STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of June 17, 2005, is entered
into by and between the undersigned stockholders of Trace Genetics, Inc., a
California corporation (collectively, the "Shareholders") and DNAPrint genomics,
Inc. (the "Buyer").
RECITAL:
The Shareholders desire to sell, and the Buyer desires to buy, all of the
issued and outstanding shares of capital stock (the "Shares") of Trace Genetics,
Inc., a California corporation (the "Company") on the terms and conditions set
forth in this Agreement.
THEREFORE, the Shareholders and the Buyer agree as follows:
1. SALE AND PURCHASE OF SHARES.
(a) Transfer of Shares. The Shareholders agree to sell, assign,
transfer and deliver to the Buyer, and the Buyer agrees to purchase and accept
from the Shareholders, at the Closing (as defined below), all of the Shares.
(b) Liabilities. The Shares shall be sold and conveyed to the Buyer
free and clear of all liabilities, obligations, liens, security interests and
encumbrances whatsoever (collectively, "Liens", or individually, a "Lien").
(c) Closing. The closing of the sale of the Shares (the "Closing")
shall take place at the Buyer's office, at 10:00 a.m., local time, on the date
that is five business days after the satisfaction of the last closing condition
set forth in Section 6 or Section 7 of this Agreement, or such other date as may
be mutually agreed upon by the parties hereto. For purposes of passage of title,
risk of loss, allocation of expenses and other economic effects, the Closing,
when completed, shall be deemed to have occurred at 12:01 a.m., local time, on
the closing date (the "Effective Time").
2. CONSIDERATION. As consideration for the purchase of the Shares, the
Buyer shall cause to be issued an aggregate of 25,000,000 shares of the Buyer's
common stock to the Shareholders in the amounts set forth on Exhibit "A."
Additionally, the Buyer will issue options for the purchase of up to 5,000,000
additional shares of DNAPrint genomics, Inc. common stock at an exercise price
of $0.02 per share, expiring five (5) years from the Closing, to the
Shareholders in the amounts set forth on Exhibit "A."
3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. In order to induce the
Buyer to enter into this Agreement, the Shareholders, jointly and severally
represent and warrant to the Buyer as follows:
(a) Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. The Company has all requisite power and authority to own,
operate and/or license and lease the Company Assets (as defined in Section 3(f))
and to conduct its business as presently conducted. The Company is not required
to qualify to do business as a foreign corporation in any jurisdiction other
than such jurisdictions where the failure to be so qualified would not have a
Material Adverse Effect (as defined in Section 3(d)) on the Company.
(b) Authority. The Shareholders have all requisite power and
authority to execute and deliver this Agreement and the other documents,
certificates and instruments contemplated hereby (collectively with the
Agreement, the "Transaction Documents") to which they are a party and to perform
the transactions contemplated hereby and thereby. Each of the Transaction
Documents to which the Shareholders are a party have been duly executed and
delivered by the Shareholders and constitute a valid and binding obligation of
the Shareholders, enforceable against them in accordance with their terms.
(c) Capitalization. The authorized capital stock of the Company
consists of 50,000,000 shares of common stock, of which 10,000,000 shares are
issued and outstanding. Schedule 3(c) sets forth a complete and accurate list of
(i) all shareholders of the Company, indicating the number of shares held by
each shareholder, (ii) all holders of options and warrants and other rights to
acquire shares of capital stock of the Company ("Rights"), including the number
of shares subject to each Right, and (iii) all of the Company's stock plans. All
of the issued and outstanding shares are, and all shares that may be issued
prior to the Effective Time upon exercise of Rights will be, duly authorized,
validly issued, fully paid, nonassessable and free of all preemptive rights.
There are no outstanding or authorized stock appreciation, phantom stock or
similar rights with respect to the capital stock of the Company. There are no
agreements, voting trusts, proxies or understandings with respect to the voting,
or registration under the Securities Act, of any shares of the Company other
than as listed in Schedule 3(c). All of the outstanding shares and Rights were
issued in compliance with applicable federal and state securities laws.
