AGREEMENT AND PLAN OF REORGANIZATION
This Agreement is made as of the 1st day of August, 2000 by and among
Innovative Medical Services, a California corporation (hereinafter referred to
as "IMS"), ETIH20, Inc., a Florida corporation (hereinafter referred to as
"ETIH20"), Xxxxxx Xxxxx and Xxxx Xxxxx and the holders of one hundred percent of
the outstanding shares of common stock of ETIH2O, being 31,240 Shares
(hereinafter referred to individually by name or as the "ETIH20 Shareholders"
collectively).
This Agreement provides for the acquisition of all of the outstanding
common stock of ETIH20 by a wholly owned subsidiary of IMS for shares of
thirty-one thousand two hundred forty shares of common voting stock of IMS, and
other valuable consideration, all for the purpose of and the establishment of
the contractual relationship by and between ETIH20 and IMS as set forth herein.
The Boards of Directors of ETIH20 and IMS have agreed, subject to the
conditions set forth in this Agreement, and by these premises do hereby evidence
their agreement, that it is desirable and in the best interests of said
corporations and their stockholders, that ETIH20 be held as a wholly owned
subsidiary of IMS held by another wholly owned subsidiary of IMS.
AGREEMENT
Now, therefore, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived here from, it is hereby agreed as follows:
ARTICLE 1: REPRESENTATIONS AND WARRANTIES OF IMS
As an inducement to, and to obtain the reliance of ETIH20, IMS
represents and warrants as follows:
1.1. Organization, Good Standing, Power, Etc. IMS (i) is a corporation duly
organized, validly existing and in good standing under the law of the State of
California; (ii) is qualified or authorized to do business as a foreign
corporation and is in good standing in all jurisdictions in which qualification
or authorization may be required; and (iii) has all requisite corporate power
and authority, licenses and permits to own or lease and operate its properties
and carry on its business as presently being conducted and to execute, deliver
and perform this Agreement and consummate the transactions contemplated hereby.
1.2. Certificate of Incorporation and Bylaws. Prior to execution of this
Agreement by both parties, IMS has furnished to ETIH20's representatives
complete and correct copies of (i) its Certificate of Incorporation, as amended
to date, and (ii) its Bylaws, as amended to date. IMS' Certificate of
Incorporation and Bylaws are in full force and effect, and they are not in
violation of any of the provisions thereof.
1.3 Capitalization. The authorized capital stock of IMS consists solely of
20,000,000 shares of Common Stock, no par value, (the "IMS Common Stock"), of
which, on the date hereof 6,416,939 shares are issued and outstanding and no
shares are held in the treasury of IMS. In addition the Company has 5,000,000
shares of Preferred Stock authorized, none of which are presently outstanding.
At the Closing of this Agreement, 31,240 shares of IMS Common Stock will have
been lawfully and validly issued to the Shareholders of ETIH20. All of such
issued and outstanding shares of the IMS Common Stock have been duly authorized
and validly issued and are fully paid and non-assessable with no personal
liability attaching to the ownership thereof and were not issued in violation of
the preemptive or other rights of any person.
1.4. Authorization of Agreement. This Agreement has been or will be at
Closing, duly and validly authorized, executed and delivered by IMS.
1.5. Tax Matters. On or before Closing, IMS will have prepared and filed
with the appropriate United States, state and local governmental agencies, and
all foreign countries and political subdivisions thereof, all tax returns
required to be filed; IMS will have paid all taxes shown on such tax returns to
be payable or which have become due pursuant to any assessment, deficiency,
notice, 30 day letter or similar notice received by it; and the provisions for
income taxes payable in the Balance Sheets of IMS delivered to ETIH20 are
sufficient for all accrued and unpaid taxes, whether or not disputed and for all
periods to and including the date of such Balance Sheet. On or before Closing,
IMS will provide true and accurate copies of all tax returns filed for the last
three fiscal years, together with a balance sheet and income statement as of the
date of this Agreement. The balance sheet and income statement of IMS shall be
updated through Closing.
1.6. Compliance with Applicable Laws. The conduct by IMS of their business
does not violate or infringe on any domestic (federal, state or local) or
foreign law, statute, ordinance or regulation now in effect, or, to the
knowledge of IMS proposed to be adopted, the enforcement of which would
materially and adversely affect its business or the value of its properties or
assets.
1.7. Litigation. There is no material claim, action, suit, proceeding,
arbitration, investigation or inquiry pending before any federal, state,
municipal, foreign or other court or governmental or administrative body or
agency, or any private arbitration tribunal, or to the knowledge of IMS,
threatened, against, relating to or affecting IMS or any of its properties or
business, or the transactions contemplated by this Agreement; nor to the
knowledge of IMS is there any basis for any such material claim, action, suit,
proceeding, arbitration, investigation or inquiry which may have any adverse
effect upon the assets, properties or business of IMS, or the transactions
contemplated by this Agreement. The foregoing notwithstanding, IMS has disclosed
to ETIH20, the litigation in which IMS is the plaintiff presently pending in
U.S. Federal Court in the State of Florida. Neither IMS nor any officer,
director, partner or employee of IMS, have been permanently or temporarily
enjoined by order, judgment or decree of any court or other tribunal or any
agency from engaging in or continuing any conduct or practice in connection with
the business engaged in by IMS. There is not in existence at present any order,
judgment or decree of any court or other tribunal or any agency enjoining or
requiring IMS to take any material action of any kind or to which IMS or its
business, properties or assets are subject or bound. IMS is not in default under
any order, license, regulation or demand of any federal, state or municipal or
other governmental agency or with respect to any order, writ, injunction or
decree or any court which would have a materially adverse impact upon IMS'
operations or affairs.
1.8. Other Information. As disclosed to ETIH20, IMS presently has the
potential of material contractual commitment with respect to the proposed
acquisition of subsidiary companies and or the assets thereof. IMS has the
executive officer and employee benefit commitments as disclosed to ETIH20. In
addition, none of the information and documents made or to be made available by
IMS or any of its representatives to ETIH20 or any of its representatives in
connection with the transactions contemplated by this Agreement is materially
false or misleading or contains any material misstatements of fact or omits any
material fact necessary to be stated in order to make the statements therein not
misleading.
1.9. No Adverse Changes. Since the date of IMS' most recent financial
statements, there has been no material adverse change in IMS' financial
condition, assets, liabilities, or business.
1.10. Exchange Act Filings and Financial Statements. On or before Closing,
IMS has delivered to ETIH20 true and accurate copies of all Financial Statements
and reports filed by IMS with the United States Securities and Exchange
Commission (the SEC) pursuant to Section 12(g) of the Securities Exchange Act of
0000 (xxx 0000 Xxx) including without limitation, registration statements,
10-K's, 10-Q's, Form 8's, etc. for each of the annual, quarterly or other fiscal
periods from the first to latest such filings since IMS first so registered as a
public company. IMS financial statements have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with that
of prior years or periods and fairly present the financial position and results
of operations of IMS as of the respective dates and for the periods indicated in
such statements. The Balance Sheets of IMS included in the statements make full
and adequate provision for all obligations, liabilities or commitments (fixed
and contingent) of IMS as of their respective dates. As of the date of such
financial statements, IMS had no material obligations, liabilities or
commitments (fixed or contingent) not required to be reserved against in the
foregoing financial statements or disclosed in the notes thereto in accordance
with generally accepted accounting principles, and since the date of the most
recent balance sheet has not incurred any material obligations, liabilities or
commitments except the transactions contemplated by this Agreement. IMS will
file all reports required of it under the 1934 Act as a result of this
transaction, including a Form 8-K.
ARTICLE 2: REPRESENTATIONS AND WARRANTIES
OF ETIH20
As an inducement to, and to obtain the reliance of IMS, ETIH20
represent and warrant as follows:
2.1. Organization, Good Standing, Power, Etc. ETIH20 (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and (ii) has all requisite corporate power and authority,
licenses, permits and franchises to own or lease and operate its properties and
carry on its business as presently being conducted and to execute, deliver and
perform this Agreement and consummate the transactions contemplated hereby.
2.2. Certificate of Incorporation and Bylaws. Prior to execution of this
Agreement by both parties, ETIH20 will furnish to IMS' representatives a
complete and correct copy of (i) ETIH20's Certificate of Incorporation, as
amended to date; and, (ii) ETIH20's Bylaws, as amended to date. As of such date
and the date of Closing, ETIH20's Certificate of Incorporation and Bylaws are
and shall be in full force and effect, and ETIH20 is not and shall not be in
violation of any of the provisions thereof.
