Document:

Exhibit
10.1

 

 

MEMORANDUM
OF UNDERSTANDING

 

Global Media Fund, LLC (GMF) hereby irrevocably and unconditionally
assigns to Mosaic Nutriceuticals Corp (“Company”) MEDIA DUE BILL Certificate #
5291 in the amount of One Million Dollars ($1,000,000) redeemable by Company
upon receipt by GMF of payments as outlined herein.

 

Company has option to increase to $2 million by extending monthly $50k
pmts from 10 to 30 months with notification.

 

Payment. Payment will be in the form of shares of restricted common
stock of Company (the “Restricted Shares”). The restricted shares portion of
this Memorandum of Understanding (“MOU”) shall be paid as follows: One Million
(1,000,000) shares of restricted common stock of Company (the “Restricted
Shares”) to be paid upon execution of this document. These One Million
(1,000,000) shares shall be valued at $500,000 for the purposes of this
agreement.

 

The number of shares of restricted stock to be issued as payment for
the remaining balance of Five Hundred Thousand ($500,000) shall be calculated
using the Market Price defined below and paid as follows: Fifty Thousand
Dollars ($50,000) worth of restricted stock to be issued for ten (10) consecutive
calendar months with the first monthly issuance commencing no later than June 30,
2005.

 

The restricted stock shall be governed by the “Restricted Stock Terms”
as outlined herein. Fulfillment of this MOU by GMF is conditional on the
receipt of all payments owed in the specified time frame. Failure to pay as
agreed may trigger a default as per the included “Default Provisions”.

 

Restricted
Stock Terms

The initial
shares of Restricted Shares of Common Stock specified as payment are to be
issued within ten days from the execution of this MOU. All the Restricted
Shares of Common Stock shall be issued as of the Effective Date.

 

Restricted Stock
Valuation (Market Price)

 

For the
purposes of this MOU, the Market Price of the restricted stock shall be
calculated as ninety percent (90%) of the arithmetic average of the closing
price of Company’s Common Stock for the ten (10) trading days immediately
preceding the stock issuance date, as reported daily by the principal national
of regional stock exchange on which the common stock is listed. The total
number of restricted shares to be issued to GMF for each payment due shall be
calculated by dividing the amount due by the Market Price.

 

Registration Provisions

 

The Restricted Shares issued to
GMF under this MOU shall be subject to the following registration provisions:

Company grants
to GMF piggyback registration rights with respect to all Restricted Shares
mentioned in this MOU. Company shall give prompt written notice to GMF of any
intended registration and will automatically include GMF’s Restricted Shares in
such registration unless notified to the contrary by GMF. In the event that
Company does not register the Restricted Shares as required in this MOU, or if
the Restricted Shares are eligible for sale pursuant to Rule 144 and the
Company does not provide all required documents such as counsel opinion letter
to remove stock restrictions within one week of written request from GMF,
Company shall pay GMF, as liquidated damages, an amount equal to five percent
(5%) of the total value of this MOU, such payment shall be made no later than
the first business day of the following calendar month and Company furthermore
agrees to accept and represent to Company’s transfer agent as valid, an opinion
letter from GMF’s counsel regarding restricted stock status.

 

1

 

Default
Provisions

 

Any default by Company in the payment of any amount when due under this
MOU, or any failure to timely review and approve media supplied by GMF for
review, shall entitle GMF to place a hold on all work specified under the
aforementioned Media Due Bill and, at its sole option, to terminate this MOU
upon ten (10) days written notice and declare associated Media Due Bill
null and void, and notwithstanding any provision hereof to the contrary,
Company shall remain liable to GMF for the entire price of this MOU, including
previously unvested shares. No media advertising will be distributed unless all
payments outlined in this MOU and associated media Due Bill have been received
by GMF in the time frame specified.

 

Failure of GMF to fulfill its obligations as outlined in this MOU is
the only cause for termination on the part of the Company. GMF shall not be in
default as a result of any delays in services that are directly or indirectly
the result of actions of Company, or failure to act on the parts of Company,
such as failure to approve copy submitted by GMF for distribution in a
reasonable yet timely manner.

 

The offer contained in this MOU supersedes any previous offers
submitted to Company and is valid for a period of 14 days from the date in the
footnote at the bottom of the page. Please indicate your acceptance of this MOU
by signing below, and then please fax the original, followed by mailing of two
executed copies, at your earliest convenience to: Don L. Rose, President,
Global Media Fund, LLC, 7777 Leesburg Place, Falls Church, VA 22043; Ph: 631/791-6126,
Fax: 631/389-2367.

 

 

	
  Agreed and Accepted:

  	
   

  
	
   

  	
   

  
	
  Mosaic Nutriceuticals Corp

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Date

  	
  April 8, 2005

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed and Accepted:

  	
   

  
	
   

  	
   

  
	
  Global Media Fund, LLC.

  	
  /s/ Done L. Rose

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Date

  	
  4/8/05

  	
   

  	
   

  

 

2Exhibit
10.2

 

	
  

  	
   

  	
  MEDIA DUE
  BILL

  	
   

  	
  

  

 

Certificate Number:  5291

 

For value received, Global Media Fund, LLC
(GMF) hereby irrevocably guarantees to pay to the order of

 

MOSAIC
NUTRICEUTICALS CORP

One Million Dollars ($1,000,000)

 

as amended

 

in print and/or radio advertising credits (“Advertising
Credit”) in accordance with the following conditions and restrictions:

 

1.               Guarantee.
This non-cancelable Media Due Bill, represents GMF’s irrevocable guarantee to
provide Advertising Credit services upon demand for five (5) years from the
date of issuance, provided Client is in compliance with any and all funds
and/or payments owed to GMF.

 

2.               Advertising
Credits. Advertising credits shall consist of any combination of newspaper,
Internet and radio features. Media advertising as defined herein, is subject to
creative content and distribution through GMF’s normal means of production and
distribution as well as standard media agency buying fees due at time of
redemption. The delivery of content to the media is done on a case-by-case
basis. GMF reserves the right to reject any advertising that does not meet GMF’s
high standards for editorial and advertising content. The value of the
Advertising Credit provided under this Media Due Bill shall be consistent with
national average advertising rate structures and production costs.

 

3.               Rate
Card. Rate Card herein refers to the national average published rate for a
given media advertising product.

 

4.               The
laws of the state of Virginia shall govern this Media Due Bill.

 

This Media Due
Bill may not be assigned, sold, transferred or hypothecated by Client, either
in whole or in part unless agreed upon written approval is obtained in advance
from both parties.

 

	
   

  	
   

  	
  ACCEPTED BY:

  
	
   

  	
   

  	
   

  
	
  AGREED TO:

  	
   

  	
  Client: Mosaic Nutriceuticals Corp

  
	
   

  	
   

  	
   

  
	
  Global Media Fund, LLC

  	
   

  	
  Signature:

  	
  /s/ Charles Townsend

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
  /s/ Don L
  Rose

  	
   

  	
   

  	
  Print Name:

  	
  Charles Townsend

  	
   

  
	
   

  	
   

  	
   

  
	
  Don L Rose - President

  	
   

  	
  Date:

  	
  Apr 8, 2005

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  4/8/2005

  	
   

  	
   

  	
  Street Address:

  	
  1502 San Antone

  	
   

  
	
   

  	
   

  	
   

  
	
  7777 Leesburg Pike, 3rd
  Floor

  	
   

  	
  City, State, Zip:

  	
  Lewisville, TX 75077

  	
   

  
	
   

  	
   

  	
   

  
	
  Falls Church, VA 22043

  	
   

  	
  Phone:

  	
  469-556-2986

  	
  Fax:

  	
  214-447-9235Exhibit
10.3

 

INTERNATIONAL
DISTRIBUTOR AGREEMENT

 

