Document:

exv10w4

EXHIBIT 10.4

AMENDMENT NO. 2

TO AGREEMENT AND PLAN OF MERGER

     THIS AMENDMENT NO. 2 (this “Amendment No. 2”) to Agreement and Plan of Merger, dated
as of October 27, 2005 (the “Agreement”), as amended by Amendment No. 1 to Agreement and
Plan of Merger, dated as of May 13, 2008 (“Amendment No. 1”), by and among TruVision, Inc.,
a Utah corporation (the “Company”), TLC Wildcard Corp., a Utah corporation
(“Mergersub”), TLC Vision Corporation, a New Brunswick corporation (TLC Canada”),
TLC Vision (USA) Corporation, a Delaware corporation (“TLC’), and Lindsay T. Atwood, by and
on behalf of each Shareholder (the “Shareholders’ Representative”) (collectively, the
“Parties”), is entered into this 10th day of August, 2009 (the “Amendment No. 2
Effective Date”). For purposes of this Amendment No. 2, capitalized terms shall have the same
meaning as those terms defined in the Agreement, unless otherwise provided.

     WHEREAS, pursuant to Section 2.03 of the Agreement, TLC is obligated to pay to the Company the
Amendment Consideration; and

     WHEREAS, the Parties have agreed to modify such obligation.

     NOW THEREFORE, in consideration of the terms and subject to the conditions herein, and for
other good and valuable consideration the sufficiency of which is hereby acknowledged, the Parties
agree as follows:

1. Amendment to Section 2.03 (Additional Consideration).

a. Section 2.03(a)(iii) of the Agreement shall be amended and replaced in its entirety by
the following:

     “(iii) (a) $340,000 cash upon the Amendment No. 2 Effective Date; (b) $340,000 cash on October
5, 2009; (c) $340,000 cash on January 5, 2010; and (d) thereafter payments shall be made in the
amounts and on the dates set forth on Schedule 2.03(a)(iii);”.

     b. The Agreement is further amended by adding Schedule 2.03(a)(iii) in the form
attached hereto.

     c. Section 2.03(b) of the Agreement shall be amended and replaced in its entirety by the
following:

“(b) The Amendment Consideration shall not be represented by promissory notes, shall not be
secured and shall not accrue interest; provided, however, that in the event TLC fails to
deliver any cash payment of Additional Consideration when due, then (i) the amount of such
delinquent payment (the “Delinquent Amount”) shall immediately be assessed a late
fee equal to ten percent (10%) of such Delinquent Amount and (ii) simple interest shall
accrue on the entire amount of the Amendment Consideration set forth in Section 2.3(a)(iii)
above, whether paid or payable, at the rate of ten percent (10%) per annum from the date of
this Amendment No. 2 to the date that the entire Amendment Consideration, together with any
Delinquent Amount and all accrued interest, is paid in full.”

2. Additional Agreements. The Parties agree that, in the event TLC fails to deliver any
cash payment of Additional Consideration as provided for in the Agreement, as amended, within
thirty (30) days after the date such payment is due, then on the thirty-first (31st) day
after such payment date each of the agreements described in clauses (3) and (4) of Section 3(b) of
Amendment No. 1 shall terminate in full, including without limitation any and all non-competition
and non-solicitation obligations, covenants or restrictions set forth in such agreements.

3. Mutual Release. Effective as of the Amendment No. 2 Effective Date, TLC, TLC Canada,
the Company, Lindsay T. Atwood individually and as Shareholders’ Representative, and each of the
Shareholders, severally, on behalf of himself, herself, or itself, and for each and all of his,
hers, or its respective partners, subsidiaries, affiliates (as defined in SEC Rule 12b-2),
associates (as defined in SEC Rule 12b-2), successors, assigns, heirs and others claiming through
or under him, her or it, hereby completely release acquit, and forever discharge one another and
their respective past or present officers, directors, shareholders, members, managers,
representatives, employees, counsel, insurers, agents, personal representatives, predecessors,
successors, partners, subsidiaries, division, assigns,

 

 

spouse, heirs, affiliates (as defined in SEC Rule 12b-2), associates (as defined in SEC Rule 12b-2)
and any members of their immediate families from and against any and all claims, including those in
law or equity, demands, rights, obligations, debts, expenses (including attorneys’ and accountants’
fees and expenses), liabilities, defenses or cause of action, whether known or unknown, alleged or
not alleged, recited, described, or currently asserted, fixed or contingent, current or future,
direct or derivative, individual or representative, (1) of every nature and description whatsoever,
which they have, may have, or could arise or could have asserted from the beginning of time up to
and including the Amendment No.2 Date, and (2) which they have, may have or could arise, could have
been asserted or could in the future assert against one another that arise out of, concern, or
relate to, such party’s obligations under the Agreement, including without limitation, all
transactions and agreements contemplated therein or related thereto (the “Amendment No. 2
Released Matters”).

The Parties expressly waive all rights under Section 1542 of the Civil Code of California which
provides:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

The Parties agree that the possibility that such unknown claims exist was taken into account in
determining the amount of consideration set forth in this Amendment No. 2, a material condition of
which was the giving of the above release.

4. Dismissal of the Litigation with Prejudice

     (a) Dismissal of the Litigation (as defined in the Amendment No. 1) shall occur only upon
payment of the last installment of Additional Consideration set forth in Section 1, above, at which
time the Parties agree to jointly execute and file a Stipulation of Dismissal with Prejudice with
the U.S. District Court for the District of Utah in the form attached as Exhibit B to Amendment No.
1, and to file the proposed Order of Dismissal with Prejudice in the form attached hereto as
Exhibit C to Amendment No. 1. The terms and provisions set forth in the Stipulation of Dismissal
With Prejudice and the proposed Order of Dismissal with Prejudice are incorporated herein by this
reference.

