EXHIBIT 10.1
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered into
as of September 21, 2006 by and among Genotec Nutritionals, Inc., a Delaware
corporation ("Seller"), Xxxxxx Xxxxxxxxxx, an individual ("Kontonotas"), Xxxxxx
Xxxxxxxx, an individual ("Xxxxxxxx"), Xxxxx Xxxxxxxx, an individual
("Xxxxxxxx"), (Kontonotas, Freedman, and Xxxxxxxx shall be collectively referred
to herein as the "Shareholders"), MM(2) Group, Inc. , a New Jersey corporation
("MM2"), and Genotec Acquisition Corporation, a newly-formed, wholly-owned
subsidiary of MM2 ("Buyer").
RECITALS
WHEREAS, the Shareholders own, of record and beneficially, 10,000,000 shares
(the "Company Shares") of the common stock, $0.01 par value, of the Seller,
being all of the issued and outstanding shares of the capital stock of the
Seller;
WHEREAS, the Seller is engaged in the business of selling nutritional
supplements (the "Business");
WHEREAS, the Buyer wishes to purchase the Business and certain other assets of
the Seller;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the following
meanings:
"Action" shall mean any action, claim, suit, arbitration, inquiry,
subpoena, discovery request, proceeding or investigation, or threat thereof, by
or before any court or grand jury, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person and any member, general partner, director, officer or employee of
such Person. For purposes of this definition of Affiliate, "control" shall mean
the power of one or more Persons to direct the affairs of the Person controlled
by reason of ownership of voting stock, contract or otherwise.
"Brokerage Business" means the business of brokering raw materials,
bulk commodities and ingredients for the benefit of third parties.
"Damages" shall mean any and all costs, losses, damages, liabilities,
demands, claims, suits, actions, judgments, causes of action, assessments or
expenses, including interest, penalties, fines and attorneys' fees incident
thereto, incurred in connection with any claim for indemnification arising out
of this Agreement and any and all amounts paid in settlement of any such claim.
"Intellectual Property" shall mean all copyrights, copyright
registrations, proprietary processes, trade secrets, license rights,
specifications, technical manuals and data, drawings, inventions, designs,
patents, patent applications, mask works, tradenames, trademarks, service marks,
product information and data, know-how and development work-in-progress,
customer lists, software, business correspondence and marketing plans and other
intellectual or intangible property.
"Knowledge" shall mean an individual shall be deemed to have
"Knowledge" of a particular fact or other matter if such individual is actually
aware of such fact or other matter or if a prudent individual could be expected
to discover or otherwise become aware of such fact or other matter in the course
of conducting a diligent and comprehensive investigation concerning the truth or
existence of such fact or other matter. Seller shall be deemed to have
"Knowledge" of a particular fact or other matter if any officer or other
representative of Seller has Knowledge of such fact or other matter.
"Person" shall mean any person or entity, whether an individual,
trustee, corporation, general partnership, limited partnership, trust,
unincorporated organization, limited liability company, business association,
firm, joint venture, or governmental agency or authority.
"Purchased Assets" shall have the meaning stated in Section 2.1 in the
Agreement.
"Solvent" shall mean that the Seller shall pay its bills in the
ordinary course of business as the bills come due.
"Taxes" shall mean all taxes, however denominated, including any
interest, penalties or other additions to tax that may become payable in respect
thereof, (i) imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such government, for
which Buyer could become liable as successor to or transferee of the Software
Assets or which could become a charge against or lien on the Software Assets,
which taxes shall include, without limiting the generality of the foregoing, all
sales and use taxes, ad valorem taxes, excise taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes, environmental
taxes, real property gains taxes, transfer taxes, payroll and employee
withholding taxes, unemployment insurance contributions, social security taxes
and other governmental charges, and other obligations of the same or of a
similar nature to any of the foregoing, which are required to be paid, withheld
or collected, or (ii) any liability for amounts referred to in (i) as a result
of any obligations to indemnify another person.
ARTICLE II.
PURCHASE AND SALE OF ASSETS
2.1 TRANSFER OF PURCHASED ASSETS. Pursuant to the terms and subject to the
conditions of this Agreement, in exchange for the consideration set forth in
Section 2.2 below, at the Closing, Seller shall sell, assign and deliver to
Buyer, and Buyer shall purchase from Seller, the assets listed on Schedule 2.1
(hereinafter collectively referred to as the "Purchased Assets").
