Document:

ex10-4.htm

Exhibit 10.4

SUBSIDIARY GUARANTEE

SUBSIDIARY GUARANTEE, dated as of March 28, 2013 (this “Guarantee”), made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “Guarantors”), in favor of Chromadex Corporation, a Delaware corporation (together with  its permitted assigns, the “Vendor”) pursuant to that certain Asset Purchase and Sale Agreement (the “Purchase Agreement”), dated as of the date hereof, between the Vendor and the NeutriSci International Inc., a corporation formed pursuant to the laws of the Province of Alberta, Canada (the “Company”).

W I T N E S S E T H:

WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to sell and issue to the Vendor, and the Vendor has agreed to purchase from the Company a Senior Secured Convertible Note (the “Note”), subject to the terms and conditions set forth therein; and

WHEREAS, each Guarantor will directly benefit from the extension of credit to the Company represented by the issuance of the Note;

NOW, THEREFORE, in consideration of the premises and to induce the Vendor to enter into the Purchase Agreement and to carry out the transactions contemplated thereby, each Guarantor hereby agrees with the Vendor as follows:

 

 

1. Definitions. Unless otherwise defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings given to them in the Purchase Agreement. The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee, and Section and Schedule references are to this Guarantee unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.  The following terms shall have the following meanings:

“Guarantee” means this Subsidiary Guarantee, as the same may be amended, supplemented or otherwise modified from time to time.

             “Obligations” means, in addition to all other costs and expenses of collection incurred by Vendor in enforcing any of such Obligations and/or this Guarantee, all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of the Company or any Guarantor to the Vendor, including, without limitation, all obligations under this Guarantee, the Note and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from any of the Vendor as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.  Without limiting the generality of the foregoing, the term “Obligations” shall include, without limitation: (i) principal of, and interest on the Note and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Company or any Guarantor from time to time under or in connection with this Guarantee, the Note and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Company or any Guarantor.

  

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2. Guarantee.

(a) Guarantee.

 

(i) The Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantee to the Vendor and their respective successors, endorsees, transferees and assigns, the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

 

(ii) Anything herein or in any other Transaction Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Transaction Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws, including laws relating to the insolvency of debtors, fraudulent conveyance or transfer or laws affecting the rights of creditors generally (after giving effect to the right of contribution established in Section 2(b)).

(iii) Each Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Vendor hereunder.

(iv) The guarantee contained in this Section 2 shall remain in full force and effect until the earlier of (i) the Forced Conversion Date or (ii) all the Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been paid in full or otherwise fully satisfied and discharged.

(v) No payment made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected by the Vendor from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Obligations or any payment received or collected from such Guarantor in respect of the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations are indefeasibly paid in full.

(vi) Notwithstanding anything to the contrary in this Guarantee, with respect to any defaulted non-monetary Obligations the specific performance of which by the Guarantors is not reasonably possible (e.g. the issuance of the Company's Common Stock), the Guarantors shall only be liable for making the Vendor whole on a monetary basis for the Company's failure to perform such Obligations in accordance with the Transaction Documents.

(b) Right of Contribution. Subject to Section 2(c), each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor's right of contribution shall be subject to the terms and conditions of Section 2(c). The provisions of this Section 2(b) shall in no respect limit the obligations and liabilities of any Guarantor to the Vendor and each Guarantor shall remain liable to the Vendor for the full amount guaranteed by such Guarantor hereunder.

  

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(c) No Subrogation.  Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Vendor, no Guarantor shall be entitled to be subrogated to any of the rights of the Vendor against the Company or any other Guarantor or any collateral security or guarantee or right of offset held by the Vendor for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Vendor by the Company on account of the Obligations are indefeasibly paid in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Vendor, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Vendor in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Vendor, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Vendor may determine.

 

(d) Amendments, Etc. With Respect to the Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Obligations made by the Vendor may be rescinded by the Vendor and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Vendor, and the Purchase Agreement and the other Transaction Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Vendor may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Vendor for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. The Vendor shall have no obligation to protect, secure, perfect or insure any Lien at any time held by them as security for the Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

 

(e) Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Vendor upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Company and any of the Guarantors, on the one hand, and the Vendor, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives to the extent permitted by law diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment and performance without regard to (i) the validity or enforceability of the Purchase Agreement or any other Transaction Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Vendor, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance or fraud by Vendor) which may at any time be available to or be asserted by the Company or any other Person against the Vendor, or (iii) any other circumstance whatsoever (with or without notice to or knowledge of the Company or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Company for the Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Vendor may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as they may have against the Company, any other Guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Vendor to make any such demand, to pursue such other rights or remedies or to collect any payments from the Company, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Company, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Vendor against any Guarantor. For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings.

