STOCK PURCHASE AGREEMENT
WITH PROMISSORY NOTE
This STOCK PURCHASE AGREEMENT WITH PROMISSORY NOTE (hereinafter referred to as
the "Agreement") is entered into as of this 22nd day of March, 2002, by and
between InterNatural Pharmaceuticals, Inc., a Nevada corporation (the "Buyer" or
"Investor"); Coslabs, Ltd., H. Bana Ltd., and Overland Food Co. (collectively
the "Seller" or "Majority Shareholders Group") who are owners of shares of
common stock of Neurochemical Research Corp., a Tennessee corporation (the
"Company').
WITNESSETH:
WHEREAS, Neurochemical Research Corp. is a Tennessee corporation with authorized
capital stock of 100,000,000 shares of common stock at $0.001 par value.
WHEREAS, Seller owns 7,390,000 shares of common stock of Company (hereinafter
referred to as "Shares"), broken down as follows:
Coslabs, Ltd. (4,140,000 common shares) H. Bana Ltd. (2,000,000 common shares)
Overland Food Co. (1,250,000 common shares)
WHEREAS, Buyer desires to purchase the Shares from Seller, being 73.44% of the
total issued and outstanding shares of common stock of COMPANY.
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the Shares
pursuant to this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants,
promises, representations and warranties contained herein, the parties hereto
agree, as follows:
ARTICLE I
PURCHASE
1.1 Purchase of Stock by Buyer. Buyer will purchase from Majority Shareholder
Group 7,390,000 shares of the Company's common stock, or approximately 73.44% of
the 10,062,234 total issued and outstanding shares of common stock of the
Company (the "Shares") for a total consideration of $225,000.00, or $ 0.0304465
per share ("Purchase Price").
1
ARTICLE II
CONSIDERATION
2.1 Purchase Price and Stock Ownership. At the Closing Date (as defined in
Article VII hereof), in accordance with the provisions of this Agreement and
applicable law, Seller agrees to sell to Buyer 7,390,000 shares of common stock
of COMPANY (the "Shares"), which shall be approximately 73.44% of the 10,062,234
total issued and outstanding shares of common stock of the Company. In
consideration for the Shares, Buyer will pay the amount of $225,000 ($ 0.0304465
per share) ("Cash Consideration") and issue to Majority Shareholder Group, pro
rata, 2,000,000 shares of post 5:1 forward split unissued common stock of Buyer
("Stock Consideration"). The Cash Consideration as set forth herein and all
amounts payable hereunder shall be in United States currency.
2.3 The Majority Shareholders Group shall cause the Board of Directors of the
Company to approve a Stock Exchange Agreement between the Company and Buyer
wherein 2,000,000 post 5:1 forward split shares of unissued common stock of
Buyer will be exchanged with 2,000,000 post 1:6 reverse split shares of unissued
common stock of Company. Such stock exchange shall take place after effectivity
of the purchase by Buyer of the Shares from the Majority Shareholder group.
2.4 First Payment. The Purchase Price shall be paid in 12 equal monthly
installment payments of $18,750.00 ("Installment Payment"). The first payment of
$18,750.00 shall be due on closing of this Agreement. Majority Shareholders
Group will advise Buyer of wire transfer instructions.
2.5 Delivery. At Closing, Seller shall deliver stock certificates representing
the Shares free and clear from all claims and encumbrances, endorsed and
accompanied by duly executed stock powers and with signatures guaranteed by a
commercial bank, and shall deliver the said stock certificates to Buyer.
2
2.6 Promissory Note. At Closing, Buyer agrees to be bound on substantially the
following terms and such other terms as shall be commercially reasonable: For
value received, and intending to be legally bound hereby, Buyer promises to pay
to the order to Seller, or Seller's successors or assigns, in lawful money of
the United States of America, the balance in the sum of $206,250.00
("Principal"), without interest, payable in Principal only, in eleven (11)
consecutive installments beginning on April 30, 2002, and ending on February 28,
2003 (the "Maturity Date") unless this Agreement is properly terminated as
provided herein. No interest or penalty shall apply to any proper termination of
payments by Buyer pursuant to Section 2.7 hereunder.
