EXHIBIT 2.1
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT made this day of June 16, 1997, by and between
Interactive Medical Technologies Ltd., a Delaware corporation having its
principal place of business 0000 Xxxxxxx Xxxxxx, Xxxxx Xxxxxx, XX 00000 ("BUYER
or IMT"), and Nutra Quest Incorporated, a Nevada corporation having its
principal place of business 0000 Xxxxxxx Xxxxxx, Xxxxx Xxxxxx, XX 00000,
hereinafter collectively referred to as ("SELLER" or "NQI").
WITNESSETH
WHEREAS, IMT desires to acquire and NQI owns and desires to sell and
transfer to, all of the issued and outstanding shares of common stock, .01 par
value, of NUTRA QUEST in exchange for a cash payment of two hundred thousand
dollars ($200,000), and WARRANTS to purchase shares of IMT common stock on
terms and conditions set forth herein, and the parties hereto desire to adopt
the Plan of Reorganization embodied in this Agreement;
WHEREAS, the parties have executed an agreement dated August 2, 1996,
entitled Revised Proposed Acquisition of Nutra Quest International Inc. and
Nutra Quest Incorporated (the "Proposal") which Proposal is incorporated herein
by reference and outlines, describes and defines the respective rights and
obligations of the parties hereto;
WHEREAS Nutra Quest failed to complete the Organization Phase (hereinafter
referred to as "Organization Phase One") as defined in the Proposal, and IMT did
continue to fund NQI operations through a second Organization Phase
(Organization Phase 2) which began on January 15, 1997, and ended on April 15,
1997, and as of April 15, 1997 Nutra Quest has commenced the Start Up Phase as
defined in the Proposal;
WHEREAS, IMT has provided the Operational Expenses described above as well
as a substantial additional sum of investment capital ("Additional Funding") in
order to maintain expanded NQI general and administrative expense during the
second portion of the Organization Phrase, and providing such continuing
additional funding required that IMT to sell ten million (10 Million) additional
shares (the "Additional Shares") of IMT common stock at prices ranging from
twenty (20%) to forty percent (40%) below the then current market prices,
certain of those transactions taking the form of convertible promissory notes
requiring that the company pay the note holders eight percent (8%) annual
interest until the notes are converted by the holders, or called by the company;
WHEREAS, the parties presently intend to follow the Proposal, subject to
mutually agreed upon changes as business and other conditions may warrant;
WHEREAS, Xxxxxxxx X. Xxxxxxxx, Xx. ("LES") has been compensated throughout
both Organization Phase One and Organization Phase Two, and will continue to be
compensated in accordance with the Proposal;
WHEREAS, for operational and accounting purposes, pending the Closing of
the acquisition of NQI by IMT, NQI will be treated as a wholly owned subsidiary
of IMT and any and all
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receipts generated by NQI in the operation of its business will be utilized as
may be determined by IMT, subject to the terms set forth herein and subject to
the understanding that IMT will use its best efforts to not utilize funds
generated from the sale of NQI products in a manner which would hinder the
growth, or expansion of NQI.
NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:
1. DEFINITIONS
1.1 Organizational Phase - Shall consist of Organizational Phase One and
Organizational Phase Two in combination covering the period August 2, 1996 to
January 15, 1997.
1.2 Start Up Phase - April 15, 1997 to October 31, 1997.
1.3 Part One - A period of time consisting of the combined Organizational
Phase One, Organizational Phase Two, and Start Up Phase.
1.4 Operational Phase (Part Two) - A period of time beginning on October
1997.
1.5 NQI gross sales - Gross wholesale receipts less returns or customer
adjustments from any and all NQI network marketing products, and sales aids or
material sold to NQI distributors or customers of NQI if sold through
distributors.
1.6 NQI Products shall mean current products and future products including,
but not limited to, the Personalized Nutrition Program, Kick Start, Melt Down,
Melt Away, Cheaters Delight I & II, Ultra Tone, Aloe Up, Nutra Meal, Nutra Fuel,
Essential Nutra Minerals, Nutra "C" & Nutra "C +" WI Co Enzyme 010, Nutra
Enzyme, OPC (Oligomeric Proantho Cyanididin) Grape Seed Extract with Hawthorn
Berry, Billberry, Ginkgo Siliba, Milk Thistle, Catalase, and Yacca, Nutra
Shield, Renew, Competitive Edge, Nutra Cal, LIPOSPRAY products (CitriMax with
Chromium, Melatonin/Kava, Ginkgo Biliba, Oxygen Combo, DHEA, CoEnzyme a-i 0,
Cats Claw, Sharks Cartilage, etc., NutraCap I (Fruit) & NutraCap II (Vegetable)
(Spray dried juice powder, from Carrots to Garlic & Apples to Tangerine Juice),
Premier Anti-Oxidant, OxyMax, Nutrition In The Kitchen, The Synergy Stop Smoking
Program & Stop Smoking II Program, related products and replacement product
therefore. NQI Products includes New Products introduced or developed by an
employee of NQI, and is not limited to nutritional uses.
