REVISED AGREEMENT FOR SALE AND PURCHASE OF ASSETS
THIS REVISED AGREEMENT FOR SALE AND PURCHASE OF ASSETS (this "Agreement")
is dated July 21, 2000 by and among IMX Pharmaceuticals, Inc., a Utah
corporation ("Purchaser"), ETI International, Inc., a Nevada corporation
("ETI"), and Dri-Kleen, Inc. d/b/a Enviro-Tech International, a Nevada
corporation ("ETIC"), and shall be effective as of 11:59 p.m., July 18, 2000
(the "Adjustment Date").
RECITALS
WHEREAS, ETIC is a manufacturing and direct sales company that markets
products through a network of independent distributors (the "Distribution
Network").
WHEREAS, on May 17, 2000, ETI, ETIC and IMX entered into that certain
Agreement for Sale and Purchase of Assets (the "Original Agreement") whereby the
Parties (as defined below) desired that the Distribution Network would be
operated for the benefit and at the risk of Purchaser and thereafter Purchaser
would purchase the Distribution Network and certain other assets, and assume
certain other liabilities, of ETI and ETIC.
WHEREAS, the Parties now desire to rescind the Original Agreement and to
declare it of no further force and effect, except as described below, and enter
into this Agreement instead.
WHEREAS, Purchaser desires to purchase and assume from ETI and ETIC, and
ETI and ETIC desire to sell to Purchaser certain assets and liabilities pursuant
to and in accordance with the terms and conditions of this Agreement.
WHEREAS, Any terms used in this Agreement but not otherwise defined shall
have the meanings ascribed to them in the Original Agreement and all Schedule
numbers and headings used in this Agreement unless otherwise provided correspond
to the Schedule numbers and headings used in the Original Agreement.
WHEREAS, any Articles, sections or subsections contained in the Original
Agreement but removed from this Agreement shall remain in full force and effect
until the Closing (as defined below) of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties agree that
the Recitals set forth above are true and correct and incorporated herein as if
fully set forth and further agree as follows:
AGREEMENT
ARTICLE I. THE PARTIES
SECTION 1.01. THE PARTIES
(a) The Purchaser is a publicly traded Utah corporation having a business
office at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000.
(b) ETI is a Nevada corporation having a business office at 0000 Xxx Xxxx
Xxxx, Xxx Xxxxx, Xxxxxx 00000.
(c) ETIC is a Nevada corporation having a business office at 0000 Xxx Xxxx
Xxxx, Xxx Xxxxx, Xxxxxx 00000. The term "Seller" includes ETIC and its
subsidiaries.
SECTION 1.02. ASSIGNMENT
(a) Purchaser may assign its rights or part of its rights under this
Agreement to corporations that are wholly-owned subsidiaries of Purchaser,
including without limitation IMX Sales and Marketing, Inc., a Florida
corporation. No assignment shall be valid unless each such assignee assumes all
applicable obligations of Purchaser under this Agreement. No assignment shall
relieve Purchaser of its obligations under this Agreement.
(b) Purchaser and Seller may not assign their rights under this Agreement
except as provided in Subsection (a) and except for that assignment to Community
First National Bank ("Community First") of certain rights of Seller under the
Original Agreement.
(c) For purposes of this Agreement, an assignment includes the purchase or
sale of over 50% of the voting securities of Purchaser or Seller.
ARTICLE II. THE ASSETS PURCHASED AND LIABILITIES ASSUMED
SECTION 2.01. THE DISTRIBUTION NETWORK
Purchaser shall purchase from Seller the "Distribution Network" which
consists of the individuals and entities in North America, including the
Caribbean Islands, that are or have been ETI Independent Distributors or
Preferred Customers (the "Independent Distributors") as listed on Schedule 2.01.
SECTION 2.02. THE EQUIPMENT
Purchaser shall purchase the "Equipment" which consists of all of the
computers and associated hardware and other office, factory and warehouse
equipment at the Facilities (as defined below) and the Canadian Property (as
defined below) now used in the operation of or necessary to operate the
Distribution Network as listed on Schedule 2.02 with the exception of certain
leased equipment ("Equipment Lease") at the Facilities which cannot be assigned
to Purchaser.
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SECTION 2.03. THE SUPPLIES
Purchaser shall purchase the "Supplies" which consists of all items of
personal property constituting stocks on hand on the Adjustment Date (as defined
below) of material used in connection with Seller's present operation of the
Distribution Network, including office supplies, marketing materials, order
forms, catalogues and distributor materials. Schedule 2.03 is an illustrative
list of the types of materials constituting the Supplies.
SECTION 2.04. THE SOFTWARE
Purchaser shall purchase the "Software" which consists of all computer
programs, including compensation plan programs, routines, subroutines, processes
and procedures now used in the operation of the Distribution Network and its web
site. The Software is listed on Schedule 2.04. Copies of all agreements related
to the Software have been delivered to Purchaser.
SECTION 2.05. THE PRODUCTION MATERIALS
Purchaser shall purchase the "Production Materials" which consist of all
copy, boards, graphics on disks, typography, printing plates, molds or other
things necessary to reproduce existing Supplies. Schedule 2.05 is an
illustrative list of the types of material constituting the Production
Materials.
SECTION 2.06. THE RIGHTS
Purchaser shall purchase the "Rights" which consist of the right to use
all rights of Seller to domain names, patents, trade names, trademarks, service
marks or other intellectual property currently used in the operation of the
Distribution Network or in connection with the Products (as defined below). The
Rights are listed on Schedule 2.06. A copy of each agreement authorizing Seller
to use the Rights has been delivered to Purchaser. If any Right has been
registered or if an application to register any Right is pending, all
information about the registration or application known to Seller is shown on
the Schedule. Seller has provided copies of all papers in its possession
relating to registrations and applications to Purchaser.
SECTION 2.07. THE CONTRACT RIGHTS
Purchaser shall purchase the "Contract Rights" which consist of all rights
of Seller under any written leases and contracts relating to the operation of
the Distribution Network, including the Equipment Leases. The Contract Rights
also include commitments for the purchase of Products, the materials needed to
make Products (excluding the existing contracts with Advanced Techniques, Inc.
and Xxxxxxx X. and Xxxxxxx X. Xxxx ("Advanced Agreements")), and Supplies, for
obtaining services, including credit card processing services, joint venture or
partnership relationships, or with respect to advertising that was entered into
in the regular and ordinary course of the operation of the Distribution Network.
The Contract Rights do not include those leases and/or contracts that are not
assignable as indicated on Schedule 2.07. All written and other agreements,
other than the Equipment Leases, are listed on Schedule 2.07. Copies of all
written instruments listed on the Schedule have been delivered to Purchaser. The
leases, contracts and commitments under which the Contract Rights arise are
sometimes called the "Contracts."
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SECTION 2.08. RESERVED
SECTION 2.09. THE PERMITS
Purchaser shall purchase the "Permits" which consist of all filings,
licenses, permissions, authorizations, or permits granted by any government or
governmental agency, authority or subdivision necessary to operate the
Distribution Network, to the extent that the permits are assignable. Schedule
2.09 is a list of the Permits. Copies of the documents evidencing the Permits
have been given to Purchaser. Purchaser acknowledges and understands that sale
tax permits are not assignable.
SECTION 2.10. THE CANADIAN LEASE
Purchaser shall assume and be responsible for all of Seller's obligations
under the Canadian Lease, with those exceptions as set forth in this Agreement.
The "Canadian Lease" is a lease for the office and warehouse (the "Canadian
Property") located at 0000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxx, Xxxxxx X0X 383.
Schedule 2.10 is a list of all the documents evidencing the Canadian Lease.
Copies of these documents have been given to Purchaser.
SECTION 2.11. THE DISTRIBUTORSHIPS
Purchaser shall purchase Seller's rights to the "Distributorships" which
consist of any and all memberships in the Distribution Network presently owned
by Seller. The Distributorships are listed on Schedule 2.11. Copies of the
documents evidencing the Distributorships have been delivered to Purchaser.
SECTION 2.12. THE GOODWILL
Purchaser shall purchase the "Goodwill" associated with the Distribution
Network which consists of the goodwill developed by Seller from its operation of
the Distribution Network.
SECTION 2.13. THE INVENTORY
Purchaser shall purchase the "Inventory" which consists of all Products
currently on hand at Seller's warehouses or other facilities as of the
Adjustment Date. The term "Products" includes all products now manufactured for
distribution through the Distribution Network either by Seller and/or its
affiliates or produced under contract by others. Schedule 2.13 sets forth the
Inventory being acquired by Purchaser. Notwithstanding the foregoing, all
ENVE'(TM) products and raw materials shall not be purchased by Purchaser under
this Agreement.
