Graphco-DPI Holding Company, Inc. and Digital Personnel Inc.
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is entered into by and
among Graphco-DPI Holding Company, Inc. ("Subsidiary"), a Delaware
Corporation, which is a wholly owned subsidiary of Graphco Technologies,
Inc., a New Jersey Corporation ("GTC"), GTC, UTEK Corporation, a Delaware
Corporation ("UTEK") and Digital Personnel, Inc. ("DPI"), a Florida
Corporation and subsidiary of UTEK.
WHEREAS, UTEK owns 70% of the outstanding shares of the capital stock of
DPI and Caltech owns 30% of the outstanding shares of capital stock of DPI;
and
WHEREAS, DPI has acquired the exclusive worldwide license to make and
market a proprietary technology for producing photo-realistic animation of
a person speaking ("Technology"), together with certain patent rights,
know-how and software related thereto, including without limitation, the US
patent application entitled "Method and Apparatus for Synthesizing
Realistic Animations of Human Speaking Using a Computer" Inventors: Xxxxx
et al. US Patent Application Number 09/074768 (Caltech Number 3209) and the
allowance of claim issued by the United States Patent and Trademark Office
with respect thereto ("Patent Application"); and
WHEREAS, the parties desire to provide for the terms and conditions upon
which DPI will merge into Subsidiary in a statutory merger ("Merger") in
accordance with the Delaware General Corporation Law, as amended ("Delaware
Act") and the Florida General Corporation Act, as amended ("Florida Act"),
upon consummation of which the assets and business of DPI will be owned by
Subsidiary, and all issued and outstanding shares of capital stock of DPI
will be exchanged for common stock of GTC, which terms and conditions are
set forth more fully herein; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a tax-free reorganization within the meaning of Section 368
(a)(1)(A) of the Internal Revenue Code of 1986, as amended ("Code").
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties agree as follows:
ARTICLE 1
THE MERGER
1.01 The Merger
(a) Agreement to Merge. Subject to the terms and conditions of this
Agreement, at the Effective Time, as defined below, DPI shall be merged
with and into Subsidiary in accordance with the provisions of this
Agreement and the Delaware Act and Florida Act (the "Merger"); the separate
corporate existence of DPI shall cease; and Subsidiary shall continue as
the surviving corporation ("Surviving Corporation"). The constituent
corporations ("Constituent Corporations") to the Merger are Subsidiary and
DPI. The name of the Surviving Corporation, "Graphco-DPI Holding Company,
Inc.", shall not be changed by reason of the Merger.
(b) Effective Time. The Merger shall become effective ("Effective
Time") upon filing of a Certificate of Merger ("Certificate of Merger")
with the Secretary of State of the State of Delaware in accordance with the
applicable provisions of the Delaware Act and the filing of the Articles of
Merger with the Secretary of State of the State of Florida in accordance
with the applicable provisions of the Florida Act.
(c) Effect of the Merger. At the Effective Time the effect of the
Merger shall be as provided herein and as set forth in Section 259 of the
Delaware Act and Section 607.231 of the Florida Act. Without limiting the
generality of the foregoing and subject thereto, as of the Effective Time,
all rights, powers, privileges, franchises, licenses and permits of the
Constituent Corporations and all property, real, personal and mixed, shall
be vested in the Surviving Corporation; and all debts, duties, liabilities
and claims of every kind, character and description of the Constituent
Corporations shall be debts, duties, liabilities and claims of the
Surviving Corporation and may be enforced against the Surviving Corporation
to the same extent as if such debts, duties, liabilities and claims had
been incurred by it originally. All rights of creditors of the Constituent
Corporations and all liens upon property of any Constituent Corporation
shall be preserved unimpaired and shall not be altered in any way by reason
of the Merger.
(d) Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368 (a) (1) (A) of the Code
and that the Agreement shall constitute a "Plan of Reorganization" within
the meaning of Treasury Regulation Section 1.350-2(g).
(e) Waiver of Notice. Notwithstanding any portion of this Agreement to
the contrary, the shareholders of DPI hereby wave any and all notice,
presentment or demand for appraisal rights, if any, under applicable law.
1.02 Conversion of Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the shareholders of the
Constituent Corporations:
(i) All of the 10,000,000 shares of DPI Stock (as defined in Section
2.01(c) hereof) that are issued and outstanding immediately prior to
the Effective Time shall be converted into 143,999 unregistered shares
of common stock of GTC, which by agreement of the shareholders of DPI
shall be issued to (i) UTEK (100,799 shares); and (ii) Caltech (43,200
shares).
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1.03 Effect of Merger
(a) Rights in DPI Cease. At and after the Effective Time, UTEK and
Caltech, as holders of each certificate of DPI Stock immediately prior to
the Merger, shall cease to have any rights as a shareholder of DPI.
(b) Closure of DPI Stock Records. From and after the Effective Time,
the stock transfer books of DPI shall be closed, and there shall be no
further registration of stock transfers on the records of DPI.