2.3. Capitalization. As of the date hereof the authorized capital stock of
ETIH20 will consist solely of 250,000 Common Shares with a par value of $0.0 per
share. By Closing 31,240 shares of Common Stock will have been issued and
outstanding and no shares are held in the treasury of ETIH20. All of such issued
and outstanding shares of ETIH20 Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable with no personal liability
attaching to the ownership thereof.
2.4. Options, Warrants, Rights, Etc. By closing, ETIH20 will not have
outstanding any options, warrants or other rights to purchase or convert any
obligation into, any shares of the ETIH20 Common Stock, nor any instruments or
obligations to confer or create such rights.
2.5 Subsidiaries. ETIH20 does not have any subsidiaries and does not own a
controlling interest in any capital stock of any corporation.
2.6. Authorization of Agreement. This Agreement has been or will be at
Closing duly and validly authorized, executed and delivered by ETIH20.
2.7. Financial Statements. ETIH20 shall deliver within 50 days of Closing,
to IMS unaudited financial statements of ETIH20 for its most recent fiscal year
ending December 31, 1999. These financial statements have been prepared to the
best of ETIH20's ability in accordance with generally accepted accounting
principles applied on a basis consistent with that of prior years or periods,
are correct and complete and to the best knowledge of ETIH20's management fairly
present the financial position and results of operations of ETIH20 as of the
date thereof and for the periods indicated in such statements. The Balance
Sheets of ETIH20 included in the statements makes full and adequate provisions
for all obligations, liabilities or commitments (fixed and contingent) of ETIH20
as of their respective dates. As of the date of such financial statements,
ETIH20 has no undisclosed obligations, liabilities or commitments (fixed or
contingent) not required to be reserved against in the foregoing financial
statements or disclosed in the notes thereto in accordance with generally
accepted accounting principles, except the transactions contemplated by this
Agreement.
2.8. Tax Matters. On or before Closing, ETIH20 will have prepared and filed
with the appropriate United States, state and local governmental agencies, and
all foreign countries and political subdivisions thereof, all tax returns
required to be filed; ETIH20 will have paid all taxes shown on such tax returns
to be payable or which have become due pursuant to any assessment, deficiency,
notice, 30 day letter or similar notice received by it; and the provisions for
income taxes payable in the Balance Sheets of ETIH20 delivered to IMS are
sufficient for all accrued and unpaid taxes, whether or not disputed and for all
periods to and including the date of such Balance Sheet. On or before Closing,
ETIH20 will provide true and accurate copies of all tax returns filed since its
date of incorporation, together with a balance sheet and income statement as of
the date of this Agreement. The balance sheet and income statement of ETIH20
shall be updated through Closing.
2.9. Material Contracts. There has not occurred any default by ETIH20 of
any event which with the lapse of time or the election of any person other than
ETIH20 or any combination thereof, will become a default, except defaults, if
any, which will not result in any material loss to or liability of ETIH20.
2.10 Permits, Licenses, Etc. ETIH20 have all permits, licenses, orders and
approvals of federal, state, local or foreign governmental or regulatory bodies
that are required in order to permit it to carry on their business as presently
conducted.
2.11. Compliance with Applicable Laws. The conduct by ETIH20 of their
business does not violate or infringe upon any domestic (federal, state or
local) or foreign law, statute, ordinance or regulation now in effect, or, to
the knowledge of ETIH20 proposed to be adopted, the enforcement of which would
materially and adversely affect its business or the value of their properties or
assets.
2.12. Litigation. There is no material claim, action, suit, proceeding,
arbitration, investigation or inquiry pending before any federal, state,
municipal, foreign or other court or governmental or administrative body or
agency, or any private arbitration tribunal, or to the knowledge of ETIH20
threatened, against, relating to or affecting ETIH20 or any of their properties
or business, or the transactions contemplated by this Agreement; nor to the
knowledge of ETIH20 is there any basis for any such material claim, action,
suit, proceeding, arbitration, investigation or inquiry which may have any
adverse effect upon the assets, properties or business of ETIH20, or the
transactions contemplated by this Agreement. Neither ETIH20 nor any officer,
director, partner or employee of ETIH20, has been permanently or temporarily
enjoined by order, judgment or decree of any court or other tribunal or any
agency from engaging in or continuing any conduct or practice in connection with
the business engaged in by ETIH20. There is not in existence at present any
order, judgment or decree of any court or other tribunal or any agency enjoining
or requiring ETIH20 to take any material action of any kind or to ETIH20 and
their respective business, properties or assets are subject or bound. ETIH20 is
not in default under any order, license, regulation or demand of any federal,
state or municipal or other governmental agency or with respect to any order,
writ, injunction or decree of any court which would have a materially adverse
impact upon ETIH20's 's operations or affairs.
2.13. Other Information. None of the information and documents which have
been furnished or made available by ETIH20 or any of its representatives to IMS
or any of their representatives in connection with the transactions contemplated
by this Agreement is materially false or misleading or contains any material
misstatements of fact or omits any material fact necessary to be stated in order
to make the statements therein not misleading.
2.14. Investment Representation by ETIH20 Shareholders. The ETIH20
shareholders are acquiring shares of IMS Common Stock issuable hereunder for
their own account and agree not to distribute any shares issuable there under
within the meaning of the Securities Act of 1933 (the 1933 Act), except as
otherwise provided herein, unless an appropriate registration statement has been
filed with the SEC or unless an exemption from registration under the 1933 Act
is available according to opinion of counsel for IMS. Each certificate for
shares issued shall be stamped or otherwise imprinted with the following or a
substantially similar legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") nor any
state securities laws. These shares may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act or pursuant to an opinion of
counsel acceptable to IMS that an exemption from such
registration is available."
The foregoing restriction on transfer shall remain in existence for a period of
one (1) year only from the date of Closing, after the expiration of which all
shares then owned or thereafter acquired pursuant to this Agreement shall be
registered on the books of IMS without any further restraint of alienation. Any
shares issued containing the foregoing Restrictive Legend may be exchanged for
shares without Restrictive Legend at any time after the expiration of two (2)
year from the date of closing at the option of the holder. By execution of this
Agreement and the Subscription Agreement attached hereto as Exhibit 2,14, the
ETIH20 shareholders represent that they have sufficient investment
sophistication and ability to take the financial risks associated with this
transaction and those representations contained in this Section 2.14, which meet
the standards for availability of an exemption from the registration
requirements of the 1933 Act and from the registration and/or qualification
requirements of any other applicable securities law. The foregoing
notwithstanding, the Shares issuable hereunder may be registered in the name of
or transferred to family members, trusts and other related parties.
2.15. Investment Representation by IMS. IMS is acquiring the shares of
ETIH20 Common Stock issuable hereunder for its own account and agrees not to
distribute any shares within the meaning of the Securities Act of 0000 (xxx 0000
Xxx) unless an appropriate registration statement has been filed with the SEC or
unless an exemption from registration under the 1933 Act is available according
to opinion of counsel for ETIH20. Each certificate for shares issued shall be
stamped or otherwise imprinted with the following or a substantially similar
legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") nor any
state securities laws. These shares may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act or pursuant to an opinion of
counsel acceptable to IMS that an exemption from such
registration is available."
By execution of this Agreement IMS represents that it has sufficient investment
sophistication and ability to take the financial risks associated with this
transaction and those representations contained in this Section 2.15, which meet
the standards for availability of an exemption from the registration
requirements of the 1933 Act and from the registration and/or qualification
requirements of any other applicable securities law.
ARTICLE 3: PLAN OF EXCHANGE AND CLOSING
3.1. The Exchange. The issued and outstanding shares of common stock of
ETIH20 shall be exchanged as follows for the consideration set forth herein:
A). At Closing, the ETIH20 Shareholders shall deliver to IMS, certificates
representing all of the outstanding common stock of ETIH20 properly endorsed for
transfer to ETI-Nevada as described below and executed Subscription Agreements
for the IMS shares. The ETIH2O Shares shall be exchanged on a one for one basis
for IMS Shares.
B). At Closing, IMS shall deliver to the ETIH20 Shareholders, IMS common
shares in the form attached hereto.
3.2. Closing. The Closing of the transactions contemplated by this
Agreement shall take place on such date as may be agreed upon by the parties,
but no later than November 30 2000 (herein called the "Closing Date"), at the
offices of IMS, 0000 Xxxxxxxxx Xxx, Xx Xxxxx, Xxxxxxxxxx or such other time and
location as the parties may mutually agree.
