AGREEMENT AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER
This Agreement and Plan of Merger
("Agreement"), is made and
entered into this 12th day of December 2008, by and among
INTERNATIONAL TECHNOLOGY SYSTEMS, INC., a Nevada corporation ("ITSI"),
IMMUNOTECH LABORATORIES, INC., a
California corporation ("IMMUNOTECH”). ITSI, and IMMUNOTECH are hereinafter sometimes collectively
referred to as the "Parties."
RECITALS:
A. ITSI desires to acquire all of
the issued and outstanding capital stock of IMMUNOTECH, through a merger
with and into ITSI (the
"Merger"), with ITSI as the surviving
corporation of the Merger.
B. It
is the intention of the parties hereto that: (i) the Merger shall qualify as a
tax free reorganization under Section 368 of the Internal Revenue Code of 1986,
as amended, and related sections thereunder; and the parties intend this
Agreement to qualify as a "plan of reorganization" within the meaning of
Treasury Regulation Sections 1.368-2(g) and 1.368-3(a), and (ii) the Merger
shall qualify as a transaction in securities exempt from registration or
qualification under the Securities Act of 1933, as amended, and under the
applicable securities laws of each state or jurisdiction where the ITSI Security
Holders reside.
C. The board of directors of each of
ITSI, and
IMMUNOTECH and the
ITSI Security Holders each
deem it to be in the best interests of ITSI and IMMUNOTECH and their respective shareholders to
consummate the Merger, as a result of which ITSI shall acquire all of the issued and
outstanding capital stock of IMMUNOTECH.
NOW, THEREFORE, in consideration
of the mutual covenants, agreements, representations and warranties contained in
this Agreement, the parties hereto agree as follows:
CERTAIN
DEFINITIONS
As used
in this Agreement, the following terms shall have the meanings set forth
below:
"Applicable Law" means any
domestic or foreign law, statute, regulation, rule, policy, guideline or
ordinance applicable to the businesses of the Parties, the Merger and/or the
Parties.
"Articles of Merger" shall mean
the certificate of merger of ITSI with and into IMMUNOTECH pursuant to the
NRS.
"Business Day" shall mean any
day, excluding Saturday or Sunday or any other day on which national banks
located in California shall be closed for business.
"Dollar" and "$" means lawful money of the
United States of America.
"ITSI
Common Stock" shall mean the
shares of common stock of ITSI, $.001 par value per
share.
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"ITSI
Fully~Diluted Common Stock" means, as at the time in question, the maximum
number shares of ITSI Common Stock that are issued and outstanding, after giving effect to: (a)
the issuance of all of the Merger Shares; and (b) the issuance of any other
shares of ITSI Common Stock that are issuable upon conversion of any ITSI notes
or shares of ITSI Preferred Stock, or upon the exercise of options, warrants or
other rights to purchase shares of ITSI capital stock, but only to the extent
that such securities are (i) outstanding as at the Effective Time of the Merger,
or (ii) issued subsequent to the Effective Time of the Merger.
"ITSI
Preferred Stock" means the shares of preferred stock of ITSI, $.001 par value
per share.
"Effective
Time" shall mean the date upon which the Merger of ITSI into IMMUNOTECH shall be
consummated pursuant to the filing of the Articles of Merger with the Secretary
of State of Nevada.
"Exchange
Act" means the Securities Exchange Act of 1934, as amended.
"GAAP"
means generally accepted accounting principles in the United States of America
as promulgated by the American Institute of Certified Public Accountants and the
Financiall Accounting Standards Board or any successor Institutes concerning the
treatment of any accounting matter.
"Investor
Questionnaire" means those certain documents provided to ITSI by the IMMUNOTECH
Security Holders establishing accredited investor status as defined in Rule 501
of Regulation D.
"Knowledge"
means the knowledge after reasonable inquiry.
"Lien"
means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, encumbrance or other adverse claim of any kind in
respect of such property or asset.
"Material
Adverse Effect" with respect to any entity or group of entities means any event,
change or effect that has or would have a materially adverse effect on the
financial condition, business or results of operations of such entity or group
of entities, taken as a consolidated whole.
"Merger
Shares" shall mean that number of shares of ITSI Common Stock or Preferred Stock
to be issued to the IMMUNOTECH Security Holders on the Closing Date and as at
the Effective Time of the Merger.
"NRS"
means the Nevada Revised Statutes.
"Person"
means any individual, corporation, partnership, trust or unincorporated
organization or a government or any agency or political subdivision
thereof.
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"IMMUNOTECH
Common Stock" shall mean the shares of common stock of IMMUNOTECH, $.001 par
value per share.
"IMMUNOTECH
Fully-Diluted Common Stock" means the maximum number shares of IMMUNOTECH Common
Stock that are issued and outstanding at the Effective Time of the Merger, plus
all additional shares of IMMUNOTECH Common Stock that would be issuable at the
Effective Time of the Merger upon the exercise of all outstanding options,
warrants or other rights to purchase shares of IMMUNOTECH capital
stock.
"IMMUNOTECH
Principal Executive Officer" shall mean the Chairman or anyone of the Board of
Directors, the President and Chief Executive Officer, respectively, of
IMMUNOTECH.
"IMMUNOTECH
Securities" means, as at the date in question, all of the issued and outstanding
equity securities of IMMUNOTECH, consisting of the IMMUNOTECH Common Stock and
(if applicable) any IMMUNOTECH Preferred Stock.
