificates; Stock Powers. 25 8.11 Purchase Order.
26 8.12 AP Payment. 26 8.13 Assignment of Patent. 26 8.14 Records. 26 8.15
Actual or Threatened Actions. 26 8.16 Material Adverse Effect. 26 8.17 Approval
of Buyer’s Lender. 26 8.18 Consents. 26 8.19 Resolutions of Board of Directors.
27 8.20 Intercompany Debt. 27       9 CONDITIONS PRECEDENT TO THE OBLIGATIONS TO
THE SHAREHOLDER 27 9.1 Accuracy of Representations and Warranties. 27 9.2
Release of Shareholder form Operating Leases. 27 9.3 Sub Lease for 701 Willow.
27 9.4 Performance of Agreements. 27 9.5 Officers’ Certificate. 28 9.6
Resolutions of Board of Directors. 28 9.7 Actual or Threatened Actions. 28      
10 CFC PAYABLE 28       11 BROKERAGE 28

 

BioZone Share Acquisition Agreement  iii

 

 

12 NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES 28 12.1 Events of
Default. 28 12.2 Survival of Representations, Etc. 28       13 INDEMNIFICATION
29 13.1 Indemnification to Buyer. 29 13.2 Indemnification to the Shareholder. 29
13.3 Representation, Cooperation and Settlement 30 13.4 Certain Limitations. 31
13.5 Payment of Indemnification Obligations. 31       14 TERMINATION OF
AGREEMENT 31 14.1 Termination. 31 14.2 Effect of Termination. 32 14.3 Right to
Proceed. 32       15 TAX MATTERS. 32       16 MISCELLANEOUS 32 16.1 Waivers and
Amendment. 32 16.2 Expenses. 33 16.3 Taxes. 33 16.4 Occurrences of Conditions
Precedent. 33 16.5 Notices. 33 16.6 Integration Clause. 35 16.7 Binding Effect;
Benefits. 35 16.8 Non assignability. 35 16.9 Applicable Law; Choice of Forum. 35
16.10 Further Assurances. 35 16.11 Interpretation; Counterparts. 36       17
DEFINITIONS 36

 

BioZone Share Acquisition Agreement  iv

 

 

AGREEMENT FOR THE PURCHASE AND SALE OF STOCK

 

THIS STOCK PURCHASE AGREEMENT (“Agreement”) is made this 21st day of April,
2016, by and among BioZone Holdings, Inc.. (“Buyer”), a Delaware corporation
having its principal office at 28350 Witherspoon Parkway, Valencia, California;
BioZone Laboratories, Inc., a Nevada Corporation (“Company”); MusclePharm
Corporation, a Nevada corporation having its principal office at 4721 Ironton
St., Unit A, Denver, Colorado (“Shareholder”), and Flavor Producers, Inc., a
California corporation having its principal office at 28350 Witherspoon Parkway,
Valencia, California (“Guarantor”). Buyer, Company, Shareholder and Guarantor
are sometimes referred to herein individually as a “Party” and collectively as
the “Parties.”

 

WHEREAS, the Shareholder owns all of the issued and outstanding stock of the
Company, consisting of 100 shares of common stock, par value $.0010 per share
(“BioZone Shares”);

 

WHEREAS, Shareholder desires to sell the BioZone Shares to Buyer, and Buyer
desires to acquire the BioZone Shares from Shareholder.

 

NOW, THEREFORE, in consideration of the promises and the respective agreements
hereinafter set forth, Buyer and Shareholder hereby agree as follows:

 

1PURCHASE OF BIOZONE SHARES

 

1.1         Sale of Stock.

 

Upon the terms and subject to the conditions set forth in this Agreement, on the
Closing Date (as defined herein), the Shareholder will sell, convey, assign,
transfer and deliver to Buyer, and Buyer will purchase and acquire from the
Shareholder, free and clear of any and all liens, claims, charges, security
interests, encumbrances and restrictions of any kind whatsoever, other than
those imposed by federal or state securities laws (“Liens”) the BioZone Shares.

 

1.2         Instruments of Conveyance.

 

On the Closing Date, the Shareholder will deliver to Buyer the certificates
representing the BioZone Shares, together with stock powers duly endorsed for
transfer in blank in a form reasonably satisfactory to the Buyer and any stamps
or other evidence of the payment of documentary taxes required in connection
with such delivery.

 

1.3         Consideration.

 

The aggregate purchase price (the “Purchase Price”) for the BioZone Shares at
closing will be Nine Million Eight Hundred Thousand Dollars ($9,800,000.00) (the
“Target Price”), less any Target Price Adjustments set forth in Article 2
hereof.

 

1.4         Payment of Purchase Price.

 

The Purchase Price will be payable on the Closing Date as follows:

 

1.4.1       Eight Million Three Hundred Thousand Dollars ($8,300,000.00)
(“Closing Payment”) which is the amount equal to the Target Price less the
Holdback Amount as set forth in Section 1.4.2 below, less the adjustments set
forth in Section 2.3, and less the payments set forth in Sections 3.4 and 3.5
will be paid in immediately available funds by electronic wire transfer to an
account in accordance with the written instructions of the Shareholder; and

 

BioZone Share Acquisition Agreement 1

 

 

1.4.2       If EBITDA of the Buyer (or for the avoidance of doubt the business
represented by the Assets (the “Business”) is Seven Hundred Fifty Thousand
Dollars ($750,000.00) or more for the twelve month calendar period commencing on
the first day of the month following the Closing Date (the “Earn-Out Period”),
Buyer shall pay to Shareholder an additional One Million Five Hundred Thousand
Dollars ($1,500,000.00) (the “Holdback Amount”), without interest, subject to
deductions for (i) Target Price Adjustments not taken prior to Closing, (ii)
amounts due from Shareholder to Company and/or Guarantor as a result of any
breach, specifically including but not limited to any then-past due payable, by
Shareholder of any other agreement between it and the Company or Guarantor,
specifically including but not limited to the BioZone Manufacturing Agreement
and the FPI Supply Agreement; and (iii) to satisfy any and all claims made by
Buyer or any other Buyer Indemnitee against Shareholder pursuant to Section 13.

 

1.4.3       Within thirty (30) Business Days after the completion of the
Earn-Out Period, Buyer shall provide to the Shareholder a detailed statement of
Buyer’s good faith calculations of EBITDA for the Earn-Out Period (the "Earn-Out
Statement"). Buyer shall provide to the Shareholder a copy of all relevant
financial statements and copies of such records and work papers ("Supporting
Documentation") which are reasonably required to support the Earn-Out Statement.
The Shareholder shall have the right to inspect Buyer’s and its affiliates books
and records during business hours, and shall have reasonable access to the
personnel responsible for the preparation of the Earn-Out Statement, upon
reasonable prior notice and solely for purposes reasonably related to
verification of the calculations of EBITDA ("Access Rights") set forth in the
Earn-Out Statement. The Shareholder shall be entitled to object to the
calculation of EBITDA for the Earn-Out Period by delivery to Buyer of written
notice of objection thereto (a "Notice of Objection"), describing in reasonable
detail the nature of the objection(s) asserted. If the Shareholder fails to
deliver a Notice of Objection to Buyer within sixty (60) Business Days following
receipt of the Earn-Out Statement, the determination of EBITDA for the Earn-Out
Period set forth in the Earn-Out Statement shall be final, binding and
conclusive on the parties hereto. In addition, within thirty (30) Business Days
after the completion of each of the Buyer’s first three calendar quarters ending
during the Earn-Out Period, Buyer shall provide to the Shareholder a statement
of Buyer’s good faith calculations of EBITDA for such quarter (the "Quarterly
Earn-Out Estimates"), together with copies of the Supporting Documentation
related thereto. The Shareholder and Buyer shall promptly endeavor to negotiate
in good faith to agree on the estimates set forth in any Quarterly Earn-Out
Estimates and the Shareholder shall have Access Rights for such purpose. To the
extent the Shareholder and Buyer agree on the calculations therein, such
calculations of EBITDA shall be used in the preparation of the Earn-Out
Statement. Any disagreements that are not resolved prior to the delivery of the
Earn-Out Statement shall be resolved by submission of a Notice of Objection in
accordance with the dispute resolution procedures described herein.

 

1.4.4       If the Shareholder timely delivers a Notice of Objection to Buyer,
then any dispute shall be resolved as follows: In the event the Buyer and the
Shareholder are unable to resolve such differences within ten (10) business days
after receipt of the Notice of Objection, subject to any reasonable extensions
necessary to allow the Buyer to provide the Supporting Documentation, then the
Buyer and the Shareholder shall engage BDO USA, LLP (the “Auditors”) or a CPA
firm mutually agreed to by the parties to review the books and records of the
Company and such other documents as the Auditors may determine (including the
Supporting Documentation) for the purposes of resolving all the disputed items
in a prompt and timely fashion, and a copy of the written decision of the
Auditors shall be delivered by the Auditors to each of the Buyer and the
Shareholder. The determination of the Auditors shall be binding and conclusive
on the Parties absent manifest error.

 

BioZone Share Acquisition Agreement 2

 

 

1.4.5       Following either (i) the date that the Earn-Out Statement is
delivered to the Shareholder reflecting that the Holdback Amount is due or (ii)
the date of the final resolution of any dispute concerning the Earn-Out
Statement in accordance with Section 1.4.4 with a finding that the Holdback
Amount is due, Buyer shall deliver to Shareholder the Holdback Amount (less any
permitted deductions), as promptly as possible but, in any event, within three
(3) Business Days of such date.

 

1.4.6       In the event the Holdback Amount (less any permitted adjustments) is
not paid on the due date, then in addition to all other rights of the
Shareholder, the unpaid Holdback Amount shall accrue interest at the rate of
five percent (5%) per annum from the first anniversary of the Closing until
paid.

 

1.4.7       During the Earn-Out Period, Buyer and the Guarantor shall, and shall
cause the Company to, (i) operate the Business in a manner which they in good
faith believe to be in the best interests of all of its shareholders and that is
not detrimental to the long-term value of the Company, and (2) in the ordinary
course in a manner consistent with the Company's past practices or current
practices; (ii) subsequent to termination of the Administrative Services
Agreement maintain separate books and records of the Company, including, but not
limited to, separate quarterly profit and loss statements of the Company, so as
to make calculation of EBITDA feasible and verifiable and the Quarterly Earn-Out
Estimates available; (iii) assure that all transactions with any Affiliate of
the Buyer or the Guarantor are at arm’s length terms; (iv) record all revenue
and expenses in accordance with GAAP; and (iv) not act in an arbitrary or
commercially unreasonable manner in the conduct or operation of the Company if
such action would be reasonably likely to materially interfere with the
achievement of the payment of the Holdback Amount (which shall include not
taking any of the following actions without making an equitable adjustment to
the EBITDA target to fully compensate for the adverse effect of such
action(s) on the achievement of such target):  (x) materially deviating from any
of the contract terms of the agreements or assign, transfer or novate any of the
Company's contracts set forth in Schedule 4.11.4 without counting the revenues
associated with such contracts as "Revenues" hereunder, or (z) disposing or
agreeing to dispose of, directly or indirectly, those Assets set forth on
Schedules 4.11.4 or 4.15). 

 

BioZone Share Acquisition Agreement 3

 

 

1.5         Guaranty.

 

Guarantor hereby unconditionally, absolutely and irrevocably guarantees the due
and prompt payment of the obligations of the Buyer to pay the Closing Payment,
the Holdback Amount and to indemnify the Shareholder with respect to the
Company’s payment obligations under the Operating Leases and the Sub-Lease (the
“Guaranteed Obligations”). Guarantor hereby waives any rights of set-off
against, defense to, or reduction of, the Guaranteed Obligations based upon any
claim Guarantor may have against any other Person. It shall not be necessary for
the Shareholder (and Guarantor hereby waives any rights which Guarantor may have
to require the Shareholder), in order to enforce the obligations of Guarantor
hereunder, first to (i) institute suit or exhaust its remedies against any other
Person, (ii) join any other Person in any action seeking to enforce this
Agreement, or (iii) resort to any other means of obtaining payment of the
Guaranteed Obligations. The Shareholder shall not be required to take any action
to reduce, collect or enforce the Guaranteed Obligations. Guarantor waives
notice of: (a) any amendment or modification of this Agreement or the Ancillary
Agreements, (b) protest, proof of non-payment or default by the Buyer or any
other Person, or (c) any other action at any time taken or omitted by the
Shareholder, and, generally, all demands and notices of every kind. Guarantor
agrees to each of the following, and agrees that its obligations under this
Guaranty shall not be released, diminished, impaired, reduced or adversely
affected by any of the following, and waives any common law, equitable,
statutory or other rights (including without limitation rights to notice) which
Guarantor might otherwise have as a result of or in connection with (1) any
renewal, extension, increase, modification, alteration or rearrangement of all
or any part of the Guaranteed Obligations; (2) any insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, dissolution,
asset sale or transfer or change of structure or organization of Buyer, (3) the
invalidity, illegality or unenforceability of all or any part of the Guaranteed
Obligations, (4) any full or partial release of the liability of the Buyer or
any other Person or any part thereof or (5) any other action taken or omitted to
be taken with respect to the Guaranteed Obligations, whether or not such action
or omission prejudices Guarantor or increases the likelihood that Guarantor will
be required to pay the Guaranteed Obligations pursuant to the terms hereof. The
guaranty set forth in this Guaranty is a continuing guaranty of payment, and it
will not be discharged until, and will remain in full force and effect until,
payment in full of the amounts required to be paid the Shareholder as provided
for in this Agreement and the fulfillment of Buyer’s indemnification obligations
as set forth above. Guarantor irrevocably waives, on behalf of itself and its
successors and assigns, until payment in full of the Guaranteed Obligations, any
and all rights at law or in equity to subrogation, reimbursement, exoneration,
contribution, indemnification, set off or any other rights that could accrue to
a guarantor against a principal, maker or obligor, and which Guarantor may have
or hereafter acquire in connection with or as a result of Guarantor’s execution,
delivery and/or performance of this Guaranty. This waiver is intended to benefit
Shareholder and shall not limit or otherwise effect Guarantor’s liability
hereunder or the enforceability of this Guaranty.