2.2 PURCHASE PRICE. As consideration for the Purchased Assets, Buyer shall
tender Seller the consideration set forth below:
(a) Ten million (10,000,000) shares of Class A Common Stock of MM(2)
Group, Inc. (the "Buyer's Stock") to Seller's designees as listed on Schedule
2.2. MM2 hereby agrees to file a registration statement with the Securities and
Exchange Commission to register the Buyer's Stock under the Securities Act of
1933 (the "Act") within sixty (60) days from the Closing Date (the "Registration
Statement"). Subsequent to the Securities and Exchange Commission declaring the
Registration Statement effective, MM2 shall have its counsel provide the
appropriate legal opinion to its transfer to remove the restrictive legend
endorsed upon the share certificates of the Buyer's Stock.
2.3 LIABILITIES OF SELLER. . Pursuant to the terms and subject to the
conditions of this
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Agreement, Buyer will assume certain liabilities included on the June 30, 2006
Balance Sheet of Seller and as adjusted in the ordinary course of business as of
the closing date. Such liabilities are listed on Schedule 2.3 herein
(hereinafter collectively referred to as the "Assumed Liabilities").
ARTICLE III.
CLOSING
3.1 CLOSING. The closing of the transactions contemplated herein (the
"Closing") shall be held at 10:00 a.m. Eastern Standard Time at the offices of
Buyer at 0 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000, on September 21,
2006, or at such other time and place as the parties may agree (the "Closing
Date") provided that all of the Closing conditions set forth in Section 3.3
hereof shall have occurred.
3.2 DELIVERIES. Together with an executed counterpart of this Agreement,
the following items shall be delivered by the parties at the Closing:
(a) BY BUYER. Buyer shall deliver:
(i) a certificate(s) evidencing the Buyer's Stock;
(ii) the Employment Agreements for each of the Shareholders
executed by Buyer.
(iii) Secretary's Certificate of the Seller as set forth in
Schedule 3.2.(a)(iv)
(iv) Officer's Incumbency Certificate of Seller as set forth in
Schedule 3.2(a)(v).
(v) MM2 shall have purchased Seventy-five Thousand Dollars
($75,000) of the Buyer's Series A Preferred Convertible Stock.
(b) BY SELLER. Seller shall deliver to Buyer:
(i) one or more Bills of Sale, in form and substance satisfactory
to Buyer and sufficient to convey the Purchased Assets to Buyer;
(ii) such electronic and paper copies and representations of the
Intellectual Property as may in Buyer's reasonable judgment be
necessary to convey the Intellectual Property to Buyer;
(iii) the Employment Agreements for each of the Shareholders
executed by Kontonotas, Freedman, and Xxxxxxxx respectively;
(iv) an Assignment of Seller's rights to the corporate name
"Genotec Nutritionals, Inc."
(v) Amendment to the Certificate of Incorporation of Genotec
Nutritionals, Inc. for filing with the Delaware Secretary of
State to change its name to a name different from and dissimilar
to Genotec Nutritionals, Inc.
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(vi) Secretary's Certificate of the Buyer as set forth in
Schedule 3.2(b)(vi).
(vii) Officer's Incumbency Certificate of Buyer as set forth in
Schedule 3.2(b)(vii).
(viii) such other documents and instruments as are reasonably
necessary to consummate the transactions contemplated hereby.
(viii) delivery of all consents, approvals, and assignments
necessary to consummate the transaction contemplated under this
Agreement including, but not limited to: third party software
vendors' consents and reseller agreement consents.
(ix) an assignment of the lease for 000 Xxxxxxx Xxxx, Xxxx Xxxx,
XX
(x) Termination of sublet to CardioCeuticals LLC for office space
located at 000 Xxxxxxx Xxxx, Xxxx Xxxx, XX.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
4.1 ORGANIZATION. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Seller is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for failures to be so qualified or licensed and in
good standing that would not, individually or in the aggregate, affect the
Purchased Assets in a materially adverse manner.
4.2 AUTHORIZATION. Seller has all necessary corporate power and authority
and has taken all corporate action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by Seller and is
a valid and binding obligation of Seller, enforceable against it in accordance
with its respective terms subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally and limitations imposed by equitable
principles, whether considered in a proceeding at law or in equity, and the
discretion of the court before which any proceeding therefor may be brought.
4.3 BROKERS. (a) The parties acknowledge that a broker's commission will be
due and owing at the Closing (the "Brokers' Commission Fee") to Xxxxxxx Xxxxxxx
("Xxxxxxx") and/or Xxxxxxx Xxxxx ("Xxxxx"). The Brokers' Commission Fee is the
sole responsibility of Buyer. Other than the Xxxxxxx and Xxxxx set forth above,
the Seller and the Shareholders represent that all negotiations relating to this
Agreement and the transactions contemplated hereby have been conducted without
the intervention of any person or entity acting on behalf of Seller in such a
manner as to give rise to any valid claim against the Seller and/or the Buyer
for any broker's or finder's commission, fee or similar
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compensation. The Seller and the Shareholders, jointly and severally, shall
indemnify Buyer and MM2 and hold both harmless from any liability or expense
arising from any claim for brokerage commissions, finder's fees or other similar
compensation based on any agreement, arrangement or understanding made by or on
behalf of Seller and/or the Shareholders.