"IMMUNOTECH
Security Holders" means the collective reference to all of the record holders of
the IMMUNOTECH Securities at the Effective Time of the Merger, including the
IMMUNOTECH Principal Executive Officers.
"Stock
Purchase Agreement" means that certain agreement by and between ITSI and the
IMMUNOTECH Security Holders providing for the acquisition by the ITSI Security
Holders of the Immunotech Common Stock.
"Surviving
Entity" shall mean ITSI as the surviving entity in the Merger as provided in
Section 1.1.
"Tax"
(and, with correlative meaning, "Taxes" and "Taxable") means:
(i) any
income, alternative or add-on minimum tax, gross receipts tax, sales tax, use
tax, ad valorem tax, transfer tax, franchise tax, profits tax, license tax,
withholding tax, payroll tax, employment tax, excise tax, severance tax, stamp
tax, occupation tax, property tax, environmental or windfall profit tax, custom,
duty or other tax, impost, levy, governmental fee or other like assessment or
charge of any kind whatsoever together with any interest or any penalty,
addition to tax or additional amount imposed with respect thereto by any
governmental or Tax authority responsible for the imposition of any such tax
(domestic or foreign), and
(ii) any responsibility for the payment
of any amounts of the type described in clause (i) above as a
result of being a member of an affiliated, consolidated, combined or unitary
group for any Taxable period, and
(iii) any
responsibility for the payment of any amounts of the type described in clauses
(i) or (ii) above as a result of any express or implied obligation to indemnify
any other person.
"Tax
Return" means any return, declaration,· form, claim for refund or information
return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
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THE
MERGER
SECTION 1. THE MERGER:
EFFECTIVE TIME.
1.1 The Merger. At the
Effective Time and subject to and upon the terms and conditions of this
Agreement, Immunotech shall merge with and into ITSI in accordance with the
provisions of the NRS, the separate corporate existence of Immunotech shall
cease and ITSI shall continue as the Surviving Entity and change its name to
IMMUNOTECH LABORATORIES, INC. The Effective Time of the Merger shall occur upon
the filing of the Articles of Merger executed in accordance with the applicable
provisions of the NRS with the Secretary of State of Nevada, or at such later
time as may be agreed to by ITSI and IMMUNOTECH and specified in the Certificate
of Merger subject to the satisfaction or waiver of each of the conditions set
forth in Section 4. The date on which the Effective Time occurs is referred to
as the "Effective Date." Provided that this Agreement has not been terminated,
the Parties will cause the Articles of Merger to be filed on the Closing Date,
as hereafter defined in Section 1.3.
(a) Upon
the terms and subject to the conditions set forth in this Agreement and in
accordance with the NRS, at the Effective Time, all IMMUNOTECH Securities shall
be converted into the right to receive the Merger Shares existing and to be
issued by ITSI.
(b) Exchange Agent. The
Law Offices of Xxxxxx X. Xxxxxxx, shall act as the exchange agent (the "Exchange
Agent") for the purpose of exchanging IMMUNOTECH Securities for the Merger
Shares. At or within thirty (30) days after the Effective Date, ITSI shall
deliver to the Exchange Agent certificates evidencing the Merger Shares. The
Merger Shares issued at the Effective Time of the Merger shall be registered in
the names of the IMMUNOTECH Security Holders.
1.2 Conversion of
Securities.
(a) Conversion of IMMUNOTECH
Securities. At the Effective Time, by virtue of the Merger and without
any action on the part of ITSI, IMMUNOTECH or the holders of any of their
respective securities:
(i) Each
one of the 100,000 shares of IMMUNOTECH Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into, and represent
the right to receive, ITSI Merger Shares (the "Conversion Ratio"), as more fully
indicated in Schedule A attached hereto.
(ii) All
IMMUNOTECH Securities shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such IMMUNOTECH Securities shall cease to have any rights with
respect thereto, except the right to receive the Merger Shares to be issued
pursuant to this Section 1.2(a) (fractional shares may be issued rounded to the
hundredth decimal point) upon the surrender of such certificate in accordance
with Section 1.8, without interest.
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(iii) Each IMMUNOTECH Share
that immediately prior to the Effective Time is held by IMMUNOTECH as a treasury
share shall be cancelled and retired without payment of any consideration
therefore and without any conversion thereof into a right to receive the Merger
Shares.
1.3 Closing.
The
closing of the Merger (the "Closing") will take place at the offices of Xxxxxx
X. Xxxxxxx Esq., counsel to Immunotech, at their office in Torrance, California,
within one (1) Business Day following the satisfaction or waiver of the
conditions precedent set forth in Section 4 or at such other date as ITSI, and
IMMUNOTECH shall agree (the "Closing Date"), but in no event shall the Closing
Date occur later than December 12,2008
1.4 Effect Of The
Merger.
At the
Effective Time, all the properties, rights, privileges, powers and franchises of
IMMUNOTECH and ITSI shall vest in the Surviving Entity, and all debts,
liabilities and duties of IMMUNOTECH and ITSI shall become the debts,
liabilities and duties of the Surviving Entity.
1.5 Certificate Of Incorporation
and Bylaws; Directors And Officers. Prior to the Effective Time of the
Merger:
(a) The
Certificate of Incorporation of ITSI are made a part hereof shall be the
Certificate of Incorporation of ITSI following the Merger. The Bylaws of ITSI
are made a part hereof shall be the Bylaws of ITSI following the
Merger.