     (b) The Parties further agree that upon execution of this Amendment No. 2, they shall jointly
inform the Arbitrator of this Amendment No. 2 and jointly request that the Arbitrator continue to
suspend the Arbitration proceeding until the last installment of Additional Consideration is made
and the Stipulation of Dismissal With Prejudice and Proposed Order of Dismissal with Prejudice are
filed, at which time the Parties shall also dismiss the Arbitration proceeding with prejudice. The
Parties acknowledge that they have each paid all of the Arbitrator’s invoices to date in full.
Accordingly, the Parties further agree to mutually request that the Arbitrator refund all amounts
paid in excess of his total invoices as follows: 50% to the Shareholders’ Representative and 50%
to TLC.

     (c) In the event TLC defaults on the payment of any cash Amendment Consideration set forth in
Section 1, above, then, notwithstanding, the mutual release in Section 3 above, the Arbitration
proceeding may be reinstated by either Party informing the Arbitrator of the default and requesting
that the Arbitration be rescheduled. Upon such default, the Shareholders’ Representative also
shall be entitled to refile his motion to reopen the proceedings in the U.S. District Court for the
District of Utah for the purpose of compelling arbitration of Year Two and Year Three Additional
Consideration payments pursuant to the original Section 2.03 of the Agreement, voiding the
amendments contemplated by Sections 1 and 3 above, with any Amendment Consideration paid prior to
such date to be held in trust to either off-set an obligations ultimately found by the Arbitrator
to be due to the Arbitrator to be due to the Shareholders or refunded to TLC as applicable;
provided that for purpose of such off-set or refund, as applicable, the TruHearing Shares shall be
valued at an aggregate $750,000 cash value rather than refunded in kind. The intent of the Parties
is that such a default by TLC will allow the Shareholders’ Representative to elect either (a) to
sue for breach of this Amendment No. 2 or (b) to void Sections 1 and 3 of this Amendment No. 2 and
pursue Arbitration of Years One, Two, and Three upon the terms of the unamended Section 2.03 of the
Agreement. In the event of any reinstatement of the Arbitration or the Litigation, all Parties
reserve all rights, and shall be permitted to assert all claims, counterclaims and defenses,
including but not limited to claims, counterclaims or defenses that arose prior to the Amendment
No. 2 Effective Date, against any Person in any forum, including but not limited to the Litigation
or the arbitration, notwithstanding Section 3 (excepting only that TLC covenants not to bring any
claim relating to actions taken in reliance on the amendments to the noncompetition covenants
set forth in Section 2).

 

 

5. Confidentiality. Except for disclosures made by the Shareholders’ Representative to the
Shareholders and discussions between the same related to any matter involved with this Amendment
No. 2, the Parties agree to keep the terms and the negotiation of this Amendment No. 2 strictly
confidential, and not to disclose any of the terms of this Amendment No. 2, except: (a) upon the
written agreement of each of TLC and the Shareholder’ Representative; (b) by order of any court;
(c) to the extent required by any state or federal corporate disclosure, financial reporting,
securities or taxation law, rule, or regulation; (d) to the Parties’ respective current officers,
directors, and members; (e) as may be necessary to enforce or perform the terms hereof; (f) as
otherwise required by law; or (g) after TLC or TLC Canada discloses the terms of this Amendment No.
2 in a publicly available disclosure.

6. Authority to Execute. Each person executing this Amendment No. 2 on behalf of the
Parties specifically warrants that he or she has full power and authority to execute this Amendment
No. 2 on behalf of such Party. The Shareholders’ Representative specifically represents and
warrants that he has the authority to execute this Amendment No. 2 for and on behalf of all
Shareholders and agrees to indemnify and hold harmless the other Parties and their respective
directors, officer and employees from and against all losses, damages, liabilities, costs and
expenses, including attorneys’ fees and other legal expenses, arising directly from any claim or
proceeding by any Shareholder that this Amendment No. 2 is not binding on all Shareholders or that
the provisions of Section 3 above are not a full and complete release as to the Amendment No. 2
Released Matters.

7. Knowledge. The Parties acknowledge that they have read this Amendment No. 2, have had an
opportunity to review the same with legal counsel and to make such investigation of the facts
pertaining to the execution of this Amendment No. 2 as they or their legal counsel deem necessary
and have entered into this Amendment No. 2 with full awareness and understanding of the contents
hereof.

8. Full Force and Effect. Except as amended hereby, the Agreement shall remain in full
force and effect.

9. Miscellaneous Provisions. The provisions of Sections 8.01-8.12 of the Agreement shall
apply to this Amendment No. 2, mutatis mutandis.

10. Governing Law; Jurisdiction; Venue. This Amendment No. 2 shall be interpreted,
construed, and enforced in accordance with and governed by the laws of the State of Utah without
giving effect to any conflict of law provisions, and each party hereby submits to the exclusive
personal jurisdiction of, and exclusive venue for the enforcement of any provision of this
Amendment No. 2, in the state and federal courts situated in Salt Lake City, Utah.

[Signature page follows]

 

 

IN WITNESS WHEREOF, this Amendment No. 2 to Agreement and Plan of Merger is hereby executed as

of the Amendment No. 2 Effective Date.

	 	 	 	 	 
	 	 	 
	 	By:  	                                                 /s/ Lindsay T. Atwood
 	 
	 	 	Lindsay T. Atwood 	 
	 	 	Individually and by and on behalf of the

Shareholders (as defined in the Agreement) 	 
	 
	 	TLC VISION CORPORATION

TLC VISION (USA) CORPORATION

TRUVISION, INC.