1.7 Grand Opening - Mass hotel meeting to be held during the middle of October
1997. Introducing management, IMT management & R & D personal, new products,
etc.
1.8 Company - Interactive Medical Technologies, Ltd.
1.9 Effective Date - August 2, 1996.
1.10 Closing Date -
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2. SHARE TRANSFER AND PAYMENTS
2.1 EXCHANGE OF SHARES - Subject to the terms and conditions hereof, NQI
agrees to assign and transfer to (IMT on the Closing Date as hereinafter
defined) and IMT agrees to acquire from NQI on the Closing Date, the shares of
NQI common stock set forth following each of the names in Exhibit A,
constituting all of the issued and outstanding shares of NQI common stock.
2.2 PURCHASE AND PERFORMANCE PAYMENTS - At the completion of the Start Up
Phase, IMT shall irrevocably Transfer and deliver a total of 3,068,666-Warrants
to purchase 3,068,666 shares of IMT common stock at the strike price of fifteen
cents per share ($.15) to LES in accordance with the schedule set forth in
subparagraph 2.3 below.
2.3 ANTI-DILUTION - The Warrant Agreement shall contain the same standard
anti-dilution provisions that other IMT senior management Warrant Agreements
contain. Anti-dilution shall be based on the number of shares outstanding as of
the Effective Date of this Agreement.
2.4 PURCHASE PRICE - The Purchase Price is $200,000. LES acknowledges that
as of April 22, 1997 he has received $87,000 of said $200,000 which represents
the three twenty thousand dollar ($20,000) payments, two ten thousand dollar
($10,000) monthly payments, and one seven thousand dollar ($7,000) payment which
are applied to the monthly payments.
The $113,000 balance of the cash purchase price shall be paid $5,000 or
more per month beginning on the Closing Date and shall continue until paid in
full.
2.5 NQI LIABILITIES - NQI has liabilities of $90,000. IMT agrees to assume
those liabilities, $60,000 of which have been paid by LES. As to that portion of
the liabilities not paid by LES, IMT reserves the right to arrange for the
payment of such other liabilities directly with creditors, subject to approval
of LES, which shall not unreasonably be withheld. LES agrees to inform IMT of
any intention to pay any amount of said liabilities 10 business days prior to
such payment. LES agrees to provide IMT with a full listing of such liabilities
at the closing. When NQI sales produce sufficient cash flow to pay NQI operating
expenses IMT will commence payment, directly to LES, the $60,000 advanced by LES
at the rate of $5,000 or more per month. Such monthly payments shall be made
from NQI cash flow and shall continue until paid, provided NQI cash flow
continues to provide sufficient monthly cash flow to pay NQI operating expenses.
If the Company raises additional investment capital in excess of one million
dollars ($1,000,000) IMT will immediately pay to LES the 50% of the balance due,
or if the balance due is less than $30,000, the total balance due, and if the
Company raises additional investment capital in excess of two million dollars
($2,000,000) IMT will immediately pay to LES the 50% of the balance due.
3.0 REPRESENTATIONS AND WARRANTIES OF NQI
NQI represents, warrants and agrees as follows:
3.1 DUE ORGANIZATION, POWER, QUALIFICATION, SUBSIDIARIES, ETC.
3.11 NQI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and has the corporate power to
its property and to carry on its business as now conducted. The nature of the
business now conducted by NQI, the character of the property owned by it, or any
other state of facts does not require NQI to be qualified to do business as a
foreign corporation in jurisdiction except California. No claim has been made by
any governmental authority that the nature of the business conducted by NQI or
the character of the property owned by it, or any statement of facts, does not
require NQI to be qualified to do business as a foreign corporation in any
jurisdiction.
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3.12 NQI has no wholly owned subsidiaries or affiliates as that term is used
in the regulations promulgated under the Securities Act of 1933 as amended, (the
"Act").
3.2 CAPITALIZATION
3.21 The total authorized capital stock of NQI consists of 25,000,000 shares
of common stock, $.01 par value, of which one hundred percent (100%) of the
shares will be duly issued, fully paid and non-assessable, upon execution of
this Agreement, subject to paragraph 2.4 above. The aggregate of 25,000,000
shares owned by the NQI as set forth in Exhibit A, represents all of the issued
and outstanding stock of NQI. All of these shares are duly and validly issued,
fully paid and non-assessable.
