Letter of Intent for Asset Purchase between MM2 Group, Inc. (Newco) and Genotec Nutritionals, Inc.

Summary

MM2 Group, Inc., through a new subsidiary (Newco), intends to purchase certain assets and assume specific liabilities of Genotec Nutritionals, Inc. (GN). The agreement outlines the assets to be acquired, liabilities assumed, purchase price in MM2 stock, and employment terms for key GN personnel. The letter is non-binding except for confidentiality, due diligence, expense, and exclusivity provisions. Both parties agree to negotiate in good faith toward a final agreement, with GN agreeing to deal exclusively with Newco until June 30, 2006. The transaction is subject to due diligence and execution of a definitive agreement.

EX-10.1 2 exhibit10-1_14307.txt LETTER OF INTENT EXHIBIT 10.1 ------------ MM2 GROUP, INC. 750 Route 34 Matawan, NJ 07747 March 31, 2006 Mr. George Kontonotas Genotec Nutritionals, Inc. 450 Commack Road Deer Park, NY 11729 Dear Mr. Kontonotas, I am pleased to provide you with this letter of intent which sets forth the terms and conditions upon which a newly-formed subsidiary of MM2 Group, Inc. ("Newco") will purchase certain assets and assume certain liabilities of Genotec Nutritionals, Inc. ("GN"). This letter is an indication of our intention to acquire the assets and assume certain liabilities of GN, but is not an offer. Any offer by Newco will be subject to the satisfactory completion of all due diligence reviews by us, our attorneys, and our certified public accountants, and the negotiation and execution of a definitive purchase and sale agreement between GN and Newco. The covenants in paragraphs I, J, K, and L are binding upon GN and Newco whether or not the parties reach a definitive agreement with respect to the acquisition of the assets of GN. While the terms and conditions of this letter of intent are non-binding as to the parties hereto (except where otherwise noted), the parties agree to act in good faith towards negotiating and executing a binding purchase and sale agreement which substantially incorporates the terms and conditions enunciated herein. Accordingly, this letter of intent describes a proposed transaction involving the purchase of certain assets of GN as follows: A. Assets To be acquired: o Accounts receivable; o All inventory; o All owned furniture, fixtures, machinery and equipment; o Prepaid expenses; o Deposits; o All trade names including all rights, if any, to the GN name and logo; o All supplier lists; o All customer lists; and o All trademarks, patents, and all other intellectual property. B. Liabilities Assumed Accounts payable and customer deposits; o Equipment leases; o No other liabilities of any type, whether disclosed or undisclosed, will be assumed. C. Purchase Price The purchase price will be those number of shares of Common Stock of MM2 equal to $350,000. The number of shares to be issued shall be a function of the price per share quoted on the date that a Form SB-2 filed with the Securities and Exchange Commission ("SEC") registering these shares is deemed effective by the SEC. MM2 will file such SB-2 within 90 days of the date of actual closing of the transaction contemplated herein. D. Capitalization MM2 will, simultaneous with the acquisition, capitalize Newco with $300,000 in cash. E. Continuing Obligations of GN GN shall have the continuing liability post-Closing (by way of illustration and not by way of limitation), to satisfy the following obligations: o all health insurance claims, if any, for pre-Closing expenditures; o the provision of continuing COBRA Coverage for all of its employees terminated, retired, etc., prior to the Closing; o all such claims of a type covered by Seller's insurance, such as workers' compensation, auto and product liability, arising out of any pre-Closing events or occurrences; and o all product liability claims pertaining to and/or arising out of any pre-Closing events or occasions. F. Employment George Kontonotas shall enter into a 3 year employment agreement at the rate of US$100,000 per annum. In addition, Mr. Kontonotas shall now conduct his raw material brokerage business, which is now conducted outside of GN, through Newco. His additional compensation for doing so shall be the net profit of such brokerage transactions, net of any expenses incurred by Newco. Joseph Freedman shall enter into a 3 year employment agreement at the rate of US$70,000 per annum. Susan Blancato shall enter into a 3 year employment agreement at the rate of US$60,000 per annum. The employment agreements shall also provide for discretionary bonuses, such bonuses to be paid at the direction of the Board of Directors. The employment agreements shall provide for a two year non-compete provision, and a two year non-solicitation provision. The terms and conditions of such provisions shall be negotiated and provided for in the