Exhibit 10.1
SETTLEMENT
AGREEMENT
This Settlement
Agreement (this “ Agreement ”) is entered
into by and among Bond Laboratories, Inc., a Nevada corporation
(“ Buyer ”), NDS Nutrition Products,
Inc., a Florida corporation (“ Buyer Sub
”), NDS Nutritional Products, Inc., a Nebraska corporation
(“ Seller ”), Cory Wiedel, an individual
(“ Wiedel ”), Ryan Zink, an individual
(“ Zink ” and together with Wiedel, the
“ Shareholders ”), effective as of
September 30, 2009 (the “ Effective Date
”). The Buyer Parties (as defined below) and the
Seller Parties (as defined below), are referred to collectively
hereafter as the “ Settling Parties
”.
A. The
“ Buyer Parties ” shall mean Buyer and
its subsidiaries (including Buyer Sub) and other
“affiliates” (for purposes of this Agreement,
“affiliate” shall have the meaning ascribed to it in
Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended), and their respective predecessors,
successors, assigns, officers, directors, employees, affiliates,
shareholders, partners, agents and representatives.
B. The
“ Seller Parties ” shall mean Seller, the
Shareholders, and their respective heirs, predecessors, successors,
assigns, officers, directors, employees, affiliates, shareholders,
partners, agents and representatives.
WHEREAS , Buyer, Seller and Shareholders are party to
that certain Asset Purchase Agreement, dated as of October 1, 2008,
as amended by that certain First Amendment to Asset Purchase
Agreement, dated March 2, 2009 (the “ Purchase
Agreement ”), pursuant to which Buyer purchased from
Seller the Acquired Assets and assumed the Assumed Liabilities, as
more particularly provided in the Purchase Agreement (the “
Acquisition ”);
WHEREAS , (i) Buyer transferred to Buyer Sub its (A)
rights, title and interest in and to the Acquired Assets, and (B)
liabilities and obligations under the Assumed Liabilities, and (ii)
Buyer Sub acquired and assumed, as appropriate, the Acquired Assets
and the Assumed Liabilities;
WHEREAS , a dispute exists among the Settling Parties
concerning Buyer’s and Seller’s respective performances
under the Purchase Agreement and related agreements, including
payment of earn-out amounts pursuant to the terms of the Purchase
Agreement; and
WHEREAS , the Settling Parties all have agreed to
resolve all of their differences by settlement, as contemplated by
the provisions of this Agreement.
NOW,
THEREFORE , for valuable
consideration, including the obligations, promises and rights
created herein, the Settling Parties agree to the foregoing and as
follows:
1.
Secured Promissory
Note .
Buyer and Buyer Sub
shall enter into a secured promissory note in favor of Seller,
dated as of the Effective Date, in substantially the form as
attached Exhibit A (the “ Note ”),
which shall provide as follows: (i) the Note shall be in the
aggregate principal amount of $621,775,01; (ii) the Note shall
supersede and replace in its entirety each of the following secured
promissory notes: (A) that certain Secured Promissory Note
(Component Inventory), dated as of October 1, 2008, made by Buyer
in favor of Seller (the “ Component Inventory
Note ”); (B) that certain Secured Promissory Note
(Fixed Assets), issued as of October 1, 2008 (the “
Fixed Assets Note ”), made by Buyer in favor of
Seller; and (C) that certain Secured Promissory Note (Installment)
dated as of October 1, 2008, made by Buyer in favor of Seller (the
“ Installment Note ” and together with
the Component Inventory Note and the Fixed Assets Note, the “
Prior Notes ”); and (iii) Buyer’s and
Buyer Sub’s payment obligation under the Note shall be
secured by Seller’s security interest in the
“Collateral”, as defined and described in that certain
Security Agreement, dated as of October 1, 2008, as amended
pursuant to that certain Amendment No. 1 to Security Agreement,
dated as of the Effective Date, in substantially the form as
attached Exhibit B (such Security Agreement, as amended, the
“ Amended Security Agreement
”). The Settling Parties expressly agree that upon
execution and issuance of the Note, the Prior Notes shall be null
and void and shall cease to be of further force or
effect.
2.
Amendment/Termination of
Acquisition Agreements . The Settling Parties herby
acknowledge and agree that upon execution of this Agreement: (i)
the terms and provisions of the Purchase Agreement, as amended by
that certain Amendment No. 2 to Asset Purchase Agreement, dated as
of the date hereof (the “ Purchase Agreement
Amendment ” and together with the Purchase Agreement,
the “ Amended Purchase Agreement ”),
shall continue in full force and effect; (ii) the terms and
provisions of the Amended Security Agreement shall continue in full
force and effect; (iii) the Prior Notes shall be null and void and
shall cease to be of further force or effect; (iv) that certain
Stock Rights and Restriction Agreement, dated as of October 1, 2008
(the “ Original Restriction Agreement ”),
as amended by that certain Amendment No. 1 to Stock Rights and
Restriction Agreement, dated effective as of September 3, 2009,
(the “Restriction Agreement Amendment” ,
and together with the Original Restriction Agreement, the “
Amended Restriction Agreement ”), shall
continue in full force and effect; and (v) that certain Supply,
License and Transition Services Agreement, dated as of October 1,
2008 (the “ Original Supply Agreement ”),
by and between Buyer and Complete Nutrition Holdings, Inc., a
Nebraska corporation (f/k/a “Complete Nutrition, Inc.”)
