AGREEMENT
AND
PLAN OF MERGER
AND
REORGANIZATION
BETWEEN
DMA RADTECH., Inc.
AND
ADVANCED KNOWLEDGE, INC.
Dated: As of June 30, 1998
AGREEMENT made as of this 30th day of June, 1998, between
ADVANCED KNOWLEDGE, INC. ("AKI"), a Delaware corporation with an
address at 00000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxx, XX 00000, DMA
RADTECH., INC., a Delaware corporation with an address at c/o
Xxxxxxx X.X. Xxxxxx, 000 Xxxxx Xxx Xxxx, Xxxx Xxxxxxx, XX 00000
("DMA"), and ELECTRO-KINETIC SYSTEMS, INC., a Pennsylvania
corporation with an address at c/o Xxxxxxx X.X. Xxxxxx, 000 Xxxxx
Xxx Xxxx, Xxxx Xxxxxxx, XX 00000 ("EKSI"), DMA's sole
stockholder.
WITNESSETH:
WHEREAS, DMA is currently inactive with no operations; and
WHEREAS, EKSI owns certain proprietary know-how and work product
in an area of interest to AKI; and
WHEREAS, the Boards of Directors of each of AKI and DMA have
determined that it is in the best interest of each corporation
and its respective stockholder to consummate a tax-free
reorganization under Section 368(a) of the Internal Revenue Code
of 1986, as amended, in the form of a merger in the manner set
forth herein.
NOW, THEREFORE, in consideration of the mutual agreements,
covenants and representations and warranties hereinafter set
forth, the aforementioned parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
NOW, THEREFORE, it is agreed as follows:
1.1 The Merger. AKI as of the Effective Date (as defined below)
shall be and hereby is merged pursuant to Section 251 of the
Delaware General Corporation Laws ("DGCL") into DMA (the
"Merger"). DMA shall be the surviving corporation and it shall
continue and shall be deemed to continue for all purposes
whatsoever after the Merger with and into itself of AKI. DMA, as
it shall exist as the surviving corporation after the Merger, is
hereinafter sometimes referred to as the "Surviving Corporation."
1.2 The Effective Date. The Merger shall become effective when
this Agreement has been adopted by DMA, AKI and their respective
shareholders and appropriate documentation has been prepared and
filed in accordance with the laws of the State Delaware. For
operational, accounting and bookkeeping purposes, the time when
the Merger shall become effective is referred to herein as the
"Effective Date" which shall be the date fixed in accordance with
the laws of, and the documentation filed with, the State of
Delaware.
1.3 Corporate Governance of Surviving Corporation. After the
Effective Date, the Surviving Corporation's name shall be changed
to "Advanced Knowledge, Inc." The present Certificate of
Incorporation of DMA shall continue to be the Certificate of
Incorporation of the Surviving Corporation. The present By-Laws
of AKI shall become the By-Laws of the Surviving Corporation and
the existing By-Laws of DMA shall no longer be in effect. The
directors and officers of DMA immediately prior to the Effective
Date shall resign and the sole officer and director of AKI shall
be the sole director and officer of the Surviving Corporation
upon the Effective Date.
1.4 Issuance of Stock. All shares of stock of AKI which are
outstanding immediately prior to the Effective Date shall be
exchanged for 2,700,000 newly issued DMA shares of Common Stock
(the "Shares").
1.5 Further Documentation. From time to time as and when
requested by the Surviving Corporation or their successors or
assigns, EKSI, AKI, DMA and their proper (or former in the case
of AKI and DMA) officers and directors, shall execute and
deliver, or cause to be executed and delivered, all deeds and
other instruments and shall take or cause to be taken all such
other and further actions as the Surviving Corporation may deem
necessary or appropriate in order to more fully vest in the
Surviving Corporation title to and possession of all of the
rights, privileges, powers, immunities, purposes and franchises
of AKI and to carry-out the intent and purposes of this
Agreement.
1.6 Closing. Concurrently with the filing of the Certificate of
Merger the parties shall execute and deliver to and among
themselves the Closing Documents (as hereinafter defined) at a
closing (the "Closing") to occur July 15, 1998 the Closing Date.
The term "Closing Documents" means the agreements, instruments
and documents which are contemplated by this Agreement to be
executed and delivered by the parties on the Closing Date.
1.7 Payments by AKI. AKI agrees that upon execution of this
Agreement it will pay EKSI $25,000 as payment for the proprietary
know-how and work product of DMA.
1.8 Additional Payment and Escrow. At the Closing, an additional
$25,000 for the payment of expenses of EKSI's obligations as
contained in Article VI(k) and Article VIII will be delivered to
Seller's counsel, Xxxxxx, Xxxxxxxx & Xxxx, P.C. ("Escrow Agent"),
to be held in escrow pending the Securities and Exchange
Commission declaring effective a Form 10 for the Surviving
Corporation. In the event such Form is not declared effective
within six months after the date hereof, the current shareholder
of AKI shall have the option for six months to return the Shares
to EKSI and the Escrow Agent shall thereupon return the escrowed
funds to the current shareholder of AKI. In the event that after
twelve months of the date hereof the escrowed funds have not been
delivered pursuant hereto and the current shareholder of AKI has
not exercised his option to return the Shares, EKSI shall then
have the option, for 90 days, to repurchase the Shares for the
amount of the escrowed funds, whereupon the Escrow Agent shall
deliver the escrowed funds to the current shareholder of AKI.
