EMPLOYMENT AND NON-COMPETITION AGREEMENT
This Employment and Non-Competition Agreement (the "Agreement") is made as
of August 30, 1999, by and between MANHATTAN SCIENTIFICS, INC., a Delaware
Corporation ("Employer"), and Xxxxxx X. Xxxxxx, Ph.D., an adult resident of New
Mexico ("Employee").
Background
A. Employer is in the business of scientific research and development, and
bringing to market, of various technologies (the "Technologies") including,
without limitation, holographic data storage and retrieval technologies
("Holographics"), micro and mid-range fuel cell technologies ("Fuel Cells"), and
nanoporous polymer filtration technologies ("Polymerics"), and Employer holds
certain key intellectual property rights in and to the Technologies.
B. Employee has specialized knowledge in the area of the Technologies
(including without limitation in Holographics and Polymerics), and Employer
wishes to engage the services of Employee to assist in the further research,
development, intellectual property protection, and bringing to market of the
Technologies.
C. Employee will hold a position of trust and confidence and will be
entrusted by Employer and its corporate subsidiaries, contractors, affiliated
individuals and business entities, including without limitation HoloStor, Inc.,
f/k/a Tamarack Storage Devices, Inc. (collectively, the "Affiliates"), with
confidential and proprietary knowledge of their research and development
including, without limitation, the working of its products, the marketing and
sale of new and existing products, technical matters relating to Employer's
intellectual property, and the like.
D. Employer and Employee desire to set forth the terms and conditions of
Employee's employment with Employer.
Agreement
In consideration of the foregoing background, and of the mutual covenants
and promises contained in this Agreement, and for other good and valuable
consideration (receipt of which is acknowledged), including without limitation
the employment of Employee by Employer, the parties hereto, intending to be
legally bound, do hereby agree as follows:
1.1 Employment. Employer hereby employs Employee to serve Employer and the
Affiliates, and Employee hereby accepts such employment and agrees to perform
Employee's duties and responsibilities hereunder in accordance with the terms
and conditions of this Agreement. It is understood that in order to accept this
employment, Employee is taking entrepreneurial leave from his current employer,
the Los Alamos National Laboratory at Los Alamos, New Mexico, through the
University of California ("UC") and the United States Department of Energy
("DOE," and together with UC and the Los Alamos National Laboratory at Los
Alamos, "LANL").
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1.2 Employment Term. (a) Unless sooner terminated in accordance with
Section IV of this Agreement, the employment period under this Agreement shall
be for one (1) year commencing on September 1, 1999 and terminating on August
31, 2000 (the "Employment Period").
(b) The Employment Period shall automatically renew and be extended
for additional one (1) year terms commencing on September 1, 2000 and September
1, 2001, respectively, unless either party shall have first provided written
notice to the other of its intention to opt out of renewal no fewer than sixty
(60) days prior to either September 1, 2000 or September 1, 2001, as
appropriate.
1.3 Duties and Responsibilities. During the Employment Period, Employee
shall serve as Senior Staff Scientist (or such other title to which the parties
may agree), and Employee shall perform all duties and accept all
responsibilities incident to such position or which may be consistent with such
position and which are delegated to Employee by Employer or its designees. Such
responsibilities include, without limitation, (i) working diligently to achieve
Employer's goals with respect to the Technologies, and particularly with respect
to Holographics and Polymerics, in accordance with Employer's timetables for the
achievement of such goals; (ii) conducting and coordinating scientific research
and development in connection with the Technologies, and particularly with
respect to Holographics and Polymerics; (iii) working to create a stable and
reliable holographic data storage medium that will enable Employer's
Holographics devices to function as intended; (iv) working to bring to market as
rapidly as possible Employer's Holographics and Polymerics devices and other
devices employing the Technologies; (v) attending meetings as reasonably
required by Employer with the Affiliates, potential strategic partners of
Employer and the Affiliates, investors, and other parties; and (vi)
participating in press conferences, interviews, or other media events as
reasonably requested by Employer (collectively, the "Services"). The scientific
research and development aspect of the Services shall be performed at Employer's
Los Alamos, New Mexico facility or such other location(s) reasonably requested
by Employer. Other aspects of the Services shall be performed at times and
locations that are reasonable in light of the services being performed.
1.4 Extent of Service. During the Employment Period, Employee shall use
his best efforts and shall devote his whole business time, attention, and energy
to such business of Employer and to the performance of Employee's Services and
the discharge of Employee's duties and responsibilities under this Agreement.
Employee further agrees not to work on either a part-time or independent
contractual basis for any other business or enterprise during the Employment
Period without the prior written approval of Employer.
II. Compensation
2.1 Base Salary. As compensation for Employee's services hereunder and for
Employee entering into the Non-Competition and other restrictive covenants as
part of this Agreement, Employer shall pay to Employee a base salary ("Base
Salary") at the annual rate of $90,000.00, less withholding as required by law
or agreed to by Employee, payable in 26 bi-
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weekly installments per annum. Such salary may (but shall not be required to) be
increased from time to time during the Employment Period in the sole discretion
of Employer, but at no time during the Employment Period shall Employee have the
right to receive or continue to receive any such increase in compensation. Any
such increase in compensation shall not be deemed to be an amendment to this
Agreement and may be discontinued at any time for any reason whatsoever in
Employer's sole discretion.
2.2 Additional Cash Compensation
(a) For the Employment Period and any renewals/extensions thereof,
Employer shall pay Employee cash compensation together with and in addition to
the Base Salary at the annual rate of $6,000.00, less withholding as required by
law or agreed to by Employee. This additional cash compensation is being made to
reimburse Employee for payroll expenses for Social Security and Medicare that he
would not have incurred if he had not taken entrepreneurial leave from LANL.
(b) For the Employment Period and only the first renewal/extension
thereof (if any), Employer shall pay Employee cash compensation together with
and in addition to the Base Salary at the annual rate of $19,000.00, less
withholding as required by law or agreed to by Employee (the "Retirement
Reimbursement"). The Retirement Reimbursement is being made to reimburse
Employee for the cost of contributions he will make toward his retirement
account with LANL.