 

2TARGET PRICE ADJUSTMENTS

 

The Target Price shall be subject to the following adjustments (collectively the
“Target Price Adjustments”) to be made without duplication:

 

2.1         Net Working Capital Adjustment

 

The Target Price shall be subject to a net working capital adjustment, which
shall be determined as follows:

 

2.1.1       At least three (3) business days prior to the Closing Date, the
Shareholder shall deliver to the Buyer a preliminary Net Working Capital
statement prepared in accordance with GAAP based upon the estimated Net Working
Capital of the Company as of the Closing Date (the “Preliminary Net Working
Capital Statement”).

 

2.1.2       As soon as reasonably practical after the Closing Date and in any
event not later than sixty (60) days following the Closing Date, the Buyer shall
review the books and records of the Company and such other documents as the
Buyer may reasonably determine to be necessary (including the working papers
used to prepare the Preliminary Working Capital Statement) and shall prepare and
deliver to the Shareholder a statement of assets and liabilities of the Company
as of the Closing Date (“Closing Date Financial Statements”) and a post-closing
Net Working Capital statement prepared in accordance with GAAP, reflecting the
actual Net Working Capital of the Company at the Closing (the “Post-Closing Net
Working Capital Statement”). Upon the Buyer’s completion of the Post-Closing Net
Working Capital Statement, the Buyer shall deliver such statement to the
Shareholder for acceptance or rejection. If Buyer does not deliver to
Shareholder a Post-Closing Net Working Capital Statement within said sixty (60)
day period, Shareholder may send written notice of such failure and demand for
such Statement to Buyer. If Buyer fails to provide such Statement to Shareholder
within fifteen (15) days of such demand, then Buyer shall be deemed to have
accepted the Preliminary Net Working Capital Statement.

 

BioZone Share Acquisition Agreement 4

 

 

2.1.3       After receipt of the Post-Closing Working Capital Statement, the
Shareholder shall have 30 days (the “Review Period”) to review the Closing
Working Capital Statement. During the Review Period, the Shareholder and the
Shareholder’s accountants shall have full access to the relevant books and
records of Buyer and the Company, the personnel of, and work papers prepared by,
Buyer and/or Buyer's accountants to the extent that they relate to the
Post-Closing Working Capital Statement and to such historical financial
information (to the extent in Buyer's possession) relating to the Post-Closing
Working Capital Statement as the Shareholder may reasonably request for the
purpose of reviewing the Post-Closing Working Capital Statement and to prepare a
Statement of Objections.

 

2.1.4       If the Shareholder accepts the Post-Closing Net Working Capital
Statement, the Shareholder shall notify the Buyer of such acceptance in writing
within thirty (30) days following the receipt of such statement. In the event
that the Net Working Capital reflected on the Post-Closing Net Working Capital
Statement is less than the Target Working Capital, the Shareholder shall, within
ten (10) business days following demand from the Buyer, pay such difference to
the Buyer, in cash. In the event that the Net Working Capital reflected on the
Post-Closing Net Working Capital Statement is greater than the Target Working
Capital, the Buyer shall, within ten (10) business days following demand of the
Shareholder, pay, in cash, such difference to the Shareholder. If, within the
Review Period, the Shareholder rejects the Post-Closing Net Working Capital
Statement, then the Shareholder shall notify the Buyer of such rejection in
writing together with reasonable details of the reasons therefore and any
supporting documentation, including working papers, reasonably necessary to
evaluate the Shareholder’s rejection of the Post-Closing Net Working Capital
Statement (the “Statement of Objections”). If the Shareholder does not provide
to the Buyer notice of acceptance or rejection of the Post-Closing Net Working
Capital Statement or or before the end of the Review Period, then the
Shareholder shall be deemed to have accepted the Post-Closing Net Working
Capital Statement.

 

2.1.5       In the event the Shareholder rejects the Post-Closing Net Working
Capital Statement as described in Section 2.1.2 above, then the Buyer and the
Shareholder shall thereafter discuss in good faith their differences regarding
the Post-Closing Net Working Capital Statement and use their reasonable efforts
to resolve such differences. In the event the Buyer and the Company are unable
to resolve such differences within ten (10) business days after receipt of the
Shareholder’s notice of rejection as described in Section 2.1.4 above, subject
to any reasonable extensions necessary to allow the Shareholder to provide the
supporting documentation referred to in Section 2.1.4, then the Buyer and the
Shareholder shall engage the Auditors to review the books and records of the
Company and such other documents as the Auditors may determine (including the
working papers used to prepare the Post-Closing Net Working Capital Statement)
for the purposes of resolving all the disputed items in a prompt and timely
fashion, and a copy of the written decision of the Auditors shall be delivered
by the Auditors to each of the Buyer and the Shareholder. The determination of
the Auditors shall be binding and conclusive on the Parties absent manifest
error. The Buyer and the Shareholder shall share equally in the cost of the
Auditors; provided however, if the Auditors determine that the actual Net
Working Capital is more than twenty percent (20%) higher than the Net Working
Capital shown on the Post-Closing Net Working Capital Statement, then the Buyer
shall pay the full cost of the Auditors; provided, further, if the Auditors
determine that the actual Net Working Capital is more than twenty percent (20%)
lower than the Net Working Capital shown on the Post-Closing Net Working Capital
Statement, then the Shareholder shall pay the full cost of the Auditors.

 

BioZone Share Acquisition Agreement 5

 

 

2.1.6       In the event the Auditors’ review pursuant to Section 2.1.5 results
in any adjustment of the amounts set forth in the Post-Closing Net Working
Capital Statement, then the Auditors shall prepare a revised Post-Closing Net
Working Capital Statement, which revised Post-Closing Net Working Capital
Statement shall be deemed to be the approved Post-Closing Net Working Capital
Statement for purposes of Section 2.1.4 above.

 

2.1.7       Any rights accruing to any Party under this Section 2.1 shall be in
addition to and independent of the rights to indemnification under Section 13.1
and any payments made to any Party under this Section 2.1 shall not be subject
to the requirements of Article 13; provided, however, that the remedies provided
in this Section 2.1 and any amounts payable pursuant to Article 13 shall be
cumulative, but not duplicative, provided further, however, that to the extent
an adjustment to the Purchase Price or Closing Payment, or a payment after the
Closing Date under this Section 2.1, has addressed a breach of a representation
or warranty under Section 4, the Buyer shall not be entitled to a claim under
Article 13 on account thereof to the extent the adjustment addressed the breach.

 

2.1.8       For purposes of determining the Target Price Adjustment under this
Section 2.1, the payment, elimination of payables, or other consequence of
performance of Section 3.5 shall be disregarded.

 

2.2         Deferred Maintenance and Missing Equipment

 

An adjustment to Target Price shall be made to reimburse Buyer for any
third-party costs incurred by Buyer within 180 days after the Closing, in excess
of $25,000, to perform any Deferred Maintenance to Company manufacturing
equipment (as set forth on Schedule 2.2 herein but expressly excluding “Mespac
Gel Line” and the “ALPS BFS Line” equipment) or to replace missing components
(other than ordinary course deferrals or losses) which have not been disclosed
herein. For purposes hereof “Deferred Maintenance” shall mean maintenance of
such equipment in general accordance with the applicable manufacturer’s written
maintenance guidelines which should have been, but was not, performed prior to
Closing. Any claim by Buyer for reimbursement of Deferred Maintenance must be
made within one hundred eighty (180) days of Closing.

 

2.3         Equipment Buyout Adjustment

 

A reduction to the Target Price shall be made for the cost to the Company on the
Closing Date of for the purchase of all equipment that is the subject of that
certain lease between Shareholder and CCA Financial, LLC that exceeds Nine
Hundred Thousand Dollars ($900,000.00).

 

3THE CLOSING

 

3.1         Closing.

 

The closing (“Closing”) with respect to the transactions provided for in this
Agreement shall take place remotely via the exchange of documents and signatures
at 5:00 p.m. Pacific Standard Time on April 29, 2016 (or on such later time and
date as the parties may agree). The time and date of the Closing is hereinafter
called the “Closing Date.”

 

BioZone Share Acquisition Agreement 6

 

 

3.2         Payment of Closing Payment.

 

At the Closing, the Buyer shall deliver the Closing Payment, as adjusted
pursuant to Section 2.3, and the payments to be made pursuant to Sections 3.4,
and 3.5 of this Agreement, by immediately available funds by electronic wire
transfer to an account in accordance with the written instructions of the
Shareholder.

 

3.3         Transfer of BioZone Shares.

 

At the Closing, the Shareholder shall transfer to Buyer or its nominee the
BioZone Shares, free and clear of all Liens. Said transfer shall be effected by
delivery to Buyer of the stock certificates representing the BioZone Shares duly
executed in blank or accompanied by duly executed stock powers in blank. The
Shareholder acknowledges that the BioZone Shares are unique and not otherwise
available, and agree that, in addition to any other available remedies, Buyer
may seek any equitable remedies to enforce performance by the Shareholder
hereunder, including, without limitation, an action for specific performance.

 

3.4         Gel Pack Purchase Order.

 

At the Closing, the Shareholder shall deliver to the Company its non-cancelable
purchase order and payment for Two Million Dollars ($2,000,000.00) of gel packs
(“Initial Purchase Order”) pursuant to the BioZone Manufacturing Agreement.

 

3.5         Accounts Payable Payment.

 

At the Closing, the Shareholder shall pay to the Company Three Hundred Fifty
Thousand Dollars ($350,000.00) (“AP Payment”) to be allocated to accounts
payable of the Company as determined by the Buyer and the Shareholder.

 

4REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER AND COMPANY

 

Shareholder and the Company hereby jointly and severally represent, warrant and
agree as of the date hereof and as of the date of the Closing as follows:

 

4.1         Organization and Qualification of Company.

 

The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada. The Company has all requisite
corporate power and authority to own, operate and lease its properties, to carry
on its business as now being conducted and to enter into this Agreement and
perform its obligations hereunder. The copies of the Articles of Incorporation
and Bylaws of the Company, as amended as of the date hereof, which have been
delivered by the Company to Buyer, are complete and correct. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each of the jurisdictions listed in Schedule 4.1 hereto and the Company has not
failed to qualify in any other jurisdiction where such qualification is
required, except where the failure to so qualify would not have a Material
Adverse Effect.

 

BioZone Share Acquisition Agreement 7

 

 

4.2         Subsidiaries; Names; Capital Stock; Officers and Directors

 

4.2.1       The Company has no subsidiaries.

 

4.2.2       The Company has not used any name for itself or its operations since
its incorporation.

 

4.2.3       The authorized capital stock of the Company consists of 100 shares
of common stock, with $.0010 par value per share, 100 shares of which are
outstanding. All such shares are owned by the Shareholder and have been duly
issued, are fully paid for and are non assessable. The Company holds no shares
of its common stock in its treasury. Except as set forth in Schedule 4.2.3
hereof, there are no outstanding or authorized subscriptions, options, warrants,
calls, rights, commitments or any other agreements of any character obligating
the Company to issue any additional shares of its common stock or any securities
convertible into or evidencing the right to subscribe for any shares of its
common stock, nor are there any voting trusts or any other agreements or
understandings with respect to the voting common stock of the Company.

 

4.2.4       There are no shareholders’ agreements, pooling agreements, voting
trusts or other similar agreements with respect to the ownership or voting of
any of the shares of the Company.

 

4.2.5       Schedule 4.2.5 hereto sets forth a true and complete list of the
officers and directors of the Company.

 

4.3         Authority of the Shareholder.

 

The execution, delivery and performance by the Company of this Agreement and the
other agreements, documents, and instruments contemplated hereby to which the
Company is or will be a party (the “Ancillary Documents”) have been duly and
effectively authorized by all necessary corporate action by the Company. This
Agreement has been, and the Ancillary Documents will be, duly executed by the
Company and the Shareholder and are or will be valid, legally binding and
enforceable obligations of the Company and the Shareholder except as
enforceability may be limited by bankruptcy, insolvency or laws affecting
creditors’ rights generally.

 

4.4         Effect of Agreement.

 

Except as set forth in Schedule 4.4 hereto, the execution, delivery and
performance of this Agreement and each of the Ancillary Documents by the Company
and the Shareholder and the consummation of the transactions contemplated hereby
will not (a) require the consent, approval or authorization of any person,
corporation, partnership, joint venture or other business association or public
authority; (b) to the best knowledge of the Company and the Shareholder,
violate, with or without the giving of notice or the passage of time, or both,
any provisions of law or statute or any rule, regulation, order, award, judgment
or decree of any court or governmental authority applicable to the Company or
the Shareholder; or (c) with or without the giving of notice, the passage of
time, or both conflict with or result in a breach or termination of any
provision of, accelerate the performance or maturity of, constitute a default
under, or result in the creation of any lien, charge or encumbrance upon any of
the Assets of the Company or upon any of the BioZone Shares pursuant to any
corporate charter, bylaw, indenture, note, bond, mortgage, deed of trust, lease,
contract, permit, agreement or other instrument, or any order, judgment, award,
decree, statute, ordinance, regulation or any other restriction of any kind or
character, to which the Company or the Shareholder is a party, or by which the
Company or the Shareholder or any of their respective assets may be bound.