2.7 Default in Payment. The failure of Buyer to make any Installment Payment
when due shall constitute a breach of this Agreement. Majority Shareholders
Group shall provide Buyer with written notice of such breach (the "Notice"). In
such event, the Agreement shall automatically terminate and the number of Shares
owned by Buyer shall be automatically reduced to a number equal to the total
Payment(s) received by Majority Shareholders Group from Buyer, divided by $
0.0304465 price per Share. The unpaid shares shall be returned to the Majority
Shareholders Group on a pro rata basis. Thereupon, the promissory note shall be
canceled and this Agreement shall be null and void except that the warranties
and representations set forth herein shall continue to apply with respect to the
Shares purchased and paid for by Buyer. Moreover, in the event of default by
Buyer, the certificate representing the 2,000,000 post 5:1 forward split shares
of unissued common stock of Buyer shall be returned to Buyer by Company for
cancellation by Buyer. Similarly, the certificate representing the 2,000,000
post 1:6 reverse split shares of unissued common stock of Company shall be
returned to Company by Buyer for cancellation by Company.
2.8 Due Diligence Audit. At any time, Buyer has the option of appointing an
independent third party auditor to conduct a due diligence audit of COMPANY, or
to conduct its own due diligence review of COMPANY. Buyer shall bear the cost of
such due diligence audit or review. COMPANY agrees to fully cooperate in such
due diligence audit or review.
3
2.9 No Dilution. No new stock, stock options or grants diluting the equity stake
of Buyer in COMPANY will be issued without the written prior consent of Buyer.
2.10 Preemptive Right. Seller will cause the Company to grant in its by-laws a
preemptive right for shareholders to maintain their percentage equity interest
in the Company by purchasing their pro rata share of any future securities
issued by the Company on the same terms at which they are offered to other
parties.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND COMPANY
Seller and Company represent and warrant to Buyer as follows:
3.1 Ownership of Stock. Seller is the lawful owner of the Shares, which shall be
free and clear of all liens, encumbrances, restrictions and claims of every kind
and character. The delivery to Buyer of Seller's Shares pursuant to the
provisions of this Agreement will transfer to Buyer valid title thereto, free
and clear of any and all encumbrances.
3.2 Authorization and Validity of Agreement. Seller has full power and authority
(corporate or otherwise) to execute and deliver this Agreement, to perform his
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly executed by Seller and is a valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
At Closing, Seller shall deliver a resolution by its Board of Directors
approving and authorizing the execution of this Agreement, as well as any
necessary consent by existing shareholders.
3.3 Consents and Approvals; No Violations. The execution and delivery of this
Agreement by Seller and the consummation by Seller of the sale of such Seller
shares as contemplated herein
(a) will not violate the provisions of the Articles of Incorporation and
By-laws of COMPANY,
(b) will not violate any statute, rule, regulation, order or decree of any
public body or authority by which such Seller, the Company or any
subsidiary is bound or by which any of their respective properties or
assets are bound,
(c) will not require any filing by any Seller with, or permit, consent or
4
approval of, or the giving of any notice to, any United States
governmental or regulatory body, agency or authority on or prior to
the Closing Date, and
(d) will not result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any encumbrance upon
any of the properties or assets of such Seller, the Company or any
Subsidiary under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit,
agreement, lease, franchise agreement or any other instrument or
obligation to which Seller, the Company or any Subsidiary is a party,
or by which they or any of their respective properties or assets may
be bound.
3.4 Organization. COMPANY is a corporation duly incorporated, validly existing
and, at the Closing, in good standing under the laws of the Tennessee, and has
corporate power and authority to own and lease its properties and to carry on
business as now being conducted.
