-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DDjdXTi+BMqJtR5K+n/Bee7I00CpmIBzp1EFA8ZvhRFFGyjdQU03KwHtHc9gSucN U6hln6iuvm6LWD0zB0347w== /in/edgar/work/20000817/0000950147-00-001282/0000950147-00-001282.txt : 20000922 0000950147-00-001282.hdr.sgml : 20000922 ACCESSION NUMBER: 0000950147-00-001282 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20000810 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMPYREAN BIOSCIENCE INC CENTRAL INDEX KEY: 0001074626 STANDARD INDUSTRIAL CLASSIFICATION: [5122 ] IRS NUMBER: 860973095 STATE OF INCORPORATION: WY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-27839 FILM NUMBER: 705101 BUSINESS ADDRESS: STREET 1: 23800 COMMERCE PARK RD., STE. A CITY: CLEVELAND STATE: OH ZIP: 44122-5828 BUSINESS PHONE: 4158612214 8-K 1 0001.txt CURRENT REPORT DATED 8/10/2000 ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) August 10, 2000 EMPYREAN BIOSCIENCE, INC. ------------------------------------------------------ (Exact Name of Registrant as Specified in Its Charter) Wyoming 0-27839 86-0973095 - ---------------------------- ----------- ------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 23800 Commerce Park Road, Suite A, Cleveland, Ohio 44122 - -------------------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (216) 360-7900 -------------------------------------------------------------- (Former name or former address, if changed since last report.) ================================================================================ EMPYREAN BIOSCIENCE, INC. ITEM 5. OTHER EVENTS On August 9, 2000, the Company settled all outstanding legal disputes between the Company and International Bioscience Corporation (IBC), and announced the formation of a joint venture company with IBC. The Company issued a press release with respect to the settlement and the joint venture on August 10, 2000. The press release is attached to this report as Exhibit 99.1. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS C. Exhibits 10.12 Settlement Agreement between Empyrean and IBC dated August 9, 2000. 10.13 Joint Venture Agreement between Empyrean and IBC dated August 9, 2000. 10.14 IBC-Empyrean, L.L.C. Operating Agreement dated August 9, 2000. 10.15 Put Agreement between IBC and Empyrean dated August 9, 2000. 10.16 Nonqualified Stock Option Agreement between Empyrean and IBC dated August 9, 2000. 10.17 Voting Agreement between Lawrence D. Bain and IBC dated August 9, 2000. 10.18 License Agreement from IBC to Empyrean dated August 9, 2000. 10.19 Trademark License from IBC to Empyrean dated August 9, 2000. 10.20 Trademark License from Empyrean to IBC-Empyrean LLC dated August 9, 2000. 10.21 Trademark License from Empyrean to IBC dated August 9, 2000. 99.1. Press release dated August 10, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EMPYREAN BIOSCIENCE, INC. (Registrant) 8/17/00 /s/ Richard C. Adamany - ------- ---------------------------------------- (Date) (Signature) Richard C. Adamany President and Chief Executive Officer EX-10.12 2 0002.txt SETTLEMENT AGREEMENT SETTLEMENT AGREEMENT This Settlement Agreement ("Agreement") entered into this 9th day of August, 2000 ("Effective Date") by and between Empyrean Bioscience, Inc. ("Empyrean"), a Wyoming corporation, having an office at 23800 Commerce Park Road, Suite A, Cleveland, Ohio 44122, and International Bioscience Corporation ("IBC"), a Florida corporation, having an office at 777 South Flagler Drive, Phillips Point Building, East Tower, Suite 909, West Palm Beach, Florida 33401, David Thornburgh, M.D. ("Dr. Thornburgh"), c/o IBC, 777 South Flagler Drive, Phillips Point Building, East Tower, Suite 909, West Palm Beach, Florida 33401, and Sara Gomez de Ferro ("Ms. Gomez"), c/o IBC, 777 South Flagler Drive, Phillips Point Building, East Tower, Suite 909, West Palm Beach, Florida 33401, (Empyrean and IBC hereinafter collectively referred to as the "Parties" and individually referred to as a "Party"): WHEREAS Empyrean commenced an action against Geda International Marketing Company (a Bahamian subsidiary of IBC, which shall herein be included in the reference "IBC"), David Thornburgh, M.D., and Sara Gomez a/k/a Sara Ferro, by filing a complaint ("the Complaint") in the United States District Court for the Southern District of Florida ("the Court"), captioned Empyrean Bioscience, Inc. v. International Bioscience Corporation, David Thornburgh, M.D., and Sara Gomez, a/k/a Sara Ferro, Case No. 00-8300-CIV-Dimitrouleas ("the Empyrean/IBC Action"); WHEREAS, OPTIMA Holding Co. has been granted the right to intervene in the Empyrean/IBC Action and has filed a Complaint In Intervention asserting certain claims against Empyrean and IBC in Case No. 00-8300 CIV - Dimitrouleas (the "Optima Action"); WHEREAS, the Parties now desire to resolve the Empyrean/IBC Action without further expense or time and Empyrean now desires to dismiss the Empyrean/IBC Action in its entirety without prejudice; NOW, THEREFORE, in consideration of the promises and conditions set forth below, the Parties agree as follows: 1. Empyrean agrees that the Empyrean/IBC Action shall be dismissed in its entirety without prejudice. To effectuate the foregoing, Empyrean shall deliver to IBC's counsel concurrently with Empyrean's execution of this Agreement an executed Stipulation of Dismissal Without Prejudice pursuant to Rule 41 (a) (1) (ii) of the Federal Rules of Civil Procedure in the form attached hereto as Exhibit A, suitable for filing with the Clerk of the Court. 2. In consideration for the settlement of the Empyrean/IBC Action and concurrently with the execution of this Settlement Agreement, Empyrean and IBC have entered into a series of Agreements on this date identified in Exhibit B hereto annexed respecting a certain proprietary formulation invented and owned by IBC and licensed to Empyrean which was the subject matter of the Empyrean/IBC Action, confirmation of which is acknowledged by the Parties. This Settlement Agreement, and the Agreements identified in Exhibit B, are deemed by the Parties to be an integrated Agreement. 3. In consideration of this Settlement Agreement and the Agreements identified in Exhibit B hereto annexed and the settlement of the Empyrean/IBC Action, Empyrean hereby voluntarily and knowingly releases and forever discharges Ms. Gomez, her predecessors, successors and assigns in her individual and representative capacity, (the "Released Gomez Party"), from any actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature and description whatsoever, whether or not now known, suspected or claimed, which Empyrean had, has, or may have related to the Empyrean/IBC Action, against the Released Gomez Party including, without 2 limitation, any actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any kind which arise out of, relate to or are based on the Empyrean/IBC Action. 4. In consideration of this Settlement Agreement and the Agreements identified in Exhibit B hereto annexed and the settlement of the Empyrean/IBC Action, Empyrean hereby voluntarily and knowingly releases and forever discharges Dr. Thornburgh, his predecessors, successors and assigns in his individual and representative capacity, (the "Released Thornburgh Party"), from any actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature and description whatsoever, whether or not now known, suspected or claimed, which Empyrean had, has, or may have related to the Empyrean/IBC Action, against the Released Thornburgh Party including, without limitation, any actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any kind which arise out of, relate to or are based on the Empyrean/IBC Action. 5. In consideration of this Settlement Agreement and the Agreements identified in Exhibit B hereto annexed and the settlement of the Empyrean/IBC Action, Empyrean hereby voluntarily and knowingly releases and forever discharges IBC, its subsidiaries, predecessors, successors and assigns (the "Released IBC Party"), from any actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature and description whatsoever, whether or not now known, suspected or claimed, which Empyrean had, has, or may have related to the Empyrean/IBC Action, against the Released IBC Party including, without limitation, any actions, claims, demands, 3 causes of action, obligations, damages, liabilities, expenses and controversies of any kind which arise out of, relate to or are based on the Empyrean/IBC Action. 6. In consideration of this Settlement Agreement and the Agreements identified in Exhibit B hereto annexed and the settlement of the Empyrean/IBC Action, IBC hereby voluntarily and knowingly releases and forever discharges Empyrean, its subsidiaries, predecessors, successors and assigns (the "Released Empyrean Party"), from any actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any nature and description whatsoever, whether or not now known, suspected or claimed, which IBC had, has, or may have related to the Empyrean/IBC Action, against the Released Empyrean Party including, without limitation, any actions, claims, demands, causes of action, obligations, damages, liabilities, expenses and controversies of any kind which arise out of, relate to or are based on the Empyrean/IBC Action. 7. Each Party hereto acknowledges that this Agreement constitutes and contains the entire agreement and understanding of the Parties concerning the Empyrean/IBC Action, and supersedes and replaces all prior negotiations, proposed agreements, and agreements, written or oral. Any amendments to this Agreement shall be in writing and executed by both parties hereto. 8. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, successors and beneficiaries. 9. The language of this Agreement shall be construed as a whole according to its fair meaning, and none of the Parties hereto shall be deemed the draftsman of this Agreement or any part hereof, for purposes of any litigation which may arise hereafter between them. If any provision or portion of this 4 Agreement shall be held for any reason to be unenforceable or illegal, that provision shall be severed from this Agreement and the remainder of this Agreement shall remain valid and enforceable between the Parties hereto just as if the provision held to be illegal or unenforceable had never been included in this Agreement. 10. Nothing herein shall preclude the Parties from making disclosure of any information regarding the terms and/or conditions of this Agreement in compliance with Securities and Exchange Commission Rules and Regulations, or in compliance with any state or federal securities rules or regulations, or as otherwise obligated by law. 11. This Agreement shall be governed by and construed in accordance with the internal laws of the state of Florida, without giving effect to principles of conflicts of law. Each Party submits to the exclusive jurisdiction of the state and federal courts located in Miami-Dade or Palm Beach Counties, in the State of Florida, for any action or proceeding relating to this agreement, and expressly waives any objection it may have to such jurisdiction or the convenience of such forum. If any legal action or other proceeding is brought for the enforcement of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys fees and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 12. Nothing in this Agreement shall be construed as or shall be an admission of any liability or wrongdoing by IBC or by Empyrean. 5 13. Each Party represents that they have read this Agreement, that they have discussed it thoroughly with their attorney, that they understand all of its provisions, that they enter into it voluntarily, and that the individuals executing this Agreement have the power and authority to do so on behalf of the respective Parties, and to bind such respective Parties to the terms hereof. 6 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date set forth above. FOR EMPYREAN BIOSCIENCE, INC. FOR INTERNATIONAL BIOSCIENCE CORPORATION - ----------------------------------- ---------------------------------------- Signed Signed - ----------------------------------- ---------------------------------------- Printed Name Printed Name - ----------------------------------- ---------------------------------------- Title Title - ----------------------------------- ---------------------------------------- Date Date 7 EXHIBIT A UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA EMPYREAN BIOSCIENCE, INC., Plaintiff, CASE NO.: 00-08300-CIV-DIMITROULEAS vs. INTERNATIONAL BIOSCIENCE CORPORATION, DAVID THORNBURGH, M.D., and SARA GOMEZ a/k/a SARA FERRO, Defendants. / ---------------------------------- STIPULATION OF DISMISSAL PURSUANT TO RULE 41(A)(1)(II), FED. R. CIV. P. IT IS HEREBY STIPULATED AND AGREED, by and among the parties, subject to the approval of the Court, that all claims and counterclaims be dismissed, without prejudice, pursuant to Rule 41(a)(1)(ii), Fed. R. Civ. P. Each party shall bear its own attorney fees and costs. 8 Dated: August ____, 2000 STROOCK & STROOCK & LAVAN LLP Attorneys for Empyrean 3300 First Union Financial Center 200 South Biscayne Boulevard Miami, Florida 33131-2385 Telephone: (305) 358-9900 By: ------------------------------------- Richard B. Simring (Florida Bar No. 890571) Dated: August ____, 2000 Holtzman, Krinzman, Equels & Furia Attorneys for IBC, Thornburgh and Ferro 2601 South Bayshore Drive, Suite 600 Miami, Florida 33133 Telephone: (305) 859-7700 By: ------------------------------------- Joseph L. Raia (Florida Bar No. 322083) SO ORDERED: ---------------------------------------- U. S. D. J. Dated: ______________________, 2000 9 EXHIBIT B 1. License Agreement from IBC to Empyrean 2. License Agreement from IBC to IBC-Empyrean LLC 3. Trademark License from Empyrean to IBC 4. Trademark License from Empyrean to IBC-Empyrean LLC 5. Trademark License from IBC to Empyrean 6. Trademark License from IBC to IBC-Empyrean LLC 7. Joint Venture Agreement between Empyrean and IBC 8. IBC-Empyrean LLC Operating Agreement 9. Voting Agreement 10. Non-Qualified Stock Option Plan 11. Put Agreement EX-10.13 3 0003.txt JOINT VENTURE AGREEMENT JOINT VENTURE AGREEMENT BETWEEN EMPYREAN BIOSCIENCE, INC. AND INTERNATIONAL BIOSCIENCE CORPORATION DATED AS OF AUGUST 9, 2000 TABLE OF CONTENTS Page 1. Definitions.............................................................. 1 2. Allocation of Rights to Commercialize the Licensed Products; Formation of IBC-Empyrean, L.L.C.............................. 5 3. Closing.................................................................. 7 4. Conditions to Closing.................................................... 7 5. Management of IBC-Empyrean, L.L.C........................................ 10 6. Manufacturing and Packaging.............................................. 11 7. Registration of Shares and Option Shares................................. 12 8. New Product Development; Non-Competition Covenants....................... 25 9. Optima Litigation........................................................ 26 10. Representations & Warranties by Empyrean................................. 26 11. Representations & Warranties by IBC...................................... 28 12. Survival of Representations and Warranties............................... 31 13. Indemnification.......................................................... 31 14. Applicable Law........................................................... 33 15. Sole and Complete Agreement.............................................. 34 16. Notices.................................................................. 35 17. Assignment............................................................... 36 (i) INDEX OF EXHIBITS Exhibit A Trademark License Agreement from Empyrean to IBC Exhibit B Trademark License Agreement from Empyrean to IBC-Empyrean Exhibit C Form S-4 Exhibit D License Agreement from IBC to Empyrean Exhibit E Trademark License Agreement from IBC to Empyrean Exhibit F License Agreement from IBC to IBC-Empyrean Exhibit G Trademark License Agreement from IBC to IBC-Empyrean Exhibit H Certificate of Formation for IBC-Empyrean, L.L.C. Exhibit I IBC-Empyrean, L.L.C. Operating Agreement Exhibit J Option Agreement Exhibit K Voting Agreement Exhibit L Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP Exhibit M Opinion of Holtzman, Krinzman, Equels & Furia Exhibit N Schedule of Adverse Changes of Empyrean Exhibit O Schedule of Adverse Changes of IBC Exhibit P GEDA LOGO Exhibit Q Put Agreement (ii) JOINT VENTURE AGREEMENT This JOINT VENTURE AGREEMENT (the "Agreement"), made as of the 9th day of August, 2000 by and among INTERNATIONAL BIOSCIENCE CORPORATION ("IBC"), a Florida corporation, having an office at 777 South Flagler Drive, Phillips Point Building, East Tower, Suite 909, West Palm Beach, Florida 33401, and EMPYREAN BIOSCIENCE, INC. ("Empyrean"), a Wyoming corporation, having an office at 23800 Commerce Park Road, Suite A, Cleveland, Ohio 44122. WITNESSETH THAT: WHEREAS, IBC and Empyrean desire to enter into a series of agreements as herein provided in connection with the commercialization of the Licensed Products derived from the Formulation (as hereinafter defined) in certain countries of the world; NOW, THEREFORE, in consideration of the premises and of the mutual undertakings hereinafter set forth, and for other good and valuable consideration, IBC and Empyrean hereby agree as follows: 1. DEFINITIONS. In this Agreement the following terms shall have the meanings hereinafter specified: (a) "Action" shall mean actions, suits, proceedings (including without limitation arbitration proceedings) and investigations. (b) "Affiliate" of a party shall mean any entity which controls, is controlled by or under common control with such party, and any joint venture (whether a corporation, partnership or other form of entity) in which such party has at least a one-third interest. (c) "Approved Manufacturer" shall mean a manufacturer of Licensed Products approved by IBC-Empyrean, LLC. (d) "Approved Packager" shall mean a packager of Licensed Products approved by IBC-Empyrean, L.L.C. (e) "Bug Trademark" shall mean the "GEDA LOGO", used by IBC, Empyrean and IBC-Empyrean, L.L.C. on all products based on all Licensed Products in the form attached hereto as Exhibit P. (f) "Derivative Products" shall mean products hereinafter developed by IBC having an effective amount of Formulation therein and being of a different product category than those Licensed Products currently being manufactured. (g) "Empyrean Documents" shall mean collectively this Agreement; the License Agreement from IBC to Empyrean; the Trademark License Agreement from Empyrean to IBC; the Trademark License Agreement from Empyrean to IBC-Empyrean; the Trademark License Agreement from IBC to Empyrean; the Operating Agreement; the Put Agreement; the Option Agreement; and the Settlement Agreement. (h) "IBC Documents" shall mean collectively this Agreement; the License Agreement from IBC to IBC-Empyrean; the Trademark License Agreement from Empyrean to IBC; the Trademark License Agreement from the IBC to Empyrean; the Trademark License Agreement from IBC to IBC-Empyrean; the Operating Agreement; the Put Agreement; the Voting Agreement; the Option Agreement; and the Settlement Agreement. 2 (i) "Form S-4" shall mean that certain Registration Statement, as amended (Registration No. 333-84147 filed by Empyrean with the Securities and Exchange Commission, in the form of Exhibit C attached hereto. (j) "Formulation" shall mean the proprietary formulation (including manufacturing technology and processes) comprising Benzalkonium Chloride as an active ingredient with Octoxynol 9 (and others) invented and created by DR. DAVID THORNBURGH and exclusively owned by IBC known as the GEDA line of products. (k) "Gel Product" shall mean the spermicide and microbicide contraceptive gel product embodying the Formulation presently being developed by IBC, also known as the GEDA Plus product, that is designed to prevent the transmission of sexually transmitted diseases including, but not limited to, gonorrhea, chlamydia, syphilis, Trichomonas, herpes I and II and HIV, and which is presently undergoing the appropriate and necessary United States governmental regulatory compliance process to permit Empyrean to include such product as a Licensed Product hereunder. (l) "Governmental Agency" shall mean any governmental agency, instrumentality, department, commission or board, domestic or foreign. (m) "License Agreement from IBC to Empyrean" shall mean that certain license agreement between IBC and Empyrean relating to commercialization of the Licensed Products in the United States in the form of Exhibit D attached hereto. (n) "License Agreement from IBC to IBC-Empyrean" shall mean that certain license agreement between IBC and IBC-Empyrean, L.L.C. relating to commercialization of the Licensed Products in the world, except the United States and Brazil, in the form of Exhibit F attached hereto. 3 (o) "Licensed Products" shall mean products having an effective amount of the Formulation therein and having all necessary government approval for commercialization, including, but not limited to, the Lotion Products, Gel Product and any Derivative Products developed by IBC. (p) "Lotion Products" (also known as GEDA Lotion) shall mean the hand sanitizing lotion presently being manufactured for Empyrean by Canadian Custom Packaging and sold by Empyrean as a Licensed Product, and presently being marketed by Empyrean under appropriate and necessary United States governmental regulatory compliance. (q) "IBC-Empyrean, L.L.C. Certificate" shall mean that certain certificate of formation relating to IBC-Empyrean, L.L.C. in the form of Exhibit H attached hereto. (r) "Operating Agreement" shall mean that certain IBC-Empyrean, L.L.C. Operating Agreement in the form of Exhibit I attached hereto. (s) "Option Agreement" shall mean that certain option agreement between Empyrean and IBC relating to 2,226,000 shares of Empyrean common stock in the form of Exhibit J attached hereto. (t) "Optima Litigation" shall mean Cases No. 98-11552 CA (09), 98-23428 CA (23) and 98-15352 CA (25) now pending in the Circuit Court of Dade County Florida, and Case No. 00-8300-CIV-Dimitrouleas, now pending in the United States District Court of the Southern District of Florida. 4 (u) "Put Agreement" shall mean that certain put agreement between IBC and Empyrean in the form attached hereto as Exhibit Q. (v) "Territory" shall mean all the countries of the world, excluding the United States and Brazil. (w) "Trademark License Agreement from Empyrean to IBC" shall mean that certain trademark license agreement between Empyrean and IBC relating to use of the Preventx trademark in Brazil in the form of Exhibit A attached hereto. (x) "Trademark License Agreement from Empyrean to IBC-Empyrean" shall mean that certain trademark license agreement between Empyrean and IBC-Empyrean, L.L.C. relating to use of the Preventx trademark in the world, except the United States and Brazil, in the form of Exhibit B attached hereto. (y) "Trademark License Agreement from IBC to Empyrean" shall mean that certain trademark license agreement between IBC and Empyrean relating to use of the BUG Trademark in the United States, in the form of Exhibit E attached hereto. (z) "Trademark License Agreement from IBC to IBC-Empyrean" shall mean that certain trademark license agreement between IBC and IBC-Empyrean, L.L.C. relating to use of the BUG Trademark in the world, except the United States and Brazil, in the form of Exhibit G attached hereto. (aa) "Voting Agreement" means that certain Voting Agreement between IBC and Lawrence D. Bain in the Form of Exhibit K attached hereto. 2. ALLOCATION OF RIGHTS TO COMMERCIALIZE THE LICENSED PRODUCTS; FORMATION OF IBC-EMPYREAN, L.L.C. 5 2.1 It is the intention and agreement of the parties to allocate the right to commercialize the Licensed Products between them as follows: (a) United States. The right to commercialize the Licensed Products in the United States shall be granted to Empyrean, pursuant to the terms and conditions of the License Agreement from IBC to Empyrean, contemplating, among other matters, certain payments to IBC pursuant to the terms and conditions of that agreement. (b) Brazil. The right to commercialize the Licensed Products in Brazil shall be retained by IBC, and in that connection the parties shall enter into the Trademark License Agreement from Empyrean to IBC, contemplating, among other matters, certain payments to Empyrean pursuant to the terms and conditions of that agreement. (c) Remainder of the World. The right to commercialize the Licensed Products in the world, except the United States and Brazil, shall be granted to IBC-Empyrean, L.L.C., and in connection with such intention (A) IBC and IBC-Empyrean, L.L.C. shall enter into the License Agreement from IBC to IBC-Empyrean, (B) IBC and IBC-Empyrean, L.L.C. shall enter into the Trademark License Agreement from IBC to IBC-Empyrean, and (C) Empyrean and IBC-Empyrean, L.L.C. shall enter into the Trademark License Agreement from Empyrean to IBC-Empyrean. (d) Manufacturing. Manufacturing of the Licensed Products shall be governed by Section 6 herein. 2.2 In order to facilitate the commercialization of the Licensed Products in the world, except the United States and Brazil, Empyrean and IBC agree to (A) enter into the IBC-Empyrean, L.L.C. Operating Agreement, and become members of IBC-Empyrean, L.L.C. as therein contemplated, and (B) cause the IBC-Empyrean, 6 L.L.C. Certificate to be filed with the Delaware Secretary of State's office on or prior to the Closing. 2.3 All expenses incurred by either IBC or Empyrean in connection with the formation of IBC-Empyrean, L.L.C. shall be borne and paid for by either IBC or Empyrean, as the case may be, unless otherwise agreed by the parties. All expenses incurred by each party in connection with the negotiation and implementation of this Agreement and the various license and trademark agreements ancillary hereto shall be borne and paid for by such party. 3. CLOSING. Unless any condition to the Closing shall not have been waived or satisfied, consummation of the transactions contemplated hereby shall be effected as soon as practicable, and in any event on or before the close of business on August 10, 2000, unless such date shall have been extended by written agreement of the parties. The closing ("Closing") shall take place at the offices of Kaye, Scholer, Fierman, Hays & Handler, LLP, Phillips Point, West Tower, Suite 1002, 777 South Flagler Drive, West Palm Beach, FL 33401, or such other place, and on such date and time as the parties may agree. 4. CONDITIONS TO CLOSING. 4.1 IBC Conditions Precedent. The obligations of IBC to effect the Closing shall be subject to the satisfaction at or prior to Closing of the following conditions, any one of which may be waived in writing by IBC in its sole discretion: (a) Execution of Agreements. Empyrean shall have duly executed and delivered each of the Empyrean Agreements. 7 (b) Representations and Warranties. All representations and warranties of Empyrean contained in each Empyrean Agreement shall be true and correct at and as of the Closing, and Empyrean shall have performed in all material respects all agreements and covenants required to be performed by it in each Empyrean Agreement. (c) Consents. All consents, approvals and waivers from third parties, governmental entities and others necessary to permit Empyrean to enter into and consummate the transactions contemplated by each Empyrean Agreement shall have been obtained. (d) No Governmental Proceedings or Litigation. No action by any Governmental Entity or third party shall have been instituted or threatened which questions the validity or legality of the transactions contemplated by any Empyrean Agreement and which could reasonably be expected to affect markedly the ability of Empyrean to fulfill its obligations under each Empyrean Agreement other than the Optima Litigation. (e) Opinion of Counsel. Empyrean shall have delivered to IBC an opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel to Empyrean, dated as of the Closing, to the effect and substantially in the form of Exhibit L hereto. (f) Certificates. Empyrean shall have furnished IBC with such certificates of Empyrean's officers and others to evidence compliance with the conditions set forth in this Article 4 as may be reasonably requested by IBC. (g) RESERVED. (h) Corporate Documents. IBC shall have received from Empyrean resolutions adopted by the board of directors of Empyrean approving each Empyrean Agreement and the transactions contemplated thereby, certified by Empyrean's corporate secretary. 8 (i) Grant Shares. Empyrean shall have delivered a stock certificate to IBC representing 5,000,000 duly authorized, fully-paid and non-assessable shares of Empyrean's common stock, no par value. (j) Option Agreement. Empyrean shall have duly executed and delivered to IBC the Option Agreement. (k) Put Agreement. Empyrean shall have duly executed and delivered to IBC the Put Agreement. 4.2 Empyrean Conditions Precedent. The obligations of Empyrean to effect the Closing shall be subject to the satisfaction at or prior to Closing of the following conditions, any one of which may be waived by Empyrean in its sole discretion: (a) Execution of Agreements. IBC shall have duly executed and delivered each of the IBC Agreements. (b) Representations and Warranties. All representations and warranties of IBC contained in each IBC Agreement shall be true and correct at and as of the Closing, and IBC shall have performed in all material respects all agreements and covenants required to be performed by it in each IBC Agreement. (c) Consents. All consents, approvals and waivers from third parties, governmental entities and others necessary to permit IBC to enter into and consummate the transactions contemplated by each IBC Agreement shall have been obtained. (d) No Governmental Proceedings or Litigation. No action by any Governmental Entity or third party shall have been instituted or threatened which questions the validity or legality of the transactions contemplated by any 9 IBC Agreement and which could reasonably be expected to affect markedly the ability of IBC to fulfill its obligations under each IBC Agreement, other than the Optima Litigation. (e) Opinion of Counsel. IBC shall have delivered to Empyrean an opinion of Holtzman, Krinzman, Equels & Furia, counsel to IBC, dated as of the Closing, to the effect and substantially in the form of Exhibit M hereto. (f) Certificates.IBC shall have furnished Empyrean with such certificates of IBC's officers and others to evidence compliance with the conditions set forth in this Article 4 as may be reasonably requested by Empyrean. (g) RESERVED. (h) Corporate Documents. Empyrean shall have received from IBC resolutions adopted by the board of directors of IBC approving each IBC Agreement and the transactions contemplated thereby, certified by IBC corporate secretary. (i) Voting Agreement. IBC shall have duly executed and delivered to Empyrean the Voting Agreement. (j) Put Agreement. IBC shall have duly executed and delivered to Empyrean the Put Agreement. 5. MANAGEMENT OF IBC-EMPYREAN, L.L.C. The parties agree that the management and corporate governance of IBC-Empyrean, L.L.C. shall be undertaken in accordance with the terms and provisions of the IBC-Empyrean, L.L.C. Operating Agreement. 10 6. MANUFACTURING AND PACKAGING. 6.1 The parties agree that all Licensed Products shall only be manufactured by an Approved Manufacturer. 6.2 (a) The parties agree that IBC shall have no obligation to deliver the Formulation to an Approved Manufacturer unless and until such Approved Manufacturer has entered into a confidentiality agreement with IBC, to the satisfaction of IBC, that prohibits such Approved Manufacturer from revealing any proprietary and confidential information relating to the Formulation to any third parties, including Empyrean and IBC-Empyrean, L.L.C. IBC covenants and agrees that, upon execution of the confidentiality agreement, it shall provide each Approved Manufacturer with the Formulation, and appropriate written documentation of the Formulation, sufficient to permit the Approved Manufacturer to make and manufacture the Licensed Products. Empyrean agrees and acknowledges it has no right to obtain access to the confidential and proprietary information included in the Formulation. (b) Notwithstanding Section 6.2 (a) above, IBC represents and warrants that the complete Formulation, when available but within six months of executing this Agreement, will be placed in escrow at the law offices of Holtzman, 11 Krinzman, Equels and Furia. IBC further agrees that, notwithstanding Section 6.2 (a) above, in the event IBC fails or otherwise refuses to deliver, upon execution of the confidentiality agreement, the complete Formulation to any Approved Manufacturer, then in such event, the board of managers of IBC-Empyrean, L.L.C. may direct that the Formulation be released from escrow and delivered to such an Approved Manufacturer. An escrow agreement setting forth this obligation and authorizing Holtzman, Krinzman, Equels and Furia to release the Formulation to an Approved Manufacturer shall be signed by the parties within thirty (30) days after the date of this Agreement. 6.3 The parties agree that all Licensed Products shall only be packaged by an Approved Packager. 7. REGISTRATION OF SHARES AND OPTION SHARES. 7.1 Obligation to Register. Empyrean covenants and agrees that it will use best efforts to file, as promptly as possible, an amendment to the Registration Statement on Form S-4 (Registration No. 333-84147) filed by Empyrean with the Securities Exchange Commission (the "SEC") on ________ __, 2000 (hereafter, as so amended, the "Registration Statement"), which amendment will, among other matters, seek to register for public resale by IBC from time to time in accordance with applicable law and regulations (i) the 5,000,000 shares of Empyrean common stock to be issued to IBC pursuant to Section 4.1(i) hereof (the "Shares"), (ii) the option and the 2,226,000 option shares (the "Option Shares") to be granted to IBC pursuant to the terms of the Option Agreement and (iii) approximately 476,000 shares of Empyrean common stock issued to IBC in April, 2000. 