AGREEMENT AND PLAN OF REORGANIZATION
by and among
Above Average Investments, LTD.
a Nevada corporation
and
QuickMed Technologies, Inc.
a Delaware corporation
Effective as of March 19, 2001
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made and entered into this
19th day of March, 2001, by and between Above Average Investments, LTD. a Nevada
corporation ("AAI"), and Quick-Med Technologies, Inc., a Delaware corporation,
("QMT").
Premises
A. This Agreement provides for the reorganization of QMT with and into
AAI, with the surviving entity adopting the name Quick-Med Technologies, Inc.,
and in connection therewith, the exchange of the outstanding common stock of QMT
for shares of common voting stock of AAI, all for the purpose of effecting a
tax-free reorganization pursuant to sections 354 and 368(a) of the Internal
Revenue Code of 1986, as amended.
The boards of directors of QMT and AAI have determined, subject to the
terms and conditions set forth in this Agreement, that the exchange contemplated
hereby, as a result of which QMT and AAI will become one entity, is desirable
and in the best interests of their stockholders. This Agreement is being entered
into for the purpose of setting forth the terms and conditions of the proposed
exchange.
Agreement
NOW, THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF QMT
As an inducement to and to obtain the reliance of AAI, QMT represents
and warrants as follows:
Section 1.1 Organization. QMT is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and has
the corporate power and is duly authorized, qualified, franchised and licensed
under all applicable laws, regulations,
ordinances and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign corporation in
the jurisdiction in which the character and location of the assets owned by it
or the nature of the business transacted by it requires qualification. Included
in the QMT Schedules (as hereinafter defined) are complete and correct copies of
the articles of incorporation, bylaws and amendments thereto of QMT as in effect
on the date hereof. The execution and delivery of this Agreement do not and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not violate any provision of QMT's articles of
incorporation or bylaws. QMT has full power, authority and legal right and has
taken all action required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this Agreement.
Section 1.2 Capitalization. The authorized capitalization of QMT
consists of 15,000,000 Common Shares, par value $0.001 per share and 1,000,000
Preferred Shares, par value $0.001 per share. As of the Closing Date hereof, QMT
will have no more than ten million (10,000,000) Common Shares issued and
outstanding. All issued and outstanding shares are legally issued, fully paid
and nonassessable and are not issued in violation of the preemptive or other
rights of any person. QMT has no other securities, warrants or options
authorized or issued.
Section 1.3 Subsidiaries and Predecessor Corporations. Except as
otherwise set forth in the QMT Schedules or as previously provided to AAI, QMT
does not have any other subsidiaries and does not own, beneficially or of
record, any shares of any other corporation.
Section 1.4 Financial Statements. Included in the QMT Schedules is
QMT's audited financial statements (including any predecessor companies)
including a balance sheet, statement of operations, shareholder equity and cash
flows and notes thereto, dated as of December 31, 2000. Relevant thereto:
(a) the QMT balance sheet presents fairly as of its date the financial
condition of QMT; QMT does not have, as of the date of such balance sheet,
except as noted and to the extent reflected or reserved against therein,
any liabilities or obligations (absolute or contingent) which should be
reflected in a balance sheet or the notes thereto and all material assets
reflected therein are properly reported and present
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fairly the value of the assets of QMT, in accordance with generally
accepted accounting principles;
(b) QMT has no material liabilities with respect to the payment of any
provincial, federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not yet
due and payable;
(c) QMT has filed all, state, federal and local income tax returns
required to be filed by it from inception to the date hereof, if any; and
(d) the books and records, financial and others, of QMT are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices.
Section 1.5 Options and Warrants. Except as set forth in the QMT
Schedules, there are no existing options, warrants, calls or commitments of any
character to which QMT is a party and by which it is bound.
Section 1.6 Absence of Certain Changes or Events. Except as set forth
in this Agreement, the QMT Schedules, or as otherwise disclosed to AAI, since
December 31, 2000:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of QMT; or (ii) any
damage, destruction or loss to QMT (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties,
assets or condition of QMT;
(b) QMT has not: (i) amended its articles of incorporation or bylaws;
(ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed or agreed to purchase or redeem any
of its capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of QMT;
(iv) made any material change in its method of management, operation or
accounting; (v) entered into any other material transaction; (vi) made any
accrual or arrangement for or payment of bonuses or special compensation of
any kind
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or any severance or termination pay to any present or former officer or
employee; (vii) increased the rate of compensation payable or to become
payable by it to any of its officers or directors or any of its employees
whose monthly compensation exceeds $5,000; or (viii) made any increase in
any profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made to,
for, or with its officers, directors or employees;
(c) QMT has not: (i) granted or agreed to grant any options, warrants
or other rights for its stocks, bonds or other corporate securities calling
for the issuance thereof; (ii) borrowed or agreed to borrow any funds or
incurred or become subject to, any material obligation or liability
(absolute or contingent) except liabilities incurred in the ordinary course
of business; (iii) paid any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent QMT balance sheet and current liabilities incurred since that
date in the ordinary course of business; (iv) sold or transferred, or
agreed to sell or transfer, any of its assets, properties or rights (except
assets, properties or rights not used or useful in its business which, in
the aggregate have a value of less than $10,000); (v) made or permitted any
amendment or termination of any contract, agreement or license to which it
is a party if such amendment or termination is material, considering the
business of QMT; or (vi) issued, delivered or agreed to issue or deliver
any stock, bonds or other corporate securities, including debentures
(whether authorized and unissued or held as treasury stock); and
(d) to the best knowledge of QMT, it has not become subject to any law
or regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets or condition
of QMT.