3.3. Closing Events. At the Closing, each of the respective parties hereto
shall execute, acknowledge, and deliver (or shall cause to be executed,
acknowledged, and delivered) any agreements, resolutions, or other instruments
required by this Agreement to be so delivered at or prior to the Closing,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate or evidence the
transactions contemplated hereby.
Directors of ETIH20. Effective on the Closing Date of this transaction,
ETI shall deliver certified resolutions to IMS to the effect that the
Board of Directors of ETIH20 shall consist of the following
individuals:
Xxxxxx Xxxxx Director
Xxxx Xxxxx Director
Xxxxxxx Xxxxx Director
Xxxxx Xxxxxx Director
Xxxx Xxxxxxxx Director
IMS agrees that so long as either Xxxxxx Xxxxx and/or Xxxx Xxxxx are employees
of ETIH20 as hereinafter provided, it shall vote its shares to cause both of
them to be elected to the Board of Directors of ETIH20 for such time as they are
willing and able to serve.
3.5. Officers of ETIH20. Effective on the Closing Date of this transaction
ETI shall deliver certified resolutions to IMS to the effect that all existing
executive officers and employees of ETIH20 shall have submitted their
resignations effective on Closing, and the above Board shall have elected new
officers of ETIH20 to consist of the following persons:
Xxxxxx X. Xxxxx President, Chief Executive Officer
Xxxxxx Xxxxx Executive Vice President
Xxxxxx Xxxxxxx Secretary
Xxxx Xxxxxxxx Treasurer
IMS agrees that so long as either Xxxxxx Xxxxx and/or Xxxx Xxxxx are employees
of ETIH20 as hereinafter provided, it shall vote its shares to cause to be
elected directors who will vote to cause each of them to be elected to the
Offices set forth above for such time as they are willing and able to serve.
3.6 Existing Liabilities of ETIH20. The parties acknowledge that as of
the date of Closing, ETIH20 will have outstanding liabilities for both unpaid
operational expenses and loans extended to ETIH20 during its formative period.
XXXXXX XXXXX and XXXX XXXXX agree that they will execute and deliver to IMS at
Closing an Indemnification Agreement in form mutually satisfactory holding
ETIH20 and IMS harmless from any and all liabilities incurred by ETIH20 prior to
Closing excepting only those liabilities incurred in the ordinary course of
business subsequent of July 20, 2000, any and all amounts which may have been
advanced by IMS pursuant to its obligations as set forth above in paragraph 3.2
above, all of which shall remain obligations of ETIH20 to be re-paid in the
ordinary course of its business. Provided further that at Closing, a
determination shall be made by the parties of the amount of all current assets
of ETIH20, including accounts receivable, loans receivable and inventory, and
such amounts (or the proceeds therefrom) shall be and shall remain available to
XXXXXX XXXXX and XXXX XXXXX when same is received by ETIH20 for satisfaction of
the outstanding liabilities referred to herein.
ARTICLE 4: SPECIAL COVENANTS
4.1. Due Diligence. The parties hereto shall have up to and including MONTH
DAY, 2000 within which to complete their due diligence investigations on the
other party and the transaction contemplated hereunder. In the event either
party hereto decides, in its sole discretion, not to proceed with the Closing
based on its due diligence investigation, it shall notify the other in writing
on or before 5:00 P.M. Pacific Time, July 20, 2000 of such decision and this
Agreement.
4.2. Exchange of Information. Each party shall cooperate fully by
exchanging information requested by the other party in a timely manner. Without
in any manner reducing or otherwise mitigating the representations contained
herein, each party and/or its attorneys shall have the opportunity to meet with
the accountants and attorneys of the other party to discuss its respective legal
and financial condition and this transaction. If this transaction is not
completed, all documents received by each party and/or its attorney shall be
returned to the other party and all such information so received shall be
treated as confidential in accordance with Section 6.10.
4.3. Conduct of Business. Prior to Closing, IMS and ETIH20 shall each
conduct their business in the normal course, and shall not sell, pledge, or
assign any assets, without the prior written approval of the other party, except
in the regular course of business. Neither IMS and ETIH20 shall amend their
Articles of Incorporation or Bylaws, declare dividends, redeem or sell stock or
other securities, incur additional or newly-funded liabilities, acquire or
dispose of fixed assets, change employment terms, enter into any material or
long-term contract, guarantee obligations of any third party, settle or
discharge any balance sheet receivable for less than its stated amount, pay more
on any liability than its stated amount, or enter into any other transaction
other than in the regular course of business and with notice to the other party.
ARTICLE 5: CONDITIONS PRECEDENT TO
OBLIGATIONS OF PARTIES
5.1. ETIH20 and ETIH20'S SHAREHOLDERS' Closing Conditions. The obligations
of ETIH20 and ETIH20'S SHAREHOLDERS hereunder are subject to fulfillment prior
to or at the Closing of each of the following conditions:
A). Closing Date. The transactions contemplated by this Agreement shall be
closed on or before November 30, 2000.
B). Representations and Warranties. The representations and warranties of
IMS made pursuant to Article 1 above shall be true and accurate in all material
respects as of the Closing Date.
C). Performance. IMS shall have performed and complied with all agreements
and conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
D). No Adverse Changes. There shall not have been, since the date of the
latest audited financial statements of IMS, any materially adverse change in
IMS' financial condition, assets, liabilities or business.
E). Opinion of IMS' Counsel. IMS shall have delivered to ETIH20 an opinion
of IMS' counsel, Xxxxxx Xxxxxxxxx, Attorney at Law, dated the Closing Date to
the effect that: (i) IMS is a corporation duly organized, validly existing and
in good standing under the laws of the State of California, has all requisite
power to carry on its business as now being conducted and to execute, deliver
and perform this Agreement and to perform its obligations thereunder; (ii) IMS
is duly qualified to do business as a foreign corporation and is good standing
in each jurisdiction in which the nature of the business conducted by it or the
property owned, operated or leased by it makes such qualification necessary;
(iii) this Agreement has been duly authorized by all necessary corporate action
on the part of IMS, has been duly executed and delivered by IMS and constitutes
the legal, valid and binding obligation of IMS enforceable in accordance with
its terms except as enforceability thereof may be limited by the insolvency or
other laws affecting the rights of creditors and the enforcement of remedies;
(iv) IMS has prepared and filed with the SEC all periodic reports required of it
under the 1934 Act; (v) the Shares issuable hereunder have been duly authorized
and will be validly issued; fully paid and non-assessable with no personal
liability attaching to the ownership thereof; (vi) neither the execution,
delivery and performance by IMS of this Agreement, nor compliance by IMS with
the terms and provisions hereof, will conflict with, or result in a breach of
the terms, conditions or provisions of, or will constitute a default under, the
Articles of Incorporation or Bylaws of IMS or any agreement or instrument known
to such counsel to which IMS is a party or by which IMS or any of its properties
or assets are bound; (vii) there are no actions, suits or proceedings pending
or, to the knowledge of such counsel, threatened against IMS before any court or
administrative agency, which have, in the opinion of such counsel, if adversely
decided, will have any material adverse effect on the business or financial
condition of IMS or which questions the validity of this Agreement or the Shares
issuable hereunder. In rendering his opinion, counsel shall be allowed to rely
on written representations of officers and directors of the Company as to
factual matters without independent verification thereof.
F). Current Status with Securities and Exchange Commission. IMS shall have
prepared and filed with the SEC all periodic reports required under the 1934 Act
pursuant to Section 12(g) thereof.
G). Due Diligence. ETIH20 and ETIH20'S SHAREHOLDERS shall have completed
and be satisfied with its due diligence investigation of IMS pursuant to Article
4.1.
H). Employment Agreements of Xxxxxx Xxxxx and Xxxxxx Xxxxx. IMS shall have
executed and delivered the Xxxxxx Xxxxx and Xxxxxx Xxxxx Employment Agreements
attached hereto as Exhibit 5.1.H.1 and 5.1.H.2.
5.2. IMS' Closing Conditions. The obligations of IMS hereunder are subject
to fulfillment prior to or at the Closing of each of the following conditions:
A). Closing Date. The transactions contemplated by this Agreement shall be
closed on or before November 30, 2000.
B). Representations and Warranties. The representations and warranties of
ETIH20 made pursuant to Article 2 above, shall be true and accurate in all
material respects as of the Closing Date.
C). Performance. ETIH20 and ETIH20 Shareholders shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing including but not
limited to:
(1) Employment Agreements of Xxxxxx Xxxxx and Xxxxxx Xxxxx. IMS shall
have executed and delivered the Xxxxxx Xxxxx and Xxxxxx Xxxxx Employment
Agreements attached hereto as Exhibit 5.1.H.1 and 5.1.H.2.
