Document:

entest_ex10-1.htm

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;

 

 

  

  

  

 

	
  

	
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;

 

 

 

  

2

  

 

	
  

	
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;

 

 

 

  

3

  

 

	
  

	
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

 

 

 

 

 

 

 

  

4entest_ex10-2.htm

Exhibit 10.2

 

 

The obligation of Entest BioMedical, Inc.  to be bound by the terms and conditions of this  Veterinary Hospital Director and Administrator Employment Agreement is contingent upon the successful acquisition of 100% of the assets of Rainbow Veterinary Hospital ( a corporation controlled by Timothy Metzger, DVM) by Entest BioMedical, Inc.  upon terms and conditions mutually acceptable to both Entest BioMedical, Inc. and Timothy Metzger, DVM.

 

 

Veterinary Hospital Director and Administrator Employment Agreement

 

This agreement is made on July 20th between Entest BioMedical Inc. (herein referred to as the Company and / or the Hospital) and Dr. Tim Metzger (hereinafter called the director/administrator).

 

The hospital hereby employs the Director/Administrator (hereafter D/A) and the D/A accepts such employment for the period of 120 months (the first 36 months are guaranteed, with the subsequent 84 months subject to renewal based upon maintaining annual revenue no less than 80% of 2010 revenue) from the date of this agreement.  The hospital administrator referred to herein is Dr. Tim Metzger.

 

EMPLOYMENT AND DUTIES

 

The hospital hereby employs the D/A in the capacity of veterinarian and administrator for the term and for the compensation provided in this contract.

 

The D/A agrees to perform such duties as may be determined and assigned by the owners.  The D/A shall faithfully adhere to the ethical principles of the veterinary profession and shall avoid all personal acts that might injure the professional and/or personal reputation of the hospital or its’ owners.  The associate shall be obligated to maintain all licenses and accreditations through the duration of this agreement.

 

The D/A shall observe all rules established by the owner governing the rendering of patient care and shall abide by the decisions of the owner with regard to the diagnosis and treatment of any patient.  In no instance shall the D/A be required to perform what he feels compromises his best professional judgment or ideals.

 

TERMS

 

Except in the case of early termination, as hereinafter specially provided, the term of this contract shall be 120 months from the effective date hereof.  No less than ninety (90) days prior to the end of the agreement a meeting with the owners and the Administrator will meet to consider a new contract.

 

WORK SCHEDULE

 

The D/A is to work a schedule of a minimum of forty hours per week.  The D/A is to arrive at work on time, and fully prepared to assume his duties.  The outpatient hours and surgical schedule are set up for the convenience of our patients, not our doctor.  An established 1 hour lunch break is provided for in the schedule and is included in the forty hours.

 

 

  

  

  

The D/A is to have treated all animals, to have performed all necessary work, to have updated all medical records, and to have made all telephone calls before leaving for the day.

 

The D/A will be reimbursed for emergency calls at the rate of 25% of the service fee.

 

PROFESSIONAL LIABILITY INSURANCE

 

The D/A shall carry personal professional liability insurance insuring the employee for professional errors, omissions, negligence, incompetence, license defense and malfeasance which will be supplied to the owner at the time of employment.  The hospital shall carry professional liability insurance on the D/A.  Such insurance protects the hospital, not the D/A.  In the event the D/A’s lapses or is not current, the D/A shall notify the hospital immediately.

 

EXCLUSIVE SERVICE

 

The D/A shall devote such time and attention as necessary to adequately perform his duties during the period of this agreement and  any and all revenues earned by the D/A from the practice of veterinary medicine up to a radius of twenty five miles from the premise shall belong to the owners.

 

PERSONAL PROPERTY

 

The D/A shall provide the hospital with a list of all equipment, supplies, instruments and books brought to the practice by the D/A, collectively the D/A’s property which shall remain the property of the D/A.

 

DISABILITY

 

If during the term of this agreement, the D/A should fail to perform his duties on account of illness or other incapacity and such illness or other incapacity shall continue for a period of more than thirty days, the hospital shall have the right to suspend his wages except for earned commission until fully able to perform all of the duties assigned by the hospital director, in the event that said illness or other incapacity shall continue  for more than 360 days, the hospital shall have the right to terminate this Agreement.  In this event, the hospital shall be obligated to pay the D/A his compensation up to the date of the suspension.

 

TERMINATION

 

The D/A may terminate this agreement anytime upon NINETY days notice to the hospital and the hospital shall be obligated in that event to pay the D/A due compensation up to the date of termination only.