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The Escrow Agent shall be entitled to rely upon the authenticity
of any signature and the genuineness and/or validity of any
writing received by it pursuant to or otherwise relating to this
Agreement.
If any dispute shall arise among the parties with respect to the
escrowed funds, the Escrow Agent may (a) commence an interpleader
or similar action permitted to stakeholders in the court of the
State of New York and deposit the escrowed funds in to the court
where such action has been commenced, or (b) whether or not such
dispute involved litigation, retain the escrowed funds pending
either a settlement of such dispute or final determination of the
rights of the respective parties thereto.
The Escrow Agent shall not be liable to anyone whatsoever by
reason of, and each party hereto agrees, jointly and severally,
to indemnify it for, and hold it harmless as to, any Loss (as
defined below), incurred by it in connection with any error of
judgment or for any act done or step taken or omitted by it in
good faith or for any mistake of fact or law or for anything
which it may do or refrain from doing in connection herewith
unless caused by or arising out of its own gross negligence or
willful misconduct.
The Escrow Agent's duties and obligations are purely ministerial
in nature and nothing herein shall be construed to give rise to
any fiduciary obligations on its part.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EKSI
EKSI hereby represents, covenants and warrants to AKI that except
as contemplated by this Agreement or any agreement related or
disclosed to AKI in writing or in any schedule or exhibit hereto:
2.1 Corporate Organization, etc. EKSI is a corporation duly
organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania. DMA is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and
authority to conduct its business as and to the extent now
conducted, and is duly qualified, licensed or admitted to do
business and is in good standing in those jurisdictions in which
the conduct or nature of its business, makes such qualification,
licensing or admission necessary. The copies of the Certificate
of Incorporation and By-Laws heretofore delivered to AKI are
complete and correct copies of such instruments as currently in
effect.
2.2 Authorized and Outstanding Shares. DMA's authorized capital
stock consists of 1,000 shares of Common Stock, no par value, all
of which are issued and outstanding and owned by EKSI. All of
such shares are duly authorized, validly issued, fully paid and
non-assessable. The delivery of a certificate or certificates at
the Closing representing the Shares will transfer to AKI good and
valid title to the Shares. Except for DMA's shares owned by EKSI,
no other equity securities, or securities convertible into or
exchangeable for equity securities, of DMA, are authorized,
issued or outstanding, and there are no outstanding options,
warrants, agreements, restrictions, contracts, calls, demands,
understandings, obligations (contingent or otherwise) or
commitments of any character relating to any equity interest in
DMA other than this Agreement. DMA does not have, nor has it ever
had, any subsidiaries.
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2.3 Title to Shares. Upon issuance, AKI will own, beneficially
and of record, the Shares free and clear of all liens, charges,
claims, restrictions, pledges and encumbrances of any kind or
nature whatsoever,
2.4 Authorization, etc. The execution, delivery and performance
of this Agreement has been duly and validly authorized by all
necessary action on the part of each of EKSI and DMA and
constitutes a legal, valid and binding obligation of each of EKSI
and DMA, enforceable in accordance with its terms, except that:
(a) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights, and
(b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding
therefore may be brought. Other than the need to comply with the
federal securities laws and California Blue Sky laws, the
execution, delivery and performance of this Agreement does not
violate or conflict with any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction
applicable to EKSI or DMA.
2.5 Good Standing Under Securities Laws. (a) Neither EKSI nor DMA
is in violation of the applicable provisions of the Securities
Exchange Act or the rules and regulations thereunder.
(b) There is no currently pending or threatened material,
complaint, inquiry, investigation, or disciplinary proceeding
undertaken by the SEC or any states concerning DMA or EKSI, or
any of its officers or directors, nor has DMA or EKSI operated
its business in a manner which would give rise to the foregoing.
(c) DMA is not an "investment company" or an "investment advisor"
as those terms are defined in the Investment Company Act of 1940
or the Investment Advisors Act of 1940 (collectively, the "1940
Acts"), respectively, nor is DMA registered as an "investment
company" or an "investment advisor" as those terms are defined in
the 1940 Acts.
2.6 Compliance with Law. DMA has operated in accordance with all
applicable laws, regulations and other requirements, of all
national governmental and quasi-governmental authorities, and of
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all states, jurisdictions, municipalities and other political
subdivisions and agencies thereof, having jurisdiction over it,
including, without limitation, all such laws, regulations and
requirements relating to antitrust, consumer protection, currency
exchange, equal opportunity, health, occupational safety, pension
and securities matters, except for violations which could not
reasonably be expected to have a material adverse effect on its
business, assets or properties. DMA has not received during the
last twelve (12) months any notification of any asserted present
or past failure to comply with such laws, rules, or regulations.
