CLOSING AGREEMENT
This Closing Agreement (this "AGREEMENT") is made effective as of December
10, 2004, by and among Biofarm, Inc., a Nevada corporation ("BIOF"), and
friendlyway, Inc. a Delaware corporation ("FWAY"), and each of FWAY's
stockholders listed in EXHIBIT A attached hereto (collectively, the "FWAY
STOCKHOLDERS"), with reference to the material facts and circumstances set forth
in the Recitals below.
RECITALS
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A. BIOF, FWAY and FWAY Stockholders are parties to that certain Share
Exchange Agreement ("EXCHANGE AGREEMENT") of even date herewith pursuant to
which BIOF will acquire all of the issued and outstanding shares of FWAY's
capital stock from the FWAY Stockholders in exchange for issuance of shares of
BIOF's Common Stock to the FWAY Stockholders (the "EXCHANGE").
B. To memorialize certain changes in circumstances since the execution of
the Exchange Agreement as more particularly described herein and to facilitate
the Closing, the parties to the Exchange Agreement desire to enter into this
Closing Agreement.
C. The parties are executing this Agreement to memorialize their
understanding regarding the foregoing.
AGREEMENT
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NOW, THEREFORE, in consideration of the covenants, promises and
representations made under the Exchange Agreement, set forth herein, and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
follows:
SECTION 1
INTERPRETATION.
1.1 INTERPRETATION. Except as stated otherwise in this Agreement, the
Exchange Agreement, including any Exhibit and Schedule thereto, shall remain in
full force and effect. In the event of a conflict between the provisions of this
Agreement and those of the Exchange Agreement, this Agreement shall control.
Terms with initial capital letters are defined terms which shall have the
respective meanings given them in the Exchange Agreement, unless the context of
this Agreement requires otherwise.
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SECTION 2
CHANGES.
2.1 ADDITIONAL FWAY STOCKHOLDERS. As more particularly described in
Schedule 3.3 of the Schedule of Exceptions attached hereto as EXHIBIT B,
subsequent to the execution of the Exchange Agreement, the following parties
(the "NEW STOCKHOLDERS") became stockholders of FWAY: (a) Pacific Capsource,
Inc.; (b) Xxxx Xxxxx Xxxxxxxxxxxx; (c) Xxxxx Xx; and (d) Derma Plus, Inc. For
all purposes, the New Stockholders shall be deemed to be parties to the Exchange
Agreement and shall be treated as FWAY Stockholders (as that term is defined in
the Exchange Agreement). EXHIBIT A to the Exchange Agreement shall be deemed to
be amended and restated to be as set forth on EXHIBIT A to this Agreement.
2.2 SCHEDULE OF EXCEPTIONS. The Schedule of Exceptions attached hereto as
EXHIBIT B sets forth exceptions to FWAY's, FWAY Stockholders', and BIOF's
respective representations and warranties as of the Closing. The Schedule of
Exceptions attached to the Exchange Agreement shall be deemed to be amended and
restated to be as set forth on EXHIBIT B to this Agreement.
2.3 FAILURE OF CONVERSION CONDITIONS RELATING TO ISSUANCE OF BIOF COMMON
STOCK. FWAY represents and warrants that with respect to the five (5) Unsecured
Convertible Promissory Notes (the "NOTES") listed in Schedule 3.3(B) of the
Schedule of Exceptions attached hereto, because the Conversion Conditions
(defined in the Notes) did not occur prior to November 15, 2004 as required, the
principal and accrued interest on the Notes will not convert into 2,833,333
shares of BIOF Common Stock as provided for in the Notes.
2.4 WAIVER OF CERTAIN CONDITIONS TO CLOSING. FWAY and each of the FWAY
Stockholders hereby waive the following conditions to their respective
obligation to close as more particularly described in Section 7 of the Exchange
Agreement: (a) Section 7.9 (Voting Agreement); (b) 7.11 (Lockup Agreement); and
(c) Section 7.15 (Registration Rights). Notwithstanding the foregoing, however,
BIOF agrees that subsequent to the Closing it shall execute the Voting
Agreement, Registration Rights Agreement, and the Finder's Fee Agreement
substantially in the forms previously delivered to BIOF.
2.5 AFFIRMATION BY FWAY STOCKHOLDERS. Each of the FWAY Stockholders hereby
affirms to its actual knowledge, as of the effective date of this Agreement,
that: (a) it is not aware of any breach by BIOF of any of BIOF's representations
and warranties set forth in the Exchange Agreement, and (b) there are no facts
or circumstances actually known to such FWAY Stockholder giving rise to an FWAY
Stockholders Claim (as defined in the that certain Indemnification Agreement
dated effective December 10, 2004 by and among BIOF, FWAY, FWAY Stockholders and
certain Trustees (the "INDEMNIFICATION AGREEMENT")). Furthermore, the parties
acknowledge and agree that notwithstanding the foregoing affirmation, nothing
shall preclude an FWAY Stockholder from pursuing an FWAY Stockholder Claim
predicated upon any facts or circumstances that become known to such FWAY
Stockholder at any time subsequent to the effective date of this Agreement.