  

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(f) Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Vendor upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

(g) Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Vendor without set-off or counterclaim in U.S. dollars at the address set forth or referred to in the Signature Pages to the Purchase Agreement.

3. Representations and Warranties. Each Guarantor hereby makes the following representations and warranties to Vendor as of the date hereof:

 

(a) Organization and Qualification. The Guarantor is a corporation, duly incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Guarantor has no subsidiaries. The Guarantor is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, (i) adversely affect the legality, validity or enforceability of any of this Guaranty in any material respect, (ii) have a material adverse effect on the results of operations, assets, prospects, or financial condition of the Guarantor or (iii) adversely impair in any material respect the Guarantor's ability to perform fully on a timely basis its obligations under this Guaranty (a “Material Adverse Effect”).

 

(b) Authorization; Enforcement.  The Guarantor has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Guarantee, and otherwise to carry out its obligations hereunder. The execution and delivery of this Guarantee by the Guarantor and the consummation by it of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Guarantor. This Guarantee has been duly executed and delivered by the Guarantor and constitutes the valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application.

(c) No Conflicts. The execution, delivery and performance of this Guarantee by the Guarantor and the consummation by the Guarantor of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of its Certificate of Incorporation or By-laws or (ii) conflict with, constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Guarantor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Guarantor is subject (including Federal and State securities laws and regulations), or by which any material property or asset of the Guarantor is bound or affected, except in the case of each of clauses (ii) and (iii), such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as could not, individually or in the aggregate, have or result in a Material Adverse Effect. The business of the Guarantor is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, do not have a Material Adverse Effect.

  

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(d) Consents and Approvals. The Guarantor is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration with, any court or other federal, state, local, foreign or other governmental authority or other person in connection with the execution, delivery and performance by the Guarantor of this Guarantee.

(e) Purchase Agreement. The representations and warranties of the Company set forth in the Purchase Agreement as they relate to such Guarantor, each of which is hereby incorporated herein by reference, are true and correct as of each time such representations are deemed to be made pursuant to such Purchase Agreement, and the Vendor shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the Company's knowledge shall, for the purposes of this Section 3, be deemed to be a reference to such Guarantor's knowledge.

(f) Foreign Law.  Each Guarantor has consulted with appropriate foreign legal counsel with respect to any of the above representations for which non-U.S. law is applicable. Such foreign counsel have advised each applicable Guarantor that such counsel knows of no reason why any of the above representations would not be true and accurate. Such foreign counsel were provided with copies of this Subsidiary Guarantee and the Transaction Documents prior to rendering their advice.

4. Covenants.

(a) Each Guarantor covenants and agrees with the Vendor that, from and after the date of this Guarantee until the Obligations shall have been indefeasibly paid in full, such Guarantor shall take, and/or shall refrain from taking, as the case may be, each commercially reasonable action that is necessary to be taken or not taken, as the case may be, so that no Event of Default (as defined in the Note) is caused by the failure to take such action or to refrain from taking such action by such Guarantor.

 

(b) So long as any of the Obligations are outstanding, unless Vendor shall otherwise consent in writing, each Guarantor will not directly or indirectly on or after the date of this Guarantee:

i. other than Permitted Indebtedness (as defined in the Note), enter into, create, incur, assume or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

ii. other than Permitted Liens (as defined in the Note), enter into, create, incur, assume or suffer to exist any liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

iii. amend its Certificate of Incorporation, Bylaws or other Charter Documents so as to adversely affect any rights of any Purchaser;

iv. repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its securities or debt obligations;

v. pay cash dividends on any equity securities of the Company;

vi. enter into any transaction with any affiliate of the Guarantor which would be required to be disclosed in any public filing of the Company with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); or

  

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vii. enter into any agreement with respect to any of the foregoing.

5. Miscellaneous.

(a) Amendments in Writing. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except in writing by the Vendor.

 

 

(b) Notices. All notices, requests and demands to or upon the Vendor or any Guarantor hereunder shall be effected in the manner provided for in the Purchase Agreement, provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 5(b).

(c) No Waiver By Course Of Conduct; Cumulative Remedies. The Vendor shall not by any act (except by a written instrument pursuant to Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default under the Transaction Documents or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Vendor, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Vendor of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Vendor would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

(d) Enforcement Expenses; Indemnification.