(d) Effect of Agreement. Except as disclosed on Schedule 3(d), the
execution, delivery and performance by the Shareholders of the Transaction
Documents do not and will not: (a) conflict with the Articles of Incorporation
or Bylaws of the Company; (b) violate any law or any rule or regulation of any
governmental body or administrative agency, or conflict with any judicial or
administrative order or decree relating to the Shareholders, the Company or the
Company Assets, except for any such violations or conflicts which would not,
individually or in the aggregate, have a material adverse effect on the
business, the Company Assets, liabilities, results of operations or condition,
financial or otherwise (in any such case, a "Material Adverse Effect") of the
Company or impair the ability of the Shareholders to consummate the transactions
contemplated by this Agreement; (c) constitute a breach or default under any of
the Company Contracts (as defined below) or any contract binding upon the
Shareholders; (d) create any Lien of any kind on any of the Company Assets; or
(e) require any consent, notice to or filing with any governmental authority or
administrative agency or any third party on behalf of the Company or the
Shareholders. The matters described on Section 3(d) are referred to as the
"Shareholders Required Consents." The Shareholders have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver the
Transaction Documents and to perform the Shareholders' obligations thereunder.
(e) Financials; Records. Attached hereto as Schedule 3(e) are true
and complete copies of the balance sheets, statements of operations, changes in
shareholders' equity and cash flows for the fiscal years ended December 31,
2004, December 31, 2003, December 31, 2002 and the most recent available
financial statements for fiscal 2005 (collectively, the "Company Financial
Statements"). The Company Financial Statements (a) are true, complete and
correct in all material respects; (b) are in accordance with the books and
records of the Company; and (c) present fairly, in all material respects, the
assets, liabilities and financial condition of the Company as of the respective
dates thereof, and the results of operations for the periods then ended in
accordance with generally accepted accounting principles (with the following
exceptions: (i) accumulated appreciation and depreciation expense are calculated
and reflected on a tax basis; (ii) no statement of cash flows is presented; and
(iii) no financial statement footnotes are presented), applied on a consistent
basis throughout the periods involved. The Company has no liability or
obligation that is not reflected or reserved against on its balance sheet as of
July 8, 2005 (the "Company Balance Sheet"), except for those that are not
required by generally accepted accounting principles to be included therein or
those that have been incurred in the ordinary course of business since the date
of the Company Balance Sheet (none of which may reasonably be expected to have a
Material Adverse Effect on the Company). The records of the Company are true,
accurate and complete in all material respects and have been maintained on a
consistent basis.
(f) Title to and Sufficiency of Assets and Other Property. Set forth
on Schedule 3(f) is a true and complete list of all material inventory,
machinery, equipment, furniture, office equipment, supplies, materials, vehicles
and other material items of tangible or intangible personal property of every
kind owned by the Company or used in connection with its business (the "Company
Assets"). The Company has good and marketable title to all of the Company
Assets, free and clear of all Liens of every kind except for Liens for current
taxes not yet due and payable and except as disclosed on Schedule 3(f). The
Company Assets constitute all of the assets of any nature required to operate
the Company's business in the manner presently operated by the Company. The
Company Assets (a) are in good operating order, condition and repair (ordinary
wear and tear excepted), (b) are suitable for use in the ordinary course of
business of the Company's business and (c) are free from material defects.
(g) Real Property. The Company owns no real property and leases the
property described on Schedule 3(g).
(h) Contracts and Leases. Schedule 3(h) lists all contracts,
commitments, agreements, understandings, obligations, whether written or oral
(including, without limitation, agreements for the borrowing of money or the
extension of credit that involve a commitment or expenditure by, or revenue to,
the Company in excess of $1,000, and agreements with employees, consultants and
other contractors), leases and licenses, whether written or oral, to which the
Company is party or by which the Company or the Company Assets are bound
(collectively, the "Company Contracts"). Each of the Company Contracts is valid,
binding and enforceable in accordance with its terms and is in full force and
effect. There are no existing defaults on the part of the Company or any other
party to the Company Contracts, and no events or circumstances have occurred
which, with or without notice or lapse of time or both, would constitute
defaults under any of the Company Contracts. The execution, delivery and
performance of the Transaction Documents do not and will not, with respect to
any Company Contract, (a) constitute a default or accelerate the obligations
thereunder, (b) require the consent of any person or party, except for the
Shareholders' Required Consents, or (c) affect the enforceability or validity
thereof or the terms thereof.