7.2 Registration Procedures. (a) In connection with the registration obligations of Empyrean pursuant to and in accordance with Section 7.1 hereof, Empyrean shall use its best efforts to obtain effectiveness of such registration to permit the sale of the Shares and Option Shares in accordance with the intended method or methods of disposition thereof, and shall continue to use its best efforts to maintain such effectiveness for the registration until the Shares and the Option Shares, have been disposed of pursuant to the Registration Statement (the "Applicable Period"), and pursuant thereto Empyrean shall as expeditiously as possible and subject to the terms and conditions herein: 12 (i) within sixty (60) days from the date of the Closing, prepare and file with the SEC the Registration Statement for the sale of the Shares and the Option Shares on Form S-4 (or such other form for which Empyrean and the registration contemplated by Section 7.1 are eligible) and use its best efforts to cause the Registration Statement to become effective; (ii) prepare and file with the SEC such amendments (including post-effective amendments) to the Registration Statement, and such supplements to the related prospectus, as may be required by the applicable rules, regulations or instructions under the Securities Act of 1933, as amended (the "Securities Act") during the Applicable Period in accordance with the intended methods of disposition specified by IBC of the Shares and Option Shares covered by the Registration Statement; make generally available as soon as practicable, but not later than ninety (90) days after the close of the period covered thereby, earnings statements satisfying the provisions of Section 11(a) of the Securities Act (provided that Empyrean shall be deemed to have complied with this clause if it has complied with Rule 158 under the Securities Act), and cause the related prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act; provided, however, that before filing the Registration Statement or prospectus, or any amendments or supplements thereto (other than reports required to be filed by it under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), Empyrean shall furnish to IBC and its counsel for review and comment, copies of all documents required to be filed; (iii) notify IBC promptly and (if requested) confirm such notice in writing, (1)when a prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any 13 post-effective amendment, when the same has become effective, (2) of any request by the SEC for amendments or supplements to the Registration Statement or the related prospectus or for additional information regarding IBC, (3) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (4) of the receipt by Empyrean of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Shares or the Option Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (5) of the happening of any event that requires the making of any changes in the Registration Statement, prospectus or documents incorporated or deemed to be incorporated therein by reference so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) use its best efforts to prevent the issuance of any stop order or suspension of effectiveness of the Registration Statement or to obtain at the earliest possible moment the withdrawal of any order suspending the effectiveness of the Registration Statement, or the lifting of any suspension of the qualification or exemption from qualification of any Shares or Option Shares for sale in any jurisdiction in the United States; (v) furnish to IBC, counsel for IBC and each managing underwriter, if any, without charge, one conformed copy of the Registration Statement, as declared effective by the SEC, and of each post-effective amendment thereto, in each case including financial statements and schedules and all exhibits and reports incorporated or deemed to be incorporated therein by reference; and deliver, without charge, such number of copies of the preliminary prospectus, any amended preliminary prospectus, each final prospectus and any 14 post- effective amendment or supplement thereto, as IBC may reasonably request in order to facilitate the disposition of the Shares or Option Shares of IBC covered by the Registration Statement in conformity with the requirements of the Securities Act; (vi) prior to any public offering of Shares or Option Shares covered by the Registration Statement, register or qualify such Shares and Option Shares for offer and sale under the United States state securities or Blue Sky laws of such jurisdictions as IBC shall reasonably request in writing, to keep such registration or qualification in effect for so long as such registration remains in effect, and take any other action which may be reasonably necessary or advisable to enable IBC to consummate the disposition of the Shares and Option Shares in such jurisdictions; provided, however, that Empyrean shall in no event be required to qualify generally to do business as a foreign corporation or as a dealer in any jurisdiction where it is not at the time so qualified or to execute or file a general consent to service of process in any such jurisdiction where it has not theretofore done so or to take any action that would subject it to general service of process or taxation in any such jurisdiction where it is not then subject; (vii) upon the occurrence of any event contemplated by Section 7.2(a)(iii)(5) above, promptly prepare and furnish to IBC a reasonable number of copies of a supplement or post-effective amendment to the Registration Statement or the related prospectus or any document incorporated or deemed to be incorporated therein by reference and file any other required document so that, as thereafter delivered to the purchasers of the Shares or Option Shares being sold thereunder, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein 15 or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (viii) promptly list all Shares and Option Shares covered by the Registration Statement on any national securities exchange or automated inter-dealer quotation system on which similar securities issued by Empyrean are then listed or quoted, if the listing or quoting of such securities is then permitted under the rules of such exchange or quotation system; (ix) make available for inspection by IBC, and any attorney, accountant or other agent retained by IBC (collectively, the "Inspectors"), all financial and other records and other information, pertinent corporate documents and properties of Empyrean and its subsidiaries (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibilities; provided, however, that the Records that Empyrean determines, in good faith, to be confidential and which it notifies the Inspectors in writing are confidential shall not be disclosed to any Inspector unless (x) such Inspector signs a confidentiality agreement reasonably satisfactory to Empyrean (which shall permit the disclosure of such Records in the Registration Statement or the related prospectus if necessary to avoid or correct a material misstatement in or material omission from the Registration Statement or prospectus) or (y) either (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the Registration Statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction; provided further, however, that (A) any decision regarding the disclosure of information pursuant to subclause (i) shall be made only after consultation with counsel for the applicable Inspectors and Empyrean and (B) with respect to any release of Records pursuant to subclause (ii), IBC agrees that it shall, promptly after learning that 16 disclosure of such Records is sought in a court having jurisdiction, give notice to Empyrean so that Empyrean, at Empyrean's expense, may undertake appropriate action to prevent disclosure of such Records; (x) comply with all applicable rules and regulations of the SEC, and not file (or withdraw or correct) any amendment or supplement to such registration statement or prospectus to which IBC shall have reasonably objected in writing on the grounds that such amendment or supplement does not comply in all material respects with the requirements of the Securities Act or of the rules or regulations thereunder; and (xi) provide a transfer agent and register for all Shares and Option Shares covered by such registration statement not later than the effective date of such registration statement. (b) In connection with the preparation and filing of each registration statement under the Securities Act, Empyrean will give IBC, the underwriters, if any, and their respective counsel and accountants, the reasonable opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the SEC and each amendment thereof or supplement thereto, and will give each of them such reasonable access to its books and records and such reasonable opportunities to discuss the business of Empyrean with its officers and the independent public accountants who have certified its financial statements as shall be necessary to conduct a reasonable investigation within the meaning of the Securities Act. 7.3 Registration Expenses. Whether or not the Registration Statement is filed or becomes effective, Empyrean shall pay all costs, fees and expenses incident to Empyrean's performance of or compliance with this Agreement, 17 including (i) all registration and filing fees, including NASD filing fees, (ii) all fees and expenses of compliance with state securities or Blue Sky laws, including reasonable fees and disbursements of Empyrean's counsel in connection therewith, (iii) printing expenses (including expenses of printing certificates for the Shares and Option Shares and of printing prospectuses if the printing of prospectuses is requested by IBC or the managing underwriter, if any), (iv) messenger, telephone and delivery expenses, (v) fees and disbursements of counsel for Empyrean, (vi) fees and disbursements of all independent certified public accountants of Empyrean (including expenses of any "cold comfort" letters required in connection with this Agreement) and all other persons retained by Empyrean in connection with the Registration Statement, (vii) fees and disbursements of one counsel, other than Empyrean's counsel, to represent IBC, (viii) fees and disbursements of underwriters customarily paid by the issuers or sellers of securities and (ix) all other costs, fees and expenses incident to Empyrean's performance or compliance with this Agreement. Notwithstanding the foregoing, any discounts, commissions or brokers' fees or fees of similar securities industry professionals and any transfer taxes relating to the disposition of the Shares or Option Shares by IBC, will be payable by IBC and Empyrean will have no obligation to pay any such amounts. 7.4 Indemnification by Empyrean. Empyrean shall, without limitation as to time, indemnify and hold harmless, to the full extent permitted by law, IBC, its officers, directors and agents and employees, each person who controls IBC (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling person, from and against any and all losses, claims, damages, liabilities, judgment, costs (including, without limitation, costs of investigation, preparation and reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or based upon any untrue 18 or alleged untrue statement of a material fact contained in the Registration Statement or the related prospectus or in any amendment or supplement thereto, or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are based upon any information furnished in writing to Empyrean by or on behalf of IBC expressly for use therein. 7.5 Indemnification by IBC. In connection with the Registration Statement in which IBC is participating, IBC shall indemnify and hold harmless, to the full extent permitted by law, Empyrean, its directors, officers, agents and employees, each person who controls Empyrean (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and the directors, officers, agents or employees of such controlling persons, from and against all Losses, as incurred, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement or the related prospectus or any amendment or supplement thereto, or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue or alleged untrue statement or omission or alleged omission is based upon any information furnished in writing by or on behalf of IBC to Empyrean expressly for use therein. 7.6 Conduct of Indemnification Proceedings. If any person shall be entitled to indemnity under Section 7.4 or 7.5 (an "indemnified party"), such indemnified party shall give prompt notice to the party from which such indemnity is sought (the "indemnifying party") of any claim or of the commencement of any proceeding with respect to which such indemnified party seeks indemnification or contribution pursuant hereto; provided, however, that the delay or failure to so 19 notify the indemnifying party shall not relieve the indemnifying party from any obligation or liability except to the extent that the indemnifying party has been prejudiced by such delay or failure. The indemnifying party shall have the right, exercisable by giving written notice to an indemnified party promptly after the receipt of written notice from such indemnified party of such claim or proceeding, to assume, at the indemnifying party's expense, the defense of any such claim or proceeding, with counsel reasonably satisfactory to such indemnified party; provided, however, that (i) an indemnified party shall have the right to employ separate counsel in any such claim or proceeding and to participate in the defense thereof, but the fees and expenses of such separate counsel shall be at the expense of such indemnified party unless: (1) the indemnifying party agrees to pay such fees and expenses; (2) the indemnifying party fails promptly to assume the defense of such claim or proceeding or fails to employ counsel reasonably satisfactory to such indemnified party; or (3) the named parties to any proceeding (including impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it that are inconsistent with those available to the indemnifying party or that a conflict of interest is likely to exist among such indemnified party and any other indemnified parties (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party); and (ii) subject to clause (3) above, the indemnifying party shall not, in connection with any one such claim or proceeding or separate but substantially similar or related claims or proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one firm of attorneys (together with appropriate local counsel) at any time for all of the indemnified parties, or for fees and 20 expenses that are not reasonable. Whether or not such defense is assumed by the indemnifying party, such indemnifying party shall not be subject to any liability for any settlement made without its consent (which consent shall not be unreasonably withheld). The indemnifying party shall not consent to entry of any judgment or enter into any settlement unless (i) there is no finding or admission of any violation of any rights of any person and no effect on any other claims that may be made against the indemnified party, (ii) the sole relief provided is monetary damages that are paid in full by the indemnifying party and (iii) such judgment or settlement includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release, in form and substance reasonably satisfactory to the indemnified party, from all liability in respect of such claim or litigation for which such indemnified party would be entitled to indemnification hereunder. 7.7 Investment Statements. IBC understands that neither the Shares nor the Option Shares have been registered under the Securities Act or under any state securities or "blue sky" laws, and, except as provided in the Section 7.1 herein, the Empyrean has no obligation to file a registration statement under the Securities Act in respect of the Shares or the Option Shares and, therefore, the Shares or the Option Shares cannot be offered or sold by IBC in the United States without registration under the Securities Act and the securities laws of all applicable states of the United States, unless an exemption from registration is available or registration is not required. IBC also understands that the Shares and Option Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon IBC's representations contained in the Agreement. IBC hereby represents and warrants to Empyrean as follows: 21 (a) IBC Bears Economic Risk. IBC has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to Empyrean so that it is capable of evaluating the merits and risks of its investment in Empyrean and has the capacity to protect its own interests. IBC must bear the economic risk of this investment indefinitely unless the Shares or the Option Shares are registered pursuant to the Securities Act, or an exemption from registration is available. IBC understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow the IBC to transfer all or any portion of the Shares or the Option Shares under the circumstances, in the amounts or at the times IBC might propose. (b) Acquisition for Own Account. IBC is acquiring the Shares and the Option Shares for IBC's own account. (c) IBC Can Protect Its Interest. IBC represents that by reason of its, or of its management's, business or financial experience, IBC has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. IBC is not a corporation, trust or partnership specifically formed for the purpose of consummating these transactions. (d) Accredited Investor. IBC represents that it is an "accredited investor" within the meaning of Regulation D under the Securities Act. (e) Legend. Upon initial issuance and thereafter until transferred pursuant to an effective registration statement under the Securities Act and qualified under applicable state securities or blue sky laws, or until receipt by Empyrean of a written opinion of counsel to IBC reasonably acceptable to Empyrean to the effect that such legend is not required in order to ensure 22 compliance with the Securities Act and state securities laws, the certificate or certificates representing any Shares or Option Shares shall bear a legend reading substantially as follows: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER. 7.8 Failure to go Effective. (a) In the event the Registration Statement has not gone effective on or prior to the 90th calendar day following the date on which the Registration Statement, as amended, is filed with the Securities and Exchange Commission or if the Registration Statement has gone effective on any date thereafter on which during the Applicable Period, with the allowance for and after the passage of a 60-day cure period pursuant to which Empyrean shall have had the opportunity to make the Registration Statement effective within such Applicable Period, the Registration Statement is no longer effective (the "Default Date"), then: (i) on the 30th business day following such Default Date, Empyrean shall issue to IBC 100,000 shares of Empyrean's common stock; and (ii) on every successive 30-day anniversary of the Default Date, in the event the Registration Statement is not effective on such anniversary date, Empyrean shall issue to IBC 100,000 shares of Empyrean Common Stock. 23 (b) Following the Default Date and until the Registration Statement shall have gone effective, Empyrean agrees to indemnify IBC, in the manner hereafter provided, for any loss on the Sale of Indemnified Shares. For purposes of this Section 7.8 (b): (i) a "Loss" with respect to a Sale of any share of Empyrean common stock shall be the difference, if any, between (1) the closing price of such share of common stock on the securities exchange or automated quotation system on which transactions in such shares of common stock are effected (the "Closing Price") and (2) the per share price realized by IBC in connection with such sale. (ii) "Indemnified Shares" shall mean the greater of (A) 1,000,000 shares of Empyrean common stock or (B) such number of shares of Empyrean common stock having an aggregate market value, as measured by the Closing Price on the date of such sale, of $1,000,000. (iii) a "Sale" shall mean a bona-fide, arm's length transaction effected by IBC with a third party (not an affiliate of IBC) pursuant to an applicable exemption from Federal and state securities laws. (c) In the event Empyrean is required to indemnify IBC pursuant to Section 7.8(b) above, then, within 30 days of the date of the Sale of the Indemnified Shares, Empyrean agrees to pay for such loss on the Sale of the Indemnified Shares (i) in cash or (ii) by the issuance of shares of Empyrean capital stock to IBC. 7.9 Shares Subject to Voting Agreement. The Shares and the Option Shares shall be subject to the terms and provisions of the Voting Agreement. Pursuant to the terms of the Voting Agreement, IBC shall be free at any time to sell any or all of the Shares or Option Shares to third parties, whether by public resale pursuant to an effective registration statement or pursuant to any valid 24 exemption from the registration requirements under applicable federal and state securities laws. The removal and applicability of the voting restrictions relating to such Shares and Option Shares sold by IBC to third parties shall be governed by the provisions of the Voting Agreement. 8. NEW PRODUCT DEVELOPMENT; NON-COMPETITION COVENANTS. 8.1 New Product Development. The parties contemplate that the development of new Licensed Products for sale by Empyrean in the United States, IBC in Brazil and IBC-Empyrean, L.L.C. in the remainder of the world will be co-ordinated by a four-person team to include medical/scientific personnel of IBC (two people) and marketing personnel of Empyrean (two people), and such team will consider new product development in light of mutually-agreed upon criteria that take into account both scientific and marketing issues. 8.2 IBC and Empyrean Covenants Relating to the World, except the United States and Brazil. Each of IBC and Empyrean covenants to each other and to IBC-Empyrean, L.L.C. that neither IBC nor Empyrean, respectively, will sell, market or distribute in the Territory any product which is in any material manner competitive with any Licensed Product then being sold, marketed or distributed by IBC-Empyrean, L.L.C. in any such country. 8.3 Sales by IBC-Empyrean, L.L.C. in the United States or Brazil. In the event any distributor or customer of IBC-Empyrean, L.L.C. sells any Licensed Products in the United States or Brazil, IBC or Empyrean as the case may be, may provide notice to IBC-Empyrean, L.L.C. of such third party sales. IBC-Empyrean, L.L.C. agrees to take all action necessary and appropriate to cease all sales from IBC-Empyrean, L.L.C. to such customer or distributor, unless another appropriate action is approved by IBC-Empyrean. L.L.C. 25 9. OPTIMA LITIGATION. In the event any court of law with jurisdiction in the Optima Litigation enters any judgment or interlocutory order which limits or precludes the right of Empyrean, from the date of such judgment or order, to use, have used, sell or have sold the Licensed Product anywhere in the world except Brazil, then in such event: (i) the parties agree and consent that Empyrean shall be deemed damaged thereby. The issue of the amount of damage (and only such issue) shall be submitted by the parties to arbitration pursuant to the "fast track" procedures established by the American Arbitration Association and in accordance with Section 14.3 hereof; and (ii) in order to secure any obligation owed by IBC to Empyrean resulting from such arbitration, IBC shall, to the extent then permitted by law, upon commencement of the arbitration, assign to Empyrean, or otherwise grant to Empyrean the highest priority perfected security interest IBC is permitted to assign or otherwise grant in, all of IBC's rights, benefits and/or interest in commercializing the Licensed Products in the United States. 10. REPRESENTATIONS & WARRANTIES BY EMPYREAN. Empyrean represents and warrants to IBC that: 10.1 Organization and Good Standing. Empyrean is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated and has the requisite power to carry on its business as now being conducted. 10.2 Authority; Noncontravention. Empyrean has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by Empyrean and the consummation by Empyrean of the transactions contemplated hereby have been duly authorized by all necessary corporate action 26 on the part of Empyrean. This Agreement has been duly executed and delivered by Empyrean and constitutes a valid and binding obligation of Empyrean, enforceable against Empyrean in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. (a) The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any lien upon any of the properties or assets of Empyrean or any of its subsidiaries pursuant to, any provision of (i) the certificate of incorporation or by-laws of Empyrean or any provision of the comparable charter, or organizational documents of any of its subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage, indenture, material lease or other material agreement, instrument, permit, concession franchise or license applicable to Empyrean or any of its subsidiaries or their respective properties, assets or business or (iii) subject to the governmental filings and other matters referred to in clause (c) below, any statute, law, rule, regulation, judgment, order or decree applicable to Empyrean or any of its subsidiaries or their respective properties or assets, other than in the case of clauses (ii) and (iii), any such conflicts, violations, defaults, rights or liens that individually or in the aggregate would not (x) have a material adverse effect on Empyrean, (y) impair in any material respect the ability of Empyrean to perform its obligations under this Agreement or (z) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement. 27 (b) No consent, approval, order or authorization of, or registration, declaration or filing with, any federal, state or local government or any court, administrative agency, regulatory body, commission or other governmental authority or agency, domestic or foreign, is required by or with respect to Empyrean or any of its subsidiaries in connection with the execution and delivery of this Agreement by Empyrean or the consummation by Empyrean of the transactions contemplated by this Agreement other than (i) the Form S-4, (ii) the IBC-Empyrean, L.L.C. Certificate and (iii) such other consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to be obtained or made would not, individually or in the aggregate, have a material adverse effect on Empyrean or prevent or materially delay the consummation of any of the transactions contemplated by this Agreement. 10.3. Litigation. With the exception of the Optima Litigation, there is no action, suit, claim, audit, investigation or legal, administrative or arbitration proceeding pending or, to the knowledge of Empyrean, threatened against or affecting Empyrean, whether civil or criminal in nature, whether or not purportedly on behalf of Empyrean and whether before or by any Governmental Agency, nor, to the knowledge of Empyrean, is there any basis for any of the foregoing. There is no judgment, decree, injunction, rule or order of any Governmental Agency outstanding against Empyrean. Empyrean is not in default under any judgment, decree, injunction or order. 11. REPRESENTATIONS & WARRANTIES BY IBC. IBC represents and warrants to Empyrean that: 11.1 Organization and Good Standing. IBC is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated and has the requisite power to carry on its business as now being conducted. 28 11.2 Authority; Noncontravention. IBC has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by IBC and the consummation by IBC of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of IBC. This Agreement has been duly executed and delivered by IBC and constitutes a valid and binding obligation of IBC, enforceable against IBC in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity. (a) The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any lien upon any of the properties or assets of IBC or any of its subsidiaries pursuant to, any provision of (i) the certificate of incorporation or by-laws of IBC or any provision of the comparable charter, or organizational documents of any of its subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage, indenture, material lease or other material agreement, instrument, permit, concession franchise or license applicable to IBC or any of its subsidiaries or their respective properties, assets or business or (iii) subject to the governmental filings and other matters referred to in clause (c) below, any statute, law, rule, regulation, judgment, order or decree applicable to IBC or any of its subsidiaries or their respective properties or assets, other than in the case of clauses (ii) and (iii), any such conflicts, violations, defaults, rights or liens that individually or in the aggregate 29 would not (x) have a material adverse effect on IBC, (y) impair in any material respect the ability of IBC to perform its obligations under this Agreement or (z) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement. (b) No consent, approval, order or authorization of, or registration, declaration or filing with, any federal, state or local government or any court, administrative agency, regulatory body, commission or other governmental authority or agency, domestic or foreign, is required by or with respect to IBC or any of its subsidiaries in connection with the execution and delivery of this Agreement by IBC or the consummation by IBC of the transactions contemplated by this Agreement (excluding such consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to be obtained or made would not, individually or in the aggregate, have a material adverse effect on IBC or prevent or materially delay the consummation of any of the transactions contemplated by this Agreement. 11.3 Litigation. With the exception of the Optima Litigation and a potential claim by Farida Darbar against IBC, there is no action, suit, claim, audit, investigation or legal, administrative or arbitration proceeding pending or, to the knowledge of IBC, threatened against or affecting IBC, whether civil or criminal in nature, whether or not purportedly on behalf of IBC and whether before or by any Governmental Agency, nor, to the knowledge of IBC, is there any basis for any of the foregoing. There is no judgment, decree, injunction, rule or order of any Governmental Agency outstanding against IBC. IBC is not in default under any judgment, decree, injunction or order. 30 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties contained herein or in any certification or instrument delivered pursuant to this Agreement, any Empyrean Agreement or any IBC Agreement shall survive the execution and delivery hereof or thereof, respectively. 13. INDEMNIFICATION. 13.1 Indemnification by Empyrean. Without prejudice to the provisions of Section 7.4 hereof relating to the Registration Statement (such Section 7.4 to be controlling with respect to the circumstances addressed therein), Empyrean agrees to indemnify, save and hold harmless IBC and its Affiliates, and its and their respective representatives, from and against all costs, losses, liabilities and damages (including, without limitation, attorneys' fees and expenses) (collectively, "Damages") incurred in connection with or arising out of or resulting from the breach of any representation, warranty or covenant contained herein or in any Empyrean Agreement. The term "losses" as used in this Section 13.1 hereof is not limited to matters asserted by third parties against IBC, its Affiliates or representatives, but includes losses incurred or sustained in the absence of third party claims. 13.2 Indemnification by IBC. Without prejudice to the provisions of Section 7.5 hereof relating to the Registration Statement and Section 9 hereof relating to the Optima Litigation (such Section 7.5 and Section 9 to be controlling with respect to the circumstances therein addressed), IBC agrees to indemnify, save and hold harmless Empyrean, its Affiliates, and its and their respective representatives, from and against any and all Damages incurred in connection with or arising out of or resulting from the breach of any representation, warranty or covenant contained in any IBC Agreement. 31 13.3 Conduct of Indemnification Proceedings. If any person shall be entitled to indemnity under Section 13.1 or 13.2, such indemnified party shall give prompt notice to the party from which such indemnity is sought of any claim or of the commencement of any proceeding with respect to which such indemnified party seeks indemnification or contribution pursuant hereto; provided, however, that the delay or failure to so notify the indemnifying party shall not relieve the indemnifying party from any obligation or liability except to the extent that the indemnifying party has been prejudiced by such delay or failure. The indemnifying party shall have the right to assume, at the indemnifying party's expense, the defense of any such claim or proceeding. 32 14. APPLICABLE LAW. 14.1 This Agreement, its terms and conditions and all business conducted hereunder shall be governed and interpreted under the laws of the State of Florida, without regard to conflict of laws provisions. 14.2 The parties will first attempt to settle each and every dispute, controversy or claim, whether based in contract, tort, statute, fraud, misrepresentation, or any other legal theory, arising out of or relating to this Agreement ("Dispute(s)"), through good faith negotiations. Except for court actions specifically allowed in the IBC Documents and Empyrean Documents or for any actions brought for wrongful termination or to seek termination of this Agreement, any Dispute not resolved within 30 days or such other period as the parties mutually agree in writing, will be then settled by final and binding arbitration in accordance with this Section 14. 14.3 Any dispute arbitrated in accordance with the terms of this agreement shall be conducted in Miami-Dade County or Palm Beach County Florida by one neutral arbitrator, in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Each party will bear its own expenses and the parties will equally share the filing and other administrative fees of the AAA and the expenses of the arbitrator. An award may be confirmed and judgment entered in any court having competent jurisdiction. The arbitrator will not have the power to award any consequential or punitive damages. The arbitrability of any Dispute, including those as to the enforceability of this Section, the applicability of statutes of limitations and questions of issue preclusion, will be determined solely by the arbitrator. This Section will be governed and enforced under the Federal Arbitration Act, 9 U.S.C. Sections 1 to 16. The local law of the State of Florida, except its laws or arbitration and choice of laws, will apply to all substantive matters 33 pertaining to this Agreement. Any party may seek a temporary injunction in a court of competent jurisdiction to the limited extent necessary to preserve the status quo during the pendency of final resolution of a Dispute in accordance with this Section. The statute(s) of limitation applicable to any Dispute will be tolled upon initiation of the Dispute resolution procedures under this Section and will remain tolled until the Dispute is resolved under this Section. 14.4 In the event any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the remaining terms shall remain in full force and effect, to effectuate this Agreement in accordance with its intent. Headings, title and subtitles of this Agreement are for convenience of reference only and are not to be considered in construing the terms of this Agreement. 15. SOLE AND COMPLETE AGREEMENT. 15.1 This Agreement is the sole and complete statement of the parties of their rights and obligations with respect to the subject matter hereof. This Agreement is an integrated agreement and replaces and supersedes any and all previous obligations and agreements between the parties. The parties hereto recognize and agree that no representations or warranties have been made except as set forth in this Agreement. Except as may otherwise be expressly provided herein, by signing this Agreement the parties expressly release each other from any and all existing obligations that pre-date this Agreement as if such obligations have been fully performed and satisfied. Any amendments to this Agreement shall be in writing and executed by both parties hereto. 34 16. NOTICES. 16.1 All notices, requests, demands, instructions, consents or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii) mailed postage prepaid by certified mail, return receipt requests, (iii) sent by a nationally recognized express courier service requiring a signature by the recipient, postage or delivery charges prepaid, at the address hereinafter specified, or to such other address as the parties may advise each other in writing from time to time. Any notice shall be addressed as follows: As to IBC: Ms. Sara Gomez de Ferro International Bioscience Corporation 777 South Flagler Drive Phillips Point Building East Tower, Suite 909 West Palm Beach, Florida 33401 With a copy to: Mr. Joseph L. Raia, Esq. Holtzman, Krinzman, Equels & Furia 2601 South Bayshore Drive, Suite 600 Miami, Florida 33133 As to Empyrean: Mr. Richard C. Adamany Empyrean Bioscience, Inc. 23800 Commerce Park Road, Suite A Cleveland, Ohio 44122 35 With a copy to: Mr. Richard H. Kronthal, Esq. Kaye, Scholer, Fierman, Hays & Handler,, LLP 425 Park Avenue New York, NY 10022 17. ASSIGNMENT. This Agreement shall be binding on and inure to the benefit of the parties. This Agreement may not be assigned by either party without the prior written consent of the other party hereto. 36 IN WITNESS WHEREOF, the parties hereto do hereby sign, enter into and acknowledge this Agreement on the date first written above. INTERNATIONAL BIOSCIENCE CORPORATION By:_____________________________________ Title:__________________________________ EMPYREAN BIOSCIENCE, INC. By:_____________________________________ Title:__________________________________ 37 EX-10.14 4 0004.txt OPERATING AGREEMENT IBC-EMPYREAN, L.L.C. OPERATING AGREEMENT TABLE OF CONTENTS Page ---- 1. Definitions 1 2. Formation and Name: Office; Purpose; Term 7 3. Members; Capital; Capital Accounts 8 4. Profit, Loss, and Distributions 9 5. Management: Rights, Powers, and Duties 12 6. Transfer of Interests and Withdrawals of Members 18 7. Dissolution, Liquidation, and Termination of the Company 20 8. Books, Records, Accounting, and Tax Elections 21 9. General Provisions 23 i INDEX OF EXHIBITS Exhibit A Schedule of Capital Contributions Exhibit B Trademark License Agreement from Empyrean to IBC-Empyrean Exhibit C License Agreement from IBC to IBC-Empyrean Exhibit D Trademark License Agreement from IBC to IBC-Empyrean Exhibit E GEDA LOGO Exhibit F Put Agreement ii IBC-EMPYREAN, L.L.C. OPERATING AGREEMENT This Operating Agreement is entered into as of August 9, 2000, by the signatories hereto, who agree as follows. 