 	 
	 	By:  	   /s/ Michael F. Gries
 	 
	 	 	Name:  	Michael F. Gries 	 
	 	 	Title:  	Chief Restructuring Officer 	 

 

 

	 	 	 	 	 

Schedule 2.03(a)(iii)

Quarterly Payments

	 	 	 	 	 
	Payment Date	 	Payment Amount
	April 5, 2010
	 	$	260,000	 
	July 5, 2010
	 	$	260,000	 
	October 5, 2010
	 	$	260,000	 
	January 5, 2011
	 	$	260,000	 
	April 5, 2011
	 	$	260,000	 
	July 5, 2011
	 	$	260,000	 
	October 5, 2011
	 	$	260,000	 
	January 5, 2012
	 	$	260,000	 
	April 5, 2012
	 	$	260,000	 
	July 5, 2012
	 	$	260,000	 
	October 5, 2012
	 	$	260,000	 
	January 5, 2013
	 	$	260,000	 
	April 5, 2013
	 	$	260,000	 
	July 5, 2013
	 	$	260,000	 
	October 5, 2013
	 	$	260,000	 
	January 5, 2014
	 	$	260,000	 
	April 5, 2014
	 	$	260,000Exhibit 10.1

Exhibit 10.1

MANUFACTURING LICENSE AGREEMENT

This Manufacturing License Agreement (the “Agreement”) is made and entered into as of this
13th day of August, 2009 by and between InnoZen, Inc., a Delaware corporation with offices at 6429
Independence Avenue, Woodland Hills, California (“InnoZen”) and Supplemental Manufacturing &
Ingredients, LLC., dba SMI Manufacturing, an Arizona limited liability company with offices at 2401
West 1st Street, Tempe, Arizona (“SMI”).

RECITALS

WHEREAS, InnoZen has experience in the formulation, development, manufacturing, distribution
and sale of edible thin film-strips containing dietary supplement, nutraceutical, and drug active
ingredients;

WHEREAS, SMI has begun and desires to design, build and operate a state-of-the-art, cGMP,
edible film-strip manufacturing facility in Arizona.

WHEREAS, SMI desires to manufacture InnoZen’s edible film-strip products in its Arizona
facility.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, InnoZen and SMI agree as follows:

I. DEFINITIONS

As used in this Agreement, the following terms, whether used in the singular or plural, shall
have the following meanings:

1.1. “Affiliate” shall mean any company or other business entity controlled by, controlling or
under common control with a party, control being presumed if there is direct or indirect ownership
of at least 35% (or, if less, the maximum permitted by applicable law) of the voting stock, equity
or income interest.

1.2. “Change of Control Transaction” shall mean a transaction (i) in which a Party sells
ownership of 50% or more of all of its classes of voting securities or ownership interests to a
single investor or group of related investors, or (ii) in which a Party sells all or substantially
all of its assets.

1.3. “Cost” shall mean the actual cost of goods sold associated with the manufacture of a
particular Product based on generally accepted accounting principles.

1.4. “FDA” shall mean the United States Food and Drug Administration (or a successor agency).

1.5. “Field” shall mean the sale of the Products to InnoZen or its Affiliates.

1.6. “Force Majeure” shall mean a failure to fulfill a requirement under this Agreement due to
fire, flood, strike or other labor dispute, accident to machinery, act of sabotage, riot,
precedence or priority granted at the request of or for the benefit, directly or indirectly, of any
government, including but not limited to the United States of America federal or state, or a
Territory, foreign government or any subdivision or agency thereof, export. or import restriction,
delay in transportation or lack of transportation, facilities, restriction imposed by United States
of America federal or state or a Territory, foreign legislation or rule or regulation there under,
or war or insurrection or any cause beyond the control of either party.

 

 

 

1.7. “GMP” shall mean current good manufacturing practices as defined under FDA and other
regulatory authority rules and regulations and that are applicable to the manufacture of the
Products.

1.8. “Licensed Technology” shall mean (i) all Patent Rights, (ii) all intellectual property,
derivatives, know-how, trade secrets, processes and data, including, but not limited to,
formulations, manufacturing procedures, and specifications owned or possessed by InnoZen as of the
date of this Agreement relating to the Manufacture and commercialization of the Products but only
to the extent such information and data is necessary to commercially exploit the Products in the
Field.

1.9. “Manufacture” shall mean the production and making of the Products by labor and
machinery, but shall not include any making or production of the Products related to research and
development activities or functions.

1.10. “Party” shall mean SMI or InnoZen; “Parties” shall mean SMI and InnoZen.

1.11.
“Patent Applications” shall mean [***].

1.12. “Patent Rights” shall mean all rights arising in connection with the Patent
Applications, and any patents ultimately issued in connection therewith.

1.13. “Product” or “Products” shall mean any commercial, edible film-strip product that
utilizes the Patent Rights or Licensed Technology.

1.14. [***]

II. MANUFACTURING LICENSE

2.1. License. Subject to (i) the termination provisions set forth in Section 2.3 herein, (ii)
the reservation of rights set forth in Section 2.4 herein, and (iii) the other terms of this
Agreement, InnoZen hereby grants to SMI a non-exclusive license in and to the Patent Rights and the
Licensed Technology to Manufacture the Products in the Territory for the Field and other customers
authorized in writing by InnoZen.

________________

	[***]	 	Confidential treatment
requested as to certain portions of this exhibit. Such portions have been redacted and filed separately with the SEC.

 

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2.2. Term of License. The non-exclusive license granted in Section 2.1 herein shall be for a
term of twelve (12) years, unless terminated earlier under the terms of this Agreement. In
addition, upon mutual agreement of the Parties, the Agreement may be extended for an additional
twelve (12) year term.

2.3. Termination of License.

(a) SMI shall provide to InnoZen a quarterly report relating to its GMP status and to its
federal, state, and local regulatory certification and authorization. In the event that SMI loses
its GMP status or its certification or authorization under any federal, state or local regulatory
authority, and after written notice thereof is provided by InnoZen, then, in addition to all other
rights and remedies under this Agreement and otherwise available at law, InnoZen shall have the
right, at its option, to temporarily suspend or terminate the license granted in Section 2.1
whereupon such license shall be temporarily suspended or terminated. If SMI is unable to regain
its GMP status or its regulatory certification or authorization for a period of sixty (60) days
after written notice thereof is provided by InnoZen, then, all rights granted to SMI by InnoZen
under this Agreement (including without limitation all Patent Rights and Product and Licensed
Technology rights) shall terminate, become null and void, and shall revert in their entirety to
InnoZen, and InnoZen may, in its sole option, terminate this Agreement in its entirety.