3.22 Except as set forth in Exhibit B, there are and on the Closing Date there
will be no outstanding subscriptions, options, warrants, contracts, calls, puts,
agreements, demands or other commitments or rights of any kind or nature to
purchase or acquire any securities of NQI, nor are there outstanding securities
of NQI which are convertible into or exchangeable for any shares of NQI common
stock, and NQI has no obligation of any kind to issue any additional securities.
3.3 TITLE AND AUTHORITY
Each of the persons named in Exhibit A herein is a holder of record and sole
beneficial owner of the shares of NQI common stock shown opposite her name and
now has and at the Closing will have and at all times prior to Closing hereunder
has:
a) Full legal title to all such shares free and clear of any liens,
encumbrances, security interests, pledges, charges, claims, voting trusts,
restrictions on transfer and of any rights or interests therein, direct or
contingent, in favor of any other parties, and
b) Full and unrestricted right, power and authority to sell, assign,
transfer and deliver the same or cause the same to be transferred to IMT in
accordance with this AGREEMENT.
3.4 FINANCIAL STATEMENT NO MATERIAL ADVERSE CHANGE
3.41 NQI has furnished to IMT a list of assets, the value of which has been
agreed to by the parties to be $200,000, said amount to be paid in accordance
with paragraph 2.2 herein above. Attached hereto as Exhibit C, is a true,
correct and complete copy thereof
3.42 Since August 2, 1996, there has been no material adverse change in
the business or financial condition or the operations of NQI, or to the best
knowledge of NQI, any occurrence, circumstance or combination thereof which
reasonably could be expected to result in such a material adverse
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change in the future,
3.43 As of the date hereof, there are no material liabilities, absolute or
contingent, of the NQI there were not shown or reserved against on the balance
sheet included in the financial statement or described in the notes thereto.
3.5 NO MISSTATEMENTS
Neither the list of assets nor any certificate furnished to by NQI contains or
at Closing will contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading, NQI
has informed IMT of all such facts as would be relevant to ac prudent
purchaser's determination in making an investment in or acquiring the business
of NQI.
3.6 PROPERTY
NQI conducts all phases of its business in substantial compliance with all
leases, any restrictions of record and all zoning, fire, safety, building,
pollution, environmental control, food, drug and health codes and other laws,
ordinances and requirements of every governmental authority applicable to the
ownership, operation or other use of such assets and properties, and
3.7 TAX MATTERS
3.71 NQI has filed or caused to be filed with the appropriate federal, state,
county, local and foreign governmental agencies or instrumentality's, all tax
returns and tax reports required to be filed, and all taxed, assessments, fees
and other governmental charges have been fully paid when due, except as may be
reserved for in the August 2, 1996 statement attached hereto as Exhibit C.
3.72 There is no pending or, to the best knowledge of NQI, threatened federal,
state or local tax audit of NQI, there is no agreement with any federal, state
or local taxing authority that may affect the subsequent tax liabilities of NQI;
and
3.73 Without limiting the foregoing, the financials include adequate
provisions for all taxes, assessments, fees, penalties, and governmental charges
which have been or may in the future be assessed against NQI with respect to the
period then ended and all periods thereto.
3.8 NO CONFLICT OR DEFAULT
Neither the execution or delivery of this Agreement, nor compliance with the
terms and provisions hereof, including without limitation the consummation of
the transactions contemplated hereby, will violate any statute, regulation or
ordinance of any governmental authority, of conflict with or result in the
breach of any term, condition or provision of the Certificate Of Incorporation
or by-laws of NQI, or of any agreement, deed, contract, mortgage, indenture,
writ, order, decree, legal obligation or instrument to which NQI is a party or
by which it or any of its respective assets or properties are or may be bound,
or constitute a default thereunder, or result in the creation or
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imposition of any lien, charge, encumbrance or restriction of any nature
whatsoever with respect to the properties or assets of NQI, or give to others
any interests or rights, including rights of termination, acceleration or
cancellation in or with respect to any of the properties, assets, contracts or
business of NQI.
3.9 PARTY TO AGREEMENTS
NQI is not a party to any contract or other agreement not made in the
ordinary course of business. NQI is not in default in any material respect
under any contract or agreement to which it is a party or by which it or any of
its assets are or may be bound.