SECTION 2.14. THE LAS VEGAS PROPERTY
Seller hereby grants Purchaser a non-revocable license to reasonable use
of the Las Vegas Property so long as the Las Vegas Property is under the control
of Seller, and to a reasonable extent the office furniture and equipment located
in the Las Vegas Property not otherwise being acquired by Purchaser hereunder,
consistent with the current use by Seller. Purchaser hereby acknowledges that
there is a currently pending foreclosure proceeding by Xxxx Xxxxxxxx, a junior
mortgage holder, and a foreclosure proceeding threatened by Xxxxxx-Xxxx.xxx, PLC
(collectively with Xxxx Xxxxxxxx, the "Junior Lienholders"), concerning the Las
Vegas Property. From the Adjustment Date until
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Purchaser no longer occupies the warehouse portion of the Las Vegas Property,
Purchaser shall be responsible for (i) all payments to the first and second
mortgage holders; and (ii) all reasonable costs of operating and maintaining the
Las Vegas Property including, without limitation, real estate taxes, property
insurance, water and sewer charges, utilities, trash pickup, ground keeping, the
security system, exterminating, normal maintenance costs, cleaning crews and
supplies and the salary of the facility manager ((i) and (ii), collectively, the
"Las Vegas Expenses"). From the date that Purchaser no longer occupies the
warehouse portion of the Las Vegas Property until the distributor services and
information services of Purchaser's Las Vegas operations no longer occupy the
Las Vegas Property, Purchaser shall pay one-third of the Las Vegas Expenses.
Thereafter, if the Junior Lienholders have approved the Reimbursement, and for a
period of up to four months or until Purchaser has expended $100,000, Purchaser
shall pay all of the Las Vegas Expenses (the "Vacant Expenses"). Purchaser shall
be reimbursed (the "Reimbursement") all amounts paid for the Vacant Las Vegas
Expenses out of the proceeds of the sale of the Las Vegas Property, after all
the obligations of the first and second trust deed notes on the Las Vegas
Property are satisfied. Seller shall use all reasonable efforts to sell the Las
Vegas Property prior to the completion of any foreclosure proceeding.
SECTION 2.15. THE ELBOW LAKE PROPERTY
Purchaser shall purchase the "Elbow Lake Property" which consists of that
certain real property located at 000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx Xxxx,
Xxxxxxxxx. Purchaser shall assume and be responsible for all payments,
mortgages, taxes, utilities or otherwise, with respect to the Elbow Lake
Property accrued after the Adjustment Date, and shall assume and be responsible
for all amounts due to Community First, including unpaid mortgage payments,
accrued interest, expenses, etc., in connection with the Elbow Lake Property
(the "Community Bank Obligations"). Seller shall be responsible for all expenses
of the Elbow Lake Property, other than the Community Bank Obligations, accrued
on or prior to the Adjustment Date. All documents and instruments concerning the
Elbow Lake Property and describing the liens to which it is subject have been
previously provided to Purchaser or are set forth on Schedule 7.01(o) of the
Original Agreement. The Las Vegas Property together with the Elbow Lake Property
are referred to herein as the "Facilities."
SECTION 2.16. TELEPHONE NUMBERS
Purchaser shall acquire the rights to use Seller's telephone numbers at
the Canadian Property and the Elbow Lake Property (the "Telephone Numbers") to
the extent such telephone numbers are assignable.
SECTION 2.17. THE PROPERTY
The "Property" consists of Seller's ownership rights in and to the
Distribution Network, Equipment, Supplies, Software, Production Materials,
Rights, Contract Rights, Permits, Canadian Lease, Seller's rights to the
Distributorships, the Elbow Lake Property, the Telephone Numbers, and Seller's
Goodwill. Notwithstanding any the foregoing, Property does not include bonds,
security deposits or the like which are collateral to the Property or to
utilities at the Facilities or the Canadian Property; provided, however, Seller
shall not cancel or withdraw such bonds or security deposits until they have
been replaced by Purchaser or 60 days from the Adjustment Date, whichever is
sooner.
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ARTICLE III. THE PURCHASE PRICE AND ITS PAYMENT
SECTION 3.01. PURCHASE PRICE
In consideration of this Agreement and the purchase, transfer, sale,
licensing, assumption and assignment of the Property, Purchaser shall pay to
Seller a purchase price ("Purchase Price") consisting of the following:
(a) Four Hundred Thousand Dollars ($400,000) which was paid on March
20, 2000 as a refundable deposit under the Original Agreement;
(b) Eight Hundred Fifty Thousand Dollars ($850,000) which was paid on
May 17, 2000 as an additional refundable deposit under the Original Agreement;
(c) Six Hundred and Fifty Thousand Dollars ($650,000) (the "Cash
Portion");
(d) Six Hundred Thousand Dollars ($600,000) (the "Inventory Portion");
and
(e) Two million five hundred thousand (2,500,000) shares (the "Stock
Portion") of the Purchaser's common stock, $.001 par value per share ("Common
Stock"). The Stock Portion shall have the registration rights as set forth in
this Agreement.
SECTION 3.02. PAYMENT OF THE PURCHASE PRICE
(a) The Cash Portion shall be paid, after all adjustments are made, on
the Closing Date (as defined below) of this Agreement in lawful currency of the
United States of America in immediately available funds.
(b) The Inventory Portion shall be paid pursuant to an interest-free
promissory note (the "Note") to be executed by Purchaser at the Closing
Conference (as defined below). The Note shall be paid down as the Inventory is
sold by Purchaser, with any remaining balance due and payable 90 days after the
Closing Date. Payments on the Note shall be made each Tuesday for the Inventory
sold during the week ending the previous Friday. Purchaser shall be given a
credit toward payments due under the Note in the amount of $84,000 at the rate
of $28,000 per month.
(c) The Stock Portion shall be issued to ETIC in certificates
representing two million five hundred thousand shares on the Closing Date.
SECTION 3.03. ADJUSTMENTS TO PURCHASE PRICE
Upon Closing, the Purchase Price shall be adjusted to take into account
the following:
(a) The Cash Portion shall be adjusted to reflect Purchaser's and
distributor's cash balances in ETI's accounts as of the Adjustment Date as
agreed by Purchaser and Seller prior to the Adjustment Date.
(b) The Cash Portion shall be adjusted to reflect all unpaid expenses
of the Elbow Lake Property accrued on or before the Adjustment Date, other than
the Community Bank Obligations.
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(c) The Cash Portion shall be adjusted in the amount of $120,000 in
satisfaction of Seller's obligation to Xxxxxxx & Associates for Seller's portion
of the broker's fee for this Agreement.
(d) The Cash Portion shall be adjusted in the amount of $10,160 to
reflect certain unpaid sales taxes owed to the State of Minnesota; provided,
however, Purchaser shall reimburse ETI or ETIC the difference between $10,160
and the actual amount paid by ETI or ETIC to satisfy the sales tax obligation to
the State of Minnesota.
(e) Seller shall also assign 100,000 shares of the Stock Portion to
Xxxxxxx & Associates in satisfaction of Seller's portion of the broker's fee for
this Agreement.
SECTION 3.04. REGISTRATION OF THE STOCK PORTION
Purchaser shall upon the closing commence the preparation of a
registration statement with the Securities and Exchange Commission ("SEC") for
the purpose of registering the Stock Portion under the Securities Act of 1933,
as amended (the "Securities Act"). Purchaser shall file such registration
statement with the SEC within 30 days of the closing. Purchaser shall make every
reasonable effort to cause the registration statement to be granted
effectiveness by the SEC as soon as possible. Seller shall be responsible for
50% of the pro rata costs of the registration (including maintaining the
effectiveness of the registration statement) and sale, including brokers'
commissions, fees, costs, and expenses, legal and accounting fees and costs,
printing costs, and other expenses in proportion to the number of shares of
Common Stock being registered.
SECTION 3.05. RESTRICTIONS ON SALE OF STOCK PORTION
Except with respect to 500,000 shares of the Stock Portion, Seller shall
agree to any reasonable lock-up or other reasonable restriction on its sale or
other transfer of the Stock Portion as reasonably requested by any investment
banker employed by Purchaser to underwrite or otherwise see to the sale of
Purchaser's equity securities or securities convertible into the Common Stock.
With respect to the first 500,000 shares of the Stock Portion to be sold by
Seller, Seller shall notify Purchaser of such proposed sale at least three
business days prior to the sale.
