Exhibit 10.2
December 10, 2001
Vitaquest International, Inc.
0 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx, President/CEO
Re: Infotopia, Inc./Vitaquest International, Inc.
Dear Xx. Xxxxxxx:
In connection with the Letter of Intent dated November 6, 2001 by and
between Infotopia, Inc., a Nevada corporation, having its principal address at
0000 Xxxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000 ("Infotopia") and Vitaquest
International, Inc., a Delaware corporation, having its principal address at 0
Xxxxxxxxx Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxxxx 00000 ("Vitaquest"), as amended and
modified by those certain side letters dated November 20, 2001 and December 7,
2001 (as so amended, the "Existing LOI", and as further amended and modified by
this letter, the "LOI"), this letter will serve to acknowledge and confirm the
following (terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Existing LOI; in the event of any inconsistency
between the terms set forth herein and the Existing LOI, the terms set forth
herein shall control):
1. Assignment. Infotopia has requested, and Vitaquest hereby agrees to
provide, consent to Infotopia's assignment of its rights and liabilities under
the LOI to Trendirect Marketing, Inc., a Delaware corporation, having its
principal address at 0000 Xxxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000 ("TMI").
TMI shall acquire the Assets pursuant to the terms of the LOI, and shall be
deemed to be a party to the LOI as if originally a signatory thereto; each of
the parties (i.e., Vitaquest and TMI) hereby restate and reaffirm in its
entirety the LOI.
2. Order. All references to the Order contained in the LOI shall be deemed
to refer to (a) the Order (dated November 21, 2001) Authorizing the Debtors to
(i) Sell Substantially all Assets Free and Clear of Liens and Encumbrances
Pursuant to 11 U.S.C.A. Sections 363(b), 363(f) and 363(k) and (ii) Assume,
Assign and Sell Executory Contracts Pursuant to 11 U.S.C.A. Sections 365(b)
and 365(f), (b) the Consent Order (dated December __, 2001) (i) Extending
Closing Deadline and (ii) Granting Certain Related Relief, and (c) the Order
(dated December __, 2001) Authorizing the Debtors to Assume, Assign and Sell
Various Executory Contracts Pursuant to 11 U.S.C.A. Sections 365(b) and
365(f) in Connection with Sale of Substantially All Assets.
3. Purchase and Sale of Assets.
(a) The parties hereby agree that TMI shall acquire directly from
DMI those assets and assume those contracts as set forth on the Bill of Sale,
Assignment and Assumption Agreement and Assignment of Trademark delivered to TMI
under the Order, a copy of which documents are annexed hereto as EXHIBIT A; all
references to the Assets in the LOI shall be deemed to refer to the assets and
contracts as set forth on the documents annexed hereto as Exhibit A. Vitaquest
hereby represents and warrants to TMI that TMI will obtain good title to the
assets acquired by TMI under the Order, free and clear of any liens and
encumbrances; in the event the foregoing representation is breached, Vitaquest
agrees to indemnify and hold TMI harmless against any losses actually suffered
by TMI solely as a direct result thereof.
(b) The total consideration payable to Vitaquest shall be modified
as follows:
Total Consideration to Vitaquest: Three Million Five Hundred Seventy
Five Thousand Dollars, without interest ($3,575,000) ("Total
Consideration"), payable in accordance with the following schedule:
$500,000, as a condition to, and upon, closing of the acquisition
of the Assets by TMI on December 21, 2001 (the "Closing");
$500,000 on or before December 31, 2001;
$1,000,000 on or before February 18, 2002; and
$500,000 at the end of each 30-day period thereafter until the Total
Consideration shall have been paid to Vitaquest, the final payment
being in the amount of the unpaid portion of the Total
Consideration.
4. Credits.
(a) Reserve/Premier Assets. Notwithstanding anything in the Existing
LOI to the contrary, (a) the Reserve Accounts (as defined in the Order),
including without limitation, all payments, rights to payment or any other
rights of any nature with respect to any payment or money returned by any credit
card processors, including but not limited to, Electronic Pay Exchange and
Xxxxxxx Bank (collectively, "EPX") and XxxXxxxxxx.xxx, on account of any excess
holdback reserves or escrow in connection with DMI and (b) the Premier Claim (as
defined in the Order), including without limitation, all payments, rights to
payment or any other rights of any nature with respect to any payments in
connection with In re Premier Membership Services, LLC, Bankr. No. 00-35053 U.S.