(c) For the Employment Period only (and no renewals or extensions
thereof), Employer shall pay Employee cash compensation together with and in
addition to the Base Salary at the annual rate of $2,500.00, less withholding as
required by law or agreed to by Employee (the "Disability Reimbursement"). The
Disability Reimbursement is being made to reimburse Employee toward the cost of
disability insurance coverage.
2.3 Benefits. Employee shall be entitled to the following benefits:
(i) six (6) week's paid vacation per contract year, to be scheduled in
consultation with Employer;
(ii) eligibility to participate in Employer's health care plan commencing on
September 1, 2000, provided that Employer has implemented a health care
plan at such time; and
(iii) paid holidays coinciding with official United States legal holidays.
2.4 Reimbursement of Expenses. Employer shall reimburse Employee for all
reasonable ordinary and necessary out-of-pocket business expenses actually
incurred by Employee in connection with the discharge of Employee's duties and
responsibilities hereunder during the Employment Period in accordance with
Employer's expense approval and reimbursement policies and procedures then in
effect and upon presentation to Employer of an
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itemized account and written proof of such expenses in the form of bona fide
original receipts. Employee shall not incur expenses without Employer's prior
knowledge and consent.
2.5 Stock Options. Employee shall receive 500,000 options to purchase
Employer's publicly traded common stock, subject to the following terms and
conditions (the "Options"):
(a) The strike price of the Options will be forty cents (.40) per share, and
may, at Employer's option, be of the "cashless" variety;
(b) The Options will have a life of 10 years from the time that they vest;
(c) The Options will be issued on or before December 1, 1999, provided that
Employee is still employed by Employer at such time.
(d) 100,000 of the Options will vest on August 31, 2000, provided that
Employee is still employed by Employer at such time;
(e) 100,000 of the Options will vest on August 31, 2001, provided that
Employee is still employed by Employer at such time; and
(f) 100,000 of the Options will vest on August 31, 2002, provided that
Employee is still employed by Employer at such time;
(g) 200,000 of the options will vest at the discretion of the Board of
Directors of Employer.
Employee acknowledges that any Options that do not vest will have no
value.
III. Confidentiality and Intellectual Property
3.1 Employee shall not at any time copy, use, disclose or authorize anyone
else to copy, use or disclose, any Confidential Information of Employer or the
Affiliates. Confidential Information includes, but is not limited to, memoranda,
notes, documents or records, whether or not marked confidential, progress
reports, milestone reports, or other material considered by Employer and/or the
Affiliates to be of a proprietary, sensitive and/or confidential nature; names,
addresses and practices of Employer's or the Affiliates' customers, business
contacts, suppliers, manufacturers, investors, and the like; customer service
requirements; management practices and personnel data; selling processes;
pricing policies and lists; sources of supply; electronic information formats;
computer software, data bases, and electronic files; business plans; financial
policies, non-public information, and the like.
3.2 Employee shall not use (or permit others to use) for personal purposes
any property of Employer or the Affiliates, including but not limited to,
materials containing Confidential Information. Further, Employee shall not make
copies of, resell or transfer any
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software or other intellectual property owned or licensed by Employer. On
termination of employment, Employee will deliver to Employer all property
belonging to Employer, and will not retain any copies or reproductions of any
documents containing Confidential Information or relating in any way to the
business of Employer.
3.3 Subject to paragraph 6.8, it is understood and agreed that any and all
intellectual property, inventions, discoveries, developments, know-how,
innovations or the like created or developed by Employee pursuant to this
agreement shall be works for hire, shall be the sole and exclusive property of
Employer and/or the Affiliates, as appropriate, and that Employee shall retain
no rights thereto. Employee shall turn over to Employer all information, notes,
files, documents, data and the like pertaining to such intellectual property,
inventions, discoveries, developments, know-how, innovations and the like, and
shall not maintain copies on home computers or similar devices without
Employer's prior written consent. Employee will disclose and assign to Employer
any and all material of a proprietary nature, particularly including, but not
limited to, material subject to protection as trade secrets or as patentable or
copyrightable ideas, inventions and/or innovations which Employee may conceive,
invent, discover or create during the course of Employee's employment. Upon
Employer's request, either during or at any time after the termination of
Employee's employment with Employer, and without further compensation, Employee
will execute and deliver all papers, including applications for patents,
copyrights, trademarks, and service marks and do such other acts as may be
necessary for Employer to obtain and maintain its proprietary rights in such
proprietary material in any and all countries and to vest title thereto in
Employer. Employee hereby appoints Xxxxxx Xxxxxx, Xxxx Xxxxxx and Xxxxx X. Xxxx,
Esq. as attorneys-in-fact for the sole and limited purpose of executing legal
instruments in Employee's name that are reasonably necessary for the assignment,
transfer and protection of intellectual property in the name of Employer or the
Affiliates, as appropriate.
3.4 The provisions of this section shall survive termination of the
Employment Period and any extensions or renewals thereof.
3.5 Employee acknowledges that a violation of this section would cause
Employer irreparable harm. Consequently, in addition to all other remedies to
which Employer is entitled, Employer may enjoin Employee from disclosing or
using Confidential Information in violation of this section.
IV. Termination
4.1 Termination of Employee. Notwithstanding any other provision of this
Agreement, Employer may terminate Employee's employment hereunder without notice
for any reason whatsoever or for no reason at any time during the Employment
Period. The employment hereunder is "at-will." The effect of termination is set
forth in paragraph 4.4 of this agreement.
4.2 Employee's Resignation. Employee may terminate his employment under
this Agreement at any time during the Employment Period by providing Employer
with sixty (60)
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days prior written notice of such termination ("Employee's Resignation").
4.3 Termination by Mutual Agreement. The parties may agree in writing at
any time to mutual termination of this agreement ("Mutual Termination").