Section 1.7 Title and Related Matters. QMT has good and marketable
title to and is the sole and exclusive owner of all of its properties,
inventory, interests in properties and assets, real and personal (collectively,
the "Assets") which are reflected in the QMT audited balance sheet and the QMT
Schedules or acquired after that date (except properties, interests in
properties and assets sold or otherwise disposed of since such date in the
ordinary course of business), free and clear of all liens, pledges, charges or
encumbrances except: (a) statutory liens or claims not yet delinquent; (b) such
imperfections of title and easements as do not and
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will not, materially detract from or interfere with the present or proposed use
of the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (c) as described in
the QMT Schedules. Except as set forth in the QMT Schedules, QMT owns free and
clear of any liens, claims, encumbrances, royalty interests or other
restrictions or limitations of any nature whatsoever any and all procedures,
techniques, marketing plans, business plans, methods of management or other
information utilized in connection with QMT's business. Except as set forth in
the QMT Schedules, no third party has any right to, and QMT has not received any
notice of infringement of or conflict with asserted rights of others with
respect to any product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, trade names or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse effect on the business, operations,
financial conditions or income of QMT or any material portion of its properties,
assets or rights.
Section 1.8 Litigation and Proceedings. To the best of QMT's knowledge
and belief, there are no actions, suits, proceedings or investigations pending
or threatened by or against QMT or affecting QMT or its properties, at law or in
equity, before any court or other governmental agency or instrumentality,
domestic or foreign or before any arbitrator of any kind that would have a
material adverse effect on the business, operations, financial condition or
income of QMT. QMT does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or instrumentality or
of any circumstances which, after reasonable investigation, would result in the
discovery of such a default.
Section 1.9 Contracts.
(a) Except as included or described in the QMT Schedules, there are no
material contracts, agreements, franchises, license agreements or other
commitments to which QMT is a party or by which it or any of its assets,
products, technology or properties are bound;
(b) except as included or described in the QMT Schedules or reflected
in the most recent QMT balance sheet, QMT is not a party to any oral or
written: (i) contract for the employment of any officer or employee which
is not terminable on thirty
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(30) days or less notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension benefit or retirement
plan, agreement or arrangement covered by Title IV of the Employee
Retirement Income Security Act, as amended; (iii) agreement, contract or
indenture relating to the borrowing of money; (iv) guaranty of any
obligation, other than one on which QMT is a primary obligor, for
collection and other guaranties of obligations, which, in the aggregate do
not exceed more than one year or providing for payments in excess of
$10,000 in the aggregate; (v) consulting or other similar contracts with an
unexpired term of more than one year or providing for payments in excess of
$10,000 in the aggregate; (vi) collective bargaining agreements; (vii)
agreement with any present or former officer or director of QMT; or (viii)
contract, agreement or other commitment involving payments by it of more
than $10,000 in the aggregate; and
(c) to QMT's knowledge, all contracts, agreements, franchises, license
agreements and other commitments to which QMT is a party or by which its
properties are bound and which are material to the operations of QMT taken
as a whole, are valid and enforceable by QMT in all respects, except as
limited by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally.
Section 1.10 Material Contract Defaults. Except as set forth in the QMT
Schedules, to the best of QMT's knowledge and belief, QMT is not in default in
any material respect under the terms of any outstanding contract, agreement,
lease or other commitment which is material to the business, operations,
properties, assets or condition of QMT, and there is no event of default in any
material respect under any such contract, agreement, lease or other commitment
in respect of which QMT has not taken adequate steps to prevent such a default
from occurring.
Section 1.11 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which QMT is a
party or to which any of its properties or operations are subject.
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Section 1.12 Governmental Authorizations. To the best of QMT's
knowledge, QMT has all licenses, franchises, permits or other governmental
authorizations legally required to enable QMT to conduct its business in all
material respects as conducted on the date hereof Except for compliance with
provincial, federal and state securities and corporation laws, as hereinafter
provided, no authorization, approval, consent or order of, or registration,
declaration or filing with, any court or other governmental body is required in
connection with the execution and delivery by QMT of this Agreement and the
consummation by QMT of the transactions contemplated hereby.
Section 1.13 Compliance With Laws and Regulations. To the best of QMT's
knowledge, except as disclosed in the QMT Schedules, QMT has complied with all
applicable statutes and regulations of any provincial, federal, state or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets or condition of QMT or would not result in QMT's incurring any material
liability.
Section 1.14 Insurance. All of the insurable properties owned either
directly or indirectly by QMT are insured for QMT's benefit in accordance with
the insurance policies disclosed in the QMT Schedules under valid and
enforceable policies issued by insurers of recognized responsibility. Such
policy or policies containing substantially equivalent coverage will be
outstanding and in full force at the Closing Date.
Section 1.15 Approval of Agreement The board of directors of QMT have
authorized the execution and delivery of this Agreement by QMT and have approved
the transactions contemplated hereby and the shareholders of QMT have approved
the transactions contemplated hereby.
Section 1.16 Material Transactions or Affiliations. Except as disclosed
herein and in the QMT Schedules, there exists no material contract, agreement or
arrangement between QMT and any predecessor and any person who was at the time
of such contract, agreement or arrangement an officer, director or person owning
of record, or known by QMT to own beneficially, ten percent (10%) or more of the
issued and outstanding QMT Common Shares and which is to be performed in whole
or in part after the date hereof.
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Section 1.18 Labor Relations. QMT has never had a work stoppage
resulting from labor problems. To the best knowledge of QMT, no union or other
collective bargaining organization is organizing or attempting to organize any
employee of QMT.
Section 1.17 Previous Sales of Securities. Since inception, QMT has
sold QMT Common Shares to investors in reliance upon applicable exemptions from
the registration requirements under the laws of the United States and any
applicable state laws and in accordance with the laws of said jurisdictions.