SECTION 3.06. SUPERVISION OF SALES
Until the earlier to occur of one year from the Adjustment Date or the
sale of the first 500,000 shares of the Stock Portion, at any xxxx Xxxxxx shall
not sell any of such shares except in a manner or through an investment banker
or broker-dealer acceptable to Purchaser, which acceptance shall not be
unreasonably withheld. Until the earlier to occur of two years from the
Adjustment Date or the sale of the next 1,000,000 shares of the Stock Portion,
Seller shall not sell any of such shares except in a manner or through an
investment banker or broker-dealer acceptable to Purchaser, which acceptance
shall not be unreasonably withheld.
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ARTICLE IV. REPRESENTATIONS
SECTION 4.01. SELLER'S REPRESENTATIONS
Seller and ETI, jointly and severally, represent to Purchaser as follows:
(a) ETI and ETIC are corporations validly existing and in good standing
under the laws of the State of Nevada. ETIC is a wholly owned subsidiary of ETI.
(b) ETIC owns all of the capital stock of its subsidiaries. Each
subsidiary is validly existing and in good standing under the laws of the state
or province of its incorporation.
(c) Seller has delivered, or will deliver prior to the Closing Date, to
Purchaser true and complete copies of all charter documents, by-laws, and
amendments thereto for ETI, ETIC, and its subsidiaries.
(d) The execution, delivery, and consummation of the transactions
contemplated by this Agreement have been duly authorized by their respective
Boards of Directors and Stockholders of Seller and ETI and will not contravene
any provisions of law, an order of any court or other agency of government, or
of their Articles of Incorporation or Bylaws. Any consents, approvals,
authorizations, registrations, or qualifications with any person, bank, or any
governmental body or court having the authority or power to regulate, supervise,
or direct the business and affairs of Seller or ETI that is necessary for the
consummation of the transactions specified in this Agreement shall have been
obtained prior to the Closing Date. Nothing in any agreement to which any of
Seller or ETI is a party prohibits the execution or implementation of this
Agreement.
(e) This Agreement constitutes the legal, valid and binding obligation
of Seller enforceable against it in accordance with its terms, subject only to
the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and the award by courts of
money damages rather than specific performance of contractual provisions
involving matters other than the payment of money.
(f) Seller may assign the agreements with members of the Distribution
Network without the members' consent. Nothing in any agreement with any member
of the Distribution Network or any other person prohibits the execution or
implementation of this Agreement. This Agreement and its implementation will not
void any agreement with any member of the Distribution Network. Seller has
provided, or will provide prior to the Closing, Purchaser with true and complete
copies of every version of its applications, agreements, and policies and
procedures that are applicable to any present member of the Distribution
Network.
(g) This Agreement is not in violation of any law or regulation of any
governmental jurisdiction in which Seller does business or, to its knowledge,
has members of the Distribution Network.
(h) The lists, copies, and other information provided on the Schedules
or delivered pursuant to this Agreement are accurate and complete in every
material respect. No party to any agreement delivered pursuant to this Agreement
or referred to in or attached to any Schedule is in default thereof except as
indicated in the applicable Schedule.
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(i) RESERVED.
(j) Seller has no knowledge of and has received no notice of any
complaint about its business practices or of any alleged violation of any law or
regulation with respect to its business practices or any Product from any
person, including the Direct Selling Association.
(k) Seller owns all the Rights free and clear of any liens, claims, or
other title defects except as listed on Schedule 7.01(k). Seller has the full
power and right to transfer title to the Rights without the consent of any other
person.
(l) Seller has not received any notification of infringement by Seller
or any claims with regard to any Right or any other trademark, service xxxx or
trade name from any person, and Seller is not aware of a basis for any claim. To
the best of Seller's knowledge, no right or other trademark, service xxxx or
trade name used by Seller in connection with its business infringes any
trademark, service xxxx or trade name of others in any country in which the
trademark, service xxxx or trade name is used in connection with the manufacture
or sale of any Product or otherwise.
(m) Seller owns the Equipment (with the exception of the equipment at
the Facilities that is leased as indicated on Schedule 2.02), Supplies,
Software, Production Materials, Distributorships, and Goodwill free and clear of
any liens, claims, or other title defects and has the full power and right to
transfer title to them without the consent of any other person. The Equipment,
Supplies, and Production Materials are in substantially good operating condition
and repair excluding ordinary wear and tear, taking into consideration the age
and prior use of same, and are in compliance with all applicable laws,
regulations, orders and ordinances. The value of fixed assets used in the
business of Seller has not been written up.
(n) The agreements with the members of the Distribution Network, the
Advanced Agreements, the Equipment Leases (other than Xxxxxx Financial Global
Vendor Finance), the Contracts, and the Canadian Lease are in full force and
effect and not in default. All payments due under them have been made through
the date of this Agreement and will be made through and including the Adjustment
Date. Except as otherwise disclosed on the applicable Schedule or otherwise
disclosed to Purchaser, Seller has no knowledge of and has received no notice of
any alleged breach of any of them from any person and knows of no state of facts
that, with the passage of time or the giving of notice, or both, would
constitute a breach. The properties subject to the Canadian Lease are not
subject to any pending or, to the knowledge of Seller, threatened adverse
change, judicial order, ordinance or zoning restriction which materially affects
the use of such properties in the business of Seller or would affect the use
thereof.
(o) To the best knowledge of Seller, Seller owns the Facilities in fee
simple absolute subject only to the liens listed on Schedule 7.01(o). Copies of
the documents evidencing the liens on the Facilities have been delivered prior
to the Closing to Purchaser. Except as otherwise disclosed, Seller has no
knowledge of and has received no notice of any alleged default of any lien from
any person, government, or governmental entity or agency. Except as otherwise
disclosed on the applicable Schedule or otherwise disclosed to Purchaser, Seller
knows of no state of facts that, with the passage of time or the giving of
notice, or both, would constitute a default under an existing lien or would give
rise to an additional lien.
(p) The Permits are all the permits or other legal authorizations
necessary for Seller to operate the Distribution Network and otherwise conduct
its business as presently conducted. The
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Permits are in full force and effect. Seller has no knowledge of and has
received no notice of any alleged violation of any Permit from any person,
including the Direct Selling Association, and knows of no state of facts that,
with the passage of time or the giving of notice, or both, would constitute a
violation. It has the full power and right to transfer the Permits, subject to
the permits being assignable by law, without the consent of any other person
except as described in Schedule 2.09.
(q) The Insurance Policies are listed on Schedule 7.01(q). The Schedule
shows each policy's carrier, the amount of coverage, its expiration date, and
the date through which premiums have been paid. All Insurance Policies are now
in full force and effect. The Insurance Policies are all the liability and other
insurance necessary with respect to the Property, Products, operation of the
Distribution Network, and the use of the Facilities, Equipment, and the property
subject to the Canadian Lease. A copy of any review of insurance coverage by any
insurance broker or consultant or other person has been listed on the Schedule
and delivered to Purchaser.
(r) The Financial Statements are listed on Schedule 7.01(r). True and
complete copies of the Financial Statements have been delivered to Purchaser.
Each of the Financial Statements is true and complete with respect thereto. Each
item therein was prepared in accordance with generally accepted accounting
principals, consistently applied, and accurately reflect the financial condition
of Seller or ETI and the results of their operations in for the periods to which
they relate. There has been no material change in the financial condition or the
operations of Seller or ETI not reflected in the Financial Statements or
otherwise disclosed to Purchaser. Seller has received no auditors' letters from
its accountants other than those listed on the Schedule. True and complete
copies of the auditors' letters have been delivered to Purchaser.
(s) The Internal Revenue Service ("IRS") has not audited Seller's tax
returns since 1994 except as listed on Schedule 7.01(s). Copies of any audit
papers and any other communications with the IRS have been delivered to
Purchaser.
(t) (i) Seller has duly and timely filed where required all federal,
state and local tax returns required to be filed prior to the date of
this Agreement, including income, employment, rent and sales and use
tax returns, and, except as noted on Schedule 7.01(t), has paid all
taxes due and payable on such returns, all deficiencies and assessments
notice of which has been received, all other taxes, and all
governmental charges, duties, penalties, interest and fines
(collectively, "Other Charges") due and payable on or before the date
of this Agreement.
(ii) There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of any
tax returns by Seller or for the payment by, or assessment against,
either of any tax, deficiency, assessment or Other Charges.
(iii) There are no suits, actions, claims, audits, investigations,
inquiries or proceedings pending against Seller in respect of any
unpaid taxes, deficiencies, assessments or Other Charges and there are
no such threatened suits, actions, claims, audits, investigations or
inquiries.
(iv) Seller has withheld or collected from each payment made to each
of its employees the amount of all taxes required to be withheld or
collected therefrom and has paid the same to the proper tax receiving
officers. Purchaser acknowledges and understands
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that Seller's obligation to continue to so withhold, collect and pay
such taxes shall cease as of the Adjustment Date and shall become the
responsibility of Purchaser.