(b) MM2 hereby agrees to issue 500,000 shares of MM2 Class A Common Stock
(the "Xxxxxxx'x Stock") to Xxxxxxx, or their designees, as complete and
final payment owed to Xxxxxxx as his Brokers' Commission Fee. Xxxxxxx'x
Stock will reduce the number of shares to be issued as Buyer's Stock. The
Xxxxxxx'x Stock will be endorsed with the restrictive legend set forth in
Section 8.1(a) herein.
4.4 LITIGATION, PROCEEDINGS AND APPLICABLE LAW. There are no Actions,
suits, investigations or proceedings, at law or in equity or before or by any
governmental authority or instrumentality or before any arbitrator of any kind,
pending or, to Seller's Knowledge, threatened (a) against Seller which, if
determined adversely against Seller, would have a material adverse effect on
Seller's or Buyer's ability to use the Intellectual Property in the manner in
which it is now being used by Seller or (b) seeking to delay or enjoin the
consummation of the transactions contemplated hereby, except as listed on
Schedule 4.4. There are no outstanding orders, decrees or stipulations issued by
any federal, state, local or foreign, judicial or administrative authority in
any proceeding to which Seller is or was a party relating to the Software
Assets.
4.5 NO CONFLICT OR VIOLATION. Neither the execution, the delivery of this
Agreement nor the consummation of the transactions contemplated hereby or
thereby will result in (i) a violation of or a conflict with any provision of
the Articles of Incorporation or Bylaws of Seller, (ii) a material breach or
termination of, or a material default under, any term or provision of any
contract to which Seller is a party or an event which, with notice, lapse of
time, or both, would result in any such material breach, such termination or
such material default, or (iii) a material violation by Seller of any Legal
Requirement or an event which, with notice, lapse of time or both, would result
in such a material violation.
4.6 INTELLECTUAL PROPERTY. Seller owns all rights to the Intellectual
Property without any conflict or infringement of the intellectual property
rights of others. In addition, Seller has taken reasonable steps (including,
without limitation, entering into Confidentiality Agreements with all officers
and employees of and consultants involved in Seller's business) to maintain the
secrecy and confidentiality of and its proprietary rights in, all Intellectual
Property.
(b) Schedule 4.6(b) lists (i) all patents and patent applications and
all registered copyrights, trade names, trademarks, service marks and other
company, product or service identifiers included in the Intellectual Property,
and specifies the jurisdictions in which each of the foregoing has been
registered, including the respective registration numbers, and/or any
application for any such registration has been filed; (ii) all licenses,
sublicenses and other agreements as to which Seller is a party and pursuant to
which Seller or any other Person is authorized to use any Intellectual Property;
and (iii) all licenses under which Seller is or may be obligated to make royalty
or other payments. Copies of all licenses, sublicenses and other agreements
identified pursuant to clauses (ii) and (iii) above have been delivered by
Seller to Buyer.
(c) Seller is not in violation in any material respect of any license,
sublicense or agreement described in Schedule 4.6(b). As a result of the
execution and delivery of this Agreement or the performance of Seller's
obligations hereunder, neither Seller nor Buyer shall be in violation in any
material respect of any license, sublicense or agreement described in such
schedule.
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(d) Seller is the sole owner of all necessary right, title and
interest in and to (free and clear of any liens, encumbrances or security
interests) all non-public domain Intellectual Property and has full rights to
the use, sale, license or disposal thereof. Except as expressly set forth in
Schedule 4.6(b), no other Person has any rights with respect to any of the
Intellectual Property, nor is any consent or approval of any third party needed
to fully utilize and exploit the Intellectual Property.
(e) No claims with respect to the Intellectual Property have been
asserted to Seller, or, to Seller's Knowledge, are threatened by any person, and
Seller knows of no claims (i) to the effect that Seller infringes any copyright,
patent, trade secret, or other intellectual property right of any third party or
violates any license or agreement with any third party, (ii) contesting the
right of Seller to use, sell, license or dispose of any Intellectual Property,
or (iii) challenging the ownership, validity or effectiveness of any of the
Intellectual Property.
(f) To the Knowledge of Seller, all trademarks, service marks, and
other company, product or service identifiers held by Seller are valid and
subsisting worldwide.