(i) Receivables. Attached hereto as Schedule 3(i) hereto is a true,
complete and accurate detailed listing of all accounts receivable of the Company
(the "Company Receivables"). The Company Receivables are, and will be at the
Effective Time, legal, valid and binding obligations that arose in the ordinary
course of business, and are, and will be at the Effective Time, collectible at
90% of face value. The Shareholders have made available to the Buyer complete
and correct copies of all instruments, documents and agreements evidencing such
Company Receivables, including, without limitation, an aging schedule related to
the Company Receivables.
(j) Intellectual Property. Schedule 3(j) hereto sets forth a
complete and correct list of (i) all patents, trademarks, trade names (including
all federal and state registrations pertaining thereto, or applications for such
registrations and a description of the status of such applications), proprietary
databases and registered copyrights owned by Company (collectively with all
unregistered copyrights, the "Company Proprietary Intellectual Property"), and
(ii) all patents, trademarks, trade names, copyrights, software, technology and
processes used by the Company in its businesses which are material to its
business and are used pursuant to a license or other right granted by a third
party, and all agreements related thereto (collectively, the "Company Licensed
Intellectual Property," and together with the Company Proprietary Intellectual
Property referred to as "Company Intellectual Property"). Each of the federal,
state and other governmental registrations with any country pertaining to the
Company Proprietary Intellectual Property is valid and in full force and effect.
The Company owns, or has the right to use pursuant to valid and effective
agreements, all Company Intellectual Property, and the consummation of the
transactions contemplated hereby will not materially impair any such rights. No
claims are pending against the Company by any person with respect to the use of
any Company Intellectual Property or challenging or questioning the validity or
effectiveness of any license or agreement relating to the same that would be
likely to have a Material Adverse Effect on the Company, and, to the
Shareholders' knowledge, the current use by the Company of the Intellectual
Property does not in any material respect infringe upon the rights of any third
party. Schedule 3(j) sets forth a list of all jurisdictions in which the Company
is operating under a trade name, and each jurisdiction in which any such trade
name is registered.
(k) Company Software. Schedule 3(k) hereto sets forth a true and
complete list of all software used by the Company or its employees in connection
with the business of the Company (the "Company Software"). The Company has been
granted under the license agreements relating to the Company Software valid and
subsisting license rights with respect to all software comprising the Company
Software, and such rights are sufficient in all respects to conduct the business
of the Company as presently conducted and as currently proposed to be conducted.
The Company is in compliance with each of the terms and conditions of each of
such license agreements except to the extent failure to so comply, individually
or in the aggregate, would not have a Material Adverse Effect on Company. Except
as disclosed on Schedule 3(k), in the case of any commercially available
"shrink-wrap" software programs (such as Microsoft Word), the Company has not
made and is not using any unauthorized copies of any such software programs, and
none of the employees, agents or representatives of the Company have made or are
using any such unauthorized copies. Except as disclosed on Schedule 3(k), there
have been no problems experienced by the Company in the past twelve (12) months
with respect to the Company Software, or the related computer hardware used by
the Company in its operations which have arisen outside the ordinary course of
business and would have a Material Adverse Effect on Company.
(l) Litigation. Except as disclosed on Schedule 3(l), there are no
claims, actions, suits or investigations pending, or to the knowledge of the
Shareholders, threatened, against the Shareholders, the Company or its business
or affecting the Company Assets.
(m) Compliance with Laws; Permits. There is not outstanding or, to
the knowledge of the Shareholders, threatened, any order or decree of any court,
governmental agency or arbitration tribunal against or involving the Company or
its business or the Company Assets. The Company is currently, and has been at
all times, in full compliance with all laws, rules, regulations and licensing
requirements of all federal, state, local and foreign authorities applicable to
the Company Assets and operation of its business, except for failures to comply
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. The Company has obtained all permits, certificates and
licenses required for the conduct of its business and the ownership of the
Company Assets, all of which are described on Schedule 3(m) (the "Company
Permits"). The Company is not in violation of any of the Company Permits, and no
proceedings are pending or, to the knowledge of the Shareholders, threatened to
revoke or limit any Company Permit.
