Exhibit 2.2
AGREEMENT AND PLAN OF EXCHANGE
BETWEEN
THE QUANTUM GROUP, INC.
QUANTUM MEDICAL TECHNOLOGIES, INC. (QMT).
AND
THE STOCKHOLDER OF QUANTUM MEDICAL TECHNOLOGIES, INC. (QMT).
DATED AUGUST 9 ,2004
INDEX
1. Definitions 1
2. Basic Transaction 3
3. Representations and Warranties of QMT and the QMT Stockholder 4
4. Representations and Warranties of QUANTUM 11
5. Additional Representations and Warranties of the QMT Stockholder 14
6. Deliveries At Closing 14
7. Miscellaneous 15
ii
AGREEMENT AND PLAN OF EXCHANGE
THIS AGREEMENT AND PLAN OF EXCHANGE is made and entered into as of this
9th day of August 2004, by and between THE QUANTUM GROUP, INC., a Nevada
corporation, QUANTUM MEDICAL TECHNOLOGIES, INC. (QMT)., a Florida corporation,
and XXXX X. XXXXXXXX, the sole stockholder of QUANTUM MEDICAL TECHNOLOGIES, INC.
(QMT).
PREMISES
This Agreement provides for the acquisition by QUANTUM of all of the
issued and outstanding shares of QMT solely in exchange for voting shares of
QUANTUM on the terms and conditions hereinafter provided, all for the purpose of
effecting a so-called "tax-free" reorganization pursuant to section 368(a)(1)(B)
of the Internal Revenue Code of 1986.
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 here from, it is hereby agreed as follows:
1. DEFINITIONS.
"Accredited Investor" has the meaning set forth in Rule 501(a) of
Regulation D promulgated under the Securities Act.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Closing" has the meaning set forth in ss.2(b) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Disclosure Schedule" has the meaning set forth in ss.3 below.
"Exchanged QUANTUM Stock" means the 4,000,000 of the common shares of
QUANTUM, par value $.001, to be issued to the QMT Stockholder pursuant to this
Agreement, and 100,000 shares of newly created class at preferred stock.
"Financial Statement" has the meaning set forth in ss.3(g) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
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"Intellectual Property" means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names and rights in telephone numbers,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including source code, executable code, data,
databases and related documentation), (g) all advertising and promotional
materials, (h) all other proprietary rights, and (i) all copies and tangible
embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in ss.3(g)
below.
"Most Recent Fiscal Year End" has the meaning set forth in ss.3(g)
below.
"Most Recent Quarterly Report" has the meaning set forth in ss.4(g)
below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" means any one of QUANTUM, QMT or the QMT Stockholder.
"Person" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
governmental entity.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"QMT" means QUANTUM MEDICAL TECHNOLOGIES, INC. (QMT)., a Florida
corporation and a Party to this Agreement.
"QMT Stock" means 10,000,000 common shares of QMT, $0.001 par value,
which are all of the issued and outstanding shares of the capital stock of QMT.
"QMT Stockholder" means Xxxx X. Xxxxxxxx, the sole stockholder of QMT
and a Party to this Agreement.
"QUANTUM" means THE QUANTUM GROUP, INC., a Florida corporation and
Party to this Agreement.
2. BASIC TRANSACTION.
(a) Pursuant to this Agreement, the QMT Stockholder hereby conveys,
transfer and assigns all of the QMT Stock to QUANTUM in exchange for the
Exchanged QUANTUM Stock. The QMT Stockholder is delivering to QUANTUM stock
certificates representing all issued and outstanding shares of QMT Stock, each
certificate duly endorsed for transfer with signature guarantees, and receiving
in exchange there for one or more certificates representing the Exchanged
QUANTUM Stock. The shares of Exchanged QUANTUM Stock issued pursuant to this
ss.2(a) are legally issued, fully paid, and non-assessable. It is the intent of
the Parties that the exchange be effected as a so-called "tax-free"
reorganization pursuant to section 368(a)(1)(B) of the Internal Revenue Code of
1986, and the Parties covenant and agree to reflect the exchange as such on all
financial statements, Tax Returns, filings, and other documents identifying or
referring to the exchange contemplated by this Agreement.
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(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Quantum commencing
at 10:00 a.m. local time concurrently with the execution and delivery of this
Agreement.
(c) Deliveries at the Closing. At the Closing, (i) QMT and the QMT
Stockholder is delivering to QUANTUM the various certificates, instruments, and
documents referred to in ss.6(a) below; and (ii) QUANTUM is delivering to QMT
and the QMT Stockholder the various certificates, instruments, and documents
referred to in ss.6(b) below.