Section 1.18 QMT Schedules. Upon execution hereof, QMT will deliver to
AAI the following schedules, which are collectively referred to as the "QMT
Schedules" and which consist of separate schedules dated as of the date of this
Agreement and instruments and data as of such date, all certified by the chief
executive officer of QMT as complete, true and correct in all material respects:
(a) copies of the articles of incorporation, bylaws and all minutes of
shareholders' and directors' meetings of QMT or such other corporate
documentation and records required to maintain QMT in good standing in the
State of Delaware;
(b) the financial statements of QMT referenced hereinabove in Section
1.4;
(c) a list indicating the names and addresses of the stockholders of
QMT, together with the number of shares owned by them;
(d) copies of all licenses, permits and other governmental
authorizations, requests or applications therefor, pursuant to which QMT
carries on or proposes to carry on its business (except those which in the
aggregate, are immaterial to the present or proposed business of QMT);
(e) a list of every debt, mortgage, security interest, pledge, lien,
encumbrance or claim of any nature whatsoever in excess of $10,000 as may
affect QMT, its properties or assets;
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(f) a list of all executive employees of QMT, including current
compensation, with notation as to job description and whether or not such
employee is subject to a written contract;
(g) a description of all real and personal property owned by QMT,
together with a description of every mortgage, deed of trust, pledge, lien,
agreement, encumbrance, claim or equity interest of any nature whatsoever
in such real and personal property;
(h) copies of all material contracts, leases, agreements or other
instruments to which QMT is a party or by which it or its properties are
bound;
(i) a copy of all material documentation relating to the sale of QMT
Common Shares by QMT to its present stockholders;
(j) a list of insurance policies referred to in Section 1.15;
(k) a description of any material adverse change in the business
operations, property, inventory, assets or condition of QMT since the most
recent QMT balance sheet required to be provided pursuant to Section 1.4;
and
(l) any other information, together with any required copies of
documents required to be disclosed in the QMT Schedules by Sections 1.1
through 1.17.
QMT shall cause the QMT Schedules and the instruments and data
delivered to AAI hereunder to be updated after the date hereof up to and
including the Closing Date, as hereinafter defined.
Section 1.19 Principals of QMT. During the past five year period, no
officer or director of QMT has been the subject of
(a) a petition under the Federal bankruptcy laws or any other
insolvency law nor has a receiver, fiscal agent or similar officer been
appointed by a court for the
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business or property of such person, or any partnership in which he was a
general partner at or within two years before the time of such filing, or
any corporation or business association of which he was an executive
officer at or within two years before the time of such filing;
(b) a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations which do not
relate to driving while intoxicated);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining him from, or otherwise limiting, the following
activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
United States Commodity Futures Trading Commission or an associated
person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or
continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation
of Federal, state or other securities laws or commodities laws.
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(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of such
person to engage in any activity described in the preceding sub-paragraph,
or to be associated with persons engaged in any such activity;
(e) a finding by a court of competent jurisdiction in a civil action
or by the Commission to have violated any securities law, regulation or
decree and the judgment in such civil action or finding by the Commission
has not been subsequently reversed, suspended or vacated; or
(f) a finding by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed
suspended or vacated.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES OF AAI
As an inducement to, and to obtain the reliance of QMT, AAI represents
and warrants as follows:
Section 2.1 Organization. AAI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has the
corporate power and is duly authorized, qualified, franchised and licensed under
all applicable laws, regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its business in all
material respects as it are now being conducted, including qualification to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the AAI Schedules (as hereinafter
defined) are complete and correct copies of the articles of incorporation and
bylaws of AAI as in effect on the date hereof. The execution and delivery of
this Agreement does not and the consummation of the transactions contemplated by
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this Agreement in accordance with the terms hereof will not, violate any
provision of AAI' s articles of incorporation or bylaws. AAI has taken all
action required by law, its articles of incorporation, its bylaws or otherwise
to authorize the execution and delivery of this Agreement. AAI has full power,
authority and legal right and has taken all action required by law, its articles
of incorporation, bylaws or otherwise to consummate the transactions herein
contemplated.
Section 2.2 Capitalization. The authorized capitalization of AAI
consists of 100,000,000 shares of Common Stock, par value $0.0001 per share. As
of the date hereof there are 3,000,000 Common Shares of AAI issued and
outstanding. As of the Closing Date (as defined herein), there will be no more
than 2,500,000 shares of AAI's common stock issued or outstanding.
Section 2.3 Subsidiaries. AAI has no subsidiary companies.
Section 2.4 Financial Statements.
(a) Included in the AAI Schedules are the audited balance sheet of AAI
for the fiscal years ended June 30, 2000 and 1999, and the related
statements of operations, stockholders' equity and cash flows for the years
then ended, and the unaudited balance sheet and related statement of
operations, stockholders' equity and cash flow for the three month period
ended December 31, 2000, which are included in the schedules identified in
Section 2.20(b).
(b) All such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved. The AAI balance sheets present fairly as
of their respective dates the financial condition of AAI. AAI did not have
as of the date of any of such AAI balance sheets, any liabilities or
obligations (absolute or contingent) which should be reflected in a balance
sheet or the notes thereto prepared in accordance with generally accepted
accounting principles, and all assets reflected therein are properly
reported and present fairly the value of the assets of AAI, in accordance
with generally accepted accounting principles. The statements of
operations, stockholders' equity and changes in financial
13
position reflect fairly the information required to be set forth therein by
generally accepted accounting principles.
(c) The books and records, financial and others, of AAI are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices.
(d) AAI has no liabilities with respect to the payment of any federal,
state, county, local or other taxes (including any deficiencies, interest
or penalties).
(e) As of the Closing Date, as defined herein, the AAI balance sheets
and the notes thereto, shall reflect that AAI has: (i) no receivables; (ii)
no accounts payable; and (iii) no contingent liabilities, direct or
indirect, matured or unmatured.
Section 2.5 Information. The information concerning AAI as set forth in
this Agreement and in the AAI Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 2.6 Options and Warrants. Other than as included in the AAI
Schedules, there are no existing options, warrants, calls or commitments of any
character to which AAI is a party and by which it is bound.