THIS
INTERNATIONAL DISTRIBUTOR AGREEMENT (hereinafter referred to as the “Agreement”),
entered into as of September 13, 2004 (hereinafter referred to as the “Effective
Date”) by and between the Mosaic Nutriceuticals Corporation, a corporation
organized and existing under the laws of the State of Nevada, United States of
America, having its offices at 1502 San Antone, Lewisville, TX 75077, United
States of America (hereinafter referred to as the “COMPANY”) and AHB Trading
Limited, S.A. a corporation existing under the laws of Panama, having its
offices at a la ficha 318840, rollo 50640, e imagen 44, en el Regitro Publico
de Panamia (hereinafter referred to as “DISTRIBUTOR”);

 

WITNESSETH

 

In
consideration of the mutual covenants contained herein, the parties hereto
agree as follows:

 

1.        APPOINTMENT

 

The COMPANY hereby appoints DISTRIBUTOR and DISTRIBUTOR hereby accepts
appointment as the exclusive authorized distributor for the COMPANY of the
products listed in Exhibit A, attached hereto, and made a part
hereof (hereinafter referred to as the “Product” or “Products”), for sales
within the territory consisting of Mexico, Central America and South America
(hereinafter referred to as the “Territory”). 
Nothing in this Agreement shall be deemed to constitute a prohibition on
parallel imports into the Territory of Products as a result of passive sales
and COMPANY shall not be responsible for transgression of DISTRIBUTOR’s rights
hereunder by third parties.  DISTRIBUTOR
agrees that it will not engage in active marketing of the Products outside the
Territory.  Without limiting the
generality of the foregoing, with respect to the Products, DISTRIBUTOR shall
not establish a branch or maintain a distribution depot for Products outside
the Territory and shall not send solicitations (including emails) or establish
a website aimed primarily at customers located outside the Territory.

 

2.        NO AGENCY RELATIONSHIP

 

DISTRIBUTOR is at all times an independent contractor and is not and
shall not be deemed to be the legal representative or agent of the COMPANY for
any purpose whatsoever, and DISTRIBUTOR is not authorized to transact business,
incur obligations (express or implied), make any commitments or
representations, or otherwise act in any manner, in the name of or on behalf of
the COMPANY. DISTRIBUTOR shall transact business in its own name and assume the
entire responsibility for all action or inaction taken by it as DISTRIBUTOR for
the Products.

 

1

 

3.        CERTAIN RESPONSIBILITIES OF
DISTRIBUTOR

 

(a)       DISTRIBUTOR shall use its best efforts to
promote the sale of Products within the Territory.

 

(b)      DISTRIBUTOR will at all times conduct its
business in a manner that will reflect favorably on the COMPANY and the
Products and will not engage in any deceptive, misleading, illegal or unethical
business practices.

 

(c)       DISTRIBUTOR agrees to convey to the COMPANY
any information which may be of value to the COMPANY that may come to the
attention of DISTRIBUTOR including, but not being limited to, information
concerning the Products, market conditions, competition, customers and
prospective customers.

 

(d)      DISTRIBUTOR agrees to fully comply with any
laws, codes or regulations relating to the distribution of the Products. The
COMPANY, upon the request of DISTRIBUTOR, shall assist, cooperate with and pay
to DISTRIBUTOR all costs and fees related to obtaining all registrations,
licenses and approvals from the countries, political subdivisions or governmental
entities located within the Territory that are necessary to distribute the
Products in accordance with this Agreement. In no event shall DISTRIBUTOR
handle, stock, store, transport, use, sell, supply, import, export or reexport
any of the Products in violation of applicable laws, regulations, orders,
standards or requirements, including without limitation those relating to
export controls and sanctions, or in violation of any license or authorizations
obtained thereunder.

 

(e)       DISTRIBUTOR agrees that it shall not, and
shall take steps to ensure that none of its principals, shareholders,
directors, officers, employees, agents, subdistributors, representatives and
other persons working on its behalf in connection with this Agreement shall,
engage in any activity that would expose the COMPANY or any of its Affiliates
to a risk of fines or penalties under laws and regulations of the Territory.  “Affiliates” means any person or entity
controlling, controlled by or under common control with the COMPANY

 

(f)       DISTRIBUTOR represents and warrants that
neither it nor any of its principals, shareholders, directors, officers,
employees, agents, subdistributors, representatives and other persons working
on its behalf in connection with this Agreement is now acting or during the
term hereof will act in an official capacity for or on behalf of, or is now or
during the term hereof will become an officer or employee of, any public
international organization or government or of any department, agency,
instrumentality or political subdivision thereof, or an official of any
political party or a candidate for political office (any of the foregoing an “official”).  DISTRIBUTOR shall provide such information or
certifications as the COMPANY may require with respect to its compliance with
the requirements of this Subsection.

 

2

 

(g)      Neither DISTRIBUTOR nor any of its
principals, shareholders, directors, officers, employees, agents,
subdistributors, representatives and other persons working on its behalf in
connection with this Agreement shall, in the name, on behalf or for the benefit
of the COMPANY or any of its Affiliates or in respect of the Products, offer,
pay, give, promise to pay or give, or authorize the payment or gift of money or
anything of value to any official, political party or employee of a customer or
to any other person at the request, suggestion or direction of any official,
political party or employee of a customer or while knowing that all or portion
of such money or thing of value will be offered, given or promised, directly or
indirectly, to any such person for the purpose of obtaining or retaining
business or favourable governmental action. DISTRIBUTOR shall provide such
information or certifications as the COMPANY may require with respect to its
compliance with the requirements of this Subsection.

 

(h)      DISTRIBUTOR shall be responsible for the
collection, remittance and payment of any and all taxes, charges, levies,
assessments and other fees of any kind imposed by governmental or other
authority in respect of the purchase, importation, sale or other distribution
of the Products.

 

(i)        For the avoidance of doubt, the price at
which DISTRIBUTOR sells Products to customers shall be determined solely by
DISTRIBUTOR; provided however that the COMPANY may communicate to DISTRIBUTOR
COMPANY’s recommended resale prices for Products.

 

(j)        DISTRIBUTOR shall not in any way alter the
Products without the prior written authorization of COMPANY, nor extend any
warranty nor make any representations regarding the Products other than those
contained in COMPANY’s then current written warranty. Any warranty given by
DISTRIBUTOR with respect to Products that have been altered without prior
authorization or any such additional warranty or representation shall be void.
Claims by DISTRIBUTOR in regard to any defect in or nonconformity of the
Products shall be made pursuant to claim procedures established by COMPANY.

 

4.        CHANGES

 

(a)       Without incurring any liability to
DISTRIBUTOR, the COMPANY, upon providing DISTRIBUTOR ninety (90) days prior
written notice, may: (i) change the designs or specifications of, or
modify any Product, in which event, the COMPANY will assist, cooperate with and
pay all costs incurred by DISTRIBUTOR in obtaining any necessary or required
registrations, licenses or approvals; or (ii) discontinue the manufacture
of, or sale for use in the Territory, of any Product.

 

(b)      The COMPANY shall provide DISTRIBUTOR with
written notice of any of the aforementioned changes, but such written notice
shall not be a prerequisite to the effectiveness of the change. In the event of
any change in designs or

 

3

 

specifications, or any modifications of any Product, the COMPANY shall
be under no obligation to make such change(s) on any Product previously
shipped.

 

5.        ORDERING TERMS

 

(a)       The COMPANY shall maintain an adequate
inventory of Products to meet the demands of the Territory served by
DISTRIBUTOR.  COMPANY will, upon request,
permit representatives of DISTRIBUTOR to inspect such inventory at reasonable
times during normal business hours.

 

(b)      COMPANY shall sell to DISTRIBUTOR at such
prices and terms and conditions set forth on Exhibit B, attached
hereto. Modifications to the prices and terms and conditions are subject to
mutual consent of DISTRIBUTOR and the COMPANY. The COMPANY reserves the right
to change the prices of Products or the discounts or promotional funds relating
thereto at any time with the consent of DISTRIBUTOR.

