1
EXHIBIT 10.11
AGREEMENT
THIS AGREEMENT is made and entered into as of July 5, 2000, by and
between ECO-FORM INTERNATIONAL, INC., a Delaware corporation (the "Company") and
VERTICALVC, INC., a Michigan corporation ("VerticalVC").
WITNESSETH:
WHEREAS, VerticalVC is experienced in assisting companies with
developing and implementing financial and business plans to enable them to grow
their companies and access the capital markets to obtain funding that will be
required to achieve that desired growth; and
WHEREAS, in exchange for certain common stock purchase warrants to be
issued as provided herein, VerticalVC has agreed to provide some consulting
services to the Company upon mutually agreed parameters.
1. Services to be Provided by VerticalVC. VerticalVC will advise and
consult with the executive officers of the Company regarding strategic business
issues and the development and implementation of its business and financial
plans. The services to be provided will be at mutually agreeable times. The
Company will permit VerticalVC, upon reasonable prior notice, the opportunity to
discuss the affairs, finances and accounts of the Company with the Company's
officers and independent public accountants. VerticalVC will not charge any fees
for those services unless the Company requests VerticalVC to provide services in
excess of those that are currently contemplated by the parties. If the Company
requests services in excess of those that are currently contemplated, VerticalVC
will advise the Company of the terms and conditions upon which those additional
services will be provided before VerticalVC commences to provide those
additional services. VerticalVC will be entitled to reimbursement for its
out-of-pocket expenses incurred in providing any services to the Company.
2. Issuance of Common Stock Purchase Warrant. Upon the execution
hereof, the Company will issue VerticalVC a common stock purchase warrant in the
form attached hereto as Exhibit A (the "Warrant") that will enable VerticalVC to
purchase up to 2,000,000 shares of the Company's common stock at a price of $.01
per share during the period ending June 30, 2003.
3. Election of VerticalVC's Nominee to the Company's Board. During the
period ending June 30, 2003, the Company agrees that it will not increase the
size of its Board of Directors to more than seven members without the consent of
VerticalVC and, during that period, it will permit VerticalVC, in its sole
discretion, to designate one person for election to the Company's Board of
Directors and will jointly approve with VerticalVC another person for election
to the Company's Board of Directors. VerticalVC has designated Xx. Xxxx Xxxxx as
its initial designee to the Company's Board. The Company will include the
persons designated pursuant to this section in the list of persons nominated by
the Company's management for election to the Board of Directors and will use its
best efforts to have those persons elected by the Company's shareholders. The
Company will seek to have its principal shareholders agree to vote their shares
in accordance with this provision.
2
4. Representations and Warranties of the Company. The Company
represents and warrants that:
4.01. Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to own its properties and assets and
to carry on its business as it is presently being conducted.
4.02. Authorization. The Board of Directors of the Company has approved
this Agreement and the transactions contemplated hereby and has authorized the
execution and delivery of this Agreement by the Company. The Company has full
power, authority and legal right to enter into this Agreement and to consummate
the transactions contemplated hereby and this Agreement constitutes a legal,
valid and binding obligation of the Company enforceable in accordance with its
terms.
4.03. Access to Properties and Records. Prior to the exercise of the
Warrant by VerticalVC, the Company will afford to VerticalVC and its authorized
representatives full access to the properties, books and records of the Company
in order that VerticalVC may have full opportunity to make such investigation as
it shall desire to make of the affairs of the Company and the Company will
furnish VerticalVC with such additional financial and operating data and other
information as to the business and properties of the Company as VerticalVC shall
reasonably request.
5. Representations and Warranties of VerticalVC.
5.01. Investment Representations. VerticalVC represents and warrants to
the Company that:
(a) VerticalVC has been informed that the sale of the Warrant
hereunder is being made without registration under the Securities Act
of 1933 (the "Act") or any state securities laws and that the Warrant
may not be sold or transferred without registration under the Act or
unless an exemption from such registration is available.
(b) VerticalVC has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and
risks of VerticalVC's investment in the Warrants or has obtained the
advice of an attorney, certified public accountant or registered
investment advisor with respect to the merits and risks of his
investment in the Warrants. VerticalVC understands that the Company is
subject to all of the risks inherent in a development stage business
and additional risks that are inherent in the Company's business.
VerticalVC has taken full cognizance of and understands those risks and
the effect they may have on the VerticalVC's investment.
(c) VerticalVC has been provided with copies of: (i) the
Company's financial statements; (ii) the Articles of Incorporation and
Bylaws of the Company; and (iii) such
2
3
other financial and other information regarding the Company that
VerticalVC deemed necessary.
