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AGREEMENT FOR SALE AND PURCHASE OF ASSETS
THIS AGREEMENT FOR SALE AND PURCHASE OF ASSETS (this "Agreement") is
dated May 17, 2000. It is between IMX Pharmaceuticals, Inc. ("Purchaser"), ETI
International, Inc.("ETI"), and Dri-Kleen, Inc. d/b/a Enviro-Tech International
("ETIC").
RECITALS
1. ETIC is a manufacturing and direct sales company that markets
products through a network of independent distributors (the "Distribution
Network").
2. The Parties desire that the Distribution Network be operated for the
benefit and at the risk of the Purchaser as of the first Monday on or after the
date set forth at the beginning of this Agreement (the "Effective Date").
3. The Parties desire that Purchaser purchase the Distribution Network,
Equipment, Supplies, Software, Production Materials, certain Rights,
Distributorships, and the Goodwill; purchase or receive assignment of certain
Rights, the Contract Rights, the Permits, and any leases with respect to all
tangible and intangible property used by ETIC and the Subsidiaries in connection
with the operation of the Distribution Network; license the use of the
Facilities; and receive assignment of the Canadian Lease; and receive a no fee,
exclusive license to use any Rights not sold or assigned to Purchaser.
AGREEMENT
The Parties agree with each other as follows:
ARTICLE I. THE PARTIES
Section 1.01 THE PARTIES
(a) The Purchaser is a publicly traded Utah corporation having a
business office at 2295 Corporate Boulevard, Suite 131, Boca Raton, Florida
33431.
(b) ETI is a Nevada corporation having a business office at 3930 Ali
Baba Lane, Las Vegas, NV 89118.
(c) ETIC is a Nevada corporation having a business office at 3930 Ali
Baba Lane, Las Vegas, NV 89118. The Subsidiaries are the corporations listed on
Schedule 1.01(b). Schedule 1.01(b) sets forth the name, state or province of
incorporation, and office address of each Subsidiary. The term "Seller" includes
ETIC and the Subsidiaries.
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Section 1.02 ASSIGNMENT
(a) Purchaser may assign its rights or part of its rights under this
Agreement to corporations that are wholly owned subsidiaries of Purchaser. No
assignment shall be valid unless each assignee assumes all applicable
obligations of Purchaser under this Agreement. No assignment shall relieve
Purchaser of its obligations under this Agreement, including the obligation to
make the payments described in Article III.
(b) Purchaser and Seller may not assign their rights under this
Agreement except as provided in Subsection (a).
(c) For purposes of the Agreement, an assignment includes the purchase
of over 50% of the voting securities of Purchaser or Seller.
ARTICLE II. THE PROPERTY
Section 2.01 THE DISTRIBUTION NETWORK
The "Distribution Network" consists of the individuals and entities in
North America, including the Caribbean Islands, that are or have been ETI
Independent Distributors or Preferred Customers (the "Independent
Distributors"). They are listed on Schedule 2.01. The Schedule shall provide
contact information for each member of the Distribution Network, show the rank
they have attained in the Distribution Network as of May 1, 2000 and set forth
the amount of their sales and the sales of their downline organization for the
year ended December 31, 1999 and the four months ended April 30, 2000. The
Schedule shall be provided as a disk or computer file in a format reasonably
specified by the Purchaser.
Section 2.02 THE EQUIPMENT
The "Equipment" consists of all of the computers and associated
hardware and other equipment now used in the operation of or necessary to
operate the Distribution Network. Schedule 2.02 is a list of the Equipment. The
Schedule specifies which pieces of Equipment are owned and which are leased. The
Schedule sets forth the monthly payment required for each piece of leased
Equipment. A true and complete copy of each signed lease ("Equipment Leases")
has been delivered, or will be delivered prior to the Closing Date (defined
below), to Purchaser.
Section 2.03 THE SUPPLIES
The "Supplies" constitute all items of personal property constituting
stocks on hand on the Closing Date of material used in connection with Seller's
present operation of the Distribution Network, including office supplies,
marketing materials, order forms, catalogues and distributor materials. Schedule
2.03 is an illustrative list of the types of materials constituting the
Supplies. Copies of the Supplies lists have been given to Purchaser for which
Purchaser acknowledges receipt. Seller will also provide a disk showing the
present inventory of Supplies and a record of the quantity of each Supply used
in each of the preceding twelve months.
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Section 2.04 THE SOFTWARE
The "Software" constitutes all computer programs, including
compensation plan programs, routines, subroutines, processes and procedures now
used in the operation of the Distribution Network and its website. The Software
is listed on Schedule 2.04. Copies of all agreements related to the Software
have been delivered to Purchaser.
Section 2.05 THE PRODUCTION MATERIALS
The "Production Materials" consist of all copy, boards, graphics on
disks, typography, printing plates, molds or other things necessary to reproduce
existing Supplies. Schedule 2.05 is an illustrative list of the types of
material constituting the Production Materials.
Section 2.06 THE RIGHTS
The "Rights" consist of all rights of Seller to domain names, patents,
trade names, trademarks, service marks or other intellectual property used in
the operation of the Distribution Network or in connection with the Products.
The Rights are listed on Schedule 2.06. If Seller does not own a Right, its
owner and the owner's address are list on the Schedule. A copy of each agreement
authorizing Seller to use the Right has been delivered to Purchaser. If any
Right has been registered or if an application to register any Right is pending,
all information about the registration or application known to Seller is shown
on the Schedule. Seller has provided, or will provide prior to the Closing Date,
copies of all papers in its possession relating to registrations and
applications to Purchaser.
Section 2.07 THE CONTRACT RIGHTS
The "Contract Rights" consist of all rights of Seller under any written
leases and contracts relating to the operation of the Distribution Network,
including the Equipment Leases but excluding the Canadian Lease (defined below).
The Contract Rights also include commitments for the purchase of Products, the
materials needed to make Products (including the existing and pending contracts
with Advanced Techniques, Inc. and Stephen D. and Leticia M. Leis ("Advanced
Agreements")), and Supplies, for obtaining services, including credit card
processing services, joint venture or partnership relationships, or with respect
to advertising that was entered into in the regular and ordinary course of the
operation of the Distribution Network. All written and other agreements, other
than the Equipment Leases, are listed on Schedule 2.07. Copies of all written
instruments listed on the Schedule have been delivered, or will be delivered
prior to the Closing Date, to Purchaser. The leases, contracts and commitments
under which the Contract Rights arise are sometimes called the "Contracts."
Section 2.08 THE FACILITIES
The "Facilities" consist of all of the offices and other space used in
the operation of the Distribution Network. The Facilities are listed on Schedule
2.08.
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Section 2.09 THE PERMITS
The "Permits" consist of all filings, licenses, permissions,
authorizations, or permits granted by any government or governmental agency,
authority or subdivision necessary to operate the Distribution Network, to the
extent that the permits are assignable. Schedule 2.09 is a list of the Permits.
Copies of the documents evidencing the Permits have been given, or will be given
prior to the Closing Date, to Purchaser. Purchaser understands that sale tax
permits are not assignable.
Section 2.10 THE CANADIAN LEASE
The "Canadian Lease" is a lease for the office and warehouse located at
2090 Walkley Road, Ottawa, Ontario, Canada K1G 383. Purchaser shall be
responsible for that portion of the lease payment attributable to office space
and Seller shall be responsible for that portion of the lease payment
attributable to the warehouse. Schedule 2.10 is a list of all the documents
evidencing the Canadian Lease. Copies of these documents have been delivered to
Purchaser.
Section 2.11 THE DISTRIBUTORSHIPS
The Distributorships are any memberships in the Distribution Network
presently owned by Seller. The Distributorships are listed on Schedule 2.11.
Copies of the documents evidencing the Distributorships have been delivered, or
will be delivered prior to the Closing Date, to Purchaser.
Section 2.12 THE GOODWILL
The "Goodwill" consists of the goodwill developed by Seller from its
operation of the Distribution Network.
Section 2.13 THE PROPERTY
The "Property" consists of Seller's rights to the Distribution Network,
Equipment, Supplies, Software, Production Materials, Rights, Contract Rights,
use of the Facilities, Permits, Canadian Lease, Seller's rights to the
Distributorships and Goodwill.
ARTICLE III. THE PURCHASE PRICE AND ITS PAYMENT
Section 3.01 PURCHASE PRICE
In consideration of this Agreement and the transfer, sale, licensing,
and assignment of the Property, Purchaser shall pay to Seller a purchase price
("Purchase Price") consisting of the following:
(a) Two million, four hundred thousand ($2,400,000) dollars ("Cash
Portion").
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(b) Two million (2,000,000) shares ("Stock Portion") of the Purchaser's
common stock, $.001 par value per share ("Common Stock").
Section 3.02 PAYMENT OF THE PURCHASE PRICE
(a) Four hundred ($400,000) dollars was paid on March 20, 2000 as a
refundable deposit ("Initial Deposit"). Seller acknowledges receipt of the
Initial Deposit.
(b) Eight hundred fifty thousand ($850,000) dollars shall be paid on
the date this Agreement is executed as an additional refundable deposit
("Additional Deposit").
(c) One hundred fifty thousand ($150,000) dollars shall be paid on the
Closing Date ("Closing Portion").
(d) Five hundred thousand ($500,000) dollars shall be paid within sixty
(60) days after the Closing Date ("First Post Closing Payment").
(e) Five hundred thousand ($500,000) dollars shall be paid within one
hundred five (105) days after the Closing Date ("Second Post Closing Payment")
(f) The Stock Portion shall be issued on the Closing Date and
registered in the name of ETIC.