There are no orders of any governmental or regulatory authority
outstanding against DMA.
2.7 No Undisclosed Liabilities, etc. DMA has no liabilities or
obligations of any nature (absolute, accrued, contingent or
otherwise), except that the liabilities listed on Schedule 2.7
were transferred to, and assumed by, EKSI.
2.8 Consents and Approvals. Other than the need to comply with
federal securities laws, Delaware corporate law (which will be
satisfied by filing a Certificate of Merger in the form of
Exhibit A hereto) and California Blue Sky laws, no consent of any
person, governmental authority or agency (federal, state or
local) or any regulatory or membership organization is necessary
to the consummation of the transactions contemplated hereby. The
execution and delivery by EKSI and DMA of this Agreement does
not, and the performance by EKSI and DMA of their respective
obligations under this Agreement and the consummation of the
transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of their respective articles
of incorporation or by-laws (or other comparable corporate
charter documents); or
(b) conflict with or result in a violation or breach of any term
or provision of any law or order applicable to EKSI or DMA or any
of their respective assets or properties.
2.9 Litigation. There is no action, suit, proceedings or, to its
knowledge, investigation pending or, to the knowledge of either
EKSI or DMA, threatened against, relating to or affecting EKSI or
DMA or any of their respective assets and properties by or before
any court or governmental or other regulatory or administrative
agency, or commission or membership body nor is there any
arbitration proceeding pending or threatened against or involving
DMA, or which questions or challenges the validity of this
Agreement or any action taken or to be taken by EKSI, DMA or AKI
pursuant to this Agreement or in connection with the transactions
contemplated hereby; and DMA does not know or have any reason to
know of any valid basis for any such action, proceeding or
investigation.
2.10 Contracts. DMA is not a party to any other contracts or
agreements.
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2.11 Books and Records. The minute books and other similar
records of DMA as made available to AKI prior to the execution of
this Agreement contain a true and complete record, in all
material respects, of all available and recorded action taken at
all meetings and by written consents in lieu of meetings of the
stockholders, the boards of directors and committees of the board
of directors of DMA. The stock transfer ledgers and other similar
records of DMA as made available to AKI prior to the execution of
this Agreement accurately reflect all record transfers prior to
the execution of this Agreement in the capital stock of DMA.
Section 2.12 Financial Statements. Prior to the execution of this
Agreement, EKSI has delivered to AKI true and complete copies of
the following financial statements:
(a) the unaudited balance sheets of DMA as of December 31, 1995,
1996 and 1997, and the related unaudited consolidated statements
of operations, stockholders' equity and cash flows for each of
the fiscal years then ended; and
(b) the unaudited balance sheets of DMA as of March 31, 1998 and
the related unaudited consolidated statements of operations,
stockholders' equity and cash flows for the portion of the fiscal
year then ended.
All such financial statements (i) were prepared in accordance
with GAAP, (ii) fairly present the financial condition and
results of operations of DMA as of the respective dates thereof
and for the respective periods covered thereby, and (iii) were
compiled from the books and records of DMA regularly maintained
by management and used to prepare the financial statements of DMA
in accordance with the principles stated therein. DMA has
maintained its respective books and records in a manner
sufficient to permit the preparation of financial statements in
accordance with GAAP.
Section 2.13 Absence of Changes. Except for the execution and
delivery of this Agreement and the transactions to take place
pursuant hereto on or prior to the Closing, since March 31, 1998
there has not been any material adverse change, or any event or
development which, individually or together with other such
events, could reasonably be expected to result in a material
adverse change, in the business or condition of DMA.
Section 2.14 Licenses. Prior to the execution of this Agreement,
EKSI has delivered to AKI true and complete copies of all
licenses and pending licenses ("Licenses") held by DMA. DMA owns
or validly holds all Licenses that are material, individually or
in the aggregate, to its business or operations. Each License is
valid, binding and in full force and effect, and DMA is not, nor
has it received any notice that it is, in default (or with the
giving of notice or lapse of time or both, would be in default)
under any such License.
Section 2.15 Insurance. DMA has no insurance policies in place
nor is it covered by any policies owned by EKSI.
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Section 2.16 Affiliate Transactions. Except as disclosed in
writing to AKI, (i) there are no intercompany liabilities between
DMA, on the one hand, and EKSI, any officer, director or
affiliate of EKSI, on the other, (ii) neither EKSI nor any such
officer, director or affiliate provides or causes to be provided
any assets, services or facilities to DMA, (iii) DMA does not
provide or cause to be provided any assets, services or
facilities to EKSI or any such officer, director or affiliate and
(iv) DMA does not beneficially own, directly or indirectly, any
investment assets issued by EKSI or any such officer, director or
affiliate.
Section 2.17 Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by
EKSI directly with AKI without the intervention of any person on
behalf of EKSI in such manner as to give rise to any valid claim
by any person against AKI or, DMA for a finder's fee, brokerage
commission or similar payment.