(b) In the event SMI materially breaches or fails to perform any provision of this Agreement
and such material breach or failure continues for a period of thirty (30) days after written notice
thereof is provided by InnoZen, then, in addition to all other rights and remedies under this
Agreement and otherwise available at law, InnoZen shall have the right, at its option, to
temporarily suspend or terminate the license granted in Section 2.1 whereupon such license shall be
temporarily suspended or terminated. If there occurs any other or additional material breach or
failure of SMI to perform its duties under this Agreement within six (6) months after the date of
the initial material breach or failure to perform (excluding any cure period) or at any time
thereafter if the initial material breach or failure to perform remains uncured, all rights granted
to SMI by InnoZen under this Agreement (including without limitation all Patent Rights and Product
and Licensed Technology rights) shall terminate, become null and void, and shall revert in their
entirety to InnoZen, and InnoZen may, in its sole discretion, terminate this Agreement in its
entirety.

2.4. Reservation of Rights. InnoZen retains all rights in and to the Products, the Patent
Rights and all of the Licensed Technology not specifically granted in Section 2.1.herein.
Consequently, in addition to other rights that SMI shall not have, SMI shall not have the right to
use, distribute, offer for sale, or sell the Products to any entity other than InnoZen or those
InnoZen designees approved and appointed by InnoZen in writing.

2.5. Reversion. Upon termination of this Agreement, SMI shall return and deliver to InnoZen
the Patent Rights, the Licensed Technology and all other information relating to the grant of the
license rights in Section 2.1, herein.

III. MANUFACTURING / SUPPLY

3.1. [***]

3.2. [***]

________________

	[***]	 	Confidential treatment
requested as to certain portions of this exhibit. Such portions have been redacted and filed separately with the SEC.

 

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3.3. Exclusive Manufacturing — Right of First Refusal. Subject to (i) the terms set forth in
Section 3.4 herein, (ii) the termination provisions set forth in Section 3.5 herein, and (iii) the
other terms of this Agreement, SMI shall have the first right to exclusively negotiate with InnoZen
for the Manufacture of the Products in the Territory for the Field (the “Right of First Refusal”).

3.4. Exercise of Right of First Refusal. The Right of First Refusal shall operate on a
Product-by-Product basis, and SMI shall exercise the Right of First Refusal for each Product
separately. InnoZen shall notify SMI in writing of its intent to commercially exploit a particular
Product [***]. SMI shall then have ten (10) days from receipt of such notification in which to
exercise the Right of First Refusal for such Product and shall inform InnoZen in writing of its
decision to exercise the Right of First Refusal for such Product. Upon SMI’s notification of its
decision to exercise the Right of First Refusal for such Product, the Parties shall immediately
begin good faith negotiations for the Manufacture of such Product under a separate Manufacturing
Agreement as provided in Section 3.6 herein.

3.5. Termination of Right of First Refusal.

(a) In the event that SMI (i) refuses to manufacture a particular Product, (ii) fails to
fulfill a purchase order for a particular Product, or (iii) is unable to meet all product
specifications, capacity requirements, quality requirements, manufacturing requirements, reasonable
customer requirements, or regulatory requirements related to a particular Product and such refusal,
failure or inability continues for a period of thirty (30) days after written notice thereof is
provided by InnoZen, then, in addition to all other rights and remedies under this Agreement and
otherwise available at law, InnoZen shall have the right, at its option, to revoke and terminate
the Right of First Refusal for that particular Product and the Right of First Refusal for that
particular Product shall be null and void. In such event, and without limiting any other InnoZen
rights and remedies, InnoZen shall have the right to grant to any person(s) or entity(ies) the
right and license to manufacture the particular Product and to do the foregoing itself. This
Section 3.5(a) shall apply and be enforceable at all times during the term of this Agreement
including both prior to SMI’s exercise of the Right of First Refusal for the particular Product and
after the exercise of such Right of First Refusal for the particular Product.

(b) SMI shall provide to InnoZen a quarterly report relating to its GMP status and to its
federal, state, and local regulatory certification and authorization. In the event that SMI loses
its GMP status or its certification or authorization under any federal, state or local regulatory
authority, and after written notice thereof is provided by InnoZen then, in addition to all other
rights and remedies under this Agreement and otherwise available at law, InnoZen shall have the
right, at its option, to revoke and terminate the Right of First Refusal for all Products and the
Right of First Refusal for all Products shall be null and void until such time as SMI is able to
regain its GMP status or its regulatory certification or authorization. In such event, and without
limiting any other InnoZen rights and remedies, InnoZen shall have the right to grant to any
person(s) or entity(ies) the right and license to manufacture the Products and to do the foregoing
itself. If SMI’s failure to maintain its GMP status or its regulatory certification or
authorization remains uncured for a period of sixty (60) days after written notice thereof is
provided by InnoZen, then, all rights granted to SMI by InnoZen under this Agreement (including
without limitation all Right of First Refusal rights, Patent Rights and Product and Licensed
Technology rights) shall terminate, become null and void, and shall revert in their entirety to
InnoZen, and InnoZen may, in its sole option, terminate this Agreement in its entirety. This
Section 3.5(b) shall apply and be enforceable at all times during the term of this Agreement
including both prior to SMI’s exercise of the Right of First Refusal for any Products and after the
exercise of such Right of First Refusal for any Products.

________________

	[***]	 	Confidential treatment
requested as to certain portions of this exhibit. Such portions have been redacted and filed separately with the SEC.