 

(c)       On the first day of each month during the
Term, DISTRIBUTOR shall submit a purchase order to COMPANY in a form,
substantially similar to Exhibit C, which shall provide, inter
alia, the amount of Products, the shipping instructions and DISTRIBUTOR’s
customer(s)’ address to where the Products are to be shipped (the “Customer
Location”).  By the fifteenth (15th)
day of each month during the term, the COMPANY, at the expense of DISTRIBUTOR,
shall deliver the Products identified in the purchase order received during
such month to the respective Customer Location. Deliveries are made F.O.B.
Customer’s Location. Risk of loss or damage and responsibility shall pass from
COMPANY to DISTRIBUTOR upon delivery to the Customer Location identified within
a purchase order. Any claims for shortages or damages suffered in transit shall
be submitted by DISTRIBUTOR directly to the COMPANY.  COMPANY, at its option, shall not be bound to
tender delivery of any Products for which DISTRIBUTOR has not provided shipping
instructions.

 

6.        ISSUANCE OF WARRANTS

 

Upon the execution and delivery of this Agreement by the parties, the
COMPANY will issue and deliver to DISTRIBUTOR warrants to purchase Common Stock
of the Company (“Common Stock”) on such terms and conditions as set forth in
the Warrants (the “Warrants”), a form of which is attached hereto as Exhibit D,
but which shall, in any event, conform to the following requirements.

 

(a)       the first Warrant shall be issued to and
exercisable by DISTRIBUTOR upon the execution of this Agreement and shall
permit DISTRIBUTOR to purchase One Million shares of Common Stock, at an
exercise price of $.60 per share;

 

(b)      the second Warrant shall be issued to and
exercisable by DISTRIBUTOR upon the execution of this Agreement and shall
permit DISTRIBUTOR to purchase One Million shares of Common Stock, at an
exercise price of $1.00 per share;

 

4

 

(c)       the third Warrant shall be issued to and
exercisable by DISTRIBUTOR upon the execution of this Agreement and shall
permit DISTRIBUTOR to purchase One Million shares of Common Stock, at an
exercise price of $1.40 per share;

 

(d)      the fourth Warrant shall be issued to and exercisable by DISTRIBUTOR upon the execution of this Agreement
and shall permit DISTRIBUTOR to purchase Five Hundred Thousand shares of Common Stock, at an exercise price of $2.00 per share; and

 

(e)       the fifth and all subsequent Warrants shall be issued to and exercisable by DISTRIBUTOR at the
conclusion of every three months during the Term (the “Quarter”), beginning on
the last day of the third month after the execution of this agreement, to
purchase shares of Common Stock in an amount equal to 5% of the gross sales
proceeds of the Products purchased by DISTRIBUTOR in the then current Quarter, at an exercise price of the greater of (1) the closing price of
the Common Stock on the last day of the Quarter as such price is reported by
the National Association of Securities Dealers through its NASDAQ system, any successor
system or any exchange on which it is listed, whichever is applicable or the (ii) the
average closing price for last ten (10) trading days of the Quarter as such
prices are reported by the National Association of Securities Dealers through its
NASDAQ system, any successor system or any exchange on which it is listed, whichever
is applicable.

 

7.        ISSUANCE AND REGISTRATION OF
COMMON STOCK

 

(a)       The Company shall reserve Three Million Five
Hundred Thousand (3,500,000) shares of Common Stock, subject to any adjustments
for stock splits, mergers or corporate
reorganizations, for issuance in connection with the exercise of the Warrants

 

(b)      The COMPANY shall use its
reasonable best efforts to file, no later than thirty (30) business days after
DISTRIBUTOR exercises its Warrants, a registration statement on Form S-4
under the Securities Act of 1933, as amended, covering the shares of Common
Stock issuable pursuant to the Warrants.

 

8.        WARRANTY AND LIMITATION OF LIABILITY

 

(a)       The COMPANY’s sole and exclusive warranty obligation with regard to any sale hereunder
is specified in the COMPANY’s
General Terms and Conditions as set forth on Exhibit E, attached
hereto.

 

(b)      Within a reasonable time following receipt of
a Product, DISTRIBUTOR shall notify COMPANY of the existence of any defect(s)
in such Product and, in any event, DISTRIBUTOR shall so notify COMPANY of
defects immediately upon their discovery by, or upon customer notice to
DISTRIBUTOR.  Within 30 days of such
notification, the COMPANY shall provide DISTRIBUTOR with shipping instructions
for such products that contain defects. 
DISTRIBUTOR shall return

 

5

 

such defective Products to the COMPANY pursuant to the return shipping
instructions and transportation costs shall be paid by the COMPANY.

 

(c)       COMPANY will replace, at its sole option and
only obligation, any Products found to be defective if notified by DISTRIBUTOR
within the warranty period.

 

(d)      COMPANY shall use commercially reasonable
efforts to replace defective Product within ninety (90) days from receipt of
the defective Product.

 

(e)       Product which has been replaced by COMPANY
during the warranty period is warranted only for the remaining unexpired
portion of the original warranty period.

 

(f)       COMPANY’s replacement of defective Product within
the warranty period shall be DISTRIBUTOR’s and its customers’ exclusive remedy
with respect to defective Product and shall be the limit of COMPANY’s liability
with respect to defective Product.

 

(g)      To the extent permitted by applicable law,
the foregoing warranty is exclusive and in LIEU OF ALL OTHER EXPRESS AND IMPLIED
WARRANTIES WHATSOEVER, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF
SATISFACTORY QUALITY, MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE.

 

(h)      All claims must be brought within one (1) year
of shipment by COMPANY.

 

(i)        Nothing herein is intended to exclude or
limit COMPANY’s liability for death or personal injury caused by its
negligence.

 

9.        CONFIDENTIALITY OF PROPRIETARY
INFORMATION

 

(a)       All information relating to Proprietary
Information (“Propriety Information” includes, but is not being limited to,
methods of manufacture, price lists or any other information relating to the
business affairs of the COMPANY not generally known to the public) supplied by
the COMPANY is solely for the use of DISTRIBUTOR under this Agreement and
remains the property of the COMPANY.

 

(b)      In the event of termination of this
Agreement, DISTRIBUTOR shall promptly return to the COMPANY or its designee all
such Proprietary Information (including all copies).

 

(c)       DISTRIBUTOR agrees: (i) not to use or
permit the use of the COMPANY’s Proprietary Information except in accordance
with this Agreement; (ii) not to disclose such Proprietary Information to
others except to the extent such disclosure is absolutely necessary to
DISTRIBUTOR’s operations under this Agreement and only then if Distributor
receives prior written authorization for such disclosure from Company and such
disclosure is subject to the same

 

6

 

limitations on the recipient as on DISTRIBUTOR; and (iii) not to
use, permit the use of, or disclose to others such Proprietary Information
after termination of this Agreement, except information which is in the public
domain through no fault of DISTRIBUTOR.

 

(d)      Without limiting the foregoing, DISTRIBUTOR
shall not, directly or indirectly, or assist others to, duplicate or
substantially copy any of the Products, in whole or in part.

 

10.      TRADEMARK AND INTELLECTUAL
PROPERTY RIGHTS

 

(a)       DISTRIBUTOR shall not use or publish any
COMPANY trade name or trademark except in association with the sale and service
of the Products. Any use of a COMPANY trade name or trademark shall have the
prior written approval of the COMPANY, and shall be discontinued upon termination
of this Agreement.

 

(b)      Nothing herein shall abrogate or invalidate
any other trademark or trade name agreements which may be in effect between
COMPANY and DISTRIBUTOR.