1.04 Certificate of Incorporation of the Surviving Corporation. The
certificate of Incorporation of the Surviving Corporation shall not be
changed by reason of the Merger.
1.05 Bylaws of the Surviving Corporation. The Bylaws of the Surviving
Corporation shall not be changed by reason of the Merger.
1.06 Closing. Subject to the terms and conditions of this Agreement,
the Closing of the Merger shall take place via facsimile on the date so
designated by the parties, but in no event later than 5PM EST on March 22,
2000 ("Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01 General Representations and Warranties of UTEK and DPI. UTEK and
DPI represent and warrant to GTC and Subsidiary that the facts set forth
below are true and correct:
(a) Organization. DPI and UTEK are corporations duly organized, validly
existing and in good standing under the laws of their respective states,
and they have the requisite power and authority to conduct their businesses
as presently being conducted and consummate the transactions contemplated
by this Agreement. True, correct and complete copies of the Article of
Incorporation, By-laws and all minutes of DPI and the Articles of
Incorporation, By-laws and the resolutions of the Directors of UTEK
approving the Merger have been provided to GTC or Subsidiary and such
documents are presently in effect and have not been amended or modified.
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(b) Authorization. The execution of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby have been duly
authorized by the Board of Directors and shareholders of DPI and UTEK; no
other corporate action by the respective parties is necessary in order to
execute, deliver, consummate and perform their respective obligations
hereunder; and DPI and UTEK have all requisite corporate and other
authority to execute and deliver this Agreement and consummate the
transactions contemplated hereby.
(c) Capitalization. The authorized capital of DPI consists of
10,000,000 shares of common stock, par value $.001 per share; at the date
hereof, 10,000,000 shares of common stock of DPI were issued and
outstanding ("DPI Stock") and no shares were held in its treasury. UTEK
owns 7,000,000 shares of DPI Stock and Caltech owns 3,000,000 shares of DPI
Stock. All issued and outstanding shares of DPI Stock have been duly and
validly issued and are fully paid and non-assessable shares and have not
been issued in violation of any preemptive or other rights of any other
person or any applicable laws. DPI is not authorized to issue any preferred
stock. All dividends on DPI Stock which have been declared prior to the
date of this Agreement have been paid in full. There are no outstanding
options, warrants, commitments, calls or other rights or agreements
requiring it to issue any shares of DPI common stock or securities
convertible into shares of DPI's common stock to anyone for any reason
whatsoever. None of the DPI Stock is subject to any charge, claim,
condition, interest, lien, pledge, option, security interest or other
encumbrance or restriction, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of
ownership.
(d) Binding Effect. The execution, delivery, performance and
consummation of this Agreement, the Merger and the transactions
contemplated hereby and thereby will not violate any obligation to which
DPI or UTEK is a party and will not create a default hereunder; and this
Agreement constitutes a legal, valid and binding obligation of DPI and
UTEK, enforceable in accordance with its terms, except as the enforcement
may be limited by bankruptcy, insolvency, moratorium, or similar laws
affecting creditor's rights generally and by the availability of injunctive
relief, specific performance or other equitable remedies.
(e) Litigation Relating to this Agreement. There are no suits, actions
or proceedings pending or to the best knowledge of DPI or UTEK threatened
which seek to enjoin the Merger or the transactions contemplated by this
Agreement or which, if adversely decided, would have a materially adverse
effect on the business, results of operations, assets, prospects, the
Patent Application, the License Agreement (as defined below), or the
results of the operations of DPI.
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(f) No Conflicting Agreements. Neither the execution and delivery of
this Agreement nor the fulfillment of or compliance by DPI or UTEK with the
terms or provisions hereof nor all other documents or agreements
contemplated hereby and the consummation of the transaction contemplated by
this Agreement will result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in a violation of,
DPI's or UTEK's corporate charter or bylaws, the Patent Application, the
License Agreement (as defined below) or any agreement, contract,
instrument, order, judgment or decree to which DPI is a party or by which
DPI or any of its assets is bound, or violate any provision of any
applicable law, rule or regulation or any order, decree, writ or injunction
of any court or government entity which materially affects its assets or
business.
(g) Consents. No consent from or approval of any court, governmental
entity or any other person is necessary in connection with execution and
delivery of this Agreement by DPI and UTEK or performance of the
obligations of DPI and UTEK hereunder or under any other agreement to which
DPI or UTEK is a party; and the consummation of the transactions
contemplated by this Agreement will not require the approval of any entity
or person in order to prevent the termination of the Patent Application,
the License Agreement, or any other material right, privilege, license or
agreement relating to DPI or its assets or business.