(v) Seller is in arrears in the payment of Federal, state and local
withholding taxes, FICA, Medicare, real estate taxes and assessments,
and sales taxes as specified on Schedule 7.01(t) ("Delinquent Taxes").
The Schedule sets forth the type of Delinquent Tax, to which government
entity it is owed, and the amount, including penalties now due.
(u) RESERVED.
(v) Seller is not a party to any civil litigation or arbitration
proceeding except as listed on Schedule 7.01(v) or otherwise disclosed to
Purchaser. Seller has no knowledge of and has received no notice of any
criminal, regulatory, or compliance proceedings or threatened proceedings from
or by any government or governmental entity or agency except as listed on the
Schedule or otherwise disclosed to Purchaser. Seller has provided, or will
provide prior to the Closing Date, Purchaser a summary of the proceedings listed
on the Schedule or otherwise disclosed to Purchaser.
(w) Seller has no knowledge of and has received no notice of any
release or other discharge or leak of or storage or possession of any substance
or material defined as hazardous under the laws of the United States, Canada,
Nevada, Minnesota, or Ontario at the Las Vegas Property, the Elbow Lake Property
or the property subject to the Canadian Lease. Seller has no knowledge of and
has received no notice of any complaint about violations of environmental law by
a former owner or tenant of any of the forgoing properties.
(x) Schedule 7.01(x) sets forth a complete description of incentive
awards now in effect for members for the Distribution Network ("Incentive
Awards").
(y) (i) Seller is acquiring the Stock Portion for investment and not
with a view toward distribution. Seller acknowledges and understands
that it must bear the economic risk of an investment in the Stock
Portion being acquired pursuant hereto for an indefinite period of time
since such securities have not been registered under the Securities Act
and, therefore, cannot be sold unless they are either subsequently
registered under the Securities Act or an exemption from such
registration is available and favorable opinions of counsel in form and
substance satisfactory to Purchaser to that effect are obtained.
Notwithstanding the foregoing, this shall not preclude the resale of
the Stock Portion to the public subsequent to the Closing Date pursuant
to an effective registration statement as contemplated in Section 3.04
hereof. The certificates representing the Stock Portion (unless such
securities have been registered) shall bear on their face the following
legend:
The shares represented by this Certificate have not been registered
under the Securities Act of 1933 (the "Securities Act"), as amended.
These shares have been acquired for investment and not for
distribution or resale. They may not be mortgaged, pledged,
hypothecated or otherwise transferred without an effective
registration statement for such shares under the Securities Act or
an opinion of counsel for the Corporation that such registration is
not required.
(ii) Seller, taking into account the personnel and resources it can
practically bring to bear on the purchase of the Stock Portion
contemplated hereby, is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to
Page 11
investments in Stock Portion presenting an investment decision like
that involved in the purchase of the Stock Portion.
(iii) Seller has had the opportunity to ask questions of and receive
answers from representatives of Purchaser or persons acting on its
behalf concerning the terms and conditions of the proposed investment
in Purchaser, has had the opportunity to obtain additional information
necessary to verify the accuracy of information previously furnished
about Purchaser, and has requested, received, reviewed and considered
all information it deems relevant in making an informed decision to
purchase the Stock Portion.
(iv) Seller is an "accredited investor" as such term is defined in
Rule 501 of Regulation D promulgated under the Securities Act.
(z) Seller is in compliance with, and has not received any notice of
any violation of, nor any notice regarding a pending site visit or investigation
pursuant to, the Occupational Health and Safety Act and the regulations issued
pursuant thereto.
(aa) To the best knowledge of Seller, Seller has complied with the
continuation coverage requirements for Group Health Plans contained in Section
4980(f) of the Code, as added by the Consolidated Omnibus Budget Reconciliation
Act of 1989, as amended ("COBRA"), relating to Seller's group health plans.
(bb) Neither Seller nor any of its officers, employees or agents, nor
any other person acting on behalf of any of them, has, directly or indirectly,
within the past five years given or agreed to give any gift or similar benefit
(other than legal price concessions to customers in the ordinary course of
business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office or other person who is or may be in a position to help the business of
Seller (or assist it in connection with any actual or proposed transaction)
which (i) might subject Seller to any damage or penalty in any civil, criminal
or governmental litigation or proceeding, (ii) if not given in the past, might
have had a materially adverse effect on the assets, business or operations of
Seller as reflected in any of the Financial Statements or (iii) if not continued
in the future, might adversely affect the assets, business, operations or
prospects of Seller.
(cc) Each of the Schedules described in this Article IV is dated as of
the Adjustment Date, identified specifically as a schedule to a particular
article, certified by Seller as being true and complete in every material
respect, and has been delivered or made available to the Purchaser by the
Seller. Information disclosed in any schedule described in this Article IV shall
not be deemed disclosed for purposes of any other schedule hereto.
(dd) None of the representations, warranties, covenants or agreements
by ETI or ETIC in this Agreement, nor any document, certificate or schedule
furnished or to be furnished pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements of facts contained therein not misleading.
(ee) All statements contained in any certificate or other instruments
delivered by or on behalf of the Seller pursuant hereto or in connection with
the transactions contemplated hereby shall be deemed a representation and
warranty of the Seller.
Page 12
SECTION 4.02. PURCHASER'S REPRESENTATIONS
Purchaser represents as follows:
(a) Purchaser is a corporation that was duly organized and is validly
existing and in good standing under the laws of the State of Utah.
(b) The execution, delivery and performance of the transactions
contemplated by this Agreement have been duly authorized by the Board of
Directors of Purchaser, and will not contravene any provisions of law, or an
order of any court or other agency of government or of its Articles of
Incorporation or Bylaws. Any and all consents, approvals, authorizations, or
orders of or registrations or qualifications with any person, bank, governmental
body, or court having authority or power to regulate supervise or direct the
business and affairs of Purchaser necessary for the consummation of the
transactions specified in this Agreement shall have been obtained prior to the
Effective Date.
(c) This Agreement constitutes the legal, valid and binding obligation
of Purchaser enforceable against it in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and the award by courts of
money damages rather than specific performance of contractual provisions
involving matters other than the payment of money.
(d) Nothing in any agreement to which Purchaser is a party prohibits
the execution or implementation of this Agreement.
(e) This Agreement is not in violation of any law or regulation of any
governmental jurisdiction in which Purchaser does business.
(f) The Common Stock of the Stock Portion, when issued in accordance
with this Agreement, will be duly authorized, validly issued, outstanding, fully
paid and non-assessable.
(g) The reports and other documents filed by Purchaser with the SEC
were complete and accurate when filed and have been updated or supplemented as
appropriate. The financial statements included or referenced therein were
prepared in accordance with generally accepted accounting principals,
consistently applied, and accurately reflect the financial condition of
Purchaser and the results of its operations for the periods to which they
relate. There has been no material change in the financial condition or the
operations of Purchaser which has not been included in a report filed with the
SEC.
(h) Purchaser is not a party to any civil litigation or arbitration
proceeding except as listed on Schedule 7.02(h). Purchaser has no knowledge of
and has received no notice of any criminal, regulatory, or compliance
proceedings or threatened proceedings from or by any government or governmental
entity or agency except as listed on the Schedule. Purchaser has provided Seller
with a copy of the pleadings or a summary of the proceedings listed, as well as
any letters from Purchaser's counsel to Purchasers auditors for any fiscal year
after 1996 relating to litigation, contingent liabilities, and other matters.
Page 13
(i) All statements contained in any certificate or other instruments
delivered by or on behalf of the Purchaser pursuant hereto, or in connection
with the transactions contemplated hereby, shall be deemed representations and
warranties by the Purchaser.
(j) The IRS has not audited Purchaser's tax returns since 1994 except
as listed on Schedule 7.02(j). Copies of any audit papers and any other
communications with the IRS have been delivered to Seller.
(k) (i) Up to and as of the Closing Date, Purchaser has duly and timely
filed where required all federal, state and local tax returns required to be
filed prior to the date of this Agreement, including income, employment, rent
and sales and use tax returns, and, except as noted on Schedule 7.02(k), has
paid all taxes due and payable on such returns, all deficiencies and assessments
notice of which has been received, all other taxes, and all Other Charges due
and payable on or before the date of this Agreement..
(ii) There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of any
tax returns by Purchaser or for the payment by, or assessment against,
either of any tax, deficiency, assessment or Other Charges.
(iii) There are no suits, actions, claims, audits, investigations,
inquiries or proceedings pending against Purchaser in respect of any
unpaid taxes, deficiencies, assessments or Other Charges and there are
no such threatened suits, actions, claims, audits, investigations or
inquiries.