 

(c)       DISTRIBUTOR agrees to promptly inform the
COMPANY of any infringement or perceived infringement of any COMPANY
Intellectual Property (“Intellectual Property” meaning any patent, copyright,
registered design, unregistered design right, trademark, trade name, logo,
trade secret, know-how or other industrial or intellectual property owned or
used by COMPANY or any of its Affiliates, whether or not registered, together
with any current registrations or applications for any registration of the
foregoing rights, trademarks or trade names) that comes to the attention of
DISTRIBUTOR.

 

(d)      DISTRIBUTOR acknowledges that COMPANY’s
rights to the Intellectual Property used on or in relation to the Products and
COMPANY’s business and the goodwill connected therewith are COMPANY’s property.
DISTRIBUTOR agrees that it is only permitted to use the Intellectual Property
for the purposes of and during the term of this Agreement and only as
authorised by COMPANY hereunder or otherwise in writing; other than to that
extent, it has and will have no right to use or to allow others to use the
Intellectual Property or any part of it and it shall not seek to register any
Intellectual Property on behalf of COMPANY without COMPANY’s express written
consent; it will not do or omit to do or authorise any third party to do or to
omit to do anything which could invalidate or be inconsistent with the
Intellectual Property; and it will make a statement in any advertising material
and promotional literature produced by or for it in connection with the
Products as to the ownership of any relevant Intellectual Property used or referred
to therein.

 

(e)       DISTRIBUTOR agrees that it will not remove,
alter or otherwise tamper with any trademarks, trade names, logos, numbers or
other means of identification on the

 

7

 

Products or the labeling, packaging or inserts therefore which come
into DISTRIBUTOR’s possession custody or control.

 

11.      INDEMNIFICATION FOR
INFRINGEMENT

 

(a)       COMPANY agrees that, upon notification by
DISTRIBUTOR pursuant to the provision governing notice herein, COMPANY will
promptly investigate and defend, at its own expense, all claims, allegations,
suits, actions or proceedings in which DISTRIBUTOR is made a defendant for any
infringement, claimed infringement or alleged inducement of infringement, or
unauthorized or unlawful use of any patent or trademark resulting from the
sale, use or other disposition of any Product purchased under this Agreement,
in accordance with its terms and conditions, except to the extent that such
claims involve trademarks, word marks or other material provided by
DISTRIBUTOR.

 

(b)      COMPANY shall have the right to settle any
such suits, actions or proceedings on terms and conditions of choice to
COMPANY.

 

12.      PRODUCT COMPLAINTS AND/OR RECALLS

 

(a)       COMPANY may notify DISTRIBUTOR if it receives
any complaints from its customers that have the potential to impact Product
received or sold by DISTRIBUTOR and the health and well being of customers. The
COMPANY shall pay DISTRIBUTOR reasonable costs and expenses for the
investigation and settlement of customer claims alleging defects to the
Products. DISTRIBUTOR shall confer with the COMPANY’S insurance carrier prior
to settlement of customer claims regarding alleged defective Products.

 

(b)      COMPANY shall carry comprehensive, liability
insurance, including product liability insurance in an amount not less than
$1,000,000, naming DISTRIBUTOR as an additional insured as its interests may
appear and providing that the coverage may not be reduced or terminated without
ten (10) days prior written notice to DISTRIBUTOR.

 

(c)       DISTRIBUTOR agrees to promptly forward to
COMPANY any and all information related to customer complaints received on any
of the Products supplied by COMPANY to DISTRIBUTOR under this Agreement.

 

(d)      COMPANY agrees to inform DISTRIBUTOR of any
corrective actions deemed necessary as a result of a complaint investigation,
and DISTRIBUTOR agrees to take whatever actions are deemed necessary by COMPANY
to remedy the situation.

 

(e)       DISTRIBUTOR agrees to cooperate with COMPANY’s
for field corrections or Product recalls.

 

(f)       DISTRIBUTOR undertakes, to the extent
permitted or required by any applicable law, to maintain appropriate up-to-date
and accurate records to enable the

 

8

 

immediate recall of any of the Products. These records shall include
records of deliveries to customers (including details of Product identification
numbers, delivery date, name and address of customer, and telephone number and
fax number if available). DISTRIBUTOR shall, at COMPANY’s cost (unless caused
in whole or in part by the act or omission of DISTRIBUTOR or its principals,
shareholders, directors, officers, employees, agents, subdistributors,
representatives or other persons working on its behalf in connection with this Agreement), give such
assistance as COMPANY shall require for the purpose of recalling as a matter of
urgency any of the Products.

 

13.      NOTICES AND REPORTS

 

(a)       DISTRIBUTOR agrees to notify the COMPANY at
once of any changes in location, ownership, nature of the business, key
personnel or other significant circumstance which may affect performance under
of this Agreement.

 

(b)      DISTRIBUTOR agrees to notify the COMPANY at
once of any matter of importance coming to its attention relating to the
Products. DISTRIBUTOR shall furnish to the COMPANY such reports as the COMPANY
may reasonably require relating to the Products.

 

(c)       Any notice provided for herein shall be
effective upon mailing, provided that it is in writing, addressed to the party
to receive such notice at the address set forth herein, and sent postage
prepaid by registered or certified mail as follows:

 

	
  If
  to the COMPANY: 

  	
  Mosaic
  Nutriceuticals Corporation

  
	
   

  	
  1502
  San Antone

  
	
   

  	
  Lewisville,
  TX 75077

  
	
   

  	
  U.S.A.

  
	
   

  	
  Attention:
  Charles Townsend

  
	
   

  	
   

  
	
  If
  to DISTRIBUTOR: 

  	
  to
  the address in the opening paragraph of this Agreement,

  
	
   

  	
  Attention:
  Esteban D. Benavides and G.R. Romero

  
	
   

  	
   

  
	
  With
  copy to:

  	
  Bryan
  Cave LLP

  
	
   

  	
  3500
  One Kansas City Place

  1200 Main Street

  Kansas City, Missouri 64105

  Attn: Wesley O. Fields, Esq.

  

 

14.      TERMINATION

 

(a)       This Agreement shall terminate upon the first
to occur of any of the following:

 

(1)   The expiration of five (5) year(s) from
the Effective Date (the “Term”). Notwithstanding the aforementioned sentence,
this Agreement shall

 

9

 

automatically renew for an additional five (5) year period, unless
at least thirty (30) days advance written notice of intent not to allow renewal
of this Agreement is given by either party to the other party. COMPANY and
DISTRIBUTOR must expressly agree in writing, by formal amendment to this
Agreement, to any extension of the term of this Agreement beyond ten (10) years;
or

 

(2)   The expiration of thirty (30) days from the
date of provision by either party of a notice of termination, without cause,
upon the other party; or

 

(3)   The filing by or against eitherparty in any
court of competent jurisdiction of a petition of bankruptcy or insolvency, or
for the appointment of a receiver or trustee, or the making of an assignment
for the benefit of creditors where permitted by law, upon the written notice of
termination by one party to the other; or

 

(4)   The determination by the COMPANY that there
has been significant change in the ownership, the organization, or the key management
of DISTRIBUTOR, upon the written notice of termination by the COMPANY to DISTRIBUTOR;
or

 

(5)   The breach of this Agreement by either party
hereto, upon the written notice of termination by one party to the other
(including by way of example and not limitation DISTRIBUTOR’s failure to agree
to and/or meet any sales quota); or

 

(6)   DISTRIBUTOR or any employee, agent,
representative or subdistributor thereof is found guilty of a criminal act
which, in the opinion of the COMPANY, may adversely affect the interests of the
COMPANY, upon the written notice of termination by the COMPANY to DISTRIBUTOR.

 

(b)      In addition to the foregoing, this Agreement
may be terminated if the parties cannot mutually agree to any adjustments in
the price of the Products.

 

(c)       Furthermore, in the event of a conflict
between any laws or regulations applicable to the COMPANY or its affiliates and
laws or regulations of any other country applicable to DISTRIBUTOR that cannot
be resolved without exposing one of the parties to a risk of penalties or
adverse action thereunder, the party so exposed shall have the right to
terminate this Agreement immediately.