Bankruptcy Court, Southern District of Florida (collectively, the
"Reserve/Premier Assets"), shall be acquired by and transferred directly to
Vitaquest (or its designee). In the event the total amount of payments received
and retained by Vitaquest (or its designee) under the Reserve/Premier Assets (i)
exceeds the sum of $1,000,000, such excess shall be credited against the Total
Consideration (such credits to be applied against payments due in the inverse
order of maturity) or (ii) if less than the sum of $1,000,000, such shortfall
shall be immediately added to any indebtedness owing to Vitaquest and be paid to
Vitaquest at the time of final payment hereunder. Upon the payment in full of
the Total
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Consideration, Vitaquest (or its designee) shall retain all remaining rights to
the Reserve/Premier Assets.
(b) Post Closing Vitaquest Royalties. Notwithstanding anything in
the Existing LOI to the contrary, provided no Event of Default has occurred, any
royalty payments due from Vitaquest to DMI under a certain Exclusive License
Agreement dated November 20, 2000 (the "Vitaquest/DMI License Agreement") and
relating solely to sales by Vitaquest following the Closing, if any, shall, at
Vitaquest's option, be retained by Vitaquest and be credited to TMI as follows:
the first $500,000 of retained royalty payments shall be used as credits against
purchases of product by TMI from Vitaquest and all retained royalty payments
thereafter shall be applied against any remaining unpaid portion of the Total
Consideration (such purchase price credits to be applied against payments due in
the inverse order of maturity). The first $500,000.00 of retained royalty
payments shall be used by Vitaquest towards the timely payment of the unsecured
creditors' payments required under the Order.
5. Assumption of Certain Liabilities.
(a) Assumption. TMI agrees to assume the timely payment and
performance of the following: (i) all cure payments associated with any and all
contracts assumed under Exhibit A; and (ii) all administrative claim payments up
to a maximum amount of $450,000. TMI agrees to indemnify and hold Vitaquest (and
its designee) harmless against TMI's failure to make timely payments of the
foregoing assumed obligations.
(b) Evidence of Payment. Without limiting TMI's obligations to make
various payments required under this LOI or any other Transaction Document, TMI
shall, (i) not later than December 21, 2001, make not less than a $100,000
payment towards the payments described under paragraph 5(a) and (ii) not later
than the end of each of the following four (4) consecutive calendar weeks
following December 21, 2001, make not less than a $100,000 payment each such
week towards the payments described under paragraph 5(a). TMI shall provide
evidence of such payments to Vitaquest and any and all other payments required
to be made by TMI to a third party under the LOI and/or any other Transaction
Document.
6. Representations, Warranties and Covenants.
(a) Infotopia/TMI. Each of Infotopia and TMI hereby jointly and
severally represent, warrant and covenant to Vitaquest (and its designee) as
follows:
(i) Each of Infotopia and TMI is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation, and have all powers, governmental licenses, authorizations,
consents and approvals required to operate its business as now conducted.
Infotopia and TMI, as applicable, are duly qualified, licensed and in good
standing in each jurisdiction where qualification or licensing is required by
the nature of its business or the character and location of its property,
business or customers, and in which the failure to so qualify or be licensed, as
the case may be, in the aggregate, could have a material adverse effect on the
business, financial position, results of operations, properties or prospects of
Infotopia or TMI.
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(ii) Each of Infotopia and TMI has the power to execute and
deliver the LOI and the other agreements, documents and instruments required to
be delivered by Infotopia and/or TMI in accordance with the provisions hereof
(the "Buyer Documents"), to perform the LOI and the Buyer Documents and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of the LOI and the other Buyer Documents by Infotopia
and TMI has been duly authorized by all necessary corporate action. The LOI has
been, and the Buyer Documents will be, duly executed and delivered on behalf of
Infotopia and TMI by duly authorized officers of Infotopia and TMI, and the LOI
constitutes, and the Buyer Documents when executed and delivered will
constitute, the legal, valid and binding obligations of Infotopia and TMI, as
applicable, enforceable in accordance with their respective terms. The
execution, delivery and performance of the LOI and the Buyer Documents, as
applicable, do not: (x) contravene, or constitute (with or without the giving of
notice or lapse of time or both) a violation of any provision of applicable law,
a violation of the organizational documents of Infotopia or TMI, or a default
under any agreement, judgment, injunction, order, decree or other instrument
binding upon or affecting Infotopia or TMI, (y) result in the creation or
imposition of any lien on any of Infotopia's or TMI's assets, or (z) expect to
give cause for the acceleration of any obligations of Infotopia or TMI to any
other creditor.