 

BioZone Share Acquisition Agreement 8

 

 

4.5         Financial Statements.

 

The balance sheet of the Company as of January 31, 2016, and related statements
of income for the year then ended, reviewed by the independent certified public
accountants for the Company in conjunction with the annual audit performed for
the Shareholder (no audit procedures were completed for the Company as a
stand-alone entitiy), and the balance sheet as of January 31, 2016 (the
“Pre-Closing Balance Sheet”), and related statement of income and retained
earnings for the same period, all as set forth in Schedule 4.5 hereto, are in
accordance with the books and records of the Company and fairly present the
financial position and results of operations of the Company as of the dates and
for the periods indicated except as set forth on Schedule 4.5. The balance sheet
for the year ended January 31, 2016 and the statements of income and retained
earnings for the same periods are collectively referred to herein as the
“Financial Statements.” The Pre-Closing Balance Sheet fairly presents the
financial position of the Company as of its date (“Balance Sheet Date”), subject
to adjustment for transactions occurring thereafter.

 

4.6         Undisclosed Liabilities.

 

Except as set forth on Schedule 4.6, as of the Closing the Company will not have
any Liability except (a) those which are adequately reflected or reserved
against in the Pre-Closing Balance Sheet as of the Balance Sheet Date, and (b)
those which have been incurred in the ordinary course of business consistent
with past practice since the Balance Sheet Date.

 

4.7         Absence of Certain Changes or Events.

 

Since the Balance Sheet Date, in conducting its business and affairs, including
but not limited to use and operation of the Company’s Assets, the Company has
not:

 

4.7.1       incurred any obligation or liability (contingent or otherwise)
except (i) normal trade or business obligations incurred in the ordinary course
of business, the performance of which will not, individually or in the
aggregate, have a Material Adverse Effect and (ii) obligations under contracts,
agreements, leases and easements described in Schedule 4.7 hereto, the
performance of which will not, individually or in the aggregate, have a Material
Adverse Effect on the Company’s financial condition or results of operations;

 

4.7.2       discharged or satisfied any lien or encumbrance or paid any
obligation or liability (contingent or otherwise), except (i) current
liabilities included in the Financial Statements, (ii) current liabilities that
have been incurred since the Balance Sheet Date in the ordinary course of
business and consistent with past practices in all material respects and (iii)
scheduled payments pursuant to obligations under contracts, agreements, leases
and easements described in Schedule 4.7 hereto;

 

4.7.3       mortgaged, pledged or subjected to any Lien any of the Assets of the
Company (whether tangible or intangible);

 

4.7.4       made any material additions to, sold, assigned, transferred,
conveyed, leased or otherwise disposed of, or agreed to sell, assign, transfer,
convey, lease or otherwise dispose of any of its Assets or properties, except
for fair consideration in the ordinary course of business;

 

BioZone Share Acquisition Agreement 9

 

 

4.7.5       canceled or compromised any debt or claim, except for adjustments
made in the ordinary course of business that, in the aggregate, are not
material;

 

4.7.6       waived or released any rights, other than in the ordinary course of
business;

 

4.7.7       transferred or granted any rights under any concessions, leases,
licenses, agreements, patents, inventions, trademarks, trade names, copyrights,
or with respect to any know how;

 

4.7.8       made or granted any general wage or salary increase or entered into
any employment contract with any officer or employee involving an annual basic
rate of compensation in excess of $50,000 or a period of employment of more than
thirty days;

 

4.7.9       entered into any transaction, contract or commitment other than in
the ordinary course of business;

 

4.7.10     made any capital expenditure or entered into any commitment therefor
that, individually, exceeds $10,000;

 

4.7.11     suffered any material casualty loss or damage, whether or not such
loss or damage will have been covered by insurance;

 

4.7.12     suffered any Material Adverse Effect;

 

4.7.13     except as set forth in Schedule 4.7, declared any dividend or made
any payment or other distribution in respect of the Company’s capital stock to
its Shareholder;

 

4.7.14     purchased, redeemed, issued, sold or otherwise acquired or disposed
of any of its shares of capital stock or any evidence of its indebtedness or any
other of its securities or granted any options, warrants or other rights to
purchase or convert any obligation into any shares of capital stock or any
evidence of indebtedness or other securities of the Company;

 

4.7.15     made any charitable contribution not in accordance with past practice
or entered into any commitment therefor;

 

4.7.16     lost any supplier or suppliers which loss or losses, individually or
in the aggregate, has or is likely to have a Material Adverse Effect;

 

4.7.17     lost any customer or customers which loss or losses, individually or
in the aggregate, has or is likely to have a Material Adverse Effect; or

 

4.7.18     introduced any material change with respect to the operation of its
business, including its method of accounting, whether by act or by lapse of time
or attention, except as otherwise agreed to in writing by Buyer.

 

4.8         Deposits

 

Since January 31, 2016, no deposits from customers of the Company have been
transferred to Shareholder.

 

BioZone Share Acquisition Agreement 10

 

 

4.9         Tax Matters.

 

The Company has duly filed with the appropriate United States, state and local
governmental agencies, and with the appropriate foreign countries and political
subdivisions thereof, all tax returns and reports required to be filed; such
returns and reports are accurate and complete; and the Company has paid in full
or made adequate provisions for all taxes, interest, penalties, assessments or
deficiencies shown to be due on such tax returns and reports or claimed to be
due by any taxing authority or otherwise due and owing. The Company has made all
withholdings of tax required to be made under all applicable United States,
state and local tax regulations including, without limitation, with respect to
any person providing services for or on behalf of the Company, and such
withholdings have either been paid to the appropriate governmental agencies or
set aside in accounts for such purpose or accrued, reserved against and entered
upon the books of the Company. Except as described in Schedule 4.9 hereto, the
Company has not executed or filed with the Internal Revenue Service or any other
taxing authority, domestic or foreign, any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any taxes. Except as described in Schedule 4.9 hereto, the Company
is not a party to any pending action or proceeding, nor, to the knowledge of the
Company or the Shareholder, is any action or proceeding threatened, by any
governmental authority for assessment or collection of taxes and no claim for
assessment or collection of taxes has been asserted against the Company.

 

4.10       Title to BioZone Shares; Title to Properties; Absence of Liens and
Encumbrances; Leases.

 

4.10.1     The Shareholder is the owner of all of the BioZone Shares, free and
clear of any Liens or other obligations or commitments, and the BioZone Shares
have been duly authorized and are fully paid and non assessable. Shareholder has
the absolute and unencumbered right to sell, assign, transfer and deliver the
BioZone Shares to Buyer, and, at Closing, Buyer will acquire full legal and
equitable title to the BioZone Shares, free and clear of all Liens. There are no
agreements of any kind relating to the sale or transfer of the BioZone Shares,
or any convertible or exchangeable securities or any options, warrants or other
rights relating to the BioZone Shares, and there are no voting agreements,
voting trusts, buy-sell agreements, options or right of first purchase or
refusal agreements or other agreements of any kind relating to the BioZone
Shares. Upon delivery of the stock certificates representing said shares
together with stock powers as described in Section 1.2 hereof, Buyer will have
good title to the BioZone Shares conveyed to Buyer hereunder, free and clear of
any Liens.

 

4.10.2     The Company owns no real property and has good title to all of its
personal property and Assets, tangible and intangible (including all property
reflected in the Financial Statements or in Schedule 4.11 hereto), free and
clear of all Liens, except as set forth on Schedule 4.10.2.

 

4.11       List of properties, Contracts and Other Data.

 

Schedule 4.11 hereto is a correct and complete list setting forth the following
information with respect to the Assets of the Company (indicating in each case,
where appropriate, whether or not the consent by a third party is required in
connection with the sale of the BioZone Shares to Buyer):

 

4.11.1     all leases and easements of real property to which the Company is a
party and belonging to or used in its business, and a brief description of the
principal buildings and structures located thereon and the equipment located
therein, with the annual rental rate of each lease and easement, the termination
date of each lease and easement and the conditions of renewal thereof being
given in each case;

 

BioZone Share Acquisition Agreement 11

 

 

4.11.2     all rights, licenses, leases of personal property, permits,
franchises, concessions, certificates of public convenience and the like that
the Company is a party to and belonging to or used in its business, together
with a brief description of the terms thereof;

 

4.11.3     all United States and foreign patents, trademarks and trade names,
trademark and trade name registrations, copyrights and copyright registrations,
unexpired as of the date hereof, all United States and foreign applications
pending for patents, for trademark or trade name registrations, or for copyright
registrations, and all trademarks, trade names (including, without limitation,
any names used by the Company in the operation of its business or to identify
any of its products or services, whether registered or unregistered), labels and
other trade rights in use by the Company, all of the foregoing belonging to or
used in its business and being owned in whole or in part as noted thereon by the
Company and (ii) all licenses granted by or to the Company and all other
agreements to which the Company is a party, which relate in whole or in part to
any items of the categories mentioned in clause (i) above or to any other
proprietary rights belonging to or used in its business, whether owned by the
Company or otherwise;

 

4.11.4     all existing contracts and commitments belonging to or used in the
Company’s business (including loan agreements, credit agreements and security
agreements) to which the Company is a party or by which the Company or any of
its properties or assets is bound, except (i) contracts or commitments involving
the payment by or to the Company of less than $25,000 with respect to any one
contract or commitment or $50,000 with respect to any related group of contracts
or commitments, (ii) contracts or commitments terminable by the Company without
liability or expense on 30 days’ notice or less, and (iii) contracts or
commitments for the purchase or sale of merchandise or services entered into in
the ordinary course of business, the performance of which by the Company will
extend over a period of less than three months and that will not have any
Material Adverse Effect on the financial condition or results of operations of
the Company;

 

4.11.5     all collective bargaining agreements, pension plans, employment and
consulting agreements, executive compensation plans, bonus plans, incentive
compensation plans, deferred compensation agreements, employee pension plans or
retirement plans, employee profit sharing plans, employee stock purchase and
stock option plans and hospitalization insurance or other plans or arrangements
providing for benefits for employees or former employees of the Company;

 

4.11.6     the names and current annual salary rates of all present directors
and officers of the Company and the names and current annual salary rates of all
employees of the Company whose current basic annual salary rate (exclusive of
sales commissions and bonuses) is $50,000 or more;

 

4.11.7     the name of each bank or other financial institution from which
credit commitments to the Company are outstanding; and

 

4.11.8     the name of each bank in which the Company has an account or safe
deposit box and the names of all persons authorized to draw thereon or to have
access thereto.

 

True and complete copies of all documents, including all amendments thereto,
referred to in such list have been delivered to Buyer. All documents, rights,
obligations and commitments referred to in such list are valid and enforceable
in accordance with their terms for the periods stated therein, except as
enforceability may be limited by bankruptcy, insolvency or laws affecting
creditors rights generally, and there is not under any of them any existing
breach, default, event of default or event that with the giving of notice or
lapse of time, or both, would constitute a default by the Company nor has any
party thereto given notice of or made a claim with respect to any breach or
default. To the best knowledge of the Company and the Shareholder, there are no
existing laws, regulations or decrees that adversely affect any of such
documents, rights, obligations or commitments. None of the contracts referenced
or listed on Schedule 4.11 was obtained or executed based in whole or in part on
the fact or representation that the Company is a minority or woman owned or
operated business or a small business enterprise as those or similar terms are
defined by Federal or state statutes or regulations.

 

BioZone Share Acquisition Agreement 12

 

 

4.12       Litigation.

 

Except as disclosed in Schedule 4.12 hereto, there are no claims, counterclaims,
actions, suits, countersuits, proceedings or investigations pending or, to the
best knowledge of the Company and the Shareholder, threatened against or
affecting the Company at law or in equity or in admiralty, or before or by any
federal, state, municipal or governmental or nongovernmental department,
commission, board, bureau, agency or instrumentality, United States or foreign,
nor does the Company or Shareholder know of any facts which would provide a
basis for any such claim, action, suit, proceeding or investigation. Except as
set forth in Schedule 4.12, no claim, action, suit, proceeding or investigation
described in Schedule 4.12 could, if adversely decided, have a Material Adverse
Effect on Company.

 

4.13       Labor Matters.

 

Except as disclosed in Schedule 4.13 hereto, there are no controversies pending
or (to the best knowledge of the Company and the Shareholder) threatened between
the Company and any of its employees; the Company has not taken or failed to
take any action that would provide a reasonable basis for any such controversy.
There are no proceedings now pending or, to the Company’s or Shareholder’s
knowledge or belief, threatened against the Company before the National Labor
Relations Board, any state department of labor, any state commission on human
rights, the Equal Employment Opportunity Commission or any other local, state or
federal agencies having jurisdiction over employee rights with respect to
hiring, tenure or conditions of employment, nor have there been any such
proceedings since June 30, 2015. The Company has complied in all material
respects with respect to all employees, including, without limitation, staff
employees and those chargeable to others, with all laws relating to the
employment of labor, including any provisions thereof relating to wages, hours,
collective bargaining and the payment of social security and similar taxes, and
is not liable for any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing. All non exempt employees have been paid
appropriate and correct premium wages where applicable. To the best knowledge of
the Company and the Shareholder, there are no present employees of the Company
who will not be available for employment by Company after the BioZone Shares are
conveyed to Buyer on substantially the same terms and conditions as they are
employed by the Company on the date hereof and immediately prior to such
conveyance. There are no organizational efforts presently being made or (to the
best knowledge of the Company and the Shareholder) threatened by or on behalf of
any labor union with respect to employees of the Company.