Section 2.18 Taxes. DMA has filed all tax returns which are
required to have been filed in any jurisdiction, and has paid all
taxes shown to be due and payable on such returns and all other
taxes payable by DMA to the extent the same have become due and
payable and before they have become delinquent. EKSI knows of no
proposed material tax assessment against DMA and in the opinion
of the EKSI all tax liabilities are adequately provided for on
the books of DMA.
Section 2.19 Disclosure. All material facts relating to the
business or condition of DMA have been disclosed in writing to
AKI in or in connection with this Agreement. No representation or
warranty contained in this Agreement, and no statement contained
in any certificate, list or other writing furnished to AKI
pursuant to any provision of this Agreement (including without
limitation the Financial Statements), contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements herein or therein, in
the light of the circumstances under which they were made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AKI
3.1 Corporate Organization, etc. AKI is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and
authority to conduct its business as and to the extent now
conducted, and is duly qualified, licensed or admitted to do
business and is in good standing in those jurisdictions in which
the conduct or nature of its business, makes such qualification,
licensing or admission necessary. The copies of the Certificate
of Incorporation and By-Laws heretofore delivered to DMA are
complete and correct copies of such instruments as currently in
effect.
3.2 Authorized and Outstanding Shares. AKI's authorized capital
stock consists of 25,000,000 shares of Common Stock, $.0001 par
value, of which 100 shares are issued and outstanding and owned
by a single stockholder. All of such shares are duly authorized,
validly issued, fully paid and non-assessable. Except for such
shares, no other equity securities, or securities convertible
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into or exchangeable for equity securities, of AKI, are
authorized, issued or outstanding, and there are no outstanding
options, warrants, agreements, restrictions, contracts, calls,
demands, understandings, obligations (contingent or otherwise) or
commitments of any character relating to any equity interest in
AKI other than this Agreement. AKI does not have, nor has it ever
had, any subsidiaries.
3.3 Authorization, etc. The execution, delivery and performance
of this Agreement has been duly and validly authorized by all
necessary action on the part of AKI and constitutes a legal,
valid and binding obligation of AKI, enforceable in accordance
with its terms, except that:
(a) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights, and
(b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding
therefore may be brought. The execution, delivery and performance
of this Agreement does not violate or conflict with any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree
or injunction applicable to AKI.
3.4 Compliance with Law. AKI has operated in accordance with all
applicable laws, regulations and other requirements, of all
national governmental and quasi-governmental authorities, and of
all states, jurisdictions, municipalities and other political
subdivisions and agencies thereof, having jurisdiction over it,
including, without limitation, all such laws, regulations and
requirements relating to antitrust, consumer protection, currency
exchange, equal opportunity, health, occupational safety, pension
and securities matters, except for violations which could not
reasonably be expected to have a material adverse effect on its
business, assets or properties. AKI has not received any
notification of any asserted present or past failure to comply
with such laws, rules, or regulations. There are no orders of any
governmental or regulatory authority outstanding against AKI.
3.5 No Undisclosed Liabilities, etc. AKI has no liabilities or
obligations of any nature (absolute, accrued, contingent or
otherwise), except as noted in AKI's financial statements
delivered to DMA pursuant to section 3.10.
3.6 Consents and Approvals. Other than the need to comply with
Delaware corporate law (which will be satisfied by filing a
Certificate of Merger in the form of Exhibit A hereto) no consent
of any person, governmental authority or agency (federal, state
or local) or any regulatory or membership organization is
necessary to the consummation of the transactions contemplated
hereby. The execution and delivery by AKI of this Agreement does
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not, and the performance by AKI of its obligations under this
Agreement and the consummation of the transactions contemplated
hereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the articles of
incorporation or by-laws (or other comparable corporate charter
documents) of AKI; or
(b) conflict with or result in a violation or breach of any term
or provision of any law or order applicable to or any of its
assets or properties.
3.7 Litigation. There is no action, suit, proceedings or, to its
knowledge, investigation pending or, to its knowledge, threatened
against, relating to or affecting AKI or any of its assets and
properties by or before any court or governmental or other
regulatory or administrative agency, or commission or membership
body nor is there any arbitration proceeding pending or
threatened against or involving AKI, or which questions or
challenges the validity of this Agreement or any action taken or
to be taken by EKSI, DMA or AKI pursuant to this Agreement or in
connection with the transactions contemplated hereby; and AKI
does not know or have any reason to know of any valid basis for
any such action, proceeding or investigation.
3.8 Contracts. AKI is not a party to any material contracts or
agreements, except as listed on Schedule 3.8 hereto.
3.9 Books and Records. The minute books and other similar records
of AKI as made available to DMA prior to the execution of this
Agreement contain a true and complete record, in all material
respects, of all available and recorded action taken at all
meetings and by written consents in lieu of meetings of the
stockholders, the boards of directors and committees of the board
of directors of AKI. The stock transfer ledgers and other similar
records of AKI as made available to DMA prior to the execution of
this Agreement accurately reflect all record transfers prior to
the execution of this Agreement in the capital stock of AKI.