3. REPRESENTATIONS AND WARRANTIES OF QMT AND THE QMT STOCKHOLDER. QMT and
the QMT Stockholder represent and warrant to QUANTUM that the statements
contained in this ss.3 are correct and complete as of the date of this
Agreement, except as set forth in the disclosure schedule accompanying this
Agreement and initialed by QMT and QUANTUM (the "Disclosure Schedule"). The
Disclosure Schedule are arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this ss.3.
(a) Organization of QMT. QMT is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b) Authorization of Transaction. QMT has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the board of directors of QMT has duly authorized
the execution, delivery, and performance of this Agreement by QMT. This
Agreement constitutes the valid and legally binding obligation of QMT,
enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which QMT is subject or any provision of the
charter or bylaws of QMT or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which QMT is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). QMT does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement.
(d) Brokers' Fees. QMT has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which QUANTUM could become liable or
obligated.
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(e) Title to Assets. QMT has good and marketable title to, or a valid
leasehold interest in, the properties and assets used by it, located on its
premises, or shown on the Most Recent Balance Sheet or acquired after the date
thereof, free and clear of all Security Interests, except for properties and
assets disposed of in the Ordinary Course of Business since the date of the Most
Recent Balance Sheet.
(f) Subsidiaries. QMT has no Subsidiaries and does not have an
ownership interest in any other Person or any security of any other Person.
(g) Financial Statements. To be provided in 60 days attire expense of
Quantum.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of any of QMT. Without limiting the generality of the foregoing, since
that date:
(i) QMT has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration
in the Ordinary Course of Business;
(ii) QMT has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and
licenses) either involving more than $5,000 or outside the Ordinary
Course of Business;
(iii) No party (including QMT) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses)
involving more than $5,000 to which QMT is a party or by which it is
bound;
(iv) QMT has not imposed any Security Interest upon any of its
assets, tangible or intangible;
(v) QMT has not made any capital expenditure (or series of
related capital expenditures) either involving more than $5,000 or
outside the Ordinary Course of Business;
(vi) QMT has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) either
involving more than $5,000 or outside the Ordinary Course of Business;
(vii) QMT has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation either involving
more than $20,000 singly or $20,000 in the aggregate;
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(viii) QMT has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of
Business;
(ix) QMT has not cancelled, compromised, waived, or released
any right or claim (or series of related rights and claims) either
involving more than $5,000 or outside the Ordinary Course of Business;
(x) QMT has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(xi) There has been no change made or authorized in the
charter or bylaws of QMT;
(xii) QMT has not issued, sold, or otherwise disposed of any
of its capital stock, or granted any options, warrants, or other rights
to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
(xiii) QMT has not declared, set aside, or paid any dividend
or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of
its capital stock;
(xiv) QMT has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(xv) QMT has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xvi) QMT has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms
of any existing such contract or agreement;
(xvii) QMT has not granted any increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xviii) QMT has not adopted, amended, modified, or terminated
any bonus, profit sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors,
officers, and employees;
(xix) QMT has not made any other change in employment terms
for any of its directors, officers, and employees outside the Ordinary
Course of Business;
(xx) QMT has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving QMT; and
(xxii) QMT has not committed to any of the foregoing.
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(i) Undisclosed Liabilities. QMT does not have any Liability (and there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Balance sheet in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
(j) Legal Compliance. Each of QMT and its Affiliates has complied with
all applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges there under) of federal, state,
local, and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply.
(k) Tax Matters.
(i) QMT has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all respects.
All Taxes owed by QMT (whether or not shown on any Tax Return) have
been paid. QMT is not currently the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made
by an authority in a jurisdiction where QMT does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There
are no Security Interests on any of the assets of QMT that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) QMT has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(iii) No director or officer (or employee responsible for Tax
matters) of QMT expects any authority to assess any additional Taxes
for any period for which Tax Returns have been filed. There is no
dispute or claim concerning any Tax Liability of QMT either (A) claimed
or raised by any authority in writing or (B) as to which any of the
directors and officers (and employees responsible for Tax matters) of
QMT has Knowledge based upon personal contact with any agent of such
authority. ss.3(k) of the Disclosure Schedule lists all federal, state,
local, and foreign income Tax Returns filed with respect to QMT for
taxable periods ended on or after December 31, 2003, indicates those
Tax Returns that have been audited, and indicates those Tax Returns
that currently are the subject of audit. QMT has delivered to QUANTUM
correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against or
agreed to by QMT since Incorporation, if applicable.
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(iv) QMT has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) The unpaid Taxes of QMT (A) did not, as of the Most Recent
Balance Sheet, exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) and (B) do not exceed
that reserve as adjusted for the passage of time through the date of
Closing in accordance with the past custom and practice of QMT in
filing its Tax Returns.