 

BioZone Share Acquisition Agreement 13

 

 

4.14       Patents; Trademarks; Intellectual Property Rights.

 

The Company has protected by way of trademark, trade name or otherwise to the
fullest extent permitted by the law the names set forth in Schedule 4.14 hereto.
Except as described in Schedules 4.11 or 4.14 hereto, all patents, trademarks,
trade names, copyrights, trade secrets, registrations, applications, internet
domain names, technical information, data, formulae, blueprints, drawings,
computer hardware and software, proprietary know how, manufacturing procedures,
process and the like (including, without limitation, any proprietary software or
databases created or compiled by the Company or its employees) necessary for or
used in the conduct of the Company’s business as now conducted (the
"Intellectual Property Rights") (a) all Intellectual Property Rights are in good
standing, are valid and enforceable, except as enforceability may be limited by
bankruptcy, insolvency or laws affecting creditors rights generally, and are
free from any default on the part of the Company and (b) the Company is not a
licensor of any Intellectual Property Rights. The Company has duly licensed all
computer software it currently uses that it does not own and has paid all fees
and other amounts payable under all such licenses. Except as set forth on
Schedule 4.14, no director, officer or employee of the Company owns, directly or
indirectly, in whole or in part, any of the Intellectual Property Rights or
interests therein that the Company has used, is presently using, or the use of
which is necessary for the Company’s business as now conducted. Except with
respect to the rights of third parties with respect to licensed Intellectual
Property Rights, to the best knowledge of the Company and the Shareholder, no
third party has any right to reproduce, modify, offer for sale or license,
distribute, market or exploit any works or materials of which any of the
Company’s products are a “derivative work” as that term is defined in the United
States Copyright Act, Title 17, U.S.C. § 101. To the best knowledge of the
Company and the Shareholder, none of the Intellectual Property Rights used in or
necessary for the Company’s business as now conducted, nor the conduct of the
Company’s business as it is now conducted or has been conducted, conflicts with
or infringes, nor has the Company received any written communications or oral
communications to the Shareholder alleging that the Company has violated or, by
conducting its business, would violate, any Intellectual Property Rights of any
other person. The transactions contemplated under this Agreement will not alter,
impair or otherwise affect any rights of the Company in the Intellectual
Property Rights. The Company has taken commercially reasonable measures to
protect the proprietary nature of the Intellectual Property Rights and to
maintain in confidence all trade secrets and confidential information owned or
used by the Company. There are no legal or governmental proceedings, including
interference, re-examination, reissue, opposition, nullity, or cancellation
proceedings pending that relate to any of the Intellectual Property, other than
review of pending patent applications, and to the best knowledge of the Company
and of the Shareholder, such proceedings are not threatened or contemplated by
any governmental entity or any other Person. To the best knowledge of the
Company and the Shareholder, there is no unauthorized use, disclosure,
infringement or misappropriation of any Intellectual Property Rights of the
Company by any third party, including, without limitation, any employee, former
employee or independent contractor of Company. Company has not entered into any
agreement to indemnify any other person or business entity against any charge of
infringement of any Intellectual Property Rights.

 

4.15       Assets.

 

Schedule 4.15 is a complete list of all Assets. Except as set forth on Schedule
4.15, the tangible personal property of the Company is in good operating
condition, normal wear and tear excepted, and each item of tangible personal
property is fit for the purpose for which it is used as of the Closing Date.
There are no actions pending or, to the best knowledge of the Company and the
Shareholder, threatened or consent decrees, orders or agreements entered by the
United States, any state or local regulatory agency or court with respect to the
compliance of such property with applicable laws, statutes, ordinances or
regulations, including, without limitation, the Environmental Laws (as that term
is defined in Section 4.23.3 hereof).

 

BioZone Share Acquisition Agreement 14

 

 

4.16       Insurance.

 

Schedule 4.16 contains a complete and accurate list of all current policies or
binders of Insurance (showing as to each policy or binder the carrier, policy
number, coverage limits, expiration dates and a general description of the type
of coverage provided, including, without limitation, whether coverage is on a
claims-made or per occurrence basis) maintained by the Company and relating to
its properties, Assets and personnel. Except as set forth on Schedule 4.16, (a)
the Insurance is in full force and effect and sufficient for compliance in all
material respects with all requirements of applicable law and of all contracts
to which the Company is a party, (b) the Company is not in material default
under any of the Insurance, (c) the Company has given any notice and presented
any claims under any of the Insurance in a due and timely manner, (d) no notice
of cancellation, termination, reduction in coverage or increase in premium
(other than reductions in coverage or increases in premiums in the ordinary
course) has been received with respect to any of the Insurance, (v) all premiums
with respect to any of the Insurance have been timely paid, and (vi) the Company
has experienced no claims in excess of current coverage of the Insurance.

 

4.17       Trade Notes and Accounts Receivable; Trade Notes and Accounts
Payable; Inventory.

 

4.17.1     All of the accounts receivable of the Company are bona fide
receivables, are reflected on the books and records of the Company and arose in
the ordinary course of business. Except as set forth on Schedule 4.17, no person
has any liens on the accounts receivable, there is no right of offset against
any of the accounts receivable, and no agreement for deduction or discount has
been made with respect to any of the accounts receivable other than ordinary
course trade discounts.

 

4.17.2     The trade notes and accounts payable of the Company reflected on the
Financial Statements, or otherwise arising through the Closing Date, (i) arose
and will arise from bona fide transactions in the ordinary course of business of
the Company and (ii) were paid or are not yet due and payable in accordance with
their terms.

 

4.17.3     Except as set forth on Schedule 4.17, (a) all of the Inventory of the
Company is owned by the Company and free and clear of any Liens, (b) none of the
Inventory is on consignment, (c) the Inventory owned by the Company as reflected
in the Financial Statements is not obsolete and has been valued in a manner
consistent with past practices and procedures and in accordance with GAAP and
(d) is not held by the Company (on consignment or otherwise) for or on behalf of
any other Person. Schedule 4.17 sets forth all of the Inventory of the Company
as of January 31, 2016, and except as set forth therein, the Inventory consists
of raw materials and supplies, work in process and finished products, salable
and/or usable within a period of time consistent with the Company’s past
experience in the ordinary course of business, subject only to write down
consistent with the Company’s established accounting practices. Except as set
forth on Schedule 4.17, the Inventory is fit and sufficient for the purpose for
which it was procured or manufactured, is in marketable condition and is not
excessive in kind or amount in light of the Company’s past experience in the
ordinary course of business.

 

4.18       Licenses; Permits; Authorizations.

 

Schedule 4.18 hereto is a schedule of all approvals, authorizations, consents,
licenses, orders and permits (except for sales and use tax permits and franchise
tax regulations) of all governmental agencies, whether United States, state or
local, or foreign, required by the nature of the business conducted by the
Company to permit the continued operation of such business in the manner in
which it was conducted immediately prior to the date hereof (indicating in each
case, where appropriate, whether or not the consent by a third party to the
transfer to Buyer is required and the expiration date of any governmental
approvals). The Company has all approvals, authorizations, consents, licenses,
orders and other permits of all governmental agencies, whether United States,
state, local or foreign, required to permit the operation of the Company’s
business as presently conducted and the Company’s business is and has been
operated in all material respects in compliance therewith.

 

BioZone Share Acquisition Agreement 15

 

 

4.19       Compliance with Applicable Law.

 

The conduct of the Company’s business does not violate or infringe any domestic
or foreign laws, statutes, ordinances or regulations or, any right or patent,
trademark, trade name, copyright, know how or other proprietary right of third
parties, the enforcement of which would have a Material Adverse Effect.

 

4.20       Pension and Employee Benefit Plans.

 

4.20.1     The Company is not a party to and has not contributed to any employee
pension benefit plan (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)) or employee welfare benefit
plans (as defined in Section 3(1) of ERISA and including, in each case, multi
employer plans) or any incentive, bonus, profit sharing, deferred compensation,
stock option, stock purchase plan or agreement, severance, termination or other
compensation plan or arrangement, or any other material employee fringe benefit
plans presently maintained by, or contributed to by the Company, as defined
below, except those described on Schedule 4.11 hereto. The Company’s pension
plans (the “Plans”) are duly qualified under Section 401 of the Internal Revenue
Code (the “Code”), all reports and actions required to be taken in connection
with such Plans have been so taken, there have been no reportable events or
prohibited transactions in connection with such Plans nor any termination or
partial termination with respect thereto or to any other plan maintained by the
Company or by an entity controlling, controlled by, or under common control with
the Company.

 

4.20.2     The Company and each of the Benefit Plans are in compliance in all
material respects with the applicable provisions of ERISA, and those provisions
of the Code applicable to Benefit Plans.

 

4.20.3     Except as may be disclosed on the Financial Statements or the
Pre-Closing Balance Sheet, the Company does not have any liability with respect
to any Benefit Plan, nor is any asset of the Company subject to any lien under
Code Section 401(a)(29), ERISA Section 302(f) or Code Section 412(n), ERISA
Section 4068 or arising out of any action filed under ERISA Section 4301(b).

 

4.20.4     The Company has not incurred any liability that could subject any of
the parties to this Agreement to material liability under Section 4062, 4063 or
4064 of ERISA.

 

4.20.5     The Company is not required to contribute to any multiemployer plan
within the meaning of Section 4001(a)(3) or ERISA. The Company has not incurred
any withdrawal liability, within the meaning of Section 4201 of ERISA, to any
multiemployer pension plan, which liability has not been fully paid as of the
date hereof.

 

4.21       No Noncompetes.

 

Except to the extent that Shareholder is a customer of the Company, neither the
Company nor the Shareholder (and/or any member of their respective immediate
families) has a financial interest (direct or indirect) in any competitor,
supplier or customer of the Company. The Company has not entered into any
noncompete agreement or other arrangement that would restrict its ability to
compete in any line of commerce.

 

BioZone Share Acquisition Agreement 16

 

 

4.22       Assets Relationship to Business of the Company.

 

The Assets owned or leased by the Company constitute all of the properties and
assets used or useful in or necessary to the conduct of the business and affairs
of the Company and, as such, constitute all of the properties and assets
necessary in order for Buyer to conduct business operations subsequent to the
Closing in the manner in which the same are presently conducted by the Company.

 

4.23       Environmental Matters.

 

4.23.1     The Company has been issued and is in compliance with all federal,
state and local permits, certificates, licenses, approvals and other
authorizations and has filed all notifications, relating to air emissions,
effluent discharges and solid and hazardous waste storage, treatment and
disposal required in connection with the operation of the business of the
Company.

 

4.23.2     There are no outstanding notices of violation, orders, claims,
citations, complaints, penalty assessments, suits or other proceedings,
administrative, civil, criminal, at law or in equity pending against the Company
and, to the best knowledge of the Company and the Shareholder, no investigation
or review is pending or threatened against the Company by any governmental
entity with respect to any alleged violation of any federal, state or local
environmental law, regulation, ordinance, standard, permit or order in
connection with the conduct of the business of the Company.

 

4.23.3     Except as otherwise disclosed on Schedule 4.23 hereto, the Company is
not in violation of The Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (“CERCLA”), The Superfund Amendments and Reauthorization
Act of 1986, The Resource Conservation and Recovery Act of 1976, as amended by
the Hazardous and Solid Waste Amendments of 1984, The Clean Water Act, the Toxic
Substances Control Act and The Clean Air Act or any rule or regulation
promulgated pursuant to any of the foregoing statutes, or any other applicable
environmental law, statute, rule, regulation or ordinance (all of the foregoing
are hereinafter sometimes collectively referred to as the “Environmental Laws”).

 

4.23.4     Except as otherwise disclosed in Schedule 4.23 hereto, or in
compliance with all applicable laws, neither the Company, nor any of its
officers, employees, agents or independent contractors has arranged, by
contract, agreement or otherwise, (i) for the disposal or treatment of, or (ii)
with a transporter for the transport or disposal or treatment of, any hazardous
substance (as defined by CERCLA, as amended);

 

4.23.5     The Company is neither an “owner” nor “operator” of a “facility” as
defined by CERCLA, as amended;

 

4.23.6     Except as otherwise set forth in Schedule 4.23, the Company did not
“own” or “operate” any “facility” at the time any hazardous substances were
disposed of within the meaning of CERCLA, as amended.

 

BioZone Share Acquisition Agreement 17

 

 

4.23.7     No hazardous, toxic or polluting substances have been released,
discharged or disposed of on property now or formerly owned or operated by the
Company. To the best knowledge of the Company and the Shareholder, no PCBs,
asbestos or urea formaldehyde insulation is present at any such property. Except
as set forth on Schedule 4.23, there are no underground storage tanks at the
property of the Company. The Company has not received from any federal, state or
local environmental regulatory entity or third party requests for information,
notice of claim, demand letters, or other notification that in connection with
the conduct of the business, it is or may be potentially responsible with
respect to any investigation or clean up of hazardous substance releases at any
sites.

 

4.23.8     No wastes generated by the Company have ever been sent directly or,
to the best of the Company’s and the Shareholder’s knowledge, indirectly to any
site listed or formally proposed for listing on the National Priority List
promulgated pursuant to CERCLA or to any site listed on any state list of
hazardous substance sites requiring investigation or clean up.