final definitive documentation. The agreement will also provide for health insurance coverage. Kontonotas and Freedman will also be covered by a key man life insurance policy paid for by Newco. F1. CardioCeuticals, LLC Newco recognizes and acknowledges that each of Kontonotas, Freedman, and Blancato are shareholders in a nutriceutical company named CardioCeuticals LLC ("Cardio"). Newco further acknowledges that each of Kontonotas, Freedman, and Blancato may be required, from time to time, to perform certain management functions in the operation of the business of Cardio. Cardio also sub-lets office space from GN. Kontonotas, Freedman, and Blancato shall provide notice to Cardio of their intention to enter into the transaction contemplated herein, and will further inform the Board of Directors of Cardio that they will be able to fulfill any management function required of them, if any, only until September 30, 2006. After that date, Kontonotas, Freedman, and Blancato will be working solely and exclusively for the benefit of Newco. Accordingly, Cardio should undertake to find replacements, if necessary, as soon as possible. In addition, Cardio co-habits with GN, and Cardio will be informed of the need to find its own office space as soon as possible. Newco acknowledges that Cardio is in the business of selling nutritional supplements to combat heart disease, and Newco represents that it will avoid selling any product which competes with Cardio's current product line. G. Pre-Closing Covenants The parties will use their best efforts to obtain all necessary third party and government consents (including all certificates, permits, approvals, and assignments required in connection with Newco's operation of the Business). GN will continue to operate the Business consistent with its past practice. H. Best Efforts The parties agree to negotiate in good faith, and to use their best efforts to (a) to execute a definitive agreement with respect to the acquisition as expeditiously as possible, on or before May 31, 2006, and (b) close the transaction on the date of execution of the definitive agreement. I. Conditions to Obligation Neither Newco nor GN will be obligated to consummate the transaction contemplated hereby unless and until the parties have reached a definitive agreement as to all the terms and conditions of the acquisition. J. Due Diligence GN agrees to cooperate with Newco's due diligence investigation of the business and to provide Newco and its representatives with prompt access to all books, records, contracts, and other information pertaining to the business (the "Due Diligence Information"). K. Confidentiality Newco will use the Due Diligence Information solely for the purpose of Newco's due diligence investigation of GN, and unless and until the parties consummate the acquisition of the GN, Newco, its affiliates, directors, officers, employees, advisors and agents will keep the Due Diligence Information strictly confidential. MM2 will, however, issue a press release announcing execution of this letter of intent and will file a Form 8-K in accordance with the rules and regulations of the SEC. L. Expenses Each party shall bear their own expenses associated with this transaction. M. Exclusive Dealing Since Newco will be expending a great deal of time, effort, and money to complete its due diligence and to prepare a definitive agreement, GN agrees to deal exclusively with Newco until June 30, 2006, or until such earlier date as the parties mutually agree. GN will not, directly or indirectly, (i) solicit the submission of offers from any person or entity other than Newco relating to the acquisition of the stock and/or assets of GN, (ii) respond in any way to an unsolicited acquisition proposal, (iii) participate in any discussions or negotiations or furnish any non-public information regarding GN to any person or entity other than Newco, or otherwise encourage any acquisition proposal by any person or entity other than Newco, or (iv) enter into any agreement or understanding, whether oral or in writing, that would have the effect of preventing the consummation of the transaction contemplated by this letter of intent. N. Closing It is the intention of the parties hereto to close this transaction on or about May 31, 2006. N. Term of Letter of Intent This letter of intent to acquire the assets and to assume certain liabilities of GN shall become effective only upon receipt of an executed copy of this letter by Newco from GN. If you are in agreement with the terms of this letter of intent, please sign where indicated below. Upon receipt of the signed copy, we will proceed with our plans for consummating the transaction in a timely manner. Sincerely, Mark Meller Chief Executive Officer AGREED TO AND ACCEPTED BY: GENOTEC NUTRITIONALS, INC. - --------------------------- BY: George Kontonatas TITLE: President