(“ CNH ”), as amended by that certain
Amendment No. 1 to Supply, License and Transition Services
Agreement, dated as of the date hereof, by and among Buyer, Buyer
Sub and CNH in substantially the form as attached Exhibit C
(the “ Supply Agreement Amendment ”, and
together with the Original Supply Agreement, the “
Supply Agreement ”), shall continue in full
force and effect. For purposes of clarity, each
agreement not specifically referenced above, including, without
limitation, those certain Proprietary Information, Non-Competition
and Non-Solicitation Agreements between Buyer, on one hand, and
each of Seller, Wiedel and Zink, on the other hand, each dated as
of October 1, 2008, shall remain in full force and effect;
provided , however , all agreements between the
Settling Parties shall in all respects be subject to the terms of
that certain Agreement, dated effective as of September 1, 2009, by
and among Buyer, Buyer’s Sub, Seller, Wiedel and Zink (the
“ Zink Agreement ”) which sets forth the
Settling Parties’ agreements with respect to the matters
specified therein, including Zink’s ability to provide
consulting or employment services on behalf of CNH.
3.
Purchase of Seller Product
Inventory; Prior Note Payment . Prior to the execution of this
Agreement, Buyer shall make or cause to be made a cash payment to
Seller (via wire transfer of immediately available funds) in the
amounts of (a) $43,551.41, which amount represents all sums owed by
Buyer to Seller as of immediately prior to the execution of this
Agreement for Product Inventory (as defined in Section 1.6 of the
Purchase Agreement) acquired from Seller pursuant to Section 1.6 of
the Purchase Agreement but not yet paid for by Buyer; and (b)
$44,007.51, which represents a partial payment of the $55,009.39
amount (the “ September 2009 Notes Payment
”) owed by Buyer to Seller on September 1, 2009 pursuant to
the Prior Notes. The Buyer Parties and Seller Parties
acknowledge and agree that the remaining $11,001.88 of the
September 2009 Notes Payment shall be included as part of the
principal amount of Note.
4.
License of Rights to NDS
Name .
(a)
License Grant . Seller hereby acknowledges
and agrees that Buyer has been using derivations of the name
“NDS Nutritional Products” in the conduct of its
business since October 1, 2008 as permitted pursuant to the terms
of the Amended Purchase Agreement. Subject to the
following sentence, as of the date hereof, Seller hereby confirms
and grants to Buyer (to the extent that Seller has any applicable
right, title and interest) a perpetual, exclusive, royalty-free,
worldwide, transferable, sublicensable license to use and otherwise
exploit the Marks and associated trade dress, logos and related
intellectual property (collectively, the “ Intellectual
Property ”) in connection with the business of Buyer
and/or Buyer’s designee. Seller may revoke the
foregoing license upon the occurrence, and during the continuance,
of an Event of Default (as defined in the Note) under
Section 4.1(a)(i), (ii), (v) and (vii) of the Note; provided,
however, that Seller shall allow Buyer and Buyer Sub to continue to
use the Marks for a period of up to thirty (30) days after delivery
of the notice of revocation solely to the extent necessary to allow
Buyer Sub to continue operation of its business while it phases out
its use of the Marks. For purposes of this Agreement,
“ Marks ” means the name “NDS
Nutritional Products” and all derivations thereof in which
Seller might have any rights, title and interest.
(b)
Assignment . Immediately upon discharge in
full of Buyer’s and Buyer Sub’s obligations under the
Note (or any replacement thereof or substitution therefore) Seller
and Buyer (or Buyer’s designee, as deemed appropriate by
Buyer), shall enter into an assignment, effective as of the
Effective Date, in substantially the form as attached Exhibit
D (the “ Assignment ”), pursuant to
which Seller shall, among other things, transfer, assign, deliver
and convey to Buyer or Buyer’s designee, at no cost to Buyer
or Buyer’s designee, all of Seller’s rights, title and
interest in and to the Intellectual Property. Seller
covenants and agrees that it will use reasonable best efforts to
cooperate with Buyer or Buyer’s designee to accomplish this
transfer, assignment, delivery and conveyance (including effecting
any required name change filings with the Nebraska Secretary of
State).
5.
Mutual Release
. In consideration of all of the
terms and conditions of this Agreement (including without
limitation the mutual releases provided herein), except as
expressly provided below, the Buyer Parties hereby release the
Seller Parties, and the Sel