(iii) No representation or warranty made by Infotopia and TMI
in the LOI or the Buyer Documents, as applicable, and no certification furnished
or to be furnished to Vitaquest (and/or its designee) pursuant to the LOI,
contains or will contain any untrue statement of a material fact or omits, or
will omit, to state a material fact necessary to make the statements contained
herein or therein not misleading.
(iv) Infotopia and, based upon an assumed fair market value of
the Assets, TMI are not, and after consummation of the transactions contemplated
by the LOI, will not be, insolvent within the meaning of 11 U.S.C. Section
101(32).
(v) Infotopia and TMI are in compliance in all material
respects with all federal, state and local laws, rules and regulations
applicable to its properties, operations, business, and finances, including,
without limitation, any federal or state laws relating to any commercial crimes;
all applicable federal, state and local laws and regulations intended to protect
the environment; and the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), if applicable.
(vi) Each of Infotopia and TMI shall conduct its business in
substantially the same manner and locations as such business is now and has
previously been conducted.
(vii) TMI shall maintain (and provide Vitaquest evidence of)
adequate insurance coverage with respect to its properties and business against
loss or damage of the kinds and in the amounts customarily insured against by
companies of established reputation engaged in the same or similar businesses
including, without limitation, commercial general liability insurance, workers
compensation insurance, and business interruption insurance.
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(b) Vitaquest. Vitaquest hereby represents, warrants and covenants
to each of Infotopia and TMI as follows:
(i) Vitaquest is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation
(ii) Vitaquest has the power to execute and deliver the LOI
and the other agreements, documents and instruments required to be delivered by
Vitaquest in accordance with the provisions hereof (the "Seller Documents"), to
perform LOI and the Seller Documents and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of the
LOI and the other Seller Documents by Vitaquest has been duly authorized by all
necessary corporate action. The LOI has been, and the Seller Documents will be,
duly executed and delivered on behalf of Vitaquest by duly authorized officers
of Vitaquest, and the LOI constitutes, and the Seller Documents when executed
and delivered will constitute, the legal, valid and binding obligations of
Vitaquest, enforceable in accordance with their respective terms.
(iii) No representation or warranty made by Vitaquest in the
LOI or the Seller Documents, and no certification furnished or to be furnished
to Infotopia or TMI pursuant to the LOI, contains or will contain any untrue
statement of a material fact or omits, or will omit, to state a material fact
necessary to make the statements contained herein or therein not misleading.
7. Default. Infotopia and TMI shall, at the option of Vitaquest, be in
default under the LOI (and the other Transaction Documents) upon the happening
of any of the following events or conditions (each an "Event of Default"): (a)
the non-payment of any principal, interest or other indebtedness when due
(including any cure period) under the LOI or under any other documents executed
and/or delivered in connection with the consummation of the transactions
contemplated thereby, including without limitation, any notes, guarantees,
security agreements, license agreements, bills of sale or assignment and
assumption agreements (collectively, the "Transaction Documents"); (b) the
failure by Infotopia or TMI, as applicable, to perform any of its obligations
under the LOI or any other Transaction Document; (c) any other default occurs
under the LOI or any other Transaction Document; (d) falsity, inaccuracy or
breach by Infotopia or TMI of any written warranty, representation or statement
made or furnished to Vitaquest (or its designee) by or on behalf of Infotopia or
TMI; (e) the filing by or against Infotopia or TMI of any proceeding in
bankruptcy, receivership, insolvency, reorganization, liquidation,
conservatorship or similar proceeding (and, in the case of any such proceeding,
such proceeding is not dismissed or stayed within thirty (30) days of the
commencement thereof); (f) any assignment by Infotopia or TMI for the benefit of
creditors, or any levy, garnishment, attachment or similar proceeding is
instituted against any property of Infotopia or TMI; (g) a default with respect
to any other indebtedness of Infotopia or TMI if the effect of such default is
to cause or permit the acceleration of such debt; (h) the entry of any judgment
against Infotopia or TMI and the failure of Infotopia or TMI to discharge the
judgment within ten (10) days of the entry thereof; (i) any material adverse
change in the business, assets, operations, financial conditions or results of
operations of Infotopia or TMI; or (j) Infotopia or TMI ceases doing business as
a going concern.