4.4 Effect of Termination.
(a) If Employee is terminated "for cause" (hereinafter defined) or
if Employee's employment is terminated as a result of Employee's resignation, or
through Mutual Termination, then Employer shall not be required to make any
further payments (or to provide any further Compensation except as required by
employment law) to Employee, and Employer shall have no further liability to
Employee hereunder whatsoever except to pay to Employee any unpaid Base Salary
and accrued vacation pay to the date of Employee's termination, and to honor any
Options that have been issued and have vested as of the date of termination.
(b) If Employee is terminated "without cause," Employer's only
responsibility and obligation to Employee shall be to (i) pay to Employee
Employee's Base Salary for the reminder of the then-current Employment Period or
until he is re-employed by LANL or any other entity, whichever shall first
occur; and (ii) honor any Options that have been issued and have vested as of
the date of termination.
(c) For purposes of this Agreement, the term "for cause" shall mean
dishonesty, disloyalty to Employer and/or to the Affiliates, conviction of a
felony or other crime involving moral turpitude, misappropriation of funds of
Employer or the Affiliates, insubordination or incitement of others to
insubordination, violation of Employer's substance abuse policy, willful
misconduct, negligence or incompetence in the performance of Employee's duties
and responsibilities hereunder, Employee's failure to timely achieve objectives
reasonably established by Employer as a result of Employee's failure to use best
efforts, the death of Employee, the inability of Employee to perform
substantially Employee's duties, by reason of illness or any other incapacity or
disability, for a period of one (1) month or more, a material breach or habitual
breach of Employer's company policies, or any other action on the part of the
Employee that is damaging or detrimental and is significant to Employer or any
member of Employer or to its Affiliates.
(d) For purposes of this Agreement, the term "without cause" shall
mean any other reason other than "for cause."
4.5 Continuing Covenant. Regardless of whether Employee's employment is
hereunder terminated "for cause," "without cause," by Employee's resignation, or
by expiration of the Employment Period or any extensions thereof, Employee shall
remain subject to and bound by the Non-Competition, Confidentiality,
Intellectual Property and other restrictive covenants set forth in this
Agreement.
V. Non-Competition and Other Restrictive Covenants
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5.1 Non-Competition; Non-Solicitation. So long as Employee is employed by
Employer and for a period of three (3) years after the termination of Employee's
employment for any reason whatsoever, Employee shall not, directly or indirectly
(either as principal, agent, employee, employer, consultant, controlling
stockholder, co-partner or in any other individual or representative capacity
whatsoever), (A) engage in or carry on research and development activities the
same or similar to the Services in competition with the business and objectives
of Employer and/or the Affiliates, (B) solicit the business of any of Employer's
or Affiliates' customers or business contacts with respect to the Services
performed by Employee, or request that any customers or business contacts of
Employer and/or the Affiliates curtail or cancel their business with Employer or
the Affiliates; (C) induce, or attempt to influence, any employee, contractor,
or advisor of Employer and/or the Affiliates to terminate his or her
relationship with Employer and/or the Affiliates, or to enter into any
employment or other business relationship with any other person (including
without limitation Employee), firm, or corporation, (D) act or conduct himself
in any manner which is inimical or contrary to the best interest of Employer
and/or the Affiliates, or (E) disclose to any person, firm, or corporation any
trade, technical or technological secrets, intellectual property, know how, any
details of organization or business affairs, names of past or present customers
or business contacts of Employer and/or the Affiliates, or any other information
relating to the business of Employer and/or the Affiliates.
Employee recognizes that immediate and irreparable damage will result to
Employer and/or the Affiliates if Employee breaches any of the items and
conditions of this Section and, accordingly, Employee hereby consents to the
entry by any court of competent jurisdiction of any injunction against Employee
to restrain any such breach, in addition to any other remedies or claims for
money damages which Employer and/or the Affiliates may be entitled to at law or
in equity.
Employee agrees that the foregoing territorial and time limitations and
prohibited activities are reasonable and properly required for the adequate
protection of Employer's interests. Employee acknowledges that Holographics,
Fuel Cells, and Polymerics are new, cutting edge technologies with the potential
to revolutionize the respective industries which they impact, that time is of
the essence with respect to development, protection and bringing to market of
those technologies, and that the foregoing non-competition covenants are
necessary in order to protect Employer's and/or the Affiliates' strategic
positioning as a front-runner in the development of such technologies, and that
in the absence of such covenants, Employer's and/or the Affiliates' strategic
positioning would be compromised. In the event the foregoing non-competition or
other restrictive covenants are held to be unenforceable by any court of
competent jurisdiction, it is agreed and understood that this Section shall be
deemed to impose, and construed as imposing, limitations upon Employee's
activities to the greatest extent permitted under then applicable law.
Employee represents and warrants to Employer that Employee's experience
and capabilities are such that he can obtain employment in business without
breaching the terms and conditions of this Section and that these restrictions
(and the enforcement thereof by injunction or otherwise) will not prevent
Employee from earning a livelihood. These non-competition and other restrictive
covenants shall be separate from and in addition to any other non-competition or
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other restrictive covenants that may be entered into by Employee and Employer as
part of this or any other agreement.
VI. Miscellaneous
6.1 Notices. Any notice or communication required or permitted to be given
by any provision of this Agreement shall be in writing and shall be deemed to
have been given when delivered personally, receipt confirmed, to the party
designated to receive such notice, or on the date following the day sent by a
nationally recognized overnight courier, charges prepaid, receipt confirmed,
directed to the following addresses or to such other or additional addresses as
any party might designate by written notice to the other party:
(1) Employer at:
Manhattan Scientifics, Inc. Bach & Associates
000 Xxxxx Xxxxxx, Xxxxx 00X Xxx Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxx Xxxxxx Att: Xxxxx X. Xxxx, Esq.
(2) The Employee at:
0 Xxxxx Xxxx
Xxxxx Xxxx, Xxx Xxxxxx 00000
6.4 Successors and Assigns. The rights and obligations of Employer under
this Agreement shall inure to the benefit of and shall be binding upon its
successors and assigns.