(h) Title to Assets. Exhibit A set forth a true and complete list of
all assets whether real personal, tangible or intangible owned by DPI. DPI
has or will by Closing have good and marketable title to its assets, free
and clear of all liens, claims, charges, mortgages, options, security
agreements and other encumbrances of every kind or nature whatsoever. All
of the tangible assets of DPI have been operated in accordance with
customary operating practices generally acceptable in its industry and have
been maintained and are in good working order and repair in the ordinary
course of business, subject only to reasonable and ordinary wear and tear.
(i) Intellectual Property.
a) The Technology is owned by Caltech. Caltech has all right, power,
authority and ownership and entitlement to file, prosecute and maintain in
effect all patents and patent applications (including without limitation
the Patent Application) with respect to the Technology;
b) The Technology was invented by Xx. Xxxxx et al. while they were
employed at the Jet Propulsion Laboratory, and they have assigned all of
their interests in the Technology (including without limitation their
interests in the Patent Application and any patent issued with respect to
such Technology) to Caltech;
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c) Exhibit B sets forth a brief description of all of DPI's right,
title and interest in and to all intellectual property rights, including
but not limited to, inventions (whether patentable or not), discoveries,
trade secrets, technology, technical information, proprietary information,
processes, know-how, designs, United States and foreign patents and patent
applications (and all reissues, divisions, renewals, extensions,
provisionals, continuations, and continuations-in-part thereof), trade
names, logos, trademarks, service marks, trademark and service marks
registrations, copyrights, copyright registrations, and all computer
software, data and databases owned by or licensed to DPI (collectively
"Intellectual Property"). DPI has good and exclusive licensee interests to
the Intellectual Property free and clear of all liens, claims, conditions,
charges, equitable interests, or other encumbrances or restrictions. To the
best of DPI's knowledge, DPI has not infringed nor is infringing, nor has
DPI contributed to or is contributing to the infringement of any
Intellectual Property owned or used by another person or entity. However,
DPI has not conducted an infringement investigation and provides no
warrantees or assurances that the Intellectual Property licensed pursuant
to the License Agreement does not or will not infringe any other parties'
Intellectual Property. There are no pending or threatened actions against
DPI for infringement of any such Intellectual Property. To the best of
DPI's knowledge, DPI does not require any rights under any Intellectual
Property which it does not either have or have the lawful right to use. The
only license which DPI has is that certain license pursuant to the License
Agreement dated December 15, 1999 from Caltech to DPI licensing certain
Intellectual Property which is more particularly described in Exhibit B
("License Agreement") for the use of certain Intellectual Property. The
License Agreement and any other Intellectual Property owned by or licensed
by third parties to DPI are (i) in full force and effect and following the
consummation of the transactions contemplated by this Agreement shall
remain in full force and effect and (ii) legal, valid, binding and
enforceable in accordance with their respective terms. Except as disclosed
in Exhibit B, DPI is not a party to any license (in or out) with respect to
the Intellectual Property. Except as set forth in Exhibit B, DPI is not a
party to any agreements which imparts or has imparted an obligation of
non-competition, secrecy, confidentiality or non-disclosure upon DPI. DPI
is or was not under any obligation of non-competition, secrecy,
confidentiality or non-disclosure to any third party.
(d) To the best knowledge of UTEK and DPI, Caltech is prosecuting the
Patent Application in good faith with diligence.
(e) Except as otherwise expressly set forth in this Agreement, DPI and
UTEK make no representations and extend no warranties of any kind, either
express or implied, including but not limited to warranties of
merchantability, fitness for a particular purpose, non-infringement and
validity of patent rights in the Patents.
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(j) Liabilities of DPI. DPI has no assets, no liabilities or
obligations of any kind, character or description except those created by
the License Agreement with Caltech and the Sponsored Research Agreement
(Technology Affiliates Program 80-5682), final copies of which have been
provided to GTC or Subsidiary and are attached as Exhibit B.
(k) Financial Statements. The unaudited financial statements of DPI,
including a Balance Sheet dated as of the Closing attached as Exhibit C and
in all respects is complete and correct and present fairly its financial
position and the results of its operations on the dates and for the periods
shown therein; provided, however, that interim financial statements are
subject to customary year-end adjustments and accruals that, in the
aggregate, will not have a material adverse effect on the overall financial
condition or results of its operations. DPI has not engaged in any business
not reflected in its financial statements. There have been no material
adverse changes in the nature of its business, prospects, the value of
assets or the financial condition since the date of its financial
statements. There are no outstanding obligations or liabilities of DPI
except as specifically set forth in the DPI financial statements and
Licensing and/or Sponsored Research Agreements with Caltech and NASA's Jet
Propulsion Laboratory that is operated by Caltech.