3.10 LITIGATION
There are no actions, suits, investigations, or proceedings pending of a
material nature, or, to the knowledge of the NQI, except as set forth in Exhibit
D threatened, against or affecting or which may affect NQI 1 the performance of
the terms and conditions hereof, or the consummation of the transactions
contemplated hereby in any court or by or before any governmental body or
agency, including any claim, proceeding or litigation for the purpose of
challenging, enjoining or preventing the execution, delivery or consummation of
this Agreement; and none of the NQI knows of any state of facts which would give
rise to any such action, suit, investigation or proceeding. NQI is not subject
to any order, judgment, decree, stipulation or consent or any agreement with any
governmental body or agency which affects or may affect its business or
operations.
3.11 BROKERAGE
NQI has been represented with respect to this transaction by a broker,
finder or similar person and compensation to such party is due for such
services.
4.0 IMT's REPRESENTATIONS AND WARRANTIES
IMT represents and Warrants as follows.
4.1 DUE ORGANIZATION
IMT is a corporation duly organized, validly existing and in good standing
under the laws of the State of California and has the corporate power to own its
properties and to carry on its business as now being conducted. The nature of
the business now being conducted by IMT, the character of the properties owned
by it, or any other state of facts, does not require IMT to be qualified to do
business as a foreign corporation in any jurisdiction.
4.2 CAPITALIZATION
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The total authorized capital stock of IMT consists of 100,000,000 shares of
common stock, $001 par value, of which an aggregate of 64,000,000 shares are
duly issued and outstanding, fully paid and non-assessable. Except as set forth
in Form 10K which the company files with the Securities and Exchange Commission
annually, there are and on the Closing Date there will be no outstanding
subscriptions, options, warrants, agreements or other commitments or rights of
any type to purchase or acquire any securities of IMT which are convertible into
or exchangeable for any shares of capital stock of IMT.
4.3 AUTHORITY
The execution and delivery of this Agreement has been duly authorized by
the Board of Directors of the IMT. On the Closing Date IMT will have full and
unrestricted right, power and authority to pay the balance of $113,000.00 to LES
hereunder, to pay the assumed liabilities and reimburse LES for said assumed
liabilities paid by LES and to issue and deliver to LES Warrants to purchase
3,066,666 shares and such shares, when delivered, will be free and clear of any
liens, encumbrances, security interests, pledges, charges, claims, voting trusts
and eligible for registration in accordance with SEC Form S-8, provided LES is
at time of such registration LES is employed by NQI, or operating in a capacity
which qualifies LES for such registration as defined by the Securities and
Exchange Commission.
4.4 FINANCIAL STATEMENTS - NO MATERIAL CHANGE
IMT has furnished to NQI the audited year end financial statement and notes
thereto of IMT as at December 31, 1994, 1995 and 1996. Attached hereto as
Exhibit F are true and correct and complete copies thereof. In addition, NQI
have received the Form 10Q for the quarters dated March, June and September,
1995 and March and June, 1996. IMT financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and fairly present the financial condition of IMT for those periods.
4.41 Since December 31, 1996, there have been no material adverse changes
in the business or financial condition or the operations of IMT, or to the best
knowledge of IMT any occurrence, circumstance or combination thereof which
reasonably could be expected to result in such a material adverse change in the
future.
4.42 As of the date hereof, IMT has incurred no liabilities That were not
set forth or reserved against on the balance sheet included in the financial
reports attached hereto as Exhibit F.
4.5 NO MISSTATEMENT
Neither IMT's financials furnished to NQI hereunder nor any certificate
furnished to NQI by IMT contain or at Closing will contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading, and IMT has disclosed to NQI all such facts
as would be relevant to a prudent purchaser's determination in making an
investment in or acquiring the securities of NQI.
4.6 TAX MATTERS
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4.61 IMT has filed or caused to be filed with the appropriate federal,
state, county, or local and governmental agencies or instrumentality's, all tax
returns and tax reports required to be filed and all taxes, assessments, fees
and other governmental charges have been fully paid; and
4.62 There is no pending or, to the best knowledge of the IMT, threatened
federal, state or local taxing authority action that may affect the subsequent
tax liabilities of IMT.
4.7 NO CONFLICT OR DEFAULT
Neither the execution and delivery of this agreement nor compliance with
its terms and conditions thereof, including without limitation the consummation
of the transactions contemplated hereby, will violate any statute, regulation or
ordinance of any governmental authority, or conflict with or result in the
breach of any term, condition or provision of the Certificate of Incorporation
of IMT or of any agreement, deed, contract, mortgage, indenture, writ, order,
decree, legal obligation or instrument to which IMT is a party or by which it or
any of its respective assets or properties are or may be bound, or constitute a
default thereunder, or result in the creation or imposition of any lien, charge,
or encumbrance, or restriction of any nature whatsoever with respect to the
properties or assets of IMT, or give to others any interest or rights, including
rights of termination, acceleration or cancellation in or with respect to any of
the properties assets, contracts or business of IMT.