(iv) Purchaser has withheld or collected from each payment made to
each of its employees the amount of all taxes required to be withheld
or collected therefrom and has paid the same to the proper tax
receiving officers. Purchaser will continue to so withhold, collect and
pay such taxes after the Adjustment Date with respect to the former
employees of Seller.
(v) Purchaser is not in arrears in the payment of Federal, state and
local withholding taxes, FICA, Medicare, real estate taxes and
assessments, and sales taxes.
(l) Purchaser has no knowledge of and has received no notice of any
release or other discharge or leak of or storage or possession of any substance
or material defined as hazardous under the laws of the United States or Florida.
Purchaser has no knowledge of and has received no notice of any complaint about
violations of environmental law by a former owner or tenant of any of its
existing or former properties.
(m) Purchaser is in compliance with, and has not received any notice of
any violation of, nor any notice regarding a pending site visit or investigation
pursuant to, the Occupational Health and Safety Act and the regulations issued
pursuant thereto.
(n) Neither Purchaser nor any of its officers, employees or agents, nor
any other person acting on behalf of any of them, has, directly or indirectly,
within the past five years given or agreed to give any gift or similar benefit
(other than legal price concessions to customers in the ordinary course of
business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office or other person who is or may be in a position to help the
Page 14
business of Purchaser (or assist it in connection with any actual or proposed
transaction) which (i) might subject Purchaser to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (ii) if not given in
the past, might have had a materially adverse effect on the assets, business or
operations of Purchaser or (iii) if not continued in the future, might adversely
affect the assets, business, operations or prospects of Purchaser.
(o) None of the representations, warranties, covenants or agreements by
Purchaser in this Agreement, nor any document, certificate or schedule furnished
or to be furnished pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements of facts contained therein not misleading.
ARTICLE V. CONDITIONS PRECEDENT TO THE CLOSING
SECTION 5.01. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
Notwithstanding any other provision herein, the obligations of the
Purchaser under this Agreement are, at the option of the Purchaser, subject to
the fulfillment of each of the conditions set forth below.
(a) The representations of the Seller and ETI contained in this
Agreement, or otherwise made in writing in connection with the transactions
contemplated hereby, shall be true and correct in all material respects on and
as of the Closing Date. On or before the Closing Date, the Seller shall have
complied with and duly performed any and all covenants, agreements and
conditions in all material respects, on its part to be complied with or
performed pursuant to or in connection with this Agreement on or before the
Closing Date.
(b) The Purchaser shall have received a certificate executed by the
Secretary of ETI and ETIC setting forth a copy of the resolutions adopted by
their respective Boards of Directors and stockholders of ETI and ETIC approving
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(c) The Purchaser shall have received an opinion of Xxxxxx Xxxxxxxx
Xxxxxx & Xxxxxxx, counsel for Seller, dated as of the Closing Date to the effect
that (i) ETI and ETIC are corporations that are validly existing and in good
standing under the laws of the state of their incorporation and have the
corporate power to carry on their business as it is now being conducted and is
qualified to do business in Nevada; (ii) any and all consents or orders of any
and all courts or governmental agencies, administrative bodies or lenders or
others known to counsel have been obtained as of the Closing Date, which are
required for the consummation of the transactions contemplated by this
Agreement; (iii) this Agreement has been duly executed and delivered by ETI and
ETIC, and is the valid and binding obligation of ETI and ETIC, in accordance
with its terms, subject only to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto, and the award by courts of money damages rather than specific
performance of contractual provisions involving matters other than the payment
of money; (iv) counsel has no knowledge of a breach by ETIC or ETI of any
representation made by ETIC or ETI pursuant to this Agreement; (v) counsel has
no knowledge of any pending or threatened litigation, action, or proceeding
involving ETIC or ETI or the entry of any orders or injunctions which might
materially and adversely affect or impair the Property; and (vi) the
transactions
Page 15
contemplated hereby will not cause a breach of the certificate of incorporation
or by-laws of ETI or ETIC.
(d) RESERVED.
(e) No action or proceeding shall have been instituted to restrain or
prohibit the acquisition by Purchaser, or the conveyance by Seller, of the
Property.
(f) RESERVED.
(g) The Property has not been subjected to any lien, charge, or any
other encumbrance not disclosed herein.
(h) The Property shall not have suffered any destruction or damage by
fire, explosion or other calamity exceeding Ten Thousand Dollars ($10,000.00) in
value not covered by insurance, nor has any other event, condition or state of
facts of any character occurred which materially and adversely affects, or, to
the best of the knowledge of the Seller, threatens to materially and adversely
affect, the Property, business or financial condition of the Seller.
(i) Seller has executed the Revised Supply Agreement which sets forth
the terms and conditions under which Seller shall serve as Purchaser's exclusive
supplier of certain proprietary formulae (the "Formulae") used in the
manufacture of the Dri Wash `n Guard products.
(j) Xxxxxx X. Xxxxx has executed the Option Agreement set forth as
Schedule 8.01(j).
(k) RESERVED.
(l) RESERVED.
(m) Seller has executed any Documents (as defined below) that require
its execution.
(n) Seller's accountants McGladrey & Xxxxxx, LLP, shall have completed
a certified audit of ETI for the three years ended December 31, 1997, 1998 and
1999.
(o) Purchaser has received reasonably satisfactory evidence that
Community First has released Seller from its obligations to it to make certain
payments and pledges from the Closing Portion, the First Post Closing Payment,
the Second Post Closing Payment and the Stock Portion as those terms were
defined in the Original Agreement, and that it will not move to execute on its
judgment concerning the Elbow Lake Property.
(p) Seller shall have delivered to its credit card processor
irrevocable instructions to direct all funds received by it to a collection
account for the benefit of IMX.
(q) Seller shall have filed with the Xxxxx County Clerk's Office such
filings as are necessary to consent to Purchaser's doing business as "IMX-ETI
Life Partners" in Xxxxx County, Nevada.
Page 16
SECTION 5.02. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION TO CLOSE
Notwithstanding any other provision herein, the obligations of the
Seller under this Agreement are, at the option of the Seller, subject to the
fulfillment of each of the conditions set forth below.
(a) The representations of the Purchaser contained in this Agreement,
or otherwise made in writing in connection with the transactions contemplated
hereby, shall be true and correct in all material respects on and as of the
Closing Date. On or before the Closing Date, the Purchaser shall have complied
with and duly performed any and all covenants, agreements and conditions in all
material respects, on its part to be complied with or performed pursuant to or
in connection with this Agreement on or before the Closing Date.
(b) The Seller shall have received a certificate dated as of the
Closing Date executed by Secretary of the Purchaser setting forth a copy of the
resolutions adopted by Purchaser's Board of Directors approving the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
(c) The Seller shall have received an opinion of Nason, Yeager, Gerson,
White & Xxxxx, P. A., counsel for the Purchaser, dated as of the Closing Date to
the effect that (i) Purchaser is a corporation that was duly incorporated and is
validly existing and in good standing under the laws of the state of Utah and
has the corporate power to carry on its business as it is now being conducted
and is qualified to do business in each jurisdiction where it owns or leases
property or where the nature of the business conducted by it requires such
qualification; (ii) any and all consents or orders of any and all courts or
governmental agencies, administrative bodies or lenders or others known to
counsel have been obtained as of the Closing Date, which are required for the
consummation of the transactions contemplated by this Agreement; (iii) this
Agreement has been duly executed and delivered by Purchaser, and is the valid
and binding obligation of Purchaser, in accordance with its terms, subject only
to the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and the award by courts of
money damages rather than specific performance of contractual provisions
involving matters other than the payment of money; (iv) counsel has no actual
knowledge of a material breach by Purchaser of any representation made by it
pursuant to this Agreement; (v) the issuance of the Stock Portion to the Seller
will be exempt from the registration provisions of the Securities Act and will
not violate the registration provisions of Section 5 of the Securities Act; (vi)
the Stock Portion, when issued, will be duly issued, fully paid, and
non-assessable; and (vii) the transactions contemplated hereby will not cause a
breach of the certificate of incorporation or by-laws of Purchaser.
(d) RESERVED.
(e) No action or proceeding shall have been instituted to restrain or
prohibit the acquisition by the Purchaser, or the conveyance by the Seller, of
the Property.
(f) RESERVED.
(g) Purchaser has executed any Documents (as defined below) that
require its execution.
Page 17
ARTICLE VI. THE CLOSING
SECTION 6.01. THE CLOSING CONFERENCE AND CLOSING DATE
The Closing Conference shall take place at Seller's business office or
at another place as agreed between the Parties. It shall be held at 10:00
o'clock AM, local time. The Closing Date shall be July 21, 2000.