6.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
conflict of law principles, as if wholly performed therein. In the event of a
dispute, the parties hereby consent to the exclusive jurisdiction of the courts,
both federal and state, located within the State of New York, and agree that
venue shall be in New York County exclusively, notwithstanding any other
provision of law in any jurisdiction in the world.
6.6 Entire Agreement; Incorporation. This instrument contains the entire
agreement of the parties hereto with respect to the subject matter hereof. It
may not be changed orally but may be changed only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. The "Whereas" clauses at the
beginning of this agreement, as well as all exhibits hereto, are hereby
incorporated by reference herein and made a part hereof.
6.7 Other Agreements; Counsel. This Agreement supersedes all prior
employee
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and compensation agreements involving Employee. The parties acknowledge that
they have read and understood this agreement in all respects, and that they have
had the opportunity to consult with counsel prior to the execution hereof.
6.8 Rights of LANL/UC/DOE. It is recognized that Employee is on
Entrepreneurial Leave from LANL, is still an employee of UC engaged in certain
work conducted by UC at the Los Alamos National Laboratory with DOE, and that
the UC may have first rights to intellectual properties, patents and inventions
arising from Employee's services under this agreement. Whenever any invention or
discovery is made, conceived or developed by Employee under this Agreement,
Employee shall promptly furnish LANL with information thereon sufficient for the
purpose of affording timely resolution of whether the invention or discovery is
within the purview of the patent agreement executed by Employee with the
University. Employee may not, by contract or otherwise, waive these rights of UC
and DOE.
IN WITNESS WHEREOF, the parties hereto have executed this Employment and
Non-Competition Agreement as of the day and year first above written.
EMPLOYER EMPLOYEE
MANHATTAN SCIENTIFICS, INC.
By: /s/ Xxxxxx Xxxxxx /s/ Xxxxxx X. Xxxxxx, Ph.D.
------------------------------- --------------------------------
XXXXXX X. XXXXXX, PH.D.
/s/ Xxxxxx X. Xxxxxx, Ph.D.
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AGREEMENT AND PLAN OF MERGER
In consideration of the mutual promises and covenants contained herein,
the receipt and sufficiency of which are hereby acknowledged, DKY, Inc., a New
Mexico business corporation (Merging Corporation) and Tamarack Storage Devices,
Inc., a Texas business corporation (Surviving Corporation) and Manhattan
Scientifics, Inc. ("MSI") a Delaware business corporation owning one hundred
percent (100%) of the outstanding shares of the Surviving Corporation, hereby
stipulate and agree as follows ("this Agreement"):
SECTION 1. MERGER
On the Effective Date, the Merging Corporation shall be merged with and into
the Surviving Corporation. The separate existence of the Merging Corporation
shall cease, and both the Merging and Surviving Corporation shall be a single
corporation which shall be the Surviving Corporation. The title to all real
estate and other property owned by the Merging Corporation and the Surviving
Corporation shall be vested in the Surviving Corporation without reversion or
impairment, and without further act or deed. The Surviving Corporation shall
assume all liabilities and obligations of the Merging Corporation and the
Surviving Corporation as of the Effective Date. Any proceeding pending against
the Merging Corporation or the Surviving Corporation may be continued as if the
merger did not occur, or the Surviving Corporation may be substituted in the
proceeding for the Merging Corporation.
SECTION 2. SHAREHOLDER APPROVAL
Forthwith upon the full execution of this agreement, the Merging
Corporation and the Surviving Corporation shall each submit this agreement to
its shareholders for approval in accordance with Business Corporation Act of the
states of New Mexico (Merging Corporation) and Texas (Surviving Corporation).
SECTION 3. EFFECTIVE DATE AND CLOSING
3.1 Effective Date. The merger of the Merging Corporation and the
Surviving Corporation shall be effective (Effective Date) upon the filing of the
Articles of Merger in accordance with the Business Corporation Act of the states
of Texas and New Mexico.
3.2 Closing. Subject to the satisfaction of the conditions set forth in
Sections 10 and 11 of this agreement, the closing of this merger shall take
place at such place or at such time as may be agreed upon by the Surviving
Corporation and the Merging Corporation. At the time of the closing:
3.2.1 Filing of Articles of Merger. The Surviving Corporation and the
Merging Corporation shall cause the Articles of Merger to be filed.
3.2.2 Certificates. The Merging Corporation and the Surviving Corporation
shall each deliver to the other certified copies of the resolutions of the Board
of Directors and Shareholders of the delivering corporation approving the
merger.
3.3 Further Assurances. From time to time after the closing, the parties
shall execute and deliver such other documents and take such other actions as
may reasonably be required to accomplish the merger.
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SECTION 4. SHARES OF STOCK, RESTRICTIONS ON RESALE
4.1 Exchange of Shares. On the Effective Date the Surviving Corporation
shall issue to the shareholders of the Merging Corporation stock certificates
representing 72,000 shares of the fully paid and nonassessable common stock (the
"Common Stock") of MSI for each one share of the Merging Corporation held by the
shareholders.
4.2 Cancellation of Shares. On the Effective Date, each share of stock of
the Merging Corporation that is then issued and outstanding shall, by virtue of
the merger and without any action on the part of the Merging Corporation or the
Surviving Corporation, be immediately canceled.
4.3 Continuation of Shares. Each share of stock of the Surviving
Corporation that is issued and outstanding as of the Effective Date shall
continue to be an issued and outstanding share of the Surviving Corporation
notwithstanding the merger.
4.4 Right of First Refusal; Matching Right. (i) In the event that any
shareholder of the Merging Corporation (the "Offeree Shareholder") desires to
transfer, sell or otherwise dispose of, or offer to do any of same, in a private
transaction, all of the shares of Common Stock now or hereafter beneficially
owned by such Offeree Shareholder, the Offeree Shareholder, before making such
offer or effecting such transfer, sale or disposition, the Offeree Shareholder
shall first give written notice (the "Seller's Notice") to the Surviving
Corporation. The Seller's Notice shall state the Offeree Shareholder's desire to
make such offer, transfer, sale or disposition of the number of shares of Common
Stock proposed to be offered or transferred (the "Offered Shares"), and the
proposed per share consideration therefor (the "ROFR Price") and any other
material terms and conditions with respect to the proposed transfer, sale or
disposition of the Offered Shares.