(2). EXCLUSIVE SUPPLIER AGREEMENT. SISTECAM and
ETIH20 shall have entered into the Exclusive Supplier
Agreement whereby ETIH2O agrees to buy the capacity of Axenohl
products manufactured by SISTECAM and not utilized or sold
within the country of Costa Rica except as with the prior
written consent of the Chief Executive Officer of IMS.
D). No Adverse Changes. There shall not have been, since the date of the
latest audited financial statements of ETIH20, any materially adverse change in
their financial condition, assets, liabilities or business;
E). Opinion of ETIH20's Counsel. ETIH20 shall have delivered to
IMS, an opinion of their counsel, Xxxx X. Xxxxxxxx, Attorney at Law, dated the
Closing Date to the effect that: (i) ETIH20 is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida,
have all requisite power to carry on their business as now being conducted and
to execute, deliver and perform this Agreement and to perform their obligations
thereunder; (ii) ETIH20 are duly qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the property owned,
operated or leased by it makes such qualification necessary; (iii) this
Agreement has been duly authorized by all necessary corporate action on the part
of ETIH20, have been duly executed and delivered by ETIH20 and constitutes the
legal, valid and binding obligation of ETIH20, enforceable in accordance with
its terms except as enforceability thereof may be limited by the insolvency or
other laws affecting the rights of creditors and the enforcement of remedies;
(iv) neither the execution, delivery and performance by ETIH20 of this
Agreement, nor compliance by ETIH20 with the terms and provisions hereof, will
conflict with, or result in a breach of the terms, conditions or provisions of,
or will constitute a default under, the Articles of Incorporation or Bylaws of
ETIH20 or any agreement or instrument known to such counsel to which ETIH20 is a
party or by which ETIH20 or any of their properties or assets are bound; (v)
there are no actions, suits or proceedings pending or, to the knowledge of such
counsel, threatened against ETIH20 before any court or administrative agency,
which, in the opinion of such counsel, if adversely decided, will have any
material adverse effect on the business or financial condition of ETIH20 or
which questions the validity of this Agreement. In rendering their opinion,
counsel shall be allowed to rely on written representations of officers and
directors of the Company as to factual matters without independent verification
thereof; and
F). Due Diligence. IMS shall have completed and be satisfied with its due
diligence investigation of ETIH20 pursuant to Article 4.1.
ARTICLE 6: MISCELLANEOUS
6.1. Expenses and Further Assurances. The parties hereto shall each bear
their respective costs and expenses incurred in connection with the transactions
contemplated by this Agreement. Each party hereto will use its best efforts
provide any and all additional information, execute and deliver any and all
documents or other written material and perform any and all acts necessary to
carryout the intent of this Agreement.
6.2. Survival of Representations, Warranties and Covenants. All of the
representations, warranties and covenants made as of the date of this Agreement
and as of Closing, shall survive the closing of this transaction.
6.3. Successors and Assigns. All representations, warranties, covenants and
agreements in this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and assigns whether so expressed or not.
6.4. Governing Law. This Agreement is to be governed by and interpreted
under the laws of the State of California, without giving effect to the
principles of conflicts of laws thereof. In addition, the parties agree to
jurisdiction in the State or Federal Courts of the State of California and the
County of San Diego.
6.5. Section and Other Headings. The section and other headings herein
contained are for convenience only and shall not be construed as part of this
Agreement.
6.6. Counterparts. This Agreement may be executed in any number of
counterparts and each counterpart shall constitute an original instrument, but
all such separate counterparts shall constitute but one and the same instrument.
6.7. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof. This Agreement may not be amended or modified, except
by a written agreement signed by all parties hereto.
6.8. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffectual to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
6.9. Confidentiality. Each party hereto agrees with the other parties that,
unless and until this Agreement has been consummated, or for a period of one (1)
year from the date of this Agreement if the transaction contemplated by this
Agreement is not consummated it and its representatives will hold in strict
confidence all data and information obtained with respect to the other party
from any representative, Officer, Director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except: (i) to the extent
such data or information has theretofore been publicly disclosed, is a matter of
public knowledge or is required by law to be publicly disclosed; and (ii) to the
extent that such data or information must be used or disclosed in order to
consummate the transactions contemplated by this Agreement. The foregoing
notwithstanding, IMS shall be authorized to publicly announce the execution and
closing of this Agreement, details thereof and a description of ETIH20 and the
business conducted thereby.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective Officers, hereunto duly authorized,
as of the date first above written.
INNOVATIVE MEDICAL SERVICE
By: /s/ XXXXXXX X. XXXXX
----------------------------
Xxxxxxx X. Xxxxx, President
ATTEST: /s/ XXXXXX XXXXXXX
-------------------------
Xxxxxx Xxxxxxx, Secretary
ETIH20, INC.
By: /s/ XXXX XXXXX
----------------------
Xxxx Xxxxx , President
ATTEST /s/ XXXXXX X. XXXXX
------------------------------------
Xxxxxx X. Xxxxx, Secretary/Treasurer
ETIHH2O Acquisition Agreement Exhibit 2.14
SECURITIES SUBSCRIPTION AGREEMENT
, 2000
------------------
Innovative Medical Services
0000 Xxxxxxxxx Xxx
Xx Xxxxx, Xxxxxxxxxx 00000
1. _______ Innovative Medical Services, a California corporation (the
"Company"), has offered to exchange ____________ shares of its common stock (the
"IMS Shares") to the undersigned subscriber (the "Subscriber) for
_________________________ shares of ETIH2O, Inc., common stock legally and
beneficially owned by the Subscriber pursuant to the Agreement and Plan of
Reorganization by and between the Company and ETIH2O, Inc., dated __, 2000, a
copy of which has been provided to the Subscriber together with the attached
Disclosure Package. Together with this Subscription Agreement, the Subscriber is
delivering to the Company a certificate representing all of the Subscriber's
ETIH2O, Inc. shares.
2. _______ The Offer to Exchange is being conducted in reliance upon the
exemption from the registration requirements of the Securities Act of 1933 (the
Act) set forth in Rule 505 of Regulation D promulgated under the Act.
3. Representations and Warranties of Subscriber. In order to induce the Company
to accept this subscription, the Subscriber hereby represents and warrants to,
and covenants with, the Company as follows:
A. The Subscriber is subscribing for the IMS Shares for its own account for
investment purposes and not with a view towards distribution and has no present
arrangement or intention to sell the Common Stock;
B. The Subscriber acknowledges and agrees that the IMS Shares and the
securities contained therein have not been registered under the Act and may not
be offered or sold in the United States or to U.S. Persons unless registered
under the Act or an exemption from the registration requirements of the Act is
available;
C. The Subscriber is not an officer, director or "affiliate" (as that term
is defined in Rule 403 under the Act) of the Company;
D. Subscriber is qualified to purchase the Shares under the laws of its
jurisdiction of residence and the offer and sale of the Shares will not violate
the securities or other laws of such jurisdiction;
E. All invitations, offers and sales of or in respect of, any of the IMS
Shares, by Subscriber and any distribution by Subscriber of any documents
relating to the offer by it of any of the IMS Shares will be in compliance with
applicable laws and regulations and will be made in such a manner that no
prospectus need be filed and no other filing need be made by Company with any
regulatory authority or stock exchange in any country or any political
subdivision of any country;
F. The Subscriber has received and carefully reviewed the Company's 1999
Annual Report and fiscal year to date SEC filings and has had the opportunity to
ask and receive answers to any and all questions the Subscriber had with respect
to the Company, its business, management and current financial condition;
G. The Subscriber is either an accredited investor as defined by Regulation
D and has completed and provided herewith the Accredited Investor Questionnaire
attached hereto or the Subscriber represents that it has such knowledge and
expertise in financial and business matters that the Subscriber is capable of
evaluating the merits and risks involved in an investment in the Common Stock
and acknowledges that an investment in the IMS Shares entails a number of very
significant risks and Subscriber is able to withstand the total loss of its
investment;
H. Except as set forth in this Agreement, no representations or warranties
have been made to the Subscriber by the Company, or any agent, employee or
affiliate of the Company and in entering into this transaction the Subscriber is
not relying upon any information, other than that which is contained in the
attached Disclosure Package, the receipt of which is hereby acknowledged and the
results of any independent investigation by the Subscriber;
I. The Subscriber understands that the IMS Shares are being offered and
sold to it in reliance on specific exemptions from the registration requirements
of the United States Federal and State securities laws and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Subscriber set forth
herein in order to determine the applicability of such exemptions and the
suitability of the Subscriber to acquire the IMS Shares, and the Subscriber
acknowledges that it is Subscriber's responsibility to satisfy itself as to the
full observance by this Offering and the sale of the IMS Shares to Subscriber of
the laws of any jurisdiction outside the United States and Subscriber has done
so;
J. The Subscriber has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder; and this Agreement is a
legally binding obligation of the Subscriber enforceable against the Subscriber
in accordance with its terms; and
K. Subscriber understands that in the view of the SEC the statutory basis
for the exemption claimed for the transaction would not be present if the
Offering, although in technical compliance with Regulation D, is part of a plan
or scheme to evade the registration provisions of the 1933 Act and Subscriber
confirms that its purchase is not part of any such plan or scheme. Subscriber
has no present intention to sell the IMS Shares.