3.5 Capitalization. COMPANY shall have 10,062,234 common shares with $0.001 par
value that are issued and outstanding. There are no outstanding options,
warrants, rights, commitments or agreements of any kind relating to the issuance
of any shares of common stock or other equity or convertible security of COMPANY
to any person.
3.6 Financial Statements. COMPANY has furnished to Buyer financial statements as
of December 31, 2001. All of said financial statements,
(i) are in accordance with COMPANY's books and records,
(ii) present fairly and accurately, subject to year end audit adjustments
with respect to the unaudited financial statements, the financial
position of COMPANY as of dates, and its results of operations and
changes in financial position for the respective periods indicated,
(iii) with respect to the audited financial statements, have been prepared
in conformity with generally accepted accounting principles applied on
a consistent basis, and
(iv) consistent with prior business practice, contain, in the opinion of
management of COMPANY, adequate reserves for all known or contingent
liabilities, losses and refunds with respect to services or products
already rendered and sold.
5
3.7 Changes in Financial Condition. From the date of the Financial Statements to
the Closing Date, there has been no material adverse change in the properties,
assets, liabilities, financial condition, business, operations, affairs or
prospects of COMPANY from that set forth or reflected in the Financial
Statements, other than changes in the ordinary course of business, none of which
have been, either in any case or in the aggregate, materially adverse.
3.8 Effect of Agreement. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated,
(i) will not conflict with, or result in a breach of the terms of, or
constitute any default under, or violation of, any law or regulation
of any governmental authority, or the Articles of Incorporation or
By-Laws of COMPANY, or any material agreement or instrument to which
COMPANY is a party or by which it is bound or is subject;
(ii) nor will it give to others any interest or rights, including rights of
termination, acceleration or cancellation, in or with respect to any
of the properties, assets, agreements, leases, or business of COMPANY.
3.9 Minutes Book. The records of meetings and other corporate actions of COMPANY
(including any committees of the Board), which are contained in the Minute Books
of COMPANY contain complete and accurate records of the matters reflected in
such minutes.
3.10 Litigation Claims. COMPANY is not a party to, and there are not any claims,
actions, suits, investigations or proceedings pending or threatened against
COMPANY or its business, at law or in equity, or before or any governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, which if determined adversely would have a material effect on the
business or financial condition of COMPANY or the ability of COMPANY to carry on
its business. The consummation of the transactions herein contemplated will not
conflict with or result in the breach or violation of any judgment, order, writ,
injunction or decree of any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign.
6
3.11 Taxes and Reports. Except as to taxes properly contested by COMPANY, at the
Closing Date, COMPANY
(i) will have filed all tax returns required to be filed by any
jurisdiction, domestic or foreign, to which it is or has been subject,
(ii) has either paid in full taxes due and taxes claimed to be due by each
jurisdiction, and any interest and penalties with respect thereto, and
(iii) has adequately reflected as liabilities on its books, all taxes
that have accrued for any period to and including the Closing Date.
3.12 Compliance with Laws and Regulations. COMPANY has complied with, and is not
in violation of any federal, state, local or foreign statute, law, rule or
regulation, violation of which could reasonably be expected to have a material
adverse effect upon the conduct of COMPANY's businesses.
3.13 Finders. COMPANY is not obligated, absolutely and contingently, to any
person for financial advice, a finder's fee, brokerage commission, or other
similar payment in connection with the transactions contemplated by this
Agreement.