1. DEFINITIONS For purposes of this Agreement: (a) ACT means the Delaware Limited Liability Company Act, as may be amended from time to time. (b) AFFILIATE of a party shall mean any entity which controls, is controlled by or under common control with such party, and any joint venture (whether a corporation, partnership or other form of entity) in which such party has at least a one-third interest. (c) AGREEMENT means this Operating Agreement, as amended or modified from time to time. (d) ATTORNEY-IN-FACT has the meaning contained in Section 5(i)(i). (e) BOARD means the board of managers of the Company. (f) BUG TRADEMARK shall mean the "GEDA LOGO", used by IBC, Empyrean and the Company on all products based on the Formulation in the form attached hereto as EXHIBIT E. (g) BUSINESS PLAN means the annual business plan for the Company jointly developed and unanimously approved by the Board, setting forth the objectives, major business actions, marketing plan and strategies of the Company. (h) CAPITAL ACCOUNT means the account maintained by the Company for each Interest Holder in accordance with the following provisions: (i) an Interest Holder's Capital Account will be credited with the Interest Holder's Capital Contributions, the amount of any Company liabilities assumed by the Interest Holder (or which are secured by Company property distributed to the Interest Holder), the Interest Holder's distributive share of Profit and any item in the nature of income or gain specially allocated to the Interest Holder in accordance with the provisions of Section 4; and (ii) an Interest Holder's Capital Account will be debited with the amount of money and the fair market value of any Company property distributed to the Interest Holder, the amount of any liabilities of the Interest Holder assumed by the Company (or which are secured by property contributed by the Interest Holder to the Company), the Interest Holder's distributive share of Loss (as defined herein) and any item in the nature of expenses or losses specially allocated to the Interest Holder in accordance with the provisions of Section 4. (iii) In the event the Gross Asset Value of the Company assets is adjusted, the Capital Accounts of the Members shall be adjusted to reflect the aggregate net adjustment as if the Company recognized Profit and Loss equal to the amount of such aggregate net adjustment and such Profit and Loss were allocated to the Members pursuant to Section 4 of this Agreement. (iv) If any Interest is transferred under the terms of this Agreement, the Transferee will succeed to the Capital Account of the Transferor to the extent the Capital Account is attributable to the transferred Interest. It is intended that the Capital Accounts of all Interest Holders will be maintained in compliance with the provisions of Regulation Section 1.704-l(b), and all provisions of this Agreement relating to the maintenance of Capital Accounts will be interpreted and applied in a manner consistent with that Regulation. (i) CAPITAL CONTRIBUTION means the total amount of cash and Gross Asset Value of any other assets contributed (or deemed contributed under Regulation Section 1.704-l(b)(2)(iv)(d)) to the Company by a Member, net of liabilities assumed or to which the assets are subject. (j) CAPITAL COMMITMENT has the meaning contained in Section 3(a). (k) CARRIED INTEREST means any equity or profit interest received by the Company in any investments made by any Funds managed by the Company. (l) CODE means the Internal Revenue Code of 1986, as amended, or any corresponding provision of any succeeding law. (m) CAPITAL CONTRIBUTION means the Capital Contributions made by the Members to the Company under Section 3(a) and as set forth on attached EXHIBIT A. (n) COMPANY means the limited liability company formed in accordance with this Agreement. (o) CONDITIONS OF TRANSFER has the meaning contained in Section 6(b). (p) DEPRECIATION means, for each fiscal year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization, or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis. (q) EMPYREAN means Empyrean Biosciences, Inc., a Wyoming corporation. 2 (r) ENTITY means any general partnership, limited partnership, corporation, limited liability company, joint venture, trust, estate, business trust, association, or other entity. (s) EXECUTIVE STEERING COMMITTEE has the meaning contained in 5(b)(i). (t) FISCAL QUARTER means each three (3) month period ending on March 31, June 30, September 30 and December 31 of each calendar year. (u) FORMULATION shall have the meaning assigned to such term in the License Agreement from IBC to IBC-Empyrean. (v) GROSS ASSET VALUE means, with respect to any asset of the Company, the Company's adjusted basis for federal income tax purposes; provided, however, that (a) the Gross Asset Value of any Company asset contributed by a Member to the Company as a Capital Contribution or distributed to a Member by the Company shall be the gross fair market value of such Company asset (computed without taking into account Code Section 7701 (g)) as reasonably determined by the Board as of the date of contribution or distribution, as the case may be; (b) the Gross Asset Value of all Company assets shall be adjusted to equal their respective gross fair market values, as reasonably determined by the Board, upon the liquidation of the Company for federal income tax purposes (including a deemed liquidation) pursuant to Code Section 708(b)(1)(B); (c) the Gross Asset Value of all Company assets shall be adjusted to equal their respective gross fair market values (taking into account Code Section 7701(g)), as reasonably determined by the Board, as of (i) the date of the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a DE MINIMUS Capital Contribution to the Company, or (ii) upon the distribution by the Company to a retiring or continuing Member of more than a de minimus amount of Company property or money. At all times, the Gross Asset Values shall be adjusted by Depreciation taken into account with respect to the Company's assets for the purposes of computing Profit and Loss. (w) INTEREST means a Person's share of the Profits and Losses of, and the right to receive distributions from, the Company. (x) INTEREST HOLDER means any Person who holds an Interest. (Y) IBC means International Bioscience Corporation, a Florida corporation. (z) IBC-EMPYREAN means IBC-Empyrean, L.L.C., a Delaware limited liability company. (aa) INVOLUNTARY WITHDRAWAL means, with respect to any Member, the occurrence of any of the following events: (i) the Member makes an assignment for the benefit of creditors; (ii) the Member files a voluntary petition of bankruptcy; 3 (iii) the Member is adjudged bankrupt or insolvent or there is entered against the Member an order for relief in any bankruptcy or insolvency proceeding; (iv) the Member files a petition or answer seeking the reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief for the Member under any statute, law, or regulation; (v) the Member seeks, consents to, or acquiesces in the appointment of a trustee for, receiver for, or liquidation of the Member or of all or any substantial part of the Member's properties or assets; (vi) the Member files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Member in any proceeding described in Subsections (i) through (v); (vii) any proceeding against the Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation, continues for ninety (90) calendar days after the commencement thereof, or the appointment of a trustee, receiver, or liquidator for the Member or all or any substantial part of the Member's properties without the Member's agreement or acquiescence, which appointment is not vacated or stayed for ninety (90) calendar days or, if the appointment is stayed, for ninety (90) calendar days after the expiration of the stay during which period the appointment is not vacated; (viii) if the Member is an individual, the Member's death or adjudication by a court of competent jurisdiction as incompetent to manage the Member's person or property; (ix) if the Member is acting as a Member by virtue of being a trustee of a trust, the termination of the trust; (x) if the Member is a partnership or another limited liability company, the dissolution and commencement of winding up of the partnership or limited liability company; or (xi) if the Member is a corporation, the dissolution or liquidation of the corporation or the revocation of its charter. (bb) LICENSE AGREEMENT FROM IBC TO EMPYREAN shall mean that certain license agreement dated as of August 9, 2000 between IBC and Empyrean relating to commercialization of the Licensed Products. (cc) LICENSE AGREEMENT FROM IBC TO IBC-EMPYREAN shall mean that certain license agreement between IBC and IBC-Empyrean relating to the commercialization of the Licensed Products in the Territory, in the form of EXHIBIT C attached hereto. (dd) LICENSED PRODUCTS shall have the meaning assigned to such term in the License Agreement from IBC to IBC-Empyrean. 4 (ee) MANAGER is a Person designated as such in Section 5(a). (ff) MEMBER means each Person who acquires Membership Rights under this Agreement and who signs this Agreement and each Person who subsequently is admitted as a Member of the Company and signs a counterpart hereto. (gg) MEMBERSHIP RIGHTS means all of the rights of a Member in the Company, including a Member's: (i) Interest; (ii) right to inspect the Company's books and records during normal business hours; and (iii) right to vote on any matters on which Members have such right hereunder. (hh) NEGATIVE CAPITAL ACCOUNT means a Capital Account with a balance of less than zero. (ii) NET CASH FLOW means all cash funds derived by the Company from any source, including any additional Capital Contributions made by any Member under Section 3(h), without reduction for any non-cash charges, but less cash funds used to pay current expenses and liabilities of the Company and to pay or establish reasonable reserves for future expenses, debt payments, capital improvements, and replacements as determined by the Board. Net Cash Flow will be increased by the reduction of any reserve previously established. (jj) NEW PRODUCT DEVELOPMENT BOARD has the meaning contained in 5(c)(i). (kk) OFFICERS has the meaning contained in Section 5(d). (ll) PERCENTAGE means, as to a Member, the percentage that the Member's Units bears to the total number of Units outstanding, and as to an Interest Holder who is not a Member, the Percentage of the Member whose Interest has been acquired by the Interest Holder, to the extent the Interest Holder has succeeded to that Member's Interest. (mm) PERSON means and includes any individual or Entity. (nn) PROFIT AND LOSS means, for each taxable year of the Company (or other period for which Profit or Loss must be computed), the Company's taxable income or loss, including the receipt of dividends, distributions or proceeds from the sale, exchange or other disposition of Carried Interests, determined in accordance with Code Section 703(a), with the following adjustments: (i) all items of income, gain, loss, deduction, or credit required to be stated separately pursuant to Code Section 703(a)(l) will be included in computing such taxable income or loss; (ii) any tax-exempt income of the Company, not otherwise taken into account in computing Profit or Loss, will be included in computing taxable income or loss; 5 (iii) any expenditures of the Company described in Code Section 705(a)(2)(B) (or treated as such pursuant to Regulation Section 1.704-l(b)(2)(iv)(i)) and not otherwise taken into account in computing Profit or Loss, will be subtracted from taxable income or loss; (iv) gain or loss resulting from any taxable disposition of Company property will be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding the fact that the Gross Asset Value differs from the adjusted basis of the property for federal income tax purposes; and (v) in lieu of the depreciation, amortization, or cost recovery deductions allowable in computing taxable income or loss, there will be taken into account Depreciation; and (vi) in the event that an Additional Member is admitted, or there is a redemption of the Units or Unit of any person (or interest therein), but more than a de minimis amount in either case, the Board may determine to restate the Gross Asset Value of the assets of the Company to equal their fair market value, and the gain or loss resulting from this restatement will be taken into account in determining Profit and Loss. (oo) PUT AGREEMENT shall mean that certain Put Agreement dated as of August 9, 2000, between IBC and Empyrean, relating to the rights and obligations of IBC or Empyrean in the event of a Change of Control (as such term is defined therein) of the parties thereto, in the form attached hereto as EXHIBIT F. (pp) REGULATION means the income tax regulations, including any temporary regulations, from time to time promulgated under the Code. (qq) REQUIREMENTS FOR SUBSTITUTION has the meaning contained in Section 6(d). (rr) SECRETARY means the Secretary of State of Delaware. (ss) TAX MATTERS PERSON has the meaning contained in Section 8(e). (tt) TERRITORY means all the countries of the world, excluding the United States and Brazil. (uu) TRADEMARK AGREEMENT FROM EMPYREAN TO IBC-EMPYREAN shall mean that certain trademark license agreement between Empyrean and IBC-Empyrean relating to use of the Prevent-X trademark in the Territory, in the form of EXHIBIT B attached hereto. (vv) TRADEMARK AGREEMENT FROM IBC TO IBC-EMPYREAN shall mean that certain trademark license agreement between IBC and IBC-Empyrean relating to the use of the Bug trademark in the Territory, in the form of EXHIBIT D attached hereto. (ww) TRANSFER means, when used as a noun, any voluntary sale, hypothecation, pledge, assignment, attachment, conveyance or other transfer, and, when used as a verb, means, voluntarily to sell, hypothecate, pledge, assign, convey or otherwise transfer. 6 (xx) TRANSFEREE has the meaning contained in Section 6(b). (yy) TRANSFEROR has the meaning contained in Section 6(b). (zz) UNIT means an interest in the Profit and Loss of the Company. (aaa) UNPAID CONTRIBUTION has the meaning contained in Section 3(b)(ii). (bbb) VALUATION GUIDELINES means in valuing the assets of the Company the following guidelines will be used: (i) Publicly traded securities that are listed on one or more recognized securities exchanges will be valued at last sales prices on the date of valuation or, if no sales occurred on such day, at the last bid prices thereon; (ii) Publicly traded securities that are traded only in the over-the-counter market will be valued at the average of the last bid prices (or in the case of securities listed on the NASDAQ National Market List, at the last sales prices) on the date of valuation; (iii) Publicly traded securities with restrictions on marketability will be valued at an appropriate discount from its otherwise applicable market price; and (iv) All other investments will be valued initially at cost, with subsequent adjustments to values which reflect, among other things, meaningful third-party transactions in the private market, or to fair market value as determined by the Board. (ccc) VOLUNTARY WITHDRAWAL means a Member's disassociation with the Company by means other than by a Transfer or an Involuntary Withdrawal. 2. FORMATION AND NAME: OFFICE; PURPOSE; TERM (a) ORGANIZATION. On August 3, 2000, Kashif Rashid, acting for the benefit of and at the request of the Board, executed the certificate of formation of the Company and delivered it to the Secretary of State of Delaware in accordance with and under the Act. The effective date of the filing is August 3, 2000. (b) NAME OF THE COMPANY. The name of the Company will be "IBC-Empyrean, L.L.C." (c) PURPOSES. The purpose of the Company will be to commercialize the Licensed Products and sell, market and distribute Licensed Products in the Territory. In that regard, the Company may license third party distributors throughout the Territory to sell, market and distribute Licensed Products. In order to be able to undertake the Company's primary contemplated market activities, on the date hereof, the Company shall enter into (i) the License Agreement from IBC to IBC-Empyrean, (ii) the Trademark License Agreement from IBC to IBC-Empyrean, (ii) the Trademark License Agreement from Empyrean to IBC-Empyrean, and (iv) such other agreements as the signatories hereto 7 unanimously determine to be necessary or useful. In addition, the Company may transact any and all other lawful business for which a limited liability company may be organized under Delaware law. The Company will have powers as are necessary to or reasonably connected with the accomplishment of the foregoing purposes. (d) TERM. The term of the Company will begin upon the filing of the certificate of formation of the Company in the Office of the Secretary and will continue in existence until December 31, 2020, unless its existence is terminated earlier under Section 7 of this Agreement. (e) PRINCIPAL PLACE OF BUSINESS. The principal place of the Company's business shall be determined by the Board of Managers. (f) REGISTERED AGENT AND OFFICE. The Company's initial registered office will be at the office of its registered agent at 1209 Orange Street, Wilmington, Delaware 19801, and the name of its initial registered agent at this address will be The Corporation Trust Company. The Board may change the registered office and registered agent from time to time by filing the address of the new registered office and the name of the new registered agent with the Secretary of State of Delaware under the Act. (g) MEMBERS. The name, present mailing address, taxpayer identification number, and each Member's Percentage are set forth on attached EXHIBIT A, which is part of this Agreement. 3. MEMBERS; CAPITAL; CAPITAL ACCOUNTS (a) CAPITAL COMMITMENTS. Each Member's capital commitment is set forth after its name on EXHIBIT A at the end of this Agreement (the "Capital Commitment"). Each Member will make capital contributions in respect of its Capital Commitment upon ninety (90) business days' written notice from the Board. No Member is entitled to interest on its contribution of capital to the Company. (b) NO ADDITIONAL CAPITAL CONTRIBUTIONS; NO PERSONAL LIABILITY. (i) No Member is required to contribute any capital to the Company in excess of the amount set forth in attached EXHIBIT A for the Member and no Member has any other personal liability for any obligation or liability of the Company. (ii) If a Member fails to pay when called all or any portion of any Capital Contribution, subject to the approval of the Board to take such action, the Board will request the non-defaulting Members to pay the unpaid amount of the defaulting Member's Capital Contribution (the "Unpaid Contribution"). If the Unpaid Contribution is contributed by any other Member, the defaulting Member's Units will be reduced by fifty percent (50%) and these forfeited Units will be allocated to each Member who makes up the Unpaid Contribution in proportion to the Member's contribution of Unpaid Contribution to the total amount of contributions of Unpaid Contribution by all Interest Holders. The Board will amend EXHIBIT A accordingly. This remedy is in addition to any other remedies allowed by law, in equity or by this Agreement. 8 (c) NO INTEREST ON CAPITAL CONTRIBUTIONS. Interest Holders may not be paid interest on their Capital Contributions. (d) RETURN OF CAPITAL CONTRIBUTIONS. Except as otherwise specifically provided in this Agreement, no Interest Holder has the right to receive the return of any Capital Contribution. (e) CAPITAL ACCOUNTS. A separate Capital Account will be maintained for each Interest Holder. (f) LOANS. Upon the approval of the Board, any Member may make or cause a loan to be made to the Company in any amount on terms agreed to by the Board and the Member. (g) ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company as Members and Membership Rights and Units may be created and issued to those Persons and to existing Members upon the prior approval of the Board and the prior approval of at least eighty percent (80%) of the outstanding Units. The Board will determine the terms and conditions at the time of admission and these terms and conditions will be approved by the vote of at least eighty percent (80%) of the outstanding Units. The terms of admission or issuance must specify the applicable Percentages and may provide for the creation of different classes or groups of Members having different rights, powers, and duties. (h) REPRESENTATIONS AND WARRANTIES. Each Member, and in the case of an Entity, the person(s) executing this Agreement on behalf of the Entity, hereby represents and warrants to the Company and each other Member (which representations and warranties will survive the execution and delivery of this Agreement) that: (a) if the Member is an Entity, that it is duly organized, validly existing, and in good standing under the laws of its state of organization and that it has full organizational power to execute, deliver and agree to this Agreement and to perform its obligations hereunder in accordance with its terms; (b) that the Member is acquiring its Membership Rights in the Company for the Member's own account as an investment and without an intent to distribute the Membership Rights; and (c) the Member acknowledges that the Membership Rights have not been registered under the Securities Act of 1933 or any state securities laws, and may not be resold or transferred by the Member without appropriate registration or the availability of an exemption from such requirements. 4. PROFIT, LOSS, AND DISTRIBUTIONS (a) DISTRIBUTIONS. (i) The Company will distribute to the Interest Holders within forty-five (45) days after the end of each Fiscal Quarter such percentage of the Company's Net Cash Flow for each such Fiscal Quarter as shall be determined by the Company's Board of Managers. 9 (ii) The Company is authorized to withhold any amounts with respect to any income, gain or profits allocated to any Member as required under the Code, Regulations or any provision of applicable state and local income tax law. Any amounts withheld shall be treated as amounts distributed to the Members pursuant to this Section 4. To the extent any distributions under this Section 4(a)(ii) exceed the amounts distributable to the Members under Section 4(a)(ii), any such excess shall be deemed to be an advance to the Members receiving such excess distributions. (b) ALLOCATION OF PROFIT OR LOSS. (i) PROFIT. Profit will be allocated as follows: (1) first, to those Interest Holders who have received allocations of Loss in prior periods, which have not been previously offset by Profit Allocations, among them in accordance with the ratios in which they shared such Losses, until the effect of such prior period Loss allocations has been eliminated (beginning with the most recent Loss allocations) from their Capital Account; and (2) second, to the Interest Holders in proportion to their Percentage. (ii) LOSS. Loss will be allocated as follows: (1) first, to those Interest Holders who have received allocations of Profits in prior periods in excess of the amount of distributions received by such Interest Holders and which have not previously been offset by Loss allocations ("Undistributed Profits"), among them in accordance with the ratios in which they shared these Undistributed Profits, until the effect of the prior period Undistributed Profits allocations has been eliminated (beginning with the most recent Profits allocations) from their Capital Accounts; and (2) the balance of any Loss will be allocated among the Interest Holders in proportion to their Percentage. (iii) EXPENSE REIMBURSEMENT. For purposes of determining Profit and Loss as herein provided, each Member and each Manager shall be entitled to a reimbursement of all out-of-pocket expenses incurred by it or them respectively, PROVIDED, HOWEVER, that any out-of-pocket expense in excess of $5,000 shall have been approved prior to incurrence thereof by the unanimous consent of the Managers, and that any such request for reimbursement shall be accompanied by reasonable supporting documentation. (c) REGULATORY ALLOCATIONS. (i) Notwithstanding anything herein to the contrary, the provisions of the applicable Regulations under Code Section 704 dealing with "qualified income offsets," "nonrecourse deductions," "partner nonrecourse debt," "minimum gain" and "partner nonrecourse debt minimum gain" as those terms are defined in the Regulations, are incorporated into this Agreement, and allocations of items of income, gain, loss and deduction shall be made in accordance with the applicable provisions of the Regulations 10 (ii) The provisions of this Section 4(c)(i) (collectively, the "Regulatory Provisions") are intended to comply with certain requirements of the Regulations. It is the intent of the Members that, to the extent possible, all allocations pursuant to the Regulatory Provisions shall be offset either with other allocations pursuant to the Regulatory Provisions or, if necessary, with curative allocations of other items of income, gain, loss or deduction pursuant to this Section 4(c)(ii). Therefore, notwithstanding any other provision of this Agreement, other than the Regulatory Provisions, allocations pursuant to the Regulatory Provisions shall be taken into account in allocating other items of income, gain, expense or loss among the Members so that, to the extent possible, the net amount of such allocations of other items and the allocations pursuant to the Regulatory Provisions to each Member are equal to the net amount that would have been allocated to such Member is the Regulatory Provisions were not part of this Agreement (d) LIQUIDATION AND DISSOLUTION. (i) If the Company is liquidated, the remaining assets of the Company will be distributed to the Interest Holders in accordance with the positive balances in their respective Capital Accounts, after taking into account the allocations of Profit or Loss under this Section 4. (ii) No Interest Holder is obligated to restore a Negative Capital Account. (e) GENERAL. (i) Except as otherwise specifically provided in this Agreement, the timing and amount of all distributions will be determined by the Board. (ii) If any assets of the Company are distributed in kind to the Interest Holders, those assets will be valued by the Board in accordance with the Valuation Guidelines, and any Interest Holder entitled to any interest in those assets will receive that interest as a tenant-in-common with all other entitled Interest Holders. Unless the Members otherwise agree, the fair market value of the assets will be determined by an independent appraiser who will be selected by the Board. The Profit or Loss for each unsold asset will be determined as if the asset had been sold at its fair market value, and the Profit or Loss will be allocated as provided in this Section 4 and will be properly credited or charged to the Capital Accounts of the Interest Holders prior to the distribution of the assets in liquidation under Section 4(d). (iii) All Profit and Loss will be allocated, and all distributions will be made to the Persons shown on the records of the Company to have been Interest Holders as of the last day of the taxable year for which the allocation or distribution is to be made. Notwithstanding the foregoing, if there is a Transfer or an Involuntary Withdrawal during the taxable year, the Profit and Loss will be allocated between the original Interest Holder and the successor on the basis of the number of days each was an Interest Holder during the taxable year; provided, however, the Company's taxable year will be segregated into two or more segments in order to account for Profit, Loss, or proceeds attributable to any extraordinary, nonrecurring items of the Company, or otherwise as required by Code Section 706 and the regulations thereunder. 11 (iv) The Board is hereby authorized, upon the advice of the Company's tax counsel, to amend this Section 4 to comply with the Code and the Regulations promulgated under Code Section 704(b); provided, however, that no amendment will materially affect distributions to an Interest Holder without the Interest Holder's prior written consent. (f) SECTION 704(C) ALLOCATION. (i) Any item of income, gain, loss and deduction with respect to any property (other than cash) that has been contributed by a Member to the capital of the Company and which is required or permitted to be allocated to such Member for income tax purposes under Code Section 704(c) so as to take into account the variation between the tax basis of such property and its Gross Asset Value at the time of its contribution shall be allocated to such Member solely for income tax purposes in the manner so required to permitted. (ii) If, under Regulations Section 1.704-1(b)(2)(iv)(f), Company property that has been revalued is properly reflected in the Capital Accounts and on the books of the Company at a Gross Asset Value that differs from the adjusted tax basis of such property, then depreciation, depletion, amortization and gain or loss with respect to such property shall be shared among the Members in a manner that takes account of the variation between the adjusted tax basis and Gross Asset Value of property contributed to the Company are taken into account (as provided in the preceding paragraph) in determining the Member's share of tax items under Code Section 704(c). (iii) Allocations pursuant to this Section 4(f) are solely for the purposes of federal, state and local taxes. As such, they shall not affect or in any way be taken into account in computing a Member's Capital Account or share of profits, losses or other items of distributions pursuant to any provision of this Agreement. (g) DIVISION AMONG MEMBERS AND INTEREST HOLDERS. Except as otherwise provided herein, all Profits, Losses and distributions to the Member(s) and Interest Holder(s) will be divided among them in proportion to their Units. 5. MANAGEMENT: RIGHTS, POWERS, AND DUTIES (a) MANAGEMENT. (i) BOARD OF MANAGERS. The Company will be managed by the Board. The Board will consist of six (6) Managers; three Managers to be appointed by IBC and three Managers to be appointed by Empyrean. The Managers will serve at the request of IBC and Empyrean and IBC and Empyrean will have the right to replace each of the three Managers they were entitled to appoint without the approval of the Board; provided, however, that any successor to the original appointees shall be either the Chairman of the Board, Chief Executive Officer, Chief Operating Officer or Chief Financial Officer of Empyrean or IBC, as the case may be. Initially, the Board will consist of Lawrence D. Bain, Richard C. Adamany, Bennett S. Rubin, Sara Gomez de Ferro, David Thornburgh, M.D. and Andrea Ferrari. A quorum of the Board shall be composed of all six Managers. 12 (1) The Board will have full, exclusive, and complete discretion, power, and authority, subject in all cases to the other provisions of this Agreement and the requirements of applicable law, to manage, control, administer, and operate the business and affairs of the Company for the purposes herein stated, and to make all decisions affecting such business and affairs, whether or not in the ordinary course of such business and affairs, and to perform any and all other acts or activities customary or incident to the management of the Company's business, including, without limitation, the making of any distributions to the Members. (2) The Board may meet at the principal offices of the Company or at any other place as may be agreed upon from time to time by the Board at any time as may be determined by the Board or upon the request of any Manager or the President upon ten (10) days' notice to all the Managers. Meetings may be held by telephone. The Board will cause written minutes to be prepared of all actions taken by the Board and will cause a copy thereof to be delivered to each Manager within fifteen (15) days after the meeting. (3) No action may be taken at a meeting of the Board unless a majority of the Managers is present at such meeting. (4) Each Manager is entitled to cast one vote with respect to any decision made by the Board, except with respect to a determination to seek indemnification under Section 5(h), in which event a Manager seeking indemnification may not vote with respect to his or her indemnification. Any action to be taken by the Board requires an affirmative vote of a majority of the Managers. Approval or action by the Board constitutes approval or action by the Company and is binding on the Members. (5) The Board will first attempt to settle and vote on each and every matter presented to it respecting the management of the affairs of the Company in good faith. In the event the business of the Company is suffering or is threatened with irreparable injury because the Board is so divided respecting the management of the affairs of the Company that the required vote for action by the Board cannot be obtained within thirty (30) days from the date such vote is first presented to the Board, the Members and the Board hereby agree to submit and have such divided vote decided by final and binding arbitration conducted in a mutually agreed location by one neutral arbitrator, in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association ("AAA"). A judgment may be entered in any court having competent jurisdiction. The arbitrator will not have the power to award any consequential or punitive damages. The arbitrator will not have the power to order pre-hearing discovery of documents or the taking of depositions, but may compel attendance of witnesses and the production of documents at the hearing. This Section will be governed and enforced under the Federal Arbitration Act, 9 U.S.C. Sections 1 to 16. (6) Any action to be taken by the Board may be taken without a meeting if consents in writing setting forth the action so taken are signed by all Managers. 