4. Representations of the Company.
The Company represents and warrants:
A. The Company is in full compliance, to the extent applicable, with all
reporting obligations under California and federal law;
B. The execution, delivery and performance of this Agreement and the
consummation of the issuance of the IMS Shares and the transactions contemplated
by this Agreement are within the Company's corporate powers and have been duly
authorized by all necessary corporate and stockholder action on behalf of the
Company;
C. All documents provided to the Subscriber do not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statement therein in light of the
circumstances under which they were made, not misleading;
5. Non-Binding Until Acceptance. The Subscriber understands that this
subscription is not binding upon the Company until the Company accepts it, which
acceptance is at the sole discretion of the Company and is to be evidenced by
the Company's execution of this Agreement where indicated. This Agreement shall
be null and void if the Company does not accept it as aforesaid. Upon acceptance
by the Company and receipt of the ETIH2O Shares of the Subscriber, the Company
will issue one or more certificates for the full number of subscribed IMS
Shares.
6. Non-Assignability. Neither this Agreement nor any of the rights of the
Subscriber hereunder may be transferred or assigned by the Subscriber.
7. Governing Law. This Agreement will be construed and enforced in accordance
with and governed by the laws of the State of California, except for matters
arising under the Act, without reference to principles of conflicts of law. Each
of the parties consents to the exclusive jurisdiction of the federal courts
whose districts encompass any part of the State of California or the state
courts of the State of California in connection with any dispute arising under
this Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions.
IN WITNESS WHEREOF, the Subscriber has executed this Securities Subscription
Agreement on the date set forth below.
(Print Name of Subscriber)
By:
----------------------------------------
(Signature)
Print Name & Title:
---------------------------------
(for corporate subscribers)
Address for Shareholder Records:
--------------------------
Number of IMS Shares Subscribed: --------------------------
(1 IMS for 1 ETIH20) --------------------------
# of ETIH2O Shares Exchanged
--------------------------
(1 IMS for 1 ETIH20)
--------------------------
The foregoing Subscription is accepted this day of July 2000 by
-------
INNOVATIVE MEDICAL SERVICES
BY:
------------------------------------
Xxxxxxx X. Xxxxx, President
ACCREDITED INVESTOR DECLARATION
The undersigned as the Subscriber of the Innovative Medical Services
Subscription Agreement dated _________ __, 2000, represents that the Subscriber
qualifies as an "Accredited Investor," as defined in Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, because the Subscriber is:
--------- (1) A private business development company as defined in Section
202(a)(22) of the Investment Advisors Act of 1940;
--------- (2) 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 purpose of investing in the Securities, with
total assets in excess of $5,000,000;
--------- (3) A director, executive officer, or general partner of the issuer of
the Securities being offered or sold, or any director, executive officer,
or general partner of a general partner of that issuer;
--------- (4) A natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase, exceeds $1,000,000;
--------- (5) 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 that
person's spouse of $300,000 in each of those years and has a reasonable
expectation of reaching those levels in the current year;
--------- (6) Any 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 Section
506(b)(2)(ii); or
--------- (7) Any entity in which all of the equity owners are accredited
investors.
Date:
------------------------
Signed:
-----------------------------------------------------------
Please print name:
--------------------------------------------------
Address:
--------------------------------------------------
Tax I.D. No.:
--------------------------------------------------
ETIHH2O Acquisition Agreement Exhibit 5.1.H.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is made and
entered into as of August 1, 2000, by and among XXXXXX X. XXXXX (the
"Executive"), INNOVATIVE MEDICAL SERVICES, a California corporation (the
"Company") and ETI H2O Corporation., a soon to be incorporated in the state of
Nevada, with regard to the following:
A. The Company desires to employ Executive to act as President of the newly
formed company known as ETI H2O Corporation. (Nevada).
B. The Executive wishes to act as President of ETIH2O Corporation on behalf
of the Company.
NOW, THEREFORE, for valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs the Executive as President, and
the Executive accepts the duties described herein, and agrees to discharge the
same faithfully and in the best of his ability. The Executive shall perform such
other duties as shall be from time to time prescribed by the board of directors
of the Company or the chief executive officer. The Executive shall devote his
full business time and attention to the business and affairs of the Company.
2. Term. The Company shall employ the Executive under the terms of this
Agreement on August 1, 2000 through July 31, 2002, subject to the terms of this
Agreement. The parties may, by mutual agreement, extend the term of this
Agreement beyond such date for additional periods of time as set forth in any
extension of this Agreement. However, the Company may terminate this Agreement
immediately upon written notice to Executive as set forth in Paragraph 4. If at
the end of the Term the Executive continues to be employed by the Company, then
the terms of this Agreement shall be deemed to have been renewed on a
month-to-month basis and shall remain in effect for as long as the Executive
continues to be so employed.
3. Compensation and Benefits. In consideration for the services to be
rendered by the Executive to the Company, the Company agrees to pay the
Executive the following compensation and benefits:
3.1 Salary. Employment package includes the following : The Company shall
pay the Executive a salary at the rate of Sixty Thousand Dollars ($60,000
.00) per year, due and payable bi-weekly, or as mutually agreed upon by the
Company and the Executive as follows:
3.1.1 Vesting of 25K share options upon employment.
3.1.2 Vesting of 25K share options and salary increase to 72k per year
upon production levels and sales of concentrate reaching 50
barrels per month.
3.1.3 Vesting of 25K share options and salary increase to 84k per year
upon production levels and sales of concentrate reaching 100
barrels per month
3.1.4 Vesting of 25K share options and salary increase to 96k per year
upon production levels and sales of concentrate reaching 150
barrels per month
3.1.5 Vesting of 25K share options upon production levels and sales
reaching 200 barrels per month
3.16. Vesting of 50K share options upon production levels and sales
reaching 1000 barrels per month
3.2. Withholding and Deductions. The Company shall withhold and/or deduct
from any and all salary or other payments, all taxes which may be required to be
deducted or withheld under any provision of law (including, but not limited to,
social security payments and income tax withholding) now in effect or which may
become effective any time during the term of this Agreement. All taxes based on
employment out of the State of Florida.
3.3.Executive Incentive Compensation. The Company agrees to evaluate
the performance of the Executive with regard to additional
compensation for superior performance within six months after the
commencement of the agreement. The Company shall consider the overall
performance of the Company in determining whether the Executive is
entitled to receive added compensation. The basis of granting such
added compensation will be to reward the Executive for outstanding
work and to provide an incentive for continued performance. Any
additional incentive compensation to be paid pursuant to this
Agreement, shall be made within the Company's discretion since such
added compensation would be affected by general and specific economic
conditions, changes in management policies and other considerations.
In the event incentive compensation is awarded, it shall be set forth
in a separate written addendum to this Agreement, signed by both
parties. As well as the following:
20k options will vest upon hiring and 20k options will vest every
six months for 4 additional time periods totaling 100k options.
This does not in any way exclude the Executive from any other
option bonuses that are received company wide.
3.4. Stock Options. The Executive shall be entitled to participate in an
incentive stock option or similar plan to be set forth in a separate written
agreement and approved by the compensation committee of the board of directors,
stockholders, if required by law, and on such terms and conditions as are
established by the Company in its complete discretion.
3.5. Benefits. The Company shall provide the Executive, at no cost to the
Executive, group health insurance for the Executive and group dental insurance
for the Executive.
3.6. Expense Reimbursement. The Company agrees to reimburse the Executive
for all ordinary and necessary expenses incurred by the Executive on behalf of
the Company, including entertainment, meals, and travel expenses. Any costs
incurred by the Executive for conventions, meetings, seminars, club dues and
special social entertainment expenses, shall be reimbursed provided the board of
directors of the Company approve such as outlined in the company's policy
manual.