 

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(c) In the event SMI materially breaches or fails to perform any provision of this Agreement
and such material breach or failure continues for a period of thirty (30) days after written
notice thereof is provided by InnoZen, then, in addition to all other rights and remedies
under this Agreement and otherwise available at law, InnoZen shall have the right, at its option,
to revoke and terminate the Right of First Refusal for all Products and the Right of First Refusal
for all Products shall be null and void until such time as SMI is able to cure such breach. In
such event, and without limiting any other InnoZen rights and remedies, InnoZen shall have the
right to grant to any person(s) or entity(ies) the right and license to manufacture the Products,
and to do the foregoing itself. If there occurs any other or additional material breach or failure
of SMI to perform its duties under this Agreement within six (6) months after the date of the
initial material breach or failure to perform (excluding any cure period) or at any time thereafter
if the initial material breach or failure to perform remains uncured, all rights granted to SMI by
InnoZen under this Agreement (including without limitation all Right of First Refusal rights,
Patent Rights and Product and Licensed Technology rights) shall terminate, become null and void,
and shall revert in their entirety to InnoZen, and InnoZen may, in its sole option, terminate this
Agreement in its entirety. This Section 3.5(c) shall apply and be enforceable at all times during
the term of this Agreement including both prior to SMI’s exercise of the Right of First Refusal for
any Products and after the exercise of such Right of First Refusal for any Products.

3.6. Manufacturing Agreements. The manufacturing relationship between the Parties shall be
governed by this Agreement and by a separate Manufacturing Agreement to be negotiated by the
parties in good faith for each particular Product. Each such Manufacturing Agreement shall be in
the form attached hereto as Exhibit A and shall contain the standard provisions therein,
including but not limited to, provisions relating to payment terms, forecasting/projections,
purchase orders, shipping, product specifications, and product returns. In the event of a
conflict between this Agreement and any Manufacturing Agreement, the provisions of this Agreement
shall govern.

3.7. Pricing. The Parties shall negotiate (in good faith) and agree upon the price for each
Product that will be charged to InnoZen by SMI for any orders placed by InnoZen on its own behalf
or on behalf of an InnoZen designated third party. The Parties hereby agree to use best efforts to
negotiate a price for each Product that is low enough to be competitive in the industry. In the
event that the Parties are unable to agree upon a price for any Product, the Parties hereby agree
that for any such Product orders placed by InnoZen on its own behalf or on behalf of an InnoZen
designated third party, SMI shall only charge InnoZen for the Cost of such order plus a fee of
[***] of such Cost.

3.8. Audit Rights; Records. SMI shall keep, or cause to be kept, accurate books, records and
data in sufficient detail to verify the calculation of Cost under Sections 1.3 and 3.7 herein and
shall retain such books, records and data at its principal place of business for at least five (5)
years after the end of the fiscal year to which they pertain. InnoZen shall have the right, at its
expense and not more frequently than once per quarter, to have its accountants and/or auditors
examine, during normal business hours, all books, records and data of SMI or its Affiliates
relating to the calculation of Cost for any period during which SMI is required to keep the books,
records and data. If such examination discovers an error in excess of three percent (3%) for the
period under review, SMI shall reimburse InnoZen for its reasonable costs of audit and examination.

3.9. No Competing Products/Technology. Except as pursuant to this Agreement, SMI, its
Affiliates, or its subsidiaries shall not manufacturer, produce or otherwise fabricate any edible
film-strip products or technology of any sort without the prior written consent of InnoZen. Any
violation of this Section 3.9 by SMI shall be considered a material default according to Section
8.1 herein.

3.10. First Right of Negotiation. In the event that a Party intends to enter negotiations or
has, in fact, entered into negotiations for a Change of Control Transaction, then such Party shall
notify the other Party in writing of such intent or action as soon as reasonably practicable. The
notified Party shall then have thirty (30) days from the date of such notice in which to enter
competing negotiations or to propose its own offer for a Change of Control Transaction. Each Party
agrees that during the thirty (30) day period it shall not enter into a binding agreement to effect
a Change of Control Transaction with any third party purchaser. It is understood and agreed,
however, that at any time following the expiration of the thirty (30) day period a Party may enter
into a Change of Control Transaction with a third party purchaser on such terms as the Party may
approve in its sole and absolute discretion.

________________

	[***]	 	Confidential treatment
requested as to certain portions of this exhibit. Such portions have been redacted and filed separately with the SEC.

 

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IV. LICENSE FEE, INVESTMENT AND KEY PERSONNEL

4.1. License Fee. In consideration of the rights granted to SMI by InnoZen hereunder, and the
other undertakings of InnoZen herein, SMI shall pay [***] to InnoZen upon execution of the
Agreement. The [***] previously paid in connection with the Parties’ Letter of Intent shall be
applied to this license fee. The remaining [***] of the license fee shall be paid within ninety
(90) days of execution of this Agreement. Such license fee is non-refundable and shall be made to
InnoZen by check or wire transfer.

4.2. Subscription. In consideration of the rights granted to SMI by InnoZen hereunder, SMI
hereby subscribes and agrees to purchase $1,000,000 worth of shares of common stock of HealthSport,
Inc., the parent corporation of InnoZen, at a per share price of $ 0.235 (the “Subscription”). The
payment of the purchase price for the shares shall be made in installments as follows:

a.) $150,000 on or before August 15, 2009;

b.) $150,000 on or before September 15, 2009;

c.) $150,000 on or before October 15, 2009;

d.) $150,000 on or before November 15, 2009;

e.) $400,000 on or before December 31, 2009.

The shares purchased with each scheduled installment payment shall not be fully paid for until the
entire purchase price is paid for such shares. InnoZen shall have the right to hold the stock
certificates for such shares until such shares are fully paid. In connection with the
Subscription, SMI represents and warrants to InnoZen as follows: (a) SMI is an accredited investor
as that term is defined in Regulation D promulgated under the Securities Act of 1933, (b) SMI is
purchasing the shares for its own account and for investment purposes, (c) SMI has conducted its
own due diligence investigation concerning the investment in the shares and is not relying upon any
representation or warranty of InnoZen or HealthSport which is not contained in this Agreement, (d)
SMI acknowledge that the shares will not have been registered under the Securities Act of 1933 and
therefore will be subject to, and will bear “restricted legends” with respect to certain
restrictions on transfer. Failure by SMI to transfer all monies according to the dates and
schedule set forth in this Section 4.2 shall be considered a material default according to Section
8.1 herein. In the event of such a default, and after termination of this Agreement under Section
8.1 or other provisions of this Agreement, InnoZen shall, in its sole option (i) demand specific
performance of performance by SMI to complete the payment for the shares, or (ii) terminate this
Agreement and any other related documents in their entirety, without obligation other than to
provide share certificates for any shares fully paid by SMI.