Upon receipt of the Seller's Notice, the Surviving Corporation shall have
the irrevocable and exclusive option (the "ROFR Option") for thirty (30) days to
purchase all of the Offered Shares subject to the Matching Notice at the price
and upon the terms set forth therein. The ROFR Option shall be at the ROFR Price
and upon such other material terms and conditions as set forth in the Seller's
Notice; it being expressly understood and agreed that the Surviving Corporation
may, at its discretion, agree to purchase any or all of the Offered Shares in
order to effect the ROFR Option.
In the event that the Surviving Corporation does not elect to purchase all
of the Offered Shares specified in the Seller's Notice, the Offeree Shareholder
may, within thirty (30) days following the expiration of the ROFR Option,
transfer, sell or dispose to a third party those Offered Shares not purchased by
the Surviving Corporation on terms and conditions to be negotiated by the
Offeree Shareholder and a third party (the "Third Party Offer"); provided,
however, that the Offeree Shareholder, before effecting such transfer, sale or
other disposition, shall first give written notice (the "Matching Notice") to
the Surviving Corporation which Matching Notice shall state the Offeree
Shareholder's desire to make such sale, transfer, or disposition of the number
of shares of Common Stock proposed to be transferred, sold or disposed of
pursuant to the Third Party Offer and any other material terms and conditions
with respect to the Third Party Offer.
Upon receipt of the Matching Notice, the Surviving Corporation shall have
the irrevocable and exclusive right for thirty (30) days (the "Matching Right")
to purchase all of Offered Shares subject to the Matching Notice; it being
expressly understood and agreed that the Surviving Corporation may, at its sole
discretion, agree to purchase any or all of the Offered Shares subject to the
Matching Notice.
In the event that the Surviving Corporation does not elect to purchase all
of the Offered Shares subject to the Matching Notice, the Offeree Shareholder
may, following the
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expiration of the Surviving Corporation's Matching Right, sell within five (5)
business days therefrom the Offer Shares to a third party upon the terms of the
Third Party Offer. All shares of Common Stock sold by the Offeree Shareholder to
a third party hereunder shall be expressly subject to such third party's
agreement to be bound to all of the provisions of this Agreement.
Notwithstanding any other term or condition in this Section 4.4, nothing
in this Section 4.4 shall act to inhibit nor apply to any transfer, assignment,
sale, bequest, devise, gift or testamentary disposition of Common Stock by any
shareholder of the Merging Corporation to their respective heirs, descendants,
children (natural issue or otherwise) or to trusts or other mechanisms set up
for the benefit of such persons or such persons' heirs or beneficiaries.
4.5 The shareholders of the Merging Corporation shall have the unfettered
right to sell the shares of Common Stock received hereunder into the public
marketplace subject only to (i) any restriction imposed upon such shareholders
by any underwriter or other financing source relative to the Surviving
Corporation, and (ii) federal and state securities laws.
SECTION 5. CORPORATE INCIDENTS
5.1 Articles of Incorporation. The Articles of Incorporation of the
Surviving Corporation, as in effect immediately prior to the Effective Date,
shall be the Articles of Incorporation of the Surviving Corporation following
this merger.
5.2 Bylaws. The Bylaws of the Surviving Corporation, as in effect
immediately prior to the Effective Date, shall be the Bylaws of the Surviving
Corporation following this merger.
5.3 Board of Directors and Officers. The Board of Directors of the
Surviving Corporation following this merger shall consist of the persons who are
members of the Board of Directors of the Surviving Corporation immediately prior
to the Effective Date, and they shall hold office until their successors have
been elected and qualified. The officers of the Surviving Corporation following
this merger shall be the persons who are the officers of the Surviving
Corporation immediately prior to the Effective Date, and they shall hold office
at the pleasure of the Board of Directors of the Surviving Corporation.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF MERGING CORPORATION
6.1 Organization. The Merging Corporation is a corporation duly organized
and existing in good standing under the laws of the state of New Mexico and has
the corporate power to own its properties and to carry on its business as now
conducted, and is qualified to do business in no other jurisdiction. No
proceeding is pending or threatened involving the Merging Corporation in which
it is alleged that the nature of its business makes qualification necessary in
any additional jurisdiction.
6.2 Capitalization. The issued and outstanding stock of the Merging
Corporation consists solely of one hundred (100) shares of common stock without
par value. All of the issued and outstanding shares of the Merging Corporation
are validly issued and outstanding, fully paid and nonassessable. There are no
existing options, warrants, calls, preemptive rights (except certain statutory
rights not affecting the transactions hereunder), or commitments of any kind
relating to the Merging Corporation's authorized and unissued capital stock.
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6.3 Subsidiaries. The Merging Corporation has no subsidiaries.
6.4 Valid and Binding Agreement. The execution and delivery of this
agreement has been approved by the Board of Directors of the Merging
Corporation, and this agreement constitutes a valid and binding obligation of
the Merging Corporation in accordance with its terms. The execution and delivery
of this agreement and the consummation thereof do not and will not violate any
provision of any judicial or governmental decree, order, or judgment or conflict
with, or result in a breach of, or constitute a default under, the Articles of
Incorporation or bylaws of the Merging Corporation, or any material agreement or
instrument to which the Merging Corporation is a party or by which it is bound.
6.5 Newly Formed Company. The Merging Company has been formed solely for
the purpose of entering into each of that certain Exclusive Patent Licensing
Agreement between the Merging Corporation and Xxxxxx X. Xxxxxxxx dated January
11, 1998 (the "License Agreement") and this Agreement. Other than the License
Agreement and this Agreement, the Merging Corporation (i) has not engaged in any
operations whatsoever, (ii) has not entered into any agreements or transactions
of any kind with any third parties, and (iii) does not have any assets or
liabilities in excess of the transaction costs and filing fees associated with
New Mexico State Corporation Commission and filings concerning its formation
this Merger and registrations and filings associated with its formation.