3.7. Vacation. The Executive shall be entitled to 5 days of vacation in the
first year, accrued monthly. After three years of employment, Executive shall be
entitled to 15 days of vacation. Vacation days shall accrue pro rata each
calendar month beginning in December 1996. The parties agree that the Executive
shall take all vacation days during the calendar year earned, to the extent
practical, and agree that notwithstanding the failure to use vacation days in a
calendar year, not more than [thirty (30)] vacation days shall be carried
forward into any calendar year from the previous year or years. Once this
maximum is reached, all further accruals will cease. Vacation accruals will
recommence after Executive has taken vacation and the accrued hours have dropped
below the [30] day maximum.
4. Termination.
4.1. Employer Right to Terminate Employment. Executive's employment shall
terminate one (1) year from the commencement date of this Agreement as set forth
in Paragraph 2, above. In addition, upon written notice to the Executive (except
in the case of death of the Executive, in which event termination shall
automatically occur at the date of death), the Agreement may be terminated
immediately for any of the following grounds as determined in the sole
discretion of the Company:
4.1.1. Willful breach or habitual neglect or inability (except where
such inability is due to Disability or death) to perform the Executive's
duties hereunder;
4.1.2. Malfeasance or misfeasance in the performance of the
Executive's duties hereunder;
4.1.3. Immoral or illegal conduct;
4.1.4. Disability or death;
4.2. Termination by the Executive. The Executive may terminate his
employment hereunder prior to the date it would otherwise terminate under this
Agreement by delivering written notice to the Company six (6) months in advance
of the date such termination is to take effect.
5. Post-Termination Payments and Benefits.
5.1. Salary and Benefits.
5.1.1. In the event the employment of the Executive is terminated
under Paragraphs 4.1.1., 4.1.2., 4.1.3., or 4.1.4., the Company shall pay
the Executive the salary due him at the end of the month in which such
termination occurs, plus any pay in lieu of vacation accrued or carried
forward to, but not taken as of the date of termination with the exception
of the options. All options will be due on the scheduled timetable as long
as the employee is not terminated for cause.
5.2. Death. In the event the employment of the Executive is terminated as a
result of death, the Company shall pay to Executive's designated beneficiary,
payments equal to the amount of salary otherwise payable under Paragraph 3.1 for
a period of six (6) months following the date of death of the Executive. In
addition all options will be due to the estate or designated heir on the
scheduled time table as prescribed in this agreement.
6. Dispute Resolution.
6.1. The parties agree that if a dispute arises concerning any provision of
this Agreement, the alleged breach thereof, or the rights and duties of any
person or entity hereunder, the parties agree first to try in good faith to
settle the dispute. In the event that the parties cannot settle the dispute, any
party shall have the right to submit the dispute, to binding arbitration. Such
arbitration shall be held before a single arbitrator agreed upon by the parties
to the dispute, and if they cannot agree, any party may petition a California
Superior Court in San Diego County for appointment of an arbitrator. The
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, subject to any contrary and/or
additional terms of this Paragraph 6 and Paragraph 9.10.
6.2. The rules of evidence shall not apply to any arbitration under this
Paragraph 6. However, in all other respects, the arbitrator shall follow
applicable law.
6.3. Subject to Paragraph 9.10, each party shall bear their own costs and
expenses of arbitration.
6.4. The decision of the arbitrator shall be binding, enforceable, and may
be entered in any court having jurisdiction thereof.
6.5. Payment of any and all amounts granted by an arbitrator
hereunder shall be made within fifteen (15) days following the date of the
decision, and thereafter, shall bear interest at the then current maximum legal
rate per month until paid in full.
6.6. The arbitrator shall not have the power to award damages to the
Executive for emotional distress or pain and suffering or to award consequential
or punitive damages, but shall be empowered to award the Executive only direct
economic damages.
6.7. Any arbitration conducted under this Paragraph 6 shall be conducted in
a confidential private proceeding and the fact of the proceeding and the
substance of the matters addressed in the proceeding shall be kept confidential
by the parties, provided that disclosure may be made by any party upon notice to
the other party or parties in the event that such disclosure is required by
applicable law or regulation or legal process.
7. Proprietary Information.
7.1. Unfair Competition. Because of his employment by the Company,
Executive will have access to trade secrets and confidential information about
the Company, its products, its customers and its methods of doing business. In
consideration of his access to this information, Executive agrees that for a
period of five (5) years after termination of his employment, he will not,
directly or indirectly compete with Company in the field of pharmaceutical water
filtration sales in the USA.
7.1.1. Competition. Executive understands and agrees that direct
competition means the design, development, production, promotion or sale of
products or services competitive with those of the Company. Indirect
competition means employment by any competitor or third party providing
products competing with the Company's products, for whom Executive will
perform the same or similar function as he will perform for the Company.
7.1.2. Additional Trade Secrets. In the course of his employment,
Executive will have access to confidential records and data pertaining to
the Company's customers and the relationship between these customers and
the Company. Such information is considered secret and is disclosed to
Executive in confidence. During his employment by the Company and for five
(5) years after termination of that employment, Executive shall not
directly or indirectly disclose or use any such information except as
required in the course of his employment by the Company. In addition,
during the five (5) years after termination of his employment, Executive
shall not induce or attempt to induce any account executive of the Company
to discontinue representing the Company for purpose of representing any
competitor of the Company.
8. Return of Documents. The Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments or other materials used and/or
developed by the Executive during the term of this Agreement are solely the
property of the Company and the Executive has no right, title or interest
therein. The Executive hereby further acknowledges that all such items
constitute confidential trade secrets the wrongful use or disclosure of which to
the public or competitors of the Company would materially adversely affect the
business and prospects of the Company. Upon termination of employment of the
Executive, the Executive or the Executive's representatives shall promptly
deliver possession of all such property to the Company in good condition.
9. General Provisions.
9.1. Notices. Unless otherwise specifically permitted by this Agreement,
all notices or other communications required or permitted under this Agreement
shall be in writing, and shall be personally delivered or sent by registered or
certified mail, postage prepaid return receipt requested, or sent by facsimile,
provided that the facsimile cover sheet contains a notification of the date and
time of transmission, and shall be deemed received: (i) if personally delivered,
upon the date of delivery to the address of the person to receive such notice,
(ii) if mailed in accordance with the provisions of this paragraph, two (2)
business days after the date placed in the United States mail, (iii) if mailed
other than in accordance with the provisions of this paragraph or mailed from
outside the United States, upon the date of delivery to the address of the
person to receive such notice, or (iv) if given by facsimile, when sent. Notices
shall be given at the following addresses:
If to the Company: Innovative Medical Services
0000 Xxxxxxxxx Xxx
Xx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
With a copy to: Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxx
Xx Xxxxx, XX 00000
If to Executive: Xxxxxx Xxxxx
0000 000xx XX
Xxxx Xxxx, Xx 00000
--------------------------
The addresses for delivery of notices may be changed by the relevant parties by
giving notice of such change in accordance with this paragraph.
9.2. Complete Agreement; Modifications. This Agreement and written
agreements, if any, entered into concurrently herewith (i) constitute the
parties' entire agreement, including all terms, conditions, definitions,
warranties, representations, and covenants, with respect to the subject matter
hereof, (ii) merge all prior discussions and negotiations between or among any
or all of them as to the subject matter hereof, and (iii) supersede and replace
all terms, conditions, definitions, warranties, representations, covenants,
agreements, promises and understandings, whether oral or written, with respect
to the subject matter hereof. This Agreement may not be amended, altered or
modified except by a writing signed by the party to be bound. With regard to
such amendments, alterations, or modifications, telecopied signatures shall be
effective as original signatures. Any amendment, alteration, or modification
requiring the signature of more than one party may be signed in counterparts.
9.3. Further Actions. Each party agrees to perform any further acts and
execute and deliver any further documents reasonably necessary to carry out the
provisions of this Agreement.
9.4. Assignment. No party may assign its rights under this Agreement
without the prior written consent of the other parties hereto.
9.5. Successors and Assigns. Except as explicitly provided herein to the
contrary, this Agreement shall be binding upon and inure to the benefit of the
parties, their respective successors and permitted assigns.
9.6. Severability. If any portion of this Agreement shall be held by a
court of competent jurisdiction to be invalid, void, or otherwise unenforceable,
the remaining provisions shall remain enforceable to the fullest extent
permitted by law if enforcement would not frustrate the overall intent of the
parties (as such intent is manifested by all provisions of the Agreement
including such invalid, void, or otherwise unenforceable portion).