Section 3.03 RETURN OF DEPOSITS
If the Closing of the sale and purchase does not occur in accordance
with ARTICLE IX before August 1, 2000, or this Agreement is sooner terminated in
accordance with its terms, the Initial Deposit and the Additional Deposit shall
be immediately repaid to Purchaser.
Section 3.04 LATE PAYMENT OF POST CLOSING PAYMENTS
If either Post Closing Payment is not made when due, it shall
thereafter bear interest at the rate of twelve percent (12%) per annum. The
interest shall accrue from the date the Post Closing Payment was due until it is
paid. Any payment made after the due date of a Post Closing Payment shall first
be applied to interest due on the late payment and then to the unpaid Post
Closing Payment.
Section 3.05 REGISTRATION OF THE STOCK PORTION
After Purchaser completes any offerings of its capital securities
necessary to raise funds to pay the Post Closing Payments, the following shall
apply:
(a) Whenever Purchaser shall prepare to file a Registration Statement
under the Securities Act of 1933 ("Securities Act") with the U. S. Securities
and Exchange Commission ("SEC") pertaining to the public sale of its Common
Stock, it shall give at least thirty (30) days
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notice of its intention to so do to Seller. The notice shall set forth the
number of shares of Common Stock to be registered for sale and, to the extent
then known by Purchaser, the proposed terms upon which the sale will take place.
Within fifteen (15) days of the notice, Seller may, by notice to Purchaser,
require Purchaser to include part of the Stock Portion in the registration
statement. The number of shares of Common Stock which Seller may include in the
registration statement shall not exceed the lesser of twenty-five (25%) percent
of the shares registered for sale by Purchaser or five hundred thousand
(500,000) shares. The costs of the registration and sale, including brokers
commissions, fees, costs, and expenses, printing costs, and other expenses shall
be borne by the Parties in proportion to the number of shares of Common Stock
being registered. Legal and accounting fees and costs shall be borne by Seller
only to the extent that extra costs are incurred because of the inclusion of its
shares in the registration statement.
(b) (i) At any time after the first anniversary of the Closing Date,
Seller may demand that Purchaser immediately commence the preparation of a
registration statement with the SEC for the purpose of registering one million
(1,000,000) shares of the Stock Portion under the Securities Act.
(ii) At any time after the second anniversary of the Closing Date,
Seller may demand that Purchaser immediately commence the preparation of a
registration statement with the SEC for the purpose of registering an additional
one million (1,000,000) shares of the Stock Portion under the Securities Act.
(iii) Purchaser shall make every reasonable effort to cause the
registration statements to be granted effectiveness by the SEC as soon as
possible. Seller shall pay all costs of these registrations of the Common Stock.
Section 3.06 RESTRICTIONS ON SALE OF STOCK PORTION
Notwithstanding the provisions of Section 3.05, Seller shall agree to
any reasonable lock-up or other reasonable restriction on its sale or other
transfer of the Stock Portion as requested by any investment banker employed by
Purchaser to underwrite or otherwise see to the sale of Purchaser's equity
securities or securities convertible into the Common Stock.
ARTICLE IV. OPERATIONS BETWEEN EFFECTIVE DATE AND THE CLOSING DATE
Section 4.01 OPERATIONAL SUPPORT
(a) Between the Effective Date and the Closing Date (the "Interim
Period"), Seller shall provide Purchaser with the services of its personnel
listed on Schedule 4.01(a). ("Contract Personnel").
(b) During the Interim Period, the members of the Contract Personnel
shall remain the employees of Seller and shall work under its direction;
however, all costs related to the Contract Personnel, as more fully described
below, are the responsibility of Purchaser. The
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Parties shall expect that all the members of the Contract Personnel shall
continue to devote their full time and attention to the operation of the
Distribution Network.
(c) Seller shall, as an independent contractor, be responsible for
supervising the Contract Personnel. Seller will use all reasonable efforts to
ensure that all tasks and functions reasonably assigned or directed to the
Contract Personnel by Purchaser and its employees and agents are promptly and
effectively carried out. Purchaser may provide Seller with written policies or
directives; provided, however, that Seller is under no obligation to follow
Purchaser's policies or directives that Seller reasonably believes violate
Applicable Laws (as defined below) or the Direct Selling Association's Code of
Ethics. Seller shall use all reasonable efforts to assure compliance with
Purchaser's reasonable policies and directives.
(d) In operating the Distribution Network, Purchaser shall comply with
all laws and regulations governing the operation of a direct selling and
multilevel marketing sales program (the "Applicable Laws"). The Applicable Laws
include, without limitation, federal and state securities laws, pyramid and
chain distribution laws, deceptive trade practice laws, business opportunity
laws, franchise laws, lottery laws, and referral sales laws. The Applicable Laws
also include, and Purchaser shall comply with, all laws and regulations
governing the sale of products sold through the Distribution Network, including
those laws and regulations administered by the Food and Drug Administration, the
Federal Trade Commission, the Environmental Protection Agency, and the Consumer
Product Safety Commission, as well as those laws governed by any comparable
state agency or board. Purchaser shall also operate the Distribution Network in
compliance with the Direct Selling Association's Code of Ethics. Purchaser shall
consult with qualified legal counsel when necessary to ensure compliance with
the Applicable Laws and industry ethics requirements.
(e) Every Wednesday during the Interim Period, commencing nine days
after the Effective Date, Purchaser shall pay to Seller the amount set forth on
Schedule 4.01(a) next to the name of each member of the Contract Personnel (the
"Weekly Employee Payment Amount"). The Weekly Employee Payment Amount shall be a
sum estimated to be sufficient to cover all personnel costs and expenses
incurred by Seller for that member of the Contract Personnel. It is intended to
cover all salary, benefits, employment taxes, both parts of Social Security and
Medicare contributions, insurance premiums, pension contributions and any other
amounts due to that member of the Contract Personnel for the week ended the
previous Sunday. The Weekly Employee Payment Amount shall constitute Purchaser's
entire obligation with respect to each member of the Contract Personnel. Seller
shall be responsible for delivering the Weekly Employee Payment Amount to the
members of the Contract Personnel or paying it for their benefit.
(f) Except with the prior written consent of Seller, which consent
shall not be unreasonably withheld, during the Interim Period, Purchaser shall
not delete the name of any member of the Contract Personnel from the list.
Purchaser's obligation to pay for the future services of that person shall cease
as of the date of the deletion to which Seller has consented. After any
deletion, Purchaser and Seller shall execute an amendment to Schedule 4.01(a) to
reflect the change. The failure to execute the amendment shall not delay the
termination of Purchaser's obligation to pay for a member of the Contract
Personnel.
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(g) Either party, with the prior written consent of the other, may add
a person to the Contract Personnel. In order to so do, they shall execute an
amendment to Schedule 4.01(a) specifying the name and weekly payroll amount for
each person added. Any person so added shall thereafter be included in the
Contract Personnel.
(h) The Parties shall make every reasonable effort to cause each member
of the Contract Personnel and the people listed on Schedule 4.01(h) to sign the
nondisclosure and non-competition agreement attached to Schedule 4.01(h).
(i) All insurance policies and other employee benefits provided for the
Contract Personnel are described on Schedule 4.01(i).
(j) During the Interim Period, Seller shall continue all its present
insurance policies ("Insurance Policies") in full force and effect. The
Insurance Policies are listed on Schedule 7.01(q). The amount insured shall not
be reduced without Purchaser's consent, which such consent shall not be
unreasonably withheld. Purchaser shall be named as an additional insured on all
Insurance Policies.
(k) During the Interim Period, Purchaser shall pay all continuing costs
associated with the development of the new compensation plan software, including
labor and outside consulting costs.
(l) During the Interim Period, Purchaser shall reimburse Seller for all
labor costs associated with work performed by Seller's employees who are not
Contract Personnel and who perform services for the operation of the
Distribution Network at the request of Purchaser.
(m) During the Interim Period, Purchaser shall be responsible for and
shall pay in a timely manner all sales taxes which accrue in connection with all
Products and Introductory Sizes ordered on or after the Effective Date.
Section 4.02 THE FACILITIES
(a) During the Interim Period, Seller shall provide Purchaser with
access to and the use of the Facilities.
(b) Seller hereby grants Purchaser a non-revocable and exclusive
license to reasonable use of the Facilities, and to a reasonable extent the
office furniture and equipment located in the Facilities, during the Interim
Period, consistent with the current use of the Facilities by Seller. At the end
of each month, Purchaser shall pay Seller an amount equal to one third (1/3) of
the actual out of pocket costs incurred to operate its building at 3930 Ali Baba
Lane, Las Vegas, Nevada. The costs shall consist of and shall be limited to,
solely the following: mortgage payments, real estate taxes, property insurance,
water and sewer charges, utilities, trash pickup, ground keeping, the security
system, exterminating, normal maintenance costs, cleaning crews and supplies,
and the salary of the facility manager. If the Interim Period contains a part of
a period to which a cost relates, the cost shall be pro-rated on a daily basis.
Seller shall designate
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the location of office space to be used by Contract Personnel, with Contract
Personnel currently expected to be located generally on the first floor of the
Las Vegas, Nevada Facilities.
(c) Seller shall be responsible for paying all costs with respect to
the Facilities.
Section 4.03 THE VARIABLE CHARGES
(a) (i) Seller hereby grants Purchaser a non-revocable and exclusive
license to use the Equipment during the Interim Period. At the end of each
month, Purchaser shall pay Seller an amount equal to the actual lease payments
shown on Schedule 2.02. If the Interim Period contains a part of a period to
which a cost relates, the cost shall be pro-rated on a daily basis.
