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" or individually a "Funding Party") 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 provisions of subsection 5.15 of the Exchange Agreement
requiring the filing and processing of a registration statement (the
"Registration Statement") with the Securities and Exchange Commission ("SEC"),
are hereby adopted and incorporated herein;
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 a
Promissory Note, a copy of which is attached hereto as Exhibit "B-1" and
incorporated herein (the "IIBM Note" or "IIBM Notes"). The terms and conditions
of the loans from IIBM to Imagenetix are set forth in the form of a 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 that Funding 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 Notes are convertible into shares of
Common Stock of IIBM, at the option of the Funding Party holding the IIBM Note,
as set forth in the IIBM Notes.
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 as follows:
Number of Warrants
Funding Party Class "A" Class "B"
XxXxxx 50,000 50,000
GEFLP 50,000 50,000
GVI, or its assigns 200,000 200,000
4. Registration Rights. IIBM hereby grants the following registration
rights in connection with the shares of Common Stock issued upon conversion of
the IIBM Notes, if any, the Warrants, the shares of Common Stock underlying the
Warrants and the shares of Common Stock issued upon conversion of the Warrants,
if any.
a. Registration Statement. IIBM shall include in the Registration
Statement filed by IIBM pursuant to subsection 5.15 of the Exchange Agreement,
the Warrants, the shares of Common Stock of IIBM underlying the Warrants, the
shares of Common Stock issued upon conversion of the Warrants and the shares of
Common Stock issued upon conversion of the IIBM Notes.
b. Piggyback Rights. If and when IIBM shall file a registration
statement with the SEC under the Securities Act of 1933 (the "Act") for the sale
of any of the securities of IIBM, prior to five years from the date hereof, on a
form prescribed by the Act which is appropriate for registration for sale of any
of the following securities of IIBM (the "Registerable Securities") held by a
Funding Party who is the registered holder of such securities as of the date for
the proposed filing of the registration statement by IIBM to wit:
Class "A" Warrants and the shares of Common Stock underlying the Warrants
Class "B" Warrants and the shares of Common Stock underlying the Warrants
Shares of Common Stock acquired by a Funding Party on exercise of
Class "A" and/or Class "B" Warrants
Shares of Common Stock acquired by a Funding Party on conversion of
Class "A" and/or Class "B" Warrants
Shares of Common Stock acquired by a Funding Party on conversion of an
IIBM Note
then IIBM shall give written notice thereof to the holders of the Registerable
Securities prior to such filing, and the holders of the Registerable Securities
shall have the right to request to have included therein such number of the
Registerable Securities 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
ending five years following the date of this Agreement, or (ii) to keep the
prospectus with respect to the Registerable Securities current for any period
extending beyond five years from the date of this agreement. If a Funding Party
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 Securities 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 Securities in such underwriting unless the holders of the
Registerable Securities 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
Securities, requested to be included in such offering exceeds the amount of
securities to be 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 Securities, which the
underwriters believe will not jeopardize the success of the offering, but in no
event shall (i) the number of Registerable Securities 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 Funding Parties
who are the registered holders of a majority in number of the Registerable
Securities, IIBM shall file a registration statement with one state in which the
Funding Parties intend to sell the Registerable Securities, 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 Securities in the filing of a registration
statement in one or more additional states, provided that the holders of such
Registerable Securities 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 Securities 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 Securities 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
Securities shall bear the fees and disbursements of their own legal counsel,
underwriting or brokerage discounts and commissions, expenses of the brokers or
underwriters of the Funding Parties, and fees of the National Association of
Securities Dealers, Inc.
f. Cooperation of the Holders of the Registerable Securities. It
shall be a condition of the obligations of IIBM to take action in response to
any request for registration by a holder of Registerable Securities 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 Securities which are the subject of such request;
(ii) information with respect to the holder and the number of Registerable
Securities proposed to be sold and a description of such Registerable
Securities, 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 Securities 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. The securities acquired and to be acquired and which may be acquired
pursuant to this Funding Agreement have not been registered under the Securities
Act of 1933 (the "Act"), or under the securities laws of any state. The
securities have been and will be acquired for investment any may not be
transferred or sold in the absence of an effective registration statement or
other compliance under the Act and the laws of the applicable state or a "no
action" or interpretive letter from the Securities and Exchange Commission or an
opinion of counsel reasonably satisfactory to the MBSI, and its legal counsel,
to the effect that the sale or transfer is exempt from registration under the
act and such state statutes.
a. Each of the Funding Parties, severally, represents and warrants:
i. The securities acquired and to be acquired and which may be
acquired pursuant to this Funding Agreement are being acquired for the Funding
Party's own account to be held for investment purposes only and not with a view
to, or for, resale in connection with any distribution of such securities or any
interest therein without registration, or
an applicable exemption from registration, or other compliance under the Act,
or any state securities law, and the Funding Party has no direct or indirect
participation in any such undertaking or in underwriting such an undertaking.
ii. The Funding Party has been advised and understands that the
securities have not been registered under the Act, or any state securities laws,
and MBSI is under no obligation to register the securities under the Act or such
state securities laws, except as specifically provided herein.
6. 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. This Agreement is not assignable in whole or in part
by any Funding Party without the prior written consent of IIBM.
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 approved 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
Its 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
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and delivers unto
__________________________________ all right, title and interest of the
undersigned in and to that certain Funding Agreement by, between and among
Xxxxxxx X. XxXxxx, Great Expectations Family Limited Partnership, a Colorado
Limited Partnership, Growth Ventures, Inc., a Colorado corporation, Imagenetix,
a California corporation, and Internet International Business Management, Inc.,
a Colorado corporation, dated the 23rd day of March 1999.
Dated this __________ day of _______________ 1999.
_______________________________
Print Name_____________________
ACCEPTANCE OF ASSIGNMENT
__________________________________ hereby accepts the foregoing assignment
of all right, title and interest of __________________________________ in and to
the Funding
Agreement identified above and in consideration therefore agrees to
be bound by the terms and conditions of said Funding Agreement as it applied to
the Funding Parties therein.
Dated this __________ day of _______________ 1999.
_______________________________
Print Name_____________________
CONSENT TO ASSIGNMENT
Internet International Business Management, Inc., a Colorado corporation, a
party to that certain Funding Agreement identified above, by and through its
undersigned duly authorized officer hereby consents to the foregoing assignment
and acceptance thereof.
Dated this __________ day of _______________ 1999.
Internet International Business Management,
Inc.
By_____________________________
It_____________________________
Print Name_____________________