(n) Taxes. The Company has properly completed and timely filed all
federal, state, local and foreign tax returns and reports required to be filed
by it (the "Tax Returns"). All Tax Returns are accurate, complete and correct as
filed, and the Company has paid in full or made adequate provision in the
Company Financial Statements for all amounts shown to be due thereon. The
Company is not delinquent in the payment of any tax assessment or other
governmental charge (including, without limitation, withholding taxes). The
Company has not been notified by any governmental authority that an audit or
review of any tax matter is contemplated. The Shareholders know of no tax
deficiency or claim for additional taxes asserted or threatened to be asserted
against it by any taxing authority and the Company knows of no grounds for any
such assessment. No extension of time with respect to any date on which a tax
return was or is to be filed by the Company is in force, and no waiver or
agreement by the Company is in force for the extension of time for the
assessment or payment of any tax. The Company is not and has never been a member
of an affiliated or consolidated group or combined group or combined group of
corporations. For purposes of this Agreement, the term "tax" includes all
federal, state, local and foreign taxes or assessments, including income, sales,
gross receipts, excise, use, value added, royalty franchise, payroll,
withholding, property and import taxes and any interest or penalties applicable
thereto.
(o) Insurance. Schedule 3(o) describes all insurance policies
maintained by the Company with respect to its business and the Company Assets.
Such policies are valid, binding and enforceable in accordance with their terms,
are in full force and effect, and all premiums due thereon have been paid.
(p) Employment and Labor Matters. Other than as reflected on the
attached Schedule 3(p), no Company employees have entered into employment or
other agreements regarding compensation with the Company. No employees of the
Company have been or are represented by a union or other labor organization or
covered by any collective bargaining agreement. There is no unfair labor
practice complaint, labor organizational effort, strike, slowdown or similar
labor matter pending or, to the knowledge of the Shareholders, threatened
against the Company or its business. The Company is in compliance with all
federal, state and local laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and there is no unfair labor practice complaint against the Company pending or,
to the knowledge of the Shareholders, threatened. Upon termination of the
employment of any employees, neither the Company, the Shareholders nor the Buyer
will by reason of the Closing or anything occurring prior to the Effective Time
be liable to any of such employees for severance pay or any other payments. Set
forth on Schedule 3(p) is a true and complete list of all current directors,
officers, employees or consultants of the Company, including, in each case,
name, current job title, base salary, bonus potential, commissions, and
termination obligations.
(q) Employee Benefits. Except as set forth on Schedule 3(q) to this
Agreement, the Company does not have in force any bonus, stock option, employee
welfare, pension or profit sharing plan or any other written or oral employee
benefit arrangement, agreement or understanding. A summary of the terms of each
such plan, agreement or understanding is set forth on Schedule 3(q) indicating
as to each whether it is a "qualified plan" within the meaning of Section 401(a)
of the Internal Revenue Code of 1986, as amended. Each such "qualified" employee
welfare, pension or profit sharing plan, if any, has since its adoption been a
"qualified plan" within the meaning of the Internal Revenue Code of 1986, as
amended. Each such plan, trust or agreement has been operated substantially in
accordance with its provisions and in compliance with the rules and regulations
applicable to such plan, trust or agreement, including but not limited to rules,
regulations and reporting requirements promulgated by the Department of Labor,
the Pension Benefit Guaranty Corporation, and the Department of Treasury
pursuant to the Employment Retirement Income Security Act of 1974 ("ERISA") or
the Internal Revenue Code and the Equal Employment Opportunity Commission
pursuant to the Age Discrimination in Employment Act. There is no material
accumulated funding deficiency within the meaning of ERISA or any liability
(including but not limited to any withdrawal liability) to any such plan, trust
or agreement, or to the Pension Benefit Guaranty Corporation established under
ERISA in connection with any such plan, trust or agreement. There has been no
prohibited transaction (as defined in Section 4975 of the Internal Revenue Code
and as defined in Section 406 of ERISA) by any such plan, trust or agreement, or
by any trustee or administrator thereof, that would subject the Company or any
such plan, trust or agreement, or any party dealing with any such plan or
agreement, to any tax or penalty on prohibited transactions imposed by said
Section 4975, nor has there been any failure to comply with the provisions of
Title I of ERISA that would subject the Company, or any such plan, trust or
agreement, any trustee or administrator thereof, or any party dealing with such
plan, trust or agreement to any fine, penalty, tax or liability. True and
complete copies of each such written plan, trust, or agreement have previously
been delivered to the Buyer.