6.6 Undisclosed Liabilities. Except as disclosed in Section 6.5 of this
Agreement, the Merging Corporation has no liabilities or obligations, absolute
or contingent, including without limitation, liabilities for federal, state,
local or foreign taxes.
6.7 Title to Properties. The Merging Corporation has good and marketable
title to all of its properties and assets, real and personal, free and clear of
all liens and encumbrances. The Merging Corporation has received no notice of
violation of any law, regulation, ordinance, or other requirement relating to
its business or operations or its owned or leased real or personal properties.
6.8 Obligations; Litigation. The Merging Corporation has performed all
material obligations required to be performed by it to date, and is not in
default under any agreement, lease or other document to which it is a party, or
under any law or order of any court or other governmental agency. There are no
claims, actions, suits, or proceedings pending or threatened at law or in equity
or before or by any federal, state, or other governmental agency with respect to
the Merging Corporation. No party with whom the Merging Corporation has an
agreement, lease or other arrangement is in default thereunder.
6.9 Compliance With Laws. The business of the Merging Corporation has been
conducted consistent with the material provisions of all applicable laws and
regulations of federal, state, and local governments (including, without
limitation, any applicable building, zoning, health, safety, or environmental
ordinance or regulation). No improper gifts or illegal payments have been made
or received on behalf of the Merging Corporation by any of its officers,
directors, employees, or agents.
6.10 Debt. The Merging Corporation has no obligations for the repayment of
borrowed money whatsoever.
6.11 Tax Matters. The Merging Corporation has filed all federal, state,
local, and foreign tax returns required to be filed by it and has paid all
federal, state, local, and foreign tax required to be paid. All taxes and
governmental charges levied or assessed against the property or the business of
the Merging Corporation have been paid.
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6.12 Labor Matters. The Merging Corporation is not a party to any
collective bargaining agreement, and there is no pension or profit-sharing plan
for the Merging Corporation's employees. The Merging Corporation has complied
with all laws and regulations which relate to employee civil rights and equal
employment opportunities and there are no presently pending or threatened labor
problems which do or may in the future adversely affect the business,
operations, or financial condition of the Merging Corporation.
6.13 Completeness of Disclosure. Neither this agreement nor any
certificate, exhibit, schedule, or other instrument furnished or to be furnished
by the Merging Corporation to the Surviving Corporation pursuant to this
Agreement, or in connection with the merger, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein not misleading. There
is no fact which materially adversely affects or may, in the future, materially
adversely affect the business, operations, or condition (financial or otherwise)
of the Merging Corporation which has not been set forth in this agreement or in
any Exhibit, certificate, or schedule furnished under this agreement.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF SURVIVING CORPORATION
7.1 Organization. The Surviving Corporation is a corporation duly
organized and existing in good standing under the laws of the state of Texas and
has the corporate power to own its properties and to carry on its business as
now conducted.
7.2 Capitalization. All of the issued and outstanding shares of the
Surviving Corporation are validly issued and outstanding, fully paid and
nonassessable.
7.3 Shares Issued in Merger. The shares of stock of the Surviving
Corporation to be issued to the shareholders of the Merging Corporation in the
merger shall be fully paid and nonassessable. However, the issuance of shares by
the Surviving Corporation will not be registered under the Securities Act of
1933, as amended (Act), nor the securities law of any state, and the Certificate
for the Shares shall bear a legend stating that the shares shall not be offered,
sold, pledged, hypothecated, or otherwise transferred or disposed of without
registration under the Act and any applicable state securities law or an opinion
of counsel or other evidence satisfactory to counsel for the Corporation that an
exemption from such registrations is available. The Surviving Corporation is
under no obligation to register the shares or to assist shareholders of the
Merging Corporation in complying with an exemption from registration.
7.4 Valid and Binding Agreement. The execution and delivery of this
agreement has been approved by the Board of Directors of the Surviving
Corporation, and this agreement constitutes a valid and binding obligation of
the Surviving Corporation in accordance with its terms. The execution and
delivery of this agreement and the consummation thereof do not and will not
violate any provision of any judicial or governmental decree, order, or
judgement or conflict with, or result in a breach of, or constitute a default
under, the Articles of Incorporation or bylaws of the Surviving Corporation, or
any material agreement or instrument to which the Surviving Corporation is a
party or by which it is bound.
7.5 Litigation. Except as disclosed in that certain limited offering
memorandum of Grand Enterprises, Inc, (the Surviving Corporation's predecessor)
dated November 12, 1997, there are no claims, actions, suits, or proceedings
pending or threatened at law or in
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equity or before or by any federal, state, or other governmental agency, which
if adversely determined would have an adverse effect on the business,
operations, or financial condition of the Surviving Corporation or would prevent
or hinder the consummation of the merger.
7.6 Completeness of Disclosure. Neither this agreement nor any
certificate, exhibit, schedule, or other instrument furnished or to be furnished
by the Surviving Corporation to the Merging Corporation pursuant to this
agreement, or in connection with the merger contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein not misleading. There
is no fact which materially adversely affects the business, operations, or
condition (financial or otherwise) of the Surviving Corporation which has not
been set forth in this agreement or in any exhibit, certificate, or schedule
furnished under this agreement.
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties of the Merging Corporation and the
Surviving Corporation shall be true and complete as of the closing and shall
survive the closing.
SECTION 9. CONDUCT OF BUSINESS PENDING CLOSING
Pending the closing of the merger, the Merging Corporation shall not, without
the prior written consent of the Surviving Corporation engage in any
transactions or agreements, make any changes in its articles of incorporation or
bylaws; issue, reclassify, or alter any shares of its outstanding or unissued
capital stock; grant options, warrants, or other rights of any kind to purchase,
or issuing any shares of their capital stock; purchasing, redeeming, or
otherwise acquiring for a consideration any shares of their capital stock;
declaring, paying, setting aside, or making any dividends or other distributions
or payment in respect to their capital stock.