(i) Each Guarantor agrees to pay, or reimburse the Vendor for, all its reasonable costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Guarantee and the other Transaction Documents to which such Guarantor is a party, including, without limitation, the reasonable fees and disbursements of counsel to the Vendor.

 

(ii) Each Guarantor agrees to pay, and to save the Vendor harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions contemplated by this Guarantee.

(iii) Each Guarantor agrees to pay, and to save the Vendor harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Guarantee to the extent the Company would be required to do so pursuant to the Purchase Agreement; provided that, notwithstanding the foregoing, each Guarantor shall not be responsible for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements which are the result of the willful misconduct or gross negligence of the Vendor.

(iv) The agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Purchase Agreement and the other Transaction Documents.

(e) Successor and Assigns. This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the Vendor and their respective successors and assigns; provided that no Guarantor may assign, transfer or delegate any of its rights or obligations under this Guarantee without the prior written consent of the Vendor.

  

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(f) Set-Off. Each Guarantor hereby irrevocably authorizes the Vendor at any time and from time to time while an Event of Default under any of the Transaction Documents shall have occurred or be continuing, without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each Guarantor, to set-off and appropriate and apply any and all deposits, credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Vendor to or for the credit or the account of such Guarantor, or any part thereof in such amounts as the Vendor may elect, against and on account of the obligations and liabilities of such Guarantor to the Vendor hereunder and claims of every nature and description of the Vendor against such Guarantor, in any currency, whether arising hereunder, under the Purchase Agreement, any other Transaction Document or otherwise, as the Vendor may elect, whether or not the Vendor have made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. The Vendor shall notify such Guarantor promptly of any such set-off and the application made by the Vendor of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Vendor under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Vendor may have.

 

(g) Counterparts. This Guarantee may be executed by one or more of the parties to this Guarantee on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

(h) Severability. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(i) Section Headings. The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

(j) Integration. This Guarantee and the other Transaction Documents represent the agreement of the Guarantors and the Vendor with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Vendor relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Transaction Documents.

(k) Governing Laws. All questions concerning the construction, validity, enforcement and interpretation of this Guarantee shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each of the Company and the Guarantors agree that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Guarantee (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each of the Company and the Guarantors hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Guarantee and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Guarantee or the transactions contemplated hereby.

  

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(l) Acknowledgements.  Each Guarantor hereby acknowledges that:

(i) it has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the other Transaction Documents to which it is a party;

 

(ii) the Vendor have no fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guarantee or any of the other Transaction Documents, and the relationship between the Guarantors, on the one hand, and the Vendor, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(iii) no joint venture is created hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated hereby among the Guarantors and the Vendor.

(m) Additional Guarantors.  The Company shall cause each of its subsidiaries formed or acquired on or subsequent to the date hereof to become a Guarantor for all purposes of this Guarantee by executing and delivering an Assumption Agreement in the form of Annex 1 hereto.

 

(n) Release of Guarantors. Each Guarantor will be released from all liability hereunder concurrently with the indefeasible repayment in full of all amounts owed under the Purchase Agreement, the Note and the other Transaction Documents.

(o) Seniority. The Obligations of each of the Guarantors hereunder rank senior in priority to any other Indebtedness (as defined in the Purchase Agreement) of such Guarantor.

(p) WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE VENDOR, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.

*********************

 

(Signature Pages Follow)

  

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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee

to be duly executed and delivered as of the date first above written.

                          BRITLOR HEALTH AND WELLNESS, INC.

                         By: /s/ Keith Bushfield

                                   Name: Keith Bushfield

                                   Title:   President & CEO

  

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Annex 1 to

 

SUBSIDIARY GUARANTEE

ASSUMPTION AGREEMENT, dated as of ______  __, 2013 made by _____________., a _____ corporation (the “Additional Guarantor”), in favor of the Vendor pursuant to the Purchase Agreement referred to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such Purchase Agreement.