4.8 LITIGATION
Except as described in exhibit G herein, there are no actions, suits,
investigations, or proceedings pending, or to the knowledge of IMT, threatened
against or affecting or which may affect IMT, the performance of the terms and
conditions hereof, or the consummation of the transactions contemplated hereby
in any court or by or before any governmental body or agency, including any
claim, proceeding or litigation for the purpose of challenging, enjoining or
preventing the execution and delivery or consummation of this Agreement; and IMT
does not know of any state of facts which could give rise to any such action,
suit investigation or proceeding. IMT is not subject to any order, judgment,
decree, stipulation or consent or any agreement with any governmental body or
agency which affects or may affect its business and operations.
4.9 RECORDS
IMT's common stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, and IMT is current in all of its requisite
filings with the Securities & Exchange Commission.
4.10 BROKERAGE
IMT has no such agreement, IMT did not use a broker, or finder, and is not
paying any such person in connection with this transaction.
5.0 COVENANTS OF NQI
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NQI agrees that prior to the Closing Date, unless MT specifically agrees in
writing:
5.1 NO DIVIDENDS
No dividend shall be declared or paid or other distribution (whether in cash,
stock, property or any combination thereof) or payment declared or made in
respect of NQI common stock, nor shall NQI purchase, acquire or redeem or split,
combine or reclassify any shares of its capital stock
5.2 NO CHANCE IN SHARES
No changes shall be made in the number of shares of authorized or issued NQI
common stock, nor shall any option, warrant, call, right, commitment, or
agreement of any character be granted or made by NQI relating to its authorized
or issued common stock; nor shall NQI issue, grant or sell any securities or
obligations convertible into or exchangeable for shares of NQI common stock.
5.3 NO ACTION
NQI will not take, agree or knowingly permit to be taken any action or to do
knowingly permit to be done anything in the conduct of its business or
otherwise, which would be contrary to or in breach of any of the terms or
provisions of this Agreement, or which would cause any of the representations of
NQI contained herein to be or become untrue in any material respect at the
Closing Date,
6. COVENANTS OF IMT
IMT agrees that prior to the Closing Date, unless NQI specifically agree in
writing:
6.1 NO ACTION
It will not take, agree to take, or knowingly permit to be taken, any action,
or do, or knowingly permit to be done, anything in the conduct of its business,
or otherwise, which would be contrary to or in breach of any of the terms or
provisions of this Agreement, or which would cause any of the representations of
IMT contained herein to be or become untrue in any material respect at the
Closing Date.
6.2 EMPLOYMENT AGREEMENT
IMT will enter into a suitable employment or consulting contract with Xx.
Xxxxxxxx X. Xxxxxxxx, Xx. in form and substance as set forth in Exhibit H
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hereto, and such contract will include but not be limited to a term of seven and
one half (7.5) years, with automatic renewal provisions for additional seven and
one half (7.5) year periods if neither party acts to terminate in accordance
with the terms herein, a monthly salary beginning at $8,500 and increasing
thereafter based upon NQI's performance and royalties payable on the gross sales
of certain present and future products of NQI and any renewal of such sales as
more fully described in F, a package of benefits equal to those received by or
made available to other executive of the IMT and other provisions including
Warrants to purchase additional shares of IMT common stock.
6.3 MASTER DISTRIBUTORSHIP
IMT grants LES a Master Distributor of NQI. Except for a IMT Master
Distributorship which shall be placed in the top most position of the
compensation plan above LES and all others, all other distributorships shall be
down line to LES. Both the IMT and LES Master Distributorships have been
grandfathered, as the two top positions, and are not contingent upon IMT
acquisition of NQI, or LES employment by IMT, and both distributorships do not
require performance or minimum sales to retain their positions.
7. CONDITIONS TO IMT'S OBLIGATION
7.1 REPRESENTATIONS TRUE; COVENANTS PERFORMED
The representations and Warranties of the IMT shall be true and correct, as
of the Closing Date, with the same force and effect as though such
representations and warranties had been made on the Closing Date, and all terms
and conditions and covenants of this Agreement to be complied with and
performed by IMT on or before the Closing Date shall have been complied with and
performed.