(ii) Purchaser may, at any time and in its sole discretion,
delete any item of leased Equipment from the list. Purchaser's obligation to pay
for that leased Equipment shall cease as of the date of the deletion. After any
deletion, Purchaser and Seller shall execute an amendment to Schedule 2.02 to
reflect the change. The failure to execute the amendment shall not delay the
termination of Purchaser's obligation to pay for that Equipment or require
Purchaser to accept assignment of the lease relating to that Equipment at the
Closing Conference (defined below).
(b) At the end of each month during the Interim Period, Purchaser shall
pay Seller all of the amounts billed to Seller and actually paid for Internet
service provider charges for Contract Personnel and for e-mail system charges
and computer service contracts. Purchaser shall pay Seller the part of the base
monthly and long distance telephone charges billed and actually paid that are
attributable to Contract Personnel or are likely to have been used in the
operation of the Distribution Network.
(c) Seller shall be responsible for paying all costs with respect to
Equipment, Internet service, e-mail, computer service, and telephone service.
ARTICLE V. INTERIM PERIOD SALE OF PRODUCTS AND INTRODUCTORY SIZES AND PAYMENT
Section 5.01 SALES
(a) Seller shall sell and deliver the Products and Introductory Sizes
(as defined below) to Purchaser or its designees on an as needed basis. Each and
every Product and Introductory Size shall be of high quality, free from any and
all defects, and fit for the particular use for which the Products and
Introductory Sizes are intended.
(b) The Products shall consist of both (i) all the products now
manufactured for distribution through the Distribution Network either by Seller
and its affiliates or produced under contract by others and (ii) any products
manufactured by Seller and its affiliates at the request of Purchaser. The
Products are listed on Schedule 5.01(b).
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(c) The Introductory Sizes are smaller filled containers of the
Products.
(d) Seller shall deliver the Products and Introductory Sizes as
reasonably directed by Purchaser.
(e) Seller shall accept all returns of Products or Introductory Sizes
ordered on or after the Effective Date that are subject to ETIC's inventory
return policy, product exchange or refund policy, the Direct Selling
Association's Code of Ethics requirements, and any applicable state product
refund or return laws. Seller's policies are set forth on Schedule 5.01(e).
(f) Each day, Seller shall electronically transmit to Purchaser a
report of all deliveries dispatched and any returns received.
(g) During the Interim Period, Purchaser shall not discontinue the
marketing and distribution of any Product or Introductory Size without the prior
written consent of Purchaser.
Article 5.02 PAYMENT
(a) Each Tuesday during the Interim Period, commencing eight (8) days
after the Effective Date, Purchaser shall pay for the Products and Introductory
Sizes shipped during the week ended the previous Saturday. Notwithstanding the
foregoing, Purchaser shall not pay for shipments ordered prior to the Effective
Date.
(b) If any refunds are issued with respect to Products or Introductory
Sizes ordered after the Effective Date because of a return or otherwise,
Purchaser shall deduct the purchase price for the Products or Introductory Sizes
to which the refund relates from the next weekly payment; provided, however,
that if the refund relates to Products or Introductory Sizes which cannot be
restocked by Seller, Purchaser shall deduct an amount equal to one-half of ETI's
actual out-of-pocket costs for such Products or Introductory Sizes from the next
weekly payment.
(c) The purchase price for the Products manufactured by Seller and its
affiliates shall be 35% of the price paid by the distributor or preferred
customer, net of distributor and preferred customer discounts as such prices and
discounts are set forth in the April 2000 order form and distributor
compensation package. The purchase price for the Introductory Sizes manufactured
by Seller and its affiliates shall be 50% of the price paid by the distributor
or preferred customer, net of distributor and preferred customer discounts as
such prices and discounts are set forth in the April 2000 order form and
distributor compensation package. The purchase price for Products or
Introductory Sizes manufactured by others shall be the net invoice cost to
Seller thereof.
(d) Seller shall be responsible for picking and packing all orders and
shall pay all costs of labor and materials; except that Purchaser shall pay the
actual costs of master packing cartons used in multiple packages. Purchaser
shall pay the freight costs of shipping.
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Section 5.03 PURCHASER PRODUCTS
During the Interim Period, Seller shall, if reasonably requested by
Purchaser, warehouse and distribute for Purchaser additional products that have
been obtained, created, developed, invented or produced by or for Purchaser (the
"Purchaser Products"). The Purchaser Products shall be delivered to Seller's
warehouse, freight prepaid. Seller shall use all reasonable efforts to deliver
the Purchaser Products as reasonably instructed by Purchaser to its customers or
through the Distribution Network. Purchaser shall be responsible for the freight
costs associated with delivering the Purchaser Products. Seller shall be
responsible for picking and packing all orders and shall pay all costs of labor
and materials; except that Purchaser shall pay the actual costs of master
packing cartons used in multiple packages. Purchaser shall pay the freight costs
of shipping. Purchaser shall pay Seller a fee equal to two percent (2%) of the
net price paid by distributors for the Purchaser Products for these services.
Seller shall keep Purchaser Products segregated from the Products and clearly
identified as the property of Purchaser by the posting of signs, tags and the
like.
Section 5.04 COMMISSIONS
During the Interim Period, Purchaser shall pay in accordance with
Seller's current policies all commissions to members of the Distribution Network
for orders placed on or after the Effective Date.
ARTICLE VI. INTERIM PERIOD MANAGEMENT OF CASH RECEIPTS
Section 6.01 RECEIPT OF CASH
(a) During the Interim Period, Purchaser shall own all payments
whenever made for the Products and Introductory Sizes ordered on or after the
Effective Date within the Distribution Network and it shall bear all risks of
their collection.
(b) Seller shall immediately endorse and deposit to Purchaser's account
or otherwise pay over to Purchaser all checks and all electronic or other
payments received that relate to Products or Introductory Sizes ordered on or
after the Effective Date within the Distribution Network. A separate bank
account shall be maintained for this purpose and shall bear the title
"Enviro-Tech Sales and Marketing" ("Collection Account").
(c) Seller's credit card processor shall be notified immediately to
direct all future payments to the Collection Account.
(d) All funds received by Seller prior to or after the execution of
this Agreement that relate to Products or Introductory Sizes ordered within the
Distribution Network after the Effective Date shall be immediately transferred
to the Collection Account.
(e) Seller hereby irrevocably appoints Purchaser as its
attorney-in-fact to endorse and deposit to the Collection Account all checks or
other instruments made payable to Seller that
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relate to Products or Introductory Sizes ordered within the Distribution Network
on or after the Effective Date.
Section 6.02 PAYMENT OFFSET
If Seller has not paid over to Purchaser any payments for Products or
Introductory Sizes ordered within the Distribution Network on or after the
Effective Date within two weeks after their receipt, Purchaser may deduct the
amount not paid from the next payment due to Seller pursuant to ARTICLE IV or V.
Purchaser shall provide Seller with a reconciliation of the amount due and the
amount paid showing the unpaid items for which a credit has been taken.
ARTICLE VII. REPRESENTATIONS
Section 7.01 SELLER'S REPRESENTATIONS
Seller and ETI, jointly and severally, represent to Purchaser as
follows:
(a) ETIC is a corporation validly existing and in good standing under
the laws of the State of Nevada. It is a wholly owned subsidiary of ETI.
(b) ETIC owns all of the capital stock of the Subsidiaries. Each
Subsidiary is validly existing and in good standing under the laws of the state
or province of its incorporation.
(c) Seller has delivered, or will deliver prior to the Closing Date, to
Purchaser true and complete copies of all charter documents, by-laws, and
amendments thereto for ETI, ETIC, and the Subsidiaries.
(d) The execution, delivery, and consummation of the transactions
contemplated by this Agreement have been duly authorized by their respective
Boards of Directors and Stockholders of Seller and ETI and will not contravene
any provisions of law, an order of any court or other agency of government, or
of their Articles of Incorporation or Bylaws. Any consents, approvals,
authorizations, registrations, or qualifications with any person, bank, or any
governmental body or court having the authority or power to regulate, supervise,
or direct the business and affairs of Seller or ETI that is necessary for the
consummation of the transactions specified in this Agreement shall have been
obtained prior to the Closing Date. Nothing in any agreement to which any of
Sellers or ETI is a party prohibits the execution or implementation of this
Agreement.
(e) This Agreement constitutes the legal, valid and binding obligation
of Seller enforceable against it in accordance with its terms, subject only to
the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and the award by courts of
money damages rather than specific performance of contractual provisions
involving matters other than the payment of money.
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(f) Seller may assign the agreements with members of the Distribution
Network without the members' consent. Nothing in any agreement with any member
of the Distribution Network or any other person prohibits the execution or
implementation of this Agreement. This Agreement and its implementation will not
void any agreement with any member of the Distribution Network. Seller has
provided, or will provide prior to the Closing, Purchaser with true and complete
copies of every version of its applications, agreements, and policies and
procedures that are applicable to any present member of the Distribution
Network.
(g) This Agreement is not in violation of any law or regulation of any
governmental jurisdiction in which Seller does business or, to its knowledge,
has members of the Distribution Network.
(h) The lists, copies, and other information provided on the Schedules
or delivered pursuant to this Agreement are accurate and complete in every
material respect. No party to any agreement delivered pursuant to this Agreement
or referred to in or attached to any Schedule is in default thereof except as
indicated in the applicable Schedule.
(i) None of the Contract Personnel has an employment contract with
Seller except those persons listed on Schedule 7.01(i). A copy of each
employment contract has been provided to Purchaser. All the employment contracts
are terminable at will by Seller except as indicated on the Schedule. None of
the Contract Personnel is subject to any labor contract or collective bargaining
agreement. Each of the Contract Personnel has signed a confidentiality and
non-competition agreement except as indicated on the Schedule. A copy of each
confidentiality and non-competition agreement has been provided, or will be
provided prior to the Closing Date, to Purchaser.