 

(d)      In the event of the termination, expiration
or non-renewal of this Agreement, for any or no reason, DISTRIBUTOR shall no
longer represent itself in any manner as a distributor of the Products.

 

(e)       In the event this Agreement is terminated,
expires or is not renewed for any or no reason, neither party shall be liable
to the other party for incidental or consequential damages incurred by reason
of such termination.

 

10

 

(f)       Neither party to this Agreement shall, by
reason of expiration, non-renewal or termination of this Agreement, be liable
to the other party for any damages on account of loss of expenditures or
commissions or in connection with any business or goodwill. The right of
termination or non-renewal, as provided herein, is absolute and the parties
recognize that termination or non-renewal of this Agreement may result in loss
or damage to either party, but hereby expressly agree that neither party shall
be liable to the other by reason of any loss or damage resulting from the
termination or non-renewal of this Agreement by the other whether for cause or
without cause including, without limitation, any loss of prospective profits,
or any damage occasioned by loss of goodwill or by reason of any expenditures,
investments leases or commitments made in anticipation of the continuance of
this Agreement.

 

15.      AMENDMENTS

 

This Agreement shall not be modified, amended or otherwise changed,
except by written amendment executed by, or on behalf of, each of the parties
hereto.

 

16.      NON-WAIVER

 

No waiver by either party of a breach of any provision of this
Agreement shall be taken or held to be a waiver by such party of any succeeding
breach of such provision or breach of any other provision of the Agreement.

 

17.      FORCE MAJEURE

 

No liability of COMPANY under this Agreement shall result from any
delay in performance or nonperformance when caused by circumstances reasonably
beyond the control and without the fault or negligence of COMPANY, including
but not limited to fire, flood, war, insurrection, terrorism, travel or
shipping restrictions, governmental regulation, labor disputes, embargoes or
other acts by any government, or shortage of, or inability to obtain materials,
equipment or transportation, insufficient labor or utilities or other services,
or any other cause, similar or dissimilar to the foregoing, which is beyond the
reasonable control of the COMPANY. In the event of a shortage of Products, the
COMPANY reserves the right to allocate its production among its customers,
including DISTRIBUTOR, on such basis as the COMPANY deems equitable or
desirable.

 

18.      ENTIRE AGREEMENT

 

This Agreement constitutes the entire agreement between the parties and
supercedes all prior distributor and/or Product sale agreements, oral or
written, between the parties with respect to the subject hereof.

 

19.      LAW GOVERNING/DISPUTE
RESOLUTION

 

Because the parties hereto do business in different jurisdictions and
because they wish to ensure that this Agreement is construed in accordance with
their intentions, they

 

11

 

agree that this Agreement shall be governed by and shall be construed
and interpreted in accordance with the laws of the State of Missouri, USA,
without giving effect to the principles of conflict of laws thereof and
DISTRIBUTOR and COMPANY hereby expressly submit to and accept the exclusive personal
and subject matter jurisdiction of the State of Missouri, U.S.A. for purposes
of the enforcement of the terms and conditions of this Agreement. The
application of the United Nations Convention on Contracts for the International
Sale of Goods and the United Nations Convention on the Limitation Period in the
International Sale of Goods to this Agreement are expressly excluded.  All disputes, controversies, or claims
arising out of or relating to this Agreement or any breach of this Agreement,
other than any action by COMPANY to seek injunctive relief, that cannot be
settled amicably by the parties must be finally and exclusively settled by
binding arbitration under the then prevailing Rules of the American
Arbitration Association by one arbitrator mutually agreed upon by the parties
or, if the parties cannot agree on one arbitrator, then by an arbitrator
appointed by the American Arbitration Association.  Such arbitration shall be held in the City of
Kansas City, State of Missouri, U.S.A. or such other location as the parties
may mutually agree, and must be conducted in the English language. The parties
agree that judgment on any arbitration award may be entered in any court of
competent jurisdiction. In no event shall either of the parties be permitted to
arbitrate any dispute as a class with other parties.

 

20.      SEVERABILITY

 

If any provision of this Agreement shall be held invalid or in
contravention of any applicable statute, regulation or law whatsoever, such
provision shall be deemed separable and not a part of this Agreement to the
extent of such invalidity or contravention, and the remainder of this Agreement
shall be enforceable in accordance with the terms hereof.

 

21.      NON-ASSIGNABILITY

 

Performance under this Agreement by, and payment due, DISTRIBUTOR shall
not be assignable without the prior written consent of the COMPANY.

 

22.      LICENSES, TAXES AND DUTIES

 

DISTRIBUTOR shall be responsible for compliance with all applicable
laws, rules and regulations, and obtaining any licenses to import the
Products into the country of destination and to pay all taxes, duties and
tariffs required to import the Products into such country, including, by way of
example and not limitation, investigating, and arranging compliance with, any
product registration requirements.

 

23.      ENGLISH VERSION

 

The version of this Agreement written in the English language shall be
the only authentic version, regardless of whether a translation is made in any
other language.

 

12

 

24.      CAPTIONS

 

It is understood and agreed by and between the parties hereto that the
descriptive caption headings appearing at the beginning of each section of
this Agreement are inserted solely for purposes of convenience of reference and
are in no event to be construed as part of the Agreement.

 

25.      AUTHORITY TO CONTRACT

 

Each of COMPANY and DISTRIBUTOR warrant and declare that it has the
right, power and authority and has taken all action necessary to execute and
deliver, and to exercise their rights and perform their obligations under this
Agreement.

 

26.      RIGHTS OF THIRD PARTIES

 

This Agreement does not create any right enforceable by any person who
is not a signatory party, except that: the terms of this Agreement intended to
benefit any Affiliate of COMPANY may be enforced by such Affiliate; and this
Agreement shall be binding upon and inure to the benefit of permitted
successors to or permitted assignees of the rights of the parties to this
Agreement.

 

IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be executed on its behalf by its duly authorized
representative or agent as of the day and year first above written.

 

THIS
AGREEMENT CONTAINS BINDING ARBITRATION PROVISIONS

THAT MAY BE ENFORCED BY THE PARTIES.

 

 

	
  MOSAIC
  NUTRICEUTICALS CORPORATION.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:
  

  	
  /s/ Charles Townsend

  	
   

  	
   

  
	
  Charles Townsend,
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AHB
  TRADING LIMITED, S.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Alberto Ortuno
  Villanueva

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
  ALBERTO ORTUNO
  VILLANUEVA

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
  PRESIDENT

  	
   

  	
   

  
							

 

13

 

EXHIBIT A

Products

 

Celaprix

 

Celaprix is a topical osteoarthritis and pain relief
rub.  The active ingredient in Celaprix
has been clinically shown to naturally reverse osteoarthritis, reduce pain and
increase joint range of motion.

 

Lipotrene

 

Lipotrene is a sugar-free candy-like chew.  The active ingredient in Lipotrene has been
clinically shown to naturally lower LDL cholesterol by 20% and enhance HDL
cholesterol by 8%.

 

 

EXHIBIT B - Pricing
Structure:

 

Celaprix

“Osteoarthritis and Pain Relief Topical Rub”

 

	
   

  	
   

  	
  EACHES

  	
   

  	
  Master Case (12)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Distributor Price

  	
   

  	
  $

  	
  10.03

  	
   

  	
  $

  	
  120.36

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wholesale Price

  	
   

  	
  $

  	
  13.04

  	
   

  	
  $

  	
  156.47

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MSRP

  	
   

  	
  $

  	
  18.25

  	
   

  	
  $

  	
  219.06

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product Specifications

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Amount Per Container

  	
   

  	
  2 oz. Per Container

  	
   

  	
   

  	
   

  

 

 

Lipotrene

 

10mg
Policosanol SF Candy Chew

 

	
  60
  count

  	
   

  	
  150 Count

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  11.54

  	
   

  	
  $

  	
  20.74

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  15.00

  	
   

  	
  $

  	
  26.95

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  25.00

  	
   

  	
  $

  	
  44.95

  	
   

  

 

 

EXHIBIT C

 

PURCHASE ORDER

 

This Purchase Order (the “Order”) is entered
into as of the             
day of
                     ,
200   , by and
between AHB Trading Limited, S.A. (“Distributor”) and Mosaic Nutriceuticals Corporation
(“Company”). Company desires to provide to Distributor, and Distributor desires
to purchase from Company, the Products set forth below pursuant to the terms
and conditions contained herein.