4.3. [***]

________________

	[***]	 	Confidential treatment
requested as to certain portions of this exhibit. Such portions have been redacted and filed separately with the SEC.

 

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4.4. Taxes. Each Party agrees to bear all of the sales and use taxes imposed as a result of
the existence or operation of this Agreement on each Party, including any tax on or measured by
sales or other payment.

V. LICENSED TECHNOLOGY AND PATENT RIGHTS

5.1. Ownership.

(a) All works of authorship, discoveries, improvements and inventions made, authored, or
invented by InnoZen, and/or any of its Affiliates in the performance of this Agreement or which
otherwise relates to the Product, the Patent Rights and/or the Licensed Technology (collectively,
“InnoZen Improvements”) shall be owned by InnoZen.

5.2. Infringement.

(a) Each Party shall promptly notify in writing the other Party during the term of this
Agreement of any: (1) known infringement or suspected infringement of any of the Patent Rights; or
(2) unauthorized use or misappropriation of the Licensed Technology by a third party of which it
becomes aware, and shall provide the other Party with all available evidence supporting said
infringement, suspected infringement or unauthorized use or misappropriation. Within ninety (90)
days after InnoZen becomes, or is made aware of any of the foregoing, InnoZen shall decide whether
or not to initiate an infringement or other appropriate action and shall notify SMI of its decision
in writing. The failure of InnoZen to inform SMI of InnoZen’s decision within such ninety (90) day
period shall be deemed a decision not to initiate an infringement or other appropriate action.
Notwithstanding anything else herein to the contrary, InnoZen agrees to and does hereby commit to
defend, indemnify and hold SMI harmless against and from any third party actions claiming or
challenging SMI’s right to Manufacture Products for the Field to the extent that such claim alleges
that the Licensed Technology infringes intellectual property rights owned by a third party.

(b) In the event that InnoZen notifies SMI of its intent to initiate an infringement or other
appropriate action within the ninety (90) day period provided in Section 6.2(a), provided such
infringement is continuing, InnoZen shall initiate such an infringement or other appropriate action
within thirty (30) days of the end of such 90-day period. InnoZen shall be entitled to join SMI as
a party to such suit, but SMI shall be under no obligation to participate except to the extent that
such participation is required as the result of being a named party to the suit or being involved
in the commercialization of any Patent Rights and/or Licensed Technology at issue. If SMI chooses
to participate, SMI shall have the right to be represented by its own counsel at its own expense.
InnoZen shall not settle any such suit involving rights of SMI nor make an admission of liability
on behalf of SMI without obtaining the prior written consent of SMI, which consent shall not be
unreasonably withheld. In the event InnoZen initiates proceedings pursuant to this Section 6.2(b),
InnoZen shall be entitled to 100% of any and all amounts recovered in such suit, whether through
judgment, settlement or otherwise, including without limitation, any punitive damages that may be
awarded, up to the amount of InnoZen’s costs of suit, and InnoZen and SMI shall each be entitled to
50% of all amounts recovered in such suit, whether through judgment, settlement or otherwise,
including without limitation, any punitive damages that may be awarded, in excess of InnoZen’s
costs of suit.

 

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(c) In the event that InnoZen decides not to initiate, or is deemed to have not decided to
initiate an infringement or other appropriate action within the 90-day period provided in
Section 6.2(a), or does not initiate such an infringement or other appropriate action within 30
days of such 90-day period as provided in Section 6.2(b), SMI shall have the right, at its expense,
to initiate an
infringement or other appropriate action, and shall be entitled to join InnoZen as a party to
such suit, but InnoZen shall be under no obligation to participate except to the extent that such
participation is required as a result of its being a named party to the suit or being the owner of
any Patent Rights and/or Licensed Technology at issue. Notwithstanding the foregoing, in the event
that InnoZen is engaged at the end of said 90-day period in negotiations for the settlement of the
said patent infringement which has been the subject of notice from SMI to InnoZen and has advised
SMI in writing of such negotiations, then the above mentioned right and option of SMI to bring suit
shall be exercised only with the written consent of InnoZen which will not be unreasonably
withheld. If InnoZen chooses to participate in any suit initiated by SMI, InnoZen shall have the
right to be represented in any such suit by its own counsel at its own expense. SMI shall not
settle any such suit involving rights of InnoZen nor make an admission of liability on behalf of
InnoZen without obtaining the prior written consent of InnoZen, which consent shall not be
unreasonably withheld. In the event SMI initiates proceedings pursuant to this Section 6.2(c), SMI
shall be entitled to 100% of any and all amounts recovered in such suit, whether through judgment,
settlement or otherwise, including without limitation, any punitive damages that may be awarded, up
to the amount of SMI’s costs of suit, and InnoZen and SMI shall each be entitled to 50% of all
amounts recovered in such suit, whether through judgment, settlement or otherwise, including
without limitation, any punitive damages that may be awarded, in excess of SMI’s costs of suit.

(d) Nothing herein contained shall be construed to require either party to expend money in
litigation or in the enforcing of Patent Rights and/or Licensed Technology rights unless it so
elects and in the event a party proceeds with litigation in the name of the other party in any
cause in which such other party is not voluntarily a party, as evidenced by written notice, such
party shall and agrees to hold the other party harmless from any all liabilities arising
thereunder, including, but not limited to, attorney’s fees, court costs, and damages arising out of
counterclaims, cross-claims and the like.

5.3. Assistance. Each Party shall provide to the other Party reasonable assistance as
necessary for the Parties to exploit its rights under this Article V.

VI. REPRESENTATIONS AND WARRANTIES

6.1. Additional Warranties. Each Party represents and warrants to the other party that (a) it
has full right, power and authority to enter into this Agreement and to carry out the provisions
hereof, (b) it has all necessary corporate approvals for its execution, delivery and performance of
this Agreement, and (c) it has not, and will not during the term of this Agreement, grant any
rights or enter into any agreement that would conflict with the terms of this Agreement. [***]

________________

	[***]	 	Confidential treatment
requested as to certain portions of this exhibit. Such portions have been redacted and filed separately with the SEC.

