ASSET PURCHASE AGREEMENT
Dated as of December 9, 1999
Among
Gateway Distributors, Ltd.
Xxxxx International, Inc.
and
Shareholders of Xxxxx International, Inc.
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement"), dated as of December 9, 1999, is by
and among Gateway Distributors, Ltd., a Nevada corporation (the "Purchaser"),
XxXxx International, Inc., a Nevada corporation (the "Company"), and the
shareholders of the Company listed on the signature page of this Agreement
(individually, a "Shareholder" and, collectively, the "Shareholders").
R E C I T A L S
A. The Shareholders own all of the issued and outstanding shares of capital
stock of the Company, which is in the business of the network marketing of
nutritional, health and dietary supplements and products (the "Business").
B. The parties hereto wish to provide for the term and conditions upon which
the Purchaser will acquire substantially all of the assets and assume all
receivables and payables listed on the attached Balance sheet dated
December 9, 1999.
C. The parties hereto wish to make certain representations, warranties,
covenants and agreements in connection with the purchase of assets and
assumption of liabilities and also to prescribe various conditions to such
transaction.
A G R E E M E N T S
- - - - - - - - -
Accordingly, and in consideration of the representations, warranties, covenants,
agreements and conditions herein contained, the parties hereto agree as follows:
ARTICLE 1
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PURCHASE AND SALE OF ASSETS
---------------------------
1.1 Assets to be Purchased. Upon satisfaction of all conditions to the
obligations of the parties contained herein (other than such conditions as
shall have been waived in accordance with the terms hereof), the Company
shall sell, transfer, convey, assign and deliver to the Purchaser, and the
Purchaser shall purchase from the Company, at the Closing (as hereinafter
defined), all of the Company's right, title and interest in and to the
assets, properties, goodwill and rights of the Company, as a going concern,
of every nature, kind and description, tangible and intangible, wherever
located and whether or not carried or reflected on the books and records of
the Company (hereinafter sometimes collectively called the "Assets"),
including without limitation: (i) the right to use the names and all
variations thereof of the company and its products. The assets referred to
in the form of Xxxx of Sale listed on Exhibit 1.1(b) hereto; and (iii) the
assets reflected on the Latest Balance Sheet (as hereinafter defined), with
only such dispositions of such assets reflected on the Latest Balance Sheet
as shall have occurred in the ordinary course of the Company's business
between the date thereof and the
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Closing and which are permitted by the terms hereof, and excluding only (x)
the minute books, corporate seal and stock records of the Company and (y)
the assets specifically described on Exhibit 1.1(c) hereto. All real
property assets and fixtures included among the Assets shall be conveyed
free and clear of any mortgage, pledge, lien, security interest,
encumbrance, claim, easement, right- of-way, tenancy, covenant,
encroachment, restriction or change of any kind or nature (whether or not
of record), except as described on Exhibit 1.1(d) hereto. All machinery,
equipment, vehicles and other personal property, including without
limitation inventories, accounts and notes receivable, trade notes, trade
accounts and Intellectual Property Rights (as hereinafter defined), shall
be conveyed free and clear of any mortgage, pledge, lien or security
interest of any kind or nature (whether or not of record) except as
described on Exhibit 1.1(d) hereto. Any and all loan amounts due to stock
holders shall remain with the company.
1.2 Assumptions of Certain Liabilities. Upon satisfaction o all conditions to
the obligations of the parties contained herein (other than such conditions
as shall have been waived in accordance with the terms hereof), the
Purchaser, pursuant to a Liabilities Undertaking in the form of attached
Balance Sheet hereto ("Liabilities Undertaking"), shall assume those
certain liabilities and obligations of the Company listed. The Purchaser is
not assuming, and will not be obligated or liable for, any liability of the
Company not listed on Exhibit 1.2(b). The Purchaser will be indemnified,
pursuant to Section 8.4, from and against any claims in respect of any
debts, obligations or liabilities of the Company of any nature whatsoever
other than the Assumed Liabilities. 1.3 Purchase Price. The Purchaser shall
pay for the Company
Assets the following consideration (the "Purchase Price"):
1.3.1Inventory Stream. The Purchaser shall make cash payment (the "Inventory
Stream"), calculated and payable as follows: (a) Commencing on the tenth
day of the first full calendar month following the Closing, and on the
tenth day of each month thereafter, the Purchaser shall pay to the Company
cash in an amount equal to 100 % of the original cost to the Company of the
portion of the Inventory (as defined in Section 2.12) which the Purchaser
sold in the preceding month providing the inventory was paid for prior to
the purchase. These payments shall terminate after Purchaser's sale of the
entire Inventory. In addition, amounts unsold after 1.5 years from the
purchase date, shall become inventory of the company and amounts will not
be determined for said products to the purchaser. In the event that the
Purchaser does not live up to this agreement (1.3.3), and pay the
outstanding obligation to the company by September 30,2000, the purchaser
will issue another 150,000 shares of Common 144 stock.