Section 2.7 Absence of Certain Changes or Events. Except as described
herein or in the AAI Schedules, since December 31, 2000:
(a) AAI has not: (i) amended its articles of incorporation or bylaws;
(ii) waived any rights of value which in the aggregate are extraordinary or
material considering the business of AAI; (iii) made any material change in
its method of management, operation or accounting; or (iv) made any accrual
or arrangement for or payment of bonuses or special compensation of any
kind or any severance or termination pay to any present or former officer
or employee;
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(b) AAI has not: (i) granted or agreed to grant any options, warrants
or other rights for its stocks, bonds or other corporate securities calling
for the issuance thereof, which option, warrant or other right has not been
cancelled as of the Closing Date; or (ii) borrowed or agreed to borrow any
funds or incurred or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the
ordinary course of business; and
(c) to the best knowledge of AAI, it has not become subject to any law
or regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets or condition
of AAI.
Section 2.8 Title and Related Matters. As of the Closing Date, AAI will
own no real, personal or intangible property.
Section 2.9 Litigation and Proceedings. There are no actions, suits or
proceedings pending or, to the best of AAI's knowledge and belief, threatened by
or against or affecting AAI, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. AAI does not have any knowledge of any default on its
part with respect to any judgment, order, writ, injunction, decree, award, rule
or regulation of any court, arbitrator or governmental agency or
instrumentality. Section 2.10 Contracts. On the Closing Date:
(a) there are no contracts, agreements, franchises, license
agreements, or other commitments to which AAI is a party or by which it or
any of its properties are bound.
(b) AAI is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which adversely affects,
or in the future may (as far as AAI can now foresee) adversely affect, the
business, operations, properties, assets or conditions of AAI; and
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(c) AAI is not a party to any oral or written: (i) contract for the
employment of any officer or employee; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension, benefit or retirement
plan, agreement or arrangement covered by Title IV of the Employee
Retirement Income Security Act, as amended; (iii) agreement, contract or
indenture relating to the borrowing of money; (iv) guaranty of any
obligation for the borrowing of money or otherwise, excluding endorsements
made for collection and other guaranties of obligations, which, in the
aggregate exceeds $1,000; (v) consulting or other similar contract; (vi)
collective bargaining agreement; (vii) agreement with any present or former
officer or director of AAI; or (viii) contract, agreement, or other
commitment involving payments by it of more than $1,000 in the aggregate.
Section 2.11 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any indenture, mortgage, deed of trust or
other contract, agreement or instrument to which AAI is a party or to which any
of its properties or operations are subject.
Section 2.12 Contract Defaults. To the best of AAI's knowledge and
belief, AAI is not in default in any respect under the terms of any outstanding
contract, agreement, lease or other commitment which is material to the
business, operations, properties, assets or condition of AAI, and there is no
event of default in any respect under any such contract, agreement, lease or
other commitment in respect of which AAI has not taken adequate steps to prevent
such a default from occurring.
Section 2.13 Governmental Authorizations. To the best of AAI's
knowledge, AAI has all licenses, franchises, permits and other governmental
authorizations that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date hereof. Except for
compliance with federal and state securities or corporation laws, no
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by AAI of the transactions contemplated hereby.
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Section 2.14 Compliance With Laws and Regulations. To the best of AAI's
knowledge and belief, AAI has complied with all applicable statutes and
regulations of any federal, state or other governmental entity or agency
thereof, including compliance with all tax laws, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets or condition of AAI or would not result in AAI's
incurring any material liability. Further, AAI is, as of the date of this
Agreement, a "reporting company" under Section 12 of the Securities Exchange Act
of 1934, as amended, and is current in filing all reports required to be filed
pursuant to said Act. AAI has filed all tax returns required to be filed by it
and does not have any tax liability to any governmental authority.
Section 2.15 Insurance. AAI has no insurable properties and no
insurance policies will be in effect at the Closing Date, as hereinafter
defined.
Section 2.16 Approval of Agreement The board of directors of AAI have
authorized the execution and delivery of this Agreement by AAI and have approved
the transactions contemplated hereby and the shareholders of AAI will approve
the transactions contemplated hereby prior to the Closing.
Section 2.17 Material Transactions or Affiliations. As of the Closing
Date, there will exist no contract, agreement or arrangement between AAI and any
person who was at the time of such contract, agreement or arrangement an
officer, director or person owning of record, or known by AAI to own
beneficially, ten percent (10%) or more of the issued and outstanding common
stock of AAI and which is to be performed in whole or in part after the date
hereof. AAI has no commitment, whether written or oral, to lend any funds to,
borrow any money from or enter into any other material transactions with, any
such affiliated person.
Section 2.18 Labor Relations. AAI has never had a work stoppage
resulting from labor problems. AAI has no employees other than its officers and
directors.
Section 2.19 Previous Sales of Securities. Since inception, AAI has
sold AAI Common Shares to investors in reliance upon applicable exemptions from
the registration requirements under the laws of the State of Nevada, the United
States and Canada and all such sales were made in accordance with the laws of
said jurisdictions.
17
Section 2.20 Principals of AAI. During the past five year period, no
officer or director of AAI has been the subject of
(a) a petition under the Federal bankruptcy laws or any other
insolvency law nor has a receiver, fiscal agent or similar officer been
appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years before
the time of such filing, or any corporation or business association of
which he was an executive officer at or within two years before the time of
such filing;
(b) a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations which do not
relate to driving while intoxicated);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining him from, or otherwise limiting, the following
activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
United States Commodity Futures Trading Commission or an associated
person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or
continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
18
Engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of Federal, state or other
securities laws or commodities laws.
(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of such
person to engage in any activity described in the preceding sub-paragraph,
or to be associated with persons engaged in any such activity;
(e) a finding by a court of competent jurisdiction in a civil action
or by the Commission to have violated any securities law, regulation or
decree and the judgment in such civil action or finding by the Commission
has not been subsequently reversed, suspended or vacated; or
(f) a finding by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed
suspended or vacated.
Section 2.21 SEC Filings. AAI has furnished to QMT true and complete
copies, including exhibits and, as applicable, amendments thereto, of (i) AAI's
Registration Statement, including all post-effective amendments thereto, for its
initial public offering; (ii) the Prospectus contained therein; and (iii) each
Quarterly Report on Form 10-QSB and each Annual Report on Form 10-KSB issued by
AAI since its incorporation. None of such filings contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading a the time of such
filings.
