ADVANCED GROWING SYSTEMS, INC. ALPHARETTA, GA 30022 July 1, 2009
Exhibit
10.1
-6-
0000
XXXXX XXXXXXXXX XXXXX, XXXXX 000
XXXXXXXXXX,
XX 00000
(678)
387-5061
July 1,
2009
Xx.
Xxxxxxx Xxxxxx, CEO
enVentive
Solutions, Inc.
0000
Xxxxxx Xxxxxx, Xxxxx 0X
Xxxxxx,
XX 00000
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Re:
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Binding
Letter of Intent between Advanced Growing Systems, Inc. and enVentive
Solutions, Inc.
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Dear Xx.
Xxxxxx:
This
letter sets forth our binding letter of intent (“Letter of Intent”) among
Advanced Growing Systems, Inc., a Nevada corporation (“Advanced Growing”) and
enVentive Solutions, Inc., a Delaware corporation (“enVentive”) and in
connection therewith, the purchase of 100% of the issued and
outstanding shares of enVentive by Advanced Growing in
exchange for common stock of Advanced Growing representing
approximately 85% of the outstanding shares of common stock on a fully diluted
basis (the “Transaction”), subject to the terms of a definitive share purchase
agreement to be negotiated and executed by the parties.
The proposed terms of the Transaction
are as follows:
1. Definitive
Agreement. Consummation of the Transaction as contemplated
hereby will be subject to the negotiation and execution of a mutually
satisfactory definitive share purchase agreement (the “Definitive Agreement”),
setting forth the specific terms and conditions of the stock purchase
transaction proposed hereby. The parties will use their reasonable
best efforts to negotiate in good faith the Definitive Agreement, which will
contain, among other standard terms and conditions, the following
provisions:
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(a)
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Advanced
Growing will issue shares of its common stock to enVentive in an amount to
be agreed upon based upon an approximate 85% of Advanced Growing’ issued
and outstanding shares upon completion of the
Transaction.
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(b)
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An
earn-out provision as set forth hereto on Exhibit
A.
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(c)
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The appointment
of Xxxx Xxxxx as the Chairman of the Board of Directors of Advanced
Growing and the appointment of Xxxxxxx Xxxxxx as Chief Executive Officer
of Advanced Growing, in each case, effective immediately after the closing
of the Transaction. Xxxxxxxxxxx X. Xxxxxxx will remain as
President and Xxx Xxxx will remain as Chief Financial Officer of Advanced
Growing.
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(d)
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Upon
completion of the Transaction, Advanced Growing will change its name to
enVentive Solutions, Inc., and will apply for a new trading symbol to
better represent the business of the combined
companies.
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(e)
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Any
necessary third-party consents shall be obtained prior to closing,
including but not limited to any consents required to be obtained from
Advanced Growings’, enVentive’s lenders, creditors, vendors and
lessors.
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(f)
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enVentive
shall be reasonably satisfied with the accounting treatment of the
Transaction for accounting and financial statement
purposes.
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2. Conditions to
Closing.
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(a)
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New
debt or equity financing acceptable to the board of directors of each of
enVentive and Advanced Growing.
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(b)
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The
approval of the board of directors of each of enVentive and Advanced
Growing.
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(c)
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The
collapse of the existing capitalization of Advanced Growing into one class
of common stock, representing approximately 15% of the post merger total
capitalization.
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(d)
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The
repayment or conversion of all secured Advanced Growing
debt.
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3. Conduct of
Business. Prior to the execution of a Definitive Agreement and
the closing of the Transaction, Advanced Growing will conduct its operations in
the ordinary course consistent with past practice and will not issue any capital
stock or grant any options with respect to its capital stock, nor will Advanced
Growing make any distributions, dividends or other payments to any affiliate or
shareholders without the consent of enVentive.
4. Public
Announcements. Neither party will make any public disclosure
concerning the matters set forth in this letter of intent or the negotiation of
the proposed Transaction without the prior written consent of the other party,
which consent shall not be unreasonably withheld. If and when either
party desires to make such public disclosure, after receiving such prior written
consent, the disclosing party will give the other party an opportunity to review
and comment on any such disclosure in advance of public
release. Notwithstanding the above, to the extent that either party
is advised by counsel that disclosure of the matters set forth in this letter of
intent is required by applicable securities laws or to the extent that such
disclosure is ordered by a court of competent jurisdiction or is otherwise
required by law, then such disclosing party will provide the other party, if
reasonably possible under the circumstances, prior notice of such disclosure as
well as an opportunity to review and comment on such disclosure in advance of
the public release.