 

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VII. CONFIDENTIAL INFORMATION, SIGNAGE

7.1. Confidential Information. The Parties will receive certain Confidential Information (as
defined below) of each other, one as the “Disclosing Party” and the other as the “Receiving Party.”
The Parties are willing to provide such Confidential Information to each other only subject to the
terms set forth in this Agreement. For purposes of this Article VII, “Confidential Information”
shall mean information of any type, in any form, which a Party or its respective officers,
directors, employees, attorneys, agents, consultants, advisors, accountants, subsidiaries or
affiliates may now possess or may hereafter obtain relating to the Disclosing Party, including, but
not limited to, information relating to the Disclosing Party’s financial condition, intellectual
property, patents, patent
applications, inventions, trade secrets, know-how, technology, operations, business, business
plans, business forecasts, marketing, product pricing, sales, assets, liabilities, future
prospects, customers, suppliers, manufacturing procedures, processes, designs, equipment,
personnel, research, production, formulations or products, which information would, under the
circumstances, (i) appear to a reasonable person to be confidential or proprietary, or (ii) is
designated by the Disclosing Party as being confidential or proprietary. Except as otherwise
provided in this Article VII and as contemplated by this Agreement, during the term of this
Agreement and for a period of five (5) years thereafter, such Confidential Information shall not be
disclosed, published or made accessible in any form by the Receiving Party or its subsidiaries or
Affiliates to any person, business, or entity at any time without the prior written consent of the
other Party. The restrictions on disclosure of Confidential Information set forth above shall not
apply to any Confidential Information which the Receiving Party can demonstrate (i) was wholly and
independently developed by the Receiving Party without the use of Confidential Information of the
Disclosing Party, or (ii) is or has become generally known to the public without breach of this
confidentiality provision by the Receiving Party, or (iii) at the time of disclosure to the
Receiving Party was known to such Receiving Party free of restriction and evidenced by
documentation in such Receiving Party’s possession; or (iv) as may otherwise be required by law.

7.2. Authorized Disclosure. Each Party may disclose Confidential Information received from
the other Party (a) to third parties under appropriate terms and conditions, including
confidentiality provisions substantially equivalent to this Article VII, for manufacturing or
external testing with respect to a Product and (b) to the extent such disclosure is reasonably
necessary in connection with submissions to regulatory authorities for purposes of this Agreement
or complying with applicable governmental regulations; provided, however, that in
the event of any proposed disclosure described in clause (b), the Disclosing Party will, except
where impracticable (e.g., medical emergencies) or where such disclosure is made for the purpose of
carrying out any obligation under this Agreement, give reasonable advance notice to the other Party
of such disclosure requirement and will use its reasonable efforts to secure confidential treatment
of the Confidential Information to be disclosed.

7.3. Public Announcements. Except to the extent required by applicable law or regulations or
to the extent the substance thereof has previously been reviewed and released by the Parties or is
in the public domain through no fault of the originating Party, neither Party shall make any
announcement, news release, public statement, publication or presentation regarding (i) the
material terms or performance of this Agreement, or (ii) the business relationship of the Parties
without the prior written consent of the other Party, which consent shall not be unreasonably
withheld. The Parties will consult with one another regarding the provisions of this Agreement to
be redacted in any filing made by the parties with regulatory agencies (e.g., Securities and
Exchange Commission) or as otherwise required by law. The Parties will use commercially reasonable
efforts to coordinate the initial announcement or press release relating to this Agreement such
that each Party’s initial announcement or press release may be made contemporaneously.

7.4. Signage. In consideration of the rights granted to SMI herein, SMI shall permit InnoZen
and its Affiliates to display company signage and Product brand signage and advertisement inside
and outside the offices and manufacturing facilities of SMI, provided that, all such
signage and advertisement is reasonable under the circumstances, does not interfere with SMI’s
signage or business operations, and is intended predominantly for the purpose of providing company
and brand recognition to customers and investors of InnoZen and its Affiliates that may, from time
to time, visit SMI.

 

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VIII. TERMINATION

8.1. Termination for Breach.

(a) By SMI. SMI shall be entitled to terminate this Agreement by written notice to
InnoZen in the event that InnoZen shall be in material default of any of its obligations hereunder
and shall fail to remedy any such default within thirty (30) days after written notice thereof by
SMI.

(b) By InnoZen. InnoZen shall be entitled to terminate this Agreement by written
notice to SMI in the event that SMI shall be in material default of any of its obligations
hereunder and shall fail to remedy any such default within thirty (30) days after written notice
thereof by InnoZen.

8.2. Effect of Termination. Termination of this Agreement shall not relieve either party of
its obligations incurred up to the date of termination. Except as otherwise provided in this
Agreement, upon termination, all rights in the Products, the Patent Rights and Licensed Technology
shall revert to and automatically be assigned to and owned by InnoZen. Upon termination, InnoZen
shall be the sole proprietor of all rights in the Products, the Patent Rights and the Licensed
Technology. Upon termination of this Agreement, no Party shall be relieved of any obligations,
including any liability for breach of this Agreement, incurred prior to such termination.

8.3. Survival of Obligations; Return of Confidential Information. Notwithstanding any
termination of this Agreement, the obligations of the Parties with respect to Confidential
Information (Article VIII), as well as any other provisions which by their nature are intended to
survive any such termination, shall survive and continue to be enforceable. Upon any termination of
this Agreement, each Party shall promptly return to each other Party all written Confidential
Information, and all copies thereof, of such other Party.

