EXHIBIT 6.1
FUNDING AGREEMENT
This Agreement, entered into this 23rd day of March 1999, is by,
between, and among Xxxxxxx X. XxXxxx, an individual ("XxXxxx"), Great
Expectations Family Limited Partnership, a Colorado limited partnership
("GEFLP"), Growth Ventures, Inc., a Colorado corporation ("GVI"), Imagenetix,
a California corporation ("Imagenetix"), Internet International Business
Management, Inc., a Colorado corporation ("IIBM").
RECITALS:
WHEREAS, Imagenetix has entered into an Exchange Agreement dated of even
date herewith by, between, and among IIBM, Imagenetix, and the shareholders
of Imagenetix (hereinafter the "Exchange Agreement") whereby Imagenetix shall
become a wholly owned subsidiary of IIBM;
WHEREAS, subsection 1.3 of the Exchange Agreement requires IIBM to
furnish a $300,000 line of credit to Imagenetix;
WHEREAS, XxXxxx, GEFLP, and GVI, or its assigns, (hereinafter
collectively the "Funding Parties") have agreed with IIBM to provide the
$300,000 line of credit to satisfy the requirements of subsection 1.3 of the
Exchange Agreement, and Imagenetix is willing to accept funding from IIBM as
set forth herein in satisfaction of the requirements of such subsection 1.3;
WHEREAS, the parties hereto have agreed to the funding provisions as set
forth herein;
NOW, THEREFORE, in consideration of the mutual terms and conditions set
forth herein, and other valuable consideration, the receipt and sufficiency
of which is hereby
acknowledged, the parties hereto agree as follows:
1. LINE OF CREDIT. The Funding Parties, severally and not jointly,
each hereby agrees to loan to IIBM, and IIBM hereby agrees to loan to
Imagenetix, upon reasonable request, up to the following maximum amount of
funds which shall be made available to IIBM, and IIBM shall make available to
Imagenetix, in the following order:
Amount
Name of Loan Payment Date
---- ------- ------------
XxXxxx $50,000 As of the date of this Agreement
GEFLP $50,000 As of the date of this Agreement
GVI, or its assigns $200,000 As of the Closing of the Exchange
Agreement, as provided therein
The terms and conditions of the loans to IIBM are set forth in the form of
Promissory Note, a copy of which is attached hereto as Exhibit "B-1" and
incorporated herein (the "IIBM Note"). The terms and conditions of the loans
from IIBM to Imagenetix are set forth in the form of Promissory Note, a copy
of which is attached hereto as Exhibit "B-2" and incorporated herein (the
"Imagenetix Note"). Simultaneous with the furnishing of funds by one of the
Funding Parties to IIBM, IIBM shall execute and deliver an IIBM Note to such
party. Simultaneous with the furnishing of funds by IIBM to Imagenetix,
Imagenetix shall execute and deliver an Imagenetix Note to IIBM. The
principal and interest due under the IIBM Note shall be convertible into
shares of common stock of IIBM, at the option of the lending party, as set
forth in the IIBM Note. Without prior notice or approval, GVI may assign all
or part of its obligation to furnish the funds set forth above to one or more
parties who, at the time of furnishing such funds, shall agree to be subject
to the terms and conditions of this Agreement.
2. DRAWS OF FUNDS. Each request for funds pursuant to this Agreement
shall be accompanied by a reasonable description of the use of such funds,
which funds shall be used for the business of Imagenetix. Each such request
shall be subject to the approval of Xxxx X. XxXxxx, which approval shall not
be unreasonably withheld.
3. ISSUANCE OF WARRANTS. As partial consideration for the Funding
Parties providing the funding to IIBM, IIBM shall issue to the members of the
Funding Parties one "A" warrant and one "B" warrant to purchase common shares
of IIBM for each $1.00 loaned by the particular member of the Funding
Parties, which warrants shall be subject to the terms and conditions set
forth in the forms attached hereto as Exhibits "B-3" and "B-4" and
incorporated herein (the "Warrants"). The Warrants shall be issued, and
Warrant certificates delivered, not later than the Closing of the Exchange
Agreement separately to each member of the Funding Parties providing the
loaned funds.