(l) Taxes. All returns, reports, statements and other similar filings
required to be filed by DPI with respect to any federal, state, local or
foreign taxes, assessments, interests, penalties, deficiencies, fees and
other governmental charges or impositions have been timely filed with the
appropriate governmental agencies in all jurisdictions in which such tax
returns and other related filings are required to be filed; all such tax
returns properly reflect all liabilities of DPI for taxes for the periods,
property or events covered thereby; and all taxes, whether or not reflected
on those tax returns, and all taxes claimed to be due from DPI by any
taxing authority, have been properly paid, except to the extent reflected
on Exhibit D where DPI has contested in good faith by appropriate
proceedings and reserves have been established on its financial statements
to the full extent if the contest is adversely decided against it. DPI has
not received any notice of assessment or proposed assessment in connection
with any tax returns, nor is DPI a party to or to the best of its
knowledge, expected to become a party to any pending or threatened action
or proceeding, assessment or collection of taxes. DPI has not extended or
waived the application of any statute of limitations of any jurisdiction
regarding the assessment or collection of any taxes. There are no tax liens
(other than any lien which arises by operation of law for current taxes not
yet due and payable) on any of its assets. There is no basis for any
additional assessment of taxes, interest or penalties. DPI has made all
deposits required by law to be made with respect to employees' withholding
and other employment taxes, including without limitation the portion of
such deposits relating to taxes imposed upon DPI. DPI is not and has never
been a party to any tax sharing agreements with any other person or entity.
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(m) Absence of Certain Changes or Events. From January 1, 1999 to the
Closing Date, DPI has not, and without the written consent of GTC or
Subsidiary, it will not have:
(i) Sold, encumbered, assigned, let lapse, or transferred any of
its material assets including without limitation its Intellectual Property
(including its interest in the Patent Application and the License Agreement)
or any other material asset; or
(ii) Amended or terminated the License Agreement or other material
contract or done any act or omitted to do any act which would cause the breach
of the License Agreement or any other material contract; or
(iii) Suffered any damage, destruction or loss whether or not in
control of DPI; or
(iv) Made any commitments or agreements for capital expenditures or
otherwise; or
(v) Entered into any transaction or made any commitment not
disclosed to GTC; or
(vi) Incurred any material obligation or liability for borrowed
money; or
(vii) Suffered any other event of any character, which is
reasonable to expect, would adversely affect the future condition (financial
or otherwise), assets or liabilities or business of DPI.
(n) Material Contracts. Exhibit E contains a true and complete list of
all contracts, material agreements, and commitments of the following types,
whether written or oral to which it is a party or is bound ("Contracts"),
has been provided to GTC or Subsidiary and such agreements are in full
force and effect without modification or amendment and constitute the
legally valid and binding obligations of DPI in accordance with their
respective terms and will continue to be valid and enforceable following
the Merger. DPI is not in default of any of the Contracts. Except as set
forth on Exhibit E, no consent or approval by or notification from or
filing with any party is required in connection with this Agreement or
transactions contemplated hereby in respect of such Contracts. In addition:
(i) There are no outstanding unpaid promissory notes, mortgages,
indentures, deed of trust, security agreements and other agreements and
instruments relating to the borrowing of money by or any extension of credit
to DPI; and
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(ii) There are no outstanding operating agreements, lease
agreements or similar agreements by which DPI is bound; and
(iii) The complete final drafts of the License Agreement, and the
Patent Applications with all schedules, exhibits and amendments relating
thereto have been provided to GTC; and
(iv) Except as set forth in Subsection n(iii), above, there are no
outstanding licenses to or from others of any Intellectual Property; and
(v) There are not outstanding contracts or commitments to sell,
lease or otherwise dispose of any of DPI's property; and
(vi) There are no breaches of any Contract.
(o) Compliance with Laws. DPI is in compliance with all applicable
laws, rules, regulations and orders promulgated by any federal, state or
local government body or agency relating to its business and operations.
DPI owns all franchises, licenses, permits, easements, rights,
applications, filings, registration and other authorizations which are
necessary for it to conduct business, all of which are valid and in full
force and effect and DPI is in full compliance therewith.
(p) Litigation. There is no suit, action or any arbitration,
administrative, legal or other proceeding of any kind or character, or any
governmental investigation pending or threatened against DPI or the
Patents, the Patent Applications, the License Agreement or the Sponsored
Research Agreement (Technology Affiliates Program) affecting its assets or
business (financial or otherwise), and there is no factual basis therefore
and DPI is not in violation of or in default with respect to any judgment,
order, decree or other finding of any court or government authority. There
are no pending or threatened actions or proceedings before any court,
arbitrator or administrative agency, which would, if adversely determined,
individually or in the aggregate, materially and adversely affect its
assets or business.
(q) Employees. DPI has no and never had any employees. DPI is not a
party to or bound by any employment agreement or any collective bargaining
agreement with respect to any employees. DPI is not in violation of any
law, regulation or requirement relating to employment of employees.
(r) Neither DPI or UTEK has any knowledge of any existing or threatened
occurrence, action or development which could cause a material adverse
effect on DPI or its business, assets or condition (financial or otherwise)
or prospects.