7.2 NO MATERIAL ADVERSE CHANGE
The business and properties of IMT shall not have been adversely affected
in any material way as a result of any act of God, public authority, or any
other event or condition which would interfere in any substantial manner with
the operations of IMT. There shall have been no changes in the business or
property of IMT since the date hereof, or in the financial condition of IMT
since, August 2, 1996, which would have a material adverse affect on its
business.
7.3 NO VIOLATION OF AGREEMENTS
The consummation of this Agreement shall not violate any agreement or
instrument to which IMT is a party or are subject.
7.4 NO LITIGATION THREATENED
No inquiry shall have been received nor any investigation, action, or
proceeding shall have been instituted or threatened by any governmental agency
regarding the transaction contemplated hereby.
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7.5 DELIVERY OF CERTIFICATE
There shall be delivered to NQI a certificate of IMT's President, dated the
Closing Date, to the effect that the obligations and conditions specified
hereinabove have been complied with.
8. CONDITIONS TO NQI'S OBLIGATION
8.1 REPRESENTATIONS TRUE; COVENANTS PERFORMED
The representations and Warranties of NQI shall be true and correct, as of
the Closing Date, with the same force and effect as though such representations
and warranties had been made on the Closing Date, and all terms and conditions
and covenants of this Agreement to be complied with and performed by NQI on or
before the Closing Date shall have been complied with and performed.
8.2 NO MATERIAL ADVERSE CHANGE
The business and properties of NQI shall not have been adversely affected
in any material way as a result any labor disturbance, or act of God, public
authority, or any other event or condition which would interfere in any
substantial manner with the operations of NQI. There shall have been no changes
in the business or property of NQI since the date hereof, or in the financial
condition of NQI since, August 2, 1996, which would have a material adverse
affect on its business.
8.3 NO VIOLATION OF AGREEMENTS
The consummation of this Agreement shall not violate any agreement or
instrument to which NQI are a party or are subject.
8.4 NO LITIGATION THREATENED
No inquiry shall have been received nor any investigation, action, or
proceeding shall have been instituted or threatened by any governmental agency
regarding the transaction contemplated hereby.
8.5 DELIVERY OF CERTIFICATE
There shall be delivered to IMT a certificate of NQI's President, dated the
Closing Date, to the effect that the obligations and conditions specified
hereinabove have been complied with.
9. ELECTION
At the Closing, IMT will appoint Xx. Xxxxxxxx X. Xxxxxxxx as the Chairman
of the Board, President and Chief Executive Officer of NQI and, subject to
meeting the performance criteria set forth in the Employment Agreement, propose
his election as a director of IMT at the next meeting of its shareholders.
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10. CLOSING
The Closing shall take place as more fully described and defined in the
Proposal or as may otherwise be mutually agreeable to the parties. At the
Closing IMT and NQI shall exchange the certificates and documents described
hereinabove. IMT will cause to be issued and delivered to the NQI, a certificate
in the amount of common shares and/or a warrant representing the right to
purchase an additional amount of its authorized but unissued common shares. NQI
will deliver to IMT, all of the issued and outstanding shares of common stock,
fully endorsed or with executed stock powers attached.
11. ENTIRE AGREEMENT
This instrument together with the attached Exhibits and the formal Employment
Agreement in accordance with Exhibit H contains the entire agreement among the
parties with respect to the purchase and sale of the securities described herein
and other transactions contemplated hereby
12. AMENDMENT
This Agreement may be amended or modified only by a writing signed by the
party or parties to be charged with such amendment or modification.
13. MATERIALITY & SURVIVAL
All covenants, agreements, representations and warranties made herein and in
any certificate delivered at the Closing, or pursuant thereto, shall be deemed
to be material and to have been relied upon by the parties hereto,
notwithstanding any investigation heretofore or hereafter made or omitted by any
such other party or on its behalf and shall survive the Closing hereunder.
14. NOTICES
All notices and other communications hereunder shall be in writing and shall
be hand delivered or mailed, first class, postage prepaid, to any party at the
address set forth in the first paragraph of this Agreement.
15. BINDING ON SUCCESSORS
All of the terms and conditions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors, assigns and legal representatives
16. SEVERABILITY
The unenforceability or invalidity of any provision of this Agreement shall
not affect the enforceability or validity of the balance of this Agreement.
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17. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
18. ARBITRATION
All disputes, controversies, or difference of opinions which may arise
between the parties hereto, out of or in relation to or in connection with this
Agreement, or the breach thereof, shall be finally settled by arbitration in
accordance with the rules of the American Arbitration Association in Los
Angeles, California, or a comparable arbitration association mutually agreed to
by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first written above.