(r) Absence of Changes. Except as disclosed on Schedule 3(r), since
January 1, 2005, the Company has conducted the operations of its business only
in the ordinary course, and has not:
(i) Suffered any damage to any Company Asset, whether or not
covered by insurance, except damage that could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company;
(ii) Sold or disposed of any Company Assets, except such sales
or dispositions made in the ordinary course of business that would
not, either individually or in the aggregate, have a Material
Adverse Effect on the Company;
(iii) Made any general wage increase for its employees as a
group other than in the ordinary course of business;
(iv) Amended or terminated any Company Contract;
(v) Incurred any obligation or liability, except normal trade
or business obligations incurred in the ordinary course of business;
(vi) Introduced any new method of management, operations or
accounting;
(vii) Suffered any adverse change in condition (financial or
otherwise), or any other event, that might reasonably be expected to
have a Material Adverse Effect on the Company; or
(viii) Agreed, whether in writing or otherwise, to take any
action described in this Section 3(r).
(s) Related Party Transactions. Except as set forth on Schedule
3(s), the Company Contracts do not include any agreement with or any other
commitment to (i) any officer or director of the Company; (ii) any person
related by blood or marriage to any such officer or director; or (iii) any
corporation, partnership, trust or other entity in which the Company or any such
officer, director or related person has an equity or participating interest, and
no such other agreement or commitment exists.
(t) Inventory. The inventory of the Company consists of finished
products, supplies, and parts, all of which is merchantable and fit for the
purpose for which it was procured or manufactured, and none of which is
slow-moving, obsolete, damaged, or defective, subject only to the reserve for
inventory writedown set forth on the face of the Company Balance Sheet.
(u) Subsidiaries. The Company has no wholly owned or partially owned
subsidiaries.
(v) Brokers' Fees. The Shareholders have not retained any broker,
finder or agent, nor have the Shareholders incurred any liability or obligation,
nor will they, or anyone on their behalf, incur any liability or obligation, to
pay any fees, commissions or similar payments to any broker, finder or agent
with respect to the transactions contemplated by this Agreement.
(w) Disclosure. No representation, warranty or statement made by the
Shareholders in this Agreement or the exhibits or schedules hereto, or in any
financial statement, other written financial information or schedule, or any
other document, certificate or other instrument furnished or to be furnished to
the Buyer by or on behalf of the Shareholders at or prior to the Closing
pursuant to this Agreement, contain or will contain any untrue statement of a
material fact, or omit to state any material fact necessary, in light of the
circumstances in which they were made, to make the statements contained herein
or therein not misleading. There is no event, fact or condition that has had, or
that reasonably could be expected to have, a Material Adverse Effect on the
Company or the Shareholders, that has not been set forth in this Agreement or
the Schedules hereto.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. In order to induce the
Shareholders to enter into this Agreement, the Buyer represents and warrants to
the Shareholders as follows:
(a) Authority. The Buyer has all requisite power and authority to
execute and deliver the Transaction Documents to which it is a party and to
perform the transactions contemplated thereby. Each of the Transaction Documents
to which the Buyer is a party has been duly executed and delivered by it and
each constitutes a valid and binding obligation of the Buyer, enforceable
against it in accordance with its terms.