(b) The
initial board of directors of IMMUNOTECH subsequent to the Merger shall consist
of those individuals whose names shall be provided to ITSI's and ITSI’s current
board of directors prior to the Closing, and whom the current directors of ITSI
and ITSI will appoint at the time when the current directors of ITSI will
simultaneously resign. Such initial members of the board of directors shall
serve until the earlier of their death, resignation or removal or until the next
annual meeting of the stockholders of ITSI, when their respective successors are
duly appointed and qualified. The officers of ITSI subsequent to the Merger
shall be the current officers of IMMUNOTECH.
1.6 Further
Actions.
(a) After
closing and upon issuance of IMMUNOTECH (formerly ITSI) Common or Preferred
Stock to Security Holders IMMUNOTECH shall also issue such shares as is
registered in Schedule A.
(b) If,
at any time after the Effective Time, the Surviving Entity considers or
is
advised
that any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm (of record or
otherwise) in the Surviving Entity its right, title or interest in, to or under
any of the rights, properties, or assets of either IMMUNOTECH or ITSI, or
otherwise to carry out the intent and purposes of this Agreement, the officers
and directors of the Surviving Entity will be authorized to execute and deliver,
in the name and on behalf of each of IMMUNOTECH and ITSI, all such deeds, bills
of sale, assignments and assurances and to take and do, in the name and on
behalf of each of IMMUNOTECH and ITSI, all such other actions and things as the
Board of Directors of the Surviving Entity may determine to be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Entity or
otherwise to carry out the intent and purposes of this
Agreement.
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1.7 Restrictions On
Resale
(a) The Merger Shares.
The Merger Shares will not be registered under the Securities Act, or the
securities laws of any state, and cannot be transferred, hypothecated, sold or
otherwise disposed of until: (i) a registration statement with respect to such
securities is declared effective under the Securities Act, or (ii) ITSI receives
an opinion of counsel for the stockholder, reasonably satisfactory to counsel
for ITSI, that an exemption from the registration requirements of the Securities
Act is available.
The
certificates representing the Merger Shares to be issued on the Effective Date
pursuant to this Agreement shall contain a legend substantially as
follows:
"THE
SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH
RESPECT THERETO IS DECLARED EFFECTIVE UNDER SUCH ACT."
1.8 Exchange of
Certificates.
(a) After
the Effective Time and pursuant to a customary letter of transmittal or other
instructional form provided by the Exchange Agent to the IMMUNOTECH Security
Holders, the IMMUNOTECH Security Holders shall be required to surrender all
their IMMUNOTECH Securities to the Exchange Agent, and the IMMUNOTECH Security
Holders shall be entitled upon such surrender to receive in exchange therefor
certificates representing the proportional number of Merger Shares into which
the IMMUNOTECH Securities theretofore represented by the stock transfer forms so
surrendered shall have been exchanged pursuant to this Agreement. Until so
surrendered, each outstanding certificate, which, prior to the Effective Time,
represented IMMUNOTECH Securities, shall be deemed for all corporate purpose,
subject to the further provisions of this Article I, to evidence the ownership
of the number of whole Merger Shares for which such IMMUNOTECH Securities have
been so exchanged. No dividend payable to holders of Merger Shares of record as
of any Date subsequent to the Effective Time shall be paid to the owner of any
certificate which, prior to the Effective Time, represented IMMUNOTECH
Securities, until such certificate or certificates representing all the relevant
IMMUNOTECH Securities, together with a stock transfer form, are surrendered as
provided in this Article I or pursuant to letters of transmittal or other
instructions with respect to lost certificates provided by the Exchange
Agent.
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(b) All
Merger Shares for which the IMMUNOTECH Securities shall have been exchanged
pursuant to this Article I shall be deemed to have been issued in full
satisfaction of all rights pertaining to the IMMUNOTECH Securities.
(c) On
the Effective Date, the stock transfer book of IMMUNOTECH shall be deemed to be
closed and no transfer of IMMUNOTECH Securities shall thereafter be recorded
thereon.
SECTION 2. REPRESENTATIONS
AND WARRANTIES OF IMMUNOTECH
IMMUNOTECH
hereby represents and warrants as follows:
2.1 Organization and Good
Standing: Ownership of Shares. IMMUNOTECH is a corporation duly organized
and validly existing under the laws of the State of California. There are no
outstanding subscriptions, rights, options, warrants or other agreements
obligating IMMUNOTECH to issue, sell or transfer any stock or other securities
of IMMUNOTECH.
2.2 Corporate Authority.
IMMUNOTECH has the corporate power to enter into this Agreement and to
perform its respective obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transaction contemplated hereby have been
duly authorized by the Board of Directors of IMMUNOTECH. The execution and
performance of this Agreement will not constitute a material breach of any
agreement, indenture, mortgage, license or other instrument or document to which
IMMUNOTECH is a party and will not violate any judgment, decree, order, writ,
rule, statute, or regulation applicable to IMMUNOTECH or its properties. The
execution and performance of this Agreement will not violate or conflict with
any provision of the respective Articles of Incorporation or bylaws of
IMMUNOTECH.
2.3 Ownership of Shares.
The IMMUNOTECH Security Holders are the owners of record and beneficially
of all of the issued and outstanding restricted shares of IMMUNOTECH Common
Stock, options and warrants to purchase shares of IMMUNOTECH Common Stock, which
IMMUNOTECH Securities, to the best of IMMUNOTECH's knowledge, are owned free and
clear of all rights, claims, liens and encumbrances, and have not been sold,
pledged, assigned or otherwise transferred except pursuant to this
Agreement.