 

4.24       Books and Records.

 

The books, records and work papers of the Company are complete and correct, have
been maintained in accordance with good business practices and accurately
reflect the basis for the financial condition and results of operations of the
Company set forth in the Financial Statements. The corporate record books of the
Company have been duly and properly maintained, are in good order; substantially
complete, accurate, and up to date; and set forth all meetings and actions
heretofore held and/or taken by the shareholders and/or directors of the
Company.

 

4.25       Condition of Assets.

 

All material tangible personal property used by the Company in or in connection
with its business or any part thereof, is and as of the Closing Date will be in
good operating condition, repair and proper working order, having regard to its
use and age, except only for reasonable wear and tear.

 

4.26       Product Warranty; Company Liability.

 

Each product or service manufactured, sold, or delivered by the Company has and
prior to the Closing Date will have been manufactured, sold, and delivered in
conformity with all applicable contractual commitments and, except as expressly
limited or excluded in any contract covering such products and services, all
express and implied warranties. Schedule 4.26 is a complete and accurate list of
all express, written warranties given to customers of the Company. Except to the
extent of any amount reserved in the Pre-Closing Balance Sheet there exists and
as of the Closing Date there will be no Liability (and there is no known basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against the Company or Shareholder giving
rise to any Liability) for replacement, repair or re-performance or other
damages (other than for warranty claims in the ordinary course of the business
of the Company) in connection with any product or service provided by the
Company prior to the Closing Date. The Company has no Liability (and there is no
known basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against Company giving rise
to any Liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product or service previously
furnished by the Company. For purposes hereof, “Liability” means any expense,
liability or obligation of any kind, character, or description, whether known or
unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed,
liquidated or unliquidated, secured or unsecured, joint or several.

 

BioZone Share Acquisition Agreement 18

 

 

4.27       Disclosure.

 

No representation or warranty in this and no statement contained elsewhere in
this Agreement or in any Schedule, Exhibit, Certificate or other document
furnished or to be furnished to Buyer pursuant hereto or in connection with the
transactions contemplated under this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact or any fact necessary to make the statements contained therein not
materially misleading. With respect to all representations and warranties herein
which are made “to the best of Shareholder' knowledge,” the Shareholder shall be
deemed to have knowledge of any matter or fact (a) if the Shareholder has actual
personal knowledge of such matter or fact, (b) if the Shareholder has
information from which a person of reasonable intelligence would infer that the
matter or fact in question exists, (c) if the Shareholder should have
ascertained such matter or fact in the performance of any duty he may have as an
officer, director or employee of the Company, if and only to the extent that the
failure by the Shareholder who is an officer, director or employee of the
Company to so ascertain such matter of fact in the performance of any duty he
may have as an officer, director or employee of the Company would constitute
gross negligence, or (d) if any of the Company's senior management, which shall
mean any person at or above the office of Vice President, has actual personal
knowledge of such matter or fact.

 

5REPRESENTATIONS AND WARRANTIES BY BUYER

 

As of the date hereof and as of the date of the Closing, Buyer and Guarantor,
jointly and severally, represent and warrant to the Shareholder as follows:

 

5.1         Authority of Buyer.

 

This Agreement and each of the agreements and other documents and instruments
delivered or to be delivered by Buyer and Guarantor pursuant to or in
contemplation of this Agreement will constitute, when so delivered, the valid
and binding obligation of Buyer and/or Guarantor, as the case may be, and shall
be enforceable in accordance with their respective terms. The execution,
delivery and performance of this Agreement and each such agreement, document and
instrument has been duly authorized by all necessary corporate action of Buyer
and/or Guarantor and is within Buyer's and/or Guarantor’s corporate powers. The
execution, delivery and performance of any such agreement, document or
instrument by Buyer and/or Guarantor and the execution, delivery and performance
of this Agreement or any other agreement, document or instrument by the Buyer or
the Guarantor does not and will not with the passage of time or the giving of
notice or both:

 

5.1.1       result in a breach of or constitute a default under any indenture or
loan or credit agreement or under any agreement of the Buyer or the Guarantor,
or any other material agreement, lease or instrument to which Buyer or the
Guarantor is a party or by which the property of Buyer or the Guarantor is bound
or affected;

 

5.1.2       result in a violation of or default under any law, rule, or
regulation, or any order, writ, judgment, injunction, decree, determination,
award, indenture, material agreement, lease or instrument now in effect having
applicability to Buyer; or

 

5.1.3       require any approval, consent or waiver of, or filing with, any
entity, private or governmental, which has not been obtained.

 

BioZone Share Acquisition Agreement 19

 

 

5.2         Disclosure.

 

No representation or warranty in this Article 5, and no statement contained
elsewhere in this Agreement or in any schedule, exhibit, certificate or other
document furnished or to be furnished by Buyer to Shareholder pursuant hereto or
in connection with the transactions contemplated under this Agreement contains
any untrue statement of a material fact or omits or will omit to state a
material fact or any fact necessary to make the statements contained therein not
materially misleading.

 

6TRANSACTIONS PRIOR TO THE CLOSING DATE

 

The Company and Shareholder covenant and agree as follows throughout the period
from the date hereof through and including the Closing:

 

6.1         Access to Information.

 

The Company will give to Buyer, its employees, counsel, accountants, engineers
and other consultants and representative, reasonable access during normal
business hours throughout the period prior to the Closing Date to the Assets,
books, contracts, commitments and records of the Company for such purposes as
Buyer deems appropriate, including, but not limited to, calculating the gross
margin realized by the Company on its sale of the its goods and services, and
will furnish to Buyer during such period all such information concerning the
affairs of the Company as either Buyer or its representatives may reasonably
request. Buyer will use its best efforts to cause its representatives to hold in
strict confidence all information so obtained from the Company and, if the
transactions herein provided for are not consummated as contemplated herein,
will return all such data as the Company may reasonably request. If any
representatives of Buyer or its affiliated entities visit any property
controlled by the Company or the Shareholder or their Affiliates, Buyer and
Guarantor shall defend, release, indemnify and hold harmless the Shareholder and
the Company from any and all loss, liability, claim or suit which the Buyer’s
representatives, may assert against the Shareholder or the Company, based upon
injury to their person (including death) or to property occurring while on such
property, arising in any manner whatsoever, unless such injury is determined by
a non-appealable judgment to have been caused solely by the gross negligence or
intentional tort of the Shareholder or the Company.

 

6.2         Conduct of the Company’s Business Pending the Closing Date.

 

The Company hereby agrees, and the Shareholder will cause the Company to,
throughout the period from the date hereof through to the Closing Date:

 

6.2.1       operate its business only in the usual, regular and ordinary manner
and, to the extent consistent with such operation, use its reasonable best
efforts to preserve its present business organization and reputation intact,
keep available the services of its present officers and employees and preserve
its present relationships and good will with persons having business dealings
with it;

 

6.2.2       pay and discharge the liabilities of the Company in the ordinary
course of its business in accordance and consistent with the past practice of
the Company;

 

6.2.3       maintain all of its properties in customary repair, order and
condition, reasonable wear and use excepted, and maintain insurance upon all of
its properties and with respect to the conduct of its business in such amounts
and of such kinds comparable to that in effect on the date hereof; and, in the
event of a casualty, loss or damage to any of such properties prior to the
Closing Date for which the Company is insured, the Company will, at Buyer’s
option, either repair or replace such damaged property or transfer the proceeds
of such insurance to Buyer;

 

BioZone Share Acquisition Agreement 20

 

 

6.2.4       maintain its books, accounts and records in the usual, regular and
ordinary manner, on a basis consistent with prior years; endeavor to materially
comply with all laws and contractual obligations applicable to it and to the
conduct of its business; and perform all of its obligations without default;

 

6.2.5       use its commercially reasonable efforts to comply in all material
respects with all laws applicable to it and the conduct of its business;

 

6.2.6       conduct its operations so as to comply in all material respects with
all Environmental Laws;

 

6.2.7       make no amendment in its Articles of Incorporation or Bylaws; and
enter or agree to enter into no merger or consolidation with, or sale of a
significant amount of its Assets to, any corporation or change the character of
its business in any manner;

 

6.2.8       make no change in the number of shares of its capital stock issued
and outstanding; and grant or make no option, warrant or any other right to
purchase or to convert any obligation into shares of its capital stock;

 

6.2.9       purchase or redeem none of such shares and dispose of no evidence of
indebtedness or other security of the Company;

 

6.2.10     make or grant no general wage or salary increase or increase in
compensation payable or to become payable to any employee, officer, director or
agent; pay or provide for no bonus, stock option, stock purchase, profit
sharing, deferred compensation, pension, multi employer pension, retirement or
other similar payment or arrangement except in the ordinary course of
administering existing plans referred to in Schedule 4.11 hereto; pay or provide
for no unfunded pensions, not covered by any pension plan, other than the
unfunded pensions, if any, referred to in Schedule 4.11 hereto and enter into no
employment or consulting agreement or sales agency with respect to the
performance of personal services that is not terminable without liability by the
Company on thirty days notice or less.

 

6.2.11     (i) incur or become subject to, or agree to incur or become subject
to, no obligation or liability (contingent or otherwise), subject to the
exceptions enumerated in Section 4.7.1 hereof; (ii) discharge or satisfy no lien
or encumbrance and pay no obligation or liability (contingent or otherwise),
subject to the exceptions enumerated in Section 4.7.2 hereof; (iii) mortgage,
pledge or subject to lien, charge, security interest or any other encumbrance
none of its Assets or properties; (iv) sell, assign, transfer, convey, lease or
otherwise dispose of, or agree to sell, assign, transfer, convey, lease or
otherwise dispose of, none of its Assets or properties, except for fair
consideration in the ordinary course of business; (v) acquire or lease (other
than a renewal of an existing lease in the ordinary course of business), or
agree to acquire or lease (other than a renewal of an existing lease in the
ordinary course of business, no material assets or property; (vi) waive or
release no rights; (vii) transfer or grant no rights under any concessions,
leases, licenses, agreements, patents, inventions, trade names, trademarks,
copyrights, or with respect to any know how or Intellectual Property Rights;
(viii) modify, change or terminate no existing license, lease, contract or other
document referred to in Schedule 4.11 hereto; (ix) make no capital expenditures
and enter into no commitments therefor that individually exceed $10,000 other
than emergency repairs or renovations, and repairs or renovations reasonable to
protect and preserve the Company’s Assets; (x) enter into no collective
bargaining agreement and, through negotiation or otherwise, make no commitment
or incur any liability to any labor organization; (xi) make no charitable
contribution; and (xii) enter into no transaction and make or enter into no
contract or commitment that by reason of its size or otherwise is not in the
ordinary course of business, except as required to comply with Section 8.20
hereof;

 

BioZone Share Acquisition Agreement 21

 

 

6.2.12     make no change in the banking and safe deposit arrangements reflected
in Schedule 4.11 hereto without prior written notice to Buyer, giving the
details of such change; and grant no powers of attorney, except as disclosed in
writing to Buyer;

 

6.2.13     make no renovation of property involving any obligation on the part
of the Company in excess of $10,000 in the aggregate other than emergency
repairs or renovations, and repairs or renovations reasonably to protect and
preserve the Company’s Assets;

 

6.2.14     make no change in its accounting procedures, except as expressly
permitted in writing by Buyer;

 

6.2.15     enter into no transaction outside of the ordinary course of its
business; and

 

6.2.16     use its commercially reasonable efforts not to permit any event to
occur that would result in any of the Company’s or the Shareholder’s
representations and warranties contained in this Agreement not being true and
correct at and as of the time immediately after the occurrence of such
transaction or event.

 

6.3         Notice of Breach.

 

To the extent Shareholder obtains actual knowledge that any of the
representations or warranties contained in Article 4 hereof would be incorrect
in any material respect were those representations or warranties made
immediately after such knowledge was obtained, Shareholder shall notify Buyer in
writing promptly of such fact and exercise their reasonable efforts to remedy
same to the extent within Shareholder' control.

 

6.4         Exclusivity; Non-Circumvention.

 

Commencing upon execution of this Agreement, the Shareholder and its affiliates
(collectively, the “Selling Parties”), and each of their agents will: (i) not
solicit, initiate, or encourage the submission of any proposal or offer from any
person relating to the transfer of the BioZone Shares (“Transaction”) or any
transaction similar to the Transaction or otherwise relating to the BioZone
Shares; (ii) not participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any person to do or seek any of the
foregoing (and Shareholder will notify Buyer immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing); and
(iii) will not, nor permit any of their respective officers, employees or agents
(including and without limitation, investment bankers, attorneys and
accountants) directly or indirectly to, solicit, discuss, encourage or accept
any offers for the purchase of the BioZone Shares or investment in the Company
and/or its Assets, whether as a primary or back-up offer, or take any other
action with the intention or reasonably foreseeable effect of leading to any
commitment or agreement to sell or accept an investment in the Company and/or
its Assets, nor do anything to frustrate or circumvent Buyer with regard to the
Transaction.

 

BioZone Share Acquisition Agreement 22

 

 

6.5         Reasonable Best Efforts.

 

Upon the terms and subject to the conditions set forth in this Agreement
(including those contained in this Section 6.5), each of the parties hereto
(including the Guarantor) shall, and shall cause its subsidiaries to, use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, and to satisfy all conditions to, in the most expeditious manner
practicable, the transactions contemplated by this Agreement, including (i) the
obtaining of all necessary consents or waivers from third parties, and (ii)
negotiating and completing the Ancillary Agreements.