(l) Real Property. Since its inception QMT has not held, and will not
hold as of the date of Closing, a fee title in any real property. All of the
real property leases necessary in any material respect for the operation of the
business of QMT are valid, subsisting, and enforceable and afford peaceful and
undisturbed possession of the subject matter of the lease, and no material
default by QMT exists under any of the provisions thereof.
(m) Intellectual Property.
(i) QMT owns or possesses or has the right to use pursuant to
a valid and enforceable, written license, sublicense, agreement, or
permission all Intellectual Property necessary for the operation of the
business of QMT as presently conducted and as presently proposed to be
conducted. Each item of Intellectual Property owned or used by QMT
immediately prior to the Closing hereunder will be owned or available
for use by QMT on identical terms and conditions immediately subsequent
to the Closing hereunder. QMT has taken all necessary action to
maintain and protect each item of Intellectual Property that it owns or
uses. These include currently in development protects such as
Cybernaptic (sm), Quantum Quotient (sm) and MDAutomated (sm) and any
other project indevelopment..
(ii) QMT has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and none of the directors and
officers (and employees with responsibility for Intellectual Property
matters) of QMT has ever received any charge, complaint, claim, demand,
or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that QMT must
license or refrain from using any Intellectual Property rights of any
third party). To the Knowledge of any of the directors and officers
(and employees with responsibility for Intellectual Property matters)
of QMT, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of QMT.
(iii) To the Knowledge of any of the directors and officers
(and employees with responsibility for Intellectual Property matters)
of QMT: (A) QMT has not in the past nor will interfere with, infringe
upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the
continued operation of its business as presently conducted and as
presently proposed to be conducted; (B) there are no facts that
indicate a likelihood of any of the foregoing; and (C) no notices
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regarding any of the foregoing (including, without limitation, any
demands or offers to license any Intellectual Property from any third
party) have been received.
(n) Tangible Assets. QMT owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its business
as presently conducted and as presently proposed to be conducted. Each such
tangible asset is free from defects (patent and latent), has been maintained in
accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear), and is suitable for the purposes for
which it presently is used and presently is proposed to be used.
(p) Contracts. ss.3(o) of the Disclosure Schedule lists the following
contracts and other agreements to which QMT is a party:
(i) Any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $5,000 per annum;
(ii) Any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, result in a material loss to QMT, or involve consideration in
excess of $5,000;
(iii) Any agreement concerning a partnership or joint venture;
(iv) Any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of
$5,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
(v) Any agreement concerning confidentiality or
non-competition;
(vi) Any agreement involving the QMT Stockholder and his
Affiliates (other than QMT);
(vii) Any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) Any collective bargaining agreement;
(ix) Any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $30,000 or providing severance benefits;
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(x) Any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xi) Any agreement under which the consequences of a default
or termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of QMT; or
(xii) Any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $5,000.
QMT has delivered to QUANTUM a correct and complete copy of each written
agreement listed in ss.3(o) of the Disclosure Schedule (as amended to date) and
a written summary setting forth the terms and conditions of each oral agreement
referred to in ss.3(o) of the Disclosure Schedule. With respect to each such
agreement: (A) the agreement is legal, valid, binding, enforceable, and in full
force and effect; (B) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) no party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement.
(p) Notes and Accounts Receivable. All notes and accounts receivable of
QMT are reflected properly on their books and records, are valid receivables
subject to no setoffs or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject only
to the reserve for bad debts set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of time
through the date of Closing in accordance with the past custom and practice of
QMT.
(q) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of QMT.
(r) Insurance. All material properties of QMT are insured for its
benefit, in amounts deemed adequate by its directors or management, against all
risks usually insured against by persons operating similar properties in the
localities where such properties are located under valid and enforceable
policies issued by insurers of recognized responsibility. QMT has not done
anything either by way of action or inaction that might invalidate such policies
in whole or in part.
(s) Litigation. ss.3(s) of the Disclosure Schedule sets forth each
instance in which QMT (i) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (ii) is a party or, to the Knowledge of any
of the directors and officers (and employees with responsibility for litigation
matters) of QMT, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in ss.3(s) of the Disclosure Schedule
could result in any material adverse change in the business, financial
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condition, operations, results of operations, or future prospects of QMT. None
of the directors and officers (and employees with responsibility for litigation
matters) of QMT has any reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against QMT.