(j) Seller has no knowledge of and has received no notice of any
complaint about its business practices or of any alleged violation of any law or
regulation with respect to its business practices or any Product from any
person, including the Direct Selling Association.
(k) Seller owns all the Rights free and clear of any liens, claims, or
other title defects except as listed on Schedule 7.01(k). Seller has the full
power and right to transfer title to the Rights without the consent of any other
person.
(l) Seller has not received any notification of infringement by Seller
or any claims with regard to any Right or any other trademark, service mark or
trade name from any person, and Seller is not aware of a basis for any claim. To
the best of Seller's knowledge, no right or other trademark, service mark or
trade name used by Seller in connection with its business infringes any
trademark, service mark or trade name of others in any country in which the
trademark, service mark or trade name is used in connection with the manufacture
or sale of any Product or otherwise.
(m) Seller owns the Equipment, Supplies, Software, Production
Materials, Distributorships, and Goodwill free and clear of any liens, claims,
or other title defects and has the full power and right to transfer title to
them without the consent of any other person. The Equipment, Supplies, and
Production Materials are in substantially good operating condition and
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repair excluding ordinary wear and tear, taking into consideration the age and
prior use of same, and are in compliance with all applicable laws, regulations,
orders and ordinances. The value of fixed assets used in the business of Seller
has not been written up.
(n) The agreements with the members of the Distribution Network, the
Equipment Leases, the Contracts, and the Canadian Lease are in full force and
effect. All payments due under them have been made through the date of this
agreement and will be made through and including the Closing Date. Except as
otherwise disclosed on the applicable Schedule, Seller has no knowledge of and
has received no notice of any alleged breach of any of them from any person and
knows of no state of facts that, with the passage of time or the giving of
notice, or both, would constitute a breach. The properties subject to the
Canadian Lease are not subject to any pending or, to the knowledge of Seller
threatened adverse change, judicial order, ordinance or zoning restriction which
materially affects the use of such properties in the business of Seller or would
affect the use thereof.
(o) Seller owns the Facilities in fee simple absolute subject only to
the liens listed on Schedule 7.01(o). Copies of the documents evidencing the
liens have been delivered, or will be delivered prior to the Closing, to
Purchaser. Seller has no knowledge of and has received no notice of any alleged
default of any lien from any person, government, or governmental entity or
agency. Seller knows of no state of facts that, with the passage of time or the
giving of notice, or both, would constitute a default under an existing lien or
would give rise to an additional lien. It has the full power and right to
license Purchaser to use the Facilities without the consent of any other person.
(p) The Permits are all the permits or other legal authorizations
necessary for Seller to operate the Distribution Network and otherwise conduct
its business as presently conducted. The Permits are in full force and effect.
Seller has no knowledge of and has received no notice of any alleged violation
of any Permit from any person, including the Direct Selling Association, and
knows of no state of facts that, with the passage of time or the giving of
notice, or both, would constitute a violation. It has the full power and right
to transfer the Permits without the consent of any other person except as
described in Schedule 2.09.
(q) The Insurance Policies are listed on Schedule 7.01(q). The Schedule
shows each policy's carrier, the amount of coverage, its expiration date, and
the date through which premiums have been paid. All Insurance Policies are now
in full force and effect. All payments due under them have been made through the
date of this agreement and will be made through and including the Closing Date.
The Insurance Policies are all the liability and other insurance necessary with
respect to the Property, Products, Introductory Sizes, operation of the
Distribution Network, and the use of the Facilities, Equipment, and the property
subject to the Canadian Lease. A copy of any review of insurance coverage by any
insurance broker or consultant or other person has been listed on the Schedule
and delivered to Purchaser.
(r) The Financial Statements are listed on Schedule 7.01(r). True and
complete copies of the Financial Statements have been delivered to Purchaser.
Each of the Financial Statements are true and complete with respect thereto.
Each item therein was prepared in accordance with generally accepted accounting
principals, consistently applied, and accurately reflect the financial
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condition of Seller or ETI and the results of their operations in for the
periods to which they relate. There has been no material change in the financial
condition or the operations of Seller or ETI not reflected in the Financial
Statements. Seller has received no auditors' letters from its accountants other
than those listed on the Schedule. True and complete copies of the auditors'
letters have been delivered, or will be delivered prior to the Closing Date, to
Purchaser.
(s) The Internal Revenue Service ("IRS") has not audited Seller's tax
returns since 1994 except as listed on Schedule 7.01(s). Copies of any audit
papers and any other communications with the IRS have been delivered to
Purchaser.
(t) (i) Seller has duly and timely filed where required all federal,
state and local tax returns required to be filed prior to the date of this
Agreement, including income, employment, rent and sales and use tax returns,
and, except as noted on Schedule 7.01(t), has paid all taxes due and payable on
such returns, all deficiencies and assessments notice of which has been
received, all other taxes, and all governmental charges, duties, penalties,
interest and fines (collectively, "Other Charges") due and payable on or before
the date of this Agreement. All such tax returns required to be filed after the
date of this Agreement and on or prior to the Closing Date, and all such
deficiencies, assessments, taxes and Other Charges required to be paid during
such period, will be filed and paid prior to the Closing Date.
(ii) There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of any tax returns
by Seller or for the payment by, or assessment against, either of any tax,
deficiency, assessment or Other Charges.
(iii) There are no suits, actions, claims, audits,
investigations, inquiries or proceedings pending against Seller in respect of
any unpaid taxes, deficiencies, assessments or Other Charges and there are no
such threatened suits, actions, claims, audits, investigations or inquiries.
(iv) Seller has withheld or collected from each payment made
to each of its employees the amount of all taxes required to be withheld or
collected therefrom and has paid the same to the proper tax receiving officers.
Seller will continue to so withhold, collect and pay such taxes after the date
of this Agreement and to and including the Closing Date.
(v) Seller is in arrears in the payment of Federal, state and
local withholding taxes, FICA, Medicare, real estate taxes and assessments, and
sales taxes as specified on Schedule 7.01(t) ("Delinquent Taxes"). The schedule
sets forth the type of Delinquent Tax, to which government entity it is owed,
and the amount, including penalties now due and estimated to be due by the
Closing Date.
(u) Seller is a member in good standing of the Direct Sales
Association. Its dues have been paid through December 31, 1999. The next dues
payment is in the amount of $17,100, of which shall be prorated as of the
Closing such that $10,739 shall be the responsibility of Purchaser and $6,361
shall be the responsibility of Seller. The dues are due June 1, 2000 and are for
the period ending December 31, 2000.
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(v) Seller is not a party to any civil litigation or arbitration
proceeding except as listed on Schedule 7.01(v). Seller has no knowledge of and
has received no notice of any criminal, regulatory, or compliance proceedings or
threatened proceedings from or by any government or governmental entity or
agency except as listed on the Schedule. Seller has provided, or will provide
prior to the Closing Date, Purchaser a copy of the pleadings or a summary of the
proceedings listed, as well as letters from Seller's counsel to Seller's
auditors for any fiscal year after 1996 relating to litigation, contingent
liabilities and other matters.
(w) Seller has no knowledge of and has received no notice of any
release or other discharge or leak of or storage or possession of any substance
or material defined as hazardous under the laws of the United States, Canada,
Nevada, Minnesota, or Ontario at the Facilities, the property subject to the
Canadian Lease, or Seller's manufacturing facility in Minnesota. Seller has no
knowledge of and has received no notice of any complaint about violations of
environmental law by a former owner or tenant of any of the forgoing properties.
(x) Schedule 7.01(x) sets forth a complete description of incentive
awards now in effect for members for the Distribution Network ("Incentive
Awards").
(y) (i) Seller is acquiring the Stock Portion for investment and not
with a view towards distribution. Seller acknowledges and understands that it
must bear the economic risk of an investment in the Stock Portion being acquired
pursuant hereto for an indefinite period of time since such securities have not
been registered under the Securities Act and, therefore, cannot be sold unless
they are either subsequently registered under the Securities Act or an exemption
from such registration is available and favorable opinions of counsel in form
and substance satisfactory to Purchaser to that effect are obtained.
Notwithstanding the foregoing, this shall not preclude the resale of the Stock
Portion to the public subsequent to the Closing Date pursuant to an effective
registration statement as contemplated in Section 3.04 hereof. The certificates
representing the Stock Portion (unless such securities have been registered)
shall bear on their face the following legend:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933. These shares have been
acquired for investment and not for distribution or resale. They
may not be mortgaged, pledged, hypothecated or otherwise
transferred without an effective registration statement for such
shares under the Securities Act of 1933 or an opinion of counsel
for the Corporation that registration is not required under such
act."
(ii) Seller, taking into account the personnel and resources it
can practically bring to bear on the purchase of the Stock Portion contemplated
hereby, is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in Stock Portion
presenting an investment decision like that involved in the purchase of the
Stock Portion.
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(iii) Seller has had the opportunity to ask questions of and
receive answers from representatives of Purchaser or persons acting on its
behalf concerning the terms and conditions of the proposed investment in
Purchaser, has had the opportunity to obtain additional information necessary to
verify the accuracy of information previously furnished about Purchaser, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Stock Portion.
(iv) Seller is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.
(z) Seller is in compliance with, and has not received any notice of
any violation of, nor any notice regarding a pending site visit or investigation
pursuant to, the Occupational Health and Safety Act and the regulations issued
pursuant thereto.
(aa) Seller has complied with the continuation coverage requirements
for Group Health Plans contained in Section 4980B(f) of the Code, as added by
the Consolidated Omnibus Budget Reconciliation Act of 1989, as amended, relating
to Seller's group health plans.