W I T N E S S E T H :

           WHEREAS, Chromadex Corporation, a Delaware corporation (the “Vendor”) and NeutriSci International Inc., an Alberta corporation (the “Company”) have entered into an Asset Purchase and Sale Agreement, dated as of March __, 2013 (as amended, supplemented or otherwise modified from time to time, the “Purchase Agreement”);

           WHEREAS, in connection with the Purchase Agreement, the Subsidiaries of the Company (other than the Additional Guarantor) have entered into the Subsidiary Guarantee, dated as of March __, 2013 (as amended, supplemented or otherwise modified from time to time, the “Guarantee”) in favor of the Vendor;

           WHEREAS, the Purchase Agreement requires the Additional Guarantor to become a party to the Guarantee; and

           WHEREAS, the Additional Guarantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee;

NOW, THEREFORE, IT IS AGREED:

1. Guarantee. By executing and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 5(m) of the Guarantee, hereby becomes a party to the Guarantee as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor thereunder. The information set forth in Annex 1 hereto is hereby added to the information set forth in Schedule 1 to the Guarantee. The Additional Guarantor hereby represents and warrants that each of the representations and warranties contained in Section 3 of the Guarantee is true and correct on and as the date hereof as to such Additional Guarantor (after giving effect to this Assumption Agreement) as if made on and as of such date.

 

2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

  

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                  IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

                                           [ADDITIONAL GUARANTOR]

                                            By:                                                                                                

                                            Name:

                                            Title:ex10-5.htm

Exhibit 10.5

ROYALTY AGREEMENT

 

THIS AGREEMENT is made effective as of the 28th day of March 2013

 

BETWEEN:

CHROMADEX CORPORATION, a corporation incorporated pursuant to the laws of the State of Delaware (“CDX”)

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NEUTRISCI INTERNATIONAL INC., a corporation incorporated pursuant to the laws of the Province of Alberta (referred to as the “NSI”) (collectively the "Parties")

WHEREAS:

 

	
A.

	
NSI has purchased all of the assets, rights and title of CDX in and to the products containing pterostilbene formerly marketed by CDX under the brand, “BlūScience” including, but not limited to the products under the names, “HeartBlū”, “MemoryBlū”, “EternalBlū”, “TrimBlū” and “Blū2Go” (the “BlūScience Products”) including the trademarks related to the “BlūScience Products (“Trademarks”); and

 

	
  

	
B.pursuant to the purchase and sale of the “BlūScience Products, NSI has agreed to pay a royalty to CDX pursuant to the terms and conditions hereinafter set forth;

 

	
C.

	
concurrently herewith, NSI and CDX have entered into a supply agreement (the “Supply Agreement”) for the supply by CDX to NSI of the product, PteroPure, being a raw ingredient in the manufacture of the BlūScience Products;

 

NOW THEREFORE, in consideration of the premises and mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party, the parties agree as follows:

 

1. INTERPRETATION

 

1.1 Definitions.  The definitions set out in Appendix “A” to this Agreement shall govern the meaning of the terms defined therein when used in this Agreement unless there is something in the subject matter or context patently inconsistent therewith.

 

	
(a)  

	
“BlūScience Products” has the meaning given in the preamble of this Agreement;

 

	
(b)  

	
“Business Day” means every day other than a Saturday, Sunday or any other day on which the principal banks located in either New York,  New York  or Calgary, Alberta are not open for business during normal banking hours;

 

	
(c)  

	
“Net Sales” means the gross billing price  NSI or its subsidiaries directly or indirectly charges to their customers for BlūScience Products, less transportation costs, sales taxes, use taxes, occupation taxes and excise taxes, discounts, returns and allowances;

 

	
(d)  

	
“Royalty” has the meaning given in Section 2.1 of this Agreement;

 

	
(e)  

	
“Royalty Period” has the meaning given in Section 2.1 of this Agreement

 

	
(f)  

	
“Supply Agreement” has the meaning given in the preamble of this Agreement;

  

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(g)  

	
“Term” has the meaning set out in Section 4.1 of this Agreement;

 

	
(h)  

	
“Termination Date” has the meaning set out in Section 4.4 of this Agreement; and

 

	
(i)  

	
“Trademarks” has the meaning given in the preamble of this Agreement.

 

1.2 Interpretation.  Any reference in this Agreement to a paragraph, section or appendix is a reference to the respective paragraph, section or appendix of this Agreement, unless otherwise expressly indicated. Unless specified otherwise, “$” and “Dollars” means the lawful currency of the United States of America.

 

2. ROYALTY PAYMENT AND ONGOING OBLIGATIONS

 

2.1 The Royalty:  Subject to early termination pursuant to Section 4.2, for so long as  NSI shall sell the BlūScience Products (the “Royalty Period”), NSI shall pay CDX a royalty in the amount of 6% of Net Sales (the “Royalty”) from its sales of (a) any BlūScience Products, (b) any products that include the Trademarks, or (c) any products hereafter marketed in connection with the Trademarks or any other trademarks created by NSI for use in connection with BlūScience Products, derivatives of the BlūScience Products or products marketed by NSI that include PteroPure or pterostilbene.