Section 2.22 AAI Schedules. Upon execution hereof, AAI shall deliver to
QMT the following schedules, which are collectively referred to as the "AAI
Schedules" which are dated the date of this Agreement, all certified by an
officer of AAI to be complete, true and accurate:
19
(a) complete and correct copies of the articles of incorporation and
bylaws of AAI as in effect as of the date of this Agreement;
(b) copies of all financial statements of AAI identified in Section
2.4(a);
(c) a list indicating the names and addresses of the stockholders of
AAI, together with the number of shares owned by them;
(d) the description of any material adverse change in the business,
operations, property, assets, or condition of AAI since December 31, 2000,
required to be provided pursuant to Section 2.7;
(e) a list of all executive employees of AAI, including current
compensation, with notation as to job description and whether or not such
employee is subject to a written contract; and
(f) any other information, together with any required copies of
documents, required to be disclosed in the AAI Schedules by Sections 2.1
through 2.18.
AAI shall cause the AAI Schedules and the instruments to be delivered
to QMT hereunder to be updated after the date hereof up to and including the
Closing Date. It is specifically acknowledged by AAI that it has no licenses,
permits or other governmental authorizations relevant to its business.
ARTICLE III
EXCHANGE PROCEDURE
Section 3.1 Share Exchange/Delivery of QMT Securities. On the Closing
Date, the holders of the QMT Common Shares shall deliver to AAI (i) certificates
or other documents evidencing all of the issued and outstanding QMT Common
Shares, duly endorsed in blank or with executed stock power attached thereto in
transferable form; and (ii) investment letters, the form of which is attached
hereto as Exhibit "B". On the Closing Date, all previously issued and
outstanding shares of common stock of QMT shall be canceled and all rights in
respect thereof shall cease.
20
Section 3.2 Issuance of AAI Common Shares. In exchange for all of the
QMT Common Shares tendered pursuant to Section 3.1, AAI shall issue an aggregate
of 10,000,000 "restricted" AAI Common Shares to the QMT shareholders on a
share-for-share basis to their existing ownership in QMT.
Section 3.3 Events Prior to Closing.
(a) Upon execution hereof or as soon thereafter as practical,
management of AAI and QMT shall execute, acknowledge and deliver (or shall cause
to be executed, acknowledged and delivered) any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings or other
instruments required by this Agreement to be so delivered, together with such
other items as may be reasonably requested by the parties hereto and their
respective legal counsel in order to effectuate or evidence the transactions
contemplated hereby, subject only to the conditions to Closing referenced
hereinbelow.
(b) Upon execution hereof or as soon thereafter as practical, all the
current shareholders of AAI, representing 500,000 shares, shall tender their
share certificates, along with a duly executed stock power, to AAI for
cancellation.
Section 3.4 Closing. The closing of the transaction contemplated by
this Agreement shall be as of the date in which (i) each party hereto has
executed this Agreement; and (ii) all of the shareholders of QMT and AAI have
approved the terms of this Agreement; and (iii) all conditions to Closing
referenced hereinabove, as well as in Articles V and VI below, have been
satisfied or waived by the appropriate party and all documentation referenced
herein is delivered to the respective party herein, unless a different date is
mutually agreed to in writing by the parties hereto (the "Closing Date").
Section 3.5 Termination.
(a) This Agreement may be terminated by the board of directors of
either AAI or QMT at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before any court or
any governmental body which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement and which,
in the judgment of such
21
board of directors, made in good faith and based on the advice of its
legal counsel, makes it inadvisable to proceed with the exchange
contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are disapproved
by any regulatory authority whose approval is required to consummate
such transactions; or
(iii) the conditions described in Articles V or VI, below, as
applicable, have not been satisfied in full; or
(iv) AAI shareholder approval shall not have been received by
June 30, 2001. In the event of termination pursuant to this
subparagraph (a) of this Section 3.5, no obligation, right, or
liability shall arise hereunder and each party shall bear all of the
expenses incurred by it in connection with the negotiation, drafting
and execution of this Agreement and the transactions herein
contemplated.
(b) This Agreement may be terminated at any time prior to the Closing
Date by action of the board of directors of AAI if QMT shall fail to comply
in any material respect with any of its covenants or agreements contained
in this Agreement or if any of the representations or warranties of QMT
contained herein shall be inaccurate in any material respect, which
noncompliance or inaccuracy is not cured after 20 days' written notice
thereof is given to QMT. If this Agreement is terminated pursuant to this
subparagraph (b) of this Section 3.5, this Agreement shall be of no further
force or effect and no obligation, right or liability shall arise
hereunder.
(c) This Agreement may be terminated at any time prior to the Closing
Date by action of the board of directors of QMT if AAI shall fail to comply
in any material respect with any of its covenants or agreements contained
in this Agreement or if any of the representations or warranties of AAI
contained herein shall be inaccurate in any material respect, which
noncompliance or inaccuracy is not cured after 20 days written notice
thereof is given to AAI. If this Agreement is terminated pursuant to this
22
subparagraph (c) of Section 3.5, this Agreement shall be of no further
force or effect and no obligation, right or liability shall arise
hereunder.
Section 3.6 Directors of AAI. Upon the Closing, the present members of
AAI' s Board of Directors shall tender their resignations seriatim so that the
following persons are appointed directors of AAI in accordance with procedures
set forth in the AAI bylaws: Xxxxx X. Xxxxxx, Xxxx X. Xxxxxx, Xxxxxx X. Xxxxx,
Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxx, and Xxxxxxx Xxxxxxx.
Each director shall hold office until his successor shall have been duly elected
and shall have qualified or until his or her earlier death, resignation or
removal.