2.4 Financial Statements, Books
and Records. Schedule 2.4 will consist of the unaudited financial
Statements (balance sheet, income Statement, notes) of IMMUNOTECH as of the
Closing Date (the "Financial Statements"). The Financial Statements fairly
represent the financial position of IMMUNOTECH as at such Dates and the results
of their operations for the periods then ended. The books of account and other
financial records of IMMUNOTECH are in all respects complete and correct in all
material respects and are maintained in accordance with good business and
accountings practices, and are capable of being audited.
2.5 Access to Records.
The corporate financial records, minute books and other documents and
records of IMMUNOTECH have been made available to ITSI prior to the Closing
hereof.
2.6 No Material Adverse Changes.
Between the execution and Closing of this Agreement, there shall not have
been:
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(a)
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any
material adverse change in the financial position of IMMUNOTECH except
changes arising in the ordinary course of business, which changes will in
no event materially and adversely affect the financial position of
IMMUNOTECH;
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(b)
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any
damage, destruction or loss materially affecting the assets, prospective
business, operations or condition (financial or otherwise) of IMMUNOTECH
whether or not covered by
insurance;
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(c)
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any
declaration, setting aside or payment of any dividend or distribution with
respect to any redemption or repurchase of IMMUNOTECH capital
stock;
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(d)
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any
sale of an asset (other than in the ordinary course of business) or any
mortgage or pledge by IMMUNOTECH of any properties or assets, other than
as set forth in Sections 2.13 or 2.14 below;
or
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(e)
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adoption
of any pension, profit sharing, retirement, stock bonus, stock option or
similar plan or arrangement.
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2.7 Taxes. IMMUNOTECH as
of the Closing Date, has filed all material tax, governmental and/or related
forms and reports (or extensions thereof) due or required to be filed and has
(or will have) paid or made adequate provisions for all taxes or assessments
which had become due as of the Closing Date and there are no deficiency notices
outstanding.
2.8 Compliance with Laws.
IMMUNOTECH has complied with all federal, State, county and local laws,
ordinances, regulations, inspections, orders, judgments, injunctions, awards or
decrees applicable to it or its business which, if not complied with, would
materially and adversely affect the business of IMMUNOTECH.
2.9 No Breach. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not:
(a)
violate any provision of the Articles of Incorporation or Bylaws of
IMMUNOTECH;
(b)
violate, conflict with or result in the breach of any of the Terms of, result in
a material modification of, otherwise give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time, or both
constitute) a default under any contract or other agreement to which IMMUNOTECH
is a party or by or to which it or any of its assets or properties may be bound
or subject;
(c)
violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon,
IMMUNOTECH or upon the properties or business of IMMUNOTECH; or
(d) violate
any statute, law or regulation of any jurisdiction applicable to the
transactions contemplated herein which could have a materially adverse effect on
the business or operations of IMMUNOTECH.
2.10
Actions and
Proceedings. IMMUNOTECH is not a party to any material pending litigation
or, to its knowledge, any governmental investigation or proceeding not reflected
in the IMMUNOTECH Financial Statements, and to its best knowledge, no material
litigation, claims, assessments or non-governmental proceedings are threatened
against IMMUNOTECH.
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2.11
Agreements.
There are no material contract or arrangement to which IMMUNOTECH is a
party or by or to which it or its assets, properties or business are bound or
subject, whether written or oral.
2.12
Brokers or Finders.
No broker's or finder's fee will be payable by IMMUNOTECH in connection
with the transactions contemplated by this Agreement, nor will any such fee be
incurred as a result of any actions by IMMUNOTECH or any of its
Shareholders.
2.13
Real Estate.
IMMUNOTECH owns no real property nor is a party to any leasehold
agreement.
2.14
Tangible Assets.
IMMUNOTECH has full title and interest in all machinery, equipment,
furniture, leasehold improvements, fixtures, projects, owned or leased by
IMMUNOTECH, any related capitalized items or other tangible property material to
the business of IMMUNOTECH (the "Tangible Assets"). IMMUNOTECH holds all rights,
title and interest in all the Tangible Assets owned by it on the Balance Sheet
or acquired by it after the Date on the Balance Sheet free and clear of all
liens, pledges, mortgages, security interests, conditional sales contracts or
any other encumbrances. All of the Tangible Assets are in good operating
condition and repair and are usable in the ordinary course of business of
IMMUNOTECH and conform to all applicable laws, ordinances and government orders,
rules and regulations relating to their construction and operation.
2.15
Liabilities.
IMMUNOTECH did not have any direct or indirect indebtedness, liability,
claim, loss, damage, deficiency, obligation or responsibility, known or unknown,
fixed or unfixed, liquidated or unliquidated, secured or unsecured, accrued or
absolute contingent or otherwise, including, without limitation, any liability
on account of taxes, any governmental charge or lawsuit (all of the foregoing
collectively defined to as "Liabilities"), which are not fully, fairly and
adequately reflected on the Financial Statement except for specific Liabilities
set forth therein. As of the Date of Closing, IMMUNOTECH will not have any
further Liabilities, other than Liabilities fully and adequately reflected on
the Financial Statements except for Liabilities incurred in the ordinary course
of business. There is no circumstance, condition, event or arrangement which may
hereafter give rise to any Liabilities not in the ordinary course of
business.