 

The hospital may discharge the D/A for: incompetency, intoxication or impairment by virtue of drug usage, or failure to adequately perform normal expected duties.

 

 

  

2

  

In addition, the D/A may be discharged for any of the following reasons:

 

	
  

	
1.

	
The suspension, revocation or cancellation of the D/A’s right to practice veterinary medicine in the State of Calif., or the suspension, lapse or cancellation of the D/A’s professional liability insurance.

 

	
  

	
2.

	
The imposition of any restrictions or limitations by any governmental authority having jurisdiction over the D/A to such an extent that he cannot engage in the professional practice for which he was employed.

 

	
  

	
3.

	
The D/A fails or refuses to faithfully and diligently perform the customary duties of employment and adhere to the provisions of this agreement.

 

	
  

	
4.

	
The D/A fails or refuses to comply with the reasonable policies, standards and regulations of the hospital, which from time to time may be established.

 

	
  

	
5.

	
The D/A is found guilty of professional misconduct by any professional organization having jurisdiction.

 

	
  

	
6.

	
A receiver, assignee, or trustee in bankruptcy is appointed for the D/A, or a petition under the Bankruptcy Code is filed against the D/A.

 

	
  

	
7.

	
The D/A dies or is otherwise unable to perform his assigned duties under this agreement.

 

COMPENSATION

 

For all the services to be rendered by the D/A in any capacity hereunder, the hospital agrees to compensate the D/A in the following manner.

 

The compensation paid to the D/A of the hospital in the amount of 20% of MONTHLY PRODUCTION.  This includes total medical services produced by the doctors as computed by Cornerstone Management software (or any subsequent software similar in nature).  The commission will be calculated on the first payroll of the month.  Payroll is compiled monthly.  The D/A’s pay is paid on the 1st day of the month (or if this falls on a Saturday or Sunday, the first business day after the 1st day of the month will be the pay day).

 

In addition to regular compensation, any year the Hospital generates more than $1,000,000 in revenue the D/A will receive $50,000 worth of newly issued stock in Entest BioMedical Inc. (OTCQB: ENTB) and $50,000 in cash.

 

Boarding, grooming, cremations, specialist surgeries, and employee pets are exempt from commission (as defined in the Compensation section below).  Refills of prescriptions and diets are also exempt from commission.  The D/A agrees that the hospital has made no other representations with respect to compensation for services rendered, except as expressly signified with this section.

 

 

  

3

  

Reimbursements

 

	
  

	
1.

	
Hospital agrees to reimburse dues and subscriptions up to $2,600 per year.

 

	
  

	
2.

	
Hospital agrees to reimburse other such reasonable equipment and/or supplies required for performance of duties or applied research.  All such expenses are to be pre-authorized by hospital prior to purchasing.

 

	
  

	
3.

	
All receipts for reimbursement must be turned in to the hospital by the end of the month subsequent to the month that expense was incurred.

 

	
  

	
4.

	
Hospital will provide normal Medical insurance to D/A.  Currently the only medical insurance being offered is health insurance.  Hospital will reimburse medical related expenses not covered by its insurance up to $2,000 per year.  The hospital will incur the costs of the plans for the D/A and his wife.

 

Vacation and Sick Days

 

Vacation for the D/A will be at such times as to provide only minimal stress to the practice.  Written requests will be filed 4 weeks prior to the requested period.  Three weeks of vacation will be allowed in the first year, with the D/A accruing one additional week per year on anniversary up to a total of six weeks.  Base pay for vacation time will be the monthly average of the D/A’s pay for the fiscal year to date prior to the vacation time off.  Any vacation time not used may be converted to company stock at a rate of $500 per day.  Stock price will be calculated on a 10 day average prior to conversion notification by the D/A.

 

MINOR BENEFITS

 

Uniforms will be provided by hospital.

 

Continuing education will be reimbursed up to $2,000 per year.

 

Stock Options:  Up to 100,000 shares to be purchased by end of each year from the company (cash) at the low of the year’s selling price.

 

APPEARANCE

 

The D/A shall dress neatly and in accordance with his professional status and the established dress code for veterinarians at this hospital.  Smoking and chewing gum or other materials is expressly forbidden in the facility or on hospital property.

 

FEE SCHEDULE

 

The Company shall review any and all fee schedules submitted by D/A and that the Company shall have sole power to establish fee schedules.

 

VETERINARY SERVICES

 

The D/A my treat his personal pets at no cost and may purchase drugs and food at cost.