(g) To the Knowledge of Seller, and except as expressly set forth in
Schedule 4.6(b), there has not been and there is not now any unauthorized use,
infringement or misappropriation of any of the Intellectual Property by any
third party. Seller has not been sued or, to Seller's Knowledge, charged as a
defendant in any claim, suit, action or proceeding that involves a claim of
infringement of any patents, trademarks, service marks, copyrights or other
intellectual property rights that comprise the Intellectual Property. Seller
does not have any infringement liability with respect to any patent, trademark,
service xxxx, copyright or other intellectual property right of any third party
insofar as the Intellectual Property is concerned.
(h) No Intellectual Property is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting in any material manner
the licensing thereof by Seller. Seller has not entered into any agreement to
indemnify any other person against any charge of infringement of any
Intellectual Property. Seller has not entered into any agreement granting any
third party the right to bring infringement actions with respect to, or
otherwise to enforce rights with respect to, any Intellectual Property. Seller
has the exclusive right to file, prosecute and maintain all applications and
registrations with respect to the Intellectual Property developed or owned by
Seller.
(i) Except as set forth in Schedule 4.6(b), no person has a license to
use or the right to acquire a license to use any future version of any product
based on the Intellectual Property or any product based on the Intellectual
Property that is under development, and no agreement to which Seller is a party
will restrict Buyer from charging customers for any such new version or product.
4.7 ASSETS GENERALLY. Seller holds good and marketable title, license to or
leasehold interest in all of the Purchased Assets and has the complete and
unrestricted power and the unqualified right to sell, assign and deliver the
Purchased Assets to Buyer. Upon consummation of the transactions contemplated by
this Agreement, Buyer will acquire good and marketable title, license or
leasehold interest to the Purchased Assets free and clear of any encumbrances
and there exists no restriction on the use or transfer of the Purchased Assets.
No Person other than Seller has any right or interest in the Purchased Assets,
including the right to grant interests in the Purchased Assets to third parties.
4.8 Left blank Intentionally
4.9 RECEIPT OF SHARES ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
Seller in reliance upon Seller's representation, which by Seller's execution of
this Agreement Seller hereby confirms, that the shares being issued to Seller's
designees hereunder are being acquired for
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investment for Seller's designees own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and that
Seller designees have no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Seller further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Buyer's Stock.
4.10 DISCLOSURE OF INFORMATION. Seller believes that it has received all
the information necessary or appropriate for deciding whether to receive the
Buyer's Stock as part of the consideration for the Purchased Assets. Seller
further represents that its officers and agents have had an opportunity to ask
questions and receive answers from Buyer regarding the terms and conditions
pertaining to the Buyer's Stock and the business, properties, prospects and
financial conditions of Buyer. Seller has arrived at an independent view
concerning the value of Buyer, recognizes that the transactions in which Seller
is acquiring the Buyer's Stock is occurring in an arms' length transaction and
is not relying upon any statements by Buyer as to the value of Buyer or the
Buyer's Stock.
4.11 SHAREHOLDERS OF SELLER. Kontonotas, Freedman, and Xxxxxxxx are the
sole shareholders of the Seller.
4.12 The Seller is Solvent, and is currently paying its outstanding
obligations to vendors, lenders, employees, governmental entities (including tax
authorities), and other third parties as such obligations become due.
4.13 INVESTMENT INTENT AND ACKNOWLEDGMENT. (a) The Seller and its designees
is acquiring the Buyer's Stock only for his own account, for investment purposes
only, and not with a view to, or for sale in connection with, any distribution
thereof and with no present intention of distribution or reselling any part of
the Buyer's Stock.
(b) The Seller and its designees hereby acknowledges that the Seller
and its designees have had an opportunity to ask questions of, and receive
answers from persons acting on behalf of the Buyer and MM2 to verify the
accuracy and completeness of the information set forth in such reports filed
with the Securities and Exchange Commission and attached financial statements
prior to the Closing Date and the Seller and its designees hereby acknowledge
that the Seller and its designees have not requested the Buyer and/or MM2 to
provide any additional information which the Buyer and/or MM2 possess or can
acquire without unreasonable effort or expense that is necessary to verify the
accuracy and completeness of the information made available.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of New Jersey and has full
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted.
5.2 AUTHORIZATION. Buyer has all necessary corporate power and authority
and has taken all corporate action necessary to enter into this Agreement to
consummate the transactions
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contemplated hereby and thereby and to perform its obligations hereunder. This
Agreement has been duly executed and delivered by Buyer and is a valid and
binding obligation of Buyer, enforceable against it in accordance with its terms
subject to the effect of applicable bankruptcy, insolvency, reorganization,
moratorium, and other similar laws relating to or affecting the rights of
creditors generally and limitations imposed by equitable principles, whether
considered in a proceeding at law or in equity, and the discretion of the court
before which any proceeding therefore may be brought.