2.16
Operations of
IMMUNOTECH. Between the execution and Closing of this Agreement,
IMMUNOTECH shall not have:
(a) incurred
any indebtedness or borrowed money;
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(b)
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declared
or paid any dividend or declared or made any distribution of any kind to
any shareholder, or made any direct or indirect redemption, retirement,
purchase or other acquisition of any shares in its capital
stock;
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(c)
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made
any loan or advance to any shareholder, officer, director, employee,
consultant, agent Of
other representative or made any other loan or advance otherwise
than in the ordinary course of
business;
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(d)
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except
in the ordinary course of business, incurred or assumed any indebtedness
or liability (whether or not currently due and
payable);
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(e) disposed
of any assets of IMMUNOTECH except in the ordinary course of
business;
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(f)
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materially
increased the annual level of compensation of any executive employee of
IMMUNOTECH;
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(g)
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increased,
terminated, amended or otherwise modified any plan for the benefit of
employees of IMMUNOTECH;
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(h) issued
any equity securities or rights to acquire such equity securities;
or
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(i)
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except
in the ordinary course of business, entered into or modified any contract,
agreement or transaction.
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2.17
Capitalization.
The authorized capital stock of IMMUNOTECH consists of 100,000 shares of
IMMUNOTECH Common Stock, $.001 per share par value, of which (a) 100,000 shares
of IMMUNOTECH Common Stock is outstanding. IMMUNOTECH has not granted, issued or
agreed to grant, issue or make any warrants, options, subscription rights or any
other commitments of any character relating to the issued or unissued shares of
capital stock of IMMUNOTECH.
2.18
Full Disclosure.
No representation or warranty by IMMUNOTECH in this Agreement or in any
document or schedule to be delivered by them pursuant hereto, and no written
Statement, certificate or instrument furnished or to be furnished by IMMUNOTECH
pursuant hereto or in connection with the negotiation, execution or performance
of this Agreement contains or will contain any untrue Statement of a material
fact or omits or will omit to State any fact necessary to make any Statement
herein or therein not materially misleading or necessary to a complete and
correct presentation of all material aspects of the business of
IMMUNOTECH.
SECTION
3. REPRESENTATIONS AND WARRANTIES OF
ITSI
ITSI
hereby represents and warrants as to itself and ITSI as follows:
3.1 Organization and Good
Standing. ITSI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada. ITSI is a corporation duly
organized and validly existing under the laws of the State of Nevada. Each has
the corporate power to own its own property and to carry on its business as now
being conducted and is duly qualified to do business in any jurisdiction where
so required except where the failure to so qualify would have no material
negative impact.
3.2 Corporate Authority.
Each has the corporate power to enter into this Agreement and to perform
their respective obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by the Board of Directors of ITSI as required by Delaware law
and the directors and shareholders of ITSI as required by Delaware law. The
execution and performance of this Agreement will not constitute a material
breach of any agreement, indenture, mortgage, license or other instrument or
document to which ITSI is a party and will not violate any judgment, decree,
order, writ, rule, statute, or regulation applicable to ITSI or its properties.
The execution and performance of this Agreement will not violate or conflict
with any provision of the respective Articles of Incorporation or Bylaws of ITSI
or ITSI.
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3.3 Capitalization: Purchase of
ITSI Shares by IMMUNOTECH Security Holders: Initial
Financing and Merger
Shares.
(a) As
of the date of this Agreement, ITSI is authorized to issue 150,000,000 shares of
ITSI Common Stock, $.001 par value per share, and 50,000,000 shares of ITSI
Preferred A Stock, $.001 par value per share, of which approximately 55,566,022
shares of ITSI Common Stock and (ii) 6,000,000 shares of ITSI
Preferred A Stock are issued and outstanding. The holders of the ITSI Preferred
Stock, which has been designated as the Series A, have the right to One vote per
share on any matter properly before the shareholders for a vote. The voting
rights are subject to all splits and the holders of all shares of Preferred A
Stock shall be entitled to 10 shares of ITSI for each share of Preferred A Stock
surrendered for conversion.
(b) Immediately
prior to the Effective Time of the Merger, IMMUNOTECH shall provide to ITSI
completed and executed copies of the Investor Questionnaire and the Stock
Subscription Agreement.
(c) There
are no outstanding warrants, issued stock options, stock rights or
other
commitments
of any character relating to the issued or unissued shares of either Common
Stock or Preferred Stock of ITSI, other than those which are set forth in
Section 3.3(e) below.
(d) At
the Closing, the Merger Shares to be issued and delivered to the IMMUNOTECH
Security Holders hereunder will when so issued and delivered, constitute valid
and legally issued shares of ITSI Common Stock, fully paid and non-assessable.
The Merger Shares issuable to such IMMUNOTECH Security Holders shall represent
approximately 98% of the ITSI Fully~Diluted Common Stock as at the Effective
Time of the Merger.
3.4 Compliance with Laws.
ITSI and ITSI has complied with all federal, State, county and local
laws, ordinances, regulations, inspections, orders, judgments, injunctions,
awards or decrees applicable to it or its business, which, if not complied with,
would materially and adversely affect the business of ITSI or ITSI or the
trading market for the ITSI or ITSI Shares and specifically, and ITSI and ITSI
has complied with provisions for registration under the Securities Act of 1933
and all applicable blue sky laws in connection with its public stock offering
and there are no outstanding, pending or threatened stop orders or other actions
or investigations relating thereto.