(b) Effect of Agreement. Except as disclosed on Schedule 4(b), the
execution, delivery and performance of the Transaction Documents to which the
Buyer is a party do not and will not: (a) violate any law or any rule or
regulation of any governmental body or administrative agency, or conflict with
any judicial or administrative order or decree relating to the Buyer, except for
any such violations or conflicts which would not, individually or in the
aggregate, have a material adverse effect on the business, liabilities, results
of operations or condition (financial or otherwise) (a "Material Adverse
Effect") of the Buyer or impair the ability of the Buyer to consummate the
transactions contemplated by this Agreement; (b) constitute a breach or default
under any contracts binding on the Buyer; (c) require any consent, notice to or
filing with any governmental authority or administrative agency or any third
party on behalf of the Buyer. The matters described on Schedule 4(b) are
referred to as the "Buyer Required Consents."
(c) Litigation. Except as disclosed on Schedule 4(c), there are no
claims, actions, suits or investigations pending, or to the knowledge of the
Buyer, threatened, against the Buyer or its assets.
(d) Brokers' Fees. The Buyer has not retained any broker, finder or
agent, nor has the Buyer incurred any liability or obligation, nor will it, or
anyone on its behalf, incur any liability or obligation, to pay any fees,
commissions or similar payments to any broker, finder or agent with respect to
the transactions contemplated by this Agreement.
(e) Disclosure. No representation, warranty or statement made by the
Buyer in this Agreement or the exhibits or schedules hereto, or in any financial
statement, other written financial information or schedule, or any other
document, certificate or other instrument furnished or to be furnished to the
Shareholders by or on behalf of the Buyer at or prior to the Closing pursuant to
this Agreement, contain or will contain any untrue statement of a material fact,
or omit to state any material fact necessary, in light of the circumstances in
which they were made, to make the statements contained herein or therein not
misleading. There is no event, fact or condition that has had, or that
reasonably could be expected to have, a material Adverse Effect on the Buyer,
that has not been set forth in this Agreement or the Schedules hereto.
5. COVENANTS OF THE PARTIES.
(a) Conduct of Business. Between the date of this Agreement and the
Effective Time, except as disclosed on Schedule 5(a), the Shareholders shall,
and shall cause the Company to:
(i) Conduct the operations of the Company's business in the
normal and customary manner in the ordinary course of business;
(ii) Maintain the Company Assets in good operating order,
repair and condition;
(iii) Keep in full force and effect the insurance described in
Section 3(o);
(iv) Perform all of its obligations under all Company
Contracts and not amend any provision thereof other than amendments
that involve a commitment or expenditure, or revenue to the Company,
of less than $5000.00;
(v) Use their best efforts to preserve the Company's
organization intact and maintain its relationships with its
employees, suppliers and customers;
(vi) Promptly advise the Buyer of any adverse change in the
condition (financial or otherwise) of the Company's business or the
Company Assets;
(vii) Promptly advise the Buyer of the occurrence of any event
or circumstance which affects the consummation of the transactions
contemplated by this Agreement or which, if in existence on the date
of this Agreement, would have been required to have been disclosed
in a Schedule to this Agreement;
(viii) Not create or permit to exist any Lien of any kind with
respect to any of the Company Assets, except for liens in effect as
of the date of this Agreement and disclosed on the Schedules hereto;
(ix) Not sell or dispose of any of the Company Assets, except
dispositions of inventory in the ordinary course of business;
(x) Promptly advise the Buyer of any change in the list of
employees referred to in Section 3(p) or in the compensation payable
to any such employee; and
(xi) Not make any capital improvement or expenditure without
the prior consent of the Buyer, other than improvements or
expenditures in the ordinary course of business in amounts of less
than $5,000;
(b) Access and Information. Upon reasonable advance notice, the
Shareholders shall permit the Buyer and its counsel, accountants and other
representatives full access during normal business hours to all the properties,
assets, books, records, agreements and other documents of the Company. The
Shareholders shall furnish to the Buyer and its representatives all information
concerning the Company, the Company Assets or the Company's business as the
Buyer may request. The Shareholders shall permit and facilitate communications
between the Buyer and the Company's suppliers, customers, landlords and other
persons having relationships with the Company.