1.3.2Common Stock. The Purchaser shall issue to the Company two hundred fifty
thousand (250,000) shares of 144 Common Stock (the "Shares") of the
Purchaser. These will be restricted stock.
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1.5 Closing and Post Closing Adjustments. The determination of the cost of the
Inventory on the date of Closing shall be accomplished at and after the
Closing in the following manner: (a) The Purchaser shall promptly prepare a
schedule of the Company's cost of the Inventory (the "Inventory Schedule")
within thirty (30) days of the date of Closing. Purchaser shall deliver
copies thereof to the Company and each Shareholder. The Company and the
Shareholders and their respective representatives, agents and advisors
shall have full and complete access to the Company's former offices and
premises and to the work papers and other records for the purpose of
observing all aspects of the Purchaser's preparation of the Inventory
Schedule.
(b) The Company and the Shareholders shall have five (5) business days
after receipt of the Inventory Schedule (the "Review Period") to
review and verify the Inventory Schedule. If no party objects in
writing to the Inventory Schedule within the Review Period, then the
Inventory Schedule shall be final and binding on all parties, and the
Purchaser shall calculate the Inventory Stream amounts using the
Inventory Schedule in accordance with Section 1.3.1. If any party does
so object within the Review Period then the parties shall meet as soon
as practicable to attempt to resolve any such objection of the
Company. If the parties agree in writing on a final Inventory Schedule
within two (2) days after the expiration of the Review Period, then
Purchaser shall calculate the Inventory Stream amounts using that
final Inventory Schedule in accordance with Section 1.3.1 and shall
pay to the Company the difference, if any, resulting from any
adjustments made to the Inventory Schedule.
Purchaser Obligations
1. Inventory will be taken over by Gateway and you will be paid the cost of
the product on a monthly basis until the entire inventory is sold.
Inventory still on the payables and not paid will be taken over by Gateway,
however no money paid out.
2. All receivables and payables will be taken over by Gateway with the
exception of loans to stock holders.
3. All information related to discussions regarding the xxx will remain
confidential between both parties unless agreed to by both parties in
writing.
4. Xxxx Xxxxxx and you will facilitate announcement of the sale.
5. Transition between the companies will be by agreement of both parties.
6. Products of XxXxx will remain in our product line unless both parties agree
to make changes
7. 250,000 shares of Gateway Distributor 144 stock will be issued upon
completion of the sale.
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This Agreement upon signing will be final and binding.
GATEWAY DISTRIBUTORS, LTD.
/s/ Xxxxxxx X. Xxxxxx
By:_________________________________________
Xxxxxxx X. Xxxxxx, President and
Chief Executive Officer
XXXXX INTERNATIONAL, INC.
/s/ Xxxxx Xxxxx
By: ________________________________________
Xxxxx Xxxxx
President
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STATE OF )
--------------------------------
) ss.
COUNTY OF )
-------------------------------
Xxxxxxx X. Xxxxxx, President and Chief Executive Officer of Gateway
Distributors, Ltd. acknowledged the foregoing instrument before me this 9th day
of December 1999, a Nevada corporation, on behalf of the corporation.
Notary Public
STATE OF )
----------------------------------------
) ss.
COUNTY OF )
---------------------------------------
Xxxxx Xxxxx, President of XxXxx International, Inc., and a Utah
corporation, on behalf of the corporation acknowledged the foregoing instrument
before me this day of December 9, 1999.
Notary Public
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