Section 3.7 Officers of AAI. Upon the Closing, the present officers of
AAI shall tender their resignations and simultaneous therewith, the following
persons shall be elected as officers of AAI in accordance with procedures set
forth in the AAI bylaws:
NAME OFFICE
---- ------
Xxxxx X. Xxxxxx President
Xxxxxxx X. Xxxxxx Secretary
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Shareholder Meeting. As soon as practicable after the date
hereof, but in no event after June 30, 2001, AAI shall cause a special meeting
of its shareholders to be held to consider and vote upon the transactions
contemplated by this agreement, including but not limited to the Merger, the
change of AAI's name to Quick-Med Technologies Corp.'s, changing the
jurisdiction of incorporation to Florida and adoption of a stock option plan
(collectively, the Shareholder Matters"). AAI shall promptly take such actions
as may be necessary to effect the foregoing, including filing and using its best
efforts to cause to be declared effective a Post-Effective Amendment to its Form
SB-2 Registration Statement (the "Post-Effective Amendment") pursuant to Rule
419 ("Rule 419") under the Securities Act of 1933, as amended (the "Securities
Act").
23
Section 4.2 Access to Properties and Records. AAI and QMT will each
afford to the officers and authorized representatives of the other full access
to the properties, books and records of AAI and QMT, as the case may be, in
order that each may have full opportunity to make such reasonable investigation
as it shall desire to make of the affairs of the other and each will furnish the
other with such additional financial and operating data and other information as
to the business and properties of AAI and QMT, as the case may be, as the other
shall from time to time reasonably request.
Section 4.3 Availability of Rule 144. Each of the parties acknowledge
that the stock of AAI to be issued pursuant to this Agreement will be
"restricted securities," as that term is defined in Rule 144 as promulgated
pursuant to the Securities Act. AAI is under no obligation to register such
shares under the Securities Act, or otherwise. Notwithstanding the foregoing,
however, following the Closing Date, AAI will use its best efforts to: (a) make
publicly available on a regular basis not less than semi-annually, business and
financial information regarding AAI so as to make available to the shareholders
of AAI the provisions of Rule 144 pursuant to subparagraph (c)(2) thereof; and
(b) within ten (10) days of any written request of any stockholder of AAI, AAI
will provide to such stockholder written confirmation of compliance with such of
the foregoing subparagraph as may then be applicable. The stockholders of AAI
holding restricted securities of AAI as of the date of this Agreement and their
respective heirs, administrators, personal representatives, successors and
assigns, are intended third party beneficiaries of the provisions set forth
herein. The covenants set forth in this Section 4.2 shall survive the Closing
and the consummation of the transactions herein contemplated.
Section 4.4 Information for AAI Public Reports. QMT will furnish AAI
with all information concerning QMT and the QMT Stockholders, including all
financial statements, required for inclusion in any registration statement or
public report intended to be filed by AAI pursuant to the Securities Act, the
Exchange Act, or any other applicable federal or state law. QMT covenants that
all information so furnished for either such registration statement or other
public release by AAI, including the financial statements described in Section
1.4, shall be true and correct in all material respects without omission of any
material fact required to make the information stated not misleading.
24
Section 4.5 Special Covenants and Representations Regarding the AAI
Common Shares to be Issued in the Exchange. The consummation of this Agreement,
including the issuance of the AAI Common Shares to the stockholders of QMT as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act, and applicable state statutes. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, inter alia, upon the
circumstances under which the QMT stockholders acquire such securities, In
connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, QMT shall cause to
be delivered, and the QMT stockholders shall deliver to AAI, the investment
letter referenced in Section 3.1.
Section 4.6 Third Party Consents. AAI and QMT agree to cooperate with
each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
Section 4.7 Actions Prior to Closing.
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the AAI or QMT Schedules or as permitted or
contemplated by this Agreement, the parties hereto will each use its best
efforts to:
(i) carry on its business in substantially the same manner as it
has heretofore;
(ii) maintain and keep its properties in states of good repair
and condition as at present, except for depreciation due to ordinary
wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations
under material contracts, leases and instruments relating to or
affecting its assets, properties and business;
25
(v) maintain and preserve its business organization intact,
retain its key employees and maintain its relationship with its
material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all provincial, federal and
state laws and all rules, regulations and orders imposed by
provincial, federal or state governmental authorities.
(vii) utilize its best efforts in order to establish a trading
market for AAI' s Common Stock on a US over the counter market.
(b) From and after the date of this Agreement until the Closing Date,
neither AAI nor QMT will, without the prior consent of the other party:
(i) except as otherwise specifically set forth herein, make any
change in their respective articles of incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding shares of
capital stock, except as may otherwise be required by law, or effect
any stock split or otherwise change its capitalization, except as
provided herein;
(iii) enter into or amend any employment, severance or similar
agreements or arrangements with any directors or officers;
(iv) grant, confer or award any options, warrants, conversion
rights or other rights not existing on the date hereof to acquire any
shares of its capital stock; or
(v) purchase or redeem any shares of its capital stock, except as
disclosed herein.
26
Section 4.8 Indemnification.
(a) QMT hereby agrees to indemnify AAI and each of the officers,
agents and directors of AAI as of the date of execution of this Agreement
against any loss, liability, claim, damage or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened or any claim whatsoever), to which it or they may become subject
arising out of or based on any inaccuracy by QMT appearing in or
misrepresentation made in this Agreement. The indemnification provided for
in this paragraph shall survive the Closing and consummation of the
transactions contemplated hereby and termination of this Agreement for a
period of 12 months.
(b) AAI and its officers and directors hereby agree to indemnify QMT
and each of the officers, agents, directors and current shareholders of QMT
as of the Closing Date against any loss, liability, claim, damage or
expense (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened or any claim whatsoever), to which it
or they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made in this Agreement and particularly
the representation regarding no liabilities referred to in Section 2.4(b).