 

Purchase
Order Number:

 

Date:

 

Company
Contact/Phone Number: 

 

Account
Number: 

 

Due
Date:

 

Distributor’s
destination: 

 

SHIP
VIA: 

 

FREIGHT
TERMS:

 

PRODUCTS
FOR PURCHASE HEREUNDER:

 

	
   

  	
   

  	
  Product

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Line

  	
   

  	
  Spec.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  No.

  	
   

  	
  No.

  	
   

  	
  Quantity

  	
   

  	
  Description

  	
   

  	
  Unit Cost

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1)             Show PURCHASE ORDER NUMBER, DESCRIPTION,
PRODUCT SPECIFICATION NUMBER AND QUANTITY exactly as above on all Packages,
Packing Slips, Invoices and Bills of Lading.

2)             Forward all invoices to the attention of
accounts payable at the address set forth below. 

 

	
  AHB TRADING LIMITED, S.A.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

 

EXHIBIT D

 

WARRANT TO PURCHASE

 

SHARES OF COMMON STOCK

 

OF MOSAIC NUTRICEUTICALS
CORPORATION

 

Void After                ,
20

 

THIS CERTIFIES THAT, for value received, AHB Trading Limited, S. A. with its principal
office at a la ficha 318840, rollo 50640, e imagen 44, en el Registro Publico
de Panama, or permitted assigns (the “Holder”), is entitled to subscribe for
and purchase at the Exercise Price (defined below) from Mosaic Nutriceuticals
Corporation, a Nevada corporation, with its principal office at 1502 San
Antone, Lewisville, Texas 75077 (the “Corporation”), [up to
                                         
shares of the Common Stock of the Corporation (as defined below)] [or an amount
of shares of Common Stock of the Corporation equal to 5% of the aggregate

amount of gross sales from the Corporation to Holder during each three-month
period, “Quarter” of the Exercise Period, beginning                              ,
2004 and ending                                       ,
2004.]

 

1.            DEFINITIONS. As used herein, the following terms shall
have the following respective meanings:

 

“Common Stock” shall mean the Corporation’s Common Stock, par value $                per
share, and any securities into which such Common Stock or such other securities
may hereafter be changed.

 

“Exercise Period” shall mean the period commencing with the date hereof
and ending at 5:00 p.m., Central time, five years from the date hereof,
unless sooner terminated as provided below.

 

“Exercise Price” [shall mean $          per
share]; or [the Fair Market Value of each share of Common Stock at the time
this Warrant is exercised. The Fair Market Value shall be:

 

If traded on a stock exchange, the Fair Market Value of the Common
Stock shall be deemed to be the greater of (i) the closing price of the
Common Stock on the last day of the Quarter as such price is reported by the
National Association of Securities Dealers through its NASDAQ system, any
successor system or any exchange on which it is listed, whichever is applicable
or the (ii) the average closing price for last ten (10) trading days
of the Quarter as such prices are reported by the National Association of
Securities Dealers through its NASDAQ system, any successor system or any
exchange on which it is listed.]

 

“Exercise Shares” shall mean the shares of the Corporation’s Common
Stock upon exercise of this Warrant.

 

 

2.             EXERCISE OF WARRANT. The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Corporation at its address set forth above (or
at such other address as it may designate by notice in writing to the Holder):

 

(a) an executed Notice of Exercise in the form attached hereto as Exhibit A;

 

(b) payment of the Exercise Price in cash or by check; and

 

(c) this Warrant.

 

Upon
the exercise of the rights represented by this Warrant, a certificate or
certificates for the Exercise Shares so purchased, registered in the name of
the Holder or persons affiliated with the Holder, if the Holder so designates,
shall be issued and delivered to the Holder within a reasonable time, not
exceeding 15 days, after the rights represented by this Warrant shall have been
so exercised. In the event that this Warrant is exercised in part, the
Corporation at its expense will execute and deliver a new Warrant of like tenor
exercisable for the number of shares for which this Warrant may then be
exercised.

 

The
person in whose name any certificate or certificates for Exercise Shares are to
be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which this Warrant was exercised
and surrendered and payment of the Exercise Price was made, irrespective of the
date of delivery of such certificate or certificates, except that, if the date
of such surrender and payment is a date when the stock transfer books of the
Corporation are closed, such person shall be deemed to have become the holder
of such shares at the close of business on the next succeeding date on which
the stock transfer books are open. The Corporation agrees to notify the Holder
in writing within ten (10) days after a determination of the dates the
stock transfer books are expected to be closed, but in no event shall such
notice be sent later than the tenth (10th) day prior to the first closure.

 

Unless
this Warrant has expired, a new Warrant representing the number of shares of
Exercise Shares, if any, with respect to which this Warrant shall not
previously have been exercised shall be issued to the Holder within such time.
All Warrants issued on transfers or changes shall be dated the date hereof and
shall be identical with this Warrant except as to the number of shares of
Exercise Shares issuable pursuant hereto. The Corporation will, at the time of
or at any time after each exercise of this Warrant, if requested by a Holder,
acknowledge in writing its continuing obligation to afford to such Holder all
rights to which such Holder shall continue to be entitled after such exercise
in accordance with the terms of this Warrant, provided that if any such Holder
shall fail to make any such request, the failure shall not affect the
continuing obligation of the Corporation to afford such rights to such Holder.

 

3.             COVENANTS OF THE
CORPORATION.

 

(a) Covenants as to Exercise Shares. The Corporation
covenants and agrees that all Exercise Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be
validly issued and outstanding, fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issuance thereof. The Corporation
further covenants and agrees that the Corporation will at all times during the
Exercise Period, have

 

2

 

authorized
and reserved, a sufficient number of shares of its Common Stock to provide for
the exercise of rights represented by this Warrant. If at any time during the
Exercise Period the number of authorized but unissued shares of Common Stock
shall not be sufficient to permit exercise of this Warrant, the Corporation
will take such corporate action as may, in the opinion of counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number
of shares as shall, be sufficient for such purposes. If the Exercise Price is
at any time less than the par value of the Exercise Shares, the Corporation
also covenants and agrees to cause to be taken such action (whether by
decreasing the par value of the Exercise Shares, the conversion of the Exercise
Shares from par value to no par value, or otherwise) as will permit the
exercise of the Warrant without any additional payment by the Holder hereof
(other than payment of the Exercise Price), and the issuance of the Exercise
Shares, which Exercise Shares, upon such issuance, will be fully paid and
non-assessable.

 

(b) No Impairment. Except and to
the extent waived or consented to by the Holder, the Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the coming out of
all the provisions of this Warrant and in the taking of all such action as may
be necessary or appropriate in order to protect the exercise rights of the
Holder against impairment. Without limiting the generality of the foregoing,
the Corporation will (i) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefore upon such exercise immediately prior to such increase in par
value, (ii) take all such action as may be necessary or appropriate in
order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock, free and clear of any liens, claims,
encumbrances and restrictions (other than as provided herein) upon the exercise
of this Warrant, and (iii) use its reasonable commercial efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Corporation to
perform its obligations under this Warrant.