4. REGISTRATION RIGHTS. The Purchaser hereby grants the following
registration rights in connection with the shares issuable upon conversion of
the IIBM Note, the Warrants, and the shares underlying such Warrants:
a. REGISTRATION STATEMENT. IIBM shall include in the registration
statement
(the "Registration Statement") filed by IIBM pursuant to subsection 5.15 of
the Exchange Agreement the shares issuable upon conversion of the IIBM Note,
the Warrants, and the shares of common stock of IIBM underlying the Warrants
(hereinafter the "Registerable Shares").
b. PIGGYBACK RIGHTS. If for any reason the Registration
Statement is not filed, or does not become effective, and IIBM files a
subsequent registration statement with the U.S. Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933 (the "Securities
Act") with respect to shares of its common stock, prior to five years
following the date of this Agreement, on a form appropriate for registering
the Registerable Shares, IIBM shall give written notice thereof to the
holders of the Registerable Shares prior to such filing, and the holders of
the Registerable Shares shall have the right to request to have included
therein such number of the Registerable Shares as shall be specified in such
request, provided, however, that the inclusion of such shares shall not
unreasonably interfere with IIBM's registration of its shares and that in no
event shall IIBM be obligated (i) to file such registration statement at any
time other than during the period ended five years following the date of this
Agreement, or (ii) to keep the prospectus with respect to such stock current
for more than five years after the effective date of the registration
statement. If Vendor does not make a request for such registration within
twenty days after receipt of notice from IIBM, IIBM shall have no obligation
to include any such Registerable Shares in such registration statement, or in
any future registration statement.
c. UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares being issued by IIBM under subparagraph
(b) above, IIBM shall not be required under subparagraph (b) to include any
of the Registerable Shares in such underwriting unless the holders of the
Registerable Shares accept the terms of the underwriting as agreed upon
between IIBM and the underwriters selected by it, and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the
success of the offering by IIBM. If the total amount of securities,
including the Registerable Shares, requested to be included in such offering
exceeds the amount of securities sold other than by the Company that the
underwriters reasonably believe compatible with the success of the offering,
only the number of such securities, including the Registerable Shares, which
the underwriters believe will not jeopardize the success of the offering, but
in no event shall (i) the number of Registerable Shares included in the
offering be reduced below ten percent (10%) of the total number of shares
included in such offering.
d. STATE REGISTRATIONS. At the written request of a majority of
the holders of the Registerable Shares, IIBM shall file a registration
statement with one state in which the such parties intends to sell the
Registerable Shares, provided that such filing can be made without
unreasonable expense to IIBM and without materially affecting the
registration statement filed with the SEC. IIBM shall cooperate with the
holders of the Registerable Shares in the filing of a registration statement
in one or more additional states, provided that the holders of such
Registerable Shares shall reimburse IIBM for its time, effort, and costs
reasonably associated with such filings.
e. PAYMENT OF EXPENSES. IIBM shall bear all expenses incurred by
it in registering the Registerable Shares hereunder, including without
limitation, all filing, registration and qualification fees of the SEC or any
state agency (except for fees incurred in states expressly
designated by the holders of the Registerable Shares in subparagraph (d)
above), printing expenses, fees and disbursements of legal counsel and all
accounting expenses including expenses of the year-end audits. The holders
of the Registerable Shares shall bear the fees and disbursements of their own
legal counsel, underwriting or brokerage discounts and commissions, expenses
of its brokers or underwriters, and fees of the National Association of
Securities Dealers, Inc.
f. COOPERATION OF THE HOLDERS OF THE REGISTERABLE SHARES. It
shall be a condition of the obligations of IIBM to take action in response to
any request for registration by the holder of Registerable Shares that such
request include or be accompanied by all of the following: (i) the holder's
confirmation that such person then has a present intention of selling or
distributing the Registerable Shares which are the subject of such request;
(ii) information with respect to the holder and the number of Registerable
Shares proposed to be sold and a description of such Registerable Shares, or,
to the extent that such information is not then available, the holder's
undertaking to furnish the same; (iii) the indemnity agreement specified in
subparagraph (g) below; (iv) the holder's agreement to refrain, in connection
with such registration, offering and sale, from taking any action violative
of the anti-manipulative rules promulgated under the Securities Exchange Act
of 1934, as amended; and (v) the holder's agreement to cooperate with IIBM
generally in connection with such registration, and the undertaking to
execute such further documents relating to formal matters in connection with
such registration, offering and sale as may be necessary, appropriate and
proper to effectuate the transactions contemplated by such request.