SECTION 6.02. SELLER'S AND ETI'S RESPONSIBILITIES AT THE CLOSING CONFERENCE
At the Closing Conference, Seller and ETI shall take the actions listed
below:
(a) Seller shall deliver all the instruments listed in this subsection
("Documents"):
(i) An assignment of all the agreements with the members of the
Distribution Network.
(ii) Bills of Sale for the Equipment (other than the Leased
Equipment), the Supplies, the Software, the Rights owned by Seller and
the Production Materials (collectively, the "Bills of Sale").
(iii) Assignments of the Equipment Leases, any licenses relating
to the Software, the Contract Rights, the Permits, the Canadian Lease,
and the Distributorships (collectively the "Assignments").
(iv) The Revised Supply Agreement and the Option Agreement.
(v) Quitclaim Deed conveying title to the Elbow Lake Property.
(vi) An affidavit of title concerning the Elbow Lake Property.
(vii) The opinion of Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxxx.
(viii) The officers' certificate as required by Section 5.01(b).
(ix) An assignment concerning the 100,000 shares of the Stock
Portion in favor of Xxxxxxx & Associates.
(x) The pledge agreement concerning the pledge of 500,000 shares
of the Stock Portion to IMX.
(b) Seller also shall deliver all of the following to Purchaser:
(i) All keys, passes, and other things necessary to access the
Facilities and the property subject to the Canadian Lease not
previously delivered or made available to Purchaser.
(ii) All disks and documentation related to the Software not
previously delivered or made available to Purchaser.
Page 18
(iii) All codes and other passwords necessary to control and
operate all software, voicemail, e-mail, and other systems used in
connection with the operation of the Distribution Network not
previously delivered or made available to Purchaser.
SECTION 6.03. PURCHASER'S RESPONSIBILITIES AT THE CLOSING CONFERENCE
At the Closing Conference, Purchaser shall take the actions listed
below:
(a) Purchaser shall deliver to Seller the Cash Portion of the Purchase
Price subject to the adjustments set forth in Section 3.03.
(b) Purchaser shall deliver to Seller the Note in the principal amount
representing the Inventory Portion of the Purchase Price.
(c) Purchaser shall deliver certificates of its Common Stock registered
in the name of ETIC representing the Shares portion of the Purchase Price.
(d) Purchaser shall accept the Assignments, the Bills of Sale and the
Quitclaim Deed.
(e) Purchaser shall accept delivery of the Revised Supply Agreement and
the Option Agreement.
(f) Purchaser shall deliver the opinion of Nason, Yeager, Gerson, White
& Xxxxx, P.A.
ARTICLE VII. ADDITIONAL COVENANTS
SECTION 7.01. TAXES
(a) Notwithstanding any other provision of this Agreement, Seller shall
not be required to pay all unpaid sales taxes prior to Closing; however,
following the Closing, Seller shall make every reasonable effort to make
acceptable payment arrangements with the states to which sales taxes are due and
Seller shall pledge up to 500,000 shares of the Stock Portion to Purchaser for
up to two years pursuant to a pledge agreement substantially in the form of
Schedule 10.01(b) to the Original Agreement as security for the payment of the
unpaid sales taxes.
(b) Purchaser shall apply for and otherwise secure sales tax accounts
in every state in which sales taxes will accrue in connection with the operation
by Purchaser of the Distribution Network immediately following the Closing Date.
SECTION 7.02. NON-COMPETITION AND NON-SOLICITATION
(a) For so long as the Revised Supply Agreement is effective plus 50
years, Seller shall not, engage, directly or indirectly, in the distribution or
sale of any of the Products in North America, including the Caribbean Islands,
except to local, state and federal governments and government agencies for
consumption by such governments and government agencies and not for resale and
except to those persons listed on Schedule 7.02(a); and except also for Products
dropped from the product line of products distributed in North America through
the Distribution Network; provided, however, that Seller may not sell or
distribute Products through multi-level marketing distribution channels.
Page 19
(b) For a period of five years from the Closing Date, neither Seller,
ETI, nor any of its representatives shall solicit to employ, engage as a
consultant, or organize a corporation, partnership, limited liability company or
otherwise enter into a joint venture arrangement with any of the members of the
Distribution Network, or the distributors, principal suppliers, consultants or
principal creditors of Purchaser, to the extent that such are not currently
suppliers, consultants, or creditors of Seller.
(c) For so long as the Revised Supply Agreement is effective and is not
in default by Purchaser plus 50 years, Seller and ETI shall not engage, directly
or indirectly, in network or multi-level marketing sales of any products or
services in North America.
(d) For so long as the Revised Supply Agreement is effective plus 50
years, Purchaser shall not engage, directly or indirectly, in network or
multi-level marketing sales of Products outside of North America.
(e) Seller and ETI acknowledge that (i) compliance with the provisions
of this Section is necessary to protect the business and goodwill of Purchaser;
(ii) Seller and ETI have no right to derive profits or benefits of any kind from
any violation of any of the provisions of this Section; (iii) Purchaser would
suffer irreparable harm if any of those provisions were breached; and (iv)
Purchaser would not have an adequate remedy at law for the breach or threatened
breach of those provisions. If Seller or ETI breaches or threatens to breach any
of the provisions set forth in this Section, Purchaser may (i) in addition to
other available remedies, seek and obtain equitable remedies, including
injunction of the breach or threatened breach and an accounting and disgorgement
of all profits resulting from any and (ii) collect its reasonable attorney's
fees and costs incurred in enforcing it's rights under this Agreement.
(f) Notwithstanding the foregoing, the limitations and restrictions set
forth in this Section 7.02 shall be of no force and effect against Seller in the
event Purchaser is in material breach of the Revised Supply Agreement under the
terms thereof.
SECTION 7.03. ASSUMPTION AND PAYMENT OF CERTAIN OTHER LIABILITIES OF SELLER AND
ETI
From the Adjustment Date, Purchaser shall assume and be responsible for
all payments or other liabilities due and owing by either Seller or ETI in
connection with Garden State Nutritionals, a division of Vitaquest
International, Inc. ("Garden State"), and Portman-Harmony, Inc. Purchaser shall
pledge 300,000 shares of Purchaser's Common Stock to Garden State as security
for the payment of this obligation.
SECTION 7.04. ASSUMPTION AND PAYMENT OF COMMUNITY BANK OBLIGATIONS
From the Closing Date, Purchaser shall assume and be responsible for
all payments or liabilities due under the Community Bank Obligations. Purchaser
shall pledge 500,000 shares of Purchaser's Common Stock to Community First as
security for the payment of this obligation.
SECTION 7.05. ASSUMPTION OF COBRA OBLIGATIONS
From the Adjustment Date forward, Purchaser shall assume full
responsibility for assuring compliance with the requirements of COBRA with
respect to any current or former employee of Seller who becomes, or has become,
an employee of Purchaser who experiences a qualifying event,
Page 20
whether such qualifying event occurred before or after the Adjustment Date under
any group health plan maintained by Seller prior to the Adjustment Date.
SECTION 7.06. REMOVAL OF XXXXX FROM CERTAIN PERSONAL GUARANTIES
Purchaser acknowledges that Xxxxxx X. Xxxxx is a personal guarantor of
certain debts being assumed by Purchaser, specifically Xx. Xxxxx personally
guaranteed that certain obligation to Community First concerning the Elbow Lake
Property and to Garden State Nutritionals, a division of Vitaquest
International, Inc. From the Closing Date, Purchaser shall use its reasonable
best efforts to remove Xx. Xxxxx as guarantor of such obligations and shall
comply with all reasonable requests for assistance, information, documents or
otherwise of Seller, ETI or Xx. Xxxxx in connection therewith.
SECTION 7.07. ALLOCATION OF BONUS POOL/ROAD TO PLATINUM INCENTIVE AWARDS
Purchaser and Seller hereby agree that the payment of all incentive
awards or bonuses earned by and owing to the members of the Distribution Network
shall be prorated between them. That portion of a bonus or award earned by a
member of the Distribution Network prior to May 21, 2000 shall be borne by
Seller. Any portion of a bonus or award earned by a member of the Distribution
Network from May 22, 2000 forward shall be borne by Purchaser. Notwithstanding
the foregoing, Purchaser shall not be responsible for the payment of any
incentive award or other bonus accrued by or owing to Xxxxxxxxx Xxxxx prior to
the Adjustment Date and Seller shall be solely responsible for such payments
accrued and owing Xxxxxxxxx Xxxxx through the Adjustment Date.