3.5 Actions and Proceedings.
ITSI is not a party
to any material pending litigation or, to its knowledge, any governmental
proceedings that are threatened against ITSI, except as set forth on
Schedule
3.5 attached hereto
and made a part hereof.
3.6 Access to Records.
The corporate financial records, minute books, and other documents and
records of ITSI have been
made available to IMMUNOTECH prior to the Closing hereof.
3.7 No Breach. The
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not:
(a) violate any provision of the Articles
of Incorporation or Bylaws of ITSI;
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(b) violate,
conflict with or result in the breach of any of the terms of, result in a
material modification of, otherwise give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time or both constitute)
a default under, any contract or other agreement to which ITSI is a party or by or to
which it or any of its assets or properties may be bound or
subject;
(c) violate
any order, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body against, or binding upon, ITSI or upon the securities,
properties or business to ITSI;
or
(d) violate
any statute, law or regulation of any jurisdiction applicable to the
transactions contemplated herein.
3.8 Brokers or
Finders. No broker's or
finder's fee will be payable by ITSI in connection with the transactions
contemplated by this Agreement, nor will any such fee be incurred as a result of
any actions of ITSI.
3.9 Authority to Execute and
Perform Agreements. ITSI
has the full legal right and power and all authority and approval
required to enter into, execute and deliver this Agreement and to perform fully
its obligations hereunder. This Agreement has been duly executed and delivered
and is the valid and binding obligation of ITSI enforceable in accordance
with its Terms, except as may be limited by bankruptcy, moratorium, insolvency
or other similar laws generally affecting the enforcement of creditors' rights.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and the performance by ITSI of this Agreement, in
accordance with its respective Terms and conditions will not:
|
(a)
|
require
the approval or consent of any governmental or regulatory body or the
approval or consent of any other
person;
|
(b) conflict with or result in any breach
or violation of any of the Terms and conditions of, or constitute (or with any
notice or lapse of time or both would constitute) a default under, any
order, judgment or decree applicable to ITSI, or any instrument, contract
or other agreement to which ITSI is a party or by or to which ITSI is bound or
subject; or
(c) result
in the creation of any lien or other encumbrance on the assets or properties of
ITSI.
3.10
Full Disclosure.
No representation or warranty by ITSI in this Agreement or in any
document or schedule to be delivered by them pursuant hereto, and no written
Statement, certificate or instrument furnished or to be furnished by ITSI
pursuant hereto or in connection with the negotiation, execution or performance
of this Agreement contains or will contain any untrue Statement of a material
fact or omits or will omit to State any fact necessary to make any Statement
herein or therein not materially misleading or necessary to complete and correct
presentation of all material aspects of the business of ITSI.
SECTION 4. CONDITIONS
PRECEDENT
4.1 Conditions Precedent to the
Obligation of IMMUNOTECH. All obligations of IMMUNOTECH and the
IMMUNOTECH Security Holders under this Agreement are subject to the fulfillment,
prior to or as of the Closing Date, as indicated below, of each of the following
conditions (anyone of which may be waived at Closing by
IMMUNOTECH):
page 12
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(a) The
representations and warranties by or on behalf of ITSI and ITSI contained in
this Agreement or in any certificate or document delivered pursuant to the
provisions hereof shall be true in all material respects at and as of Closing
Date as though such representations and warranties were made at and as of such
time.
(b) ITSI
and ITSI shall have performed and complied in all material respects, with all
covenants, agreements, and conditions set forth in, and shall have executed and
delivered all documents required by this Agreement to be performed or complied
with or executed and delivered by them prior to or at the Closing.
(c) On
the Closing Date, an executive officer of ITSI shall have delivered to
IMMUNOTECH a certificate, duly executed by such Person and certifying, that to
the best of such Person's knowledge and belief, the representations and
warranties of ITSI set forth in this Agreement are true and correct in all
material respects.
(d) On
or before the Closing, the Board of Directors and the shareholders of ITSI and
ITSI shall have approved, in accordance with applicable law, the execution,
delivery and performance of this Agreement and the consummation of the
transaction contemplated herein and authorized all of the necessary and proper
action to enable ITSI to comply with the Terms of the Agreement
(e) The
Merger shall be permitted by applicable law and ITSI shall have sufficient
shares of ITSI Common Stock authorized to complete the Merger.
(f) At
the Closing, all instruments and documents delivered to IMMUNOTECH and
the
Shareholders
pursuant to provisions hereof shall be reasonably satisfactory to legal counsel
for IMMUNOTECH.
(g) The
Merger Shares to be issued to the Shareholders of IMMUNOTECH at Closing will be
validly issued, non-assessable and fully paid under the NRS and will be issued
in a non-public offering and exempt merger transaction in Compliance with all
federal and State securities laws, bearing a restrictive legend, as is more
fully set forth herein.
4.2 Conditions Precedent to the
Obligations of ITSI and ITSI. All obligations of ITSI and ITSI under this
Agreement are subject to the fulfillment, prior to or at Closing, of each of the
following conditions (anyone of which may be waived at Closing by ITSI and
ITSI):
(a) The
representations and warranties by IMMUNOTECH contained in this Agreement or in
any certificate or document delivered pursuant to the provisions hereof shall be
true in all material respects at and as of the Closing as though such
representations and warranties were made at and as of such time;
(b) IMMUNOTECH
and the IMMUNOTECH Security Holders shall have performed and complied with, in
all material respects, with all covenants, agreements, and conditions set forth
in, and shall have executed and delivered all documents required by this
Agreement to be performed or complied or executed and delivered by them prior to
or at the Closing;
page 13
of 19
(c) On
the Closing Date, one of the IMMUNOTECH Principal Executive Officers shall have
delivered to ITSI a certificate, duly executed by such Person and certifying,
that to the best of such Person's knowledge and belief, the representations and
warranties of IMMUNOTECH set forth in this Agreement are true and correct in all
material respects.