9.7. Extension Not a Waiver. No delay or omission in the exercise of any
power, remedy, or right herein provided or otherwise available to any party
shall impair or affect the right of such party thereafter to exercise the same.
Any extension of time or other indulgence granted to a party hereunder shall not
otherwise alter or affect any power, remedy or right of any other party, or the
obligations of the party to whom such extension or indulgence is granted except
as specifically waived.
9.8. Time of Essence. Time is of the essence of each and every term,
condition, obligation and provision hereof.
9.9. No Third Party Beneficiaries. This Agreement and each and every
provision hereof is for the exclusive benefit of the parties hereto and not for
the benefit of any third party.
9.10. Attorneys' Fees. Should any litigation (including any proceedings in
a bankruptcy court) or arbitration be commenced between the parties hereto or
their representatives concerning any provision of this Agreement or the rights
and duties of any person or entity hereunder, the party or will bear their own
legal expenses and cost attributed to any action..
9.11. Headings. The headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular provision hereof.
9.12. References. A reference to a particular paragraph of this Agreement
shall be deemed to include references to all subordinate paragraphs, if any.
9.13. Counterparts. This Agreement may be signed in multiple counterparts
with the same force and effect as if all original signatures appeared on one
copy; and in the event this Agreement is signed in counterparts, each
counterpart shall be deemed an original and all of the counterparts shall be
deemed to be one agreement.
9.14. Applicable Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of California.
10. Severance Pay. Should the employee be terminated or terminate their
employment for any reason the severance pay will be calculated as follows: The
last six months pay divided by six paid for the length of the non-compete. All
benefits that were being paid by the company, health, dental, etc. will continue
as if the employee where still employed for the length of the non-compete.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
EXECUTIVE
By: /s/ XXXXXX X.XXXXX
------------------
Xxxxxx X. Xxxxx
INNOVATIVE MEDICAL SERVICES
By: /s/ XXXXXXX X. XXXXX
---------------------------
Xxxxxxx X. Xxxxx, President
ETIHH2O Acquisition Agreement Exhibit 5.1.H.2
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is made and
entered into as of August 1, 2000, by and among XXXXXX XXXXX (the
"Executive"), INNOVATIVE MEDICAL SERVICES, a California corporation (the
"Company") and ETI H2O Corporation., a soon to be incorporated in the state of
Nevada, with regard to the following:
A. The Company desires to employ Executive to act as President of the newly
formed company known as ETI H2O Corporation. (Nevada).
B. The Executive wishes to act as President of ETIH2O Corporation on behalf
of the Company.
NOW, THEREFORE, for valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs the Executive as Executive Vice
President, and the Executive accepts the duties described herein, and agrees to
discharge the same faithfully and in the best of his ability. The Executive
shall perform such other duties as shall be from time to time prescribed by the
board of directors of the Company or the chief executive officer. The Executive
shall devote his full business time and attention to the business and affairs of
the Company.
2. Term. The Company shall employ the Executive under the terms of this
Agreement on August 1, 2000 through July 31, 2002, subject to the terms of this
Agreement. The parties may, by mutual agreement, extend the term of this
Agreement beyond such date for additional periods of time as set forth in any
extension of this Agreement. However, the Company may terminate this Agreement
immediately upon written notice to Executive as set forth in Paragraph 4. If at
the end of the Term the Executive continues to be employed by the Company, then
the terms of this Agreement shall be deemed to have been renewed on a
month-to-month basis and shall remain in effect for as long as the Executive
continues to be so employed.
3. Compensation and Benefits. In consideration for the services to be
rendered by the Executive to the Company, the Company agrees to pay the
Executive the following compensation and benefits:
3.1 Salary. Employment package includes the following : The Company shall
pay the Executive a salary at the rate of Sixty Thousand Dollars ($60,000
.00) per year, due and payable bi-weekly, or as mutually agreed upon by the
Company and the Executive as follows:
3.1.1 Vesting of 25K share options upon employment.
3.1.2 Vesting of 25K share options and salary increase to 72k per year
upon production levels and sales of concentrate reaching 50
barrels per month.
3.1.3 Vesting of 25K share options and salary increase to 84k per year
upon production levels and sales of concentrate reaching 100
barrels per month
3.1.4 Vesting of 25K share options and salary increase to 96k per year
upon production levels and sales of concentrate reaching 150
barrels per month
3.1.5 Vesting of 25K share options upon production levels and sales
reaching 200 barrels per month
3.16. Vesting of 50K share options upon production levels and sales
reaching 1000 barrels per month
3.2. Withholding and Deductions. The Company shall withhold and/or deduct
from any and all salary or other payments, all taxes which may be required to be
deducted or withheld under any provision of law (including, but not limited to,
social security payments and income tax withholding) now in effect or which may
become effective any time during the term of this Agreement. All taxes based on
employment out of the State of Florida.
3.3.Executive Incentive Compensation. The Company agrees to evaluate
the performance of the Executive with regard to additional
compensation for superior performance within six months after the
commencement of the agreement. The Company shall consider the overall
performance of the Company in determining whether the Executive is
entitled to receive added compensation. The basis of granting such
added compensation will be to reward the Executive for outstanding
work and to provide an incentive for continued performance. Any
additional incentive compensation to be paid pursuant to this
Agreement, shall be made within the Company's discretion since such
added compensation would be affected by general and specific economic
conditions, changes in management policies and other considerations.
In the event incentive compensation is awarded, it shall be set forth
in a separate written addendum to this Agreement, signed by both
parties. As well as the following:
20k options will vest upon hiring and 20k options will vest every
six months for 4 additional time periods totaling 100k options.
This does not in any way exclude the Executive from any other
option bonuses that are received company wide.
3.4. Stock Options. The Executive shall be entitled to participate in an
incentive stock option or similar plan to be set forth in a separate written
agreement and approved by the compensation committee of the board of directors,
stockholders, if required by law, and on such terms and conditions as are
established by the Company in its complete discretion.
3.5. Benefits. The Company shall provide the Executive, at no cost to the
Executive, group health insurance for the Executive and group dental insurance
for the Executive.
3.6. Expense Reimbursement. The Company agrees to reimburse the Executive
for all ordinary and necessary expenses incurred by the Executive on behalf of
the Company, including entertainment, meals, and travel expenses. Any costs
incurred by the Executive for conventions, meetings, seminars, club dues and
special social entertainment expenses, shall be reimbursed provided the board of
directors of the Company approve such as outlined in the company's policy
manual.
3.7. Vacation. The Executive shall be entitled to 5 days of vacation in the
first year, accrued monthly. After three years of employment, Executive shall be
entitled to 15 days of vacation. Vacation days shall accrue pro rata each
calendar month beginning in December 1996. The parties agree that the Executive
shall take all vacation days during the calendar year earned, to the extent
practical, and agree that notwithstanding the failure to use vacation days in a
calendar year, not more than [thirty (30)] vacation days shall be carried
forward into any calendar year from the previous year or years. Once this
maximum is reached, all further accruals will cease. Vacation accruals will
recommence after Executive has taken vacation and the accrued hours have dropped
below the [30] day maximum.
4. Termination.
4.1. Employer Right to Terminate Employment. Executive's employment shall
terminate one (1) year from the commencement date of this Agreement as set forth
in Paragraph 2, above. In addition, upon written notice to the Executive (except
in the case of death of the Executive, in which event termination shall
automatically occur at the date of death), the Agreement may be terminated
immediately for any of the following grounds as determined in the sole
discretion of the Company:
4.1.1. Willful breach or habitual neglect or inability (except where
such inability is due to Disability or death) to perform the Executive's
duties hereunder;
4.1.2. Malfeasance or misfeasance in the performance of the
Executive's duties hereunder;
4.1.3. Immoral or illegal conduct;
4.1.4. Disability or death;
4.2. Termination by the Executive. The Executive may terminate his
employment hereunder prior to the date it would otherwise terminate under this
Agreement by delivering written notice to the Company six (6) months in advance
of the date such termination is to take effect.
5. Post-Termination Payments and Benefits.
5.1. Salary and Benefits.
5.1.1. In the event the employment of the Executive is terminated
under Paragraphs 4.1.1., 4.1.2., 4.1.3., or 4.1.4., the Company shall pay
the Executive the salary due him at the end of the month in which such
termination occurs, plus any pay in lieu of vacation accrued or carried
forward to, but not taken as of the date of termination with the exception
of the options. All options will be due on the scheduled timetable as long
as the employee is not terminated for cause.