3.14 Nature of Representations. Seller and COMPANY have taken reasonable care to
ensure that all disclosures and facts stated herein are true and accurate, and
that there are no other material facts, the omission of which would make
misleading any statement herein. Further, to the best of COMPANY's knowledge, no
representation, warranty, or agreement made by COMPANY in this Agreement or any
of the Schedules or any other Exhibits hereto and no statement made in the
Schedules or any other Exhibits hereto, list, certificate or schedule or other
instrument or disclosure furnished by them in connection with the transactions
herein contemplated contain, or will contain, any untrue statement of a material
fact necessary to make any statement, representation, warranty or agreement not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to COMPANY as follows:
4.1 Organization. Buyer is a corporation duly incorporated, validly existing
and, at the Closing, in good standing under the laws of Nevada and has corporate
power and authority to own and lease its properties and to carry on business as
now being conducted.
7
4.2 Authorization. Buyer has the power to enter into this Agreement, and this
Agreement, when duly executed and delivered, will constitute the valid and
binding obligation of Buyer. Other than approval by the Board of Directors, no
proceedings are necessary to authorize this Agreement or the transactions
completed hereby. This Agreement constitutes the legal, valid and binding
obligation of Buyer enforceable in accordance with its terms. At Closing, Buyer
shall deliver a resolution by its Board of Directors approving and authorizing
the execution by Buyer of this Agreement, as well as any necessary consent by
existing shareholders.
4.3 Effect of Agreement. The execution and delivery by Buyer of this Agreement
and the consummation of the transactions herein contemplated,
(i) will not conflict with, or result in a breach of the terms of, or
constitute any default under, or violation of, any law or regulation
of any governmental authority, or the Articles of Incorporation or
By-Laws of Buyer, or any material agreement or instrument to which
Buyer is a party or by which it is bound or is subject;
(ii) nor will it give to others any interest or rights, including rights of
termination, acceleration or cancellation, in or with respect to any
of the properties, assets, agreements, leases, or business of Buyer.
4.4 Litigation Claims. Buyer is not a party to, and there are not any claims,
actions, suits, investigations or proceedings pending or threatened against
Buyer or its business, at law or in equity, or before or any governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, which if determined adversely would have a material effect on the
business or financial condition of Buyer or the ability of Buyer to carry on its
business. The consummation of the transactions herein contemplated will not
conflict with or result in the breach or violation of any judgment, order, writ,
injunction or decree of any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign.
4.5 Compliance with Laws and Regulations. To the best of Buyer's knowledge,
Buyer has complied with, and is not in violation of any federal, state, local or
foreign statute, law, rule or regulation, violation of which could reasonably be
expected to have a material adverse effect upon the conduct of Buyer's
businesses.
8
ARTICLE V
CONDUCT OF BUSINESS
COMPANY covenants that after the Closing:
5.1 Ordinary Course of Business. The Company's business will be conducted only
in the ordinary course.
5.2 No Changes. No material change will be made in the Company's Certificate of
Incorporation or By-Laws, except as may be first approved in writing by Buyer.
No change will be made in the Company's authorized or issued shares without the
prior written consent of Buyer.
5.3 No Dividends. No dividend or other distribution or payment will be declared
or made in respect to the Company's corporate shares except as may be approved
in writing by Buyer.
5.4 Compensation and Contracts. No increase will be made in the compensation
payable or to become payable by the Company to any officer, nor will any bonus
payment or arrangement or other benefit be paid by the Company to or with any
officer other than as detailed in the COMPANY Business Plan unless first
approved by the Board of Directors.
5.5 Preservation. COMPANY will use its best efforts to preserve its business
organization intact; to keep available to COMPANY the services of its present
officers and employees; and to preserve for COMPANY the goodwill of its
suppliers, customers, and others having business relations with it.
5.6 Other. All debts will be paid as they become due, no contract right of the
Company will be waived, no uninsured material physical damage or loss will occur
to the assets or business of the Company, and no material obligation except
current liabilities under contracts entered into in the ordinary course of
business will be incurred, except as may be first approved in writing by the
Board of Directors.
9
5.7 Directors. On or before March 15, 2001, the Board of Directors of COMPANY
shall execute a board resolution fixing the number of directors to five (5).