(bb) Neither Seller nor any of its officers, employees or agents, nor
any other person acting on behalf of any of them, has, directly or indirectly,
within the past five years given or agreed to give any gift or similar benefit
(other than legal price concessions to customers in the ordinary course of
business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office or other person who is or may be in a position to help the business of
Seller (or assist it in connection with any actual or proposed transaction)
which (i) might subject Seller to any damage or penalty in any civil, criminal
or governmental litigation or proceeding, (ii) if not given in the past, might
have had a materially adverse effect on the assets, business or operations of
Seller as reflected in any of the Financial Statements or (iii) if not continued
in the future, might adversely affect the assets, business, operations or
prospects of Seller.
(cc) Each of the Schedules described in this Article VII is dated the
date of this Agreement, identified specifically as a schedule to a particular
article, certified by Seller as being true and complete in every material
respect, and has been delivered to the Purchaser by the Seller. Information
disclosed in any schedule described in this Article VII shall not be deemed
disclosed for purposes of any other schedule hereto.
(dd) None of the representations, warranties, covenants or agreements
by ETI or ETIC in this Agreement, nor any document, certificate or schedule
furnished or to be furnished pursuant hereto, or in connection with the
transactions contemplated hereby, 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 of facts contained therein not misleading.
(ee) All statements contained in any certificate or other instruments
delivered by or on behalf of the Seller pursuant hereto or in connection with
the transactions contemplated hereby shall be deemed a representation and
warranty of the Seller.
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Section 7.02 PURCHASER'S REPRESENTATIONS
Purchaser represents as follows:
(a) Purchaser is a corporation that was duly organized and is validly
existing and in good standing under the laws of the State of Utah.
(b) The execution, delivery and performance of the transactions
contemplated by this Agreement have been duly authorized by the Board of
Directors of Purchaser, and will not contravene any provisions of law, or an
order of any court or other agency of government or of its Articles of
Incorporation or Bylaws. Any and all consents, approvals, authorizations, or
orders of or registrations or qualifications with any person, bank, governmental
body, or court having authority or power to regulate supervise or direct the
business and affairs of Purchaser necessary for the consummation of the
transactions specified in this Agreement shall have been obtained prior to the
Effective Date.
(c) This Agreement constitutes the legal, valid and binding obligation
of Purchaser enforceable against it in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and the award by courts of
money damages rather than specific performance of contractual provisions
involving matters other than the payment of money.
(d) Nothing in any agreement to which Purchaser is a party prohibits
the execution or implementation of this Agreement.
(e) This Agreement is not in violation of any law or regulation of any
governmental jurisdiction in which Purchaser does business.
(f) The Common Stock, when issued in accordance with this agreement,
will be validly issued, outstanding, fully paid, and non-assessable.
(g) The reports and other documents filed by Purchaser with the SEC
were complete and accurate when filed. The financial statements included or
referenced therein were prepared in accordance with generally accepted
accounting principals and accurately reflect the financial condition of
Purchaser and the results of its operations for the periods to which they
relate. There has been no material change in the financial condition or the
operations of Purchaser which has not been included in a report filed with the
SEC.
(h) Purchaser is not a party to any civil litigation or arbitration
proceeding except as listed on Schedule 7.02(h). Purchaser has no knowledge of
and has received no notice of any criminal, regulatory, or compliance
proceedings or threatened proceedings from or by any government or governmental
entity or agency except as listed on the Schedule. Purchaser has provided Seller
with a copy of the pleadings or a summary of the proceedings listed, as well as
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any letters from Purchaser's counsel to Purchasers auditors for any fiscal year
after 1996 relating to litigation, contingent liabilities, and other matters.
(i) All statements contained in any certificate or other instruments
delivered by or on behalf of the Purchaser pursuant hereto, or in connection
with the transactions contemplated hereby, shall be deemed representations and
warranties by the Purchaser.
(j) The IRS has not audited Purchaser's tax returns since 1994 except
as listed on Schedule 7.02(j). Copies of any audit papers and any other
communications with the IRS have been delivered to Seller.
(k) (i) Purchaser has duly and timely filed where required all
federal, state and local tax returns required to be filed prior to the date of
this Agreement, including income, employment, rent and sales and use tax
returns, and, except as noted on Schedule 7.02(k), has paid all taxes due and
payable on such returns, all deficiencies and assessments notice of which has
been received, all other taxes, and all Other Charges due and payable on or
before the date of this Agreement. All such tax returns required to be filed
after the date of this Agreement and on or prior to the Closing Date, and all
such deficiencies, assessments, taxes and Other Charges required to be paid
during such period, will be filed and paid prior to the Closing Date.
(ii) There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of any tax returns
by Purchaser or for the payment by, or assessment against, either of any tax,
deficiency, assessment or Other Charges.
(iii) (There are no suits, actions, claims, audits,
investigations, inquiries or proceedings pending against Purchaser in respect of
any unpaid taxes, deficiencies, assessments or Other Charges and there are no
such threatened suits, actions, claims, audits, investigations or inquiries.
(iv) Purchaser has withheld or collected from each payment
made to each of its employees the amount of all taxes required to be withheld or
collected therefrom and has paid the same to the proper tax receiving officers.
Purchaser will continue to so withhold, collect and pay such taxes after the
date of this Agreement and to and including the Closing Date.
(v) Purchaser is not in arrears in the payment of Federal,
state and local withholding taxes, FICA, Medicare, real estate taxes and
assessments, and sales taxes.
(l) Purchaser has no knowledge of and has received no notice of any
release or other discharge or leak of or storage or possession of any substance
or material defined as hazardous under the laws of the United States or Florida.
Purchaser has no knowledge of and has received no notice of any complaint about
violations of environmental law by a former owner or tenant of any of its
existing or former properties.
(m) Purchaser is in compliance with, and has not received any notice of
any violation of, nor any notice regarding a pending site visit or investigation
pursuant to, the Occupational Health and Safety Act and the regulations issued
pursuant thereto.
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(n) Neither Purchaser nor any of its officers, employees or agents, nor
any other person acting on behalf of any of them, has, directly or indirectly,
within the past five years given or agreed to give any gift or similar benefit
(other than legal price concessions to customers in the ordinary course of
business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office or other person who is or may be in a position to help the business of
Purchaser (or assist it in connection with any actual or proposed transaction)
which (i) might subject Purchaser to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) if not given in the
past, might have had a materially adverse effect on the assets, business or
operations of Purchaser or (iii) if not continued in the future, might adversely
affect the assets, business, operations or prospects of Purchaser.
(o) None of the representations, warranties, covenants or agreements by
Purchaser in this Agreement, nor any document, certificate or schedule furnished
or to be furnished pursuant hereto, or in connection with the transactions
contemplated hereby, 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 of facts contained therein not misleading.
ARTICLE VIII. CONDITIONS PRECEDENT TO THE CLOSING
Section 8.01 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
Notwithstanding any other provision herein, the obligations of the
Purchaser under this Agreement are, at the option of the Purchaser, subject to
the fulfillment of each of the conditions set forth below.
(a) The representations of the Seller and ETI contained in this
Agreement, or otherwise made in writing in connection with the transactions
contemplated hereby, shall be true and correct in all material respects on and
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date. On
or before the Closing Date, the Seller shall have complied with and duly
performed any and all covenants, agreements and conditions in all material
respects, on its part to be complied with or performed pursuant to or in
connection with this Agreement on or before the Closing Date.
(b) The Purchaser shall have received certificates, in form
satisfactory to it, dated the Closing Date as follows:
(i) A certificate executed by the Chairman of ETI and ETIC and
the President of each other corporation constituting Seller certifying that the
representations made by the Seller and ETI in this Agreement are true and
correct in every material respect at and as of the Closing Date and that it has
fulfilled the covenants, agreements and conditions to be fulfilled by it.
(ii) A certificate executed by the Secretary of ETI and ETIC
setting forth a copy of the resolutions adopted by their respective Boards of
Directors and stockholders of ETI
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and ETIC approving the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(c) The Purchaser shall have received an opinion of Kummer Kaempfer
Bonner & Renshaw, counsel for Seller, dated as of the Closing Date, in form and
substance satisfactory to the Purchaser to the effect that (i) ETI and ETIC are
corporations that are validly existing and in good standing under the laws of
the state of their incorporation and have the corporate power to carry on their
business as it is now being conducted and is qualified to do business in Nevada;
(ii) any and all consents or orders of any and all courts or governmental
agencies, administrative bodies or lenders or others known to counsel have been
obtained as of the Closing Date, which are required for the consummation of the
transactions contemplated by this Agreement; (iii) this Agreement has been duly
executed and delivered by ETI and ETIC, and is the valid and binding obligation
of ETI and ETIC, in accordance with its terms, subject only to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and
other similar laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, and the award by courts of money damages
rather than specific performance of contractual provisions involving matters
other than the payment of money; (iv) counsel has no knowledge of a breach by
ETIC or ETI of any representation made by ETIC or ETI pursuant to this
Agreement; (v) counsel has no knowledge of any pending or threatened litigation,
action, or proceeding involving ETIC or ETI or the entry of any orders or
injunctions which might materially and adversely affect or impair the Property;
and (vi) the transactions contemplated hereby will not cause a breach of the
certificate of incorporation or by-laws of ETI or ETIC.
(d) All actions, proceedings, instruments and documents required to
carry out this Agreement or incidental hereto, and all other related legal
matters, shall have been approved by Nason, Yeager, Gerson, White & Lioce, P.
A., counsel for the Purchaser.
(e) No action or proceeding shall have been instituted to restrain or
prohibit the acquisition by the Purchaser, or the conveyance by the Seller, of
the Property.
