The clinic...
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JOINT VENTURE AGREEMENT
THIS AGREEMENT (hereinafter "the agreement"), is made and entered into as
of the 30th day of January, 2002, by and between NUTRA PHARMA CORP., a
California corporation, at 79811 "A" Country Club Drive, Bermuda Dunes,
California 92201 U.S.A., (hereinafter "NPHC"), and TERRA BIOPHARMA, S.A., a
corporation formed under the laws of the Republic of Panama, at Edificio
Vallarino, Floor 6th, P.O. Box 4413, Zone 5, Panama City, Republic of Panama,
(hereinafter "TBPH"), provides as follows:
.
.
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5. RIGHTS AND RESPONSIBILITIES OF TERRA BIOPHARMA
TBPH shall have the following rights and responsibilities with regard to
the joint venture:
1. TBPH shall lease suitable space and convert said space into a clinic,
according to hospital industry standards set by the Health Department of
Nicaragua, and as approved by the Chief Science Officer of NPHC, and shall
staff the clinic with four nurses, two licensed treating doctors, two blind
assessors, and 3 cleaning personnel. TBPH shall maintain a small manufacturing
plant within the clinic to serve the clinical trials, which plant shall be
constructed according to internationally acceptable standards and as approved
by the Chief Science Officer of NPHC, and be capable of producing 10 pounds per
day of product.
2. TBPH shall purchase suitable land for, and construct the manufacturing
plant, according to internationally acceptable standards and subject to the
approval of the Chief Science Officer of NPHC. The plant shall be sufficient
to produce one ton per month of product per shift, with a capacity of three
shifts.
3. TBPH shall provide all of the product as is ordered by NPHC, up to
the manufacturing plant's capacities. TBPH shall maintain quality control on
the manufacturing of the product, and packaging of the product for shipment to
destinations specified by NPHC.
4. TBPH shall submit to NPHC copies of all receipts for all expenditures
made pursuant to the budget, and shall submit all budget requests to NPHC in
advance.
5. TBPH shall be a guaranteed sales agent of all products.
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Later...
COMPANY HISTORY
ACQUISITION OF NUTRA PHARMA, INC.
On November 23, 2001, the Company completed the acquisition of 100% of the issued and outstanding common stock of Nutra Pharma, Inc., (“NPI”) a privately held company. This acquisition was made pursuant to an Agreement and Plan for Exchange of Common Stock between Nutra Pharma, NPI, and its sole stockholder. NPI was formed on May 3, 2001 under the laws of the State of Nevada and at the time of this acquisition, the only asset that NPI had, was an exclusive license agreement (the “License Agreement”) through which NPI owned the exclusive worldwide rights to distribute a medicinal compound. The principal products that were to be developed from this medicinal compound were products designed to treat and heal open wounds and other skin disorders such as acne and psoriasis. NPI was a development stage company, as it had not realized any revenue from the date of its inception on May 3, 2001 up to the date that it was acquired by the Company on November 23, 2001.
To effect this transaction, the Company issued 4,500,000 shares of its restricted common stock to NPI’s sole stockholder, in exchange for 100% of the issued and outstanding common stock of NPI. At the time of the acquisition, NPI, as the licensee under the License Agreement, owed $1,750,000 to Terra Bio Pharma, S.A. (“TBPH”), a Panamanian company, which was the licensor of the medicinal compound that was the subject of the License Agreement. The term of the License Agreement was for a period of five (5) years commencing in May 2001. Payments to TBPH under the License Agreement were to be made in installments through May 2003.
JOINT VENTURE WITH TERRA BIOPHARMA
On January 30, 2002, the Company entered into a Joint Venture Agreement (the “JV Agreement”) with TBPH, whereby it acquired a 50% ownership interest in a newly formed Panamanian company called Terra Nutra, S.A. (“Terra Nutra”). This JV Agreement superseded the License Agreement between TBPH and NPI. The purpose of the joint venture was to patent the raw material composition, manufacturing process and various uses of the medicinal compound that was the subject of the License Agreement between TBPH and NPI. Pursuant to the JV Agreement, the parties agreed that the patent for the raw material composition and the patent for the manufacturing process would be owned by TBPH. Terra Nutra would own all future patents for all subsequent uses and products.
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As part of the JV Agreement, the Company agreed to pay $1,740,000 to TBPH to secure the exclusive, worldwide distribution rights to all products derived from the medicinal compound. This sum was to be paid in monthly installments of varying amounts over a sixteen (16) month period beginning in July 2002. The Company also agreed to pay all costs associated with purchasing and developing the land that was to be used for growing the raw material that was required to produce the medicinal compound, the costs associated with the construction of a manufacturing plant used to process the raw material and the costs associated with clinical trials and patent applications. The JV Agreement acknowledged that amounts paid toward these costs would be deducted from the amount owing under the License fee. The Company also agreed to pay a 3% royalty to TBPH on gross sales from any product ultimately derived from the medicinal compound.
RESCISSION OF ACQUISITION OF NUTRA PHARMA INC.
On May 14, 2002, the Company notified TBPH of its intent to rescind the JV Agreement due to the lack of progress made by TBPH toward applying for patents. The Company also notified NPI’s sole stockholder of its intent to rescind the NPI Agreement in order to recover the 4,500,000 shares that were issued in connection with the NPI Agreement. The Company also notified certain other stockholders holding a portion of the 4,500,000 shares of common stock (the “Individual Stockholders”) that had received shares through a transfer from NPI’s sole stockholder. The notifications specified that the Company had rescinded the NPI Agreement and had instructed its transfer agent to place a stop transfer on all stock certificates that represented the 4,500,000 shares issued in connection with the NPI Agreement.
On October 23, 2002, the Company received a total of 2,037,500 shares of its common stock from a group that included NPI’s sole stockholder and other Individual Stockholders. These shares were cancelled and returned to the Company’s Treasury.
On December 23, 2002, the Company, and NPI’s sole stockholder agreed to rescind the NPI Agreement dated November 23, 2001. Pursuant to a Rescission, Settlement and Release Agreement, NPI’s sole stockholder agreed to facilitate the return of 2,092,500 of the 4,500,000 shares of common stock that were issued by the Company in connection with the NPI Agreement. Of the 2,092,500 shares, 2,037,500 were previously returned on October 23, 2002. As part of this Rescission Agreement, upon the receipt by the Company of the additional 55,000 shares, NPI’s sole stockholder would receive 450,000 shares of free trading common stock directly from an existing stockholder of the Company who was also an Officer and Director of the Company. The 55,000 shares were subsequently received on January 17, 2003 and were cancelled and returned to the Company’s Treasury.
From February 10, 2003 to February 23, 2004, the Company received an additional 2,180,000 shares of its common stock from four Individual Stockholders. These shares were cancelled and returned to Treasury. At March 31, 2004, the Company had an agreement in place to recover an additional 15,000 shares from an Individual Stockholder. Upon the return of these shares, a total of 4,287,500 of the 4,500,000 shares originally issued to NPI’s sole stockholder will have been returned. The remaining 212,500 shares are deemed by the Company to be irretrievable.
FAILED ACQUISITION OF BIOTHERAPEUTICS |