(t) Employees. To the Knowledge of any of the directors and officers
(and employees with responsibility for employment matters) of QMT, no executive,
key employee, or group of employees has any plans to terminate employment with
QMT. QMT is not a party to or bound by any collective bargaining agreement, nor
has any of them experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. QMT has not committed any
unfair labor practice. None of the directors and officers (and employees with
responsibility for employment matters) of QMT has any Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of QMT.
(u) Guaranties. QMT is not a guarantor or otherwise is liable for any
Liability or obligation (including indebtedness) of any other Person.
(v) Certain Business Relationships With QMT. All the parties
acknowledge that the officers, directors and shareholders of THE QUANTUM GROUP,
INC. and QUANTUM MEDICAL TECHNOLOGIES, INC. are practically the same and that
this transaction is not negotiated in an arms length relationship and further
that the consideration has been arbitrary and materially approved by all the
directors of both company and by a majority of the shareholders of both
companies and my Xxxx X. Xxxxxxxx the beneficial owner of over 51% of the voting
shares of Quantum are QMT.
(w) Disclosure. The representations and warranties contained in this
ss.3 do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this ss.3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF QUANTUM. QUANTUM represents and
warrants to QMT and to the QMT Stockholder that the statements contained in this
ss.4 are correct and complete as of the date of this Agreement, except as set
forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this ss.4.
(a) Organization of QUANTUM. QUANTUM is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b) Authorization of Transaction. QUANTUM has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of QUANTUM, enforceable in accordance
with its terms and conditions.
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(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which QUANTUM is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
QUANTUM is a party or by which it is bound or to which any of its assets is
subject. QUANTUM does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement.
(d) Brokers' Fees. QUANTUM has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which QMT could become liable or
obligated.
(e) SEC Reports. ss.4(e) of the Disclosure Schedule contains all Annual
Report on Form 10-KSB for the year ended January 31, 2004, as filed with the
Securities and Exchange Commission and quarterly reports on Form 10-QSB for the
quarters ended April 30, 2004. Such reports are complete and accurate in all
material respects, and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements and
information contained in such reports not misleading.
(f) Subsidiaries. Not applicable.
(g) Undisclosed Liabilities. QUANTUM has no Liabilities (and there is
no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
Liability), except for (i) Liabilities set forth on the face of the balance
sheet (rather than in any notes thereto) contained in QUANTUM's quarterly report
on Form 10-QSB for the fiscal quarter ended April 30, 2004 (the "Most Recent
Quarterly Report") and (ii) Liabilities which have arisen after the Most Recent
Quarterly Report in the Ordinary Course of Business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law).
(h) Legal Compliance. QUANTUM and each of its predecessors and
Affiliates has complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
there under) of federal, state, local, and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against any of
them alleging any failure so to comply.
(i) Litigation. QUANTUM is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of any of the directors and officers of QUANTUM, is threatened to be
made a party to any action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator.
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(j) Tax Matters.
(i) QUANTUM has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all respects.
All Taxes owed by QUANTUM (whether or not shown on any Tax Return) have
been paid. QUANTUM is not currently the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made
by an authority in a jurisdiction where QUANTUM does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.
(ii) No director or officer of QUANTUM expects any authority
to assess any additional Taxes for any period for which Tax Returns
have been filed. There is no dispute or claim concerning any Tax
Liability of QUANTUM either (A) claimed or raised by any authority in
writing or (B) as to which any of the directors and officers of QUANTUM
has Knowledge based upon personal contact with any agent of such
authority. ss.4(j) of the Disclosure Schedule lists all federal, state,
local, and foreign income Tax Returns filed with respect to QUANTUM for
taxable periods ended on or after December 31, 2003, indicates those
Tax Returns that have been audited, and indicates those Tax Returns
that currently are the subject of audit. QUANTUM has delivered to QMT
correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against or
agreed to by QUANTUM since January 1, 2004.
(k) Certain Business Relationships With QUANTUM. All the parties
acknowledge that the officers, directors and shareholders of THE QUANTUM GROUP,
INC. and QUANTUM MEDICAL TECHNOLOGIES, INC. are practically the same and that
this transaction is not negotiated in an arms length relationship and further
that the consideration has been arbitrary and materially approved by all the
directors of both company and by a majority of the shareholders of both
companies and my Xxxx X. Xxxxxxxx the beneficial owner of over 51% of the voting
shares of Quantum are QMT.
(l) Condition at Closing. Except as set forth in ss.4(l) of the
Disclosure Schedule, as of the Closing QUANTUM has no outstanding options or
rights to acquire additional shares of QUANTUM common stock.
(m) Disclosure. The representations and warranties contained in this
ss.4 do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this ss.4 not misleading.
5. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE QMT STOCKHOLDER. The
QMT Stockholder represent and warrant to QUANTUM that the additional statements
contained in this ss.5 are correct and complete as of the date of this
Agreement.