(d) The
holders of a majority of the issued and outstanding shares of IMMUNOTECH Common
Stock shall have approved, ratified and confirmed this Agreement, the Merger and
all of the transactions contemplated hereby, all in accordance with applicable
Nevada law.
SECTION 5.
COVENANTS
5.1 Corporate Examinations and
Investigations. Prior to the Closing Date, the parties acknowledge that
they have been entitled, through their employees and representatives, to make
such investigation of the assets, properties, business and operations, books,
records and financial condition of the other as they each may reasonably
require. No investigations, by a party hereto shall, however, diminish or waive
any of the representations, warranties, covenants or agreements of the party
under this Agreement.
5.2 Further Assurances.
The parties shall execute such documents and other papers and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby. Each such party
shall use its best efforts to fulfill or obtain the fulfillment of the
conditions to the Closing, including, without limitation, the execution and
delivery of any documents or other papers, the execution and delivery of which
are necessary or appropriate to the Closing.
5.3 Confidentiality. In
the event the transactions contemplated by this Agreement are not consummated,
ITSI, and IMMUNOTECH and the respective parties Principal Executive Officers
agree to keep confidential any information disclosed to each other in connection
therewith for a period of three (3) years from the Date hereof; provided,
however, such obligation shall not apply to information which:
(i) at
the time of the disclosure was public knowledge;
|
(ii)
|
is
required to be disclosed publicly pursuant to any applicable Federal or
State securities laws;
|
|
(iii)
|
after
the time of disclosure becomes public knowledge (except due to the action
of the receiving party);
|
(iv) the
receiving party had within its possession at the time of disclosure;
or
(v) is
ordered disclosed by a Court of proper jurisdiction.
5.4 Stock Certificates.
Within thirty (30) days of the Closing or a time frame as determined by
SEC regulatory requirements for filings etc., the ITSI Security Holders shall
have delivered the certificates representing the ITSI Securities duly endorsed
(or with executed stock powers) so as to make IMMUNOTECH the sole owner thereof.
Further, within thirty (30) days of such Closing, ITSI shall issue to the
IMMUNOTECH Security Holders the Merger Shares.
page 14
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5.5 Filing of Certificate of
Merger. The Articles of Merger shall have been filed in the office of the
Secretary of State for the State of Nevada.
5.6 Board of Directors. A
list of the initial board of directors of IMMUNOTECH subsequent to the Merger
shall be provided by IMMUNOTECH prior to the Closing. Such initial members of
the board of directors shall serve until the earlier of their death, resignation
or removal or until the next annual meeting of the stockholders of IMMUNOTECH,
when their respective successors are duly appointed and qualified. The officers
of IMMUNOTECH subsequent to the Merger shall be the current officers of
IMMUNOTECH.
5.7 Indemnification of Officers
and Directors. It is the intention of the Parties that ITSI and
IMMUNOTECH shall indemnify its officers and directors to the fullest extent
permitted by law, as applicable. In such connection, the Parties agree not to
amend the Certificates of incorporation or Bylaws of either ITSI or IMMUNOTECH
if such amendment shall have the effect of reducing, terminating or otherwise
adversely affecting the indemnification rights and privileges applicable to
officers and directors of each of ITSI and IMMUNOTECH, as the same are in effect
Immediately prior to the Effective Time of the Merger.
SECTION
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Notwithstanding
any right of either party to investigate the affairs of the other party and its
Shareholders, each party has the right to rely fully upon representations,
warranties, covenants and agreements of the other party and its Shareholders
contained in this Agreement or in any document delivered to one by the other or
any of their representatives, in connection with the transactions contemplated
by this Agreement. All such representations, warranties, covenants and
agreements shall survive the execution and delivery hereof and the closing
hereunder for three (3) years following the Closing.
SECTION 7. DOCUMENTS AT
CLOSING AND THE CLOSING
7.1 Documents at Closing
At the Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
(a) IMMUNOTECH
will deliver, or will cause to be delivered, to ITSI the following:
(i)
a certificate executed by the President and Secretary of IMMUNOTECH to the
effect that all representations and warranties made by IMMUNOTECH under this
Agreement are true and correct as of the Closing, the same as though originally
given to ITSI on said Date;
(ii) a
certificate from the State of Nevada Dated at or about the Closing to the effect
that IMMUNOTECH is validly existing under the laws of said
State;
page 15
of 19
(iii) stock
certificates representing those shares of IMMUNOTECH to be cancelled and
exchanged for the Merger Shares.
(iv) all
other items, the delivery of which is a condition precedent to the obligations
of ITSI, as set forth in Section 4.
(b) ITSI
and ITSI will deliver or cause to be delivered to IMMUNOTECH and the IMMUNOTECH
Security Holders:
(i) a
certificate from ITSI executed by the President or Secretary of ITSI, to the
effect that all representations and warranties of ITSI and ITSI made under this
Agreement are true and correct as of the Closing, the same as though originally
given to IMMUNOTECH on said Date;
(ii) certified
copies of resolutions by ITSI and ITSI Board of Directors authorizing this
transaction;
(iii) certificates
from the Delaware Secretary of State Dated at or about the Closing Date that
ITSI and ITSI are in good standing under the laws of said State;
and
(iv) all
other items, the delivery of which is a condition precedent to the obligations
of IMMUNOTECH, as set forth in Section 4 hereof.