 

(c) Notices of Record Date. In
the event of any taking by the Corporation of a record of the holders of any
Common Stock for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend which is the same
as cash dividends paid in previous quarters) or other distribution on shares of
Common Stock, the Corporation shall notify the Holder, in accordance with Section 11
herein, at least ten (10) days prior to the date specified herein, of the
date on which any such record is to be taken for the purpose of such dividend
or distribution.

 

4.             ADJUSTMENT OF EXERCISE PRICE.

 

(a) Adjustment of Exercise Price and Number of Shares. The
number and kind of securities purchasable upon the exercise of a Warrant and
the Exercise Price therefor shall be subject to adjustment from time to time
upon the occurrence of certain events, as follows:

 

(i)            Adjustments for Subdivisions of Common Stock. If the number of shares of Common Stock
outstanding at any time is increased by a stock dividend payable in

 

3

 

shares of Common Stock or by a subdivision or split up of stock, then
concurrently with the effectiveness of such dividend, subdivision or split up, (A) the
Exercise Price then in effect shall be proportionately decreased and (B) the
number of shares of Common Stock issuable upon the exercise of a Warrant shall
be increased in proportion to such increase of outstanding shares of Common
Stock.

 

(ii)           Adjustments for Combinations of Common Stock. If the number of shares of Common Stock
outstanding at any time is decreased by a combination of the outstanding shares
of Common Stock, then concurrently with the effectiveness of such combination, (A) the
Exercise Price then in effect shall be proportionately increased and (B) the
number of shares of Common Stock issuable upon the exercise of a Warrant shall
be decreased in proportion to such decrease in outstanding shares of Common
Stock.

 

(iii)          Adjustments for Stock Dividends and Other
Distributions. In the event
the Corporation at any time or from time to tome makes or fixes a record date
for the determination of holders of Common Stock entitled to receive any
distribution (excluding any repurchases of securities by the Corporation not
made on a pro rata basis from all holders of any class of the Corporation
securities) payable in property or in securities of the Corporation other than
shares of Common Stock, then, in each such event, the Exercise Price in effect
immediately prior to the close of business on the record date fixed for the
determination of the Holders entitled to receive such distribution, shall be
reduced to a price determined by multiplying such Exercise Price by a fraction (A) the
numerator of which shall be the Exercise Price in effect immediately prior to
the close of business on such record date minus the value on such record date
of such distribution (as determined in good faith by the Board of Directors of
the Corporation), applicable to one share of Common Stock; and (B) the
denominator of which shall be such Exercise Price in effect immediately prior
to the close of business on such record date.

 

(iv)          Adjustments for Reclassification, Exchange
and Substitution. Except as
provided in Section 6 upon a Notice Event, if the Common Stock issuable
upon the exercise of a Warrant shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for above), then each Warrant shall thereafter
be exercisable for the remaining exercise period of the Warrant for the
purchase of, in lieu of the number of shares of Common Stock which the Holder
thereof would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of
Common Stock that would have been received by such Holder upon exercise of the
warrant immediately before that change. In addition, to the extent applicable
in any reorganization or recapitalization, provision shall be made by the
Corporation with the successor or surviving entity, if not the Corporation, so
that the Holder of a Warrant shall thereafter be entitled to receive upon
exercise during the remaining exercise period of the Warrant owned by such
Holder the number of shares of stock or other securities or property of the
Corporation or otherwise, to which such Holder would have been entitled on such
reorganization or recapitalization had such Holder exercised the Warrant in its
entirety immediately prior to such change.

 

4

 

(v)           Notification. Upon any adjustment pursuant to this Section      ,
the Corporation shall, within ten (10) days thereafter, deliver written
notice thereof to the Holders, which notice shall state the increased or
decreased number of shares of Common Stock issuable upon the exercise of the
Warrants, the adjusted Exercise Price and/or the details of any other
adjustment pursuant to this Section 4, setting forth in reasonable detail
the method of calculation, and the facts upon which such calculations are
based.

 

5.             MERGER, CONSOLIDATION, OR
LIQUIDATION.

 

(a) If (i) the Corporation consolidates with or merges into
another entity and is not the survivor, or sells or conveys substantially all
of its property, and (ii) in connection therewith, shares of stock, other
securities, property, or cash (collectively, “Merger Consideration”) are
issuable or deliverable in exchange for the Corporation’s capital stock, then
the Corporation shall give each Holder at least ten (10) days prior
written notice of the consummation of such transaction and (iv) the
Corporation shall make proper provision such that, the Holder of this Warrant,
upon the exercise hereof at any time after the consummation of such
transaction, shall be entitled to receive, at the Exercise Price then in
effect, in lieu of the Common Stock immediately prior to such transaction, the
Merger Consideration to which such Holder would have been entitled if such
Warrant had been exercised in full immediately prior to such transaction,
subject to adjustments subsequent to such transaction as nearly equivalent as
possible to the adjustments provided for in Section 4 above.

 

(b) If the Corporation receives notice that a purchase, tender or
exchange offer has been made to the holders of more than 50% of the outstanding
Common Stock (on an as converted basis) the Corporation shall give each Holder
reasonable notice thereof, but in any event, the Corporation shall give each
Holder at least ten (10) days prior written notice of the consummation of
such transaction.

 

6.             NOTICE OF CERTAIN EVENTS. In the event
(a “Notice Event”):

 

(a) the
Corporation authorizes the issuance to any holders of any class of its capital
stock rights or warrants to subscribe for or purchase shares of its capital
stock, or any other subscription rights or warrants;

 

(b) the Corporation authorizes the distribution to any holders of
any class of its capital stock evidences of indebtedness or assets;

 

(c) of any capital reorganization or reclassification of the
Warrant Shares or the Corporation’s Common Stock, other than a subdivision or
combination of the outstanding Common Stock and other than a change in par
value of the Common Stock;

 

(d) of any liquidation, consolidation or merger to which the
Corporation is a party and for which approval of any of the Corporation’s
stockholders is required, other than a consolidation or merger in which the
Corporation is the continuing corporation and that does not result in any reclassification
or change of the shares of Common Stock issuable upon the exercise of a Warrant;

 

5

 

(e) of the conveyance or transfer of the Corporation’s properties
and assets, substantially as an entirety; or

 

(f) of the Corporation’s voluntary or involuntary dissolution,
liquidation or winding-up; then, in each such instance, the Corporation shall
cause to be mailed by certified mail to each Holder, at least ten (10) days
prior to the applicable record or effective date for any event set forth above,
a notice stating the dates as of which (x) the holders of capital stock of
record to be entitled to receive any such rights, warrants or distributions or
to be entitled to vote on such Notice Event are to be determined, and (y) such
Notice Event is expected to become effective.

 

7.             FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder. In lieu of such fractional
shares the Corporation shall make a cash payment therefor based upon the Fair
Market Value (as defined below) of the Common Stock on the date of exercise.
For the purposes of this Section 7 hereof “Fair Market Value” of a share
of Common Stock as of a particular date means:

 

(a) if traded on an exchange or the over-the-counter market,
quoted on the Nasdaq National Market or reported by the National Quotation
Bureau, then the most recently reported closing or bid price,

 

(b) if conversion or exercise is simultaneous with an underwritten
public offering registered under the Securities Act of 1933, as amended, the
public offering price (before deducting commissions, discounts or expenses) per
share sold in such offer, and

 

(c) otherwise, the price, not less than book value, determined in
good faith and in such reasonable manner as prescribed by a majority of
Corporation’s Directors who are not Corporation officers or employees (the “Outside
Directors”); provided, however that (i) the Corporation shall notify the
Holder of such price within ten (10) days from the date of exercise; (ii) the
Holder shall have ten (10) days after receipt of such notice to dispute
such price by written notice to the Corporation; (iii) the Holder and the
Corporation shall thereafter mutually agree upon an appraiser to determine a
Fair Market Value binding upon the Holder and the Corporation; and (iv) the
Corporation and the Holder shall split equally the costs of such appraisal
unless the Fair Market Value determined thereby is 110% or more of that
determined by the Outside Directors, in which case the Corporation shall bear
the full costs of such appraisal.