Buyer shall appoint 2 of the five board members, and the board of directors of
COMPANY shall execute a board resolution filling the two of the board seats with
Buyer's appointees after such board seats have become vacant because of the
resignation of three board members. The fifth vacant board seat shall be filled
by a person jointly appointed by Buyer and Seller. At all meetings of the Board
of Directors, each director present shall have one vote. Action approved by a
majority of the votes of the Directors present at any meeting of the Board at
which a quorum is present shall be the act of the Board of Directors.
ARTICLE VI
ACCESS TO INFORMATION
6.1 Access to Information. COMPANY shall afford representatives of Buyer
reasonable access to officers, personnel and professional representatives of
COMPANY and to the financial, contractual and corporate records of COMPANY as
shall be reasonably necessary for Buyer's investigations and appraisal of
COMPANY.
6.2 Effect of Investigations. Any such investigation by Buyer of COMPANY shall
not affect any of the representations and warranties herein and shall not be
conducted in such manner as to interfere unreasonably with the operation of the
business of COMPANY.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are, at the option of Buyer,
subject to the satisfaction, at and prior to the Closing Date, of the following
conditions:
7.1 Fulfillment of Covenants. All the terms, covenants and conditions of this
Agreement to be complied with and performed by Seller and COMPANY at or before
the Closing Date shall have been duly complied with and performed.
10
7.2 Accuracy of Representations and Warranties: Other Documents. All of the
representations and warranties made by Seller and COMPANY to this Agreement
shall be true as of the Closing Date.
7.3 No Litigation. There shall be no action, proceeding, investigation or
pending or actual litigation the purpose of which is to enjoin or may be to
enjoin the transactions contemplated by this Agreement or which would have the
effect, if successful, of imposing a material liability upon COMPANY, or any of
the officers or directors thereof, because of the consummation of the
transactions contemplated by this Agreement.
ARTICLE VIII
CLOSING
8.1 Closing Date. The consummation of the exchange shall take place on March 27,
2002, at 1900 Avenue of the Stars, Suite 1635, Los Angeles, California 90067, or
such other time or place as shall be mutually agreed upon by the parties to this
Agreement.
8.2 Actions to be Taken by Parties on the Closing Date. On the Closing Date,
each party shall deliver to the other all documents or agreements provided
herein to be delivered on the Closing Date.
8.3 Other. Between the date hereof and the Closing Date, COMPANY will take no
actions, other than in the ordinary course of its business and those reasonably
required to consummate a closing, without the prior written consent of Buyer.
ARTICLE IX
INDEMNIFICATION AND ARBITRATION
9.1 Indemnification. For a period of one year after the last scheduled
Installment Payment date in accordance with Section 2.4 herein, each of the
parties agree to indemnify and hold harmless the other against any and all
damages, claims, losses, expenses, obligations and liabilities (including
reasonable attorney's fees) resulting from or related to any breach of, or
failure by each of the parties to perform any of their representations,
warranties, covenants, conditions or agreements in this Agreement or in any
schedule, certificate, exhibit or other document furnished, or to be furnished
under this Agreement. This indemnification agreement shall be in addition to any
other remedy a party may have against the other party at law or in equity,
including damages for breach of contract or otherwise.
11
9.2 Claims to Indemnification. Any claim for indemnification pursuant to this
Agreement, unless otherwise received by means of direct negotiation among the
parties upon reasonable oral notification by the party seeking indemnification
to all other parties, shall be made in writing in respect to the nature and
amount of the claim to the other.
9.3 Arbitration. In the event of any differences, claims or disputed matters
between the parties hereto arising out of this Agreement or connected herewith,
the parties agree to submit such matters to arbitration by the American
Arbitration Association or its successor in Los Angeles, California. Either
party can invoke arbitration upon ten days' written notice to the other party.