The indemnification provided for in this Section shall survive the Closing
and consummation of the transactions contemplated hereby and termination of
this Agreement for a period of 12 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF AAI
The obligations of AAI under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.1 Accuracy of Representations. The representations and
warranties made by QMT in this Agreement were true when made and shall be true
at the Closing Date with the same force and effect as if such representations
and warranties were made at the Closing Date (except for changes therein
permitted by this Agreement), and QMT shall have performed or complied with all
covenants and conditions required by this Agreement to be performed or complied
with by QMT prior to or at the Closing. AAI shall be furnished with a
certificate,
27
signed by a duly authorized officer of QMT and dated the Closing Date, to the
foregoing effect.
Section 5.2 Stockholder Approval The stockholders of QMT shall have
approved this Agreement and the transactions contemplated thereby.
Section 5.3 Officer's Certificate. AAI shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
QMT to the effect that: (a) the representations and warranties of QMT set forth
in the Agreement and in all Exhibits, Schedules and other documents furnished in
connection herewith are in all material respects true and correct as if made on
the Closing Date; (b) QMT has performed all covenants, satisfied all conditions,
and complied with all other terms and provisions of this Agreement to be
performed, satisfied or complied with by it as of the Closing Date; (c) since
the date of QMT' s audited Balance Sheet of December 31, 2000, there has not
been any materially adverse change in the business, prospects, properties or
financial condition of QMT; (d) since such date and other than as previously
disclosed to AAI, QMT has not entered into any material transaction other than
transactions which are usual and in the ordinary course of its business; and (e)
no litigation, proceeding, investigation or inquiry is pending or, to the best
knowledge of QMT, threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Agreement or,
to the extent not disclosed in the QMT Schedules, by or against QMT which might
result in any material adverse change in any of the assets, properties, business
or operations of QMT.
Section 5.4 No Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of QMT.
Section 5.5 Other Items. AAI shall have received such further
documents, certificates or instruments relating to the transactions contemplated
hereby as AAI may reasonably request.
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ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF QMT
The obligations of QMT under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise indicated herein),
of the following conditions:
Section 6.1 Accuracy of Representations. The representations and
warranties made by AAI in this Agreement were true when made and shall be true
as of the Closing Date (except for changes therein permitted by this Agreement)
with the same force and effect as if such representations and warranties were
made at and as of the Closing Date, and AAI shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by AAI prior to or at the Closing. QMT shall have been furnished
with a certificate, signed by a duly authorized executive officer of AAI and
dated the Closing Date, to the foregoing effect.
Section 6.2 Officer's Certificate. QMT shall be furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
AAI to the effect that: (a) the representations and warranties of AAI set forth
in the Agreement and in all Exhibits, Schedules and other documents furnished in
connection herewith are in all material respects true and correct as if made on
the Closing Date; (b) AAI has performed all covenants, satisfied all conditions,
and complied with all other terms and provisions of the Agreement to be
performed, satisfied or complied with by it as of the Closing Date; (c) since
the date of AAI' s audited Balance Sheet of June 30, 2000, there has not been
any materially adverse change in the business, prospects, properties or
financial condition of AAI; (d) since such date, AAI has not entered into any
material transaction other than transactions which are usual and in the ordinary
course of its business; and (e) no litigation, proceeding, investigation or
inquiry is pending or, to the best knowledge of AAI, threatened, which might
result in an action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or, to the extent not disclosed in the AAI
Schedules, by or against AAI which might result in any material adverse change
in any of the assets, properties, business or operations of AAI.
Section 6.3 No Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may
29
cause or create any material adverse change in the financial condition, business
or operations of AAI.
Section 6.4 Additional Conditions to Closing. AAI shall have complied
with all applicable provisions of Rule 419 under the Securities Act, including
the filing of the Post-Effective Amendment with the Commission and the
circulation of a reconfirmation offer to each original investor in AAI approving
the Shareholder Matters.
Section 6.5 Compliance with Reporting Requirements. As of the Closing
Date, AAI shall be current in and in compliance with all requirements of all
filings required to be tendered to the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.
Section 6.6 Other Items. QMT shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as QMT may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Except as stated in Schedule 7.1, each
party hereto hereby represents and warrants that it is under no obligation,
express or implied, to pay certain finders in connection with the bringing of
the parties together in the negotiation, execution, or consummation of this
Agreement. The parties each agree to indemnify the other against any claim by
any third person not listed in Schedule 7.1 for any commission, brokerage or
finder's fee or other payment with respect to this Agreement or the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.
Section 7.2 Law, Forum and Jurisdiction. This Agreement shall be
construed and interpreted in accordance with the laws of the State of Nevada.
30
Section 7.3 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to AAI: Xxxxxxx X. Xxxxxx, Esq.
Xxxxx & Lardner
Xxx Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
If to QMT: Xxxxx X. Xxxxxx
000 XX 00xx Xxxxxxx
Xxxx Xxxxx, XX 00000-0000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
Section 7.4 Attorneys' Fees. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.5 Confidentiality. Each party hereto agrees with the other
parties that, unless and until the reorganization contemplated by this Agreement
has been consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, of such other party,
and shall not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or is
required by law to be published; and
31
(ii) to the extent that such data or information must be used or disclosed in
order to consummate the transactions contemplated by this Agreement.
Section 7.6 Schedules; Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's Schedules delivered
pursuant to this Agreement.
Section 7.7 Third Party Beneficiaries. This contract is solely among
AAI and QMT and, except as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this Agreement.
Section 7.8 Entire Agreement This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
Section 7.9 Survival; Termination. Except as otherwise provided herein,
the representations, warranties and covenants of the respective parties shall
survive the Closing Date and the consummation of the transactions herein
contemplated.
Section 7.10 Counterparts Facsimile Execution. For purposes of this
Agreement, a document (or signature page thereto) signed and transmitted by
facsimile machine or telecopier is to be treated as an original document. The
signature of any party thereon, for purposes hereof, is to be considered as an
original signature, and the document transmitted is to be considered to have the
same binding effect as an original signature on an original document. At the
request of any party, a facsimile or telecopy document is to be re-executed in
original form by the parties who executed the facsimile or telecopy document. No
party may raise the use of a facsimile machine or telecopier machine as a
defense to the enforcement of the Agreement or any amendment or other document
executed in compliance with this Section.
