Exhibit 10.1
 
 

 

 

 
July 19, 2011
 

 
Dr. Timothy Metzger
Rainbow Veterinary Hospital
2321 West Empire Ave
Burbank CA 91504
 
 
Re:           Non-Binding Letter of Intent
 
 
Dear Dr. Metzger:
 
This Letter of Intent (“LOI”) constitutes a proposal from Entest BioMedical,
Inc. (hereinafter, “Buyer”) to Rainbow Veterinary Hospital to buy 100% of the
assets of the Corporation as more clearly defined below (the “Transaction”)
owned by Seller in connection with the operation and management of its business
(the “Business”) located at 2321 West Empire Avenue, Burbank, CA (the
“Property”). Buyer and Seller may be referred to individually as “Party” and
collectively as “Parties”.
 
This proposal supersedes any other previous written or oral proposals or
communications between the Parties. The terms of this proposal shall be as
follows:
 
 
1.
Purchase Price.

 
The Purchase Price for the acquisition of 100% of the assets of the Corporation
shall be two million dollars ($2,000,000.00) to be paid as follows.
 
The Purchase Price for the acquisition of the stock shall be payable as follows:
 
 
a.
Buyer shall deposit $300,000 worth of Entest BioMedical Inc. common stock
(OTCQB: ENTB)  (“Escrow Deposit”) with Herman H. Pettegrove (“Escrow Agent”),
Attorney at Law, 1350 Main Street, Venice, CA 90291 – 310.392.5400 within three
(3) days of execution by the Parties of the escrow agreement. The terms of the
Escrow shall provide that:

 
 
i.
In the event that Definitive Purchase Agreement (“DPA” as defined in Section 2)
is not executed by the Parties on or before September 1, 2011 then the Escrow
Deposit shall be returned to Buyer;

 
 

 
 

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ii.
In the event that negotiations regarding the Transaction terminate due to (a) a
breach of 3(m) or 3(n) by the Seller then the Escrow Deposit shall be returned
to Buyer and;

 
 
iii.
It is agreed by the Parties that Escrow Agent shall serve as such regarding any
escrow which is required to be established in accordance with any DPA entered
into by and among the Parties.

 
 
b.
Successful closing of escrow will include finalized employment agreements with
key parties of Rainbow Veterinary Hospital. In addition to the stock and
employment agreements, a bonus structure will be established that is mutually
agreeable with all parties.

 
 
2.
Due Diligence

 
Upon the deposit of the Escrow Deposit by Buyer and for a period of thirty (30)
days thereafter (the “Due Diligence Period”), Seller shall provide Buyer with
reasonable access to all of the Corporation’s books, records, legal documents,
assets and other information (the “Books and Records”), all as no cost to Buyer.
At such time as Due Diligence Period has expired the Parties shall use their
best efforts to negotiate and execute a Definitive Purchase Agreement (“DPA”)
whereby Seller shall sell 100% of the assets of the Corporation to Buyer under
terms and conditions similar to those set forth herein. The Parties agree and
acknowledge that this list of terms and conditions set forth herein is not
intended to be all inclusive and the DPA to be executed by the Parties may
contain terms different or in addition to those set forth herein. Both Parties
shall use their best efforts to execute a DPA no later than September 1, 2011
with the Transaction closing no later than September 1, 2011 (the “Closing Date
of Sale”).
 
 
3.
Basic Terms.

 
The DPA shall include terms and conditions similar to the following:
 
 
a.
Upon the mutual execution by the Parties of the Definitive Purchase Agreement,
Buyer shall have no contingencies and his obligation to close the Transaction
shall be unconditional;

 
 
b.
Seller shall assign the assets to Buyer;

 
 
c.
Seller shall retain cash and accounts receivable from Business and Buyer shall
have no interest or obligations with respect thereto to the extent such
retention shall not result in the Corporation having liabilities in excess of
what may be agreed upon by the Parties pursuant to a DPA as of the Closing Date;

 
 
d.
Buyer shall indemnify and protect Seller from all liabilities or obligations of
Corporation after the Closing Date of Sale;

 
 
 

 
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e.
Seller shall indemnify and protect Buyer from all liabilities or obligations of
Corporation prior to the closing Date of Sale;

 
 
f.
Seller shall not, within a radius of ten (10) miles of the Property, directly or
indirectly engage in the practice of veterinary, other than as provided in the
agreement, for a period of five (5) years from the Closing Date, unless Seller
is employed by Buyer;

 
 
g.
Seller agrees that it shall not directly or indirectly induce any former
patients to patronize anyone other than Buyer for a period of five (5) years
from the Closing Date;

 
 
h.
Seller agrees that it shall not solicit for hire employees of its Business for a
period of five (5) years from the Closing Date;

 
 
i.
Seller and Buyer agree to enter into an employment agreement such that Seller
shall be employed by Buyer as follows: (a) Salary equals 20% of monthly revenue
for Rainbow Vet Hospital plus normal benefits package; (b) Work week to consist
of at least 40 hours per week; (b) a cash bonus equal to 5.0% of the annual
gross collections over baseline revenue of $1,000,000.00 generated; a stock
bonus equal to 5.0% of the annual gross collections over baseline revenue of
$1,000,000.00 generated.

 
 
j.
Seller shall represent and warrant that all tax returns and financial
information delivered to Buyer in connection herewith are true and accurate and
that to the best of Seller’s knowledge it is not aware of any actual, contingent
or threatened liabilities, lawsuits or claims against it for any act or omission
in connection with the Corporation or operation of the Business;

 
 
k.
Buyer shall represent and warrant that it understands that it is purchasing the
assets of the Corporation “as is” without representation or warranty and the
Seller is making no representation or warranty with respect to the future
success of the Business;

 
 
l.
The Parties shall be responsible for their own costs or attorneys, advisor and
accountants in connection with the consummation of the Transaction.

 
 
m.
If any Party fails to negotiate in good faith, or if each Party hereto has not
entered into the Definitive Purchase Agreement by September 1, 2011, then any
obligation to negotiate and prepare the DPA or otherwise deal with any other
Party to this LOI shall immediately terminate.

 
 
n.
Seller agrees that it shall not entertain any offers to purchase the Corporation
during the term of this LOI;

 
 
 

 
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o.
Each Party shall be solely responsible for its own expenses, legal fees and
consulting fees related to the negotiations described in the LOI, whether or not
any of the transactions contemplated in the LOI are consummated;

 
 
p.
VENUE, CHOICE OF LAW. The terms and conditions of the LOI shall be governed by
and construed in accordance with the laws of the State of California, without
reference to its choice of law rules. Any action arising as a result of this
Letter shall be brought in the state courts located in San Diego County, State
of California.

 
 
q.
Other than the covenants in Sections 1(a), 3(m), 3(n), 3(o) and 3(p) of this
LOI, this LOI is not binding upon either the buyer or the Seller, and the
Acquisition is subject to the negotiation and execution of a definitive
acquisition agreement between the Purchaser, Company and Seller.

 

Very truly yours,
 
 
“Buyer”
 
 
By: /s/ David Koos
Entest BioMedical, Inc.
David Koos, CEO
 
Date: 8/08/2011
 

 
AGREED AND ACCEPTED THIS 21 DAY OF JULY, 2011:
 

“Seller”
 
 
By: /s/ Timothy Metzger
Timothy Metzger, DVM
 
 
 
 

 
 

 

 
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