5.3 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been conducted without the intervention of
any person or entity acting on behalf of Buyer in such a manner as to give rise
to any valid claim against Seller for any broker's or finder's commission, fee
or similar compensation.
5.4 CONSENTS AND APPROVALS. No consent, waiver, approval or authorization
of or by, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by Buyer in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
5.5 INSURABILITY OF SHAREHOLDERS. Each of the Shareholders hereby
represents and warranties that he/she is in good physical health, and shall
qualify to underwritten at a standard rate for a "key man" life insurance policy
to be purchased by the Surviving Corporation, naming the Surviving Corporation
as the beneficiary. Each of the Shareholders hereby agrees to use commercially
reasonable efforts to assist the Company in applying for such a policy.
ARTICLE VI.
CERTAIN COVENANTS
6.1 COVENANTS OF BOTH PARTIES. Buyer, on the one hand, and Seller, on the
other hand, each covenant to the other that:
(a) FURTHER ASSURANCES. Each party will cooperate in good faith with
the other and will take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder. From and
after the execution hereof, Seller will promptly refer all inquiries with
respect to the ownership of the Purchased Assets to Buyer and execute such
documents as Buyer may reasonably request from time to time to evidence transfer
of the Purchased Assets to Buyer.
6.2 SELLER'S COVENANTS. Seller covenants to Buyer that:
(a) COOPERATION AND TRANSITION ASSISTANCE. Seller shall use its best
efforts to facilitate the transition of customers, customer support services,
and development, marketing and sales functions related to the Purchased Assets
to Buyer, and shall direct any new inquiries regarding the Purchased Assets to
Buyer or its assignee.
(b) DOCUMENTATION. Seller shall provide Buyer with full and complete
documentation, both written and computer generated, relating to the Business
that Seller has conducted using the Purchased Assets, including all
correspondence and files relating to their development.
(c) CHANGE OF CORPORATE NAME. On the Closing Date, the Seller shall
deliver to the
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Buyer an Amendment to the Certificate of Incorporation of the Seller for filing
with the Delaware Secretary of State that shall change the name of the Seller to
a name that is not similar to its present name.
6.3 MM2'S COVENANTS. MM2 covenants to the Seller and the Shareholders
that:
(a) ADDITIONAL INVESTMENT IN THE BUYER. MM2 agrees to investment an
additional Two Hundred and Twenty-five Thousand Dollars ($225,000)
(the "Additional Investment") through the purchase of the Buyer's
Series A Convertible Preferred Stock, as requested from time to time
by the Board of Directors of the Buyer, as they deem appropriate to
fund the Buyer's working capital needs.
(b) DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. For as long as MM2 shall
keep in force Directors' and Officers', the Directors and Officers of
the Buyer shall be covered under said policy.
ARTICLE VII.
INDEMNIFICATION
7.1 INDEMNIFICATION BY BUYER. In the event Buyer (i) breaches or is deemed
to have breached any of the material representations and warranties contained in
Article V herein, or (ii) fails to perform or comply with any of the covenants
and agreements set forth in this Agreement, Buyer shall hold harmless, indemnify
and defend Seller and each of its directors, officers, shareholders, attorneys,
representatives and agents, from and against any Damages, including all court
costs, litigation expenses and reasonable attorneys' fees, incurred or paid by
Seller to the extent such Damages arise or result from a breach by Buyer of any
such representations or warranties or a violation of any covenant in this
Agreement.
7.2 INDEMNIFICATION BY SELLER AND SHAREHOLDERS.
(a) Notwithstanding any investigation by Buyer or its representatives,
Seller and the Shareholders, individually, will jointly and severally, indemnify
and hold Buyer, its Affiliates and their respective directors, officers,
employees and agents (collectively, the "Buyer Parties") harmless from any and
all Damages, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all court costs, litigation expenses and reasonable
attorneys' fees that any Buyer Parties may suffer or incur as a result of or
relating to:
(i) the breach of any material representation or warranty made by
Sellers in this Agreement;
(ii) all Taxes allocable to any taxable period (or any portion
thereof) ending on or before the Closing Date.;
(iii) any claim commenced by any third party relating to actions or
omissions of Seller (or any of their Affiliates) that occurred prior to the
Closing Date; and/or (iv) any claim or liability not disclosed in the
financial statements delivered on the Closing Date or incurred in the
ordinary course of business consistent with past practice .
(b) Notwithstanding the above, the Buyer shall not seek indemnification
pursuant to this Article VII against one or more of the individual Shareholders
for any act(s) by another individual Shareholder that occurred subsequent to the
Closing Date.