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(s) Employee Benefit Plans. There are no and have never been, and there
are no commitments to create any employee benefit plans, including without
limitation, as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended, and there are no outstanding or unfunded
liabilities nor will the execution of this Agreement and the actions
contemplated herein result in any obligation or liability to any present or
former employee.
(t) Books and Records. The books and records of DPI are complete and
accurate in all material respects, fairly present its business and
operations, have been maintained in accordance with good business
practices, and applicable legal requirements, and accurately reflect in all
material respects its business, financial condition and liabilities.
(u) No Broker's Fees. Neither UTEK nor DPI has incurred any finder's,
broker's, investment banking, financial, advisory or other similar fees or
obligations in connection with this Agreement or the transactions
contemplated hereby.
(v) Full Disclosure. All representations or warranties of UTEK and DPI
are true, correct and complete in all material respects to the best of our
knowledge on the date hereof and shall be true, correct and complete in all
material respects as of the Closing as if they were made on such date.
2.02 General Representations and Warranties of GTC and Subsidiary. GTC
and Subsidiary represents and warrants to UTEK and DPI that the facts set
forth are true and correct.
(a) Organization. GTC and Subsidiary are corporations duly organized,
validly existing and in good standing under the laws of their respective
States, are qualified to do business as a foreign corporation in each other
jurisdiction in which the conduct of its business or the ownership of its
properties require such qualification, and have all requisite power and
authority to conduct their business and operate properties.
(b) Authorization. The execution of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby have been duly
authorized by the Board of Directors of GTC and the Board of Directors and
Shareholders of Subsidiary; no other corporate action on their respective
parts is necessary in order to execute, deliver, consummate and perform
their obligations hereunder; and they have all requisite corporate and
other authority to execute and deliver this Agreement and consummate the
transactions contemplated hereby.
(c) Capitalization. The authorized capital stock of GTC being issued to
UTEK and Caltech pursuant to the terms of this Agreement consists of
10
143,999 shares of common stock, par value _______ per share ("GTC Stock").
All GTC Stock have been duly and validly issued and are fully paid and
non-assessable and have not been issued in violation of any preemptive or
other rights of any other person or any applicable laws.
(d) Binding Effect. The execution, delivery, performance and
consummation of the Merger and the transactions contemplated hereby will
not violate any obligation to which GTC or Subsidiary is a party and will
not create a default hereunder, and this Agreement constitutes a legal,
valid and binding obligation of GTC and Subsidiary, enforceable in
accordance with its terms, except as the enforcement may be limited by
bankruptcy, insolvency, moratorium, or similar laws affecting creditor's
rights generally and by the availability of injunctive relief, specific
performance or other equitable remedies.
(e) Litigation Relating to this Agreement. There are no suits, actions
or proceedings pending or to its knowledge threatened which seek to enjoin
the Merger or the transactions contemplated by this Agreement or which, if
adversely decided, would have a materially adverse effect on its business,
results of operations, assets, prospects or the results of its operations
of GTC or Subsidiary.
(f) No Conflicting Agreements. Neither the execution and delivery of
this Agreement nor the fulfillment of or compliance by GTC and Subsidiary
with the terms or provisions thereof will result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in a
violation of, their respective corporate charters or bylaws, or any
agreement, contract, instrument, order, judgment or decree to which they
are a party or by which they or any of their assets are bound, or violate
any provision of any applicable law, rule or regulation or any order,
decree, writ or injunction of any court or governmental entity which
materially affects their assets or business.
(g) Consents. Assuming the correctness of UTEK's and DPI's
representations, no consent from or approval of any court, governmental
entity or any other person is necessary in connection with its execution
and delivery of this Agreement and performance of the obligations of GTC
and Subsidiary hereunder or under any other agreement to which GTC or
Subsidiary is a party; and the consummation of the transactions
contemplated by this Agreement will not require the approval of any entity
or person in order to prevent the termination of any material right,
privilege, license or agreement relating to GTC and Subsiaiary or their
assets or business.
(h) Financial Statements. The unaudited financial statements of
GTC attached as Exhibit F present fairly its financial position and the
results of its operations on the dates and for the periods shown therein;
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provided, however, that interim financial statements are subject to
customary year-end adjustments and accruals that, in the aggregate, will
not have a material adverse effect on the overall financial condition or
results of its operations. GTC has not engaged in any business not
reflected in its financial statements. There have been no material adverse
changes in the nature of its business, prospects, the value of assets or
the financial condition since the date of its financial statements. There
are no outstanding obligations or liabilities of GTC except as specifically
set forth in the GTC financial statements.
(i) Full Disclosure. All representations or warranties of GTC and
Subsidiary are true, correct and complete in all material respects on the
date hereof and shall be true, correct and complete in all material
respects as of the Closing as if they were made on such date. No statement
made by them herein or in the exhibits hereto or any document delivered by
them or on their behalf pursuant to this Agreement contains an untrue
statement of material fact or omits to state all material facts necessary
to make the statements therein not misleading in any material respect in
light of the circumstances in which they were made.