5.2. Death. In the event the employment of the Executive is terminated as a
result of death, the Company shall pay to Executive's designated beneficiary,
payments equal to the amount of salary otherwise payable under Paragraph 3.1 for
a period of six (6) months following the date of death of the Executive. In
addition all options will be due to the estate or designated heir on the
scheduled time table as prescribed in this agreement.
6. Dispute Resolution.
6.1. The parties agree that if a dispute arises concerning any provision of
this Agreement, the alleged breach thereof, or the rights and duties of any
person or entity hereunder, the parties agree first to try in good faith to
settle the dispute. In the event that the parties cannot settle the dispute, any
party shall have the right to submit the dispute, to binding arbitration. Such
arbitration shall be held before a single arbitrator agreed upon by the parties
to the dispute, and if they cannot agree, any party may petition a California
Superior Court in San Diego County for appointment of an arbitrator. The
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, subject to any contrary and/or
additional terms of this Paragraph 6 and Paragraph 9.10.
6.2. The rules of evidence shall not apply to any arbitration under this
Paragraph 6. However, in all other respects, the arbitrator shall follow
applicable law.
6.3. Subject to Paragraph 9.10, each party shall bear their own costs and
expenses of arbitration.
6.4. The decision of the arbitrator shall be binding, enforceable, and may
be entered in any court having jurisdiction thereof.
6.5. Payment of any and all amounts granted by an arbitrator
hereunder shall be made within fifteen (15) days following the date of the
decision, and thereafter, shall bear interest at the then current maximum legal
rate per month until paid in full.
6.6. The arbitrator shall not have the power to award damages to the
Executive for emotional distress or pain and suffering or to award consequential
or punitive damages, but shall be empowered to award the Executive only direct
economic damages.
6.7. Any arbitration conducted under this Paragraph 6 shall be conducted in
a confidential private proceeding and the fact of the proceeding and the
substance of the matters addressed in the proceeding shall be kept confidential
by the parties, provided that disclosure may be made by any party upon notice to
the other party or parties in the event that such disclosure is required by
applicable law or regulation or legal process.
7. Proprietary Information.
7.1. Unfair Competition. Because of his employment by the Company,
Executive will have access to trade secrets and confidential information about
the Company, its products, its customers and its methods of doing business. In
consideration of his access to this information, Executive agrees that for a
period of five (5) years after termination of his employment, he will not,
directly or indirectly compete with Company in the field of pharmaceutical water
filtration sales in the USA.
7.1.1. Competition. Executive understands and agrees that direct
competition means the design, development, production, promotion or sale of
products or services competitive with those of the Company. Indirect
competition means employment by any competitor or third party providing
products competing with the Company's products, for whom Executive will
perform the same or similar function as he will perform for the Company.
7.1.2. Additional Trade Secrets. In the course of his employment,
Executive will have access to confidential records and data pertaining to
the Company's customers and the relationship between these customers and
the Company. Such information is considered secret and is disclosed to
Executive in confidence. During his employment by the Company and for five
(5) years after termination of that employment, Executive shall not
directly or indirectly disclose or use any such information except as
required in the course of his employment by the Company. In addition,
during the five (5) years after termination of his employment, Executive
shall not induce or attempt to induce any account executive of the Company
to discontinue representing the Company for purpose of representing any
competitor of the Company.
8. Return of Documents. The Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments or other materials used and/or
developed by the Executive during the term of this Agreement are solely the
property of the Company and the Executive has no right, title or interest
therein. The Executive hereby further acknowledges that all such items
constitute confidential trade secrets the wrongful use or disclosure of which to
the public or competitors of the Company would materially adversely affect the
business and prospects of the Company. Upon termination of employment of the
Executive, the Executive or the Executive's representatives shall promptly
deliver possession of all such property to the Company in good condition.
9. General Provisions.
9.1. Notices. Unless otherwise specifically permitted by this Agreement,
all notices or other communications required or permitted under this Agreement
shall be in writing, and shall be personally delivered or sent by registered or
certified mail, postage prepaid return receipt requested, or sent by facsimile,
provided that the facsimile cover sheet contains a notification of the date and
time of transmission, and shall be deemed received: (i) if personally delivered,
upon the date of delivery to the address of the person to receive such notice,
(ii) if mailed in accordance with the provisions of this paragraph, two (2)
business days after the date placed in the United States mail, (iii) if mailed
other than in accordance with the provisions of this paragraph or mailed from
outside the United States, upon the date of delivery to the address of the
person to receive such notice, or (iv) if given by facsimile, when sent. Notices
shall be given at the following addresses:
If to the Company: Innovative Medical Services
0000 Xxxxxxxxx Xxx
Xx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
With a copy to: Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxx
Xx Xxxxx, XX 00000
If to Executive: Xxxxxx Xxxxx
0000 000xx XX
Xxxx Xxxx, Xx 00000
--------------------------
The addresses for delivery of notices may be changed by the relevant parties by
giving notice of such change in accordance with this paragraph.
9.2. Complete Agreement; Modifications. This Agreement and written
agreements, if any, entered into concurrently herewith (i) constitute the
parties' entire agreement, including all terms, conditions, definitions,
warranties, representations, and covenants, with respect to the subject matter
hereof, (ii) merge all prior discussions and negotiations between or among any
or all of them as to the subject matter hereof, and (iii) supersede and replace
all terms, conditions, definitions, warranties, representations, covenants,
agreements, promises and understandings, whether oral or written, with respect
to the subject matter hereof. This Agreement may not be amended, altered or
modified except by a writing signed by the party to be bound. With regard to
such amendments, alterations, or modifications, telecopied signatures shall be
effective as original signatures. Any amendment, alteration, or modification
requiring the signature of more than one party may be signed in counterparts.
9.3. Further Actions. Each party agrees to perform any further acts and
execute and deliver any further documents reasonably necessary to carry out the
provisions of this Agreement.
9.4. Assignment. No party may assign its rights under this Agreement
without the prior written consent of the other parties hereto.
9.5. Successors and Assigns. Except as explicitly provided herein to the
contrary, this Agreement shall be binding upon and inure to the benefit of the
parties, their respective successors and permitted assigns.
9.6. Severability. If any portion of this Agreement shall be held by a
court of competent jurisdiction to be invalid, void, or otherwise unenforceable,
the remaining provisions shall remain enforceable to the fullest extent
permitted by law if enforcement would not frustrate the overall intent of the
parties (as such intent is manifested by all provisions of the Agreement
including such invalid, void, or otherwise unenforceable portion).
9.7. Extension Not a Waiver. No delay or omission in the exercise of any
power, remedy, or right herein provided or otherwise available to any party
shall impair or affect the right of such party thereafter to exercise the same.
Any extension of time or other indulgence granted to a party hereunder shall not
otherwise alter or affect any power, remedy or right of any other party, or the
obligations of the party to whom such extension or indulgence is granted except
as specifically waived.
9.8. Time of Essence. Time is of the essence of each and every term,
condition, obligation and provision hereof.
9.9. No Third Party Beneficiaries. This Agreement and each and every
provision hereof is for the exclusive benefit of the parties hereto and not for
the benefit of any third party.
9.10. Attorneys' Fees. Should any litigation (including any proceedings in
a bankruptcy court) or arbitration be commenced between the parties hereto or
their representatives concerning any provision of this Agreement or the rights
and duties of any person or entity hereunder, the party or will bear their own
legal expenses and cost attributed to any action..
9.11. Headings. The headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular provision hereof.
9.12. References. A reference to a particular paragraph of this Agreement
shall be deemed to include references to all subordinate paragraphs, if any.
9.13. Counterparts. This Agreement may be signed in multiple counterparts
with the same force and effect as if all original signatures appeared on one
copy; and in the event this Agreement is signed in counterparts, each
counterpart shall be deemed an original and all of the counterparts shall be
deemed to be one agreement.
9.14. Applicable Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of California.
10. Severance Pay. Should the employee be terminated or terminate their
employment for any reason the severance pay will be calculated as follows: The
last six months pay divided by six paid for the length of the non-compete. All
benefits that were being paid by the company, health, dental, etc. will continue
as if the employee where still employed for the length of the non-compete.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
EXECUTIVE
By: /s/ XXXXXX XXXXX
----------------
Xxxxxx Xxxxx
INNOVATIVE MEDICAL SERVICES
By: /s/ XXXXXXX X. XXXXX
---------------------------
Xxxxxxx X. Xxxxx, President