3.10 Financial Statements. Prior to the execution of this
Agreement, AKI has delivered to DMA true and complete copies of
the unaudited balance sheets of AKI for the period from inception
through June 30, 1998 and the related unaudited consolidated
statements of operations, stockholders' equity and cash. Such
financial statements (i) were prepared in accordance with GAAP,
(ii) fairly present the financial condition and results of
operations of AKI as of the specified date thereof and for the
period covered thereby, and (iii) were compiled from the books
and records of AKI regularly maintained by management and used to
prepare the financial statements of AKI in accordance with the
principles stated therein. AKI has maintained its respective
books and records in a manner sufficient to permit the
preparation of financial statements in accordance with GAAP.
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3.11 Absence of Changes. Except for the execution and delivery of
this Agreement and the transactions to take place pursuant hereto
on or prior to the Closing, since the date of its financial
statements described above, there has not been any material
adverse change, or any event or development which, individually
or together with other such events, could reasonably be expected
to result in a material adverse change, in the business or
condition of AKI.
3.12 Licenses. Prior to the execution of this Agreement, AKI has
delivered to DMA true and complete copies of all licenses and
pending licenses ("Licenses") held by AKI. AKI owns or validly
holds all Licenses that are material, individually or in the
aggregate, to its business or operations. Each License is valid,
binding and in full force and effect, and AKI is not, nor has it
received any notice that it is, in default (or with the giving of
notice or lapse of time or both, would be in default) under any
such License.
3.13 Insurance. AKI has no insurance policies in place except as
listed on Schedule 3.13 hereto.
3.14 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by AKI
directly with EKSI without the intervention of any person on
behalf of AKI in such manner as to give rise to any valid claim
by any person against EKSI or DMA for a finder's fee, brokerage
commission or similar payment.
3.15 Taxes. AKI has filed all tax returns which are required to
have been filed in any jurisdiction, and has paid all taxes shown
to be due and payable on such returns and all other taxes payable
by AKI to the extent the same have become due and payable and
before they have become delinquent. The AKI knows of no proposed
material tax assessment against AKI and in the opinion of the AKI
all tax liabilities are adequately provided for on the books of
AKI.
3.16 Disclosure. All material facts relating to the business or
condition of AKI have been disclosed in writing to DMA in or in
connection with this Agreement. No representation or warranty
contained in this Agreement, and no statement contained in any
certificate, list or other writing furnished to DMA pursuant to
any provision of this Agreement (including without limitation the
Financial Statements), contains any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in the light of
the circumstances under which they were made, not misleading.
3.17 The Shares.
(a) AKI is acquiring the Shares for investment for its own
account and not with a view to distribution or resale, and is not
holding all or any portion of the Shares for any other person.
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(b) AKI has evaluated and understands the high risks and terms of
this transaction and has available to it persons that possess
experience and sophistication which are adequate for the
evaluation of the merits and risks associated with the Shares.
(c) Prior to executing this Agreement, AKI has made an
independent investigation of DMA and has had available to it all
information with respect thereto which it deemed it needed to
make an informed decision. EKSI has made available all documents
that were requested relating to this investment and has provided
written answers to any questions concerning the offering. AKI has
not been furnished with or relied upon any representations or
other information (whether oral or written) other than as
contained in any documents or written answers to questions
furnished by EKSI.
(d) AKI has its principal place of business in the state set
forth in its address above.
(e) AKI understands that, unless the Shares are registered
pursuant to an effective Registration Statement, or an exemption
from such registration is available, the Shares cannot be sold,
transferred, pledged, offered for sale or otherwise transferred
during at least the twelve months following the date hereof and
that AKI must bear the economic risk of this investment for such
period of time. AKI agrees that the Shares subscribed for are
subject to the restrictions on transfer described and/or referred
to herein and AKI understands that the Surviving Corporation may
issue stop transfer orders with its transfer agent to enforce
such restrictions.
(f) AKI is aware that there is presently no market for the resale
of the Shares and that no market may exist in the future for such
resale. AKI understands that DMA has no operations and has
essentially been inactive for at least the last 12 months.
(g) AKI is neither a member of, affiliated with or employed by a
member of the National Association of Securities Dealers, nor is
it employed by or affiliated with a broker-dealer registered with
the Securities and Exchange Commission or with any state
regulatory authority.
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ARTICLE IV
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
(a) The representations and warranties contained herein shall not
be deemed waived or otherwise affected by any investigations made
by the parties hereto except for facts actually known to them on
the date hereof. All representations, warranties, covenants and
agreements shall survive the execution and delivery hereof and
the Closing hereunder. The provisions of this Article IV shall
have no effect upon any other obligation of the parties hereto,
whether to be performed before or after the Closing.
(b) EKSI shall indemnify AKI in respect of, and hold it harmless
from and against, any and all Losses (as defined below) suffered,
incurred, or sustained by it or to which it becomes subject,
resulting from, arising out of or relating to any breach of
representation or warranty or nonfulfillment of or failure to
perform any covenant or agreement on the part of EKSI contained
in this Agreement or arising from or relating to any false or
misleading statement made or any statement not made contained in
any document prepared by it and filed with the Securities and
Exchange Commission ("SEC") or any state securities agency or
distributed to the stockholders of EKSI.