(f) The Seller shall have obtained the consent of each other party to
all contracts, leases and agreements to which the Seller is a party which
consents are required by reason of the execution of this Agreement or the
consummation of the transactions contemplated hereby.
(g) The Property has not been subjected to any lien, charge, or any
other encumbrance not disclosed herein.
(h) The Property shall not have suffered any destruction or damage by
fire, explosion or other calamity exceeding Ten Thousand Dollars ($10,000.00) in
value not covered by insurance, nor has any other event, condition or state of
facts of any character occurred which materially and adversely affects, or, to
the best of the knowledge of the Seller, threatens to materially and adversely
affect, the Property, business or financial condition of the Seller.
(i) Seller has executed the Supply Agreement and the Facility License
Agreement. They are set forth as Schedules 8.01(i)(1) and (2), respectively.
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(j) Rodney C. Yanke has executed the Option Agreement that is set forth
as Schedule 8.01(j).
(k) Seller has executed the Rights License Agreement set forth as
Schedule 8.01(k).
(l) Seller has paid or otherwise satisfied the Delinquent Taxes and
provided proof satisfactory to Purchaser of the payment of all sales,
withholding, Social Security, and Medicare taxes that are due through the
Closing Date.
(m) Seller has executed the Documents that require its execution.
(n) Advanced Techniques, Inc. and Stephen D. and Leticia M. Leis have
consented to the provisions of the Supply Agreement that pertain to them.
(o) Purchaser has received or has been approved for any Permits needed
to conduct the Distribution Network in all jurisdictions where the Distribution
Network is now active, where it has been active since 1995, or where it now
holds a permit.
(p) Purchaser has been allowed to assume the Insurance Policies or has
been able to obtain comparable coverage at the same or lower cost.
(q) Seller's accountants, McGlandrey & Pullen, LLP, shall have
completed a certified audit of ETI for the three (3) years ended December 31,
1997, 1998, and 1999.
(r) Purchaser has received reasonably satisfactory evidence that
Community First National Bank, Fargo, North Dakota will not move to execute on
its judgment concerning the Elbow Lake, Minnesota facility.
Section 8.02 CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION TO CLOSE
Notwithstanding any other provision herein, the obligations of the
Seller under this Agreement are, at the option of the Seller, subject to the
fulfillment of each of the conditions set forth below.
(a) The representations of the Purchaser contained in this Agreement,
or otherwise made in writing in connection with the transactions contemplated
hereby, shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date. On or before the Closing
Date, the Purchaser shall have complied with and duly performed any and all
covenants, agreements and conditions in all material respects, on its part to be
complied with or performed pursuant to or in connection with this Agreement on
or before the Closing Date.
(b) The Seller shall have received certificates, in form satisfactory
to it, dated the Closing Date as follows:
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(i) A certificate executed by the Chairman of Purchaser
certifying that the representations made by the Purchaser in this Agreement are
true and correct at and as of the Closing Date and that it has fulfilled the
covenants, agreements and conditions to be fulfilled by it.
(ii) A certificate executed by Secretary of the Purchaser
setting forth a copy of the resolutions adopted by Purchaser's Board of
Directors approving the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(c) The Seller shall have received an opinion of Nason, Yeager, Gerson,
White & Lioce, P. A., counsel for the Purchaser, dated as of the Closing Date,
in form and substance satisfactory to the Seller to the effect that (i)
Purchaser is a corporation that was duly incorporated and is validly existing
and in good standing under the laws of the state of Utah and has the corporate
power to carry on its business as it is now being conducted and is qualified to
do business in each jurisdiction where it owns or leases property or where the
nature of the business conducted by it requires such qualification; (ii) any and
all consents or orders of any and all courts or governmental agencies,
administrative bodies or lenders or others known to counsel have been obtained
as of the Closing Date, which are required for the consummation of the
transactions contemplated by this Agreement; (iii) this Agreement has been duly
executed and delivered by Purchaser, and is the valid and binding obligation of
Purchaser, in accordance with its terms, subject only to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and
other similar laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, and the award by courts of money damages
rather than specific performance of contractual provisions involving matters
other than the payment of money; (iv) counsel has no actual knowledge of a
material breach by Purchaser of any representation made by it pursuant to this
Agreement; (v) the issuance of the Stock Portion to the Seller will be exempt
from the registration provisions of the Securities Act and will not violate the
registration provisions of Section 5 of the Securities Act; (vi) the Stock
Portion, when issued, will be duly issued, fully paid, and non-assessable; and
(vii) the transactions contemplated hereby will not cause a breach of the
certificate of incorporation or by-laws of Purchaser.
(d) All actions, proceedings, instruments and documents required to
carry out this Agreement or incidental hereto, and all other related legal
matters, shall have been approved by Kummer Kaempfer Bonner & Renshaw, counsel
for the Seller.
(e) No action or proceeding shall have been instituted to restrain or
prohibit the acquisition by the Purchaser, or the conveyance by the Seller, of
the Property.
(f) Purchaser has executed the Supply Agreement and the Facility
License Agreement.
(g) Purchaser has executed those documents it is required to execute.
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ARTICLE IX. THE CLOSING
Section 9.01 THE CLOSING CONFERENCE
The Closing Conference shall take place at Seller's business office or
at another place as agreed between the Parties. It shall be held at 10:00
o'clock AM, local time.
Section 9.02 THE CLOSING DATE
(a) The Closing Date shall be the fifth (5th) Monday after the
Effective Date.
(b) If either party is unable to comply with the conditions to the
other party's obligation to close, it may adjourn the Closing Conference for two
(2) weeks.
Section 9.03 SELLER'S AND ETI'S RESPONSIBILITIES AT THE CLOSING CONFERENCE
At the Closing Conference, Seller and ETI shall take the actions listed
below:
(a) Seller shall deliver all the instruments listed in this subsection
("Documents"):
(ii) An assignment, in form satisfactory to Purchaser, of all
the agreements with the members of the Distribution Network.
(ii) A bill of sale, in form satisfactory to Purchaser, for
the Equipment (other than the leased Equipment), the Supplies, the Software, the
Rights owned by Seller, the Production Materials and the Software.
(iii) Assignments, in form satisfactory to Purchaser, of the
Equipment Leases, any licenses relating to the Software, any licenses relating
to the Rights, the Contract Rights, the Permits, the Canadian Lease, and the
Distributorships.
(iv) The Supply Agreement, the Facilities License, the Option
Agreement, and the Rights License Agreement.
(v) The opinion of Kummer Kaempfer Bonner & Renshaw.
(vi) Its officers' certificates as required by Section
8.02(b).
(vii) A release of the Contract Personnel, in form
satisfactory to Purchaser, from all of their obligations to Seller.
(viii) A confidentiality and nondisclosure agreement, in form
satisfactory to Purchaser, executed by the Contract Personnel.
(b) Seller shall deliver all of the following to Purchaser:
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<PAGE>
(i) All keys, passes, and other things necessary to access the
Facilities and the property subject to the Canadian Lease.
(ii) All disks and documentation related to the Software.
(iii) All codes and other passwords necessary to control and
operate all software, voicemail, e-mail, and other systems used in connection
with the operation of the Distribution Network.
Section 9.04 PURCHASER'S RESPONSIBILITIES AT THE CLOSING CONFERENCE
(a) Purchaser shall accept the Assignments.
(b) Purchaser shall receive delivery of the Supply Agreement, the
Facilities License, the Option Agreement, and the Rights License Agreement.
(c) Purchaser shall accept the confidentiality and nondisclosure
agreement, in form satisfactory to Purchaser, executed by the Contract
Personnel.
(d) Purchaser shall pay the Closing Portion and Deliver the Stock
Portion.
(e) Purchaser shall deliver the opinion of Nason, Yeager, Gerson, White
& Lioce, P.A.
Section 9.05 RIGHT OF CANCELLATION
(a) If either Seller or Purchaser (the "Nonperforming Party") shall be
unable to fully consummate the transaction contemplated by this Agreement in
accordance with its terms on the Closing Date or the Adjourned Closing Date,
Purchaser or Seller (the "Cancelling Party") may give notice to the
Nonperforming Party that it desires to cancel this Agreement. Upon receipt of a
notice given pursuant to this subsection, the Nonperforming Party may again
reschedule the Closing Conference to any Monday less than fifteen (15) days from
the date of notice by giving notice to the Cancelling Party. If the
Nonperforming Party fails to give notice pursuant to this subsection or cannot
fully consummate the transaction contemplated by this Agreement in accordance
with it, the Cancelling Party may cancel this Agreement.
(b) If the Closing does not take place on or before August 1, 2000 or
an adjourned Closing Conference pursuant to subsection 9.05(a), whichever shall
later occur, each party shall have the option to cancel this Agreement by giving
notice to the other.
(c) If either party shall cancel the Agreement pursuant to this
Section, the Initial Deposit and the Additional Deposit shall be immediately
returned to Purchaser.
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<PAGE>
(d) Any notice of cancellation from Seller, in order to be effective,
must be accompanied by a bank cashier's check payable to Purchaser in the amount
of the Initial Deposit and the Additional Deposit.
ARTICLE X. ADDITIONAL COVENANTS
Section 10.01 TAXES
(a) Within thirty (30) days of the Closing Date, Seller shall pay any
Federal, state and local withholding taxes, FICA, Medicare relating to the
Contract Personnel, and real estate taxes and assessments relating to the
Facilities or the property subject to the Canadian Leases.