13 (ii) LIMITATION ON AUTHORITY OF MEMBERS. (1) No Member is an agent of the Company solely by virtue of being a Member, and no Member has authority to act for the Company solely by virtue of being a Member. (2) This Section 5(a)(ii)(2) supersedes any authority granted to the Members under the Act. Any Member who takes any action or binds the Company in violation of this Section will be solely responsible for any loss, cost, and expense incurred by the Company (including, without limitation, reasonable attorneys' fees) as a result of the unauthorized action and that Member will indemnify and hold the Company and its officers harmless with respect to all loss, cost, or expense. (b) EXECUTIVE STEERING COMMITTEE. (i) Subject to the approval of a Business Plan by the Board, the Board may appoint an executive steering committee (the "Executive Steering Committee") to manage, control, administer and operate the following business and affairs of the Company: (1) all sales, marketing and distribution of the Licensed Products in the Territory; (2) licensing of all third-party distributors; (3) production scheduling; and (4) financial and administrative functions as delineated in the Business Plan. In addition, the Executive Steering Committee shall be responsible for the following business and activities, if any, of the Company: (1) all research and development; (2) product improvement; (3) manufacturing facility approvals; (4) clinical trials; (5) product testing; (6) quality control; (7) lot tracking of the products; (8) label claims; (9) product registration; and (10) regulatory approvals. (c) NEW PRODUCT DEVELOPMENT BOARD. (i) Development of all new products shall be managed, controlled, administered and operated by the new product development board (the "New Product Development Board") to be appointed by the Board. The New Product Development Board shall consist of four (4) members to include two (2) medical/scientific personnel of IBC and two (2) marketing personnel of Empyrean, in accordance with mutually agreed upon criteria which will take into account both scientific and marketing issues. In the event the Company does not desire to distribute and market a product developed by IBC, IBC may independently market and distribute such product at its own expense. (d) OFFICERS. (i) APPOINTMENT OF OFFICERS BY THE BOARD. The Board may appoint one or more officers of the Company ("Officers") and may delegate to these Officers the day-to-day ordinary and usual business and affairs of the Company, consistent with the terms hereof. The terms of employment of these Officers may be governed by employment contracts or similar documents with the Officers. In addition, the Officers will have the responsibility of implementing the decisions of the Board and Members and making all of those decisions specially delegated to the Officers by the Board. Notwithstanding anything contained herein to the 14 contrary, unless specifically delegated to the Officers under this Agreement or in accordance with an instruction from the Board from time to time, all decision making authority is reserved for the Board. The acts of the Officers will bind the Members and the Company when these acts are within the scope of the Officers' authority as provided in this Agreement. The Officers are subject to the direction of the Board at all times and will keep the Board informed about all material matters relating to the Company. (ii) TENURE. Each Officer will hold office from the date of appointment until removed by the Board or until such Officer will resign. (iii) RESIGNATION AND REMOVAL. Any Officer may resign at any time by giving written notice to the Board, and, unless otherwise specified therein, the acceptance of such resignation will not be necessary to make it effective. Any Officer may be removed at any time by the Board, with or without cause. (iv) SALARIES. The salaries of the Officers will be fixed from time to time by the Board. (v) INDEMNIFICATION OF OFFICERS. To the maximum extent permitted under the Act and any other applicable law, the Company will indemnify the Officers and make advances for reasonable expenses. (vi) REMOVAL. Any one or more of the Officers may be removed at any time, with or without cause, by the Board, subject to the terms of any employment agreements that the Officers may have with the Company. The removal of an Officer who is also a Member will not affect such person's rights as a Member and will not constitute a termination of a Member. (vii) OFFICERS. (1) CO-CHAIRMEN. The Co-Chairmen will preside at all meetings of the Board and the Members, and will exercise and perform any other duties as assigned by the Board. Lawrence D. Bain and Sara Gomez de Ferro initially will be the Co-Chairmen of the Board. (2) OTHER OFFICERS. The Company may, at the discretion of the Board, appoint additional Officers including, without limitation, a President, a Chief Financial Officer, one or more Vice-Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers. One person may hold two or more offices. When the incumbent of an office is unable to perform its duties, or where there is not an incumbent of an office, the duties of the Officer will be performed by the person specified by the Board. (e) VOTE OF THE MEMBERS. The Company may not take any of the following actions without the approval of one hundred percent (100%) of the outstanding Units: (i) sell, convey, or otherwise dispose of all or substantially all of its property or business or merge into or consolidate with any other entity or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of; 15 (ii) dissolve, liquidate or wind up the activities of the Company; (iii) acquire any other business; (iv) change the nature of the Company's business; (v) alter or change the rights, preferences or privileges of the Units; (vi) increase or decrease the total number of Units outstanding; (vii) authorize or issue, or obligate itself to issue, any additional security; (viii) amend this Agreement; (ix) change the number of managers or composition of the Board. (f) PERSONAL SERVICES. No Member is required to perform services for the Company solely by virtue of being a Member. Unless approved by the Board, no Member may perform services for the Company or be entitled to compensation for services performed for the Company. (g) DUTIES OF PARTIES. (i) The Board will devote time to the business and affairs of the Company necessary to carry out the Board's duties set forth in this Agreement. (ii) Except as otherwise expressly provided in Section 5(e), nothing in this Agreement may be deemed to restrict in any way the rights of any Member, or of any Affiliate of any Member, to conduct any other business or activity whatsoever, and no Member is accountable to the Company or to any Member with respect to that business or activity even if the business or activity competes with the Company's business, so long as such business or activity is not a microbicide product that is the same as a Licensed Product. The organization of the Company will be without prejudice to any Member's respective rights (or the rights of any Member's respective Affiliates) to maintain, expand, or diversify other interests and activities and to receive and enjoy these profits or compensation. Each Member waives any rights the Member may otherwise have to share or participate in other interests or activities of any other Member or that Member's Affiliates. (iii) Each Member understands and acknowledges that the conduct of the Company's business may involve business dealings and undertakings with Members and their Affiliates. In any of those cases, those dealings and undertakings will be at arm's length and on commercially reasonable terms. 16 (h) LIABILITY AND INDEMNIFICATION. (i) The Board, the members of the Advisory Board, and the Officers are not liable, responsible, or accountable, in damages or otherwise, to any Member or to the Company for any act performed by such Person within the scope of the authority conferred on such Person by this Agreement, except for fraud, gross negligence, or an intentional breach of this Agreement. (ii) The Company will indemnify the Board (and each of its managers, officers, shareholders, employees and agents), the members of the Advisory Board, the Officers and each Member for any and all losses, liabilities, damages, judgments, amounts paid in settlement, costs and expenses (including, without limitation, attorneys' fees) to which any Person may actually incur or become subject in connection with any threatened, pending or completed action, suit, or proceeding to which any of them was or is made a party or threatened to be made a party by reason of the direct or indirect association by them with the Company or in connection with any involvement with any portfolio company (to the extent not indemnified by such portfolio company) as and to the fullest extent permitted by the Act and applicable law, provided the Person seeking indemnification was not grossly negligent or engaged in willful malfeasance or in intentional breach of this Agreement. Whenever any indemnification has been paid to or expenses advanced to any such Person, this occurrence will be reported to the Members prior to or with the next notice of a meeting of Members. (iii) The Company shall obtain liability insurance for all Managers and Officers. All Members shall bear the costs of such insurance equally. (i) POWER OF ATTORNEY. (i) GRANT OF POWER. Each Member hereby constitutes and appoints each member of the Board as the Member's true and lawful attorney-in-fact ("Attorney-in-Fact"), and in the Member's name, place and stead, to make, execute, sign, acknowledge, deliver, and file: (1) the Certificate of Formation of the Company; (2) all documents (including amendments to the Certificate of Formation) that the Attorney-in-Fact deems appropriate to reflect any amendment, change, or modification of this Agreement; (3) any and all other certificates or other instruments required to be filed by the Company under the laws of the State of Delaware or of any other state or jurisdiction, including, without limitation, any certificate or other instruments necessary in order for the Company to continue to qualify as a limited liability company under the laws of the State of Delaware; (4) one or more applications to use an assumed name; and (5) all documents that may be required to dissolve and terminate the Company and to cancel its Certificate of Formation. 17 (ii) IRREVOCABILITY. The foregoing power of attorney is irrevocable and is coupled with an interest, and, to the fullest extent permitted by applicable law, will survive the death or disability of a Member. It will also survive the Transfer of an Interest, except that if the Transferee is approved for admission as a Member, this power of attorney will survive the delivery of the assignment for the sole purpose of enabling the Attorney-in-Fact to execute, acknowledge and file any documents needed to effectuate the substitution. Each Member will be bound by any representations made by the Attorney-in-Fact acting in good faith pursuant to this power of attorney, and each Member hereby waives any and all defenses which may be available to contest, negate or disaffirm the action of the Attorney-in-Fact taken in good faith under this power of attorney. 6. TRANSFER OF INTERESTS AND WITHDRAWALS OF MEMBERS (a) RESTRICTIONS ON TRANSFER. The Members have agreed that it is not desirable that any Person Transfer any of its Units, Membership Rights or Interest to non-Member Persons because of the Members' desire to ensure continuity of ownership of the Company. No Person shall sell or otherwise Transfer all or any portion of or any interest or rights in such Person's Units, Membership Rights or Interest without the majority approval of the remaining non-transferring Members. The Members agree that the foregoing Transfer restriction is necessary for the operation of the Company's business, is reasonable in view of the Company's purpose and the relationship of the Members, and may be specifically enforced by the Company or any of its Members. (b) CONDITIONS OF TRANSFERS. Subject to Section 6(a) above and subject to any restrictions on transferability required by law (including the Securities Act of 1933, as amended, any state securities or "Blue Sky" law and the rules promulgated thereunder) if any Person ("Transferor") Transfers to any other Person ("Transferee") all or any portion of or any interest or rights in such Person's Membership Rights or Interest, the following conditions ("Conditions of Transfer") must be satisfied: (i) The Transfer may not require registration of Interests or Membership Rights under any federal or state securities laws; (ii) The Transferee shall deliver to the Board an unqualified opinion of counsel in form and substance satisfactory to counsel designated by the Board, that neither the Transfer nor any offering in connection therewith violates any provision of any federal or state securities law; (iii) The Transferee shall execute a statement that the Membership Rights or Interest are being acquired for investment purposes and not with a view to distribution, fractionalization or resale; (iv) The Transferee shall deliver to the Company a written instrument agreeing to be bound by the terms of this Agreement; 18 (v) The Board shall receive a favorable opinion of counsel in form and substance satisfactory to counsel designated by the Board that the Transfer will not result in the termination of the Company under the Act; (vi) The Transfer will not result in the Company being subject to the Investment Company Act of 1940, as amended; and (vii) The Transferor or the Transferee shall deliver the following information to the Company: (1) the Transferee's taxpayer identification number; and (2) the Transferee's initial tax basis in the Transferred Interest. (c) STATUS OF TRANSFEREE. Subject to Section 6(a) above, if the Conditions of Transfer are satisfied, then a Member or Interest Holder may Transfer all or any portion of that Person's Interest. Unless the Transferee is admitted as a substitute Member under Section 6(d), the Transfer of an Interest under Section 6(b) may not result, however, in the Transfer of any of the Transferor's other Membership Rights, if any, and the Transferee of the Interest has no right to: (i) become a Member; (ii) exercise any Membership Rights other than those specifically pertaining to the ownership of an Interest; (iii) act as an agent of the Company; (iv) inspect the Company's books and records; (v) receive an accounting of Company financial affairs; or (vi) otherwise take part in the Company's business or exercise the rights of a Member under this Agreement. If the Transfer is of all Membership Rights and the conditions set forth in Section 6(d) are satisfied, the Transferee will succeed to all Membership Rights of a Member who Transfers such Membership Rights. (d) REQUIREMENTS FOR SUBSTITUTION. Subject to Section 6(a), no Transferee of a Member's Membership Rights under Section 6(c) will have the right to become a Member unless and until all of the following conditions ("Requirements for Substitution") are satisfied: (i) The admission is approved by the Board; (ii) A duly executed and acknowledged written instrument of transfer approved by the Board has been filed with the Company setting forth (1) the intention of the Transferee to be admitted as a Member; (2) the notice address of the Transferee and the Transferee's taxpayer identification number; and (3) the number of Units transferred to the Transferee; (iii) Each of the opinions of counsel specified in Section 6(b); (iv) Written acceptance and adoption by the Transferee of the provisions of this Agreement; (v) The Transferee's completion of a purchaser qualification questionnaire or similar document which will enable counsel for the Company to determine whether such proposed substitution is consistent with the requirements of a private placement exemption from registration under the Securities Act of 1933 and relevant state law; and 19 (vi) A transfer fee has been paid to the Company sufficient to cover all costs and expenses in connection with the transfer and admission, including, but not limited to, reasonable attorneys' fees incurred in connection with the legal opinions referred to in Section 6(b). (e) TRANSFERS IN VIOLATION. The Transfer of any Membership Rights or Interests in violation of the prohibitions contained in this Section 6 will be deemed invalid, null and void, and of no force or effect. Any Person to whom Membership Rights are attempted to be transferred in violation of this Section 6 will not be entitled to exercise any rights or powers of a Member, but will be entitled, to the maximum extent permitted by the Act, to share in the Profits and Losses and to receive distributions from the Company to the extent that the Transferor was entitled to share in such items. (f) VOLUNTARY WITHDRAWAL. Without the Board's prior consent, no Member will have the right or power to make a Voluntary Withdrawal from the Company and any Member who makes a Voluntary Withdrawal will be in intentional breach of this Agreement. No Member who will Voluntary Withdrawal will be entitled to receive, in liquidation of such Member's Interest, under the Act or otherwise, the fair value of the Member's Interest on the date of Voluntary Withdrawal or any other distribution whatsoever. (g) INVOLUNTARY WITHDRAWAL. Immediately upon the occurrence of an Involuntary Withdrawal, the successor of the withdrawn Member will thereupon become an Interest Holder but will not become a Member, unless the Requirements for Substitution are satisfied. The successor Interest Holder will have all the rights of an Interest Holder but neither the predecessor nor the successor Interest Holder will be entitled to receive in liquidation of the Interest, pursuant the Act, the fair market value of the Member's Interest as of the date the Member involuntarily withdrew from the Company. (h) CHANGE OF CONTROL. In the event of any Change of Control (as such term is defined in the Put Agreement attached hereto as EXHIBIT F) of either IBC or Empyrean, the party not subject to such Change of Control, being either IBC or Empyrean, as the case may be, shall have the right, subject to the terms of the Put Agreement, to sell their shares to the party subject to such Change of Control or to a third party upon the terms and conditions as described therein. 7. DISSOLUTION, LIQUIDATION, AND TERMINATION OF THE COMPANY (a) EVENTS OF DISSOLUTION. The Company will be dissolved upon the happening of any of the following events: (i) When the period fixed for its duration in Section 2(d) has expired; (ii) Upon the sale of all or substantially all of the assets of the Company and the distribution of the Net Cash Flow under Section 4(a); (iii) Upon written notice of the Board; provided, however, the Involuntary Withdrawal or Voluntary Withdrawal of a Member will not cause the dissolution of the Company under the Act and the business of the Company will continue until the Company is dissolved upon the happening of one of the above events; or 20 (iv) Upon the approval of the Members under Section 5(e)(ii). (b) PROCEDURE FOR WINDING UP AND DISSOLUTION. If the Company is dissolved, the Board will wind up its affairs. On winding up of the Company, (i) the assets of the Company will, to the maximum extent practicable, be reduced to cash, and such cash shall be distributed, first, to pay the expenses and fees of winding up the business of the Company incurred by the Board (including, without limitation, reasonable attorneys' fees), then to creditors of the Company, including Interest Holders who are creditors, in satisfaction of the liabilities of the Company, and then to the Interest Holders in accordance with Section 4(d). In the event the Company has assets that are not reduced to cash, the Interest Holders will initially attempt to agree between themselves as to how any such assets shall be distributed. In the event the Interest Holders are not able to come to agreement with respect to such distributions, the issue shall be submitted to arbitration in accordance with the provisions of Section 9(m) hereof. (c) FILING OF CERTIFICATE OF DISSOLUTION. If the Company is dissolved, the Board will promptly file a Certificate of Dissolution (the "Certificate") with the Secretary. If there is no Board, then the Certificate will be filed by the remaining Members; if there are no remaining Members, the Certificate will be filed by the last Person to be a Member; if there is neither a Board, remaining Members, or a Person who last was a Member, the Certificate will be filed by the legal or personal representatives of the Person who last was a Member. 8. BOOKS, RECORDS, ACCOUNTING, AND TAX ELECTIONS (a) BANK ACCOUNTS. All funds of the Company will be deposited in a bank account or accounts maintained in the Company's name. The Board will determine the institution or institutions at which the accounts will be opened and maintained, the types of accounts, and the Persons who will have authority with respect to the accounts and the funds therein. (b) BOOKS AND RECORDS. (i) The Board will keep or cause to be kept complete and accurate books and records of the Company and supporting documentation of the transactions with respect to the conduct of the Company's business. The records will include, but not be limited to, complete and accurate information regarding the state of the business and financial condition of the Company, a copy of the Certificate of Formation and this Agreement and all amendments to the Certificate of Formation and this Agreement; a current list of the names, the last known business, residence, or mailing addresses, the Capital Contributions, and the dates of initial membership of all Members; and the Company's federal, state or local tax returns. (ii) The books and records will be maintained in accordance with sound accounting practices and will be available at the Company's principal office for examination by any Member or the Member's duly authorized representative at any and all reasonable times during normal business hours. 21 (iii) Each Member will promptly reimburse the Company for all costs and expenses incurred by the Company in connection with the Member's inspection and copying of the Company's books and records. (c) ANNUAL ACCOUNTING PERIOD. The annual accounting period of the Company will be its taxable year. The Company's taxable year will be selected by the Board, subject to the requirements and limitations of the Code. (d) REPORTS. Within ninety (90) days after the end of each taxable year of the Company, the Board will cause to be sent to each Person who was a Member at any time during the accounting year then ended: (i) audited annual financial statements of the Company, to be prepared by the accountant then currently retained by the Board to conduct the Company's annual audits, in accordance with standards issued by the American Institute of Certified Public Accountants; and (ii) a report summarizing the investments and operations of the Company. In addition, within ninety (90) days after the end of each taxable year of the Company, the Board will cause to be sent to each Person who was an Interest Holder at any time during the taxable year then ended, that tax information concerning the Company which is necessary for preparing the Interest Holder's income tax returns for that year. Within forty-five (45) days after the end of each Fiscal Quarter, the Board will cause to be sent to each Person who was an Interest Holder at any time during the Fiscal Quarter, an unaudited quarterly Company financial report showing each Interest Holder's Capital Account and any additions thereto or subtractions therefrom. Within twenty (20) days after the end of each month, the Board will cause to be sent to each Person who was a Member at the end of such month unaudited monthly operating statements of the Company. (e) TAX MATTERS PERSON. A Member selected by the Board will be the Company's "tax matters person" ("Tax Matters Person") for purposes of Section 6221 et seq. of the Code. The Tax Matters Person will have all powers and responsibilities provided in Code Section 6221, et seq. or such other provisions as may become applicable to limited liability companies. The Tax Matters Person will keep all Members reasonably informed of all notices from government taxing authorities which may come to the attention of the Tax Matters Person. The Company will pay and be responsible for all reasonable third-party costs and expenses incurred by the Tax Matters Person in performing those duties. A Member will be responsible for any and all costs and expenses incurred by the Member with respect to any tax audit or tax-related administrative or judicial proceeding against any Member, even though it relates to the Company. The Tax Matters Person may not compromise any dispute with the Internal Revenue Service without the approval of a majority of the Units. Initially, Empyrean shall be the Tax Matters Person. (f) TAX ELECTIONS. The Board will have the authority to make all Company elections permitted under the Code, including, without limitation, elections of methods of depreciation and elections under Code Section 754. The decision to make or not make an election will be at the Board's sole and absolute discretion. 22 (g) TITLE TO COMPANY PROPERTY. (i) Except as provided in Section 8(g)(ii) all real and personal property and assets acquired by the Company will be acquired and held by the Company in its name until distributed to the Members in accordance with the terms hereof. (ii) The Board may direct that legal title to all or any portion of the Company's property and assets be acquired or held in a name other than the Company's name. Without limiting the foregoing, the Board may cause title to be acquired and held in its name or in the names of trustees, nominees, or straw parties for the Company. It is expressly understood and agreed that the manner of holding title to the Company's property (or any part thereof) is solely for the convenience of the Company, and all of that property will be treated as Company property. 9. GENERAL PROVISIONS (a) ASSURANCES. Each Member will execute all certificates and other documents and will do all filing, recording, publishing and other acts as the Board reasonably deems appropriate to comply with the requirements of law for the formation and operation of the Company and to comply with any laws, rules, and regulations relating to the acquisition, operation, or holding of the property and assets of the Company. (b) NOTIFICATIONS. Any notice, demand, consent, election, offer, approval, request, or other communication (collectively, a "notice") required or permitted under this Agreement must be in writing and (i) delivered personally, (ii) sent by certified or registered U.S. mail, postage prepaid, return receipt requested, (iii) sent by recognized overnight delivery service, or (iv) sent by facsimile transmittal. A notice must be addressed to an Interest Holder at the Interest Holder's last known address on the records of the Company. A notice to the Company must be addressed to the Company's principal office. A notice delivered personally will be deemed given only when acknowledged in writing by the person to whom it is delivered. A notice that is sent by mail will be deemed given five (5) business days after it is mailed. A notice sent by recognized overnight delivery service will be deemed given when received or refused. A notice sent by facsimile will be deemed given when sent, provided notice by personal delivery or overnight delivery service is effective the day following such facsimile transmission. Any party may designate, by notice to all of the others, substitute addresses or addressees for notices; and, thereafter, notices are to be directed to those substitute addresses or addressees. All notices to IBC and Empyrean shall be sent to: 23 As to IBC: Ms. Sara Gomez de Ferro International Bioscience Corporation 777 South Flagler Drive Phillips Point Building East Tower, Suite 909 West Palm Beach, Florida 33401 With a copy to: Mr. Joseph L. Raia, Esq. Holtzman, Krinzman, Equels & Furia 2601 South Bayshore Drive, Suite 600 Miami, Florida 33133 As to Empyrean: Mr. Richard C. Adamany Empyrean Bioscience, Inc. 23800 Commerce Park Road, Suite A Cleveland, Ohio 44122 With a copy to: Mr. Richard H. Kronthal, Esq. Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, NY 10022 (c) SPECIFIC PERFORMANCE. The parties recognize that irreparable injury will result from a breach of any provision of this Agreement and that money damages will be inadequate to fully remedy the injury. Accordingly, in the event of a breach or threatened breach of one or more of the provisions of this Agreement, any party who may be injured (in addition to any other remedies which may be available to that party) is entitled to one or more preliminary or permanent orders (i) restraining and enjoining any act that would constitute a breach or (ii) compelling the performance of any obligation which, if not performed, would constitute a breach. (d) COMPLETE AGREEMENT. This Agreement is the sole and complete statement of the Members of their rights and obligations with respect to the subject matter hereof. This Agreement is an integrated agreement and replaces and supersedes any and all previous obligations and agreements between the Members. The Members hereto recognize and agree that no representations or warranties have been made except as set forth in this Agreement. Except as may otherwise be expressly provided herein, by signing this Agreement the Members expressly release each other from any and all existing obligations that pre-date this Agreement as if such obligations have been fully performed and satisfied. 24 (e) APPLICABLE LAW. All questions concerning the construction, validity, and interpretation of this Agreement and the performance of the obligations imposed by this Agreement will be governed and enforced by the internal law, not the law of conflicts, of the State of Delaware. (f) SECTION TITLES. This Agreement's headings are inserted as a matter of convenience only, and do not define, limit, or describe the scope of this Agreement or the intent of its provisions. (g) BINDING PROVISIONS. This Agreement is binding upon, and inures to the benefit of, the parties hereto and their respective heirs, executors, administrators, personal and legal representatives, successors, and permitted assigns. (h) JURISDICTION AND VENUE. Subject to subsection (m) below, any action or proceeding in any way, manner or respect arising out of this agreement or arising from any dispute or controversy arising in connection with this Agreement, will be litigated only in the courts having situs within Miami-Dade County or Palm Beach County in the State of Florida, and each member consents and submits to the jurisdiction of any state or federal court located within such county and state with respect to any such proceeding. Each maker hereby waives any right such maker may have to transfer or change the venue of any action or litigation brought in accordance with this section. (i) TERMS. Common nouns and pronouns will be deemed to refer to the masculine, feminine, neuter, singular and plural, as the identity of the Person may in the context require. (j) SEPARABILITY OF PROVISIONS. Each provision of this Agreement is considered separable; and if, for any reason, any provision or provisions herein are determined to be invalid and contrary to any existing or future law, this invalidity will not impair the operation of or affect those portions of this Agreement which are valid. (k) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which will be deemed an original and all of which, when taken together, constitute one and the same document. The signature of any party to any counterpart will be deemed a signature to, and may be appended to, any other counterpart. (l) PARTITION. To the furthest extent permitted by law, each Member irrevocably waives any right that the Member may have to maintain any action for partition with respect to Company property or assets. (m) ARBITRATION. (i) The parties will first attempt to settle each and every dispute, controversy or claim, whether based in contract, tort, statute, fraud, misrepresentation, or any other legal theory, arising out of or relating to this Agreement ("Dispute(s)"), through good faith negotiations. Except for any 25 actions brought for wrongful termination or to seek termination of this Agreement, any Dispute not resolved within 30 days or such other period as the parties mutually agree in writing, will be then settled by final and binding arbitration conducted in a mutually agreed location by one neutral arbitrator, in accordance with this Section 9(m) and with the then current Commercial Arbitration Rules of the AAA. Any dispute arbitrated in accordance with the terms of this agreement shall be conducted in Miami-Dade County or Palm Beach County, Florida by one neutral arbitrator. Each party will bear its own expenses and the parties will equally share the filing and other administrative fees of the AAA and the expenses of the arbitrator. An award may be confirmed and judgment entered in any court having competent jurisdiction. The arbitrator will not have the power to award any consequential or punitive damages. The arbitrability of any Dispute, including those as to the enforceability of this Section, the applicability of statutes of limitations and questions of issue preclusion, will be determined solely by the arbitrator. This Section will be governed and enforced under the Federal Arbitration Act, 9 U.S.C. Sections 1 to 16. The local law of the State of Delaware, except its laws or arbitration and choice of laws, will apply to all substantive matters pertaining to this Agreement. Any party may seek a temporary injunction in a court of competent jurisdiction to the limited extent necessary to preserve the status quo during the pendency of final resolution of a Dispute in accordance with this Section. The statute(s) of limitation applicable to any Dispute will be tolled upon initiation of the Dispute resolution procedures under this Section and will remain tolled until the Dispute is resolved under this Section. 26 IN WITNESS WHEREOF, the parties hereto do hereby sign, enter into and acknowledge this Agreement on the date first written above. MEMBERS INTERNATIONAL BIOSCIENCE CORPORATION By: ------------------------------------- Title: ---------------------------------- EMPYREAN BIOSCIENCE, INC. By: ------------------------------------- Title: ---------------------------------- COMPANY IBC-EMPREAN LLC FOR IBC By: ------------------------------------- Title: ---------------------------------- FOR EMPYREAN By: ------------------------------------- Title: ---------------------------------- 27 IBC-EMPYREAN, L.L.C. OPERATING AGREEMENT EXHIBIT A LIST OF MEMBERS, CAPITAL, NUMBER OF UNITS AND PERCENTAGES COMMON MEMBERS: PERCENTAGE INTEREST NAME, ADDRESS AND TAXPAYER CAPITAL NUMBER (FULLY IDENTIFICATION COMMITMENT OF UNITS DILUTED) - -------------------------- ---------- -------- -------- Empyrean Bioscience, Inc. The execution and 50 50% 23800 Commerce Park Road, Suite A delivery of the Cleveland, Ohio 44122 Trademark License Agreement from Empyrean to IBC-Empyrean International Bioscience Corporation The execution and 50 50% 777 South Flagler Drive delivery of the Phillips Point Building (i) License East Tower, Suite 909 Agreement from IBC West Palm Beach, Florida 33401 to IBC-Empyrean, and (ii) the Trademark License Agreement from IBC to IBC-Empyrean TOTAL 100 100% 28 EX-10.15 5 0005.txt PUT AGREEMENT PUT AGREEMENT PUT AGREEMENT, dated of August 9, 2000, by and between Empyrean Bioscience, Inc., a Wyoming corporation (the "Empyrean"), and International Bioscience Corporation, a Florida corporation ("IBC"). WITNESSETH: WHEREAS, Empyrean and IBC are parties to the Limited Liability Company Operating Agreement (the "LLC Agreement") of IBC-Empyrean, L.L.C. (the "LLC"), such LLC formed for the purpose of commercializing the Licensed Products (as such term is defined in the LLC Agreement) in certain countries; and WHEREAS, Empyrean and IBC desire to enter into certain agreements as more fully set forth herein in connection with a Change of Control (as herein defined) of Empyrean or IBC. NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained in this Agreement, the parties hereto agree as follows. 1. Definitions. As used in this Agreement the following terms have the meaning set forth below: "Act" shall mean the Delaware Limited Liability Company Act, as amended from time to time. "Change of Control" shall mean the happening of any of the following with respect to either IBC or Empyrean (for the purposes of this definition, each a "company"): (i) any "person", as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the company representing fifty percent (50%) or more of the combined voting power of the company's outstanding securities; (ii) with respect to IBC, if Sara Gomez de Ferro ceases for any reason, except by reason of her death or incapacity, to be a director on the board of directors of IBC, or, with respect to Empyrean, if Lawrence D. Bain ceases for any reason, except by reason of his death or incapcity, to be a director on the board of directors of Empyrean; (iii) the shareholders of the company approve a merger or consolidation of the company with any other corporation, other than (x) a merger or consolidation which would result in the voting securities of the company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than eighty percent (80%) of the combined voting power of the voting securities of the company or such surviving entity outstanding immediately after such merger or consolidation or (y) a merger or consolidation effected to implement a recapitalization of the company (or similar transaction) in which no "person" (as defined above in clause (i)) acquires more than fifty percent (50%) of the combined voting power of the company's then outstanding securities; (iv) the shareholders of the company approve a plan of complete liquidation of the company or an agreement for the sale or disposition by the company of all or substantially all of its assets or any transaction having a similar effect; or (v) the company enters into an agreement with an unrelated party for the sale of all or substantially all of the assets or outstanding stock of the company or any transaction having a similar effect. "Fair Market Value" shall mean the fair market value of the Target's Interest in the LLC as determined by a nationally-recognized independent investment banking firm mutually agreed upon by Empyrean and IBC to determine such value. "Interest" shall mean all membership interests, units or any other additional rights the Target possesses in the LLC. "Non-Target" shall have the meaning contained in Section 2. "Target" shall have the meaning contained in Section 2. 