(j) No Broker's Fees. Except as set forth on Exhibit G, neither GTC nor
Subsidiary has incurred any finder's, broker's, investment banking,
financial advisory or other similar fees or obligations in connection with
this Agreement or the transactions contemplated hereby.
2.03 Investment Representations of UTEK. UTEK represents and warrant
to GTC that::
(a) General. It has such knowledge and experience in financial and
business matters as to be capable of evaluating the risks and merits of an
investment in the GTC Stock pursuant to the Merger. It is able to bear the
economic risk of the investment in the GTC Stock, including the risk of a
total loss of the investment in the GTC Stock. The acquisition of the GTC
Stock is for its own account and is for investment and not with a view to
the distribution thereof. Except a permitted by law, it has a no present
intention of selling, transferring or otherwise disposing in any way of all
or any portion of the shares. All information that it has supplied to GTC
is true and correct. It has conducted all investigations and due diligence
concerning GTC to evaluate the risks inherent in accepting and holding the
GTC Stock which it deems appropriate, and it has found all such information
obtained fully acceptable. It has had an opportunity to ask questions of
the officer and directors of GTC concerning the GTC Stock and the business
and financial condition of and prospects for GTC, and the officers and
directors of GTC have adequately answered all questions asked and made all
relevant information available to them. UTEK is an "accredited investor,"
as the term is defined in Regulation D, promulgated under the Securities
Act of 1933, as amended.
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(b) Stock Transfer Restrictions.
UTEK acknowledges that the GTC Stock will not be registered
and UTEK will not be permitted to sell or otherwise transfer the GTC Stock
in any transaction in contravention of the following legend, which will be
imprinted in substantially the follow form on the GTC Stock:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR
SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
PURSUANT TO THE PROVISION OF THE ACT AND THE LAWS OF SUCH STATES UNDER
WHOSE LAWS A TRANSFER OF SECURITIES WOULD BE SUBJECT TO A REGISTRATION
REQUIREMENT OR AN OPINION OF COUNSEL TO GRAPHCO TECHNOLOGIES, INC. IS
OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION.
ARTICLE III
TRANSACTIONS PRIOR TO CLOSING
3.01.Corporate Approvals. Prior to Closing, each of the parties shall
submit this Agreement to its Board of Directors and shareholders and obtain
approval thereof. Copies of corporate actions taken shall be provided to
each party.
3.02 Access to Information. Each party agrees to permit upon reasonable
notice the attorneys, accountants, and other representatives of the other
parties reasonable access during normal business hours to its properties
and its books and records to make reasonable investigations with respect to
its affairs, and to make its officers and employees available to answer
questions and provide additional information as reasonably requested.
3.03 Expenses. Each party agrees to bear its own expenses in connection
with the negotiation and consummation of the Merger and the transactions
contemplated hereby.
3.04 Covenants. Except as permitted in writing, each party agrees that
it will:
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(i) Use its good faith efforts to obtain all requisite licenses,
permits, consents, approvals and authorizations necessary in order to
consummate the Merger; and
(ii) Notify the other parties upon the occurrence of any event which
would have a materially adverse effect upon the Merger or the
transactions contemplated hereby or upon the business, assets or
results of operations; and
(iii) Not modify its corporate structure, except as necessary or
advisable in order to consummate the Merger and the transactions
contemplated hereby.
ARTICLE IV
CONDITIONS PRECEDENT
The obligation of the parties to consummate the Merger and the transactions
contemplated hereby are subject to the following conditions that may be
waived to the extent permitted by law:
(a) Each party must obtain the approval of its Board of Directors and
DPI and Subsidiary must obtain approval of their respective shareholders in
accordance with applicable law, and such approval shall not have been
rescinded or restricted; and
(b) Each party shall obtain all requisite licenses, permits, consents,
authorizations and approvals required to complete the Merger and the
transactions contemplated hereby; and
(c) There shall be no claim or litigation instituted or threatened in
writing by any person or governmental authority seeking to restrain or
prohibit any of the transactions contemplated hereby or challenge the
right, title and interest of UTEK in the DPI Stock or the right of DPI or
UTEK to consummate the Merger contemplated hereunder; and
(d) The representations and warranties of the parties shall be true and
correct in all material respects at the Effective Time; and
(e) The Patent Application has been prosecuted in good faith with
reasonable diligence.
(f) The License Agreement is valid and in full force and effect without
any default therein and consent to the transfer of the License Agreement to
Subsidiary shall have been given in writing by Caltech.
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(g) Immediately prior to the execution of this Agreement, DPI will pay
$200,000 to Caltech to cover fifty percent (50%) of the required sponsored
research program for refinement of the technology pursuant to the terms of
the Sponsorship Agreement ("Research Payment"). GTC agrees to pay the
remaining portion of the Research Payment to Caltech on or before December
1st, 2000.