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8. Remedies. Upon the occurrence of an Event of Default, Vitaquest and/or
its designee shall be entitled to all of the rights and remedies of Vitaquest
and/or its designee under the LOI, any Transaction Document or at law or in
equity.
9. Miscellaneous.
(a) The representations, warranties, covenants and agreements of
Infotopia, TMI and Vitaquest contained in the LOI, or in any document and
certificate delivered pursuant hereto, and the respective obligation of the
parties with respect thereto, shall survive the making of the LOI, any
investigations made by or on behalf of the parties hereto, and the Closing and
all subsequent closings of payments/transfers made under the Post Closing
Payment/Transfer Schedule, and shall continue in full force and effect.
(b) Any notices or other communications provided for hereunder may
be given to any party to the LOI at the address set forth above, with a copy to
that party's attorney (Vitaquest: Xxxxx, Danzig, Scherer, Xxxxxx & Xxxxxxxx,
LLP, Headquarters Plaza, Xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000,
Attn: Xxxxxx X. Xxxxx, Esq.; Infotopia and TMI: Xxxxx & Xxxxxxx LLP, 0 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxxx Xxxxx, Esq.) and shall either be
(a) hand-delivered, (b) deposited with an overnight courier delivery service or
(c) mailed by certified mail, return receipt requested, postage prepaid. All
notices shall be deemed to have been given either when hand-delivered, 1 day
after having been deposited with an overnight courier delivery service or 2 days
following the date of mailing.
(c) The LOI shall inure to the benefit of and shall be binding upon
Vitaquest, Infotopia and TMI, their heirs, successors and assigns. TMI (and
Infotopia, as applicable) may not assign the LOI without obtaining the prior
written consent of Vitaquest.
(d) The LOI shall not, and shall not be deemed to, confer any rights
or remedies upon any party other than Infotopia, TMI, Vitaquest and their
respective successors and assigns.
(e) The LOI shall be construed in accordance with the laws of the
State of New Jersey. Vitaquest, Infotopia and TMI hereby irrevocably consent to
the jurisdiction of the courts of the State of New Jersey or any Federal Court
in New Jersey in connection with any action or proceeding arising out of or
related to the LOI or any other document delivered in connection with the LOI.
(f) The LOI may be executed in any number of counterparts, all of
which taken together shall constitute an original hereof. When counterparts have
been executed by all parties, they shall have the same effect as if the
signatures were upon the same document.
(g) Each of the parties hereto shall take such action as the other
party may reasonably request from time to time in order to carry out the
purposes of the LOI. In addition, in connection with any subsequent closings of
payments/transfers made under the Post Closing Payment/Transfer Schedule, each
of the parties shall reaffirm all representations, warranties and covenants
under the LOI and further shall deliver evidence of corporate authorization
(including good standing certificates, resolutions, incumbency certificates and
opinions of counsel).
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(h) The LOI (including the exhibits and schedules referred to
herein) contains the entire agreement among the parties with respect to the
transactions contemplated under the LOI and supersedes all prior agreements or
commitments, written and oral, with respect thereto.
(i) Paragraphs 8(A)(2) and 10 of the November 6, 2001 letter of
intent are hereby deleted. Paragraph 2 of the November 20, 2001 side letter is
hereby deleted.
All conditions to the obligations of TMI and Infotopia, as applicable, to
consummate the transactions pursuant to the terms of the LOI have been
satisfied.
Please indicate your acceptance and acknowledgement of this letter by
executing below.
Very truly yours,
Infotopia, Inc.
By: /s/ Xxxxxx Xxxxx
__________________________
Xxxxxx Xxxxx, CEO/Chairman
Trendirect Marketing, Inc.
By: /s/ Xxxxxx Xxxxxxx
__________________________
Xxxxxx Xxxxxxx, CEO
Agreed and Accepted to
this 10th day of December, 2001
Vitaquest International, Inc.
By: /s/ Xxxxx Xxxxxxx
__________________________
Xxxxx Xxxxxxx, CEO
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