5. Due Diligence;
Confidentiality Agreement. Each party and its representatives,
officers, employees and advisors, including accountants and legal advisors, will
provide the other party and its representatives, officers, employees and
advisors, including accountants and legal advisors, with all information, books,
records and property (collectively, “Transaction Information”) that such other
party reasonably considers necessary or appropriate in connection with its due
diligence inquiry. Each party agrees to make available to the other
party such officers, employees, consultants, advisors and others as reasonably
requested by the other party for meetings, visits, questions and discussions
concerning each other and the Transaction. Each of the parties will
use its reasonable best efforts to maintain the confidentiality of the
Transaction Information, unless all or part of the Transaction Information is
required to be disclosed by applicable securities laws or to the extent that
such disclosure is ordered by a court of competent jurisdiction. Due
to the commercially sensitive nature of the Transaction Information, promptly
following the execution of this Letter of Intent, the parties shall cause each
of their respective directors, representatives, officers, employees and
advisors, including accountants and legal advisors, who receive Transaction
Information to enter into a confidentiality agreement in form and substance
reasonably satisfactory to the other party.
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6. Exclusivity. In
consideration for the mutual covenants and agreements contained herein, until
the earlier of the closing of the Transaction or termination of this letter of
intent in accordance with its terms, Advanced Growing, its officers, directors,
employees, shareholders and other representatives will not, and will not permit
any of their respective affiliates to, directly or indirectly, solicit, discuss,
accept, approve, respond to or encourage (including by way of furnishing
information) any inquiries or proposals relating to, or engage in any
negotiations with any third party with respect to any transaction similar to the
Transaction or any transaction involving the transfer of a significant or
controlling interest in the assets or capital stock of Advanced Growing,
including, but not limited to, a merger, acquisition, strategic investment or
similar transaction (“Acquisition Proposal”). Advanced Growing and
its officers or their respective affiliates will immediately notify enVentive in
writing of the receipt of any third party inquiry or proposal relating to an
Acquisition Proposal and will provide enVentive with copies of any such notice
inquiry or proposal. Notwithstanding the foregoing, nothing in this
Section 5 will be construed as prohibiting the board of directors of Advanced
Growing from making any disclosure required by applicable law to its
shareholders.
7. Termination. This
letter of intent may be terminated (a) by mutual written consent of the parties
hereto and (b) by either party (i) after 5:00 p.m. Eastern standard time on
September 1, 2009 if a Definitive Agreement is not executed and delivered by the
parties prior to such time, (ii) if the Transaction is enjoined by a court or
any governmental body (including if consummation of the Transaction is enjoined
pending approval by the shareholders of enVentive).
8. No
Brokers. Each party represents and warrants to the other
that there are no brokers or finders entitled to any compensation with respect
to the execution of this Letter of Intent, and each agrees to indemnify and hold
the other harmless from and against any expenses or damages incurred as a result
of a breach of this representation and warranty.
9. Expenses. Each
of the parties will be responsible for its own expenses in connection with the
Transaction, including fees and expenses of legal, accounting and financial
advisors.
10. Choice of
Law. This Letter of Intent shall be governed by and construed
in accordance with the internal substantive laws of the State of
Nevada.
11. Compliance with the
Securities Laws. enVentive acknowledges that it and its
officers, directors, shareholders and employees and other representatives may,
in connection with the Transaction, come into possession of material non-public
information about Advanced Growing. Accordingly, enVentive will use
its best efforts to ensure that none of its officers, directors, shareholders
and employees or other representatives will trade (or cause or encourage any
third party to trade) in any of the securities which they will receive as a
result of the Transaction while in possession of any such material, non-public
information. Advanced Growing acknowledges that it and its officers,
directors, shareholders and employees and other representatives may, in
connection with the Transaction, come into possession of material non-public
information about enVentive and its respective
affiliates. Accordingly, Advanced Growing will use its best efforts
to ensure that none of its officers, directors, shareholders and employees or
other representatives will trade (or cause or encourage any third party to
trade) in any of the securities which they will receive as a result of the
Transaction while in possession of any such material, non-public
information.
12. Counterparts. This
letter of intent maybe executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument. Fax copies of signatures shall be treated as originals
for all purposes.
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13. Effect. This
letter of intent is a binding contract between the parties, and contains the
entire agreement by and among the parties to date with respect to the subject
matter hereof and supersedes any and all prior agreements and understandings,
oral or written, with respect to such matters.
INTENTIONALLY
LEFT BLANK SIGNATURE PAGE FOLLOWS
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This
letter of intent will terminate at 5:00 p.m. Eastern standard time on July 1,
2009 unless it has been duly executed by or on behalf of the Parties prior to
such time.
Very truly yours,
By: /s/ Xxxxx
X. Xxxxxxx
Name: Xxxxx
X. Xxxxxxx
Title:Chief
Executive Officer
Agreed and
Accepted:
EVENTIVE
SOLUTIONS, INC.
By: /s/ Xxxxxxx
Xxxxxx
Name: Xxxxxxx
Xxxxxx
Title: Chief
Executive Officer
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EXHIBIT
A
Advanced
Growing shall have an earn-out for 5% of the post merger total capitalization
based upon achieving more than 30% of the combined EBITDA for 18 months ending
December 2010, based upon the current enVentive plus the acquisition of
Hi-Tech. Advanced Growing shall have a further 2.5% earn-out of the
post merger total capitalization based on achieving more than 40% of the
combined EBITDA in the calendar year 2011, based upon the current enVentive plus
the acquisition of Hi-Tech.
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