 

6.6         Authorization from Others.

 

Shareholder shall use its reasonable efforts to obtain all authorizations,
consents and approvals of third parties or governmental agencies that may be
required to permit the consummation of the transactions contemplated by this
Agreement.

 

6.7         Public Announcements.

 

Except as required by law, none of the Parties shall make any public
announcement concerning this Agreement or the subject matter hereof without
first consulting with the other Parties and providing such Party with a
reasonable opportunity to comment on such proposed public announcement.

 

7TRANSACTIONS AFTER THE CLOSING

 

7.1         Access Agreement and Assignment

 

Buyer and Shareholder shall use their reasonable best efforts to cause 580
Garcia LLC (“Landlord”), the landlord under that certain Lease dated as of March
1, 2004 (together with all amendments and modifications thereto and waivers
thereof, the “Lease”), with BioZone Laboratories, Inc., a California corporation
(the “Original Tenant”) with respect to the 580 Garcia Avenue (the “Premises”)
to execute and deliver to [Wells Fargo Bank] the agreement in the form to be
agreed to prior to Closing (the “Access Agreement”). If the Landlord has not
executed and delivered the Access Agreement on or before the six (6) month
anniversary of the Closing (the “Trigger Date”), the Company shall have the
right to assign the Lease to the Shareholder subject to the following terms and
conditions:

 

7.1.1       Assumption

 

The Company shall deliver a written demand to Shareholder that Shareholder
assume the Lease (the “Assumption Notice”) which Assumption Notice shall be
delivered no later than sixty (60) days after the Trigger Date. Simultaneous
with the delivery of the Assumption Notice Buyer shall deliver an executed copy
of the Assignment and Assumption agreement in the form to be agreed to prior to
Closing. Shareholder shall have ten (10) business days to acknowledge the
effectiveness of the Assumption Notice or to dispute the Company’s right to
deliver the Assumption Notice. If Shareholder fails to dispute the Assumption
Notice within such period it shall be deemed accepted.

 

BioZone Share Acquisition Agreement 23

 

 

7.1.2       Delivery

 

7.1.2.1 Condition. Upon acceptance or deemed acceptance of the Assumption
Notice, the Company shall, at its sole cost and expense, (i) promptly remove all
of its goods, inventory, machinery, equipment, and furniture and trade fixtures
(such as equipment bolted to floors) (the “Property”) from the Premises, (ii)
promptly repair, at the Company’s expense, or reimburse Landlord for any
physical damage to the Premises actually caused by Company’s occupancy of the
Premises and/or the removal of the Property and (iii) deliver the Premises to
Shareholder in broom clean condition.

 

7.1.2.2 Delivery. The Company shall deliver the Premises to Shareholder in the
required condition (including, if applicable, the payment of any amounts to
reimburse the Tenant or Landlord for damage to the Premises) (“Delivery”) as
promptly as possible but in no event more than ninety (90) days after the
delivery of the Assumption Notice. The Company shall be solely responsible for,
and shall pay to the Landlord and applicable third parties, all payments due
under the Lease and otherwise for the period on or prior to the date of
Delivery.

 

7.2         I.R.S. Tax Lien.

 

On or before the date that is ninety (90) days following the Closing Date,
Shareholder shall furnish to Buyer evidence in form and substance satisfactory
to Buyer of the termination of that certain federal tax lien of record referred
to as the “I.R.S. Payroll Matter” in Schedule 4.9.

 

8CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

 

The obligations of Buyer under this Agreement are subject to the satisfaction at
or prior to the Closing Date of each of the following conditions:

 

8.1         Accuracy of Representations and Warranties.

 

The representations and warranties of the Company and the Shareholder herein
contained will be true and correct on and as of the Closing Date with the same
force and effect as though made on and as of such date, except as affected by
transactions contemplated hereby.

 

8.2         Performance of Agreements.

 

The Company and the Shareholder will have performed all obligations and
agreements and materially complied with all covenants and conditions contained
in this Agreement to be performed or complied with by it at or prior to the
Closing Date.

 

8.3         Officers’ Certificate.

 

The Company will have furnished Buyer with a certificate dated as of the Closing
Date, of the Shareholder acting in his capacity as a senior officer of the
Company, to the effect that the Company has fulfilled the conditions specified
in Sections 8.1 and 8.2 hereof.

 

8.4         Shareholder’s Certificate.

 

The Shareholder will have furnished Buyer with a certificate dated as of the
Closing Date of the Shareholder to the effect that Shareholder has fulfilled the
conditions specified in Sections 8.1 and 8.2 hereof.

 

BioZone Share Acquisition Agreement 24

 

 

8.5         Secretary’s Certificate.

 

The Company will have furnished the Buyer with a Secretary’s Certificate with
true, correct, and complete copies of following: (a) the Bylaws of the Company
(as amended), (b) the Articles of Incorporation of the Company (as amended)
certified by the Secretary of State of Nevada, (c) certificates of good standing
for California and any foreign jurisdictions where the Company is registered to
do business, (d) the resolutions of the Board of Directors of the Company
approving this Agreement, the Ancillary Documents, and the transactions
contemplated hereby and thereby, and (e) the resolutions of the shareholders of
the Company approving this Agreement, the Ancillary Documents, and the
transactions contemplated hereby and thereby and establishing the incumbency of
the officers of the Company executing this Agreement and any of the Ancillary
Documents.

 

8.6         Employment Agreements.

 

Employment Agreement with Brian Keller substantially in the form as set forth in
Exhibit “A” hereto will have been executed and delivered to the Buyer.

 

8.7         Manufacturing Agreements.

 

8.7.1       An agreement for Company to provide manufacturing (“BioZone
Manufacturing Agreement”) for Shareholder in form and substantially in the form
as set forth in Exhibit “B” hereto will have been executed and delivered to
Buyer; and

 

8.7.2       An agreement for Guarantor to provide certain ingredients to
Shareholder for certain products not being manufactured by Company (“FPI Supply
Agreement”) substantially in the form as set forth in Exhibit “C” will have been
executed and delivered to Guarantor.

 

8.8         Administrative Services Agreement.

 

An agreement for Shareholder to provide administrative services (the
“Administrative Services Agreement”) to Company substantially in the form
annexed hereto as Exhibit “D” will have been executed and delivered to Buyer.

 

8.9         Resignations.

 

Duly executed resignations effective as of the Closing Date of each director and
officer of the Company will be delivered to Buyer.

 

8.10       Stock Certificates; Stock Powers.

 

As required by Section 1.2 hereof, Shareholder will have made the deliveries to
Buyer of the stock certificates representing the BioZone Shares, together with
stock powers duly endorsed for transfer in blank in a form reasonably
satisfactory to the Buyer and any stamps or other evidence of the payment of
documentary taxes required in connection with such delivery.

 

BioZone Share Acquisition Agreement 25

 

 

8.11       Purchase Order.

 

As required by Section 3.4 hereof, Shareholder will have made delivery to
Company of the Initial Purchase Order and the payment therefor.

 

8.12       AP Payment.

 

As required by Section 3.5 hereof, Shareholder will have made delivery to
Company of the AP Payment.

 

8.13       Assignment of Patent.

 

At or prior to Closing, Shareholder will have assigned to Company all right,
title, and interest in and to that certain patent identified on Schedule 8.13
hereto pursuant to terms and conditions reasonably satisfactory to Buyer.

 

8.14       Records.

 

All corporate and other Company records and other documents referred to in this
Agreement and any schedule have been delivered to the Buyer.

 

8.15       Actual or Threatened Actions.

 

There will not be any actual or threatened action or proceeding by or before any
court or other governmental body or agency that will seek to restrain, prohibit
or invalidate the transactions contemplated by this Agreement or that could
affect the right of Buyer to own, operate or control the Assets of the Company
after the Closing Date.

 

8.16       Material Adverse Effect.

 

There has been no Material Adverse Effect.

 

8.17       Approval of Buyer’s Lender.

 

Buyer will have received approval from its lender to consummate the transactions
that are the subject hereof and the documentation related thereto.

 

8.18       Consents.

 

All required consents will have been received by Buyer including, but not
limited to, all consents and approvals required to permit the Company to enjoy
after the Closing Date all rights and benefits presently enjoyed by the Company,
including without limitation, such consents and approvals as are required to
avoid a default or event that, with the passage of time or giving of notice,
will be a default under any agreement between the Company and its customers.
Without in any way limiting the foregoing, Buyer shall have received the consent
from:

 

8.18.1     the Master Landlord to the Sub-Lease;

 

BioZone Share Acquisition Agreement 26

 

 

8.18.2     Cosmetic Dermatology, Inc, to the assignment to the Company and
change in control, and waiver of its right to terminate that certain
Manufacturing Agreement with BioZone Laboratories, Inc. a California
corporation, dated August 12, 2012.

 

8.19       Resolutions of Board of Directors.

 

The Board of Directors will have approved the execution and delivery by Buyer of
this Agreement and the other Ancillary Documents to which Buyer is, or is
specified to be, a party and the consummation by Buyer of the transactions
contemplated hereby and thereby.

 

8.20       Intercompany Debt.

 

At the Closing and with the exception of all accounts receivable due from the
Shareholder to the Company for products manufactured by the Company and shipped
to the Shareholder on or after January 1, 2016, the intercompany debt
(specifically including but not limited to trade payables, parent and subsidiary
advances, and intercompany loans) between the Company and the Shareholder will
be cancelled. The Shareholder and the Company will take all such actions and
execute all such agreements, instruments, and other documents as will be
required to fulfill this condition and the Buyer hereby consents to such
actions.

 

9CONDITIONS PRECEDENT TO THE OBLIGATIONS TO THE SHAREHOLDER

 

The obligations of the Shareholder under this Agreement are subject to
satisfaction at or prior to the Closing Date of each of the following
conditions:

 

9.1         Accuracy of Representations and Warranties.

 

The representations and warranties of Buyer herein contained will be true and
correct on and as of the Closing Date, with the same force and effect as though
made on and as of such date, except as affected by the transactions contemplated
hereby.

 

9.2         Release of Shareholder form Operating Leases.

 

Shareholder shall have received in form and substance satisfactory to it a
release from or indemnification for any liability under the leases for the
“Mespac Gel Line” and the “ALPS BFS Line” equipment (the “Operating Leases”).

 

9.3         Sub Lease for 701 Willow.

 

Shareholder and the Company shall have entered into the Sub-Lease (the
“Sub-Lease”) in substantially the form annexed hereto as Exhibit E.

 

9.4         Performance of Agreements.

 

Buyer will have performed all obligations and agreements and materially complied
with all covenants and conditions contained in this Agreement to be performed or
complied with by it at or prior to the Closing Date.

 

BioZone Share Acquisition Agreement 27

 

 

9.5         Officers’ Certificate.

 

Buyer will have furnished the Company with a certificate, dated as of the
Closing Date, of a senior officer, to the effect that Buyer has fulfilled the
conditions specified in Sections 9.1 and 9.2 hereof.

 

9.6         Resolutions of Board of Directors.

 

The Board of Directors will have approved the execution and delivery by Buyer of
this Agreement and the other Ancillary Documents to which Buyer is, or is
specified to be, a party and the consummation by Buyer of the transactions
contemplated hereby and thereby.

 

9.7         Actual or Threatened Actions.

 

There will not be any actual or, in the best knowledge of the Company and the
Shareholder, threatened action or proceeding by or before any court or other
governmental body or agency that will seek to restrain, prohibit or invalidate
the transactions contemplated by this Agreement.

 

10CFC PAYABLE

 

Shareholder shall within five (5) days of Closing pay in full any and all
amounts that may then be due from Shareholder to Creative Flavor Concepts, Inc.,
a Pennsylvania corporation (“CFC”), for products or services provided to
Shareholder by CFC.

 

11BROKERAGE

 

Buyer shall be responsible for all fees of the Cyrano Group, Inc. and David
Bergstein and the Shareholder shall be responsible for all fees of
Canaccord/Genuity, if any, arising out of this Agreement and the transactions
contemplated hereby. Each Party to this agreement represents, warrants, and
agrees that except as set forth in the immediately preceding sentence all
negotiations relative to this agreement have been carried on by it, him or her,
or its, his or her representative, directly with the other party without the
intervention of any person; that no broker brought about this sale on its, his
or her behalf; and that each party will indemnify and hold the other party
harmless from any and all claims, suits, and actions for brokerage or other
commissions, and from and against all expenses of any character, including
reasonable attorneys’ fees incurred by the other by reason of any claim by any
person or broker claiming to have been engaged by, or on behalf of, the
indemnifying party, or with whom the indemnifying party is claimed to have made
any agreement for compensation.

 

12NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES

 

12.1       Events of Default.

 

A breach of any representation or warranty by the Company, the Shareholder or
Buyer, or a breach as a result of the failure of the Company, the Shareholder or
Buyer to perform any of their agreements, covenants, and obligations under this
Agreement, will be considered a default hereunder giving rise to the rights of
indemnification set forth in Section 13.1 and Section 13.2 hereof.

 

12.2       Survival of Representations, Etc.

 

All representations, warranties and agreements made by the Company, the
Shareholder and Buyer in this Agreement or in any exhibit, certificate, document
or instrument delivered pursuant to the provisions hereof or in connection with
the transactions contemplated hereby, and the remedies of Buyer and the
Shareholder with respect thereto, will survive the Closing hereunder for the
following periods:

 

BioZone Share Acquisition Agreement 28

 

 

12.2.1     With respect to the representations and warranties of the Company,
the Shareholder, and the Buyer as contained in this Agreement and all related
documents, except as expressly provided below, any claim arising thereunder must
be brought within a period of eighteen (18) months following the Closing Date,
except as otherwise provided in Section 12.2.2.