 

2.2 Quarterly Reporting.  During the Royalty Period, NSI shall provide CDX with a quarterly report (whether or not NSI has generated any Net Sales) showing all amounts of Net Sales during that quarter.  The quarterly reports shall also show the calculation of the Royalty for that quarter, if any.

 

2.3 Payment.  Royalties shall be payable on a quarterly basis.

 

3. REPRESENTATIONS AND WARRANTIES

 

3.1 CDX's Representations and Warranties.  CDX warrants and  represents to NSI that as of the date hereof:

 

	
(a)  

	
CDX is duly incorporated, validly subsisting and in good standing under the laws of the State of Delaware with full capacity and authority to enter into this Agreement and complete the actions and transactions contemplated by this Agreement;

 

	
(b)  

	
CDX has (i) taken all corporate actions necessary to authorize the execution and delivery of this Agreement and completion of the actions and transactions contemplated herein and (ii) validly executed and delivered this Agreement; and

 

	
(c)  

	
this Agreement constitutes a legal, valid and binding obligation of CDX enforceable against CDX in accordance with its terms and conditions, provided that enforcement may be limited by bankruptcy, insolvency and other similar laws of general application affecting the enforcement of creditors' rights generally.

 

3.2 NSI's Representations and Warranties.  NSI warrants, and represents to CDX that as of the date hereof:

 

	
(a)  

	
NSI is duly incorporated, validly subsisting and in good standing under the laws of the Province of Alberta  with full capacity and authority to enter into this Agreement and complete the actions and transactions contemplated by this Agreement;

 

	
(b)  

	
NSI has (i) taken all corporate actions necessary to authorize the execution and delivery of this Agreement and completion of the actions and transactions contemplated herein and (ii) validly executed and delivered this Agreement; and

 

	
(c)  

	
this Agreement constitutes a legal, valid and binding obligation of NSI enforceable against NSI in accordance with its terms and conditions; provided that enforcement may be limited by bankruptcy, insolvency and other similar laws of general application affecting the enforcement of creditors' rights generally.

 

  

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4. TERM AND TERMINATION

 

4.1 Term.  This Agreement shall be effective from the date hereof and, subject to termination in accordance with Section 4.2, be considered as an ongoing contract thereafter pursuant to the terms of this Agreement.

 

4.2 Early Termination.  This Agreement may be terminated  by the non-breaching Party if the breaching Party fails to comply with any material provision of this Agreement, provided that the party responsible for the default will not be deemed in breach or default of this Agreement unless and until the  non breaching Party gives written notice to the breaching Party of the failure to comply and such breaching Party fails to cure the failure within thirty (30) days after the notice.

 

4.3 Notice of Termination.  For termination of this Agreement pursuant to Section 4.2  to be effective, the Party not in breach or default must deliver written notice of termination to the other at the expiry of such “right to cure” thirty (30) days or such longer period, as applicable.  Termination will be effective thirty (30) days following delivery of the termination notice.

 

4.4 Effect of Termination. If a default has occurred and is not cured as set out above, and notice of termination has been delivered to the defaulting party by the non-defaulting party, upon expiration of thirty (30) days following the notice of termination, this Agreement shall terminate (the “Termination Date”) and as of the Termination Date, each Party will have no further obligation to the other (provided, however, if NSI is the defaulting party then NSI shall continue to pay CDX the Royalty pursuant to Section 2.1 of this Agreement and Sections 2, 5, 6 and 7 of this Agreement shall survive such termination).

 

5. CONFIDENTIALITY

 

5.1 Confidentiality.  This Agreement and each of its terms and provisions shall be kept strictly confidential between the Parties and shall not be disclosed by either Party without the prior written consent of the other Party.  Further, the Parties shall keep confidential, use only for the purpose of this Agreement and shall not disclose without the prior written consent of the other Party any information that is confidential or proprietary to that Party.  Notwithstanding the foregoing, a Party may disclose information in relation to this Agreement: (i) where such disclosure is required by applicable law, regulation, legal process or applicable stock exchange requirement, or (ii) to the disclosing Party's professional advisors where those advisors are bound to keep such information confidential or (iii) where such disclosure is necessary for the enforcement of the disclosing Party's rights.