(c) AKI shall indemnify the EKSI in respect of, and hold it
harmless from and against, any and all Losses suffered, incurred
or sustained by it or to which it becomes subject, resulting
from, arising out of or relating to any breach of representation
or warranty or nonfulfillment of or failure to perform any
covenant or agreement on the part of AKI contained in this
Agreement or arising from or relating to any false or misleading
statement made or any statement not made contained in any
document prepared by it and filed with the SEC or any state
securities agency or distributed to the stockholders of EKSI.
(d) "Loss" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses including without limitation,
fees for attorneys, accountants and other experts or other
expenses of litigation or other proceedings or of any and all
expenses (including without limitation interest, court costs,
fees of attorneys, claim, default or assessment).
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ARTICLE V
COVENANTS
5.1 EKSI covenants and agrees with AKI that, at all times from
and after the date hereof until the Closing and, with respect to
any covenant or agreement by its terms to be performed in whole
or in part after the Closing, EKSI will comply with all covenants
and provisions of this Article V, except to the extent AKI may
otherwise consent in writing or as otherwise specifically
required hereto:
(i) Investigation by AKI. EKSI will, and will cause DMA to, (a)
provide AKI and its officers, directors, employees, agents,
counsel, accountants, financial advisors, consultants and other
representatives (together "Representatives") with full access,
upon reasonable prior notice and during normal business hours, to
all officers, employees, agents and accountants to DMA and its
assets and properties and books and records, and (b) furnish AKI
and such Representatives with all such information and data
(including without limitation copies of any contracts, benefit
plans and other books and records) concerning the business and
operations of DMA as AKI or any of such Representatives
reasonably may request in connection with such investigation.
(ii) Conduct of Business. EKSI will cause DMA to conduct business
only in the ordinary course consistent with past practice.
(iii) Certain Restrictions. Except as required by the terms of
this Agreement, EKSI will cause DMA to refrain from:
(a) amending its articles of incorporation or by-laws (or other
comparable corporate charter documents) or taking any action with
respect to any such amendment or any recapitalization,
reorganization, liquidation or dissolution of any such
corporation;
(b) authorizing, issuing, selling or otherwise disposing of any
shares of capital stock of or any option with respect to DMA, or
modifying or amending any right of any holder of outstanding
shares of capital stock of or option with respect to DMA;
(c) declaring, setting aside or paying any dividend or other
distribution in respect of the capital stock of DMA, or directly
or indirectly redeeming, purchasing or otherwise acquiring any
capital stock of or any option with respect to DMA;
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(d) acquiring or disposing of, or incurring any lien on, any
assets and properties, other than in the ordinary course of
business consistent with past practices;
(e) (i) entering into, amending, modifying, terminating
(partially or completely), granting any waiver under or giving
any consent with respect to (A) any contract or (B) any material
license or (ii) granting any irrevocable powers or attorney;
(f) violating, breaching or defaulting under in any material
respect, or taking or failing to take any action that (with or
without notice or lapse of time or both) would constitute a
material violation or breach of, or default under, any term or
provision of any license held or used by DMA.
(g) incurring any indebtedness;
(h) engaging with any person in any merger or other business
combination;
(i) making capital expenditures;
(j) writing off or writing down any of DMA's assets or
properties; or
(k) entering into any contract to do or engage in any of the
foregoing.
(iv) Affiliate Transactions. Immediately prior to the Closing,
all indebtedness and any other amounts owing under contracts
between EKSI, any officer, director or affiliate (other than DMA)
of EKSI, on the one hand, and DMA, on the other, will be paid in
full or assumed by EKSI and EKSI will terminate and will cause
any such officer, director or affiliate to terminate each
contract with DMA. Prior to the Closing, DMA will not enter into
any contract, and will not engage in any transaction with EKSI or
any such officer, director or affiliate.
(v) Books and Records. On the Closing Date, EKSI will deliver or
make available to DMA all of DMA's books and records in its
possession and/or control, and if at any time after the Closing
EKSI discovers in its possession or under its control any other
books and records, it will forthwith deliver such books and
records to DMA.
(vi) Taxes. EKSI will pay all taxes (including interest and
penalties), other than taxes imposed on the income of AKI, which
may be payable in respect of the execution and delivery of this
Agreement or of the sale and delivery of any of the Shares or of
any amendment of, or waiver or consent under or with respect to,
this Agreement and will hold AKI and all subsequent holders of
the Shares harmless against any loss or liability resulting from
nonpayment or delay in payment of any such taxes.
(vii) Recapitalization. Prior to the Effective Date, EKSI shall
(a) cause DMA's Certificate of Incorporation to be amended to
increase its authorized common stock to 25,000,000 shares and (b)
declare a 300:1 stock split or dividend.