SECTION 7.08. LITIGATION PROCEEDS
Purchaser acknowledges that there are currently pending litigation
proceedings concerning the Elbow Lake Property. Purchaser hereby covenants and
agrees that any settlement, damages or other award or proceeds shall be the sole
and exclusive property of Seller to which it has no interest or claim. Any
proceeds received by Purchaser in connection with such litigation shall be
remitted immediately to Seller.
SECTION 7.09. CONFIDENTIALITY WITH RESPECT TO THE FORMULAE
Purchaser acknowledges and agrees that it could have access to certain
trade secrets, know-how, proprietary processes and formulae (collectively,
"Proprietary Information"), whether patentable or unpatentable, necessary to
manufacture the Formulae used to make the Dri Wash `n Guard Products. For so
long as Seller is able to perform under the Revised Supply Agreement, or for any
such longer period that Purchaser continues to purchase Formulae from Seller,
Purchaser shall not disclose, use, permit the use, reverse engineer or take any
other action in contravention of Seller's right to exclusively manufacture and
distribute the Formulae or otherwise exploit the Proprietary Information.
SECTION 7.10. OPERATION OF SOFTWARE
For a period of one year from the Closing Date, Seller shall continue
to assist Purchaser, at Purchaser's sole cost and expense, with the operation,
modification and replacement of the Software as reasonably required by
Purchaser.
Page 21
SECTION 7.11. RESTRICTION OF ISSUANCE OF PURCHASER'S CAPITAL STOCK
Until the earlier to occur of (a) two years after the Closing Date or
(b) the one million (1,000,000) shares of the Stock Portion are sold by Seller
or ETI, Purchaser shall not issue any additional capital stock without the prior
written consent of ETI, which consent shall not be unreasonably withheld. ETI
hereby consents to the issuance of additional capital stock (a) in an amount
equal to the number of shares currently allocated to Purchaser's stock option
plan, (b) in an amount equal to the number of shares allocated to Purchaser's
existing warrants, (c) up to five million shares for the acquisition of
additional companies, (d) in order to raise funds to pay any part of the Cash
Portion, (e) to acquire Select Benefits, Inc., (f) to acquire Classic Optical
Laboratories, Inc., and (g) in an amount equal to the number of shares issued
and outstanding as of May 22, 2000 but subsequently surrendered or otherwise
returned to Purchaser.
SECTION 7.12. NO CHANGES IN BOARD EFFECTED BY SELLER
After the Closing Date and for a period of two years, Seller shall vote
any portion of the Stock Portion then owned in favor of all directors nominated
by Purchaser's board of directors.
SECTION 7.13. APPOINTMENT OF DIRECTORS OF PURCHASER
After the Closing Date and on the approval of Purchaser, which such
approval shall not be unreasonably withheld, Seller shall nominate two members
of ETI's board of directors to sit on Purchaser's Board of Directors. Purchaser
shall take every reasonable action to cause such persons to be appointed or
elected to Purchaser's board of directors. Seller and Purchaser understand and
agree that all members of Purchaser's board of directors must provide Purchaser
with the personal information necessary to satisfy Purchaser's legal reporting
obligations. In addition, Seller and Purchaser agree that except in unusual
circumstances no person who has been convicted of a felony or subject to a
permanent injunction against future violations of securities laws, mail fraud,
U.S. Food and Drug Administration or Federal Trade Commission rules and
regulations, state securities laws or state multi-level marketing laws, should
be a member of Purchaser's board of directors.
SECTION 7.14. RESTRICTIONS ON DISTRIBUTION OF PRODUCTS
Following the Effective Date, Purchaser shall not distribute the
Products by any other means other than through the Distribution Network, and
shall only distribute the Products in North America, including the Caribbean
Islands.
SECTION 7.15. CONTINUATION OF IMX-ETI LIFE PARTNERS
Following the Closing, Purchaser shall continue to operate the
Distribution Network and sell the Products under the name of "IMX-ETI Life
Partners."
SECTION 7.16. COMPENSATION REPORTS
For a period of one year following the Closing, Purchaser shall provide
Seller with a list of the monthly compensation report for distributors in the
Distribution Network, prior to the payment of such compensation to distributors,
for purposes of reviewing the monthly compensation report as a consultant to
Purchaser on a pro xxxx basis. Any such reports or information so delivered or
disclosed to Seller shall be kept in the strictest of confidence.
Page 22
SECTION 7.17. FURTHER ACTIONS
The Parties agree, in order to perfect Purchaser's right and title to
and use of the Property, the Facilities and to accomplish the purpose of this
Agreement, including obtaining reasonable title insurance, to execute all
documents and take all such other action as the Parties may reasonably request,
whether at or after the Closing Date, as may be reasonably necessary or proper
to allow the Parties to receive the full benefits of this Agreement and
Purchaser's purchase and operation of the Distribution Network. Seller shall
further assist Purchaser in obtaining any Permits necessary to operate the
Distribution Network.
ARTICLE VIII. MISCELLANEOUS
SECTION 8.01. ENTIRE AGREEMENT; AMENDMENTS
This Agreement, including those additional agreements referred to in
the Schedules, embodies the entire understanding of the Parties. No amendment or
modification of this Agreement may be made except in writing, signed by the
Parties hereto.
SECTION 8.02. EXPENSES
Each party hereto shall pay its own expenses incidental to the
preparation of this Agreement, and the consummation of the transactions
contemplated hereby unless expressly provided herein.
SECTION 8.03. HEADINGS
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
SECTION 8.04. NOTICES
All notices, requests, demands, approvals, consents, waivers or other
communications hereunder shall be in writing and shall be deemed duly given if
delivered to or mailed by registered or certified mail, postage prepaid or by
nationally recognized overnight express delivery service as follows:
If to Purchaser to: IMX Pharmaceuticals, Inc.
0000 Xxxxxxxxx Xxxx., Xxx. 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
If to Seller to: Dri-Kleen, Inc d/b/a Enviro-Tech International and
ETI International, Inc.
Attn: President
X.X. Xxx 00000
Xxx Xxxxx, Xxxxxx 00000-0000
~ or ~
0000 Xxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Page 23
A party may change their address for purposes of this Section 8.04 by giving
notice hereunder.
SECTION 8.05. GOVERNING LAW; JURISDICTION
This Agreement and the legal relations among the Parties hereto shall
be governed by and construed in accordance with the substantive law of the State
of Nevada without regard to conflict of law principles. The Parties consent to
the jurisdiction of the courts of the State of Nevada or the U.S. District Court
for the District of Nevada as if all parts of the agreement were negotiated and
effectuated there.
SECTION 8.06. BENEFICIARIES
This Agreement shall inure to the benefit of and be binding upon the
Parties hereto and their respective successors and legal representatives.
Nothing in this Agreement, express or implied, is intended to confer on any
other person other than the Parties hereto or their respective successors and
legal representatives, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
SECTION 8.07. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument. Its execution shall be effective when
copies of signed signature pages are exchanged by facsimile between the Parties.
SECTION 8.08. SEVERANCE
If any section, subsection or provision of this Agreement, or the
application of such section, subsection, or provision, is held invalid, the
remainder of this Agreement and the application of such section, subsection or
provision to persons or circumstances other than those to which it is held
invalid shall not be affected thereby.
SECTION 8.09. SURVIVAL OF REPRESENTATIONS
All representations and covenants contained in this Agreement shall
survive the Closing.
SECTION 8.10. INDEMNIFICATION
(a) Seller and ETI shall indemnify and hold Purchaser, their officers,
directors, employees, and agents (each a "Seller Indemnified Entity") harmless
from and against, and reimburse a Seller Indemnified Entity with respect to, any
and all loss, damage, liability, cost and expense, including reasonable
attorneys' fees and costs incurred by the Seller Indemnified Entity by reason
of, or arising out of (i) the material breach of any representation made by
Seller or ETI in this Agreement; (ii) Seller's or ETI's failure to perform any
action required by this Agreement or reasonably directed by Purchaser pursuant
hereto; (iii) Seller's or ETI's failure to make any payment to an employee,
landlord, equipment owner, government, government agency, or otherwise with
respect to the Contract Personnel, the Delinquent Taxes, or the Property; (iv)
claims arising from any actual or asserted product liability claim related to
the Products sold in the Distribution Network on or before the Adjustment Date;
(v) claims arising from commissions paid to members of the
Page 24
Distribution Network on or before May 22, 2000; and (vi) claims arising from
credit balances of members of the Distribution Network that occurred prior to
May 22, 2000.