 

 

  

4

  

OWNERSHIP

 

Medical records including treatment card, laboratory results, radiographs, etc.  are the property of the hospital, not the D/A.  Removal of said records is grounds for immediate termination of this contract.

 

DISCLOSURE OF INFORMATION

 

The D/A recognizes and acknowledges that the names and addresses of the hospital’s clients and patients are valuable and unique assets of the hospital.   The D/A will not, during or after the term of the employment, disclose these names or addresses to any other firm, corporation, association or other entity for any reason or purpose whatsoever, without the prior written consent of the owner.

 

RESTRICTIONS

 

The D/A agrees that he will not own, manage, operate, control, be employed by, participate, or be connected in any manner with the ownership, management, operation, or control and any other hospital including that of a mobile practice, engaged in veterinary services during the period this agreement is in effect and for a period of TWO YEARS after the termination thereof, within an area of a TEN MILE RADIUS of the hospital.

 

Further, the D/A shall be deemed to have violated this covenant if he solicits or contacts any patient of record of the hospital.

 

The D/A further agrees that he will not, during or at any time after the term of his association, disclose to any person, firm or corporation, the names or addresses of any past or present clients of the hospital, or solicit business of a similar nature to that of the hospital, from such clients.

 

If the D/A violates any of the terms of this agreement and/or does not adhere to the restrictive covenant as stipulated in this section, the hospital shall be entitled to an injunction by any competent court enjoining and restraining each and every person involved from continuance of prohibited practices.  The said injunction shall be in addition to the hospital’s right to damages in any other legal right that the hospital may possess in connection with any said violation by the D/A.

 

Further, if the associate violates the provisions of this agreement and does not adhere to the restrictive covenant as stated herein, the D/A shall pay to the hospital $25,000 for associating with, or becoming financially interested in any office or facility including mobile clinics for the practice of veterinary medicine.  The parties further agree that such monies paid for damages reflect the minimum amount of loss incurred by the hospital in an event of any violation hereof.  This agreement shall be binding upon the D/A, his heirs, executors, as assigns, and shall insure to the benefit of hospital, its successors, and assigns.  In the event of a breach or threatened breach by the D.A of the provisions of this paragraph, the hospital shall be entitled to an injunction restraining the D/A from disclosing, in whole or in part, the names and addresses of the hospital’s patients, and from rendering any services to any firm, person, corporation, association or theIr entity to whom such lists in whole or in part, has been disclosed or is threatened with disclosure.  Nothing herein shall be construed as prohibiting the hospital from pursuing any other remedies available to the hospital for such breach or threatened breach, including the recovery of damages from the D/A.  The damage to the employer would be difficult to determine, should he D/A breach their covenant not to compete.  The parties hereto have discussed what amount would be equitable and fair on liquidated damages and have mutually agreed that a sum equal to two years base salary shall be the amount of liquidated damages that the D/A would be liable to the employer should the D/A breach the covenant not to compete.

 

 

  

5

  

ADMINISTRATIVE

 

Set hospital standards according to the AVMA Code of Ethics and the Standards of the AVMA, the California Veterinary Society, the AAHA and Federal and State laws.

 

Communicate your vision to the staff and give leadership for this vision.

 

Plan one and five-year goals

 

Plan a maintenance program for interior and exterior of the hospital; appoint staff to be responsible for each area

 

Review financial health of practice

 

Both the Company and the D/A agree that it is their common goal to have a new employment agreement in place one month before previous contract expires.

 

Plan purchases of equipment and plan for repairs

 

PROFESSIONAL GROWTH AND GOALS

 

Attend Regional and National AAHA continuing Education

 

Submit continuing education hours to California State Board.

 

May attend VHMA conferences also

 

Teach staff new techniques and information gained

 

Read professional publications and management literature.

 

Maintain a veterinary library

 

NOTICE

 

Any and all notices referred to herein shall be sufficient if furnished in writing and sent to the representative parties at the addresses subscribed below following the signatures to this agreement or to the last addresses furnished to the hospital.

 

The D/A shall function as an employee during the 120 month period of time as stipulated by the terms of this agreement.  This agreement contains the sole and entire agreement of the parties with respect to the subject matter thereof.  Any and all prior discussions, negotiations, commitments and understandings relating thereto are merged herein.

 

 

  

6

  

This agreement may be changed only by a written amendment signed by both parties.

 

 

 

Signed in agreement:

 

/s/David R. Koos

David R. Koos

Chairman & CEO

Entest BioMedical Inc.

Date: 7/28/2011

/s/Timothy Metzger

Timothy Metzger, DVM

Veterinarian / Employee

Date: 7/21/2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

7

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