5.2 AKI covenants and agrees with DMA that, at all times from and
after the date hereof until the Closing and, with respect to any
covenant or agreement by its terms to be performed in whole or in
part after the Closing, AKI will comply with all covenants and
provisions of this Article V, except to the extent DMA may
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otherwise consent in writing or as otherwise specifically
required hereto:
(i) Investigation by EKSI and/or DMA. AKI will(a) provide EKSI
and/or DMA and their officers, directors, employees, agents,
counsel, accountants, financial advisors, consultants and other
representatives (together "Representatives") with full access,
upon reasonable prior notice and during normal business hours, to
all officers, employees, agents and accountants to AKI and its
assets and properties and books and records, and (b) furnish EKSI
and/or DMA and such Representatives with all such information and
data (including without limitation copies of any contracts,
benefit plans and other books and records) concerning the
business and operations of AKI as EKSI and/or DMA or any of such
Representatives reasonably may request in connection with such
investigation.
(ii) Conduct of Business. AKI will conduct business only in the
ordinary course consistent with past practice.
(iii) Certain Restrictions. AKI will refrain from:
(a) amending its articles of incorporation or by-laws (or other
comparable corporate charter documents) or taking any action with
respect to any such amendment or any recapitalization,
reorganization, liquidation or dissolution of any such
corporation;
(b) authorizing, issuing, selling or otherwise disposing of any
shares of its capital stock or any option or modifying or
amending any right of any holder of its outstanding shares of
capital stock or option;
(c) declaring, setting aside or paying any dividend or other
distribution in respect of its capital stock, or directly or
indirectly redeeming, purchasing or otherwise acquiring any of
its capital stock or any of its options;
(d) acquiring or disposing of, or incurring any lien on, any
assets and properties, other than in the ordinary course of
business consistent with past practices;
(e) (i) entering into, amending, modifying, terminating
(partially or completely), granting any waiver under or giving
any consent with respect to (A) any contract or (B) any material
license or (ii) granting any irrevocable powers or attorney;
(f) violating, breaching or defaulting under in any material
respect, or taking or failing to take any action that (with or
without notice or lapse of time or both) would constitute a
material violation or breach of, or default under, any term or
provision of any license held or used by it.
-17-
(g) incurring any indebtedness;
(h) engaging with any person in any merger or other business
combination;
(i) making capital expenditures;
(j) writing off or writing down any of its assets or properties;
or
(k) entering into any contract to do or engage in any of the
foregoing.
(iv) Books and Records. On the Closing Date, AKI will deliver or
make available to EKSI all of its books and records in its
possession and/or control, and if at any time after the Closing
AKI discovers in its possession or under its control any other
books and records, it will forthwith deliver such books and
records to the Surviving Corporation.
ARTICLE VI
CONDITIONS TO CLOSING
The obligations of the parties hereto to be performed under this
Agreement at the Closing are subject to the satisfaction of each
of the following conditions on or before the Closing unless
waived in writing by the party having the benefit of such
provision:
(a) Each of AKI's and EKSI's representations and warranties made
herein shall be true and correct in all material respects on the
date hereof and at the Closing.
(b) The current officers and directors of DMA shall resign and
appoint Xx. Xxxxx Xxxxx as the sole officer and director.
(c) EKSI shall have performed and complied with, in all material
respects, each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by EKSI at or
before the Closing.
(d) There shall not be in effect on the Closing Date any order or
law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated
by this Agreement or which could reasonably be expected to
otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement to either party, and
there shall not be pending on the Closing Date any action or
proceeding in, before or by any governmental or regulatory
authority which could reasonably be expected to result in the
issuance of any such order or the enactment, promulgation or
deemed applicability to AKI, DMA or EKSI of any such law.
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(e) All consents, approvals and actions of, filings with and
notices to any governmental or regulatory authority necessary to
permit AKI, DMA and EKSI to perform their obligations under this
Agreement and to consummate the transactions contemplated hereby
(i) shall have been duly obtained, made or given, (ii) shall be
in form and substance reasonably satisfactory to AKI, (iii) shall
not be subject to the satisfaction of any condition that has not
been satisfied or waived and (iv) shall be in full force and
effect, and all terminations or expirations of waiting periods
imposed by any governmental or regulatory authority necessary for
the consummation of the transaction contemplated by this
Agreement shall have occurred.
(f) All consents (or in lieu thereof waivers) to the performance
by AKI and EKSI of their obligations under this Agreement or to
the consummation of the transactions contemplated hereby (a)
shall have been obtained, (b) shall be in form and substance
reasonably satisfactory to AKI, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or
waived and (d) shall be in full force and effect.
(g) AKI shall have received the opinion of Xxxxxx, Xxxxxxxx &
Xxxx, P.C., counsel to EKSI and DMA, dated the Closing Date,
substantially in the form and to the effect of Exhibit A hereto
and EKSI shall have received the opinion of Nida & Xxxxxxx,
counsel to AKI, dated the Closing Date, substantially in the form
and to the effect of Exhibit B hereto.
(h) All proceedings to be taken on the part of EKSI in connection
with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in
form and substance to AKI, and AKI shall have received copies of
all such documents and other evidences as AKI may reasonably
request in order to establish the consummation of such
transactions and the taking of all proceedings in connection
therewith.