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SECTION 3
MISCELLANEOUS.
3.1 AMENDMENT. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument referencing this Agreement and signed by FWAY, each FWAY
Stockholder and BIOF.
3.2 NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be sent overnight courier, by facsimile
or otherwise delivered by hand or by messenger addressed:
(a) if to BIOF:
To the CEO or President of BIOF at the address stated in
the then most current BIOF SEC Document.
(b) if to FWAY:
friendlyway, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
(c) If to the FWAY Stockholders:
To the contact person at the address set forth in
EXHIBIT A.
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Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by courier, at the earlier of its receipt or
48 hours after the same has been given to a reputable courier service, addressed
and mailed as aforesaid, if sent by facsimile, upon confirmation of facsimile
transfer.
3.3 GOVERNING LAW. This Agreement shall be governed in all respects by the
internal laws of the State of California as applied to agreements entered into
among California residents to be performed entirely within California, without
regard to principles of conflicts of law.
3.4 SUCCESSORS AND ASSIGNS. This Agreement, and any and all rights, duties
and obligations hereunder, shall not be assigned, transferred, delegated or
sublicensed by any party without the prior written consent of the other parties.
Any attempt by a party without such permission to assign, transfer, delegate or
sublicense any rights, duties or obligations that arise under this Agreement
shall be void. Subject to the foregoing and except as otherwise provided herein,
the provisions of this Agreement shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
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3.5 ENTIRE AGREEMENT. The Exchange Agreement and this Agreement constitute
the full and entire understanding and agreement among the parties with regard to
the subjects hereof and thereof. No party shall be liable or bound to any other
party in any manner with regard to the subjects hereof or thereof by any
warranties, representations or covenants except as specifically set forth herein
or therein.
3.6 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any party to this
Agreement upon any breach or default of any other party under this Agreement
shall impair any such right, power or remedy of such non-defaulting party, nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring, nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement (including, without
limitation, the remedies described in Section 10) or by law or otherwise
afforded to any party to this Agreement, shall be cumulative and not
alternative.
3.7 SEVERABILITY. If any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, portions of such provision, or such provision in its entirety, to the
extent necessary, shall be severed from this Agreement, and such court will
replace such illegal, void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
same economic, business and other purposes of the illegal, void or unenforceable
provision. The balance of this Agreement shall be enforceable in accordance with
its terms.
3.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
3.9 TELECOPY EXECUTION AND DELIVERY. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto and
delivered by such party by facsimile or any similar electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen. Such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute and deliver an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
3.10 JURISDICTION; VENUE. With respect to any disputes arising out of or
related to this Agreement, the parties consent to the exclusive jurisdiction of,
and venue in, the state courts in San Francisco County in the State of
California (or in the event of exclusive federal jurisdiction, the courts of the
Northern District of California).
3.11 CONSTRUCTION. No provision of this Agreement shall be construed in
favor of or against any party on the ground that such party or its counsel
drafted the provision. Any remedies provided for herein are not exclusive of any
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other lawful remedies which may be available to either party, except as
otherwise provided in this Agreement. This Agreement shall at all times be
construed so as to carry out the purposes stated herein. Time shall be of the
essence.
3.12 ATTORNEY'S FEES. In the event that any suit or action is instituted
to enforce any provisions in this Agreement, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation all fees, costs and expenses of
appeals.
(THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK.)
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IN WITNESS WHEREOF, this Closing Agreement is executed as of the date
first written above.
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BIOFARM, INC., a Nevada corporation FRIENDLYWAY AG, a German corporation
By: ______________________________
By: ______________________________ Name: ___________________________
Name: ___________________________ Title: _____________________________
Title: _____________________________
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FRIENDLYWAY, INC., a Delaware
corporation
By: ______________________________ __________________________________
XXXXXXXXX XXX XXXXXXXX
Name: ___________________________
Title: _____________________________
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XXXXX XX XXXX XXXXX JOHANNSMEIER
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DERMA PLUS, INC., a Nevada corporation PACIFIC CAPSOURCE, INC., a Nevada
corporation
By: ______________________________
By: ______________________________
Name: ____________________________
Name: ____________________________
Title: _____________________________
Title: _____________________________
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EXHIBIT "A"
FWAY STOCKHOLDERS
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EXHIBIT "B"
SCHEDULE OF EXCEPTIONS
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[SEE ATTACHED]
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