7.3 NOTIFICATION OF CLAIMS. If any party or parties (the "Indemnified
Party") reasonably believes that it is entitled to indemnification hereunder, or
otherwise receives notice of the assertion
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or commencement of any third-party claim, action, or proceeding (a "Third-Party
Claim"), with respect to which such other party or parties (the "Indemnifying
Party") is obligated to provide indemnification pursuant to Section 7.1 or 7.2
above, the Indemnified Party shall promptly give the Indemnifying Party written
notice of such claim for Indemnification (an "Indemnity Claim"). Any claim for
indemnification under this Section 7 must be brought prior to the expiration of
the survival period for the representation and warranty as set forth in Section
9.1. The delivery of such notice of Indemnity Claim ("Claim Notice") shall be a
condition precedent to any liability of the Indemnifying Party for
indemnification hereunder. The Indemnifying Party shall have twenty (20) days
from the receipt of a Claim Notice (the "Notice Period") to notify the
Indemnified Party of whether or not the Indemnifying Party disputes its
liability to the Indemnified Party with respect to such Indemnity Claim.
7.4 RESOLUTION OF CLAIMS. With respect to any Indemnity Claim involving a
Third-Party Claim, following prompt notification of the Indemnifying Party, the
Indemnified Party shall proceed with the defense of such Third-Party Claim.
During such defense proceedings, the Indemnified Party shall keep the
Indemnifying Party informed of all material developments and events relating to
the proceedings. The Indemnifying Party shall have a right to be present at the
negotiation, defense and settlement of such Third-Party Claim. The Indemnified
Party shall not agree to any settlement of the Third-Party Claim without the
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. Following entry of judgment or settlement with respect to the Third-
Party Claim, any dispute as to the liability of the Indemnifying Party with
respect to the Indemnity Claim shall be resolved as provided in Section 9.7.
(b) With respect to any Indemnity Claim not involving a Third-Party
Claim, if the Indemnifying Party disputes its liability within the Notice
Period, the liability of the Indemnifying Party shall be resolved in accordance
with Section 9.7.
(c) In the event that an Indemnified Party makes an Indemnity Claim in
accordance with Section 7.3 and the Indemnifying Party does not dispute its
liability within the Notice Period, the amount of such Indemnity Claim shall be
conclusively deemed a liability of the Indemnifying Party.
ARTICLE VIII.
RESTRICTIONS ON MM2 GROUP, INC. CLASS A COMMON SHARES
8.1 STOCK LEGEND. The Buyer's Stock issued to Seller's designees pursuant
to this Agreement shall be subject to the following restrictions:
(a) Legends on Stock Certificates. Each certificate representing
shares issued pursuant to this Agreement shall be endorsed with the following
legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING
SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR ITS
SUCCESSOR RULE UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT EXEMPTIONS FROM SUCH
REGISTRATION AND FROM THE PROVISIONS OF ANY APPLICABLE STATE "BLUE
SKY" LAWS ARE AVAILABLE.
10
ARTICLE IX.
MISCELLANEOUS
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties and indemnities included or provided for in this Agreement or in any
agreement, schedule or certificate or other document or instrument delivered
pursuant to this Agreement will survive the Closing Date for a period of
thirty-six (36) months. No claim may be made by any party hereto unless written
notice of the claim is given within that thirty-six month period; provided,
however, that the foregoing limitation period will not apply to a breach of any
representation, warranty or covenant known to any party before the Closing Date.
9.2 [Intentionally omitted]
9.3 COVENANT NOT TO COMPETE.
A. For a period of ten (10) years following the Closing Date, Seller will
not do any of the following activities listed below, either directly
or indirectly, anywhere in the United States or Canada. In the event
that Seller improperly compete with Buyer in violation of this Section
9.3, the period during which they engage in such competition shall not
be counted in determining the duration of the ten (10) year
non-compete restriction:
(a) For purposes of this Section 9.3, "Competitive Activity" shall
mean any activity relating to, in respect of or in connection with,
directly or indirectly, any and all products that the Seller offered
to its customers or anticipated to offer to its customers immediately
prior to the Closing Date, except: (i) for the Brokerage Business
conducted by Kontonotas prior to the Closing date and (ii) the
business of CardioCeuticals LLC and [*the mail order business*] only
through September 30, 2006.