 

8.             REGISTRATION AND TRANSFER.

 

(a) Registration.  The
Corporation shall maintain a register for the registration of the transfer and
exchange of Warrants. The Warrants shall initially be registered in the name of
the Holder.  The Corporation shall be
entitled to treat the registered Holder of any Warrant as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other person or
entity.

 

(b) Transfer and Exchange of Warrants: Procedure.  Any Warrant shall be transferable only upon
surrender of the Warrant Certificate at the Corporation’s office at the address
set forth in the opening paragraph of this Agreement, duly endorsed by its
Holder or by such Holders duly authorized attorney or representative,
accompanied by a duly executed Assignment Form

 

6

 

provided
in the Warrant Certificate, together with payment of any taxes which may be
payable in connection with such transfer. Upon any registration of transfer,
the Corporation shall deliver a new Warrant Certificate to the person or entity
entitled thereto and the surrendered Warrant Certificate shall be canceled.
Warrant Certificates so canceled shall be delivered to the Corporation from
time to time upon the Corporation’s request.

 

9.             EARLY TERMINATION.  In the event of, at any time during the Exercise Period, an initial
public offering of securities of the Corporation registered under the
Securities Act or the sale or other disposition of all or substantially all of
the properties and assets of the Corporation in its entirety to any other
person, the Corporation shall provide to the Holder at least 30 days advance
written notice of such public offering or such sale or other disposition of the
Corporation’s properties and assets.  In
the event of such sale (other than a public offering) or other disposition of
all or substantially all of the properties and assets of the Corporation, if
the value received by the Corporation, on a per share of Common Stock basis, is
greater than the Exercise Price (per share) then this Warrant shall be deemed exercised
in its entirety and the appropriate shares of Common Stock issued entitling the
Holder to receive its proportionate distribution as a shareholder of the
Corporation. If the value received by the Corporation, on a per share of Common
Stock basis, is less than the Exercise Price (per share) then this Warrant shall
terminate. In addition, this Warrant shall terminate in the event of a public
offering unless exercised within one (1) year after the date such public
offering is closed.

 

10.          NO STOCKHOLDER RIGHTS.   This Warrant in and of itself shall not entitle the Holder to any
voting rights or other rights as a stockholder of the Corporation. 

 

11.          NO TRANSFER OF WARRANT. There may be no transfers of this Warrant
except as set forth in this Section 11. This Warrant may be transferred on
the books of the Corporation by the Holder in person or by duly authorized
attorney to one or more “accredited investors” or “qualified institutional
buyers” who satisfy the criteria set forth in item (3) of Exhibit A, upon
surrender of this Warrant at the principal office of the Corporation, properly
endorsed and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer and delivery of the assignment form set forth
in Exhibit B. This Warrant is exchangeable at the principal office of the
Corporation for Warrants for the purchase of the same number of shares of Exercise
Shares, each new Warrant to represent the right to purchase such number of
shares of Exercise Shares as the Holder hereof shall designate at the time of
such exchange. Notwithstanding the Holder’s right to transfer this Warrant, in
whole or in part, the Holder agrees that at any time that it wishes to sell or
transfer any interest in this Warrant to any person or entity other than to an “affiliate”
(as defined in the Securities Act), it will give written notice to the
Corporation disclosing the identity of the proposed purchaser or transferee,
the number of Exercise Shares to which such purchaser or transferee will be
entitled to exercise, the purchase or transfer price, and the scheduled closing
time. The Corporation shall have 20 days in which to notify the Holder in
writing that it wishes to purchase that portion of the Warrant being offered at
the purchase or transfer price per share, which purchase by the Corporation
shall occur and be consummated on the later of: (a) the scheduled closing
time identified in the Holder’s written notice and (b) the 30th day after
written notice was first given by the Holder to the Corporation of such
proposed purchase or transfer.  If no
written notice by the Corporation of its intent to purchase is received by the
Holder within the 20-day period, the Holder shall be free to proceed with its
sale and transfer. All purchasers and transferees (other than the Corporation)
shall be 

 

7

 

entitled
to the same rights of the Holder hereunder and shall be subject to all the
terms hereof, including without limitation, Sections 4.1 and 10 hereof.

 

12.          LOST, STOLEN, MUTILATED OR DESTROYED WARRANT.  If
this Warrant is lost, stolen, mutilated or destroyed, the Corporation may, on
such terms as it may reasonably impose (which shall, in the case of a mutilated
Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.  Any such new Warrant shall constitute an
original contractual obligation of the Corporation, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time
enforceable by anyone.

 

13.          NOTICES. All notices
and other communications required or permitted hereunder shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed facsimile if sent during
normal business hours of the recipient, if not, then on the next business day; (c) three
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the following
addresses or facsimile numbers: (a) if to the Corporation, to Mosaic Nutriceuticals
Corporation, Facsimile Number: (           )
                                 ,
and (b) if to the Holder, to the address set forth below the Holder’s
signature on the following page, or at such other address or facsimile number
as one party may furnish to the other in writing.

 

14.          ACCEPTANCE.  Receipt of this Warrant by the Holder shall
constitute acceptance of and agreement to all of the terms and conditions
contained herein.

 

15.          ASSIGNMENT.  This Warrant (and any Exercise Shares) and
the agreements set forth herein shall be binding on all successors, assignees
or transferees of the parties, and shall bind such successor, assignee, and
transferee to the performance, duties and obligations to the same extent as the
party from which it received its interest.

 

16.          SURVIVAL. The terms
of Sections 4 and 10 shall survive the termination or expiration of this
Warrant.

 

17.          GOVERNING LAW. This
Warrant and all rights, obligations and liabilities hereunder shall be governed
by the laws of the State of Delaware.

 

8

 

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by its duly
authorized officer effective as of                           200   .

 

 

	
   

  	
  MOSAIC
  NUTRICEUTICALS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Charles Townsend, President

  
	
   

  	
   

  
	
  AGREED
  AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Facsimile:

  	
   

  	
   

  	
   

  
									

 

9

 

EXHIBIT A

 

NOTICE OF
EXERCISE

 

TO:
Mosaic Nutriceuticals Corporation

 

The undersigned hereby elects to exercise                           
Warrants represented by this Warrant Certificate to purchase
                          
shares of Common Stock (or other shares) issuable upon the exercise of such
Warrants, and tenders herewith payment of the purchase price of such shares in
full.

 

Please issue a certificate or certificates representing said shares of
Common Stock (or other shares) in the name of the undersigned or in such other
name as is specified below:

 

	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  	
   

  	
   

  
						

 

10

 

EXHIBIT B

 

FOR
VALUE RECEIVED,                                                      hereby
sells, assigns and transfers unto
                        
the within Warrant and all rights evidenced thereby and does irrevocably constitute
and appoint
                                       ,
attorney, to transfer the said Warrant on the books of the within named
corporation.

 

	
  Dated:

  	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
  Address

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

 

PARTIAL ASSIGNMENT

 

FOR
VALUE RECEIVED,                                             hereby sells, assigns and transfers unto
                                the
right to purchase
                             shares
of Exercise Shares evidenced by the within Warrant together with all rights
therein, and does irrevocably constitute and appoint
                               ,
attorney, to transfer that part of the said Warrant on the books of the within named corporation.

 

	
  Dated:

  	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
  Address

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

11

 

EXHIBIT E

PRODUCT
WARRANTY

 

We
warrant that our products are produced in compliance with GMP (good manufacturing
processes) and when applicable and required in OTC facilities. We also warrant
that our products meet or exceed labels claims and will provide C of A’s
(Certificate of Analysis) to verify product label claims. We warrant that when
the product leaves our factory that it is in saleable condition and contains an
applicable expiration date and lot number.

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