(b) Notwithstanding any other provision of this Agreement, Seller shall
not be required to pay all unpaid sales taxes prior to Closing; however,
following the Closing, Seller shall make every reasonable effort to make
acceptable payment arrangements with the states to which sales taxes are due and
Seller shall pledge the Stock Portion to Purchaser pursuant to a pledge
agreement substantially in the form of Schedule 10.01(b) as security for the
payment of the unpaid sales taxes.
(c) Upon the Effective Date, Purchaser shall apply for and otherwise
secure sales tax accounts in every state in which sales taxes will accrue in
connection with the operation by Purchaser of the Distribution Network following
the Closing.
Section 10.02 FURTHER ACTIONS
The Parties agree, in order to perfect Purchaser's title to and use of
the Property and to accomplish the purpose of this Agreement, to execute all
documents and take all such other action as the Parties may reasonably request,
whether at or after the Closing Date, as may be reasonably necessary or proper
to allow the Parties to receive the full benefits of this Agreement and
Purchaser's operation of the Distribution Network. Seller shall further assist
Purchaser in obtaining any Permits necessary to operate the Distribution
Network.
Section 10.03 NON-COMPETITION AND NON-SOLICITATION
(a) For so long as the Supply Agreement is effective plus 50 years,
Seller shall not, engage, directly or indirectly, in the distribution or sale of
any of the Products in North America, including the Caribbean Islands, except to
local, state and federal governments and government agencies for consumption by
such governments and government agencies and not for resale; and except also for
Products dropped from the product line of products distributed in North America
through the Distribution Network; provided, however, that Seller may not sell or
distribute Products through multi-level marketing distribution channels.
(b) For a period of five years from the Closing Date, neither Seller,
ETI, nor any of its representatives shall solicit to employ, engage as a
consultant, or organize a corporation, partnership, limited liability company or
otherwise enter into a joint venture arrangement with any of the Contract
Personnel, members of the Distribution Network, or the distributors,
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<PAGE>
principal suppliers, consultants or principal creditors of Purchaser, to the
extent that such are not currently suppliers, consultants, or creditors of
Seller.
(c) For so long as the Supply Agreement is effective plus 50 years,
Seller and ETI shall not engage, directly or indirectly, in network or
multi-level marketing sales of any products or services in North America.
(d) For so long as the Supply Agreement is effective plus 50 years,
Purchaser shall not engage, directly or indirectly, in network or multi-level
marketing sales of Products or Introductory Sizes outside of North America.
(e) Seller and ETI acknowledge that (i) compliance with the provisions
of this Section is necessary to protect the business and goodwill of Purchaser;
(ii) Seller and ETI have no right to derive profits or benefits of any kind from
any violation of any of the provisions of this Section; (iii) Purchaser would
suffer irreparable harm if any of those provisions were breached; and (iv)
Purchaser would not have an adequate remedy at law for the breach or threatened
breach of those provisions. If Seller or ETI breaches or threatens to breach any
of the provisions set forth in this Section, Purchaser may (i) in addition to
other available remedies, seek and obtain equitable remedies, including
injunction of the breach or threatened breach and an accounting and disgorgement
of all profits resulting from any and (ii) collect its reasonable attorney's
fees and costs incurred in enforcing it's rights under this Agreement.
Section 10.04 OPERATION OF SOFTWARE
For a period of one year from the Closing Date. Seller shall continue
to assist Purchaser, at Purchaser's expense, with the operation, modification,
and replacement of the Software as reasonably required by Purchaser.
Section 10.05 RESTRICTION OF ISSUANCE OF PURCHASER'S CAPITAL STOCK
Until the earlier to occur of (a) two years after the Closing or (b)
the one million (1,000,000) shares of the Stock Portion are sold by Seller or
ETI, Purchaser shall not issue any additional capital stock without the prior
written consent of ETI, which consent shall not be unreasonably withheld. ETI
hereby consents to the issuance of additional capital stock (a) in an amount
equal to the number of shares currently allocated to Purchaser's stock option
plan, (b) in an amount equal to the number of shares allocated to Purchaser's
existing warrants, (c) up to five million shares for the acquisition of
additional companies, (d) in order to raise funds to pay any part of the Cash
Portion, (e) to acquire Select Benefits, Inc., (f) to acquire Classic Optical
Laboratories, Inc., and (g) in an amount equal to the number of shares currently
issued and outstanding but subsequently surrendered or otherwise returned to
Purchaser.
Section 10.06 APPOINTMENT OF DIRECTORS OF PURCHASER
Until the second anniversary of the Closing Conference, Seller shall
nominate to Purchaser's Board of Directors any two of the following present
members of ETI's board of
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<PAGE>
directors, Yanke, Woodcock, or Peterson. Purchaser shall take every reasonable
action to cause such persons to be appointed or elected to Purchaser's board of
directors.
Section 10.07 RESTRICTIONS ON DISTRIBUTION OF PRODUCTS
Following the Effective Date, Purchaser shall not distribute the
Products by any other means other than through the Distribution Network, and
shall only distribute the Products in North America.
Section 10.08 NONASSIGNMENT OF PROPERTY
Following the Closing, Purchaser shall not sell, assign, pledge,
hypothecate or otherwise transfer any interest in the Property except to a
wholly-owned subsidiary that remains wholly-owned, without the prior written
consent of ETI and only after Seller has rejected the opportunity to purchase,
have assigned, have pledged, have hypothecated or otherwise have the Property
transferred to Seller under identical terms to those contemplated by Purchaser.
Section 10.09 COMPLIANCE
Following the Closing, in operating the Distribution Network and
otherwise, Purchaser shall be in full compliance with Applicable Laws and the
Direct Selling Association's Code of Ethics in all material aspects.
Section 10.10 CONTINUATION OF ENVIRO-TECH INTERNATIONAL
Following the Closing, Purchaser shall continue to operate the
Distribution Network and sell the Products under the name of "Enviro-Tech
International."
Section 10.11 COMPENSATION REPORTS
For a period of one year following the Closing, Purchaser shall provide
Seller with a list of the monthly compensation report for distributors in the
Distribution Network, prior to the payment of such compensation to distributors,
for purposes of reviewing the monthly compensation report as a consultant to
Purchaser on a pro bono basis.
Section 10.12 DISCONTINUANCE OF PRODUCTS
For a period of five years following the Closing, Purchaser shall not
discontinue the marketing or distribution of any Products or Introductory Sizes,
without purchasing Purchasers existing inventory of such Products and
Introductory Sizes.
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<PAGE>
ARTICLE XI. MISCELLANEOUS
Section 11.01 ENTIRE AGREEMENT; AMENDMENTS
This Agreement, including those additional agreements referred to in
the Schedules, embodies the entire understanding of the Parties. No amendment or
modification of this Agreement may be made except in writing, signed by the
Parties hereto.
Section 11.02 EXPENSES
Each party hereto shall pay its own expenses incidental to the
preparation of this Agreement, and the consummation of the transactions
contemplated hereby unless expressly provided herein.
Section 11.03 HEADINGS
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
Section 11.04 NOTICES
All notices, requests, demands, approvals, consents, waivers or other
communications hereunder shall be in writing and shall be deemed duly given if
delivered to or mailed by registered or certified mail, postage prepaid or by
nationally recognized overnight express delivery service as follows:
If to Purchaser to: IMX Pharmaceuticals, Inc.
2295 Corporate Blvd., Ste 131
Boca Raton, Florida 33431
Attn: William A. Forster
If to Seller to: Dri-Kleen, Inc d/b/a Enviro-Tech
International and
ETI International, Inc.
Attn: President
P.O. Box 98867
Las Vegas, Nevada 89193-8867
~ or ~
3930 Ali Baba Lane
Las Vegas, Nevada 89118
Section 11.05 GOVERNING LAW; JURISDICTION
This Agreement and the legal relations among the Parties hereto shall
be governed by and construed in accordance with the substantive law of the State
of Nevada without regard to
Page 32 of 35
<PAGE>
conflict of law principles. The Parties consent to the jurisdiction of the
courts of the State of Nevada or the U.S. District Court for the District of
Nevada as if all parts of the agreement were negotiated and effectuated there.
Section 11.06 BENEFICIARIES
This Agreement shall inure to the benefit of and be binding upon the
Parties hereto and their respective successors and legal representatives.
Nothing in this Agreement, express or implied, is intended to confer on any
other person other than the Parties hereto or their respective successors and
legal representatives, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
Section 11.07 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument. Its execution shall be effective when
copies of signed signature pages are exchanged by facsimile between the Parties.
Section 11.08 SEVERANCE
If any section, subsection or provision of this Agreement, or the
application of such section, subsection, or provision, is held invalid, the
remainder of this Agreement and the application of such section, subsection or
provision to persons or circumstances other than those to which it is held
invalid shall not be affected thereby.
Section 11.09 SURVIVAL OF REPRESENTATIONS
All representations and covenants contained in this Agreement shall
survive the Closing.
Section 11.10 INDEMNIFICATION
(a) Seller and ETI shall indemnify and hold Purchaser, their officers,
directors, employees, and agents (each a "Seller Indemnified Entity") harmless
from and against, and reimburse a Seller Indemnified Entity with respect to, any
and all loss, damage, liability, cost and expense, including reasonable
attorneys' fees and costs incurred by the Seller Indemnified Entity by reason
of, or arising out of (i) the breach of any representation made by Seller or ETI
in this Agreement; (ii) Seller's or ETI's failure to perform any action required
by this Agreement or reasonably directed by Purchaser pursuant hereto; (iii)
Seller's or ETI's failure to make any payment to an employee, landlord,
equipment owner, government, government agency, or otherwise with respect to the
Contract Personnel, the Delinquent Taxes, or the Property; and (iv) claims
arising from any actual or asserted product liability claim with the exception
of claims arising from or related to the Products or Introductory Sizes sold in
the Distribution Network.