(b) The Seller shall not solicit or perform services in connection
with any Competitive Activity for any current customers of Buyer or
any party who was a customer during the past two (2) years except as
otherwise permitted under the Employment Agreements;
(c) The Seller shall not solicit for employment or employ any then
current employees employed by Buyer without Buyer's consent; or
B. For a period of two (2) years following the Closing Date, the
Shareholders will not do any of the following activities listed below,
either directly or indirectly, anywhere in the United States or
Canada. In the event that the Shareholders improperly compete with
Buyer in violation of this Section 9.3, the period during which they
engage in such competition shall not be counted in determining the
duration of the two (2) year non-compete restriction:
(a) The Shareholders individually shall not solicit nor perform
services in connection with any Competitive Activity for any current
customers of Buyer or any party who was a customer during the past two
(2) years except as otherwise permitted under the Employment
Agreements;
(b) The Shareholders individually shall not solicit for employment nor
employ any current employees employed by Buyer or Seller without
Buyer's consent; or
(c) For a period of two (2) years following the Closing Date, the
Shareholders individually shall not compete with the Buyer or MM2, in
any fashion, and shall not work for, advise, be
11
a consultant to or an officer, director, agent or employee of or
otherwise associate with any person, firm, corporation or other
entity, or hold more than five percent (5%) of the outstanding capital
stock of any such entity, which is engaged in or plans to engage in a
Competitive Activity, except for (i) the Shareholders existing equity
interests in CardioCeuticals, LLC. and (ii) Xx. Xxxxxxxx'x optometry
practice as permitted and set forth in Section 10(a).H of the
Employment Agreement between the Buyer and Xxxxxxxx.
(d) Notwithstanding anything to the contrary, should (i) MM2 not
contribute the Additional Investment as set forth in Section 6.3(a)
within eighteen months (18) from the Closing Date and (ii) the
individual Shareholder has resigned h is/her employment with the Buyer
due to MM2's failure to contribute the Additional Investment (the
`Resigned Shareholders"), then the Resigned Shareholder shall
thereafter be released from the restrictive covenant set forth in
Section 9.3.B above.
(e) Notwithstanding anything to the contrary, Kontonotas may continue
to conduct and operate his Brokerage Business with those clients
and/or customers of the Seller that were also clients and/or customers
of the Seller prior to the Closing Date.
9.4 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Prior to the Closing Date,
neither the Seller (nor their respective shareholders, officers and directors)
shall issue any press release or make any public announcement concerning the
matters set forth in this Agreement (other than as required by applicable
disclosure rules or regulations) without the consent of the Buyer. Buyer shall
have the right to make such disclosure and announcements as may be required by
the rules and regulations of the Securities and Exchange Commission.
9.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. Buyer
may, without need for any consent or notice to Seller, assign all of its rights
and obligations under this Agreement to any Affiliate of Buyer, and such
assignment shall release Buyer of all of its liabilities and obligations to
Seller, provided such liabilities and obligations are fully assumed by Buyer's
assignee.
9.6 NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by either party to the other
shall be in writing and delivered by telecopy or other facsimile (with receipt
acknowledged) and followed with delivery via an overnight courier service, or
delivered by an overnight courier service, such notice to be effective on the
date such receipt is acknowledged or refused), to the addresses of the parties
appearing on the signature page of this Agreement or to such other place and
with such other copies as either party may designate as to itself by written
notice to the other.
9.7 CHOICE OF LAW. This Agreement shall be governed under and construed in
accordance with the laws of the State of New York without regard to its choice
of law principles. For purposes of any dispute or controversy arising under this
Agreement or the transactions contemplated hereby, the parties mutually consent
to the exclusive jurisdiction of the courts of the State of New York or the U.S.
Federal District Court for the Eastern District of New York.
9.8 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all exhibits and schedules hereto, constitute the entire agreement among
the parties pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other
12
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
9.9 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimile signature pages
shall be considered originals.
9.10 TITLES. The titles, captions or headings of the Articles and Sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
9.11 KONTONOTAS, FREEDMAN, AND XXXXXXXX. Kontonotas, Freedman, and
Xxxxxxxx, as sole shareholders and officers of the Seller, hereby agree to
guarantee the performance by the Seller of its obligations herein and the
accuracy of the Seller's representations and warranties under this Agreement.
Kontonotas, Freedman, and Xxxxxxxx hereby agree that the Buyer may look to
Kontonotas, Freedman, and Xxxxxxxx for performance of the Seller's obligations
herein, including, but not limited to the Seller's obligations under Article
VII.
9.12 CARDIOCEUTICALS, LLC. and Nutritional Health, LLC, Kontonotas,
Freedman, and Xxxxxxxx are each shareholders in CardioCeuticals LLC ("Cardio")
and Nutritional Health, LLC ("Nutritional"). Cardio sublets office space from
the Seller.