 

12.2.2     With respect to the representations and warranties of the Company and
the Shareholder as to federal, state and other taxes set forth in Section 4.8,
any claim arising thereunder may be brought at any time, subject to the
applicable statute of limitations.

 

13INDEMNIFICATION

 

13.1       Indemnification to Buyer.

 

The Shareholder agrees to indemnify, defend and hold Buyer, its Affiliates, the
successors and assigns of Buyer and its Affiliates, and the shareholders,
directors, members, managers, partners, officers, employees, agents, and
representatives of any of the foregoing (“Buyer Indemnitees”) harmless against
and in respect of

 

13.1.1     any claim, suit, demand, action, cause of action, loss, cost, damage,
liability, expense, fine, penalty, or other amount (a “Claim”) suffered or
incurred by Buyer because of a breach of any agreement, covenant, or obligation
of the Company or the Shareholder incurred under this Agreement, or because any
representation or warranty of the Company or the Shareholder under this
Agreement is false as of the date of this Agreement or the Closing Date;

 

13.1.2     any Claim relating to that certain action pending in the Superior
Court of California, Contra Costa County, Case No. C1400754 (“Garcia Claim”);

 

13.1.3     all contingent undisclosed liabilities which the Company becomes
obligated to pay and which exist at the Closing Date whether or not the
Shareholder or the Corporation have notice thereof or of the facts or
circumstances which give rise thereto;

 

13.1.4     any assessment for taxes of the Company for any period up to and
including the Closing Date;

 

13.1.5     all reasonable costs and expenses (including, without limitation,
accounting and attorneys’ fees) incurred by or in connection with any action,
suit, proceeding, demand, assessment or judgment incident to any of the matters
indemnified against in this Section 13.1.

 

13.2       Indemnification to the Shareholder.

 

Buyer agrees to defend, indemnify and hold the Shareholder, its Affiliates, the
successors and assigns of Shareholder, and the shareholders, directors, members,
managers, partners, officers, employees, agents, and representatives of any of
the foregoing harmless against and in respect of:

 

BioZone Share Acquisition Agreement 29

 

 

13.2.1     any loss, liability, damage, expense, fine, penalty, or other amount
suffered or incurred by the Shareholder because of a breach of any agreement,
covenant, or obligation of the Buyer under this Agreement, or because any
representation or warranty of the Buyer under this Agreement is false as of the
date of this Agreement or the Closing Date; and

 

13.2.2     all reasonable costs and expenses (including, without limitation,
accounting and attorneys’ fees) incurred by the Shareholder in connection with
any action, suit, proceeding, demand, assessment or judgment incident to any of
the matters indemnified against it in this Section 13.2.

 

13.3       Representation, Cooperation and Settlement

 

13.3.1     If any Claim for which indemnification is provided under Section 13.1
or 13.2 relates to a claim, demand, action, suit, countersuit, litigation,
dispute, order, writ, injunction, judgment, assessment, decree, grievance,
investigation or other proceeding by a third-party (a “Third-Party Claim”), the
party with the right to be indemnified against such Third-Party Claim (the
"Indemnified Party") will give written notice of such Third-Party Claim
(including a reasonable description thereof) to the party required to provide
indemnification (the “Indemnifying Party”) within ten (10) days of notification
of the Third-Party Claim, provided that the Indemnified Party’s right to
indemnification will not be waived by any failure to provide notification within
such ten (10) day period, unless such failure materially prejudices the ability
of the Indemnifying Party to defend the Third-Party Claim. The Indemnifying
Party will have 15 days from the receipt of such notice to give written notice
to the Indemnified Party of its intention to defend such Third-Party Claim on
behalf of the Indemnified Party (the “Indemnity Acknowledgement Period”), which
notice will acknowledge the obligation of the Indemnifying Party to indemnify
the Indemnified Party against such Third-Party Claim.

 

13.3.2     If notice to defend and the required acknowledgement are given by the
Indemnifying Party within the Indemnity Acknowledgement Period, the Indemnifying
Party will have the right to compromise or defend any such Third-Party Claim
through counsel of its own choosing (provided that such counsel is reasonably
satisfactory to the Indemnified Party) and at its own expense. In the event the
Indemnifying Party undertakes to defend any such Third-Party Claim, the
Indemnifying Party will promptly provide the Indemnified Party with copies of
all pleadings and filings pertinent to the Third-Party Claim.

 

13.3.3     Notwithstanding the foregoing provisions, the Indemnifying Party will
not agree to any settlement or remedy (a) that involves any remedy other than a
pure monetary resolution, including, without limitation, injunctive relief
against the Indemnified Party or requires the Indemnified Party to enter into a
consent decree or (b) requires the Indemnified Party to confess to any
wrongdoing, unless the Indemnified Party consents in writing to such settlement
or remedy.

 

13.3.4     If prior to (i) the Indemnified Party giving notice to the
Indemnifying Party of a Third-Party Claim or (ii) the expiration of the
Indemnity Acknowledgement Period, the Indemnified Party takes any action with
respect to a Third-Party Claim, the Indemnifying Party will not be relieved of
its indemnification obligations unless the Indemnifying Party is prejudiced by
any of the Indemnified Party’s actions and then only to the extent of such
prejudice and only with respect to such Indemnified Party undertaking such
actions.

 

BioZone Share Acquisition Agreement 30

 

 

13.3.5     If the Indemnifying Party fails to give written notice to the
Indemnified Party within the Indemnity Acknowledgement Period of the
Indemnifying Party’s intention to defend such Third-Party Claim at its own
expense and acknowledging its obligation to indemnify the Indemnified Party
against such claim or fails to defend diligently and continuously a Third-Party
Claim against the Indemnified Party, the Indemnified Party will have the right
to compromise or defend such Third-Party Claim through counsel of its own
choosing, but for the account and at the expense of the Indemnifying Party,
subject to the applicable limitation of liability set forth in Section 13.1 or
13.2, as the case may be.

 

13.4       Certain Limitations.

 

(a) Except with regard to Claims under Sections 4.9, 7.2 and 13.1.2, an
Indemnifying Party’s indemnification obligations under Section 13.1 or Section
13.2 for breaches of representations and warranties shall not arise unless the
amount of Indemnifiable Losses for which the Indemnifying Party is so required
to indemnify for all breaches of representations and warranties exceeds $100,000
in the aggregate (the “Basket”), whereupon the total amount of such
Indemnifiable Losses shall be recoverable by the Indemnified Party (subject to
the limitation in Section 13.4(b)). The Basket shall not apply to breaches of
any covenants contained herein.

 

(b) The Shareholder’s maximum liability for Claims shall be limited to the
Holdback Amount and in no event shall the Shareholder’s liability for Claims
exceed the Holdback Amount. For the avoidance of doubt if the Holdback Amount is
not earned or paid then Shareholder shall have no liability for any Claims. The
Buyer’s indemnification obligations under Section 13.1 or Section 13.2 for
breaches of representations and warranties shall not exceed One Million Five
Hundred Thousand Dollars ($1,500,000.00). Notwithstanding the foregoing, the
limitations in this Section 13.4(b) shall not apply (i) to Shareholder with
respect to any breach by Shareholder of (1) any other agreement between
Shareholder and the Company or Guarantor (specifically including but not limited
to the BioZone Manufacturing Agreement or the FPI Supply Agreement, or (2)
under Sections 4.1 through 4.4, 4.8, 4.9, 4.10,  4.20, 4.23, 7.2, and 13.1.2,
and (ii) to Buyer with respect to any breach by Buyer, the Guarantor or the
Company of (1) the BioZone Manufacturing Agreement, the FPI Supply Agreement,
the Sublease or the Administrative Services Agreement or (2) under Section 5.1
or 5.2.

 

Notwithstanding anything in this Agreement to the contrary, the parties
acknowledge and agree that, in the event of fraud, nothing in this Agreement
shall limit (i) any party’s rights or (ii) the amount of damages recoverable by
a party against the party committing such fraud.

 

13.5       Payment of Indemnification Obligations.

 

Each Party will promptly pay to any Indemnified Party the amount of all damages,
losses, deficiencies, liabilities, costs, expenses, claims and other obligations
to which the foregoing provisions of this Article 12 relates together with
interest thereon from the date of assertion of such Claims at the prime rate in
effect from time to time as announced by Wells Fargo, N.A.

 

14TERMINATION OF AGREEMENT

 

14.1       Termination.

 

At any time prior to the Closing Date, this Agreement may be terminated (i) by
the consent of the Buyer and Shareholder, (ii) by Shareholder if there has been
a material misrepresentation, breach of warranty or breach of covenant by Buyer
in its representations, warranties and covenants set forth herein, (iii) by
Buyer if there has been a material misrepresentation, breach of warranty or
breach of covenant by the Shareholder in its representations, warranties and
covenants set forth herein, (iv) by the Shareholder if the conditions stated in
Article 9 have not been satisfied at or prior to the Closing Date or (v) by
Buyer if the conditions stated in Article 8 have not been satisfied at or prior
to the Closing Date.

 

BioZone Share Acquisition Agreement 31

 

 

14.2       Effect of Termination.

 

If this Agreement shall be terminated as above provided, this Agreement shall
become null and void and have no effect all obligations of the parties hereunder
shall terminate without liability of any party to the other; provided however,
that nothing in this Section 14.2 shall prevent any party from seeking or
obtaining damages or appropriate equitable relief for the breach of any
representation, warranty or covenant made by any other party hereto.

 

14.3       Right to Proceed.

 

Anything in this Agreement to the contrary notwithstanding, if any of the
conditions specified in Article 8 hereof have not been satisfied at or prior to
the Closing, Buyer, having otherwise satisfied its obligations or met conditions
to Closing hereunder, shall have the right to proceed with the transactions
contemplated hereby without waiving any of its rights hereunder, and if any of
the conditions specified in Article 8 hereof have not been satisfied at or prior
to the Closing, the Shareholder, having otherwise satisfied their obligations or
met conditions to Closing hereunder, shall have the right to proceed with the
transactions contemplated hereby without waiving any of their rights hereunder.

 

15TAX MATTERS.

 

(a)          The Shareholder shall prepare or cause to be prepared and file all
tax returns of the Company that are required to be filed or that may be filed on
or before the Closing Date with respect to any pre-closing tax period (including
the period from January 1, 2016 through the Closing). All such tax returns shall
be prepared in a manner consistent with past practice of the Company (as
applicable) unless otherwise required by applicable Law. A copy of each such tax
return shall be provided to the Buyer [for its review and approval (not to be
unreasonably withheld, conditioned or delayed) at least fifteen (15) days prior
to its filing date; provided that the Buyer’s review and approval shall not be
required with respect to any tax return if none of the positions taken in or
other contents of such tax return would be reasonably expected to materially
affect the tax Liability of the Company for any post-Closing tax period. Buyer
and the Company shall provide Shareholder with access to the books and records
and personnel of the Company to allow Shareholder to prepare the foregoing tax
returns

 

(b)          The Buyer shall prepare or cause to be prepared and file or cause
to be filed all tax returns of the Company due after the Closing Date (beginning
with the period commencing on the Closing and ending December 31, 2016).

 

16MISCELLANEOUS

 

16.1       Waivers and Amendment.

 

16.1.1     The Shareholder, on the one hand, or Buyer, on the other hand may, by
written notice to the other, (i) extend the time for the performance of any of
the obligations or other actions of the other; (ii) waive any inaccuracies in
the representations or warranties of the other contained in this Agreement;
(iii) waive compliance with any of the covenants of the other contained in this
Agreement; and (iv) waive or modify performance of any of the obligations of the
other.

 

BioZone Share Acquisition Agreement 32

 

 

16.1.2     This Agreement may be amended, modified or supplemented only by a
written instrument executed by all the parties hereto. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, will be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement will
not operate or be construed as a waiver of any subsequent breach.

 

16.2       Expenses.

 

Whether or not the transactions contemplated by this Agreement are consummated,
Buyer will pay the fees and expenses of its counsel, accountants, other experts
and all other expenses incurred by it incident to the negotiation, preparation,
execution and consummation of the transactions contemplated by and of this
Agreement, and the Shareholder will pay any and all fees and expenses incurred
by the Company or the Shareholder with respect to their counsel, accountants,
other advisors or experts and all other expenses incurred by it incident to the
negotiation, preparation, execution and consummation of the transactions
contemplated by and of this Agreement and the performance by the Company and the
Shareholder of their obligations hereunder. No such fees or expenses of the
Company have been or will be paid by the Company, and Shareholder will reimburse
the Company for any such fees or expenses paid by the Company.

 

16.3       Taxes.

 

Any taxes in the nature of a sales or transfer tax and any stock transfer tax,
payable on the sale or transfer of all or any portion of the BioZone Shares or
the consummation of any other transaction contemplated hereby shall be paid by
Shareholder.

 

16.4       Occurrences of Conditions Precedent.

 

Each of the parties hereto agrees to use its best efforts to cause all
conditions precedent to its obligations under this Agreement to be satisfied.