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(a) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not: result in the breach of, constitute a default
under, result in the acceleration of, create in any Person the right to
accelerate, terminate, modify, cancel, or require any notice under, any material
agreement, contract, lease, license, instrument, or other arrangement to which
the QMT Stockholder is a party or by which he is bound; or, violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which he is subject.
(b) The QMT Stockholder has full power and authority, and has taken all
action required by law and otherwise to execute and deliver this Agreement and
to perform his obligations hereunder. This Agreement represents the valid and
binding obligation of the undersigned enforceable in accordance with its terms,
except as limited by bankruptcy and insolvency laws and by other laws affecting
the rights of creditors generally.
(c) 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 the QMT Stockholder of this
Agreement and the consummation by him of the transactions contemplated hereby.
(d) The QMT Stockholder is the legal and beneficial owner of the QMT
Stock, free and clear of Security Interests, and he has full right, power, and
authority to transfer, assign, convey, and deliver the QMT Stock; and delivery
of such stock conveys to QUANTUM good and marketable title to the QMT Stock free
and clear of any Security Interests.
(e) The QMT Stockholder (i) understands that the Exchanged QUANTUM
Stock has not been, and will not be, registered under the Securities Act, or
under any state securities laws, and is being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public offering,
(ii) is acquiring the Exchanged QUANTUM Stock solely for his own account for
investment purposes, and not with a view to the distribution thereof, (iii) is
an Accredited Investor, (iv) is a sophisticated investor with knowledge and
experience in business and financial matters, (v) has received the SEC Reports
identified in ss.4(e) of this Agreement and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding the Exchanged QUANTUM Stock, and (v) is able to bear the
economic risk and lack of liquidity inherent in holding the Exchanged QUANTUM
Stock.
6. DELIVERIES AT CLOSING.
(a) Deliveries of QMT and the QMT Stockholder. The obligation of
QUANTUM to consummate the transactions to be performed by it in connection with
the Closing is subject to QMT and the QMT Stockholder making the following
deliveries:
(i) QMT shall have procured all of the third party consents
specified in ss.5(b) above; and
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(ii) QUANTUM shall have received the duly endorsed
certificates representing the QMT Stock contemplated by ss.2(a).
QUANTUM may waive any item specified in this ss.6(a) if it executes a writing so
stating at or prior to the Closing.
(b) Deliveries of the QUANTUM. The obligation of QMT and the QMT
Stockholder to consummate the transactions to be performed by it in connection
with the Closing is subject to QUANTUM making the following deliveries:
(i) The QMT Stockholder shall have received certificates
representing the Exchanged QUANTUM Stock contemplated by ss.2(a);
(ii) QUANTUM shall have entered into the Option Agreement in
the form attached hereto as Exhibit B; and
(iii) The board of directors shall have appointed to the board
of directors of QUANTUM one director designated by QMT effective as of
the Closing, and each of the officers of QUANTUM shall have resigned in
favor of the appointment of new officers designated by QMT effective as
of the Closing.
QMT may waive any item specified in this ss.6(b) if it executes a writing so
stating at or prior to the Closing.
7. MISCELLANEOUS.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder for a term of two years.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they relate in any way to the subject
matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
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(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to QMT and the QMT Stockholder: Xx. Xxxx X. Xxxxxxxx (QMT)
0000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to QUANTUM: President
0000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the state of Nevada without giving effect
to any choice or conflict of law provision or rule (whether of the state of
Nevada or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the state of Nevada.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
QUANTUM and QMT. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
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(k) Expenses. Each of QUANTUM, the QMT Stockholder, and QMT will bear
his or its own costs and expenses (including legal fees and expenses) incurred
in connection with this Agreement and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated there under, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself). The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
(o) Post-Closing Events. Shareholders will have the unchallengeable
right to break up his holdings and instruct Quantum to further instruct the
transfer agent for Quantum to issue shares under appropriate legend as if they
were to be issued to shareholder.
(p) All shares issued under this agreement will be legend as restricted
shares under Rule 144 of Regulation D of the securities act of 1933 and future
subject to restriction on transfer for 3 years under waivers granted at the sole
and unchallengeable discretion of the executive committee of the board of
directors of THE QUANTUM GROUP, INC.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
THE QUANTUM GROUP, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------
Xxxx Xxxxxxxx, President
QUANTUM MEDICAL TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------
Xxxx X. Xxxxxxxx, Chairman
THE QMT STOCKHOLDER
/s/ Xxxx X. Xxxxxxxx
--------------------
Xxxx X. Xxxxxxxx
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