Kontonotas, Freedman, and Xxxxxxxx shall provide notice, as of the Closing
Date, to Cardio and Nutritional that they may fulfill any management function
required of them, if any, up to and including September 30, 2006. Thereafter,
the Shareholders are expressly prohibited from providing any services to Cardio
and Nutritional. After that date, Kontonotas, Freedman, and Xxxxxxxx will be
employed solely and exclusively, on a full-time basis, for the benefit of Buyer,
except as set forth in each of the Shareholder's respective employment
agreements.
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, in multiple originals, all as of the day and year first above
written.
Address for Notice: GENOTEC NUTRITIONALS, INC.,
a Delaware corporation
000 Xxxxxxx Xxxx
Xxxx Xxxx, XX 00000
By:_______________________
Xxxxxx Xxxxxxxxxx
President
Address for Notice: XXXXXX XXXXXXXXXX
an individual
000 Xxxxxxx Xxxx
Xxxx Xxxx, XX 00000
By:_______________________
Xxxxxx Xxxxxxxxxx
XXXXXX XXXXXXXX
Address for Notice: an individual
000 Xxxxxxx Xxxx
Xxxx Xxxx, XX 00000
By:_______________________
Xxxxxx Xxxxxxxx
Address for Notice: XXXXX XXXXXXXX
an individual
000 Xxxxxxx Xxxx
Xxxx Xxxx, XX 00000
By:________________________
Xxxxx Xxxxxxxx
Address for Notice: MM(2) GROUP, INC.
[Limited to Paragraphs 2.2,
3.2(a)(v), 4.3(b) and 6.3 only]
0 Xxxxxx Xxxxxx Xxxxx 000
Xxxxxxxxxx, XX 00000
By:________________________
Xxxx Xxxxxx
President
Address for Notice: GENOTEC ACQUISITION CORP.
a New Jersey corporation
0 Xxxxxx Xxxxxx Xxxxx 000
Xxxxxxxxxx, XX 00000
By:________________________
Xxxx Xxxxxx
President
14
Schedule 2.1
PURCHASED ASSETS
A) All of the accounts receivable, inventories, cash received as customer
deposits (work-in-process), capitalized leases, other deposits, prepaid
expenses, patents, trademarks and other intangible assets (except
goodwill), notes receivable and all other assets except goodwill and cash
of any other type. Also included in the acquisition shall be all current
customers, all past customers from the past 24 months prior to the closing
date, all customer lists and contact information, the name of the company
("Genotec Nutritionals, Inc." and any other current or prior trade names
ever used by Seller), customer contracts, logos and all proprietary data,
records and files and any other material currently utilized or reasonably
necessary for the continued operation of the business.
B) All valid and disclosed existing leases for equipment.
C) Valid purchase orders issued in the ordinary course of business.
15
Schedule 2.2
SELLER'S DESIGNEES
Seller hereby directs MM2 Group, Inc. to issue an aggregate of 10 million
shares of MM(2) Group, Inc. Class A Common Stock to the following
individuals and/or entities:
Xxxxxx Xxxxxxxxxx 4,581,500 shares
Xxxxxx Xxxxxxxx 2,992,000 shares
Xxxxx Xxxxxxxx 1,776,500 shares
Xxxxxxx Xxxxxxx 500,000 shares
Xxxxxxx XxXxxxxxxx 80,000 shares
Xxxxx Xxxxxxx 40,000 shares
Xxxxxxx Xxxxxxx 15,000 shares
Xxxxxx Xxxxxxxx 15,000 shares
16
Schedule 2.3
ASSUMED LIABILITIES
o Accounts payable and customer deposits;
o Equipment leases;
o No other liabilities of any type, whether disclosed or undisclosed,
will be assumed, including, but not limited to accrued expenses, unpaid
vacation days, unpaid sick days and other similar short terms payables
17
Schedule 2.4
SELLER'S ACCOUNT RECEIVABLES
18
Schedule 2.5
SELLER'S ACCOUNTS PAYABLE
19
Schedule 2.6
Leased Assets
20
Schedule 3.2.(a)(iv)
Secretary's Certificate of the Seller
21
Schedule 3.2(a)(v)
Officer's Incumbency Certificate of Seller
22
Schedule 3.2(b)(vi)
Secretary's Certificate of the Buyer
23
Schedule 3.2(b)(vii)
Officer's Incumbency Certificate of Buyer
24
Schedule 4.6 (b)
INTELLECTUAL PROPERTY
All current customers, all past customers from the past 24 months prior to the
closing date, all customer lists and contact information, the name of the
company ("Genotec Nutritionals, Inc." and any other current or prior trade names
ever used by Genotec Nutritionals), customer contracts, logos and all
proprietary data, records and files and any other material currently utilized or
reasonably necessary for the continued operation of the business.
25