SECTION 8.
MISCELLANEOUS
8.1 Waivers. The waiver
of a breach of this Agreement or the failure of any party hereto to exercise any
right under this Agreement shall in no way constitute waiver as to future breach
whether similar or dissimilar in nature or as to the exercise of any further
right under this Agreement.
8.2 Amendment. This
Agreement may be amended or modified only by an instrument of equal formality
signed by the parties or the duly authorized representatives of the respective
parties.
8.3 Assignment. This
Agreement is not assignable except by operation of law.
8.4 Notice. Until
otherwise specified in writing, the mailing addresses and fax numbers of the
parties of this Agreement shall be as follows:
To: ITSI:
000
Xxxxxx Xxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx 00000.
To:
IMMUNOTECH AND THE IMMUNOTECH PRINCIPAL EXECUTIVE OFFICERS:
000 Xxxx
Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000.
Any
notice or Statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
page 16
of 19
8.5 Governing
Law. This Agreement shall
be construed, and the legal relations between the parties determined, in
accordance with the laws of the State of Nevada, thereby precluding any
choice of law rules which may direct the application of the laws of any
other jurisdiction.
8.6 Arbitration. The
parties hereby agree that any dispute or cause of action arising under this
Agreement shall be settled by arbitration conducted by one arbitrator. The
arbitrator shall be acceptable to both IMMUNOTECH and ITSI. The arbitrator shall
set a limited time period and establish procedures designed to reduce the cost
and time for discovery while allowing the parties an opportunity, adequate in
the sole judgment of the arbitrator, to discover relevant information from the
opposing parties about the subject matter of the dispute The arbitrator shall
rule upon motions to compel or limit discovery and shall have the authority to
impose sanctions, including attorneys' fees and costs, to the same extent as a
court of competent law or equity, should the arbitrator determine that discovery
was sought without substantial justification or that discovery was refused or
objected to without substantial justification. The decision of the arbitrator
shall be written, shall be in accordance with applicable law and with this
Agreement, and shall be supported by written findings of fact and conclusion of
law which shall set forth the basis for the decision of the arbitrator. Any such
arbitration shall be held exclusively in Los Angeles County,
California.
8.7 Publicity. No
publicity release or announcement concerning this Agreement or the transactions
contemplated hereby shall be issued by either party hereto at any time from the
signing hereof without advance approval in writing of the form and substance by
the other party.
8.8 Entire Agreement.
This Agreement (including the Exhibits and Schedules to be attached
hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the transactions contemplated
hereby, and supersedes all prior agreements, written or oral, with respect
hereof.
8.9 Headings. The
headings in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
8.10
Severability of
Provisions. The invalidity or unenforceability of any term, phrase,
clause, paragraph, restriction, covenant, agreement or provision of this
Agreement shall in no way affect the validity or enforcement of any other
provision or any part thereof.
8.11
Counterparts.
This Agreement may be executed in any number of counterparts, each of
which when so executed, shall constitute an original copy hereof, but all of
which together shall consider but one and the same document.
8.12
Binding Effect.
This Agreement shall be binding upon the parties hereto and inure to the
benefit of the parties, their respective heirs, administrators,
executors,
successors
and assigns.
8.13
Press Releases.
The parties will mutually agree as to the wording and timing of any
informational releases concerning this transaction prior to and through
Closing.
page 17
of 19
SIGNATURE
PAGE FOLLOWS
IN WITNESS WHEREOF, the
parties have executed this agreement on the Date first above
written.
INTERNATIONAL
TECHNOLOGY SYSTEMS, INC.
By:_/s/ Allie
Chang______________________________
Name:
Xxxxx Xxxxx
Its:
President
By: _/s/ Ara
Ghaname________________________________
Name: Xxx
Xxxxxxx
Its:
President
By: _/s/ Xxxxx
Zhabilov________________________________
Name:
Xxxxx Zhabilov
Its:
Chief Scientist
page 18
of 19
SCHEDULE
A
Entity
|
Description
|
Amount
Owed
|
Preferred
Stock
|
Un-Restricted
Common Stock or Cash
|
Restricted
Common Stock
|
Bra
Investment Group, LLC
|
3,600,000
|
||||
Diamond
Investment, LLC
|
3,600,000
|
||||
Milan
Investment Group, LLC
|
3,600,000
|
||||
Xxxxx
X. Zhabilov
|
4,800,000
|
||||
Xxx
X. Xxxxxxx
|
4,800,000
|
||||
Dubai
Securities Investments, LLC
|
3,600,000
|
||||
La
Meridien Investment Fund, LLC
|
3,600,000
|
||||
Solidere
Holdings, LLC
|
3,600,000
|
||||
Xxxx
Xxxxxx Equities, LLC
|
3,600,000
|
||||
Xxxxx
Xxxxxxxxxx
|
400,000
|
||||
Xxxx
Xxxxxxx
|
2,000,000
|
||||
Xxxxx
Xxxxx
|
400,000
|
||||
Felizian
Xxxx
|
400,000
|
||||
Other
|
2,000,000
|
||||
TOTALS
|
40,000,000
|
page 19
of 19