SECTION 10. CONDITIONS PRECEDENT TO OBLIGATIONS OF MERGING CORPORATION
The obligation of the Merging Corporation to consummate the merger is, at
the option of the Merging Corporation, subject to the fulfillment, prior to or
at the closing, of each of the following conditions:
10.1 Representations and Performance. The representations and warranties
made under this agreement by the Surviving Corporation shall be true and correct
in all material respects at the time of the closing, and the Surviving
Corporation shall have performed and complied with all agreements, covenants,
and conditions required of the Surviving Corporation by the closing under the
terms of this agreement.
10.2 Adverse Changes. There shall not have been any material adverse
changes in the conditions, financial or otherwise, or business of the Surviving
Corporation since the date hereof.
10.3 Shareholder Approval. This agreement shall have been approved by the
holders of a majority of the issued and outstanding shares of the stock of the
Merging Corporation as required under the Business Corporation Act of the state
of New Mexico.
10.4 Dissenters' Rights. Prior to the approval of this agreement by the
shareholders of the Merging Corporation, the Merging Corporation shall not have
received written notice of intent to assert dissenters' rights and demand
payment of fair value for shares by reason of
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this merger from the holders of more than five percent of the issued and
outstanding shares of stock of the Merging Corporation.
10.5 Opinion of Counsel for Surviving Corporation. The Merging Corporation
shall receive an opinion, addressed to the Merging Corporation and the
shareholders of the Merging Corporation, dated as of the date of the closing, of
Surviving Corporation's Counsel, in form satisfactory to the Merging Corporation
to the effect that:
10.5.1 The Surviving Corporation and MSI are corporations duly organized,
validly existing, and in good standing under the laws of the states of Texas and
Delaware, respectively.
10.5.2 The execution, delivery and performance of this agreement by the
Surviving Corporation and MSI have been duly authorized by all requisite
corporate action, and this agreement has been duly executed and delivered and
constitutes a valid and binding obligation of the Surviving Corporation and MSI
in accordance with its terms.
10.5.3 The shares of stock of MSI to be received by the shareholders of
the Merging Corporation pursuant to this agreement have been validly authorized
and issued and upon delivery will be fully paid and nonassessable.
10.5.4 Except as may be specified in writing by such counsel, counsel does
not know of any material default or any meritorious basis for any claim of such
default of any litigation, proceeding, or governmental investigation which is
pending or threatened against or relates to the Surviving Corporation or MSI, as
the case may be, its property or business, or which seeks to restrain or obtain
damages or other relief in connection with this agreement or the consummation of
the merger.
SECTION 11. CONDITIONS TO OBLIGATIONS OF SURVIVING CORPORATION
The obligation of the Surviving Corporation to consummate the merger is,
at the option of the Surviving Corporation, subject to the fulfillment, prior to
or at the closing, of each of the following conditions:
11.1 Representations and Performance. The representations and warranties
made under this agreement by the Merging Corporation shall be true and correct
in all material respects at the time of the closing, and the Merging Corporation
shall have performed and complied with this agreement, covenants, and conditions
required of the Merging Corporation by the closing under the terms of this
agreement.
11.2 Adverse Changes. There shall not have been any material adverse
change in the conditions, financial or otherwise, or business of the Merging
Corporation since the date hereof.
11.3 Shareholder Approval. This agreement shall have been approved by the
holders of a majority of the issued and outstanding shares of the stock of the
Surviving Corporation as required under the Business Corporation Act of the
state of Delaware.
11.4 Dissenters' Rights. Prior to the approval of this agreement by the
shareholders of the Surviving Corporation, the Surviving Corporation shall not
have received written notice of intent to assert dissenters' rights and demand
payment of fair value for shares by reason of this merger from the holders of
more than five percent of the issued and outstanding shares of stock of the
Surviving Corporation.
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11.5 Investment Representations. The shareholders of the Merging
Corporation receiving stock of the Surviving Corporation in the merger shall
execute and deliver to Surviving Corporation an investment representation
certificate warranting and representing that the shareholder:
11.5.1 Has sufficient knowledge and experience to evaluate the merits and
risks of his or her investment in the shares of the Surviving Corporation.
11.5.2 Has been provided with, or given reasonable access to, full and
fair disclosure of all information material to his or her investment in the
shares of the Surviving Corporation.
11.5.3 Understands that no market is likely to exist for the shares of the
Surviving Corporation and does not anticipate the need to sell the shares in the
foreseeable future.
11.5.4 Is acquiring the shares of the Surviving Corporation for the
shareholder's own account for investment purposes only and not with a view to
their distribution.
11.5.5 Understands that the shares will not be registered under the
Securities Act of 1933, as amended (Act), nor the securities law of any state,
and accordingly these securities may not be offered, sold, pledged,
hypothecated, or otherwise transferred or disposed of in the absence of
registration or the availability of an exemption from registration under the Act
and any applicable state securities law. The shareholder further understands
that the Surviving Corporation is under no obligation to register the shares on
behalf of the shareholder or to assist the shareholder in complying with an
exemption from registration.
11.5.6 Understands that the certificate for the shares of the Surviving
Corporation will bear a legend that the shares shall not be offered, sold,
pledged, hypothecated, or otherwise transferred or disposed of without
registration under the Act and any applicable state securities law or an opinion
of counsel or other evidence satisfactory to counsel for the Corporation that an
exemption from such registrations is available.
11.5.7 Is a resident of the state of New Mexico.
11.6 Opinion of Counsel for Merging Corporation. The Surviving Corporation
shall receive an opinion, addressed to the Surviving Corporation and dated as of
the date of the closing, of Xxxxxxx X. Xxxxxx, Esq., in form satisfactory to the
Surviving Corporation to the effect that:
11.6.1 The Merging Corporation is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Texas and has the
corporate power to own its property and to conduct its business as then being
conducted.
11.6.2 The execution, delivery, and performance of this agreement by
Merging Corporation have been duly authorized by all requisite corporate action,
and this agreement has been duly executed and delivered and constitutes a valid
and binding obligation of the Merging Corporation in accordance with its terms.