The determination of the arbitrator shall be final and absolute. The arbitrator
shall be governed by the duly promulgated rules and regulations of the American
Arbitration Association or its successor, and the pertinent provisions of the
laws of the State of California, relating to arbitration. The decision of the
arbitrator may be entered in a judgment in any court of the State of California
or elsewhere. The arbitrator shall have no power to award consequential,
exemplary or punitive damages.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
10.1 Covenants. All statements contained in the Schedules, any Exhibit or other
instrument delivered by or on behalf of the parties hereto or in connection with
the transactions contemplated by this Agreement, shall be deemed to be
representations made by or on behalf of the parties to this Agreement, and all
representations, warranties and agreements made by the parties to this Agreement
or pursuant hereto shall survive for a period of one year after the last
scheduled Installment Payment date in accordance with Section
2.4 herein.
ARTICLE XI
GENERAL
11.1 Partial Invalidity. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those to which it
is held invalid or unenforceable, shall not be affected thereby, and each such
term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
12
11.2 Waiver. No waiver of any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.
11.3 Notices. All notices or other communications required or permitted
hereunder shall be in writing, and shall be deemed to have been received upon
the earlier of personal delivery by courier, facsimile or other receipted
delivery, or two business days after deposit in the United States mails by
registered or certified mail, postage prepaid, return receipt requested, and
addressed to the intended recipient as follows:
If to Buyer
To: 4201 Wilshire Blvd., Suite 525 Los Angeles, CA 90010
If to Seller
To: Attention: Mr. Dan Tennant 3485 Sacramento Drive, #F San Luis Obispo, CA
93401
IF TO COMPANY
To: Attention: Mr. Dan Tennant
3485 Sacramento Drive, #F
San Luis Obispo, CA 93401
Notice of change of address shall be given by written notice in the manner
detailed in this subsection 11.3. Both parties shall maintain mailing addresses
within the United States of America.
11.4 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the permitted successors and assigns of the parties
hereto.
13
11.5 Professional Fees. In the event of the bringing of any action or suit by a
party hereto against another party hereunder by reason of any breach of any of
the covenants, agreements or provisions on the part of the other party arising
out of this Agreement, then in that event the prevailing party shall be entitled
to have and recover from the other party all costs and expenses of the action or
suit, including reasonable attorney's fees, accounting fees, and other
professional fees resulting therefrom.
11.6 Entire Agreement. This Agreement is the final statement of, and contains
the entire agreement between, the parties with respect to the subject matter
hereof and supersedes all prior understandings with respect thereto. This
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
party to be charged or by his agent duly authorized in writing or as otherwise
expressly permitted herein. The parties do not intend to confer any benefit
hereunder on any person, firm or corporation other than the parties hereto.
11.7 Time of the Essence. The parties hereby acknowledge and agree that time is
strictly of the essence with respect to each and every term, condition,
obligation and provision hereof and that failure to timely perform any of the
terms, conditions, obligations or provisions hereof by either party shall
constitute a material breach of and non-curable (but waivable) default under
this Agreement by the party so failing to perform.
11.8 Construction. Headings at the beginning of each section and subsection are
solely for the convenience of the parties and are not a part of the Agreement.
Whenever required by the context of this Agreement, the singular shall include
the plural and the masculine shall include the feminine. This Agreement shall
not be construed as if it had been prepared by one of the parties, but rather as
if both parties had prepared the same. Unless otherwise indicated, all
references to sections and subsections are to this Agreement. In the event the
date on which any party is required to take any action under the terms of this
Agreement is not a business day, the action shall be taken on the next
succeeding day.
14
11.9 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be an original and all of which taken together shall
constitute one instrument.
11.10 Governing Law. The parties hereto expressly agree that this Agreement
shall be governed by, interpreted under, and construed and enforced in
accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in 3/27/02.
BUYER: SELLER:
/s/ Roy Rayo /s/ Dan Tennant
- ---------------------- --------------------
Corporate Secretary Authorized
Representative of
Majority Shareholders
COMPANY:
/s/ Carol Slavin
- ------------------
President
15