2. Put Option. (a) Upon a Change of Control of either Empyrean or IBC, as the case may be (the party subject to such change of control referred to as the "Target"), the other party (the "Non-Target") shall have the right, at its sole option and upon written notice delivered within 30 calendar days of each Change in Control, to: (i) in the event of a Change of Control as described in paragraph (i) of the definition of "Change of Control" above, exercise the right to sell to such person who has acquired 50% or more of the combined voting power of the Target's outstanding securities, such Non-Target's Interest at the Fair Market Value thereof; (ii) in the event of a Change of Control as described in paragraph (ii) of the definition of "Change of Control" above, exercise the right to sell to the Target such Non-Target's Interest at the Fair Market Value thereof; (iii) in the event of a Change of Control as described in paragraph (iii) of the definition of "Change of Control" above, exercise the right to sell to the surviving entity resulting from the merger of the Target with any other corporation such Non-Target's Interest at the Fair Market Value thereof; (iv) in the event of a Change of Control as described in paragraph (iv) of the definition of "Change of Control" above, exercise the right to sell 2 to such company or "person" (as such term is defined in Section 13(d) or 14(d) of the Exchange Act) that acquires the Target or all or substantially all of the Target's assets, whether in a liquidation of the Target or in any sale or disposition of assets by the Target or otherwise, such Non-Target's Interest at the Fair Market Value thereof; or (v) in the event of a Change of Control as described in paragraph (v) of the definition of "Change of Control" above, exercise the right to sell to such unrelated party that acquires all or substantially all of the Target's assets or outstanding stock or to any such unrelated party involved in any transaction having a similar effect such Non-Target's Interest at the Fair Market Value thereof. In the event that the Non-Target does not elect to exercise its put right as provided for in Section 2(a) within such 30 calendar day period, the put right shall be extinguished. (b) Promptly after receipt of the put notice, the parties shall select a nationally-recognized independent investment banking firm which shall promptly establish the Fair Market Value of the Interest being sold. In the event the parties cannot promptly agree on the selection of an investment banking firm, the issue shall be submitted for resolution pursuant to the arbitration provisions set forth in Section 14.2 of the LLC Agreement. (c) Within 10 business days of the establishment of the Fair Market Value of the Interest being sold, the party acquiring such Interest shall pay the selling party such Fair Market Value. 3. Notices. All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier by telecopy or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows: (a) if to Empyrean, at: Empyrean Bioscience, Inc. 23800 Commerce Park Road, Suite A Cleveland, Ohio 44122 Attention: Mr. Richard C. Adamany Facsimile No.: (216) 360-7909 with a copy to: Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, New York 10022 Attention: Richard H. Kronthal, Esq. Facsimile No.: 212-836-8689 3 (b) if to IBC, at: International Bioscience Corporation 777 South Flagler Drive Phillips Point Building East Tower, Suite 909 West Palm Beach, Florida 33401 Attn: Ms. Sara Gomez de Ferro Facsimile No.: (561) 366-8905 with a copy to: Holtzman, Krinzman, Equels & Furia 2601 South Bayshore Drive, Suite 600 Miami, Florida 33133 Attn: Mr. Arthur J. Furia, Esq. Facsimile No.: (305) 859-9996 Any such notice or communication shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date sent), (ii) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (iii) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (iv) in the case of mailing, on the third business day following the date on which the piece of mail containing such communication is posted. 4. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach. Any of the provisions of this Agreement may be waived only by an instrument in writing executed by the party or parties whose rights are being waived. 5. Amendment. This Agreement may not be amended, terminated, suspended or otherwise modified except in a written instrument, duly executed by both parties. 6. Governing Law. (i) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof. (ii) Except for actions brought for wrongful termination or to seek termination of this Agreement, if any disagreement arises regarding the interpretation of any points of the Agreement or any other point not covered herein or any claims for damages or specific performance, the disagreement, upon request of either party hereto delivered in writing to the other party, shall be resolved by arbitration before a single arbitrator in accordance with the commercial rules and procedures set forth by the American Arbitration Association. The prevailing party in such action or arbitration shall be entitled to receive from the other party a reasonable sum for it's attorneys' fees and all other reasonable costs and expenses incurred in such action or arbitration. (iii) The venue of any arbitration between the parties arising from or related to this Agreement shall be in either Miami-Dade County or Palm Beach County, Florida. Any litigation arising from or related to this Agreement shall be brought exclusively in an appropriate state or federal court in Miami-Dade County or Palm Beach County, Florida, and the parties waive any right to challenge such venue. 7. Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement. 8. Entire Agreement. This Agreement is the sole and complete statement of the parties of their rights and obligations with respect to the subject matter hereof. This Agreement is an integrated agreement and replaces and supersedes any and all previous obligations and agreements between the parties. The parties hereto recognize and agree that no representations or warranties have been made except as set forth in this Agreement. Except as may otherwise be expressly provided herein, by signing this Agreement the parties expressly release each other from any and all existing obligations that pre-date this Agreement as if such obligations have been fully performed and satisfied. Any amendments to this Agreement shall be in writing and executed by both parties hereto. 9. Severability. In the event any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the remaining terms shall remain in full force and effect, to effectuate this Agreement in accordance with its intent. Headings, title and subtitles of this Agreement are for convenience of reference only and are not to be considered in construing the terms of this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 4 IN WITNESS WHEREOF, the parties hereto do hereby sign, enter into and acknowledge this Put Agreement on the date first written above. INTERNATIONAL BIOSCIENCE CORPORATION By:_____________________________________ Title:__________________________________ EMPYREAN BIOSCIENCE, INC. By:_____________________________________ Title:__________________________________ 5 EX-10.16 6 0006.txt NONQUALIFIED STOCK OPTION AGREEMENT NONQUALIFIED STOCK OPTION AGREEMENT NONQUALIFIED STOCK OPTION AGREEMENT, dated as of August 9, 2000, by and between, Empyrean Bioscience, Inc., a Wyoming corporation (the "Company"), and International Bioscience Corporation, a Florida corporation (the "Optionee"). W I T N E S S E T H: WHEREAS, the Company and the Optionee are parties to a Joint Venture Agreement dated August 9, 2000 which contemplates that the Company will, among other matters and in order to induce the Optionee to enter into the Joint Venture Agreement, issue to the Optionee an option to acquire certain shares of the Company's Common Stock, no par value, on the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual agreements contained in this Agreement, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following terms have the meanings set forth below: "Act" shall mean the Securities Act of 1933, as amended. "Affiliate" when used with reference to any Person, shall mean any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Person specified. "Board" shall mean the board of directors of the Company. "Common Stock" shall mean the shares of Common Stock of the Company, no par value. "Contemplated Agreements" shall mean the following agreements dated as of August 9, 2000: (i) the Trademark License Agreement from the Company to the Optionee; (ii) the Trademark License Agreement from the Company to IBC-Empyrean, L.L.C.; (iii) the License Agreement from the Optionee to the Company; (iv) the Trademark License Agreement from the Optionee to the Company; (v) the License Agreement from the Optionee to IBC-Empyrean, L.L.C.; (vi) the Trademark License Agreement from the Optionee to IBC-Empyrean, L.L.C.; (vii) the Joint Venture Agreement between the Company and the Optionee (the "Joint Venture Agreement"); (viii) the Limited Liability Company Agreement of IBC-Empyrean, L.L.C.; (ix) the Put Agreement between the Company and the Optionee; and (x) the Voting Agreement between the Optionee and Lawrence D. Bain (the "Voting Agreement"). "Derivative Products" shall mean products hereinafter developed by the Optionee having an effective amount of Formulation therein, and being of a different product category than those Licensed Products currently being manufactured. "Exercise Price" shall have the meaning ascribed to such term in Section 2 of this Agreement. "Fair Market Value" of a share of Common Stock on any date shall mean, (i) if the Common Stock is listed on a national stock exchange, the officially quoted closing price on such stock exchange, (ii) if the Common Stock is listed on the NASDAQ National Market, the officially quoted closing price on NASDAQ, (iii) if the Common Stock is listed on NASDAQ but not on the National Market, the average of the closing bid and asked prices reported by NASDAQ, in each case on the date as of which the value is to be determined (or if such date is not a trading day, as of the preceding trading day), (iv) if the Common Stock is listed on an over-the-counter market, the average of the last bid prices on the date as of which the value is to be determined (or if such date is not a trading day, as of the preceding trading day) or (v) if the Common Stock is not listed on either a national stock exchange or NASDAQ, the fair market value determined in good faith by the Board. "Formulation" shall mean the proprietary formulation (including manufacturing technology and processes) comprising Benzalkonium Chloride as an active ingredient with Octoxynol 9 (and others) invented and created by Dr. David Thornburgh and exclusively owned by the Optionee known as the GEDA line of products. "GEDA Plus Product" shall mean the spermicide and microbicide contraceptive gel product embodying the Formulation presently being developed by the Optionee, also known as the "Gel Product", designed to prevent the transmission of sexually transmitted diseases including, but not limited to, gonorrhea, chlamydia, syphilis, Trichomonas, herpes I and II and HIV, and which is presently undergoing the appropriate and necessary United States governmental regulatory compliance process to permit the Company to include such product as a Licensed Product. "Licensed Products" shall mean products having an effective amount of the Formulation therein and having all necessary government approval for commercialization, including, but not limited to, the Lotion Products, the Gel Product and any Derivative Products hereinafter developed by the Optionee. "Lotion Products" (also known as GEDA Lotion) shall mean the hand sanitizing lotion presently being manufactured for the Company by Canadian Custom Packaging and sold by the Company as a Licensed Product, and presently being marketed by the Company under appropriate and necessary United States governmental regulatory compliance. "Option" shall have the meaning set forth in Section 2 hereof. "Person" shall mean any individual, limited liability company, partnership, corporation, group, trust or other legal entity. 2. Grant of Option; Option Price. On the terms and subject to the conditions of this Agreement, the Company hereby grants to the Optionee the option (the "Option") to purchase an aggregate of 2,226,000 shares of Common 2 Stock (the "Option Shares") at an exercise price of $.83 per share (the "Exercise Price"). 3. Term. The term of the Option (the "Option Term") shall commence on the date hereof and expire on the tenth anniversary of the date hereof, unless the Option shall theretofore have been terminated in accordance with the terms of this Agreement. 4. Vesting and Exercisability. The right to acquire the shares of Common Stock (the "Shares") represented by this Option shall vest as follows, and shall otherwise be exercisable in accordance with the following terms and conditions: (i) 1,000,000 of the Option Shares may be purchased upon receipt of the pre-IND number from the Food and Drug Administration for the GEDA Plus Product; (ii) 1,000,000 of the Option Shares may be purchased upon delivery of the towlettes presently being manufactured with agreed upon claims for retail distribution; and (iii) the remaining 226,000 Option Shares may be immediately purchased upon execution of the Contemplated Agreements. 5. Procedure for Exercise. (a) The Option may be exercised with respect to Shares that are exercisable, from time to time, in whole or in part (but for the purchase of whole Shares only), by delivery of a written notice (the "Exercise Notice") from the Optionee to the Company at its principal executive office, which Exercise Notice shall: (i) state that the Optionee elects to exercise the Option; (ii) specify the number of Shares with respect to which the Optionee is exercising the Option; (iii) include any representations of the Optionee required under Section 7 hereof; (iv) state the date upon which the Optionee desires to consummate the purchase of such Shares (which date must be prior to the termination of the Option); (v) state the payment method for the exercise of the Option; and (vi) comply with such further provisions as the Company may reasonably require. (b) Payment of the Exercise Price for the Shares to be purchased on the exercise of the Option shall be made by cash or check payable to the order of the Company. Notwithstanding the foregoing, the Optionee shall have the right, subject to the Company's approval (in its sole discretion), to receive in 3 lieu of the Shares an amount in cash from the Company equal to the difference between the Fair Market Value of the Shares to be received upon the exercise of the Option and the Exercise Price therefore. (c) The Company shall be entitled to require as a condition of delivery of the Shares that the Optionee agree to remit when due an amount in cash sufficient to satisfy all current or estimated future federal, state and local withholding and employment taxes relating thereto. 6. Rights as a Stockholder. The Optionee's rights as a stockholder upon exercise of the Option Shares shall be subject to the Voting Agreement. 7. Registration of Shares and Additional Provisions Related to Exercise. (a) The registration of the Common Stock underlying the Option Shares and the registration rights of the Optionee are subject to Section 7 of the Joint Venture Agreement. (b) In the event of the exercise of the Option at a time when there is not in effect a registration statement under the Securities Act of 1933, as amended (the "Act"), relating to the Shares, the Optionee hereby represents and warrants, and by virtue of such exercise shall be deemed to represent and warrant, to the Company that the Shares are being acquired for investment only and not with a view to the distribution thereof except in compliance with such Act, and the Optionee shall provide the Company with such further representations and warranties as the Board may reasonably require in order to ensure compliance with applicable federal and state securities, "blue sky" and other laws. No Shares shall be purchased upon the exercise of the Option unless and until the Company and/or the Optionee shall have complied with all applicable federal or state registration, listing and/or qualification requirements and all other requirements of law or of any regulatory agencies having jurisdiction. 8. Restriction on Transfer. The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee and may be exercised only by the Optionee. The Option shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Option, shall be null and void and without effect. 9. Adjustment. (a) If the Shares are changed, or the number of Shares outstanding is increased or diminished, by reason of a stock split, reverse stock split, stock dividend, recapitalization or similar corporate event or converted into or exchanged for cash or other securities as a result of a merger, consolidation or reorganization or a dividend in cash or property (other than an ordinary cash dividend after the Company has become public) is made to the stockholders of the Company, the Board shall make such adjustments in the number and class of shares of stock or other securities subject to the Option, and such adjustments to the exercise price of outstanding Options as it determines to be equitable and appropriate in its good faith judgment under the circumstances. In the event of 4 a merger, consolidation, corporate reorganization or a recapitalization to which the Company is a party that involves any change in the number or class of shares of capital stock of the Company outstanding, the Option shall thereafter be exercisable only for and to the extent of the kind and amount of cash, securities and/or other property, or the cash equivalent thereof, receivable as a result of such event by the holder of a number of Shares for which the Option could have been exercised immediately prior to such event (taking account of all Shares issuable under the Option, whether or not then exercisable). (b) The following rules shall apply in connection with Section 9(a) above: (i) no fractional shares shall be issued as a result of any such adjustment, and any fractional shares resulting from the computations pursuant to Section 9(a) shall be eliminated without consideration from the Option; (ii) no adjustment shall be made for the issuance to stockholders of rights to subscribe for additional Shares or other securities; and (iii) any adjustments referred to in Section 9(a) shall be made by the Board in its reasonable discretion and shall be conclusive and binding on the Optionee. 10. Notices. All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally recognized overnight courier by telecopy or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows: (a) if to the Company, at: Empyrean Bioscience, Inc. 23800 Commerce Park Road, Suite A Cleveland, Ohio 44122 Attention: Mr. Richard C. Adamany Facsimile No.: (216) 360-7909 with a copy to: Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, New York 10022 Attention: Richard H. Kronthal, Esq. Facsimile No.: 212-836-8689 5 (b) if to the Optionee, at: International Bioscience Corporation 777 South Flagler Drive Phillips Point Building East Tower, Suite 909 West Palm Beach, Florida 33401 Attn: Ms. Sara Gomez de Ferro Facsimile No.: (561) 366-8905 with a copy to: Holtzman, Krinzman, Equels & Furia 2601 South Bayshore Drive, Suite 600 Miami, Florida 33133 Attn: Mr. Arthur J. Furia, Esq. Facsimile No.: (305) 859-9996 Any such notice or communication shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date sent), (ii) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (iii) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (iv) in the case of mailing, on the third business day following the date on which the piece of mail containing such communication is posted. 11. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach. Any of the provisions of this Agreement may be waived only by an instrument in writing executed by the party or parties whose rights are being waived. 12. Optionee's Undertaking. The Optionee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the provisions of this Agreement. 13. Amendment. This Agreement may not be amended, terminated, suspended or otherwise modified except in a written instrument, duly executed by both parties. Waivers of or amendments to this Agreement shall be binding as against the Company only if approved by the Board. 14. Governing Law. (i) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof. 6 (ii) Except for actions brought for wrongful termination or to seek termination of this Agreement, if any disagreement arises regarding the interpretation of any points of the Agreement or any other point not covered herein or any claims for damages or specific performance, the disagreement, upon request of either party hereto delivered in writing to the other party, shall be resolved by arbitration before a single arbitrator in accordance with the commercial rules and procedures set forth by the American Arbitration Association. The prevailing party in such action or arbitration shall be entitled to receive from the other party a reasonable sum for it's attorneys' fees and all other reasonable costs and expenses incurred in such action or arbitration. (iii) The venue of any arbitration between the parties arising from or related to this Agreement shall be in either Miami-Dade County or Palm Beach County, Florida. Any litigation arising from or related to this Agreement shall be brought exclusively in an appropriate state or federal court in Miami-Dade County or Palm Beach County, Florida, and the parties waive any right to challenge such venue. 15. Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement. 16. Entire Agreement. This Agreement is the sole and complete statement of the parties of their rights and obligations with respect to the subject matter hereof. This Agreement is an integrated agreement and replaces and supersedes any and all previous obligations and agreements between the parties. The parties hereto recognize and agree that no representations or warranties have been made except as set forth in this Agreement. Except as may otherwise be expressly provided herein, by signing this Agreement the parties expressly release each other from any and all existing obligations that pre-date this Agreement as if such obligations have been fully performed and satisfied. 17. Severability. In the event any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the remaining terms shall remain in full force and effect, to effectuate this Agreement in accordance with its intent. Headings, title and subtitles of this Agreement are for convenience of reference only and are not to be considered in construing the terms of this Agreement. 18. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, subject to the limitations set forth in Section 8 hereof. [Remainder of Page Intentionally Blank] 7 IN WITNESS WHEREOF, the parties hereto do hereby sign, enter into and acknowledge this Nonqualified Stock Option Agreement on the date first written above. INTERNATIONAL BIOSCIENCE CORPORATION By:_____________________________________ Title:__________________________________ EMPYREAN BIOSCIENCE, INC. By:_____________________________________ Title:__________________________________ 8 EX-10.17 7 0007.txt VOTING AGREEMENT VOTING AGREEMENT VOTING AGREEMENT (this "Agreement") dated as of August 9, 2000, by and between Lawrence D. Bain ("Bain") and International Bioscience Corporation, a Florida corporation ("IBC"). WITNESSETH THAT: WHEREAS, Empyrean Bioscience, Inc., a Wyoming corporation ("Empyrean"), issued 5,000,000 shares (the "Shares") of its duly authorized, fully paid and non-assessable common stock, no par value, to IBC pursuant to the terms and provisions of that certain Joint Venture Agreement (the "Joint Venture Agreement") dated as of August 9, 2000, between IBC and Empyrean and, in addition, has entered into a Nonqualified Stock Option Agreement (the "Option Agreement") dated as of August 9, 2000 with IBC, granting IBC an option to purchase an additional 2,226,000 shares of Empyrean's common stock (if and when exercised, the "Option Shares"); and WHEREAS, IBC has agreed that it will be in its best interests and in the best interest of Empyrean and Bain if Bain, as a holder of approximately 2,725,000 shares of common stock of Empyrean (together with any additional shares of capital stock of Empyrean Bain directly or indirectly acquires in the future, the "Bain Shares"), and IBC enter into this Agreement, subject to the terms and conditions set out herein; and WHEREAS, Empyrean would not have issued any of its common stock or entered into the Joint Venture Agreement or the Option Agreement with IBC without this Agreement being entered into. NOW, THEREFORE, to induce Empyrean and IBC to enter into, and in consideration of their entering into, the Joint Venture Agreement and the Option Agreement, and in consideration of the promises and the representations, warranties and agreements contained herein, the parties hereto agree as follows: 1. Representations and Warranties of IBC. IBC hereby represents and warrants to Bain as of the date hereof as follows: (a) AUTHORITY; NO CONFLICTS. IBC has the necessary legal capacity, power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by and on behalf of IBC, and, assuming due authorization, execution and delivery by Bain, constitutes a legal, valid and binding obligation of IBC, enforceable in accordance with its terms. None of the execution and delivery of this Agreement by and on behalf of IBC, the consummation of the transactions contemplated hereby and compliance with the terms hereof by IBC will conflict with, or result in any violation of, or default (with or without notice or lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise, license, judgment, order, notice, decree, statute, law, ordinance, rule or regulation applicable to IBC or to IBC's property or assets. (b) The Shares. IBC is the beneficial owner of the Shares and has the sole right and power to vote and dispose of the Shares, and none of the Shares is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting or transfer (other than the provisions of the Securities Act) of any of the Shares, except as contemplated by this Agreement. 2. REPRESENTATIONS AND WARRANTIES OF BAIN. Bain represents and warrants that this Agreement has been duly authorized, executed and delivered by him and, assuming due authorization, execution and delivery by IBC, constitutes a legal, valid and binding obligation of Bain enforceable in accordance with its terms. 2 3. Covenants of IBC. Until the termination of this Agreement in accordance with Section 4 hereof, IBC agrees as follows: (a) VOTING OF SHARES AND OPTION SHARES. At any meeting of stockholders of Empyrean or at any adjournment thereof or in any other circumstances upon which IBC's vote, consent or other approval as a stockholder of Empyrean is sought, IBC shall vote the Shares and Option Shares in accordance with and in the same manner as Bain votes the Bain Shares. (b) PROXIES. As security for the agreements of IBC provided for herein, IBC hereby grants, contemporaneously with the execution of this Agreement, to Bain a proxy, in the form attached hereto as Exhibit A, to vote the Shares and Option Shares as indicated in Section 3(a) above. IBC agrees that this proxy shall be irrevocable during the term of this Agreement and coupled with an interest and IBC and Bain will take such further action or execute such other instruments as may be necessary to effectuate the intent of this PROXY. (c) NO TRANSFER RESTRICTIONS. IBC shall be free at any time to sell any or all of the Shares or Option Shares to third parties, whether by public resale pursuant to an effective registration statement or pursuant to any valid exemption from the registration requirements under applicable federal and state 3 securities laws. This Agreement shall immediately terminate with respect to any such shares sold, devised, assigned or otherwise disposed of to such third parties upon receipt by Bain of a legal opinion to the effect that such shares were sold pursuant to a public resale on Form S-4 or on any other registration statement as Empyrean shall be qualified to file with respect to such shares or that such transfer is not required to be registered under the Securities Act of 1933, as amended; provided, however, that this Agremeent shall not terminate with respect to those shares sold in a private sale of Shares or Option Shares that, within a 90-day period, exceed the greater of (i) twenty percent (20%) of the total shares of common stock then owned by IBC or (ii) a value of one million dollars (US$1,000,000). In the event IBC acquires, directly or indirectly, any additional shares of capital stock of Empyrean during the term of this Agreement through the exercise of any options under the Option Agreement, such shares shall immediately become subject to this agreement. (d) NO ADDITIONAL AGREEMENTS. IBC agrees not to enter into any voting arrangement or understanding with respect to the Shares or Option Shares, whether by proxy, voting agreement or otherwise, or take any action that would reasonably be expected to make any of its representations or warranties contained herein untrue or incorrect or could have the effect of preventing or disabling IBC from performing any of its obligations hereunder. 4. Term and Termination. 4 (a) In the event that Bain shall cease to act as a director on the board of directors of Empyrean for any reason, including by reason of death, incapacity or resignation, Bain shall, in his sole discretion, either (i) assign all of his rights and obligations relating to this Voting Agreement and the irrevocable proxy granted to Bain by IBC pursuant to Section 3(b) of this Agreement and all voting rights in and a proxy with respect to the Bain Shares, which shares shall be equal to or greater than the number of shares of capital stock of Empyrean Bain holds as of the date hereof, to the then-current chairman of the board of directors of Empyrean as Bain's successor-in-interest to this Agreement or (ii) elect not to assign his rights and obligations under this Agreement to such person, thereby resulting in the termination of this Agreement and all of the rights and obligations of the parties hereunder. In the event the number of shares Bain holds at the time he ceases to be a director shall be less than the number of shares he holds as of the date hereof, this Voting Agreement shall terminate at such time with respect to the Shares and the Option Shares along with all the rights and obligations of the parties hereunder. The right of Bain to assign the proxy to vote the Shares and Option Shares, as described in Section 4(a)(i) above, shall be a personal right and may not be assigned by Bain to any other person. (b) Notwithstanding Section 4(a) above, this Agreement shall terminate, and no party shall have any rights or obligations hereunder and this Agreement shall become null and void and have no further effect immediately following such time as Empyrean becomes the full legal and beneficial owner of 100% of its issued and outstanding capital stock. 5. General Provisions. (a) INTERPRETATION. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Wherever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." (b) COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more of the counterparts have been signed by each of the parties and delivered to the other parties, it being understood that each party need not sign the same counterpart. 5 (c) GOVERNING LAW. (i) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Wyoming regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof. (ii) Except for actions brought for wrongful termination or to seek termination of this Agreement, if any disagreement arises regarding the interpretation of any points of the Agreement or any other point not covered herein or any claims for damages or specific performance, the disagreement, upon request of either party hereto delivered in writing to the other party, shall be resolved by arbitration before a single arbitrator in accordance with the commercial rules and procedures set forth by the American Arbitration Association. The prevailing party in such action or arbitration shall be entitled to receive from the other party a reasonable sum for it's attorneys' fees and all other reasonable costs and expenses incurred in such action or arbitration. (iii) The venue of any arbitration between the parties arising from or related to this Agreement shall be in either Miami-Dade County or Palm Beach County, Florida. Any litigation arising from or related to this Agreement shall be brought exclusively in an appropriate state or federal court in Miami-Dade County or Palm Beach County, Florida, and the parties waive any right to challenge such venue. (d) COMPLETE AGREEMENT. This Agreement is the sole and complete statement of the parties of their rights and obligations with respect to the subject matter hereof. This Agreement is an integrated agreement and replaces and supersedes any and all previous obligations and agreements between the parties. The parties hereto recognize and agree that no representations or warranties have been made except as set forth in this Agreement. Except as may otherwise be expressly provided herein, by signing this Agreement the parties expressly release each other from any and all existing obligations that pre-date this Agreement as if such obligations have been fully performed and satisfied. Any amendments to this Agreement shall be in writing and executed by both parties hereto. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 6 IN WITNESS WHEREOF, the parties hereto do hereby sign, enter into and acknowledge this Agreement on the date first written above. INTERNATIONAL BIOSCIENCE CORPORATION By:_____________________________________ Title:__________________________________ ---------------------------------------- Lawrence D. Bain Exhibit A Power of Attorney and Irrevocable Proxy Reference is hereby made to that certain Voting Agreement (the "Voting Agreement"), dated as of the date hereof, between the undersigned, IBC (the "Granting Stockholder"), and Lawrence D. Bain (the "Proxyholder"), with respect to certain shares of common stock of Empyrean Bioscience, Inc. owned by IBC, of which this Power of Attorney and Irrevocable Proxy (this "Irrevocable Proxy") forms a part. Capitalized terms used but not defined in this Irrevocable Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Irrevocable Proxy is being delivered by the Granting Stockholder pursuant to Section 3(b) of the Voting Agreement. The undersigned Granting Stockholder hereby irrevocably appoints the Proxyholder as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of Section 17-16-722 of the Wyoming Business Corporation Act, with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all Shares and Option Shares, now or hereafter owned, of record or beneficially, by the Granting Stockholder, which the Granting Stockholder is entitled to vote at any meeting of the stockholders of Empyrean (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise. A copy of the executed Voting Agreement is attached hereto and is made a part of and incorporated into this Proxy. THIS POWER OF ATTORNEY AND IRREVOCABLE PROXY IS IRREVOCABLE AND COUPLED WITH AN INTEREST, SUCH INTEREST BEING THE VOTING AGREEMENT. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to the Shares and Option Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder with respect thereto. In the event the Granting Stockholder acquires, directly or indirectly, any additional shares of capital stock of Empyrean during the term of the Voting Agreement as described in Section 3(c) thereof, such shares shall immediately become subject to this irrevocable proxy. This Irrevocable Proxy shall be valid and irrevocable until terminated in accordance with the conditions set forth below: (a) In the event that the Proxyholder shall cease to act as a director on the board of directors of Empyrean for any reason, including by reason of death, incapacity or resignation, the Proxyholder shall, in his sole discretion, either (i) assign all of his rights and obligations relating to the Voting Agreement and the irrevocable proxy granted to the Proxyholder by the Granting Stockholder pursuant to Section 3(b) of the Voting Agreement and all voting rights in and a proxy with respect to the Bain Shares, which shares shall be equal to or greater than the number of shares of capital stock of Empyrean the Proxyholder holds as of the date hereof, to the then-current chairman of the board of directors of Empyrean as the Proxyholder's successor-in-interest to the Voting Agreement or (ii) elect not to assign his rights and obligations under the Voting Agreement to such person, thereby resulting in the termination of the Voting Agreement and all of the rights and obligations of the parties hereunder. In the event the number of shares the Proxyholder holds at the time he ceases to be a director shall be less than the number of shares he holds as of the date hereof, the Voting Agreement shall terminate at such time with respect to the Shares and the Option Shares along with all the rights and obligations of the parties hereunder. The right of the Proxyholder to assign the proxy to vote the Shares and Option Shares, as described in Section 4(a)(i) above, shall be a personal right and may not be assigned by Proxyholder to any other person. (b) Notwithstanding paragraph (a) above, the Voting Agreement shall terminate, and no party shall have any rights or obligations hereunder and the Voting Agreement shall become null and void and have no further effect immediately following such time as Empyrean becomes the full legal and beneficial owner of 100% of its issued and outstanding capital stock. (c) The Voting Agreement shall immediately terminate with respect to any such Shares or Option Shares sold, devised, assigned or otherwise disposed of by the Granting Stockholder to a third party upon receipt by the Proxyholder of a legal opinion to the effect that such shares were sold pursuant to a public resale on Form S-4 or on any other registration statement as Empyrean shall be qualified to file with respect to such shares or that such transfer is not required to be registered under the Securities Act of 1933, as amended; provided, however, that the Voting Agremeent shall not terminate with respect to those Shares or Option Shares sold in a private sale of such Shares or Option Shares that, within a 90-day period, exceed the greater of (i) twenty percent (20%) of the total shares of common stock then owned by the Granting Stockholder or (ii) a value of one million dollars (US$1,000,000). Dated as of August 9, 2000 INTERNATIONAL BIOSCIENCE CORPORATION By:______________________________ Name:__________________________________ Title:_________________________________ EX-10.18 8 0008.txt LICENSE AGREEMENT FROM IBC TO EMPYREAN LICENSE AGREEMENT FROM IBC TO EMPYREAN (for sales of Licensed Products in the U.S.) LICENSE AGREEMENT FROM IBC TO EMPYREAN This License Agreement (the "Agreement") made as of the 9th day of August, 2000 ("the Effective Date") by and among INTERNATIONAL BIOSCIENCE CORPORATION ("IBC"), a Florida corporation, having an office at 777 South Flagler Drive, Phillips Point Building, East Tower, Suite 909, West Palm Beach, Florida 33401, and EMPYREAN BIOSCIENCE, INC. ("Empyrean"), a Wyoming corporation, having an office at 23800 Commerce Park Road, Suite A, Cleveland , Ohio 44122; WITNESSETH THAT: WHEREAS, Empyrean desires to acquire an exclusive license from IBC to purchase the Licensed Products (as defined below) and to sell and distribute the Licensed Products in the United States; WHEREAS, IBC (or its predecessors) entered into a Distributorship Agreement dated March 20, 1997 with Prevent-X, Inc. ("Prevent-X"), pursuant to which IBC granted Prevent-X the exclusive right to distribute and sell Lotion Products (as defined below) in the United States (the "United States Distributorship Agreement"); WHEREAS, Empyrean (its predecessor or subsidiary) entered, with the consent and novation of IBC, into a Sub-License Agreement dated July 20, 1998 with Prevent-X pursuant to which Prevent-X appointed Empyrean as its exclusive sub-licensee and assigned all its rights and delegated all its duties under the United States Distributorship Agreement to Empyrean (the "United States Sub-License Agreement"); WHEREAS, Empyrean, as of the Effective Date, has been and continues to purchase and sell Lotion Products under the United States Sub-License Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual undertakings hereinafter set forth, and for other good and valuable consideration, IBC and Empyrean hereby agree as follows: 1. DEFINITIONS In this Agreement the following terms shall have the meanings hereinafter specified: (a) An "Approved Manufacturer" shall mean those manufacturers selected and approved by IBC-Empyrean LLC for manufacture of the Licensed Products. (b) An "Approved Packager" shall mean those packaging companies selected and approved by IBC-Empyrean LLC for packaging of the Licensed Products. (c) "Derivative Products" shall mean products hereinafter developed by IBC having an effective amount of Formulation therein, and being of a different product category than those Licensed Products currently being manufactured. (d) "Formulation" shall mean the proprietary formulation (including manufacturing technology and processes) comprising Benzalkonium Chloride as an active ingredient with Octoxynol 9 (and others) invented and created by Dr. David Thornburgh and exclusively owned by IBC known as the GEDA line of products. (e) "Gel Product" shall mean the spermicide and microbicide contraceptive gel product embodying the Formulation presently being developed by IBC, also known as the GEDA Plus product, designed to prevent the transmission of sexually transmitted diseases including, but not limited to, gonorrhea, chlamydia, syphilis, Trichomonas, herpes I and II and HIV, and which is presently 2 undergoing the appropriate and necessary United States governmental regulatory compliance process to permit Empyrean to include such product as a Licensed Product hereunder. (f) "Licensed Products" shall mean products having an effective amount of the Formulation therein and having all necessary government approval for commercialization, including, but not limited to, the Lotion Products, Gel Product and any Derivative Products hereinafter developed by IBC. (g) "Lotion Products" (also known as GEDA Lotion) shall mean the hand sanitizing lotion presently being manufactured for Empyrean by Canadian Custom Packaging and sold by Empyrean as a Licensed Product, and presently being marketed by Empyrean under appropriate and necessary United States governmental regulatory compliance. (h) "Net Sales" shall mean the total of gross sales of the Licensed Products by Empyrean to a third party, at the invoice selling price, net of normal and reasonable cash, trade and quantity discounts and returns for credit, and without deductions for costs incurred in manufacturing, selling, distributing or advertising or for uncollectable accounts. (i) "Territory" shall mean the United States of America and its possessions and territories. 2. REPRESENTATIONS IBC represents as follows: (a) IBC has the right and authority (i) to enter into this Agreement, and (ii) to grant the License as defined in Section 5 below. (b) With the exception of the United States Distributorship Agreement and with the exception of any rights or claims to the Formulation asserted by, on behalf of, or through Optima Holding Company and/or Mercury Technology 3 Corporation in Cases No. 98-11552 CA (09), 98-15352 CA (25) and 98-23428 CA (23) now pending in the Circuit Court of Miami-Dade County Florida, and Case No. 00-8300-CIV-Dimitrouleas, now pending in the United States District Court for the Southern District of Florida, IBC represents that: (i) it owns all right, title and interest to and in the Formulation free of all liens and encumbrances thereto, (ii) IBC has executed no agreement in conflict herewith, (iii) IBC has not granted to any other person, firm, corporation or entity any right or license to make, have made, use, sell or distribute the Formulation or the Licensed Products in the Territory; and (iv) To the best of IBC's knowledge, the Formulation for use in connection with the Licensed Products does not infringe any patents of third parties, nor is IBC aware of any claims by third parties that the Licensed Products infringe any patent of third parties. Empyrean represents as follows: (c) Empyrean has the right and authority to enter into this Agreement. (d) Empyrean has executed no agreement in conflict herewith. (e) Empyrean has granted no rights to make, have made, use, sell or distribute the Formulation or the Licensed Products in the Territory to any sublicensee or distributor. 3. CONFIDENTIALITY (a) In consideration of this Agreement and in the course of its fulfillment, and solely for the mutual benefit of the parties hereto, IBC or Empyrean (their predecessors, subsidiaries or affiliates) may send (or have 4 previously sent) or supply (or have previously supplied) the other party with confidential information with regard to the Formulation, Licensed Products, pricing or marketing strategy. The information may be (or may have been) marked "Company Proprietary", or "Company Confidential" or another similar manner indicating its confidentiality. This information may pertain to such items as price lists, financial information, contracts, product information, plans and design documentation relating to IBC's business or Empyrean's business ("Business Information") and may also pertain to such items as the Formulation or the manufacturing process used in connection with the Licensed Products ("Formulation Information"). Each party hereto agrees to keep any such Business Information confidential for a period of not less than five (5) years from the date of termination of this Agreement, and agrees to keep any such Formulation Information confidential in perpetuity. (b) Each party further assumes liability hereunder for the actions, statements and representations of its employees, officers, agents, representatives and sublicensees; and agrees to inform them of the provisions of this Agreement and enforce its provisions against each of them. (c) Each of the parties mutually agree that the rights protected by this Article are unique and not adequately protected or compensated for by money damages. In the event of a material breach or threatened material breach of the provisions of this Section, IBC or Empyrean shall be entitled to enjoin the other party from use and dissemination of any and all the respective parties' confidential information. 4. PROTECTION OF THE FORMULATION (a) Empyrean acknowledges that the Formulation is confidential and proprietary information owned by IBC and that it does not have any right in or to the Formulation except as provided in Section 5. Empyrean agrees to protect 5 the confidentiality of the Formulation in accordance with Section 3 above and further agrees to make no disclosure of the Formulation to any third party should Empyrean know or come to know the Formulation. 5. EXCLUSIVE LICENSE FROM IBC TO EMPYREAN (a) IBC grants to Empyrean an exclusive right and license in the Territory: (i) to purchase from an Approved Manufacturer Licensed Products and/or products containing the Formulation for packaging into a Licensed Product by an Approved Packager; and (ii) to use, have used, sell and have sold the Licensed Products. (b) Empyrean agrees to use reasonable commercial efforts, and to expend within five (5) years of executing this Agreement, if necessary, up to ten million United States dollars (US$10,000,000) to market the Licensed Products in the Territory during the term of this Agreement. 6. EXCLUSIVE LICENSE (a) The License from IBC to Empyrean, as defined in Section 5 above, shall be exclusive during the term of this Agreement. IBC covenants and agrees not to sell the Formulation or Licensed Products to any person, firm, partnership, corporation or other entity other than Empyrean in the Territory, and agrees not to sell the Formulation or Licensed Products to any person, firm, partnership, corporation or other entity that sells Licensed Products into the Territory, and shall not grant any right or appoint any distributor or licensor other than Empyrean to purchase, sell, use, market, offer to sell or distribute the Formulation or the Licensed Products in the Territory. In the event IBC breaches the provisions of this Section, Empyrean may, in addition to its other 6 rights, including damages, enjoin any such breach upon thirty (30) days written notice specifying the nature of such breach, unless, within such 30-day period IBC discontinues such breach and provides a written notice to Empyrean of such discontinuance together with the identification of the steps taken by IBC to discontinue such breach. 7. ROYALTIES (a) For the Term of this Agreement, Empyrean shall pay to IBC a Royalty which shall be computed as five percent (5%) of Empyrean's Net Sales of Licensed Products to any third party. (b) Empyrean shall pay all Royalties to IBC quarterly, within forty-five (45) days after the end of each calendar quarter. (c) IBC acknowledges that Empyrean's obligation to pay royalties to IBC is based upon Empyrean's exclusive right to sell, offer for sale, and distribute Licensed Products in the Territory. If, during the Term of this Agreement, a third party not a sublicensee, distributor or joint venturer of Empyrean sells, offers for sale, or distributes Licensed Products in the Territory which products originate in whole or in part from IBC ("Third Party Sales"), Empyrean shall promptly notify IBC in writing of such Third Party Sales, including the name of such Third Party and the type of Licensed Product being sold, offered for sale or distributed in accordance with the terms set forth in Section 19 below. After formal notice of Third Party Sales from Empyrean to IBC, Empyrean shall also have the right seek a preliminary injunction against IBC or any third party to enjoin any such Third Party Sales upon thirty (30) days written notice specifying the nature of such Third Party Sales, unless, within such 30-day period such Third Party Sales discontinue. If it is established through arbitration that such Third Party Sales are the fault, in whole or in part, of IBC then Empyrean shall have the right to cease paying Royalties thereafter incurred by Empyrean until such Third Party Sales cease. 7 (d) If, during the Term of this Agreement, Empyrean is forced or otherwise obligated to pay a royalty to a third party for sale or distribution of the Licensed Products in the Territory by reason of such third party's claim of patent or trade secret rights in or to the Formulation or the Licensed Products, any and all Royalties thereafter incurred by Empyrean under this Agreement shall be reduced by an amount equal to such royalties paid to such third party. 8. REPORTING AND RECORD KEEPING (a) Within forty-five (45) days after the end of each calendar quarter, irrespective of whether any Net Sales have been made or whether any sum is then due to IBC, Empyrean shall deliver to IBC via regular mail a complete and accurate written statement setting forth the amount of Licensed Products sold, the gross price at which such Licensed Products were sold, the amount of any discount or allowances given consistent with the terms of this Agreement, the credit for Licensed Products allowed to be returned and other deductions allowed herein to compute Net Sales in specific detail, so as to reasonably allow an audit of underlying documents, together with Empyrean's calculation of the amount of royalties then due IBC for the period covered by such report. (b) Empyrean shall keep or cause to be kept accurate, complete and up-to-date books of accounts separately stating by clear means records of all sales of the Licensed Products including records pertaining to invoiced amounts by customer and records pertaining to all freight charges, discounts, allowances, and returns allowed by Empyrean. Such books and records of accounts shall reflect that a sale of the Licensed Products shall be deemed to have occurred as of the date such Licensed Products were invoiced to Empyrean's customers. 8 (c) IBC or its authorized representatives shall have the right, once each calendar year, to inspect all records of Empyrean with respect to the Licensed Products and to make copies of said record utilizing Empyrean's facilities without charge and shall have free and full access thereto on reasonable notice during the normal business hours of Empyrean. In the event that such inspection or audit reveals an underpayment by Empyrean under this Agreement, Empyrean shall immediately pay to IBC the balance of all such amounts found to be due pursuant to such audit or inspection together with interest thereon at the "best commercial customer" rate at the Bank of America, plus six percent (6%) per annum from the date such amounts first became due to IBC until all such amounts have been paid in full. Further, if such inspection or audit discloses that, for the annual period reviewed or audited, Empyrean has underpaid or understated its obligation under this Agreement by twenty percent (20%) or more, then Empyrean shall also pay three times the reasonable professional fees of the independent representatives (such as auditor and attorneys' fees) engaged to conduct or review such inspection or audit. 9. MODIFICATION OF THE FORMULATION (a) Neither IBC nor Empyrean shall alter, modify or change the Formulation for use in the Licensed Products in the Territory without first obtaining the written approval of IBC-Empyrean LLC. 10. THE GEL PRODUCT (a) IBC covenants and agrees to use its best efforts to take any and all required action to seek and secure the approval of the United States Food and Drug Administration (the "USFDA") to manufacture, distribute and sell the Gel Product, provided, however, that Phase III data shows statistics that clearly demonstrate the efficacy of the Gel Product. 9 (b) IBC further covenants and agrees to expend, if necessary, up to ten million United States dollars (US$10,000,000) in connection with the USFDA approval. For the avoidance of doubt, IBC shall not be required to spend ten million United States dollars (US$10,000,000) for such clinical trials if the clinical trials can be successfully conducted for a lesser amount. IBC agrees to prepare and conduct all such clinical trials, and to prepare all necessary materials required in order to achieve approval from the applicable regulatory bodies for the Gel Product, in such a way as to ensure that such clinical trials, the results of such clinical trials and/or all materials produced as a result of or in connection with achieving regulatory approval shall be in such condition so as to be admissible and acceptable to the USFDA and any other regulatory agencies in the United States required to permit the Gel Product to be sold in the United States. (c) IBC agrees to use its best efforts to commence the appropriate and necessary governmental regulatory approvals to market the Gel Product in the United States as preventing the transmission of chlamydia, gonorrhea, syphilis, Trichomonas, herpes I and II within twelve (12) months of the date of this Agreement, provided, however, that Phase III data shows statistics that clearly demonstrate the efficacy of the Gel Product. (d) IBC agrees to use its best efforts to commence the appropriate and necessary governmental regulatory approvals to market the Gel Product in the United States as preventing the transmission of HIV within twenty four (24) months of the date of this Agreement, provided, however, that Phase III data shows statistics that clearly demonstrate the efficacy of the Gel Product. 10 11. TERM (a) The term of this Agreement shall begin on the Effective Date and shall continue for a period of ten (10) years (the "Initial Term"). (b) This Agreement shall be automatically renewed at the conclusion of the Initial Term, and each subsequent Additional Term, if applicable, for Additional Terms of ten (10) years, unless terminated in accordance with Section 12 below. 12. TERMINATION (a) IBC shall have the right to terminate this Agreement upon written notice to Empyrean at least sixty (60) days prior to the end of any calendar year, in the event that Empyrean, its affiliates and/or distributors, sell no Licensed Products in the Territory for a period of two (2) years. (b) In the event that Empyrean otherwise materially breaches this Agreement, IBC's sole remedy shall be to seek specific performance by filing an appropriate action in arbitration, in the event Empyrean fails to cure such breach within sixty (60) days after receipt of written notice of such material breach. (c) If, within the first two years of this Agreement, Empyrean fails to pay any Royalties with respect to a calendar quarter for which Royalties are due, IBC's sole remedy shall be the right to bring an action in arbitration for payment of such Royalties, plus interest at the prime interest rate plus 6%, plus attorneys fees, in the event Empyrean fails to cure such breach within sixty (60) days after receipt of written notice of such breach. (d) If, within the third, fourth and fifth year of this Agreement, Empyrean fails to pay any Royalties with respect to a calendar quarter for which Royalties are due, IBC shall, in addition to the remedies set forth in Section 11 12 (c) above, have the right to convert Empyrean's exclusive license to a non-exclusive license, in the event Empyrean fails to cure such breach within sixty (60) days after receipt of written notice of such breach. (e) If, after the fifth year of this Agreement, Empyrean fails to pay any Royalties with respect to a calendar quarter for which Royalties are due, IBC shall, in addition to the remedies set forth in Sections 12 (c) and (d) above, have the right to terminate this Agreement, in the event Empyrean fails to cure such breach within thirty (30) days after receipt of written notice of such breach. IBC shall not be obligated to arbitrate its right to any remedy under this subsection 12(e). 13. PRESS RELEASES (a) IBC and Empyrean each agree that, in the event either party desires to issue a press release that refers to the other party by name, the party issuing the press release shall, in advance, submit a copy of such press release to the other party for the other party's approval, which approval shall not be unreasonably withheld; provided, however, that the foregoing approval requirement shall not apply in such circumstances where a party shall, on the advice of counsel, issue a press release in order to comply with any then applicable Federal or state securities law disclosure requirement. The other party shall have two (2) business days to object to such press release. The failure of the other party to object, or approve, within two (2) business days will be deemed by the issuing party as an approval of the press release. 14. NO PARTNERSHIP or JOINT VENTURE (a) Nothing herein contained shall be construed so as to constitute the parties hereto as partners or as joint venturers, or either as agent of the other, and neither IBC nor Empyrean shall have the power to obligate or bind the other in any manner whatsoever. 12 15. GENERAL INDEMNIFICATION (a) Empyrean agrees (i) to assume the defense of any suit brought against IBC arising out of Empyrean's packaging, sale, use or distribution of the Licensed Products, and (ii) to indemnify IBC against any money damages and/or costs, including reasonable attorneys fees, provided that (a) Empyrean is given exclusive control of the defense of such suit and all negotiations relative to the settlement thereof, (b) IBC promptly informs Empyrean in writing of any claims for which Empyrean has assumed responsibility hereunder, and (c) the liability claim shall not have arisen because of wrongful or negligent conduct by IBC. (b) IBC agrees (i) to assume the defense of any suit brought against Empyrean arising out of a claim against Empyrean for any personal injury, property damage or products liability based on the Formulation, and/or based upon any claim asserted against any Licensed Product label, Trade Dress or advertising or promotional material that is required and approved by IBC, and (ii) to indemnify Empyrean against any money damages and/or costs, including reasonable attorneys fees, provided that (a) IBC is given exclusive control of the defense of such suit and all negotiations relative to the settlement thereof, (b) Empyrean promptly informs IBC in writing of any claims for which IBC has assumed responsibility hereunder, and (c) the liability claim shall not have arisen because of wrongful or negligent conduct by Empyrean. 13 16. INSURANCE (a) IBC and Empyrean agree to maintain at their own expense, in full force and effect, at all times during which Licensed Products are being sold and used, products liability insurance with limits of liability of at least $5,000,000.00 per accident or occurrence with respect to the Licensed Products, with a recognized and responsible insurance carrier duly and/or properly licensed and reasonably acceptable to each party. IBC agrees that, upon written notice to IBC, IBC will raise such limits of liability to meet or exceed limits maintained by Empyrean in the future. Each party shall be named as an additional insured on the others' policy. Such insurance shall be in such form or duration as shall insure against all accidents or occurrences occurring at all times during which Licensed Products are being sold and used regardless of when a claim shall be made. Such insurance shall insure and be for the benefit of Empyrean and IBC and its officers and directors (same hereinafter referred to as "coinsured"), and IBC shall provide for at least thirty (30) days prior, written notice to all "co-insureds" and Empyrean of the cancellation or substantial modification thereof. The maintenance of such insurance coverage shall not excuse or take the place of any of IBC's other obligations. Certificates of such insurance shall be furnished to all co-insureds within thirty (30) days of the date of this Agreement and annually thereafter for the term of this Agreement. 17. APPLICABLE LAW (a) This Agreement, its terms and conditions and all business conducted hereunder shall be governed and interpreted under the laws of the State of Florida, without regard to conflict of laws provisions. The venue of any arbitration between the parties arising from or related to this Agreement shall be in either Miami-Dade County or Palm Beach County, Florida. Any litigation 14 arising from or related to this Agreement shall be brought exclusively in an appropriate state or federal court in Miami-Dade County or Palm Beach County, Florida, and the parties waive any right to challenge such venue. (b) Except as agreed to in Sections 3, 4 and 6 above, and except for actions brought for wrongful termination or to seek termination of this Agreement, if any disagreement arises regarding the interpretation of any points of the Agreement or any other point not covered herein or any claims for damages or specific performance, the disagreement, upon request of either party hereto delivered in writing to the other party, shall be resolved by arbitration before a single arbitrator in accordance with the commercial rules and procedures set forth by the American Arbitration Association. The prevailing party in any litigation or arbitration brought under this Agreement shall be entitled to recover reasonable attorney's fees and costs. (c) In the event any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the remaining terms shall remain in full force and effect, to effectuate this Agreement in accordance with its intent. Headings, title and subtitles of this Agreement are for convenience of reference only and are not to be considered in construing the terms of this Agreement. 18. SOLE AND COMPLETE AGREEMENT (a) This Agreement is the sole and complete statement of the parties of their rights and obligations with respect to the subject matter hereof. This Agreement is an integrated agreement and replaces and supersedes any and all previous obligations and agreements between the parties, their predecessors and subsidiaries, both oral and written. The Parties hereto recognize and agree that no representations or warranties have been made except as set forth in this 15 Agreement. Except as may otherwise be expressly provided herein, by signing this Agreement the parties expressly release each other, their predecessors and subsidiaries from any and all existing obligations that pre-date this Agreement as if such obligations have been fully performed and satisfied. Any amendments to this Agreement shall be in writing and executed by both parties hereto. 19. NOTICES (a) All notices, requests, demands, instructions, consents or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii) mailed postage prepaid by certified mail, return receipt requested, (iii) sent by a nationally recognized express courier service requiring a signature by the recipient, postage or delivery charges prepaid, at the address hereinafter specified, or to such other address as the parties may advise each other in writing from time to time. Any notice shall be addressed as follows: As to IBC: Ms. Sara Gomez International Bioscience Corporation 777 South Flagler Drive Phillips Point Building East Tower, Suite 909 West Palm Beach, Florida 33401 With a copy to: Joseph L. Raia, Esq. Holtzman, Krinzman, Equels & Furia 2601 South Bayshore Drive, Suite 600 Miami, Florida 33133 16 As to Empyrean: Mr. Richard C. Adamany Empyrean Bioscience, Inc. 23800 Commerce Park Road, Suite A Cleveland, Ohio 44122 With a copy to Richard H. Kronthal, Esq. Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, New York 10022 20. ASSIGNMENT (a) Empyrean has the exclusive right to sub-license its rights under this Agreement. (b) Neither IBC nor Empyrean may assign its rights or delegate its duties under this Agreement without the express written consent of the other party. (c) This Agreement shall be binding on and inure to the benefit of the parties, and their respective legal representatives, successors and assigns. (d) No assignment shall be valid unless accepted in writing by the party to be bound. Any assignment of rights of one party without the express written consent of the other party shall be void, not valid and of no legal effect. 17 IN WITNESS WHEREOF, the parties hereto do hereby sign, enter into and acknowledge this Agreement. INTERNATIONAL BIOSCIENCE CORPORATION By: ------------------------------------- Title: ---------------------------------- EMPYREAN BIOSCIENCE, INC. By: ------------------------------------- Title: ---------------------------------- 18 EX-10.19 9 0009.txt TRADEMARK LICENSE FROM IBC TO EMPYREAN TRADEMARK LICENSE FROM IBC TO EMPYREAN (for sales of Licensed Products in US) TRADEMARK LICENSE FROM IBC TO EMPYREAN This License Agreement (the "Agreement") made as of the 9th day of August, 2000 ("the Effective Date") by and among INTERNATIONAL BIOSCIENCE CORPORATION ("IBC"), a Florida corporation, having an office at 777 South Flagler Drive, Phillips Point Building, East Tower, Suite 909, West Palm Beach, Florida 33401, and EMPYREAN BIOSCIENCE, INC. ("Empyrean"), a Wyoming corporation, having an office at 23800 Commerce Park Road, Suite A, Cleveland, Ohio 44122; WITNESSETH THAT: WHEREAS, IBC represents that it is the sole owner of the entire right, title and interest in and to the Bug Trademark (as defined below), free and clear of any liens or encumbrances, and the entire right, title and interest to the use of the Bug Trademark in connection with the Licensed Products (as defined below); WHEREAS, IBC has granted Empyrean the exclusive right to purchase and sell Licensed Products in the United States pursuant to a License Agreement from IBC to Empyrean executed concurrently herewith ("the License Agreement from IBC to Empyrean"); WHEREAS, Empyrean desires to acquire the right to use the Bug Trademark (as defined below) on and in connection with the manufacture, promotion, merchandising, distribution and sale of the Licensed Products in the United States; NOW, THEREFORE, in consideration of the premises and of the mutual undertakings hereinafter set forth, and for other good and valuable consideration, IBC and Empyrean hereby agree as follows: 1. Definitions In this Agreement the following terms shall have the meanings hereinafter specified: (a) "Bug Trademark" shall mean the "GEDA LOGO" used by IBC on all products based on the Formulation which is owned by IBC, an exemplar of which is annexed hereto as Exhibit A. (b) "Copyrights" shall mean the copyrights subsisting in the Trade Dress. (c) "Empyrean Trade Dress" shall mean the two-dimensional or three-dimensional packaging decorations, designs, slogans, tag lines and appliques that are applied to the Licensed Products or packaging therefor. (d) "Formulation" shall mean the proprietary formulation (including manufacturing technology and processes) comprising Benzalkonium Chloride as an active ingredient with Octoxynol 9 (and others) invented and created by Dr. David Thornburgh and exclusively owned by IBC known as the GEDA line of products. (e) "Gel Product" shall mean the spermicide and microbicide contraceptive gel product embodying the Formulation presently being developed by IBC, also known as the GEDA Plus product, designed to prevent the transmission of sexually transmitted diseases including, but not limited to, gonorrhea, chlamydia, syphilis, Trichomonas, herpes I and II and HIV, and which is presently undergoing the appropriate and necessary United States governmental regulatory compliance process to permit Empyrean to include such product as a Licensed Product hereunder. (f) "Licensed Products" shall mean products having an effective amount of the Formulation therein and having all necessary government approval for commercialization, including, but not limited to, the Lotion Products, Gel Product and any Derivative Products hereinafter developed by IBC. 2 (g) "Lotion Products" (also known as GEDA Lotion) shall mean the hand sanitizing lotion presently being manufactured for Empyrean by Canadian Custom Packaging and sold by Empyrean as a Licensed Product, and presently being marketed by Empyrean under appropriate and necessary United States governmental regulatory compliance. (h) "Territory" shall mean the United States of America and its possessions and territories. 2. REPRESENTATIONS IBC represents as follows: (a) IBC has the right and authority (i) to enter into this Agreement, and (ii) to grant the License as defined in Section 3 below. (b) IBC has executed no agreement in conflict herewith. (c) IBC owns all right, title and interest to and in the Bug Trademark, in the United States and certain countries foreign to the United States, free of all liens and encumbrances thereto. 3. TRADEMARK LICENSE FROM IBC TO EMPYREAN (a) IBC hereby grants to Empyrean, upon the terms and conditions of this Agreement, whatever rights IBC may have to use the Bug Trademark as part of the Empyrean Trade Dress in the Territory, on and in connection with the promotion, merchandising, distribution and sale of Licensed Products. (b) To the extent such Bug Trademark is available for use in the Territory, Empyrean agrees to use and shall use the Bug Trademark in the Empyrean Trade Dress only on or in connection with the promotion, merchandising, distribution and sales of Licensed Products in the Territory. Empyrean shall not use the Bug 3 Trademark or sell products using or incorporating the Bug Trademark except as expressly provided in this Agreement or as approved by IBC. (c) IBC reserves all rights to the Bug Trademark except as expressly granted herein to Empyrean. 