Section 7.11 Amendment or Waiver. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in
32
equity, and may be enforced concurrently herewith, and no waiver by any party of
the performance of any obligation by the other shall be construed as a waiver of
the same or any other default then, theretofore, or thereafter occurring or
existing. At any time prior to the Closing Date, this Agreement may be amended
by a writing signed by all parties hereto, with respect to any of the terms
contained herein, and any term or condition of this Agreement may be waived or
the time for performance hereof may be extended by a writing signed by the party
or parties for whose benefit the provision is intended.
Section 7.12 Incorporation of Recitals. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
Section 7.13 Expenses. Each party herein shall bear all of their
respective costs and expenses incurred in connection with the negotiation of
this Agreement and in the consummation of the transactions provided for herein
and the preparation therefor.
Section 7.14 Headings; Context. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only and
do not form a part hereof and in no way modify, interpret or construe the
meaning of this Agreement.
Section 7.15 Benefit. This Agreement shall be binding upon and shall
inure only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
Section 7.16 Public Announcements. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
Section 7.17 Severability. In the event that any particular provision
or provisions of this Agreement or the other agreements contained herein shall
for any reason hereafter be determined to be unenforceable, or in violation of
any law, governmental order or regulation, such unenforceability or violation
shall not affect the remaining provisions of such agreements, which shall
continue in full force and effect and be binding upon the respective parties
hereto.
Section 7.18 Failure of Conditions; Termination. In the event any of
the conditions specified in this Agreement shall not be fulfilled on or before
the Closing Date, either of the
33
parties have the right either to proceed or, upon prompt written notice to the
other, to terminate and rescind this Agreement without liability to any other
party. The election to proceed shall not affect the right of such electing party
reasonably to require the other party to continue to use its efforts to fulfill
the unmet conditions.
Section 7.19 No Strict Construction. The language of this Agreement
shall be construed as a whole, according to its fair meaning and intendment, and
not strictly for or against either party hereto, regardless of who drafted or
was principally responsible for drafting the Agreement or terms or conditions
hereof
Section 7.20 Execution Knowing and Voluntary. In executing this
Agreement, the parties severally acknowledge and represent that each: (a) has
fully and carefully read and considered this Agreement; (b) has been or has had
the opportunity to be fully apprised by its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and (c) is
executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, and entered
into as of the date first above written.
34
ABOVE AVERAGE INVESTMENTS, LTD. QUICK-MED TECHNOLOGIES, INC.
By: /s/ Xxxxxxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxxx
---------------------------------- -------------------------------
Xxxxxxxx Xxxxxxxx Xxxxx X. Xxxxxx
Its: President Its: President
---------------------------------- -------------------------------
35
EXHIBIT "B"
FORM OF INVESTMENT LETTERS
36
EXHIBIT "B"
INVESTMENT LETTER
____________, 2001
-----------------
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common stock of
Quick-Med Technologies, Inc., a Delaware corporation, ("QMT"), as described
below (endorsed, or having executed stock powers attached) in acceptance of and
subject to the terms and conditions of that certain Agreement and Plan of
Reorganization (the "Agreement"), between Above Average Investments, LTD.
("AAI") and QMT, dated March 19 1, 2001, receipt of which is hereby
acknowledged, in exchange for shares of Common Stock of AAI (the "Exchange
Shares"). If any condition precedent to the Agreement is not satisfied within
the relevant time parameters established in Agreement (or any extension
thereof), the certificate(s) are to be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees with you that,
in connection with the undersigned's acceptance of the Exchange Shares and as of
the date of this letter:
2. The undersigned warrants full authority to deposit all shares
referred to above.
3. The undersigned has full power and authority to enter into this
Agreement and that this Agreement constitutes a valid and leg ally binding
obligation of the undersigned.
4. By execution hereof, the undersigned hereby confirms that the AAI
common stock to be received in exchange for QMT common stock (the "Securities"),
will be acquired for investment for the undersigned's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that the undersigned has no present intention of selling, granting
any participation in, or otherwise distributing the same. By execution hereof,
the undersigned further represents the undersigned does not have any
37
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___________, 2001
Page 2
contract, undertaking, agreement or arrangement with any third party, with
respect to any of the Securities.
5. The undersigned understands that the Securities are being issued
pursuant to available exemption thereto and have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or under any state
securities laws. The undersigned understands that no registration statement has
been filed with the United States Securities and Exchange Commission nor with
any other regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as the undersigned by an impartial review of
such a registration statement by the Securities and Exchange Commission or other
regulatory authority will not be forthcoming. The undersigned understands that
he/she/it cannot sell the Securities unless such sale is registered under the
1933 Act and applicable state securities laws or exemptions from such
registration become available, In this connection the undersigned understands
that the Company has advised the Transfer Agent for the Common Shares to be
issued to US residents that the Securities are "restricted securities" under the
1933 Act and that they may not be transferred by the undersigned to an person
without the prior consent of the Company, which consent of the Company will
require an opinion of counsel to the effect that, in the event the Securities
are not registered under the 1933 Act, any transfer as may be proposed by the
undersigned must be entitled to an exemption from the registration provisions of
the 1933 Act. To this end, the undersigned acknowledges that a legend to the
following effect will be placed upon the certificate representing the Securities
and that the Transfer Agent has been advised of such facts:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, ANT) MAY BE
OFFERED AND SOLD ONLY IF REGISTERED PURSUANT TO THE
PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE, THE
AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
The undersigned understands that the foregoing legend on his/her its
certificate for the Common Shares limits their value, including their value as
collateral.
(The Balance of this Page Intentionally Left Blank)
38
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______________, 2001
Page 3
In Witness Whereof, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: ______________, 2001
Very truly yours,
---------------------------------------
(signature)
---------------------------------------
(print name in full)
---------------------------------------
(street address)
---------------------------------------
(city, state, zip)
---------------------------------------
(social security number or
employer identification number)
39