g. INDEMNIFICATION. Any registration hereunder shall be
accompanied by an agreement of the holder of the Registerable Shares to be
registered to indemnify IIBM, each of its directors, each of its officers who
sign the registration statement, and each person who controls IIBM against
any loss, claim, liability, damage or action arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained
in the registration statement when the same becomes effective or in any final
prospectus or amendment or supplement thereto, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and to reimburse the
indemnified persons for any legal or other expenses reasonably incurred in
investigating or defending any such action or claim, but only to the extent
that the untrue statement (or alleged untrue statement) or omission (or
alleged omission) was made in reliance upon and in conformity with written
information furnished to IIBM by or on behalf of the holder for use in the
registration statement, final prospectus, or amendment or supplement thereto,
as the case may be.
5. MISCELLANEOUS.
a. NOTICES. All communications provided for herein shall be in
writing and shall be deemed to be given or made when served personally or
when deposited in the United States mail, certified return receipt requested,
addressed as follows, or at such other address as shall be designated by any
party hereto in written notice to the other party hereto delivered pursuant
to this subsection:
XxXxxx: 00 Xxx Xxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
GEFLP, IIBM and GVI: 00 Xxx Xxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Attn: Xxxx X. XxXxxx
With Copy to: Xxxxxx X. Xxxxx
Attorney at Law
00 Xxxx 000 Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Imagenetix
and Shareholders: 0000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
With Copy to: Xxxxx X. Xxxxx
Attorney at Law
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
b. DEFAULT. Should any party to this Agreement default in any of
the covenants, conditions, or promises contained herein, the defaulting party
shall pay all costs and expenses, including a reasonable attorney's fee, which
may arise or accrue from enforcing this Agreement, or in pursuing any remedy
provided hereunder or by the statutes of the State of Utah.
c. ASSIGNMENT. Except as set forth in Paragraph 1 above, this
Agreement may not be assigned in whole or in part by the parties hereto without
the prior written consent of the other party or parties, which consent shall not
be unreasonably withheld.
d. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their heirs, executors,
administrators, successors and assigns.
e. PARTIAL INVALIDITY. If any term, covenant, condition, or
provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be invalid or unenforceable, the remainder of
this Agreement or application of such term or provision to persons or
circumstances other than those as to which it is held to be invalid or
unenforceable shall not be affected thereby and each term, covenant, condition,
or provision of this Agreement shall be valid and shall be enforceable to the
fullest extent permitted by law.
f. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all negotiations, representations, prior discussions, letters of
intent, and preliminary agreements between the parties hereto relating to the
subject matter of this Agreement.
g. INTERPRETATION OF AGREEMENT. This Agreement shall be
interpreted and construed as if equally drafted by all parties hereto.
h. SURVIVAL OF COVENANTS, ETC. All covenants, representations,
and warranties made herein to any party, or in any statement or document
delivered to any party hereto, shall survive the making of this Agreement and
shall remain in full force and effect until the obligations of such party
hereunder have been fully satisfied.
i. FURTHER ACTION. The parties hereto agree to execute and
deliver such additional documents and to take such other and further action
as may be required to carry out fully the transactions contemplated herein.
j. AMENDMENT. This Agreement or any provision hereof may not be
changed, waived, terminated, or discharged except by means of a written
supplemental instrument signed by the party or parties against whom
enforcement of the change, waiver, termination, or discharge is sought.
k. FULL KNOWLEDGE. By their signatures, the parties acknowledge
that they have carefully read and fully understand the terms and conditions
of this Agreement, that each party has had the benefit of counsel, or has
been advised to obtain counsel, and that each party has freely agreed to be
bound by the terms and conditions of this Agreement.
l. HEADINGS. The descriptive headings of the various sections or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
m. COUNTERPARTS. This Agreement may be executed in two or more
partially or fully executed counterparts, each of which shall be deemed an
original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto executed the foregoing Funding
Agreement as of the day and year first above written.
XxXxxx: /s/ Xxxxxxx X. XxXxxx, Individually
GEFLP: Great Expectations Family Limited Partnership
By /s/ Xxxx X. XxXxxx, General Partner
IIBM: Internet International Business Management, Inc.
By /s/ Xxxx X. XxXxxx, President
Imagenetix: Imagenetix
By /s/ Xxxxxxx X. Xxxxxxx, President
GVI: Growth Ventures, Inc.
By /s/ Xxxx X. XxXxxx, President