4. TRADEMARK (a) Empyrean recognizes that IBC is the owner of all right, title and interest in and to the Bug Trademark in any form or embodiment thereof and is also the owner of the goodwill attached or which shall become attached to the Bug Trademark in connection with the business and goods in relation to which the same has been, is, or shall be used. Sales by Empyrean shall be deemed to have been made by IBC for the purposes of goodwill and all uses of the Bug Trademark by Empyrean shall inure to the benefit of IBC and any rights of IBC. Empyrean shall not at any time intentionally or recklessly do or suffer to be done by anyone acting on its behalf or in connection with Empyrean any act or thing which will in any way impair the rights of IBC in or to the Bug Trademark or any application or registration thereof or which depreciates the value of the Bug Trademark or its reputation. (b) Empyrean shall, at the request of IBC, fully cooperate with IBC in preparing, executing and causing to be recorded or filed such agreements (including registered user agreements and other documents reasonably required by IBC) to confirm the ownership by IBC of the Bug Trademark, and to evidence, protect and implement its rights to the Bug Trademark within and outside the Territory and the respective rights of IBC and Empyrean pursuant to this Agreement. IBC and Empyrean acknowledge that only IBC may file and prosecute trademark applications regarding the Bug Trademark or Empyrean's use of the Bug Trademark anywhere. Empyrean will cooperate with IBC, at IBC's request, in 4 connection with the preparation, execution, filing and prosecution of applications to register the Bug Trademark both inside and outside the Territory and the maintenance of such registrations as may issue. Upon expiration or termination of this Agreement for any reason whatsoever, Empyrean will execute and file such documents as shall be required by IBC, including without limitation, termination of any agreements and assignments of rights. (c) Empyrean shall cause to appear on all Licensed Products and on all materials on or in connection with which the Bug Trademark is used such legend, markings and notice of any trademark, trade name or other rights therein or pertaining thereto as IBC shall reasonably require and shall comply with all notice and marking requirements of any law applicable or necessary to the protection of the Bug Trademark. (d) Empyrean shall never (i) challenge IBC's ownership of or right to license, or the validity of, the Bug Trademark, any application for registration thereof or any trademark registration thereof nor (ii) contest the fact that Empyrean's rights under this Agreement are solely those of a Licensee. (e) At the expiration or termination of this Agreement, except as expressly provided herein, all rights of Empyrean with respect to use of the Bug Trademark shall thereupon cease and terminate for all purposes whatsoever. 5 5. QUALITY CONTROL (a) Empyrean acknowledges that the preservation and enhancement of the value of the Bug Trademark requires IBC to reasonably control the type, image and quality of products manufactured and sold using the Bug Trademark and the use of the Bug Trademark in connection with the manufacture and sale of Licensed Products. (b) Empyrean shall only use the Bug Trademark on the Licensed Products in stylization consistent with and conforming to visual representations and images to be provided to Empyrean by IBC. (c) Empyrean shall submit to IBC for IBC's approval, samples of all labels, tags, packaging and other materials intended to be used in connection with Licensed Products, before the same may be used, and no use shall be made of the same unless approved by IBC in writing, which approval shall not be unreasonably withheld. (d) In order that IBC may assure itself of the maintenance of the quality standards set forth in this Agreement: (i) Before manufacturing or having manufactured for it any Licensed Products intended to bear the Bug Trademark, Empyrean shall deliver to IBC, or as IBC may direct, for IBC approval, free of charge, one (1) pre-production sample and six (6) production samples related to same, of such Licensed Products intended to be sold by Empyrean. Nothing herein shall preclude IBC from requesting additional samples from Empyrean in order to monitor quality control, and Empyrean shall provide such samples when requested. (ii) All Licensed Products bearing the Bug Trademark manufactured by or for Empyrean or sold, distributed or promoted by it shall conform in all material respects to the samples approved by IBC. 6 (e) Empyrean shall not use any samples furnished by IBC, created by or for Empyrean for use in connection with Licensed Products, or approved for such use by IBC, except as provided in this Agreement, it being the understanding of the parties that Empyrean may use the same solely in connection with Licensed Products. (f) Empyrean shall submit to IBC, or as IBC may direct, before publication, any and all advertising and promotional material for approval by IBC. (g) Except as otherwise expressly provided herein, whenever, under the terms of this Agreement, the approval, consent or permission of IBC shall be required, such approval, consent or permission, shall not be unreasonably withheld or delayed. If IBC shall deny approval, it shall state in writing the reasons therefor. After any sample, copy or art work has been approved by IBC, Empyrean shall not vary or depart therefrom in any material respect without the further approval of IBC. (h) Empyrean agrees that all Licensed Products will be manufactured, labeled, sold, distributed, promoted and advertised in accordance with all applicable Federal, State and local, and if appropriate, foreign laws and regulations. (i) Subject to the Bug Trademark requirements set forth herein, the parties agree that co-branding the Bug Trademark with the trademark of a third party is permitted by IBC as long as such third party trademark preserves the value of the trademark. 6. INFRINGEMENT OF TRADEMARK (a) Empyrean shall, promptly after becoming aware of same, notify IBC of any infringement or imitation of the Bug Trademark, of any use by any person or entity of a trademark or design similar to the Bug Trademark, or of any unfair competition relating to the Bug Trademark, or of any other apparent violation of 7 the rights of IBC, so as to allow for IBC to take such action as IBC deems advisable for the protection of IBC's rights. Empyrean shall, if requested by IBC, fully cooperate with IBC and, if so requested by IBC, shall join with IBC at Empyrean's expense, as a party to any action brought by IBC for such purpose. In no event, however, shall IBC be required to take any action if IBC deems it inadvisable to so do. IBC shall have full control over any action taken by it, including without limitation, the right to select counsel, to settle on any terms it deems advisable, in its discretion, to appeal any adverse decision rendered in any court, to discontinue any action taken by it, and otherwise to make any decision in respect thereto as it in its discretion deems advisable. 7. Termination of TRADEMARK LICENSE FROM IBC TO EMPYREAN (a) On the expiration, or termination of this Agreement or the License Agreement from IBC to Empyrean, except as otherwise expressly provided herein, all rights of Empyrean hereunder shall terminate forthwith and revert automatically to IBC, and neither Empyrean nor its receivers, trustees, representatives, agents, successors or assigns shall have any right to exploit or in any way use the Bug Trademark or Trade Dress in connection with the manufacture, advertising, merchandising, promotion, sale or distribution of Licensed Products or otherwise or any right to use any designs, patterns, stylings or samples furnished by IBC created by or for Empyrean for use in connection with Licensed Products or approved by IBC for such use. Except as otherwise expressly provided herein, upon the expiration or termination of this Agreement or the License Agreement from IBC to Empyrean, Empyrean shall forthwith discontinue all use of the Bug Trademark and Trade Dress and any variation or simulation thereof. 8 8. TERM (a) The term of this Agreement shall begin on the Effective Date and shall continue until the expiration or termination of the License Agreement from IBC to Empyrean executed concurrently herewith. 9. TERMINATION (a) IBC shall have the right to terminate this Agreement upon written notice to Empyrean at least sixty (60) days prior to the end of any calendar year, in the event that Empyrean sells no Licensed Products in the Territory for a period of two (2) years. 10. Applicable Law (a) This Agreement, its terms and conditions and all business conducted hereunder shall be governed and interpreted under the laws of the State of Florida, without regard to conflict of laws provisions. The venue of any arbitration between the parties arising from or related to this Agreement shall be in either Miami-Dade County or Palm Beach County, Florida. Any litigation arising from or related to this Agreement shall be brought exclusively in an appropriate state or federal court in Miami-Dade County or Palm Beach County, Florida, and the parties waive any right to challenge such venue. (b) Except for actions brought for wrongful termination or to seek termination of this Agreement, if any disagreement arises regarding the interpretation of any points of the Agreement or any other point not covered herein or any claims for damages or specific performance, the disagreement, upon request of either party hereto delivered in writing to the other party, shall be resolved by arbitration before a single arbitrator in accordance with the commercial rules and procedures set forth by the American Arbitration Association. The prevailing party in any litigation or arbitration brought under 9 this Agreement shall be entitled to recover reasonable attorney's fees and costs. (c) In the event any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the remaining terms shall remain in full force and effect, to effectuate this Agreement in accordance with its intent. Headings, title and subtitles of this Agreement are for convenience of reference only and are not to be considered in construing the terms of this Agreement. 11. Sole and Complete Agreement (a) This Agreement is the sole and complete statement of the parties of their rights and obligations with respect to the subject matter hereof. This Agreement is an integrated agreement and replaces and supersedes any and all previous obligations and agreements between the parties, their predecessors and subsidiaries, both oral and written. The Parties hereto recognize and agree that no representations or warranties have been made except as set forth in this Agreement. Except as may otherwise be expressly provided herein, by signing this Agreement the parties expressly release each other, their predecessors and subsidiaries from any and all existing obligations that pre-date this Agreement as if such obligations have been fully performed and satisfied. Any amendments to this Agreement shall be in writing and executed by both parties hereto. 12. Notices (a) All notices, requests, demands, instructions, consents or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii) mailed postage prepaid by certified mail, return receipt 10 requests, (iii) sent by a nationally recognized express courier service requiring a signature by the recipient, postage or delivery charges prepaid, at the address hereinafter specified, or to such other address as the parties may advise each other in writing from time to time. Any notice shall be addressed as follows: As to Empyrean: Mr. Richard C. Adamany Empyrean Bioscience, Inc. 23800 Commerce Park Road, Suite A Cleveland, Ohio 44122 With a copy to Richard H. Kronthal, Esq. Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, New York 10022 As to IBC: Ms. Sarah Gomez International Bioscience Corporation 777 South Flagler Drive Phillips Point Building East Tower, Suite 909 West Palm Beach, Florida 33401 With a copy to: Joseph L. Raia, Esq. Holtzman, Krinzman, Equels & Furia 2601 South Bayshore Drive, Suite 600 Miami, Florida 33133 13. Assignment (a) Empyrean has no right to sub-license or otherwise assign its rights and delegate its duties under this Agreement. (b) Neither IBC nor Empyrean may assign its rights or delegate its duties under this Agreement without the express written consent of the other party. 11 (c) This Agreement shall be binding on and inure to the benefit of the parties, and their respective legal representatives, successors and assigns. (d) No assignment shall be valid unless accepted in writing by the party to be bound. Any assignment of rights of one party without the express written consent of the other party shall be void, not valid and of no legal effect. 12 IN WITNESS WHEREOF, the parties hereto do hereby sign, enter into and acknowledge this Agreement. INTERNATIONAL BIOSCIENCE CORPORATION By: ____________________________________ Title: _________________________________ EMPYREAN BIOSCIENCE, INC. By: ____________________________________ Title: _________________________________ 13 EXHIBIT A GEDA(R) EX-10.20 10 0010.txt TM LICENSE FROM EMPYREAN TO IBC-EMPYREAN LLC TRADEMARK LICENSE FROM EMPYREAN TO IBC-EMPYREAN LLC (for sales of Licensed Products worldwide with the exception of Brazil and US) TRADEMARK LICENSE FROM EMPYREAN TO IBC-EMPYREAN LLC This License Agreement (the "Agreement") made as of the 9th day of August, 2000 ("the Effective Date") by and among EMPYREAN BIOSCIENCE, INC. ("Empyrean"), a Wyoming corporation, having an office at 23800 Commerce Park Road, Suite A, Cleveland, Ohio 44122, and IBC-EMPYREAN LLC, a Delaware limited liability corporation having an office at ________________ ("IBC-Empyrean LLC"); WITNESSETH THAT: WHEREAS, International Bioscience Corporation ("IBC") and Empyrean each own one-half of the membership interest in IBC-Empyrean LLC, a Delaware limited liability corporation established to manufacture the Licensed Products (as defined below) and to sell and distribute the Licensed Products in all countries of the world except United States and Brazil in accordance with the IBC-Empyrean LLC Operating Agreement executed concurrently herewith (the "Operating Agreement"); WHEREAS, IBC-Empyrean LLC desires to acquire the right to use Empyrean Trade Dress (as defined below) and Trademark (as defined below) on and in connection with the manufacture, promotion, merchandising, distribution and sale of the Licensed Products in the Territory (as defined below); NOW, THEREFORE, in consideration of the premises and of the mutual undertakings hereinafter set forth, and for other good and valuable consideration, Empyrean and IBC-Empyrean LLC hereby agree as follows: 1. DEFINITIONS In this Agreement the following terms shall have the meanings hereinafter specified: (a) "Copyrights" shall mean the copyrights subsisting in the Trade Dress. (b) "Derivative Products" shall mean products hereinafter developed by IBC having an effective amount of Formulation therein, and being of a different product category than those Licensed Products currently being manufactured. (c) "Empyrean Trade Dress" shall mean the two-dimensional or three-dimensional packaging decorations, designs, slogans, tag lines and appliques that are applied to the Licensed Products or packaging therefor. (d) "Formulation" shall mean the proprietary formulation (including manufacturing technology and processes) comprising Benzalkonium Chloride as an active ingredient with Octoxynol 9 (and others) invented and created by Dr. David Thornburgh and exclusively owned by IBC known as the GEDA line of products. (e) "Gel Product" shall mean the spermicide and microbicide contraceptive gel product embodying the Formulation presently being developed by IBC, also known as the GEDA Plus product, designed to prevent the transmission of sexually transmitted diseases including, but not limited to, gonorrhea, chlamydia, syphilis, Trichomonas, herpes I and II and HIV, and which is presently undergoing the appropriate and necessary United States governmental regulatory compliance process to permit IBC-Empyrean LLC to include such product as a Licensed Product hereunder. (f) "Licensed Products" shall mean products having an effective amount of the Formulation therein and having all necessary government approval for commercialization, including, but not limited to, the Lotion Products, Gel Product and any Derivative Products hereinafter developed by IBC. 2 (g) "Lotion Products" (also known as GEDA Lotion) shall mean the hand sanitizing lotion presently being manufactured for Empyrean by Canadian Custom Packaging and sold by Empyrean as a Licensed Product, and presently being marketed by Empyrean under appropriate and necessary United States governmental regulatory compliance. (h) "Territory" shall mean the world with the exception of Brazil and the United States of America and its possessions and territories. (i) "Trademark" shall mean the mark "Prevent-X", any modification, variation or designation of origin that is confusingly similar thereto. 2. REPRESENTATIONS Empyrean represents as follows: (a) Empyrean is the owner of the trademark "Prevent-X" in the United States and certain countries foreign to the United States (the "Trademark"). (b) Empyrean, during the Term of this Agreement will, from time to time, provide IBC-Empyrean LLC with additional Trade Dress (all of which packaging decorations, ornamentations and appliques are collectively, the "Trade Dress"). (c) Empyrean is the owner of all rights, title and interest in and to the copyrights subsisting in the Trade Dress (collectively the "Copyrights"). 3. TRADEMARK LICENSE FROM EMPYREAN TO IBC-EMPYREAN LLC (a) Empyrean hereby grants to IBC-Empyrean LLC, upon the terms and conditions of this Agreement, whatever rights Empyrean may have to use the Trademark and Empyrean Trade Dress in the Territory, on and in connection with 3 the manufacture, promotion, merchandising, distribution and sale of Licensed Products. (b) To the extent such Trademark and/or Trade Dress is available for use in the Territory, IBC-Empyrean LLC shall use the Trademark and Empyrean Trade Dress only on or in connection with the manufacture, promotion, merchandising, distribution and sales of Licensed Products in the Territory. IBC-Empyrean LLC shall not use the Trademark and Empyrean Trade Dress or manufacture or sell products using or incorporating the Trademark and Empyrean Trade Dress except as expressly provided in this Agreement or as approved by Empyrean. (c) Empyrean reserves all rights to the Trademark and Empyrean Trade Dress except as expressly granted herein to IBC-Empyrean LLC. Nothing contained herein shall be deemed or construed to prohibit Empyrean from using or granting the right to use the Trademark and Trade Dress for any purpose in the United States. (d) In the event Empyrean breaches the provisions of this Section, IBC-Empyrean LLC may, in addition to its other rights, including damages, enjoin any such breach upon thirty (30) days written notice specifying the nature of such breach, unless, within such 30-day period Empyrean discontinues such breach and provides a written notice to IBC-Empyrean LLC of such discontinuance together with the identification of the steps taken by Empyrean to discontinue such breach. 4. TRADEMARK (a) IBC-Empyrean LLC recognizes that Empyrean is the owner of all right, title and interest in and to the Trademark in any form or embodiment thereof and is also the owner of the goodwill attached or which shall become attached to the Trademark in connection with the business and goods in relation to which the 4 same has been, is, or shall be used. Sales by IBC-Empyrean LLC shall be deemed to have been made by Empyrean for the purposes of goodwill and all uses of the Trademark by IBC-Empyrean LLC shall inure to the benefit of Empyrean and any rights of Empyrean. IBC-Empyrean LLC shall not at any time intentionally or recklessly do or suffer to be done by anyone acting on its behalf or in connection with IBC-Empyrean LLC any act or thing which will in any way impair the rights of Empyrean in or to the Trademark or any application or registration thereof or which depreciates the value of the Trademark or its reputation. (b) IBC-Empyrean LLC shall, at the request of Empyrean, fully cooperate with Empyrean in preparing, executing and causing to be recorded or filed such agreements (including registered user agreements and other documents reasonably required by Empyrean) to confirm the ownership by Empyrean of the Trademark, and to evidence, protect and implement its rights to the Trademark within and outside the Territory and the respective rights of Empyrean and IBC-Empyrean LLC pursuant to this Agreement. Empyrean and IBC-Empyrean LLC acknowledge that only Empyrean may file and prosecute trademark applications regarding the Trademark or IBC-Empyrean LLC's use of the Trademark anywhere. IBC-Empyrean LLC will cooperate with Empyrean, at Empyrean's request, in connection with the preparation, execution, filing and prosecution of applications to register the Trademark both inside and outside the Territory and the maintenance of such registrations as may issue. Upon expiration or termination of this Agreement for any reason whatsoever, IBC-Empyrean LLC will execute and file such documents as shall be required by Empyrean, including without limitation, termination of any agreements and assignments of rights. 5 (c) IBC-Empyrean LLC shall cause to appear on all Licensed Products and on all materials on or in connection with which the Trademark is used such legend, markings and notice of any trademark, trade name or other rights therein or pertaining thereto as Empyrean shall reasonably require and shall comply with all notice and marking requirements of any law applicable or necessary to the protection of the Trademark. (d) IBC-Empyrean LLC shall never (i) challenge Empyrean's ownership of or right to license, or the validity of, the Trademark, any application for registration thereof or any trademark registration thereof nor (ii) contest the fact that IBC-Empyrean LLC's rights under this Agreement are solely those of a Licensee. (e) At the expiration or termination of this Agreement or the Operating Agreement, except as expressly provided herein, all rights of IBC-Empyrean LLC with respect to use of the Trademark shall thereupon cease and terminate for all purposes whatsoever. 5. QUALITY CONTROL (a) IBC-Empyrean LLC acknowledges that the preservation and enhancement of the value of the Trademark and Trade Dress requires Empyrean to reasonably control the type, image and quality of products manufactured and sold using the Trademark and Trade Dress and the use of the Trademark and Trade Dress in connection with the manufacture and sale of Licensed Products. (b) IBC-Empyrean LLC shall only use the Trademark on the Licensed Products in stylization consistent with and conforming to a Style Guide to be provided to IBC-Empyrean LLC by Empyrean ("Style Guide"). 6 (c) IBC-Empyrean LLC shall only use the Trade Dress consistent with and conforming to the Style Guide provided to IBC-Empyrean LLC by Empyrean. (d) IBC-Empyrean LLC shall submit to Empyrean for Empyrean's approval, samples of all labels, tags, packaging and other materials intended to be used in connection with Licensed Products, before the same may be used, and no use shall be made of the same unless approved by Empyrean in writing, which approval shall not be unreasonably withheld. (e) In order that Empyrean may assure itself of the maintenance of the quality standards set forth in this Agreement: (i) Before manufacturing or having manufactured for it any Licensed Products intended to bear the Trademark and Trade Dress, IBC-Empyrean LLC shall deliver to Empyrean, or as Empyrean may direct, for Empyrean approval, free of charge, one (1) pre-production sample and six (6) production samples related to same, of such Licensed Products intended to be sold by IBC-Empyrean LLC. Nothing herein shall preclude Empyrean from requesting additional samples from IBC-Empyrean LLC in order to monitor quality control, and IBC-Empyrean LLC shall provide such samples when requested. (ii) All Licensed Products bearing the Trademark and Trade Dress manufactured by or for IBC-Empyrean LLC or sold, distributed or promoted by it shall conform in all material respects to the samples approved by Empyrean. (f) IBC-Empyrean LLC shall not use any Trade Dress or samples furnished by Empyrean, created by or for IBC-Empyrean LLC for use in connection with Licensed Products, or approved for such use by Empyrean, except as provided in this Agreement, it being the understanding of the parties that IBC-Empyrean LLC may use the same solely in connection with Licensed Products. 7 (g) IBC-Empyrean LLC will use and display the Trademark and Trade Dress only in such forms and manners as are approved by Empyrean, specifically, as displayed in the Style Guide. (h) IBC-Empyrean LLC shall submit to Empyrean, or as Empyrean may direct, before publication, any and all advertising and promotional material for approval by Empyrean. (i) Except as otherwise expressly provided herein, whenever, under the terms of this Agreement, the approval, consent or permission of Empyrean shall be required, such approval, consent or permission, shall not be unreasonably withheld or delayed. If Empyrean shall deny approval, it shall state in writing the reasons therefor. After any sample, copy or art work has been approved by Empyrean, IBC-Empyrean LLC shall not vary or depart therefrom in any material respect without the further approval of Empyrean. (j) IBC-Empyrean LLC agrees that all Licensed Products will be manufactured, labeled, sold, distributed, promoted and advertised in accordance with all applicable Federal, State and local, and if appropriate, foreign laws and regulations. (k) Subject to the Trademark and Trade Dress requirements set forth herein, the parties agree that co-branding the Trademark and Trade Dress with the trademark of a third party is permitted by IBC-Empyrean LLC as long as such third party trademark preserves the value of the trademark and Trade Dress. 6. COPYRIGHT (a) Empyrean is the owner of all right, title and interest in and to the Trade Dress, Style Guide and Copyrights in any form or embodiment thereof. IBC-Empyrean LLC shall not at any time intentionally or recklessly do or suffer to be done by anyone acting on its behalf or in connection with IBC-Empyrean LLC 8 any act or thing which will in any way impair the rights of Empyrean in or to the Copyrights or any application or registration thereof or which depreciates the value of the Copyrights. (b) IBC-Empyrean LLC shall, at the request of Empyrean, fully cooperate with Empyrean in preparing, executing and causing to be recorded or filed such agreements (including registered user agreements and other documents reasonably required by Empyrean) to confirm the ownership by Empyrean of the Copyrights, and to evidence, protect and implement its rights to the Copyrights inside and outside the Territory and the respective rights of Empyrean and IBC-Empyrean LLC pursuant to this Agreement. IBC-Empyrean LLC acknowledges that only Empyrean may file and prosecute copyright applications regarding the Copyrights or IBC-Empyrean LLC's use of the Trade Dress anywhere. IBC-Empyrean LLC will cooperate with Empyrean, at Empyrean's request, in connection with the preparation, execution, filing and prosecution of applications to register the Copyrights of Licensed Products both inside and outside the Territory and the maintenance of such registrations as may issue, and shall supply to Empyrean at no cost, from time to time such samples, containers, labels and similar materials as may reasonably be required in connection with any such applications. (c) Upon expiration or termination of this Agreement for any reason whatsoever, IBC-Empyrean LLC will execute and file such documents as shall be required by Empyrean, including without limitation, termination of any agreements and assignments of rights. (d) IBC-Empyrean LLC shall cause to appear on all Licensed Products and on all materials on or in connection with which the Trade Dress are used such legend, markings and notice of any copyright or other rights therein or pertaining thereto as Empyrean shall reasonably require and shall comply with all notice and marking requirements of any law applicable or necessary to the protection of the Copyrights. 9 (e) IBC-Empyrean LLC shall never (i) challenge Empyrean's ownership of or right to license, or the validity of, the Trade Dress and the Copyrights, any application for registration thereof or any copyright registration thereof nor (ii) contest the fact that IBC-Empyrean LLC's rights under this Agreement are solely those of a Licensee. (f) At the expiration or termination of this Agreement, except as expressly provided herein, all rights of IBC-Empyrean LLC with respect to use of the Copyrights and Trade Dress shall thereupon cease and terminate for all purposes whatsoever. (g) Any copyright which may be created in the Licensed Products and in any package design, label or the like bearing the Trademark or Trade Dress shall be the property of Empyrean and shall carry such copyright notices as Empyrean may reasonably direct. (h) Any copyrights in and to the Style Guide shall remain property of Empyrean. (i) The artistic and creative designs and ornamental appearances of, and the copyrights, industrial designs and design patents on the Licensed Products shall be the sole property of Empyrean, and IBC-Empyrean LLC agrees to execute such documents as may be required to effectuate this provision. Empyrean hereby grants a license to IBC-Empyrean LLC during the term of this Agreement to use the properties referred to in this section on or in connection with Licensed Products. 7. INFRINGEMENT OF TRADEMARK (a) IBC-Empyrean LLC shall, promptly after becoming aware of same, notify Empyrean of any infringement or imitation of the Trademark and/or Trade Dress, of any use by any person or entity of a trademark or design similar to the 10 Trademark or Trade Dress, or of any unfair competition relating to the Trademark or Trade Dress, or of any other apparent violation of the rights of Empyrean, so as to allow for Empyrean to take such action as Empyrean deems advisable for the protection of Empyrean's rights. IBC-Empyrean LLC shall, if requested by Empyrean, fully cooperate with Empyrean and, if so requested by Empyrean, shall join with Empyrean at IBC-Empyrean LLC's expense, as a party to any action brought by IBC-Empyrean LLC for such purpose. In no event, however, shall Empyrean be required to take any action if Empyrean deems it inadvisable to so do. Empyrean shall have full control over any action taken by it, including without limitation, the right to select counsel, to settle on any terms it deems advisable, in its discretion, to appeal any adverse decision rendered in any court, to discontinue any action taken by it, and otherwise to make any decision in respect thereto as it in its discretion deems advisable. 8. TERMINATION OF TRADEMARK LICENSE FROM EMPYREAN TO IBC-EMPYREAN LLC (a) On the expiration, or termination of this Agreement or the Operating Agreement, except as otherwise expressly provided herein, all rights of IBC-Empyrean LLC hereunder shall terminate forthwith and revert automatically to Empyrean, and neither IBC-Empyrean LLC nor its receivers, trustees, representatives, agents, successors or assigns shall have any right to exploit or in any way use the Trademark or Trade Dress in connection with the manufacture, advertising, merchandising, promotion, sale or distribution of Licensed Products or otherwise or any right to use any designs, patterns, stylings or samples furnished by Empyrean created by or for IBC-Empyrean LLC for use in connection with Licensed Products or approved by Empyrean for such use. 11 Except as otherwise expressly provided herein, upon the expiration or termination of this Agreement or the Operating Agreement, IBC-Empyrean LLC shall forthwith discontinue all use of the Trademark and Trade Dress and any variation or simulation thereof. 9. TERM (a) The term of this Agreement shall begin on the Effective Date and shall continue until the expiration or termination of the Operating Agreement. 10. TERMINATION (a) Empyrean shall have the right to terminate this Agreement upon written notice to IBC-Empyrean LLC at least sixty (60) days prior to the end of any calendar year, in the event that IBC-Empyrean LLC sells no Licensed Products in the Territory for a period of two (2) years. 11. INDEMNITY Empyrean agrees (a) to assume the defense of any suit brought against IBC-Empyrean LLC based upon any claim asserted against any Licensed Product label, Trade Dress or advertising or promotional material that is required and approved by Empyrean; and (b) to indemnify IBC-Empyrean LLC against any money damages and/or costs, including reasonable attorneys fees, provided that (i) Empyrean is given exclusive control of the defense of such suit and all negotiations relative to the settlement thereof, (ii) IBC-Empyrean LLC promptly informs Empyrean in writing of any claims for which Empyrean has assumed responsibility hereunder, and (iii) the liability claim shall not have arisen because of wrongful or negligent conduct by IBC-Empyrean LLC. 12 12. APPLICABLE LAW (a) This Agreement, its terms and conditions and all business conducted hereunder shall be governed and interpreted under the laws of the State of Florida, without regard to conflict of laws provisions. The venue of any arbitration between the parties arising from or related to this Agreement shall be in either Miami-Dade County or Palm Beach County, Florida. Any litigation arising from or related to this Agreement shall be brought exclusively in an appropriate state or federal court in Miami-Dade County or Palm Beach County, Florida, and the parties waive any right to challenge such venue. (b) Except for actions brought for wrongful termination or to seek termination of this Agreement, if any disagreement arises regarding the interpretation of any points of the Agreement or any other point not covered herein or any claims for damages or specific performance, the disagreement, upon request of either party hereto delivered in writing to the other party, shall be resolved by arbitration before a single arbitrator in accordance with the commercial rules and procedures set forth by the American Arbitration Association. Any party may seek a temporary injunction in court to the limited extent necessary to preserve the status quo during the pendency of any arbitration in accordance with this section. The prevailing party in any litigation or arbitration brought under this Agreement shall be entitled to recover reasonable attorney's fees and costs. (c) In the event any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the remaining terms shall remain in full force and effect, to effectuate this Agreement in accordance with its intent. Headings, title and subtitles of this Agreement are for convenience of reference only and are not to be considered in construing the terms of this Agreement. 13 13. SOLE AND COMPLETE AGREEMENT (a) This Agreement is the sole and complete statement of the parties of their rights and obligations with respect to the subject matter hereof. This Agreement is an integrated agreement and replaces and supersedes any and all previous obligations and agreements between the parties, both oral and written. The parties hereto recognize and agree that no representations or warranties have been made except as set forth in this Agreement. Except as may otherwise be expressly provided herein, by signing this Agreement the parties expressly release each other from any and all existing obligations that pre-date this Agreement as if such obligations have been fully performed and satisfied. Any amendments to this Agreement shall be in writing and executed by both parties hereto. 14. NOTICES (a) All notices, requests, demands, instructions, consents or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii) mailed postage prepaid by certified mail, return receipt requested, (iii) sent by a nationally recognized express courier service requiring a signature by the recipient, postage or delivery charges prepaid, at the address hereinafter specified, or to such other address as the parties may advise each other in writing from time to time. Any notice shall be addressed as follows: As to Empyrean: Mr. Richard C. Adamany Empyrean Bioscience, Inc. 23800 Commerce Park Road, Suite A Cleveland, Ohio 44122 With a copy to Richard H. Kronthal, Esq. Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, New York 10022 14 As to IBC-Empyrean LLC: [TO BE FILLED IN] With a copy to Richard H. Kronthal, Esq. Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, New York 10022 and With a copy to: Arthur J. Furia, Esq. Holtzman, Krinzman, Equels & Furia 2601 South Bayshore Drive, Suite 600 Miami, Florida 33133 15. ASSIGNMENT (a) IBC-Empyrean LLC has no right to sub-license or otherwise assign its rights and delegate its duties under this Agreement. (b) Neither IBC nor IBC-Empyrean LLC may assign its rights or delegate its duties under this Agreement without the express written consent of the other party. (c) This Agreement shall be binding on and inure to the benefit of the parties, and their respective legal representatives, successors and assigns. (d) No assignment shall be valid unless accepted in writing by the party to be bound. Any assignment of rights of one party without the express written consent of the other party shall be void, not valid and of no legal effect. 15 IN WITNESS WHEREOF, the parties hereto do hereby sign, enter into and acknowledge this Agreement. EMPYREAN BIOSCIENCE, INC. By: --------------------------------------- Title: ------------------------------------ IBC-EMPREAN LLC FOR EMPYREAN BIOSCIENCE, INC. By: --------------------------------------- Title: ------------------------------------ FOR INTERNATIONAL BIOSCIENCE CORPORATION By: --------------------------------------- Title: ------------------------------------ EX-10.21 11 0011.txt TRADEMARK LICENSE FROM EMPYREAN TO IBC TRADEMARK LICENSE FROM EMPYREAN TO IBC (for sales of Licensed Products in Brazil) TRADEMARK LICENSE FROM EMPYREAN TO IBC This License Agreement (the "Agreement") made as of the 9th day of August, 2000 ("the Effective Date") by and among EMPYREAN BIOSCIENCE, INC. ("Empyrean"), a Wyoming corporation, having an office at 23800 Commerce Park Road, Suite A, Cleveland, Ohio 44122, and INTERNATIONAL BIOSCIENCE CORPORATION ("IBC"), a Florida corporation, having an office at 777 South Flagler Drive, Phillips Point Building, East Tower, Suite 909, West Palm Beach, Florida 33401; WITNESSETH THAT: WHEREAS, IBC and Empyrean each own one-half of the membership interest in IBC-Empyrean LLC, a Delaware limited liability corporation established to manufacture the Licensed Products and to sell and distribute the Licensed Products (as defined below) in all countries of the world except United States and Brazil; WHEREAS, IBC has the right to manufacture, sell and distribute Licensed Product in Brazil; WHEREAS, IBC desires to acquire the right to use Empyrean Trade Dress (as defined below) and Trademark (as defined below) on and in connection with the manufacture, promotion, merchandising, distribution and sale of the Licensed Products in Brazil; NOW, THEREFORE, in consideration of the premises and of the mutual undertakings hereinafter set forth, and for other good and valuable consideration, Empyrean and IBC hereby agree as follows: 1. DEFINITIONS In this Agreement the following terms shall have the meanings hereinafter specified: (a) "Copyrights" shall mean the copyrights subsisting in the Trade Dress. (b) "Derivative Products" shall mean products hereinafter developed by IBC having an effective amount of Formulation therein, and being of a different product category than those Licensed Products currently being manufactured (c) "Empyrean Trade Dress" shall mean the two-dimensional or three-dimensional packaging decorations, designs, slogans, tag lines and appliques that are applied to the Licensed Products or packaging therefor. (d) "Formulation" shall mean the proprietary formulation (including manufacturing technology and processes) comprising Benzalkonium Chloride as an active ingredient with Octoxynol 9 (and others) invented and created by Dr. David Thornburgh and exclusively owned by IBC known as the GEDA line of products. (e) "Gel Product" shall mean the spermicide and microbicide contraceptive gel product embodying the Formulation presently being developed by IBC, also known as the GEDA Plus product, designed to prevent the transmission of sexually transmitted diseases including, but not limited to, gonorrhea, chlamydia, syphilis, Trichomonas, herpes I and II and HIV, and which is presently undergoing the appropriate and necessary United States governmental regulatory compliance process to permit Empyrean to include such product as a Licensed Product hereunder. (f) "Licensed Products" shall mean products having an effective amount of the Formulation therein and having all necessary government approval for commercialization, including, but not limited to, the Lotion Products, Gel Product and any Derivative Products hereinafter developed by IBC. 2 (g) "Lotion Products" (also known as GEDA Lotion) shall mean the hand sanitizing lotion presently being manufactured for Empyrean by Canadian Custom Packaging and sold by Empyrean as a Licensed Product, and presently being marketed by Empyrean under appropriate and necessary United States governmental regulatory compliance. (h) "Net Sales" shall mean the total of gross sales of the Licensed Products by IBC to a third party, at the invoice selling price, net of normal and reasonable cash, trade and quantity discounts and returns for credit, and without deductions for costs incurred in manufacturing, selling, distributing or advertising or for uncollectable accounts. (i) "Territory" shall mean the country of Brazil. (j) "Trademark" shall mean the mark "Prevent-X", any modification, variation or designation of origin that is confusingly similar thereto; 2. REPRESENTATIONS Empyrean represents as follows: (a) Empyrean has the right and authority to enter into this Agreement. (b) Empyrean has executed no agreement in conflict herewith. (c) Empyrean is the owner of the trademark "Prevent-X" in the United States and certain countries foreign to the United States (the "Trademark"). (d) Empyrean, during the Term of this Agreement will, from time to time, provide IBC with additional trade dress (all of which packaging decorations, ornamentations and appliques are collectively, the "Trade Dress" or "Empyrean Trade Dress"). (e) Empyrean is the owner of all rights, title and interest in and to the copyrights subsisting in the Trade Dress (collectively the "Copyrights"). 3 3. TRADEMARK LICENSE FROM EMPYREAN TO IBC (a) Empyrean hereby grants to IBC, upon the terms and conditions of this Agreement, whatever rights Empyrean may have to use the Trademark and Empyrean Trade Dress, in the Territory, on and in connection with the manufacture, promotion, merchandising, distribution and sale of Licensed Products. (b) To the extent such Trademark and/or Trade Dress is available for use in the Territory, IBC shall use the Trademark and Empyrean Trade Dress only on or in connection with the manufacture, promotion, merchandising, distribution and sales of Licensed Products in the Territory. IBC shall not use the Trademark and Empyrean Trade Dress or manufacture or sell products using or incorporating the Trademark and Empyrean Trade Dress except as expressly provided in this Agreement or as approved by Empyrean. (c) Empyrean reserves all rights to the Trademark and Empyrean Trade Dress except as expressly granted herein to IBC. Nothing contained herein shall be deemed or construed to prohibit Empyrean from using or granting the right to use the Trademark and Trade Dress for any purpose in the United States. (d) Nothing contained herein shall be deemed or construed to obligate IBC to use the Trademark or Empyrean Trade Dress on or in connection with the manufacture, promotion, merchandising, distribution or sales of Licensed Products in the Territory. (e) In the event IBC breaches the provisions of this Section, Empyrean may, in addition to its other rights, including damages, enjoin any such breach upon thirty (30) days written notice specifying the nature of such breach, unless, within such 30-day period IBC discontinues such breach and provides a written notice to Empyrean of such discontinuance together with the identification of the steps taken by IBC to discontinue such breach. 4 4. ROYALTIES (a) For the Term of this Agreement, IBC shall pay to Empyrean a Royalty which shall be computed as five percent (5%) of IBC's Net Sales of Licensed Products in the Territory to any third party. Royalties shall be payable regardless of whether the Licensed Product contains Empyrean Trade Dress or Trademark. (b) IBC shall pay all Royalties to Empyrean quarterly, within forty-five (45) days after the end of each calendar quarter. (c) Within forty-five (45) days after the end of each calendar quarter, irrespective of whether any Net Sales have been made or whether any sum is then due to Empyrean, IBC shall deliver to Empyrean via regular mail a complete and accurate written statement setting forth the amount of Licensed Products sold, the gross price at which such Licensed Products were sold, the amount of any discount or allowances given consistent with the terms of this Agreement, the credit for Licensed Products allowed to be returned and other deductions allowed herein to compute Net Sales in specific detail, so as to reasonably allow an audit of underlying documents, together with IBC's calculation of the amount of royalties then due Empyrean for the period covered by such report. 5. REPORTING AND RECORD KEEPING (a) IBC shall keep or cause to be kept accurate, complete and up-to-date books of accounts separately stating by clear means records of all sales of the Licensed Products including records pertaining to invoiced amounts by customer and records pertaining to all freight charges, discounts, allowances, and returns allowed by IBC. Such books and records of accounts shall reflect that a sale of the Licensed Products shall be deemed to have occurred as of the date such Licensed Products were invoiced to IBC's customers. 5 (b) Empyrean or its authorized representatives shall have the right, once each calendar year, to inspect all such records of IBC with respect to the Licensed Products and to make copies of said record utilizing IBC's facilities without charge and shall have free and full access thereto on reasonable notice during the normal business hours of IBC. In the event that such inspection or audit reveals an underpayment by IBC under this Agreement, IBC shall immediately pay to Empyrean the balance of all such amounts found to be due pursuant to such audit or inspection together with interest thereon at the "best commercial customer" rate at the Bank of America, plus six percent (6%) per annum from the date such amounts first became due to Empyrean until all such amounts have been paid in full. Further, if such inspection or audit discloses that, for the annual period reviewed or audited, IBC has underpaid or understated its obligation under this Agreement by twenty percent (20%) or more, then IBC shall also pay three times the reasonable professional fees of the independent representatives engaged to conduct or review such inspection or audit. 6. TRADEMARK (a) IBC recognizes that Empyrean is the owner of all right, title and interest in and to the Trademark in any form or embodiment thereof and is also the owner of the goodwill attached or which shall become attached to the Trademark in connection with the business and goods in relation to which the same has been, is, or shall be used. Sales by IBC shall be deemed to have been made by Empyrean for the purposes of goodwill and all uses of the Trademark by IBC shall inure to the benefit of Empyrean and any rights of Empyrean. IBC shall not at any time intentionally or recklessly do or suffer to be done by anyone acting on its behalf or in connection with IBC any act or thing which will in any way impair the rights of Empyrean in or to the Trademark or any application or registration thereof or which depreciates the value of the Trademark or its reputation. 6 (b) IBC shall, at the request of Empyrean, fully cooperate with Empyrean in preparing, executing and causing to be recorded or filed such agreements (including registered user agreements and other documents reasonably required by Empyrean) to confirm the ownership by Empyrean of the Trademark, and to evidence, protect and implement its rights to the Trademark within and outside the Territory and the respective rights of Empyrean and IBC pursuant to this Agreement. Empyrean and IBC acknowledge that only Empyrean may file and prosecute trademark applications regarding the Trademark or IBC's use of the Trademark anywhere. IBC will cooperate with Empyrean, at Empyrean's request, in connection with the preparation, execution, filing and prosecution of applications to register the Trademark both inside and outside the Territory and the maintenance of such registrations as may issue. Upon expiration or termination of this Agreement for any reason whatsoever, IBC will execute and file such documents as shall be required by Empyrean, including without limitation, termination of any agreements and assignments of rights. (c) IBC shall cause to appear on all Licensed Products and on all materials on or in connection with which the Trademark is used such legend, markings and notice of any trademark, trade name or other rights therein or pertaining thereto as Empyrean shall reasonably require and shall comply with all notice and marking requirements of any law applicable or necessary to the protection of the Trademark. (d) IBC shall never (i) challenge Empyrean's ownership of or right to license, or the validity of, the Trademark, any application for registration thereof or any trademark registration thereof nor (ii) contest the fact that IBC's rights under this Agreement are solely those of a Licensee. 7 (e) At the expiration or termination of this Agreement, except as expressly provided herein, all rights of IBC with respect to use of the Trademark shall thereupon cease and terminate for all purposes whatsoever. 7. QUALITY CONTROL (a) IBC acknowledges that the preservation and enhancement of the value of the Trademark and Trade Dress requires Empyrean to reasonably control the type, image and quality of products manufactured and sold using the Trademark and Trade Dress and the use of the Trademark and Trade Dress in connection with the manufacture and sale of Licensed Products. (b) IBC shall only use the Trademark on the Licensed Products in stylization consistent with and conforming to a Style Guide to be provided to IBC-Empyrean LLC by Empyrean ("Style Guide"). (c) IBC shall only use the Trade Dress consistent with and conforming to the Style Guide provided to IBC-Empyrean LLC by Empyrean. (d) IBC shall submit to Empyrean for Empyrean's approval, samples of all labels, tags, packaging and other materials incorporating the Trademark and/or Trade Dress and intended to be used in connection with Licensed Products, before the same may be used, and no use shall be made of the same unless approved by Empyrean in writing, which approval shall not be unreasonably withheld. (e) In order that Empyrean may assure itself of the maintenance of the quality standards set forth in this Agreement: 8 (i) Before manufacturing or having manufactured for it any Licensed Products intended to bear the Trademark and Trade Dress, IBC shall deliver to Empyrean, or as Empyrean may direct, for Empyrean approval, free of charge, one (1) pre-production sample and six (6) production samples related to same, of such Licensed Products intended to be sold by IBC. Nothing herein shall preclude Empyrean from requesting additional samples from IBC in order to monitor quality control, and IBC shall provide such samples when requested. (ii) All Licensed Products bearing the Trademark and Trade Dress manufactured by or for IBC or sold, distributed or promoted by it shall conform in all material respects to the samples approved by Empyrean. (f) IBC shall not use any Trade Dress or samples furnished by Empyrean, created by or for IBC for use in connection with Licensed Products, or approved for such use by Empyrean, except as provided in this Agreement, it being the understanding of the parties that IBC may use the same solely in connection with Licensed Products. (g) IBC will use and display the Trademark and Trade Dress only in such forms and manners as are approved by Empyrean, specifically, as displayed in the Style Guide. (h) IBC shall submit to Empyrean, or as Empyrean may direct, before publication, any and all advertising and promotional material for approval by Empyrean. (i) Except as otherwise expressly provided herein, whenever, under the terms of this Agreement, the approval, consent or permission of Empyrean shall be required, such approval, consent or permission, shall not be unreasonably withheld or delayed. If Empyrean shall deny approval, it shall state in writing the reasons therefor. After any sample, copy or art work has been approved by Empyrean, IBC shall not vary or depart therefrom in any material respect without the further approval of Empyrean. 9 (j) IBC agrees that all Licensed Products will be manufactured, labeled, sold, distributed, promoted and advertised in accordance with all applicable Federal, State and local, and if appropriate, foreign laws and regulations. (k) Subject to the Trademark and Trade Dress requirements set forth herein, the parties agree that co-branding the Trademark and Trade Dress with the trademark of a third party is permitted by IBC as long as such third party trademark preserves the value of the Trademark and Trade Dress. 8. COPYRIGHT (a) Empyrean is the owner of all right, title and interest in and to the Trade Dress, Style Guide and Copyrights in any form or embodiment thereof. IBC shall not at any time intentionally or recklessly do or suffer to be done by anyone acting on its behalf or in connection with IBC any act or thing which will in any way impair the rights of Empyrean in or to the Copyrights or any application or registration thereof or which depreciates the value of the Copyrights. (b) IBC shall, at the request of Empyrean, fully cooperate with Empyrean in preparing, executing and causing to be recorded or filed such agreements (including registered user agreements and other documents reasonably required by Empyrean) to confirm the ownership by Empyrean of the Copyrights, and to evidence, protect and implement its rights to the Copyrights inside and outside the Territory and the respective rights of Empyrean and IBC pursuant to this Agreement. IBC acknowledges that only Empyrean may file and prosecute copyright applications regarding the Copyrights or IBC's use of the Trade Dress anywhere. IBC will cooperate with Empyrean, at Empyrean's request, in connection with the preparation, execution, filing and prosecution of applications to register the 10 Copyrights of Licensed Products both inside and outside the Territory and the maintenance of such registrations as may issue, and shall supply to Empyrean at no cost, from time to time such samples, containers, labels and similar materials as may reasonably be required in connection with any such applications. (c) Upon expiration or termination of this Agreement for any reason whatsoever, IBC will execute and file such documents as shall be required by Empyrean, including without limitation, termination of any agreements and assignments of rights. (d) IBC shall cause to appear on all Licensed Products and on all materials on or in connection with which the Trade Dress are used such legend, markings and notice of any copyright or other rights therein or pertaining thereto as Empyrean shall reasonably require and shall comply with all notice and marking requirements of any law applicable or necessary to the protection of the Copyrights. (e) IBC shall never (i) challenge Empyrean's ownership of or right to license, or the validity of, the Trade Dress and the Copyrights, any application for registration thereof or any copyright registration thereof nor (ii) contest the fact that IBC's rights under this Agreement are solely those of a Licensee. (f) At the expiration or termination of this Agreement, except as expressly provided herein, all rights of IBC with respect to use of the Copyrights and Trade Dress shall thereupon cease and terminate for all purposes whatsoever. (g) Any copyright which may be created in the Licensed Products and in any package design, label or the like bearing the Trademark or Trade Dress shall be the property of Empyrean and shall carry such copyright notices as Empyrean may reasonably direct. (h) Any copyrights in and to the Style Guide shall remain property of Empyrean. 11 (i) The artistic and creative designs and ornamental appearances of, and the copyrights, industrial designs and design patents on the Licensed Products shall be the sole property of Empyrean, and IBC agrees to execute such documents as may be required to effectuate this provision. Empyrean hereby grants a license to IBC during the term of this Agreement to use the properties referred to in this section on or in connection with Licensed Products. 9. INFRINGEMENT OF TRADEMARK (a) IBC shall, promptly after becoming aware of same, notify Empyrean of any infringement or imitation of the Trademark and/or Trade Dress, of any use by any person or entity of a trademark or design similar to the Trademark or Trade Dress, or of any unfair competition relating to the Trademark or Trade Dress, or of any other apparent violation of the rights of Empyrean, so as to allow for Empyrean to take such action as Empyrean deems advisable for the protection of Empyrean's rights. IBC shall, if requested by Empyrean, fully cooperate with Empyrean and, if so requested by Empyrean, shall join with Empyrean at IBC's expense, as a party to any action brought by IBC for such purpose. In no event, however, shall Empyrean be required to take any action if Empyrean deems it inadvisable to so do. Empyrean shall have full control over any action taken by it, including without limitation, the right to select counsel, to settle on any terms it deems advisable, in its discretion, to appeal any adverse decision rendered in any court, to discontinue any action taken by it, and otherwise to make any decision in respect thereto as it in its discretion deems advisable. 12 10. TERMINATION OF TRADEMARK LICENSE FROM EMPYREAN TO IBC (a) On the expiration, or termination of this Agreement or the IBC-Empyrean LLC Operating Agreement executed concurrently with this Agreement (the "Operating Agreement"), except as otherwise expressly provided herein, all rights of IBC hereunder shall terminate forthwith and revert automatically to Empyrean, and neither IBC nor its receivers, trustees, representatives, agents, successors or assigns shall have any right to exploit or in any way use the Trademark or Trade Dress in connection with the manufacture, advertising, merchandising, promotion, sale or distribution of Licensed Products or otherwise or any right to use any designs, patterns, stylings or samples furnished by Empyrean created by or for IBC for use in connection with Licensed Products or approved by Empyrean for such use. Except as otherwise expressly provided herein, upon the expiration or termination of this Agreement or the Operating Agreement, IBC shall forthwith discontinue all use of the Trademark and Trade Dress and any variation or simulation thereof. 11. TERM (a) The term of this Agreement shall begin on the Effective Date and shall continue for a period of ten (10) years (the "Initial Term"). (b) This Agreement shall be automatically renewed at the conclusion of the Initial Term, and each subsequent Additional Term, if applicable, for Additional Terms of ten (10) years, unless terminated in accordance with Section 12 below. 12. TERMINATION (a) Empyrean shall have the right to terminate this Agreement upon termination of the Operating Agreement. 13 13. INDEMNITY Empyrean agrees (a) to assume the defense of any suit brought against IBC based upon any claim asserted against any Licensed Product label, Trade Dress or advertising or promotional material that is required and approved by Empyrean; and (b) to indemnify IBC against any money damages and/or costs, including reasonable attorneys fees, provided that (i) Empyrean is given exclusive control of the defense of such suit and all negotiations relative to the settlement thereof, (ii) IBC promptly informs Empyrean in writing of any claims for which Empyrean has assumed responsibility hereunder, and (iii) the liability claim shall not have arisen because of wrongful or negligent conduct by IBC. 14. APPLICABLE LAW (a) This Agreement, its terms and conditions and all business conducted hereunder shall be governed and interpreted under the laws of the State of Florida, without regard to conflict of laws provisions. The venue of any arbitration between the parties arising from or related to this Agreement shall be in either Miami-Dade County or Palm Beach County, Florida. Any litigation arising from or related to this Agreement shall be brought exclusively in an appropriate state or federal court in Miami-Dade County or Palm Beach County, Florida, and the parties waive any right to challenge such venue (b) Except for actions brought for wrongful termination or to seek termination of this Agreement, if any disagreement arises regarding the interpretation of any points of the Agreement or any other point not covered herein or any claims for damages or specific performance, the disagreement, upon request of either party hereto delivered in writing to the other party, shall be 14 resolved by arbitration before a single arbitrator in accordance with the commercial rules and procedures set forth by the American Arbitration Association. Any Party may seek a temporary injunction in court to the extent necessary to preserve the status quo during the pendency of any dispute or arbitration proceeding. The prevailing party in any litigation or arbitration brought under this Agreement shall be entitled to recover reasonable attorney's fees and costs. (c) In the event any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the remaining terms shall remain in full force and effect, to effectuate this Agreement in accordance with its intent. Headings, title and subtitles of this Agreement are for convenience of reference only and are not to be considered in construing the terms of this Agreement. 15. SOLE AND COMPLETE AGREEMENT (a) This Agreement is the sole and complete statement of the parties of their rights and obligations with respect to the subject matter hereof. This Agreement is an integrated agreement and replaces and supersedes any and all previous obligations and agreements between the parties, their predecessors and subsidiaries, both oral and written. The Parties hereto recognize and agree that no representations or warranties have been made except as set forth in this Agreement. Except as may otherwise be expressly provided herein, by signing this Agreement the parties expressly release each other, their predecessors and subsidiaries from any and all existing obligations that pre-date this Agreement as if such obligations have been fully performed and satisfied. Any amendments to this Agreement shall be in writing and executed by both parties hereto. 15 16. Notices (a) All notices, requests, demands, instructions, consents or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii) mailed postage prepaid by certified mail, return receipt requests, (iii) sent by a nationally recognized express courier service requiring a signature by the recipient, postage or delivery charges prepaid, at the address hereinafter specified, or to such other address as the parties may advise each other in writing from time to time. Any notice shall be addressed as follows: As to Empyrean: Mr. Richard C. Adamany Empyrean Bioscience, Inc. 23800 Commerce Park Road, Suite A Cleveland, Ohio 44122 With a copy to Richard H. Kronthal, Esq. Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, New York 10022 As to IBC: Ms. Sara Gomez International Bioscience Corporation 777 South Flagler Drive Phillips Point Building East Tower, Suite 909 West Palm Beach, Florida 33401 With a copy to: Joseph L. Raia, Esq. Holtzman, Krinzman, Equels & Furia 2601 South Bayshore Drive, Suite 600 Miami, Florida 33133 16 17. ASSIGNMENT (a) IBC has no right to sub-license or otherwise assign its rights and delegate its duties under this Agreement. (b) Neither IBC nor Empyrean may assign its rights or delegate its duties under this Agreement without the express written consent of the other party. (c) This Agreement shall be binding on and inure to the benefit of the parties, and their respective legal representatives, successors and assigns. (d) No assignment shall be valid unless accepted in writing by the party to be bound. Any assignment of rights of one party without the express written consent of the other party shall be void, not valid and of no legal effect. 17 IN WITNESS WHEREOF, the parties hereto do hereby sign, enter into and acknowledge this Agreement. EMPYREAN BIOSCIENCE, INC. By: ------------------------------------ Title: ---------------------------------- INTERNATIONAL BIOSCIENCE CORPORATION By: ------------------------------------ Title: ---------------------------------- 18 EX-99.1 12 0012.txt PRESS RELEASE PREVENTX(R) FOR IMMEDIATE RELEASE INVESTOR CONTACT: Steve Phillips Edward Howard & Co. (216) 781-2400 MEDIA CONTACT: Diana Lueptow or Steve Phillips Edward Howard & Co. (216) 781-2400 EMPYREAN BIOSCIENCE AND INTERNATIONAL BIOSCIENCE FORM JOINT VENTURE COMPANIES SETTLE ALL OUTSTANDING LEGAL ISSUES CLEVELAND, August 10, 2000 - Empyrean Bioscience Inc. (OTCBB: EMDG) and International Bioscience Corp. (IBC) today announced the formation of a joint venture, to manufacture, market, sell and distribute innovative personal care products throughout the world. The products will be based upon proprietary formulations licensed from IBC designed to prevent the spread of infectious diseases. The creation of this 50/50 joint venture is part of an overall settlement wherein the two companies have resolved all outstanding legal issues between them. The joint venture will operate under a business plan developed jointly by Empyrean and IBC. A board of directors representing both companies will provide oversight, and a team comprising marketing personnel from Empyrean and scientific personnel from IBC will coordinate new product development. Under the agreement, Empyrean will retain full and exclusive rights to sell, market and distribute a wide range of products in the United States based upon IBC formulations. Empyrean will license all Preventx(R) trademarks and logos to IBC and the joint venture. Empyrean will pay IBC a five percent royalty on net sales within the United States. -more- IBC will be granted full and exclusive rights to sell, market and distribute all products using IBC formulations in Brazil. IBC will retain the right, title and interest in all product formulations and will license the GEDA(R) trademarks to both Empyrean and the joint venture. IBC will pay Empyrean a five percent royalty on net sales within Brazil. In exchange for the issuance of 5,000,000 shares of Empyrean common stock, IBC will forgo the payment by Empyrean of any further minimum guaranteed royalties, which total $13,657,000 for the seven years remaining in the initial term of the existing license agreement and $46,311,000 in the first ten-year renewal term. In addition, Empyrean will grant IBC an option to purchase another 2,226,000 shares of Empyrean common stock, having a strike price of $0.83 a share and vesting based upon IBC's completion of critical strategic initiatives. As part of the agreement, IBC agreed to fund clinical trials for the microbicidal contraceptive gel, with a commitment to invest up to $10 million. The trials will be designed to fulfill all requirements for United States Food and Drug Administration approval of the product. The trials will test the efficacy and safety of the microbicidal contraceptive gel against various sexually transmitted diseases including HIV. For all markets other than the United States and Brazil, Empyrean and IBC will operate the joint venture to manufacture, market, sell and distribute products based on the IBC formulations by granting distribution rights to independent, third-party distributors, which will be qualified under requirements developed in the joint venture. "Maximizing the strengths of both companies and truly aligning our interests for the first time, the joint venture will enable us to focus our full, collective attention on realizing the potential that our products offer," said Richard C. Adamany, Empyrean's president and chief executive officer. "By combining forces, we can now aggressively bring products to market that will not only help our shareholders achieve maximum value, but can also lead the worldwide battle against infectious diseases. The joint venture is the perfect marriage of Empyrean's sales, marketing and distribution capabilities with IBC's world-class research, development and regulatory expertise." "We are particularly excited about the potential of our microbicidal contraceptive gel," continued Adamany, "which we believe will be shown to be effective against HIV and a host of other sexually transmitted diseases, and thereby become the leading product in an estimated $2 billion global market." -more- "The settlement allows IBC and Empyrean to work together with regulatory agencies toward expediting the approval of our products," said IBC's President and Chief Executive Officer, Sara Gomez de Ferro. "This cooperation is especially critical to obtain approval for our microbicidal contraceptive gel, which will begin Phase III trials in Brazil for gonorrhea, chlamydia, syphilis, herpes and Trichomonas within the next 120 days, as these trials will be conducted in accordance with USFDA guidelines. IBC has waived its guaranteed minimum royalty payments in exchange for the shares of Empyrean and the opportunity to work together to execute our joint business plan, which we anticipate will be far more profitable to our company than the royalty guarantees." "The global need for an effective microbicide to prevent the transmission of sexual diseases, including enveloped viruses such as HIV, has never been greater," said Dr. David Thornburgh, IBC's chairman. "We are anxious to begin large clinical trials which we hope will confirm the favorable results that were obtained in several pilot studies. By resolving the outstanding issues between our companies, we can now direct our attention to this important task." All pending legal actions between Empyrean and IBC will be dismissed. As part of the settlement, IBC agreed to fully indemnify Empyrean for any damages Empyrean may incur resulting from the legal actions involving Optima Holding Co. Empyrean and IBC will also join forces to resolve the claims against Optima. Empyrean Bioscience is a consumer products company specializing in the marketing, sale and distribution of innovative personal care products designed to prevent the spread of infectious diseases. The company markets its products under the Preventx(R) and Coleman(R) brand names. For more information, see www.empyreanbio.com. International Bioscience Corporation is a company with revolutionary breakthrough products that it believes will change the medical world and people's lives everywhere. The company is the owner of the formulation for GEDA Plus, a microbicidal contraceptive gel and Peloderm, a healing, pain reducing wound dressing. For more information, see www.intlbio.net. -more- THIS PRESS RELEASE INCLUDES STATEMENTS THAT MAY CONSTITUTE FORWARD-LOOKING STATEMENTS MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THE STATEMENTS REGARDING "DESIGNED TO PREVENT THE SPREAD OF INFECTIOUS DISEASES," "WILL PROVIDE OVERSIGHT," "WILL COORDINATE NEW PRODUCT DEVELOPMENT," "GRANTING DISTRIBUTION RIGHTS TO INDEPENDENT, THIRD-PARTY DISTRIBUTORS," "FOCUS OUR FULL, COLLECTIVE ATTENTION ON REALIZING THE POTENTIAL THAT OUR PRODUCTS OFFER," "AGGRESSIVELY BRING PRODUCTS TO MARKET," "HELP OUR SHAREHOLDERS ACHIEVE MAXIMUM VALUE," "LEAD THE WORLDWIDE BATTLE AGAINST INFECTIOUS DISEASES," "WHICH WE BELIEVE WILL BE SHOWN TO BE EFFECTIVE," "BECOME THE LEADING PRODUCT," "EXPEDITING THE APPROVAL OF OUR PRODUCTS," "WHICH WILL BEGIN PHASE III TRIALS," "WHICH WE ANTICIPATE WILL BE FAR MORE PROFITABLE," "BEGIN LARGE CLINICAL TRIALS WHICH WE HOPE WILL CONFIRM THE FAVORABLE RESULTS," "EMPYREAN AND IBC WILL ALSO JOIN FORCES TO RESOLVE" AND "WILL CHANGE THE MEDICAL WORLD AND PEOPLE'S LIVES EVERYWHERE" ARE FORWARD-LOOKING IN NATURE. THESE STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS. SUCH RISKS INCLUDE, AMONG OTHER FACTORS, THE SUCCESS OF THE CLINICAL TRIALS, THE JOINT VENTURE'S ABILITY TO OBTAIN GOVERNMENT APPROVAL, THE ACCEPTABILITY OF THE POTENTIAL PRODUCT IN THE MARKETPLACE, AND THE ABILITY TO OBTAIN SUFFICIENT CAPITAL TO FUND OPERATIONS. ADDITIONAL FACTORS, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM EXPECTATIONS IN THE FORWARD-LOOKING STATEMENTS, ARE SET FORTH IN THE COMPANY'S FORM 10K-SB ANNUAL REPORT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. # # # -----END PRIVACY-ENHANCED MESSAGE-----