 

6. AUDIT RIGHTS

 

6.1 Audit.  NSI shall keep and maintain accurate books and records concerning its purchase, sale, marketing and distribution of product.  Such books and records shall be sufficiently detailed to enable CDX or its agents, as necessary, to calculate the amount of gross sales or disposition of BlūScience Products and Trademarks as contemplated in Section 2.1.  During the Royalty Period and for a period of two (2) year’s thereafter, CDX shall have the right, upon at least five (5) days written notice and no more than once per calendar year, to inspect NSI’s books and records and all other documents and material in the possession of or under the control of NSI with respect to the calculation of the Net Sales and the Royalty at the place or places where such records are normally retained by NSI. CDX shall have free and full access thereto for such purposes and shall be permitted to be able to make copies thereof and extracts therefrom.

 

6.2 Audit Costs. In the event a shortfall in the amount of the Royalty of five percent (5%) or more is discovered,  NSI shall reimburse CDX for the cost of the audit including any attorney’s fees incurred in connection therewith; otherwise, all audit costs shall be borne exclusively by CDX.

 

7. AMENDMENT

 

7.1 This Agreement may be amended from time to time in writing with the consent of both Parties to the Agreement.

  

-3-

  

8. GENERAL

 

8.1 Independent Contractor and No Agency.  Nothing in this Agreement shall be construed to constitute either Party as the employee, partner, franchisee or agent of the other, nor shall either Party have any authority to bind the other in any respect, it being intended that each shall remain an independent contractor responsible only for its own affairs and actions.

 

8.2 Entire Agreement.  This Agreement and any Appendices contains the entire understanding of the Parties and shall be binding upon and inure to the benefit of the Parties successors and assigns.  This Agreement and any Appendices may not be amended or modified in any way without the written consent of both Parties.

 

8.3 No Assignment.  NSI or CDX shall not have the right to assign this Agreement in whole or in part without the written consent of the other Party.

 

8.4 Further Assurances.  Each of the Parties to this Agreement shall do all such further acts and shall execute all such further documents and assurances as any other Party reasonably requests in order to carry out the terms of this Agreement.

 

8.5 Notices.

 

	
(a)  

	
All notices and other communications required or permitted to be given in connection with this Agreement shall be in writing and shall be delivered to the representatives of the Parties and at the addresses specified in paragraph (c) below.  Any communication shall be sufficiently given if delivered by mail, hand, reputable courier service, facsimile or other similar means of electronic communication.  If there is an actual or threatened disruption of mail service, all communications shall be delivered by any other method specified in this Section.

 

	
(b)  

	
Any communication sent by mail will be deemed to have been received five (5) Business Days after the date of mailing.  Any communication sent by overnight courier will be deemed to have been received one (1) Business Day after the date it was sent.  Any communication sent by hand, local courier or electronic communication will be deemed to have been received on the Business Day such communication was sent, provided that communications sent after 5:00 p.m. Eastern Time will be deemed to be received on the next Business Day.

 

	
(c)  

	
Until a Party notifies the other Parties in writing of a change of the notifying Party's address for service, the Parties' respective addresses for service are:

 

	
(i)  

	
in the case of CDX, at:

 

ChromaDex Corporation

10005 Muirlands Blvd, Ste G

Irvine, CA  92618, USA

Attention: Tom Varvaro

Fax:   (949) 419-0294

Email: tom.varvaro@chromadex.com

	
(ii)  

	
in the case of NSI, at:

 

NeutriSci International Inc.

c/o Tingle Merrett LLP, Barristers & Solicitors

1250 Standard Life Building

639 - 5th Avenue SW

Calgary, AB, Canada  T2P 0M9

Attention:  Cynthia Solano

Fax: (403) 571-8008

Email: csolano@tinglemerrett.com

  

-4-

  

8.6 Survival.  All obligations and liability of any party under this Agreement which arise prior to termination shall survive such termination and continue in full force and effect.

 

8.7 Governing Law.  This Agreement shall be construed and enforced in accordance with, and the rights of the parties hereto shall be governed by, the laws of the State of New York without regard to principles of conflicts of law. Any action brought concerning the transactions contemplated by this Agreement shall be brought in the state courts or federal courts located in New York, New York.  The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted in compliance with this Section 8.7 and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.  The parties executing this Agreement agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury.

 

8.8 Counterparts.  This Agreement may be executed in counterpart in different places, at different times and on different dates, and in that case such counterparts collectively constitute a single binding agreement.

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.

 

	
CHROMADEX CORPORATION

Per:

 

/s/ Frank Jaksch

	 	
NEUTRISCI INTERNATIONAL INC.

Per:

 

/s/ Keith Bushfield

	FRANK JAKSCH, President and CEO	 	KEITH BUSHFIELD, President and CEO

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