IMT
Attest: INTERACTIVE MEDICAL TECHNOLOGIES LTD
/s/ Xxxxxx Xxxxxxxx
-------------------- -----------------------------------
Secretary By: Xxxxxx Xxxxxxxx, CEO
(SEAL)
NQI
Attest: NUTRA QUEST, INC.
/s/ Xxxxxxxx Xxxxxxxx
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Secretary By: Xxxxxxxx Xxxxxxxx, President
Page 13
Revised June 6, 1997
EXHIBIT H
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EMPLOYMENT AGREEMENT
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IMT shall enter into a seven and one-half (7 1/2) year Employment Agreement,
with options to renew thereafter for two (2) year intervals, with LES as
President, Chairman of the Board and Chief Executive Officer of NQI, LES having
all the power and authority commensurate with said titles, subject to the
approval of the Management Board, as defined below, including, but not limited
to:
1) The right to hire personnel, utilize services of personnel within IMT or
to obtain such services from outside providers if such outside providers
can deliver superior quality services or deliver such services in a more
timely manner;
2) operational control of all NQI business activities, including but not
limited to development, marketing and sales of all products sold or to be
sold by NQI;
3) signing authority on all contracts to expend funds in the normal course
of business which includes but is not limited to formulation, manufacture,
warehousing, wholesale distribution, sales and marketing of current and
scheduled products, normal business operating expenses, and inventory
replenishment. Once operating income exceeds operating expenses, the
signing authority of LES for other business purposes shall be commensurate
with the ability of NQI, under standard accounting principles, to meet its
financial obligations as they become due; and
4) the location of all offices and facilities of NQI.
The responsibilities of LES shall include, but not be limited to:
1) the preparation of quarterly and annual operating plans and budgets
which will be submitted to the Management Committee, as herein defined, at
least 15 days prior to the end of each quarter for review, revision and
approval;
2) preparation of periodically revised operating plans and sales
projections, said plans and projections to be used for planning purposes
and not as binding objections for use in performance evaluations;
For the purpose of the review and approval of said quarterly operating plans
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and budgets and the general management of the business of NQI as set forth
therein, LES shall report to, and be responsible to, a Management Committee,
which shall also constitute the Board of Directors of NQI, composed of Xxxxxxxx
Xxxxxxxx, Xxxxxx Xxxxxxxx, and an individual jointly selected by Xxxxxxxx
Xxxxxxxx and Xxxxxx Xxxxxxxx, all of selected persons to have suitable relevant
business crudentials. The Management Committee to meet at least once a month.
LES shall have two (2) votes, Xxxxx Benz shall have one (1) vote and Xxxxxx
Xxxxxxxx shall have one (1) vote.
1. SALARY
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1.1 If any performance criteria is reached in less than the designated
period, the next salary level shall commence the following month. The
following NQI Gross Sales amounts and the dates by which these Gross Sales
are to be achieved for the purpose of the Employment Agreement shall be
referred to as the Performance Criteria. Upon the successful completion of
the Performance Criteria for the 3 years, or sooner, as outlined below, the
terms of the Employment Agreement shall be in full effect. With options to
renew, which will not be unreasonably withheld.
Employment Agreement Performance Criteria Gross Sales
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a) Start Up Phase $ 200,000
b) First 12 Months or less,
commencing with the Grand Opening $ 2 Million
c) Second 12 Months or less after
the Grand Opening $ 4 Million
d) Third 12 Months or less after
the Grand Opening $10 Million
1.2 The following performances are established for the purposes of the
Purchase Agreement. Upon the successful completion of the Performance
Criteria for the first year, as outlined below, the terms of the Purchase
Agreement shall be in full effect.
Employment Agreement Performance Criteria Gross Sales
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a) Start Up Phase $ 200,000
b) First 12 Months after the Grand Opening $ 2 Million
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1.3 Salaries for subsequent periods are:
1.31 $8,500 per month for the first 4 months following the Effective
Date, and $8,500 for the 5th through 12th month provided that NQI
achieves the Start Up Phase Performance Criteria.
1.32 $10,000 for the second 12 months provided NQI achieved $2 million
total Gross Sales the first 12 month, or sooner.
1.33 $12,000 per month upon NQI achieving total Gross Sales of $4
Million in any consecutive 12 month period, or sooner.
1.34 $16,000 per month upon NQI achieving total Gross Sales of $10
Million in any consecutive 12 month period, or sooner.
1.35 $20,000 per month upon NQI achieving total Gross Sales of $20
Million in any consecutive 12 month period, or sooner.