(b) Purchaser shall indemnify and hold ETI and Seller, their officers,
directors, employees and agents (each a "Purchaser Indemnified Party") harmless
from and against, and reimburse a Purchaser Indemnified Party with respect to,
any and all loss, damage, liability, cost and expense, including reasonable
attorneys' fees and costs, incurred by the Purchaser Indemnified Party by reason
of or arising out of (i) the material breach of any representation or covenant
made by Purchaser in this Agreement; (ii) the failure by Purchaser to perform
any action required by this Agreement; (iii) claims arising from any actual or
asserted products liability claim not related to Products sold in the
Distribution Network prior to the Adjustment Date; and (iv) claims arising from
members of the Distribution Network arising from activities of Purchaser.
(c) If a claim for which indemnification may be sought against the
other party is asserted the party entitled to indemnification hereunder shall
advise the other to that effect and shall thereafter permit the other to
participate at such party's sole expense in the negotiation and settlement of
that claim and to join in or assume the defense of any legal action arising
therefrom with counsel selected by them and reasonably satisfactory to the other
party. Either party may implead the other in any action that is subject to
indemnity.
SECTION 8.11. BROKERS AND FINDERS
All brokers' commissions related to the sale and purchase of the
Distribution Network shall be borne equally and paid in accordance with that
certain letter agreement ("Letter Agreement") between Seller, Purchaser and
Xxxxxxx & Associates. No other broker or finder shall be entitled to any fees or
commissions relating to this Agreement except as set forth in the Letter
Agreement.
SECTION 8.12. INTERPRETATION
The use of words "it" or "its," in reference to any party hereto shall
be construed to be a proper reference even though a party may be a partnership,
an individual or two or more individuals. The term "person" includes
individuals; corporations, partnerships, associations, or other legal entities;
and governments, governmental subdivisions, agencies, or instrumentalities.
Words of one gender shall be deemed to include the other, or both, or neither. A
provision of this Agreement that requires a party to perform an action shall be
construed as requiring the party to perform the action or to cause such action
to be performed. A provision of this Agreement that prohibits a party from
performing an action shall be construed as prohibiting such party from
performing such action or permitting others to perform such action. Wherever the
term "including" is used herein, the same shall be deemed to read "including,
but not limited to." The singular shall be deemed to include the plural, and the
plural shall be deemed to include the singular. The agreements contained in this
Agreement shall not be construed as independent covenants. "Any" shall be deemed
to read "any and all" whenever applicable. "Anytime" shall be deemed to read
"anytime and from time to time" whenever applicable. The conjunction "and" shall
include the conjunction "or" whenever applicable. The conjunction "or" shall
include the conjunction "and" whenever applicable.
(The balance of this page has been intentionally left blank)
Page 25
IN ORDER TO INDICATE THEIR INTENTION to be bound, the Parties hereto
have caused this Agreement to be duly executed as of the date first above
written by their respective duly authorized officers.
IMX PHARMACEUTICALS, INC.
By: /s/
-------------------------------------------
Xxxx Xxxxxxx, Chairman & CEO
DRI-KLEEN, INC. d/b/a Enviro-Tech International
By: /s/
----------------------------------
Xxxxxx X. Xxxxx, Chairman & CEO
ETI joins in its representations in ARTICLE IV and accepts the
responsibilities assigned to it in ARTICLES IV, VI, VII and VIII. It shall be
jointly and severally liable with Seller therefore in its representations and
responsibilities.
ETI INTERNATIONAL, INC.
By: /s/
----------------------------------
Xxxxxx X. Xxxxx, Chairman & CEO
Page 26
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
TABLE OF CONTENTS
ARTICLE I. THE PARTIES....................................................2
SECTION 1.01. THE PARTIES.................................................2
SECTION 1.02. ASSIGNMENT..................................................2
ARTICLE II. THE ASSETS PURCHASED AND LIABILITIES ASSUMED...................2
SECTION 2.01. THE DISTRIBUTION NETWORK....................................2
SECTION 2.02. THE EQUIPMENT...............................................2
SECTION 2.03. THE SUPPLIES................................................3
SECTION 2.04. THE SOFTWARE................................................3
SECTION 2.05. THE PRODUCTION MATERIALS....................................3
SECTION 2.06. THE RIGHTS..................................................3
SECTION 2.07. THE CONTRACT RIGHTS.........................................3
SECTION 2.08. RESERVED....................................................4
SECTION 2.09. THE PERMITS.................................................4
SECTION 2.10. THE CANADIAN LEASE..........................................4
SECTION 2.11. THE DISTRIBUTORSHIPS........................................4
SECTION 2.12. THE GOODWILL................................................4
SECTION 2.13. THE INVENTORY...............................................4
SECTION 1.14. THE LAS VEGAS PROPERTY......................................4
SECTION 1.15. THE ELBOW LAKE PROPERTY.....................................5
SECTION 1.16. TELEPHONE NUMBERS...........................................5
SECTION 1.17. THE PROPERTY................................................5
ARTICLE III. THE PURCHASE PRICE AND ITS PAYMENT.............................6
SECTION 3.01. PURCHASE PRICE..............................................6
SECTION 3.02. PAYMENT OF THE PURCHASE PRICE...............................6
SECTION 3.03. ADJUSTMENTS TO PURCHASE PRICE...............................6
SECTION 3.04. REGISTRATION OF THE STOCK PORTION...........................7
SECTION 3.05. RESTRICTIONS ON SALE OF STOCK PORTION.......................7
SECTION 3.06. SUPERVISION OF SALES........................................7
ARTICLE IV. REPRESENTATIONS................................................8
SECTION 4.01. SELLER'S REPRESENTATIONS....................................8
SECTION 4.02. PURCHASER'S REPRESENTATIONS................................13
ARTICLE V. CONDITIONS PRECEDENT TO THE CLOSING...........................15
SECTION 5.01. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO
CLOSE......................................................15
SECTION 5.02. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION TO
CLOSE......................................................17
ARTICLE VI. THE CLOSING...................................................18
SECTION 6.01. THE CLOSING CONFERENCE AND CLOSING DATE....................18
SECTION 6.02. SELLER'S AND ETI'S RESPONSIBILITIES AT THE CLOSING
-i-
CONFERENCE.................................................18
SECTION 6.03. PURCHASER'S RESPONSIBILITIES AT THE CLOSING
CONFERENCE.................................................19
ARTICLE VII. ADDITIONAL COVENANTS..........................................19
SECTION 7.01. TAXES......................................................19
SECTION 7.02. NON-COMPETITION AND NON-SOLICITATION.......................19
SECTION 7.03. ASSUMPTION AND PAYMENT OF CERTAIN OTHER
LIABILITIES OF SELLER AND ETI..............................20
SECTION 7.04. ASSUMPTION AND PAYMENT OF COMMUNITY BANK
OBLIGATIONS................................................20
SECTION 7.05. ASSUMPTION OF COBRA OBLIGATIONS............................20
SECTION 7.06. REMOVAL OF XXXXX FROM CERTAIN PERSONAL GUARANTIES..........21
SECTION 7.07. ALLOCATION OF BONUS POOL/ROAD TO PLATINUM
INCENTIVE AWARDS...........................................21
SECTION 7.08. LITIGATION PROCEEDS........................................21
SECTION 7.09. CONFIDENTIALITY WITH RESPECT TO THE FORMULAE...............21
SECTION 7.10. OPERATION OF SOFTWARE......................................21
SECTION 7.11. RESTRICTION OF ISSUANCE OF PURCHASER'S CAPITAL
STOCK......................................................22
SECTION 7.12. NO CHANGES IN BOARD EFFECTED BY SELLER.....................22
SECTION 7.13. APPOINTMENT OF DIRECTORS OF PURCHASER......................22
SECTION 7.14. RESTRICTIONS ON DISTRIBUTION OF PRODUCTS...................22
SECTION 7.15. CONTINUATION OF IMX-ETI LIFE PARTNERS......................22
SECTION 7.16. COMPENSATION REPORTS.......................................22
SECTION 7.17. FURTHER ACTIONS............................................23
ARTICLE VIII. MISCELLANEOUS.................................................23
SECTION 8.01. ENTIRE AGREEMENT; AMENDMENTS...............................23
SECTION 8.02. EXPENSES...................................................23
SECTION 8.03. HEADINGS...................................................23
SECTION 8.04. NOTICES....................................................23
SECTION 8.05. GOVERNING LAW; JURISDICTION................................24
SECTION 8.06. BENEFICIARIES..............................................24
SECTION 8.07. COUNTERPARTS...............................................24
SECTION 8.08. SEVERANCE..................................................24
SECTION 8.09. SURVIVAL OF REPRESENTATIONS................................24
SECTION 8.10. INDEMNIFICATION............................................24
SECTION 8.11. BROKERS AND FINDERS........................................25
SECTION 8.12. INTERPRETATION.............................................25
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