(h) GTC or Subsidiary shall have received at or prior to closing each
of the following:
i. the stock certificates representing the DPI Stock, duly endorsed
(or accompanied by duly executed stock powers) by UTEK and Caltech for
cancellation;
ii. all technical data, literature and other documentation relating to
the DPI's business, all in form and substance satisfactory to GTC
and/or the Subsidiary;
iii. such contracts, files and other data and documents pertaining to
DPI's business as GTC or the Subsidiary may reasonably request;
iv. copies of the general ledgers and books of account of DPI, and all
federal, state and local income, franchise, property and other tax
returns filed by DPI since inception of DPI;
v. certificates of (i) the Secretary of State of the State of Florida
as to the legal existence and good standing, as applicable, (including
tax) of DPI in Florida; and (ii) the Secretary of State of the State
of Delaware as to the legal existence and good standing, as
applicable, (including tax) of UTEK in Delaware;
vi. certificates of the Secretary of DPI and UTEK, respectively,
attesting to the incumbency of respectively, DPI's and UTEK's
officers, the authenticity of the resolutions authorizing the
transactions contemplated by the Agreement, and the authenticity and
continuing validity of their charter documents and accompanied by
certified copies of such charter documents;
vii. the original minute books of DPI, including the articles or
certificate of incorporation and bylaws of DPI, and all other
documents filed therein;
viii. a certificate executed by DPI and UTEK to the effect that all
representations and warranties made by DPI and UTEK under this
Agreement are true and correct as of the Closing, as though originally
given to GTC and Subsidiary on said date;
15
ix. all consents, assignments or related documents of conveyance to
give Subsidiary the benefit of the transactions contemplated
hereunder;
x. an opinion of Xxxxxx & Xxxxxx, counsel to DPI and UTEK, dated as of
the Closing in form customary for a transaction of this nature and
reasonably satisfactory to GTC and Subsidiary and their counsel, as to
the consummation of the transactions contemplated by this Agreement;
xi. such documents as may be needed to accomplish the Closing under
the corporate laws of the states of incorporation of Subsidiary and
DPI, and
xii. such other documents, instruments or certificates as GTC,
Subsidiary or their counsel may reasonably request.
(i) GTC and Subsidiary shall have completed due diligence investigation to
GTC and Subsidiary satisfaction in their sole discretion.
(j) GTS or Subsidiary shall receive the resignation effective the date of
Closing of each Director and officer of DPI.
ARTICLE IV
LIMITATIONS
(A) Survival of Representations and Warranties.
(1) The representations and warranties made by UTEK and DPI
shall survive for a period of 3 years after Closing, and thereafter all
such representation and warranties shall be extinguished, except with
respect to claims then pending for which specific notice has been given
during such 3 year period. UTEK shall have liability and responsibility
for the surviving representations and warranties made by it herein,
notwithstanding any due diligence investigation or examination by GTC
or Subsidiary.
(2) The representations and warranties made by GTC and
Subsidiary shall survive for a period of 3 years after Closing, and
thereafter all such representations and warranties shall be
extinguished, except with respect to claims then pending for which
specific notice has been given during such 3 year period. GTC and
Subsidiary shall have liability and responsibility for the surviving
representations and warranties made to GTC or Subsidiary,
notwithstanding any due diligence investigation or examination by UTEK.
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(B) Limitations on Liability. Notwithstanding any other
provision hereto the contrary, neither party hereto shall be liable to
the other party for any cost, damage, expense, liability or loss under
this indemnification provision until after the sum of all amounts
individually when added to all other such amounts in the aggregate
exceeds $500, and then such liability shall apply only to matters in
excess of $500.
(C) Indemnification. Indemnification by UTEK. UTEK agrees to
defend, indemnify and hold GTC and the Subsidiary harmless from and
against any and all claims, actions, damages, obligations, losses,
liabilities, costs, and expenses (including attorneys' fees and
expenses) (collectively, "Losses") arising out of or resulting from a
misrepresentation, breach or warranty, or breach or non-fulfillment of
any covenant of DPI or UTEK contained herein or in the Schedules or
Exhibits annexed hereto or in any other documents or instruments
furnished or to be furnished by DPI or UTEK pursuant hereto or in
connection with the transaction contemplated hereby or thereby, whether
asserted by GTC or Subsidiary in its own right or asserted against by
any third-party, or any allegation which, if true, would constitute a
misrepresentation or breach or non-fulfillment of any such covenant of
DPI or UTEK.
Indemnification by GTC and Subsidiary. GTC and Subsidiary
shall indemnify, defend and hold harmless UTEK from and against any and all
Losses incurred by UTEK which arise out of or result from misrepresentation,
breach of warranty or breach or non-fulfillment of any covenant of GTC or
Subsidiary contained herein or in the Exhibits or Schedules annexed hereto
or in any other documents or instruments furnished by GTC or Subsidiary
pursuant hereto or in connection with the transactions contemplated hereby
or thereby.