1.36 An additional $5,000 per month effective upon NQI achieving each
$10 Million increase in total Gross Sales in any consecutive 12 month
period, or sooner.
Should Gross Sales decrease the salary will also decrease according to the
above schedule.
2. BENEFITS
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2.1 $500 per month automobile allowance beginning on the Effective Date and
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continuing until the end of the Start Up Phase, to be increased by 10% per
year.
2.2 Medical insurance with Blue Cross or equivalent insurance provider, as
previously agreed, which shall as a minimum be equivalent to that provided
to other executives within IMT if IMT coverage provides greater benefits.
2.3 4 Weeks Vacation, to be taken in accordance with Company policy.
2.4 Other benefits as normally provided to senior Company management.
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3. ROYALTIES
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3.1 A one and one-half percent (1-1/2%) royalty on NQI Gross Sales,
commencing with sales after January 1, 1998, of NQI Products created by or
introduced by LES and/or associates, payable monthly with Distributor check
runs. Products introduced by or through IMT and distributed by NQI are not
subject to a royalty, unless said product(s) replaces an NQI Product. If an
IMT product replaces an NQI product the royalty shall remain 1-1/2%.
3.2 Royalty payments shall remain in effect for fifteen years, and if LES
is still employed by NQI, for an additional ten years.
4. OTHER TERMS AND CONDITIONS
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4.1 LES will serve as NQI director.
4.2 At the first anniversary of this Agreement, LES will be nominated for
the Board and current Board members will not withhold their vote for LES to
become a Director.
5. WARRANTS
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IMT agrees to issue LES Warrants to purchase additional IMT common stock at
prices and vesting dates as follows:
5.1 500,000 shares, @ $0.15 per share, upon NQI reaching $50,000 gross
sales;
5.2 400,000 shares, @ $0.15 per share, upon NQI reaching $250,000 in gross
sales;
5.3 500,000 shares, @ $0.15 per share, upon NQI reaching $500,000 or more
Gross Sales in a first month and reaching at least $450,000 gross monthly
sales in the month thereafter, or $950,000 in any consecutive 2 month
period;
5.4 66,666 shares, @ $0.15 per share, upon NQI reaching $750,000 Gross
Sales per month in a first month and reaching at least $675,000 Gross
monthly sales in the month thereafter, or $1,425,000 in any consecutive 2
month period;
5.5 650,000 shares, @ $0.15 per share, upon NQI reaching $5,000,000 Gross
Sales in any consecutive period not exceeding
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twelve months;
5.6 650,000 shares, @ $0.15 per share, upon NQI reaching $12,500,000 Gross
Sales in any consecutive period not exceeding twelve months;
5.7 300,000 shares, @ $0.15 per share, upon NQI reaching $40,000,000 Gross
Sales in any consecutive twelve month period.
5.8 400,000 shares, @ $0.15 per share, upon NQI reaching $50,000,000 Gross
Sales in any consecutive twelve month period.
5.9 300,000 shares @ $0.15 per share upon NQI reaching $65,000,000 Gross Sales
in any consecutive twelve month period.
5.10 350,000 shares @ $0.15 per share upon NQI reaching $75,000,000 Gross Sales
in any consecutive twelve month period.
5.11 383,334 shares @ $0.15 per share upon NQI reaching $100,000,000 Gross
Sales in any consecutive twelve month period.
5.12 300,000 additional shares, @ $0.15 per share, for each $50,000,000
increase in NQI Gross Sales above $100,000,000 in any consecutive twelve month
period for the life of the Employment Agreement.
6. TERMINATION
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6.1 Without Cause
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a) All salary, shares of stock, warrants and benefits shall
extend for the balance of the unexpired term and one extension term.
b) LES will enter into a noncompete agreement with a term of no
greater than one (1) year.
c) All earned (prorated for any relevant period of time) and past
due monetary compensation, shares of stock, warrants of any nature
shall become immediately payable.
6.2 For Cause
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a) Cause shall consist of present acts which interfere with
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the ability of LES to conduct the business of NQI in a financially sound and
business-like manner including any criminal activities by LES against NQI or
IMT, but shall not include any acts by LES of any nature prior to the execution
of the Letter of Intent of August 2, 1996; if the cause is of a nature that can
be corrected by LES then LES shall be given 60 days notice to so correct and if
corrected that cause shall be considered to have never existed;
b) LES will enter into a noncompete agreement with a term of no greater than one
(1) year as long as all compensation and benefits continue for that period as if
LES were still in his prior position with NQI.
c) All earned (prorated for any relevant period of time) and past due monetary
compensation, shares of stock, warrants of any nature shall become immediately
payable.
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