11.6.3 The authorized, issued, and outstanding capital stock of the
Merging Corporation is correctly set forth and described in Section 6.2 of this
agreement. All of the issued and outstanding shares of the Merging Corporation
are duly authorized, validly issued and outstanding, fully paid, and
nonassessable.
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11.6.4 The execution and delivery of this agreement and the consummation
of the merger do not conflict with, or result in a breach of, or constitute a
default under, the Articles of Incorporation or bylaws of the Merging
Corporation, or any agreement or instrument, of which such counsel has knowledge
and to which the Merging Corporation is a party or by which it is bound.
11.6.5 Except as may be specified in writing by such counsel, counsel does
not know of any material default or any meritorious basis for any claim of such
default of any litigation, proceeding, or governmental investigation which is
pending or threatened against or relates to the Merging Corporation, its
property or business, or which seeks to restrain or obtain damages or other
relief in connection with this agreement or the consummation of the merger.
11.6.6 Condition to Obligations of Both Corporations. The obligations of
the Merging Corporation and the Surviving Corporation to consummate the merger
are, at the option of either party, subject to the condition that, at the time
of the closing, no suit, action, or other proceeding is pending or threatened
before any court or other governmental agency in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
agreement or the consummation of the merger.
11.6.7 Xxxxxxxx License Status. Except as may be specified in writing by
such counsel, counsel does not know of any material default or any meritorious
basis for any claim of such default or any litigation, proceeding, or
governmental investigation which is pending or threatened against Merging
Corporation or relates to the enforceability, validity or in any way adversely
affects the status of that certain Exclusive Patent License between Merging
Corporation and Xxxxxx X. Xxxxxxxx, dated January 11, 1998.
SECTION 12. EXPENSES
The Surviving Corporation and the Merging Corporation shall each bear
their own expenses, including legal and accounting fees, incurred in connection
with this transaction.
SECTION 13. INTENT
It is the intent of the parties that the transaction contemplated by this
agreement shall constitute a merger under the Business Corporation Acts of the
states of Texas and New Mexico and qualify as a tax-free corporate
reorganization within the meaning of IRC Section 368(a)(1)(A).
SECTION 14. MISCELLANEOUS PROVISIONS
14.1 Time of Essence. Time is of the essence of this agreement.
14.2 Commissions. Each of the parties represents to the other that, to the
best of the party's knowledge, no person has right to a fee, commission, or
other payment for services in connection with the merger. Each of the parties
shall indemnify the other and hold the other harmless from any claim for any
such fee, commission, or other payment arising out of the actual or purported
act or agreement of the party.
14.3 Binding Effect. The provisions of this agreement shall be binding
upon and inure to the benefit of the successors and assigns of the parties.
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14.4 Notice. Any notice or other communication required or permitted to be
given under this agreement shall be in writing and shall be mailed by certified
mail, return receipt requested, postage prepaid, addressed to the parties as
follows:
Merging Corporation:
Xxxxxx X. Xxxxxxxx, President
DKY, Inc.
0000 Xxxxxxx Xxx.
Xxx Xxxxxx, XX 00000
Surviving Corporation:
Xxxxxx Xxxxxx, Chairman
c/o Projectavision, Inc.
0 Xxxx Xxxxx Xxxxx 000
Xxx Xxxx, XX 00000
Bach & Associates
0 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxx
Xxxxxxxx Xxxxxxxx, Esq.
Xxxxxxxx, Xxxx & Brandeis
000 0xx Xxx.
Xxx Xxxx, XX 00000
All notices and other communications shall be deemed to be given at the
expiration of three days after the date of mailing. The address of a party to
which notices or other communications shall be mailed may be changed from time
to time by giving written notice to the other party.
14.5 Litigation Expense. In the event of a default under this Agreement,
the defaulting party shall reimburse the nondefaulting party or parties for all
costs and expenses reasonably incurred by the nondefaulting party or parties in
connection with the default, including without limitation attorney's fees.
Additionally, in the event a suit or action is filed to enforce this agreement
or with respect to this agreement, the prevailing party or parties shall be
reimbursed by the other party for all costs and expenses incurred in connection
with the suit or action, including without limitation reasonable attorney's fees
at the trial level and on appeal.
14.6 Waiver. No waiver of any provision of this agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
14.7 Applicable Law. This agreement shall be governed by and shall be
construed in accordance with the laws of the state of New York without reference
to conflict of laws and may be enforced in any court of competent jurisdiction,
the parties expressly consenting to venue and personal jurisdiction of the
federal and state courts within the States of New Mexico and New York.
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14.8 Condition Precedent to Performance. Notwithstanding any other term or
condition of this Agreement: (1) the parties hereto acknowledge that their
respective performance under this Agreement is expressly contingent upon the
written notification from Tamarack Storage Devices, Inc. regarding the
consummation of each of (i) the Limited Offering of Grand Enterprises, Inc. as
set forth in the Limited Offering Memorandum related thereto dated November 12,
1997, and (ii) the Agreement and Plan of Reorganization among Grand Enterprises,
Inc., Grand Subsidiary, Inc. and Tamarack Storage Devices, Inc..
14.9 Entire Agreement. This agreement constitutes the entire agreement
between the parties pertaining to its subject matter, and it supersedes all
prior contemporaneous agreements, representations, and understandings of the
parties. No supplement, modification, or amendment of this agreement shall be
binding unless executed in writing by all parties.
14.10 Counterparts. This Agreement may be executed simultaneously in one
or more original or facsimile counterparts, each of which shall be deemed an
original, but all of which when taken together shall constitute one and the same
instrument.
DATED: 1/11/98
/s/ Xxxxxx Xxxxxx
--------------------------------
Tamarack Storage Devices, Inc.
By Xxxxxx Xxxxxx, Chairman/CEO
/s/ Xxxxxx Xxxxxx
--------------------------------
Manhattan Scientifics, Inc.
By Xxxxxx Xxxxxx, Chairman/CEO
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------
DKY, Inc.
By Xxxxxx Xxxxxxxx, President
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