(d) VerticalVC has been provided with the opportunity to visit
the places of business of the Company and ask questions of, and receive
answers from, the Company and its officers, employees and agents
concerning the business and financial condition of the Company and
VerticalVC has received satisfactory answers to any such questions and
has no further questions at this time.
(e) VerticalVC understands that its investment in the Company
is speculative and may remain so for an indefinite period, that
additional investments in the Company may be required and that there is
no assurance that any such additional investments can be obtained, and
acknowledges that it is able to bear the economic risk of its
investment should it be determined ultimately to be worthless.
5.02. Accredited Investor Status. In order to enable the Company to
determine if VerticalVC would be considered to be an "accredited investor" as
that term is defined in Rule 501 promulgated by the Securities and Exchange
Commission under the Securities Act of 1933 (the "Act"), the VerticalVC warrants
and represents to the Company that he or it comes within all of the categories
that it has answered yes to below (please xxxx yes or no to each category):
(a) It is either (i) a bank as defined in Section 3(a)(2) of
the 1933 Act, or a savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the 1933 Act whether acting in its
individual or fiduciary capacity; (ii) a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934; (iii) an
insurance company as defined in Section 2(13) of the 1933 Act; (iv) an
investment company registered under the Investment Company Act of 1940
or a business development company as defined in Section 2(a)(48) of
that Act; (v) a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; or (vi) an employee benefit plan
within the meaning of Title I of the Employee Retirement income
Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which is either a
bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors.
Yes No
----- -----
(b) It is a private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940.
Yes No
----- -----
3
4
(c) It is an organization described in Section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of
$5,000,000.
Yes No
----- -----
(d) It is an executive officer or director of the Company.
Yes No
----- -----
(e) It is a natural person whose individual net worth, or
joint net worth with my spouse, at the time of my purchase exceeds
$1,000,000.
Yes No
----- -----
(f) It is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income
with my spouse in excess of $300,000 in each of those years and have a
reasonable expectation of reaching the same income level in the current
year.
Yes No
----- -----
(g) It is a trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person as
described in Rule 506(b)(2)(ii) of Regulation D.
Yes No
----- -----
(h) It is an entity in which all of the equity owners are
accredited investors under (a) - (g) above.
Yes No
----- -----
(i) It is not an accredited investor because he or it does not
come within any of the categories set forth above.
Yes No
----- -----
5.03. Authorization. The execution of this Agreement has been duly
authorized by VerticalVC and this Agreement is binding upon VerticalVC in
accordance with its terms.
6. Survival of Agreements. All covenants, agreements, representations
and warranties made herein shall survive execution and delivery of this
Agreement and the Closing hereunder.
4
5
7. Notices. All notices, requests, consents and other communications
herein shall be in writing and shall be mailed by certified mail, return receipt
requested, postage prepaid, or personally delivered to the address set below
each party's signature to this Agreement or such other addresses as each of the
parties hereto may provide from time to time in writing to the other parties.
Any such notice or communication shall be deemed to have been given as of the
date so delivered, mailed or telegraphed.
8. Modifications, Waiver. No modification or waiver of any provision of
this Agreement or consent to any departure therefrom shall be effective unless
in writing and approved by all of the parties hereto.
9. Entire Agreement. This Agreement and the Exhibits hereto contain the
entire agreement between the parties with respect to the transactions
contemplated hereby, and supersedes all negotiations, agreements,
representations, warranties, commitments, whether in writing or oral, prior to
the date hereof.
10. Successors and Assigns. All of the terms of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto. Notwithstanding the foregoing,
VerticalVC may not assign its rights under this Agreement without the written
consent of the Company.
11. Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute one
instrument. Each party shall receive a duplicate original of the counterpart
copy or copies executed by it.
12. Governing Law and Forum. This Agreement shall be governed by the
laws of the State of Michigan without regard to its principles of conflicts of
laws.
13. Severability. In the event any provision of this Agreement or the
application of such provision to any party shall be held by a court of competent
jurisdiction to be contrary to law, the remaining provisions of this Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
VERTICALVC, INC. ECO-FORM INTERNATIONAL, INC.
By: By:
--------------------------- ----------------------------------
Xxxxxx Keep, President
Its:
-------------------------------
0000 X. Xxxxxxxx, Xxxxx 000 0000 Xxxxxxxxx Xx., Xxxxx 00
X. Xxxxxxx, XX 00000 Xxxxxx, Xxxxxxx Xxxxxx X0X 0X0
5
6
The undersigned shareholders of the Company hereby agree to vote their shares of
the Company's common stock for the election to the Company's Board of Directors
of the persons designated pursuant to Section 3 of this Agreement.
--------------------------------- ------------------------------------\
Xxxxxx Keep Xxxxxxxx Keep
6