(b) Purchaser shall indemnify and hold ETI and Seller, their officers,
directors, employees and agents (each a "Purchaser Indemnified Party") harmless
from and against, and
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<PAGE>
reimburse a Purchaser Indemnified Party with respect to, any and all loss,
damage, liability, cost and expense, including reasonable attorneys' fees and
costs, incurred by the Purchaser Indemnified Party by reason of or arising out
of (i) breach of any representation or covenant made by Purchaser in this
Agreement; (ii) the failure by Purchaser to perform any action required by this
Agreement; (iii) claims arising from any actual or asserted products liability
claim related to Purchaser's products; and (iv) claims arising from members of
the Distribution Network arising from activities of Purchaser.
(c) If a claim for which indemnification may be sought against the
other party is asserted the party entitled to indemnification hereunder shall
advise the other to that effect and shall thereafter permit the other to
participate at such party's sole expense in the negotiation and settlement of
that claim and to join in or assume the defense of any legal action arising
therefrom with counsel selected by them and reasonably satisfactory to the other
party. Either party may implead the other in any action that is subject to
indemnity.
Section 11.11 BROKERS AND FINDERS
All brokers' commissions related to the sale and purchase of the
Distribution Network shall be borne equally. The Parties shall work together to
negotiate the amount, terms, and payment of these commissions.
Section 11.12 INTERPRETATION
The use of words "it" or "its," in reference to any party hereto shall
be construed to be a proper reference even though a party may be a partnership,
an individual or two or more individuals. The term "person" includes
individuals; corporations, partnerships, associations, or other legal entities;
and governments, governmental subdivisions, agencies, or instrumentalities.
Words of one gender shall be deemed to include the other, or both, or neither. A
provision of this Agreement that requires a party to perform an action shall be
construed as requiring the party to perform the action or to cause such action
to be performed. A provision of this Agreement that prohibits a party from
performing an action shall be construed as prohibiting such party from
performing such action or permitting others to perform such action. Wherever the
term "including" is used herein, the same shall be deemed to read "including,
but not limited to." The singular shall be deemed to include the plural, and the
plural shall be deemed to include the singular. The agreements contained in this
Agreement shall not be construed as independent covenants. "Any" shall be deemed
to read "any and all" whenever applicable. "Anytime" shall be deemed to read
"anytime and from time to time" whenever applicable. The conjunction "and" shall
include the conjunction "or" whenever applicable. The conjunction "or" shall
include the conjunction "and" whenever applicable.
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<PAGE>
IN ORDER TO INDICATE THEIR INTENTION to be bound, the Parties hereto have caused
this Agreement to be duly executed as of the date first above written by their
respective duly authorized officers.
IMX PHARMACEUTICALS, INC.
By: /S/
-----------------------------------------
Bill Forster, Chairman & CEO
DRI-KLEEN, INC. d/b/a Enviro-Tech International
By: /S/
-----------------------------------------
Rodney C. Yanke, Chairman & CEO
ETI joins in its representations in ARTICLE VII and accepts the
responsibilities assigned to it in ARTICLES VII, IX, X and XI. It shall be
jointly and severally liable with Seller therefore in its representations and
responsibilities.
ETI INTERNATIONAL, INC.
By: /S/
--------------------------------------------------
Rodney C. Yanke, Chairman & CEO
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<PAGE>
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. THE PARTIES..................................................................................4
SECTION 1.01 THE PARTIES.............................................................................4
-----------
SECTION 1.02 ASSIGNMENT..............................................................................5
----------
ARTICLE II. THE PROPERTY.................................................................................5
SECTION 2.01 THE DISTRIBUTION NETWORK................................................................5
------------------------
SECTION 2.02 THE EQUIPMENT...........................................................................5
-------------
SECTION 2.03 THE SUPPLIES............................................................................5
------------
SECTION 2.04 THE SOFTWARE............................................................................6
------------
SECTION 2.05 THE PRODUCTION MATERIALS................................................................6
------------------------
SECTION 2.06 THE RIGHTS..............................................................................6
----------
SECTION 2.07 THE CONTRACT RIGHTS.....................................................................6
-------------------
SECTION 2.08 THE FACILITIES..........................................................................6
--------------
SECTION 2.09 THE PERMITS.............................................................................7
-----------
SECTION 2.10 THE CANADIAN LEASE......................................................................7
------------------
SECTION 2.11 THE DISTRIBUTORSHIPS....................................................................7
--------------------
SECTION 2.12 THE GOODWILL............................................................................7
------------
SECTION 2.13 THE PROPERTY............................................................................7
------------
ARTICLE III. THE PURCHASE PRICE AND ITS PAYMENT...........................................................7
SECTION 3.01 PURCHASE PRICE..........................................................................7
--------------
SECTION 3.02 PAYMENT OF THE PURCHASE PRICE...........................................................8
-----------------------------
SECTION 3.03 RETURN OF DEPOSITS......................................................................8
------------------
SECTION 3.04 LATE PAYMENT OF POST CLOSING PAYMENTS....................................................8
SECTION 3.05 REGISTRATION OF THE STOCK PORTION.......................................................8
---------------------------------
SECTION 3.06 RESTRICTIONS ON SALE OF STOCK PORTION...................................................9
-------------------------------------
ARTICLE IV. OPERATIONS BETWEEN EFFECTIVE DATE AND THE CLOSING DATE........................................9
SECTION 4.01 OPERATIONAL SUPPORT.....................................................................9
-------------------
SECTION 4.02 THE FACILITIES.........................................................................11
--------------
SECTION 4.03 THE VARIABLE CHARGES...................................................................12
--------------------
ARTICLE V. INTERIM PERIOD SALE OF PRODUCTS AND INTRODUCTORY SIZES AND PAYMENT..........................12
SECTION 5.01 SALES..................................................................................12
-----
ARTICLE 5.02 PAYMENT................................................................................13
-------
SECTION 5.03 PURCHASER PRODUCTS.....................................................................14
------------------
SECTION 5.04 COMMISSIONS............................................................................14
-----------
ARTICLE VI. INTERIM PERIOD MANAGEMENT OF CASH RECEIPTS...................................................14
SECTION 6.01 RECEIPT OF CASH........................................................................14
---------------
SECTION 6.02 PAYMENT OFFSET.........................................................................15
--------------
ARTICLE VII. REPRESENTATIONS..............................................................................15
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 7.01 SELLER'S REPRESENTATIONS...............................................................15
------------------------
SECTION 7.02 PURCHASER'S REPRESENTATIONS............................................................21
---------------------------
ARTICLE VIII. CONDITIONS PRECEDENT TO THE CLOSING..........................................................23
SECTION 8.01 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE................................23
-------------------------------------------------------
SECTION 8.02 CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION TO CLOSE...............................25
--------------------------------------------------------
ARTICLE IX. THE CLOSING..................................................................................27
SECTION 9.01 THE CLOSING CONFERENCE.................................................................27
----------------------
SECTION 9.02 THE CLOSING DATE.......................................................................27
----------------
SECTION 9.03 SELLER'S AND ETI'S RESPONSIBILITIES AT THE CLOSING CONFERENCE..........................27
-------------------------------------------------------------
SECTION 9.04 PURCHASER'S RESPONSIBILITIES AT THE CLOSING CONFERENCE.................................28
------------------------------------------------------
SECTION 9.05 RIGHT OF CANCELLATION..................................................................28
---------------------
ARTICLE X. ADDITIONAL COVENANTS.........................................................................29
SECTION 10.01 TAXES..................................................................................29
-----
SECTION 10.02 FURTHER ACTIONS........................................................................29
---------------
SECTION 10.03 NON-COMPETITION AND NON-SOLICITATION...................................................29
------------------------------------
SECTION 10.04 OPERATION OF SOFTWARE..................................................................30
---------------------
SECTION 10.05 RESTRICTION OF ISSUANCE OF PURCHASER'S CAPITAL STOCK...................................30
----------------------------------------------------
SECTION 10.06 APPOINTMENT OF DIRECTORS OF PURCHASER..................................................30
-------------------------------------
SECTION 10.07 RESTRICTIONS ON DISTRIBUTION OF PRODUCTS...............................................31
----------------------------------------
SECTION 10.08 NONASSIGNMENT OF PROPERTY..............................................................31
-------------------------
SECTION 10.09 COMPLIANCE.............................................................................31
----------
SECTION 10.10 CONTINUATION OF ENVIRO-TECH INTERNATIONAL..............................................31
-----------------------------------------
SECTION 10.11 COMPENSATION REPORTS...................................................................31
--------------------
SECTION 10.12 DISCONTINUANCE OF PRODUCTS.............................................................31
--------------------------
ARTICLE XI. MISCELLANEOUS................................................................................32
SECTION 11.01 ENTIRE AGREEMENT; AMENDMENTS...........................................................32
----------------------------
SECTION 11.02 EXPENSES...............................................................................32
--------
SECTION 11.03 HEADINGS...............................................................................32
--------
SECTION 11.04 NOTICES................................................................................32
-------
SECTION 11.05 GOVERNING LAW; JURISDICTION............................................................32
---------------------------
SECTION 11.06 BENEFICIARIES..........................................................................33
-------------
SECTION 11.07 COUNTERPARTS...........................................................................33
------------
SECTION 11.08 SEVERANCE..............................................................................33
---------
SECTION 11.09 SURVIVAL OF REPRESENTATIONS............................................................33
---------------------------
SECTION 11.10 INDEMNIFICATION........................................................................33
---------------
SECTION 11.11 BROKERS AND FINDERS....................................................................34
-------------------
SECTION 11.12 INTERPRETATION.........................................................................34
--------------
</TABLE>
2