 

16.5       Notices.

 

All notices, requests, demands and other communications that are required or may
be given under this Agreement will be in writing and will be deemed to have been
duly given if (a) delivered personally, (b) two business days after being sent
by registered or certified mail, return receipt requested, postage prepaid, or
(c) one business day after being sent by a nationally-recognized overnight
courier service providing for reasonable means of proof of delivery:

 

BioZone Share Acquisition Agreement 33

 

 

If to the Shareholder or to the Company before the Closing, to:

 

MusclePharm Corporation

4721 Ironton St., Building A

Denver, CO 80239

 

Attention: John Price, Chief Financial Officer

 

with a copy which shall not constitute notice to:

 

Barry Rutcofsky

Kasowitz Benson Torres & Friedman LLP

1633 Broadway

New York, NY 10019

 

If to the Buyer or to the Company after the Closing, to:

 

BioZone Holdings, Inc.

28350 Witherspoon Parkway

Valencia, CA 91355

 

Attention: Jeff Harris

 

with a copy which shall not constitute notice to:

 

Jerry Rappaport

Rappaport Law Corporation

2500 Broadway, Suite F-125

Santa Monica, CA 90404

 

If to the Guarantor, to:

 

Flavor Producers, Inc.

28350 Witherspoon Parkway

Valencia, CA 91355

 

Attention: Jeff Harris

 

with a copy which shall not constitute notice to:

 

Jerry Rappaport

Rappaport Law Corporation

2500 Broadway, Suite F-125

Santa Monica, CA 90404

 

or to such other address as any party will have specified by notice in writing
to the other parties from time to time. For purposes hereof, “business day”
means any day other than a Saturday or Sunday that is not a bank holiday in the
State of California.

 

BioZone Share Acquisition Agreement 34

 

 

16.6       Integration Clause.

 

This Agreement (including, without limitation, the Exhibits and Schedules
hereto, which are incorporated herein by reference and made a part hereof)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements with
respect to the subject matter hereof, whether written or oral, whether express
or implied.

 

16.7       Binding Effect; Benefits.

 

This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and any permitted assigns. Except as
expressly provided for herein, nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto, or their
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.

 

16.8       Non assignability.

 

This Agreement and any rights pursuant hereto will not be assignable by either
party without the prior written consent of the other party, which consent may be
withheld in such other party’s sole discretion; provided, however, Seller hereby
expressly consents to Buyer:

 

(a)assigning some or all of its rights and/or delegating some or all of its
obligations hereunder to any of its Affiliates, provided, however, the Buyer
shall notify the Shareholder of such assignment and such assignment shall not
relieve Buyer of any of its obligations hereunder; and

 

(b)encumbering, mortgaging, hypothecating, or otherwise assigning or
transferring its rights under this Agreement or to the Assets, or granting to
any lender any other type of security interest therein.

 

16.9       Applicable Law; Choice of Forum.

 

This Agreement and the legal relations between the parties hereto will be
governed by and in accordance with the laws of the California. Except as
otherwise provided in Section 2.1.5 hereof, the parties hereto hereby submit to
the exclusive jurisdiction of the courts of the State of California or the
courts of the United States located in the State of California in respect of the
interpretation and enforcement of the provisions of this Agreement and hereby
waive, and agree not to assert, any defense in any action, suit or proceeding
for the interpretation or enforcement of this Agreement, that they are not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in such courts or that this Agreement may not be enforced in or
by such courts or that their property is exempt or immune from execution, that
the suit, action or proceeding is brought in an inconvenient forum, or that the
venue of the suit, action or proceeding is improper. Service of process with
respect thereto may be made upon any party by mailing a copy thereof by
registered or certified mail, postage prepaid, to such party at its address as
provided in Section 16.5 hereof.

 

16.10     Further Assurances.

 

From time to time after the Closing and without further consideration, the
parties will execute and deliver, or arrange for the execution and delivery of
such other instruments of conveyance and transfer and take such other action or
arrange for such other actions as may reasonably be requested to more
effectively complete any of the transactions provided for in this Agreement or
any document annexed hereto.

 

BioZone Share Acquisition Agreement 35

 

 

16.11     Interpretation; Counterparts.

 

The section and other headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. As the context requires, all words used herein in the singular will
extend to and include the plural, all words used in the plural will extend to
and include the singular, and all words used in any gender will extend to and
include the other gender or be neutral. “Herein”, “hereof”, “hereby”, “hereto”,
and the like will refer to this Agreement as a whole, except where the context
otherwise requires. “Including” (and its correlates) where used in this
Agreement will be deemed to mean “including, without limitation,” whether or not
such qualification is expressly stated. All statutes and other laws referred to
in this Agreement will be deemed to be referred to as the same may be amended
from time to time. This Agreement may be executed in any number of counterparts
(including, without limitation, by facsimile or electronic counterparts), each
of which will be deemed to be an original and all of which taken together will
be deemed to be one and the same instrument.

 

17DEFINITIONS

 

For purposes hereof, the following terms will have the following meanings:

 

“Access Rights” has the meaning given to the term in Section 1.4.3 hereof.

 

“Accounting Firm” has the meaning given to the term in Section 3.4 hereof.

 

“Accounts Payable” means all amounts currently due and owing by the Company in
the ordinary course of its business including amounts for the purchase of
services, Inventory, and supplies but excluding amounts for salaries payable,
accrued interest payable, and rent payable.

 

“Accounts Receivable” means all amounts due and owing to the Company on accounts
incurred in the ordinary course of its business less any customary allowance for
bad debts.

 

“Administrative Services Agreement” has the meaning given to the term in Section
7.8.

 

“Affiliate” means, when used with reference to any entity or natural person, any
other entity or natural person directly or indirectly controlling, controlled
by, or under direct or indirect common control with, the referenced entity or
natural person. For purposes hereof, "control," when used with respect to any
specified entity, means the power to direct or cause the direction of the
management and/or policies of such entity, directly or indirectly, whether
through ownership of voting securities or other voting rights, by contract or
otherwise (and the words "controlling" and "controlled" have meanings
correlative of the foregoing).

 

“Agreement” has the meaning give to the term in the preamble hereof.

 

“Ancillary Documents” has the meaning given to the term in Section 4.3 hereof.

 

“AP Payment” has the meaning given to the term in Section 3.5 hereof.

 

BioZone Share Acquisition Agreement 36

 

 

“Assets” means all assets, properties, rights and interests, of any kind and
description (whether real, personal or mixed, tangible or intangible, or fixed,
contingent or otherwise), wherever located and by whomever possessed, owned,
licensed or leased by the Company.

 

“Auditors” has the meaning given to the term in Section 2.1.5 hereof.

 

“Balance Sheet Date” has the meaning given to the term in Section 4.5 hereof.

 

“BioZone Manufacturing Agreement” has the meaning given to the term in Section
8.7.1 hereof.

 

“BioZone Shares” has the meaning given to the term in the recitals hereof.

 

“Business” has the meaning given to the term in Section 1.4.2 hereof.

 

“Buyer” has the meaning given to the term in the preamble hereof.

 

“CERCLA” has the meaning given to the term in Section 4.23.3 hereof.

 

“Claim” has the meaning given to the term in Section 13.1.1 hereof.

 

“Closing” has the meaning given to the term in Section 3.1 hereof.

 

“Closing Date” has the meaning given to the term in Section 3.1 hereof.

 

“Closing Date Financial Statements” has the meaning given to the term in Section
2.1.2.

 

“Closing Payment” has the meaning given to the term in Section 1.4.1 hereof.

 

“Code” has the meaning given to the term in Section 4.20.1. hereof.

 

“Company” has the meaning given to the term in the recitals hereof.

 

“Earn-Out Period” has the meaning given to the term in Section 1.4.2 hereof.

 

“Earn-Out Statement” has the meaning given to the term in Section 1.4.3 hereof.

 

“EBITDA” means for any period (i) the consolidated net income of the Company
during such period, plus (ii) to the extent (but only to the extent) deducted in
determining such net income (A) income taxes paid by Company during such period,
(B) net interest expense paid by the Company during such period, (C)
amortization expenses and (D) depreciation expenses, in each case determined on
a consolidated basis in accordance with GAAP

 

“Environmental Laws” has the meaning given to the term in Section 4.23.3 hereof.

 

“ERISA” has the meaning given to the term in Section 4.20.1 hereof.

 

“Financial Statements” has the meaning given to the term in Section 4.5 hereof.

 

“FPI Supply Agreement” has the meaning given to the term in Section 8.7.2
hereof.

 

BioZone Share Acquisition Agreement 37

 

 

“GAAP” means those generally accepted accounting principles and practices that
are used in the United States and recognized as such by the American Institute
of Certified Public Accountants acting through its Accounting Principles Board
or by the Financial Accounting Standards Board or through other appropriate
boards or committees thereof and that are consistently applied for all periods
in accordance with historical practices so as to properly reflect the financial
position, results of operations and operating cash flow on a consolidated basis
of the party, except for any accounting principle or practice required to be
changed by the Accounting Principles Board or Financial Accounting Standards
Board (or other appropriate board or committee) in order to continue as a
generally accepted accounting principle or practice may be so changed.

 

“Guarantor” has the meaning given to the term in the recitals hereof.

 

“Holdback Amount” has the meaning given to the term in Section 1.4.2 hereof.

 

“Indemnified Party” has the meaning given to the term in Section 13.3.1.

 

“Indemnifying Party” has the meaning given to the term in Section 13.3.1.

 

“Indemnity Acknowledgement Period” has the meaning given to the term in Section
13.3.1 hereof.

 

“Initial Purchase Order” has the meaning given to the term in Section 3.4
hereof.

 

“Intellectual Property Rights” has the meaning given to the term in Section 4.14
hereof.

 

“Inventory” means all items of inventory of the Company (excluding obsolete
inventory) wherever located, including, without limitation, raw materials, work
in process, finished goods, supplies used to operate and maintain the equipment
or process raw materials and work in process, spare parts and supply and
packaging items including any of the aforementioned owned by Shareholder but in
the possession of manufacturers, customers, suppliers or dealers, or in transit
or returned goods.

 

“Liability” has the meaning given to the term in Section 4.26 hereof.

 

“Liens” has the meaning given to the term in Section 1.1 hereof.

 

“Material Adverse Effect” means any event, occurrence, fact, condition or change
that is, or could reasonably be expected to become, individually or in the
aggregate, materially adverse to (a) the business, results of operations,
condition (financial or otherwise) or assets of the Company, (b) the ability of
Shareholder to consummate the transactions contemplated hereby on a timely
basis; provided, however, that "Material Adverse Effect" shall not include any
event, occurrence, fact, condition, or change, directly or indirectly, arising
out of or attributable to: (i) any changes, conditions or effects in the United
States or foreign economies or securities or financial markets in general; (ii)
changes, conditions or effects that generally affect the industries in which the
Company operates; (iii) any change, effect or circumstance resulting from an
action required or permitted by this Agreement; or (iv) conditions caused by
acts of terrorism or war (whether or not declared); provided further, however,
that any event, occurrence, fact, condition, or change referred to in clauses
(i), (ii) or (iv) immediately above shall be taken into account in determining
whether a Material Adverse Effect has occurred or could reasonably be expected
to occur to the extent that such event, occurrence, fact, condition, or change
has a disproportionate effect on the  Company compared to other participants in
the industries in which the Company operates..

 

BioZone Share Acquisition Agreement 38

 

 

“Notice of Objection” has the meaning given to the term in Section 1.4.3 hereof.

 

“Operating Leases” has the meaning given to the term in Section 9.2 hereof.

 

“Party” and “Parties” have the meaning given to those terms in the preamble
hereof.

 

“Plans” has the meaning given to the term in Section 4.20.1 hereof.

 

“Post-Closing Net Working Capital Statement” has the meaning given to the term
in Section 2.1.2 hereof.

 

“Pre-Closing Balance Sheet” has the meaning given to the term in Section 4.5
hereof.

 

“Preliminary Net Working Capital Statement” has the meaning given to the term in
Section 2.1.1

 

“Prepaid Expenses” means all amounts paid by the Company prior to the time when
they are due.

 

“Purchase Price” has the meaning given to the term in Section 1.3 hereof.

 

“Quarterly Earn-Out Estimates” has the meaning given to the term in Section
1.4.3 hereof.

 

“Shareholder” has the meaning given to the term in the preamble hereto.

 

“Sub-Lease” has the meaning given to the term in Section 8.3 hereof.

 

“Supporting Documentation” has the meaning given to the term in Section 1.4.3
hereof.

 

“Target Net Working Capital” shall mean $988,413.00.

 

“Target Price Adjustments” has the meaning given to the term in Article 2.

 

“Third-Party Claim” has the meaning given to the term in Section 13.3.1.

 

“to the best of Shareholder's knowledge” has the meaning given to the term in
Section 4.27.

 

[The remainder of this page is intentionally blank; Signatures follow on the
next page]

 

BioZone Share Acquisition Agreement 39

 

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have
duly executed and delivered this Agreement as of the date first above written.

 

  BUYER:       BioZone Holdings, Inc., a Nevada corporation         By: /s/ Jeff
Harris           Name:  Jeff Harris           Title:    President        
SHAREHOLDER:       MusclePharm Corporation, a Nevada corporation         By: /s/
Ryan Drexler           Name:  Ryan Drexler           Title:    Chief Executive
Officer         COMPANY:       BioZone Laboratories, Inc., a Nevada corporation
        By: /s/ John Price           Name:  John Price           Title:    Chief
Financial Officer         GUARANTOR:       Flavor Producers, Inc., a California
corporation         By: /s/ Jeff Harris           Name:  Jeff Harris          
Title:    Chief Executive Officer

 

BioZone Share Acquisition Agreement 40