ARTICLE V
REMEDIES
6.01 Specific Performance. Each party's obligations under this
agreement is unique. If any party should default in its obligations under
this agreement, the parties each acknowledge that it would be extremely
impracticable to measure the resulting damages; accordingly, the
non-defaulting party, in addition to any other available rights or
remedies, may xxx in equity for specific performance, and the parties each
expressly waive the defense that a remedy in damages will be adequate.
6.02 Costs. If any legal action or any arbitration or other
proceeding is brought for the enforcement of this agreement or because of
an alleged dispute, breach, default, or misrepresentation in connection
with any of the provisions of this agreement, the successful or prevailing
party or parties shall be entitled to recover reasonable attorneys' fees
and other costs incurred in that action or proceeding, in addition to any
other relief to which it or they may be entitled.
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ARTICLE VI
ARBITRATION
In the event a dispute arises with respect to the interpretation or effect
of this Agreement or concerning the rights or obligations of the parties
hereto, the parties agree to negotiate in good faith with reasonable
diligence in an effort to resolve the dispute in a mutually acceptable
manner. Failing to reach a resolution thereof, either party shall have the
right to submit the dispute to be settled by arbitration under the
Commercial Rules of Arbitration of the American Arbitration Association.
The parties agree that all arbitration shall be conducted in Philadelphia,
Pennsylvania, unless the parties mutually agree to the contrary. The cost
of arbitration shall be borne by the party against whom the award is
rendered or, if in the interest of fairness, as allocated in accordance
with the judgment of the arbitrators. All awards in arbitration made in
good faith and not infected with fraud or other misconduct shall be final
and binding. The arbitrators shall be selected as follows: one by GTC , one
by UTEK and a third by the two selected arbitrators. The third arbitrator
shall be the chairman of the panel.
ARTICLE VII
MISCELLANEOUS
No party may assign this Agreement or any right or obligation of it
hereunder without the prior written consent of the other parties hereto. No
permitted assignment shall relieve a party of its obligations under this
Agreement without the separate written consent of the other parties. This
Agreement shall be binding upon and enure to the benefit of the parties and
their respective permitted successors and assigns. Each party agrees that
it will comply with all applicable laws, rules and regulations in the
execution and performance of its obligations under this Agreement. This
Agreement shall be governed by and construct in accordance with the laws of
the State of Delaware without regard to principles of conflicts of law.
This document constitutes a complete and entire agreement among the parties
with
[space intentionally left blank]
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reference to the subject matters set forth herein. No statement or
agreement, oral or written, made prior to or at the execution hereof and no
prior course of dealing or practice by either party shall vary or modify
the terms set forth herein without the prior consent of the other parties
hereto. This Agreement may be amended only by a written document signed by
the parties. Notices or other communications required to be made in
connection with this Agreement shall be delivered to the parties at the
address set forth below or at such other address as may be changed from
time to time by giving written notice to the other parties. The invalidity
or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. This
Agreement may be executed in multiple counterparts, each of which shall
constitute one and a single Agreement. Any facsimile signature of any part
hereto or to any other agreement or document executed in connection hereof
should constitute a legal, valid and binding execution by such parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by a duly authorized officer this ____day of March 2000.
DIGITAL PERSONNEL, INC.
By:___________________________
Xxxxxxxx X. Xxxxx, Ph.D. President
UTEK Corporation
By:________________________
Xxxxxxxx X. Xxxxx, Ph.D.
Chief Executive Officer
Graphco-DPI Holding Company, Inc.
By:___________________________
Name:
Title:
Graphco Technologies, Inc.
By:___________________________
Xxxxxxx Xxxxxxxx
Chief Executive Officer
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EXHIBIT A
Assets
See attached.
20
Exhibit B
Intellectual Property
(1) License Agreement Between DPI and Caltech - see attached.
(2) Outline of Sponsored Research Plan Between DPI and Caltech - see attached.
21
EXHIBIT C
Financial Statements of UTEK
See attached.
22
EXHIBIT D
Taxes
None.
23
EXHIBIT E
Material Contracts
See Exhibit C.
24
EXHIBIT F
Financial Statement of GTC
See attached.
25
EXHIBIT G
Brokerage Fees
GTC has entered into an agreement with the investment banking firm of May Xxxxx
in connection with this Agreement and the transactions contemplated hereby
("Investment Agreement"), a copy of which is attached hereto. Pursuant to the
Investment Agreement, GTC agreed to pay as consideration for the services
rendered by May Xxxxx 16,001 shares of GTC Stock, which GTC will issue directly
to May Xxxxx on or after the Effective Time of the Merger.
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Exhibit H
Consent from Caltech to the transfer of the License to
Graphco-DPI Holding Company, Inc.
See attached.
27