(i) All proceedings to be taken on the part of AKI in connection
with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in
form and substance to EKSI, and EKSI shall have received copies
of all such documents and other evidences as EKSI may reasonably
request in order to establish the consummation of such
transactions and the taking of all proceedings in connection
therewith.
(j) Notwithstanding anything in this Article VI to the contrary,
AKI understands and acknowledges that court decisions and Sec
no-action letters indicate that transactions of this nature
should have a Form 10 (or Form 10SB) (the "Form")filed with the
SEC and an Information Statement containing, in large part, the
information required by Regulation 14C under the Securities
Exchange Act of 1934 (the "Statement") shall be delivered to the
Shareholders, and that all references in this Article to
consents, approvals, laws, actions, filings, notices or similar
concepts shall not mean any references to the requirements of
such Form or Statement.
-19-
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 Expenses; etc. AKI agrees that all fees and expenses incurred
by it in connection with this Agreement shall be borne by it and
EKSI agrees that all fees and expenses incurred by it in
connection with this Agreement shall be borne by it.
Notwithstanding the foregoing, AKI shall pay all transfer taxes
and other taxes and fees associated with or arising out of this
Agreement.
7.2 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given and received
if delivered by hand four (4) days after having been mailed,
certified or registered mail, return receipt requested, with
postage prepaid:
(a) If to AKI:
Xx. Xxxxx Xxxxx
Advanced Knowledge, Inc.
00000 Xxxxxxx Xxxx.
Xxxxx 000, Xxxxxx, XX 00000
with a copy to:
Xxx X. XxXxxxxx, Esq.
Nida & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
(b) If to EKSI, to:
Xxxxxxx X.X. Xxxxxx
000 Xxxxx Xxx Xxxx
Xxxx Xxxxxxx, XX 00000
with a copy to:
Xxxxxx Xxxxxxxxx, Esq.
Xxxxxx, Xxxxxxxx & Xxxx, P.C.
000 XxxxxxxXxxxxx
Xxx Xxxx, Xxx Xxxx 00000
7.3 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but
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neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by AKI without the prior
written consent of EKSI.
7.4 Governing Law. This Agreement and the legal relations among
the parties hereto shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard
to its conflicts of law doctrine.
7.5 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
7.6 Headings. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not
constitute a part hereof or affect in any the meaning or
interpretation of this Agreement.
7.7 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto in respect of
the subject matter contained herein, and supersedes all prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
7.8 Third Parties. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person or
corporation other than the parties hereto and their successors or
assigns, any rights or remedies under or by reason of this
Agreement.
7.9 Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in
any way the remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
7.10 Public Announcement. At all times at or before the Closing,
EKSI and AKI will not issue or make any reports, statements or
releases to the public or generally with respect to this
Agreement or the transactions contemplated hereby without the
consent of the other, which consent shall not be unreasonably
withheld unless counsel for such party determines that a public
disclosure is required by law or otherwise advisable to disclose.
7.11 Confidentiality. Each party hereto will hold, and will use
its best efforts to cause its affiliates, and their respective
representatives to hold, in strict confidence from any person
(other than any such affiliate or representative), unless (i)
compelled to disclose by judicial or administrative process
(including without limitation in connection with obtaining the
necessary approvals of this Agreement and the transactions
contemplated hereby of governmental or regulatory authorities) or
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by other requirements of law or (ii) disclosed in an action or
proceeding brought by a party hereto in pursuit of its rights or
in the exercise of its remedies hereunder, all documents and
information concerning the other party or any of its affiliates
furnished to it by the other party or such other party's
representatives in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE VIII
POST CLOSING OBLIGATIONS
8.1 The parties hereto agree that following the Closing each
shall use its best efforts to quickly cause the Form and the
Statement to be filed and/or distributed, as necessary, with AKI
preparing the Form and EKSI the Statement.
8.2 Following effectiveness of the Form and distribution of the
Statement, EKSI will promptly distribute, pro rata, as a dividend
to its stockholders, all shares that it owns of the Surviving
Corporation.
8.3 The Surviving Corporation will, as promptly as practicable,
take all commercially reasonable steps necessary or desirable to
obtain all consents, approvals or actions of, make all filings
with and give all notices to governmental or regulatory
authorities or any other person required to consummate the
transactions contemplated hereby.
8.4 EKSI will cooperate with the Surviving Corporation in
connection with the performance of its obligations hereunder.
8.5 Pending the release of the escrowed funds by the Escrow
Agent, the current shareholder of AKI will not sell, pledge,
hypothecate or otherwise transfer the Shares.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the day and year first above
written.
ADVANCED KNOWLEDGE, INC.
By: /s/ Xxxxx Xxxxx
-------------------------
Name: Xxxxx Xxxxx
ELECTRO-KINETIC SYSTEMS, INC.
By: /s/ Xxxxxxx X. X. Xxxxxx
-------------------------
Name: Xxxxxxx X.X. Xxxxxx
DMA RADTECH., INC.
By: /s/ Xxxxxxx X. X. Xxxxxx
---------------------------
Name: Xxxxxxx X.X. Xxxxxx