IX. INDEMNIFICATION

9.1. By SMI. SMI shall provide all proper safeguards and shall assume all risks in its
performance of this Agreement and shall indemnify and save InnoZen and its Affiliates, employees,
agents, representatives, directors, officers, members and shareholders harmless from and against
any and all loss, liability, damages, claims for damages, suits, recoveries, judgments or
executions, including costs, expenses and reasonable attorneys’ fees, that may be claimed asserted
or recovered against InnoZen by any person, firm or corporation whatsoever or whomsoever, on
account of any actual or alleged injury to person or property or death occurring to any person
whatsoever and arising out of: (i) any breach by SMI of any representation, warranty, covenant or
obligation under this Agreement, or (ii) the negligence, misrepresentations or misconduct of SMI,
its employees, or its Affiliates.

9.2. By InnoZen. InnoZen shall provide all proper safeguards and shall assume all risks in
its performance of this Agreement and shall indemnify and save SMI and its Affiliates, employees,
agents, representatives, directors, officers, members and shareholders harmless from and against
any and all loss, liability, damages, claims for damages, suits, recoveries, judgments or
executions, including costs, expenses and reasonable attorneys’ fees, that may be claimed asserted
or recovered against SMI by any person, firm or corporation whatsoever or whomsoever, on account of
any actual or alleged injury to person or property or death occurring to any person whatsoever and
arising out of: (i) any breach by InnoZen of any representation, warranty, covenant or obligation
under this
Agreement, or (ii) the negligence, misrepresentations or misconduct of InnoZen, its employees,
or its Affiliates.

 

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X. MISCELLANEOUS

10.1. Governing Law. This Agreement shall be governed by, and construed in accordance with
the laws of the United States of America and the State of California without regard to its rules
governing conflicts of law.

10.2. Waiver. The waiver by any Party of a breach or a default of any provision of this
Agreement by any other Party shall not be construed as a waiver of any succeeding breach of the
same or any other provision, nor shall any delay or omission on the part of a Party to exercise or
avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver
of any right, power or privilege by such Party.

10.3. Notices. Any notice or other communication in connection with this Agreement must be in
writing and if by mail, by certified mail, return receipt requested, and shall be effective when
delivered to the addressee at the address listed below or such other address as the addressee shall
have specified in a notice actually received by the addressor.

	 	 	 	 	 
	 

	 	If to InnoZen:
	 	InnoZen, Inc.
	 

	 	 	 	6429 Independence Avenue
	 

	 	 	 	Woodland Hills, CA 91367
	 

	 	 	 	Attn: Thomas Beckett
	 

	 	 	 	Facsimile: 818.593.4808
	 
	 	 	 	 
	 

	 	If to SMI:
	 	SMI, Inc.
	 

	 	 	 	2401 West 1st Street
	 

	 	 	 	Tempe, AZ 85281
	 

	 	 	 	Attn: Kevin Taheri and Rick Gean

10.4. Entire Agreement. This Agreement contains the full understanding of the Parties with
respect to the subject matter hereof and supersedes all prior understandings and writings relating
hereto. No waiver, alteration or modification of any of the provisions hereof shall be binding
unless made in writing and signed by the Parties.

10.5. Headings. The headings contained in this Agreement are for convenience of reference
only and shall not be considered in construing this Agreement.

10.6. Severability. In the event that any provision of this Agreement is held by a court of
competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of any
relevant jurisdiction, the validity of the remaining provisions shall not be affected.

10.7. Assignment. Either Party shall have the right to transfer all of its rights under this
Agreement to any successor or assign of all, or substantially all, such Party’s assets or equity
interests;
provided, however, that the proposed successor or assign agrees in writing to
remain bound by the terms of this Agreement. Other than as set forth above, neither Party may
assign its rights or obligations hereunder without the prior written consent of each other Party.

 

- 11 -

 

10.8. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their successors and permitted assigns.

10.9. Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of such together shall constitute one and the same
instrument.

10.10. No Partnership. This Agreement does not constitute and shall not be construed as
constituting an agency, partnership or joint venture relationship between SMI and InnoZen. Neither
SMI nor InnoZen shall have the right to obligate or bind the other party in any manner whatsoever,
and nothing herein contained shall give or is intended to give any rights of any kind to any third
persons.

10.11. No Third-Party Beneficiaries. There are no third-party beneficiaries of this
Agreement.

10.12. Litigation Costs. In the event of any litigation arising out of or with respect to
this Agreement, the non-prevailing party shall pay the costs of the prevailing party including its
reasonable attorneys’ fees incurred in connection therewith through and including the costs of any
appeals and appellate costs relating thereto, and the reasonable attorneys’ fees and costs incurred
in connection with any bankruptcy proceeding.

10.13. Expenses in Connection with this Agreement. Each party shall bear their own costs and
expenses in connection with the negotiation, preparation, due diligence, and closing of this
Agreement.

10.14. Cooperation. Each party shall cooperate fully with the other party in carrying out the
terms of this Agreement and shall take any action or execute any document reasonably necessary to
effectuate the Agreement.

 

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IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed in their name
by their properly and duly authorized officer or representative and this Agreement shall be
effective and create a binding obligation of such Party as of the date first above written.

	 	 	 	 	 
	 	INNOZEN:

INNOZEN, INC., a Delaware corporation

 	 
	 	By:  	/s/ Robert Davidson
 	 
	 	 	Name:  	Robert Davidson 	 
	 	 	Title:  	CEO 	 
	 
	 	SMI:

Supplemental Manufacturing & Ingredients LLC dba

SMI Manufacturing, an Arizona limited liability company

 	 
	 	By:  	                 /s/ Kevin Taheri
 	 
	 	 	Name:  	Kevin Taheri 	 
	 	 	Title:  	CEO 	 

IN WITNESS WHEREOF, HealthSport, Inc., by its signature below and as of the date first above
written consents to InnoZen, Inc.’s execution of this Agreement and agrees to issue the shares of
HealthSport, Inc. common stock in accordance with the terms of Section 4.2 of this Agreement.

	 	 	 	 	 
	 	HEALTHSPORT, INC., a Delaware corporation

 	 
	 	By:  	/s/ Robert Davidson
 	 
	 	 	Name:  	Robert Davidson 	 
	 	 	Title:  	Chairman 	 

 

- 13 -

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