(c) No Other Solicitations. Until the earliest of (i) the Effective
Time, (ii) the date on which the Buyer advises the Shareholders in writing that
the Buyer does not wish to proceed with the transactions contemplated hereby, or
(iii) 120 days from the date of this Agreement, the Shareholders shall not, and
the Shareholders shall cause each of the Company's officers, directors,
employees, representatives and agents or affiliates of such officers, directors,
employees, representatives and agents not to, directly or indirectly, solicit,
initiate or encourage any offer, proposal or inquiry from, or engage in any
discussions or negotiations with, any person regarding the sale or lease of the
capital stock of the Company, its business, or any of the Company Assets. The
Shareholders shall immediately notify the Buyer of, and shall disclose to the
Buyer all details of, any inquiries, discussions or negotiations of the nature
described above.
(d) Employment Agreements. The Shareholders shall use their best
efforts to cause the employees of the Company set forth on Schedule 5(d) (the
"Key Employees") to enter into commitments reasonably acceptable to the Buyer to
continue employment with the Company after the Closing Date.
(e) Tax Matters. The parties shall take such steps and execute such
documents and instruments as may be reasonably required to make a valid election
under Section 338(h)(10) of the Internal Revenue Code.
(f) Further Assurances. From and after the Closing Date, the parties
shall take such steps and execute such documents and instruments as may be
reasonably required to make effective the transactions contemplated hereby.
(g) Confidentiality. In recognition of the confidential nature of
certain of the information which will be exchanged by the parties, each of the
Buyer and the Shareholders agrees to retain in confidence, and to require its
directors, officers, employees, consultants, professional representatives and
agents (collectively, its "Representatives") to retain in confidence all
information transmitted or disclosed to it by the other party, and further
agrees that it shall not use for its own benefit (other than in connection with
the transactions contemplated by this Agreement) and shall not use or disclose
to any third party, or permit the use or disclosure to any third party of, any
information obtained from or revealed by any other party, except that each of
the Buyer and the Shareholders may disclose the information to those of its
Representatives who need the information for the proper performance of their
assigned duties with respect to the consummation of the transactions
contemplated hereby. In making such information available to its
Representatives, the Buyer and the Shareholders shall take all precautions to
ensure that its Representatives use the information only as permitted hereby.
Notwithstanding anything to the contrary in the foregoing provisions, such
information may be disclosed: (a) where it is legally necessary, to any
regulatory authorities or governmental agencies; (b) if it is required by court
order or decree or applicable law; (c) if it is ascertainable or obtained from
public or published information; (d) if it is received from a third party not
known to the recipient to be under an obligation to keep such information
confidential; or (e) if the recipient can demonstrate that such information was
in its possession prior to disclosure thereof in connection with this Agreement.
If any party is required to make disclosure of any such information by operation
of law, such disclosing party will give the other party prior notice of the
making of such disclosure and will use all reasonable efforts to afford such
other party an opportunity to contest the making of such disclosure. In the
event that the Closing does not occur, each of the Buyer and the Shareholders
shall immediately deliver, or cause to be delivered, to the other (without
retaining any copies thereof) any and all documents, statements or other written
information obtained from the other that contain confidential information.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligations of the
Buyer to consummate the transactions contemplated by this Agreement are subject
to the satisfaction of the following conditions on or before the Closing Date:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Shareholders contained in this Agreement shall be true and
correct on the Closing Date, and the Shareholders shall have duly performed and
complied with all covenants required by this Agreement to be performed or
complied with by him on or prior to the Closing.
(b) Absence of Litigation. No action or proceeding shall be pending
or threatened by or before any court or other governmental body or agency
seeking to restrain, prohibit or invalidate the transactions contemplated by
this Agreement or which would adversely affect the right of the Buyer to own the
Shares or the right of the Company to own, operate or control the Company Assets
or the Company's business after the Closing Date.
(c) Absence of Change. Between the date of this Agreement and the
Closing, no adverse change shall have occurred in the business, operations or
financial or other condition of the Company, its business or the Company Assets,
nor shall there have occurred any casualty loss or destruction of, or damage to,
any of the Company Assets.
(d) Consents and Approvals. All (i) Company Required Consents, (ii)
licenses, (iii) other orders or notifications of, or registrations, declarations
or filings with, or expiration of waiting periods imposed by, any applicable
governmental or judicial authority and (iv) consents, approvals, authorizations
or notifications of any other third parties, all as required in connection with
consummation of the transactions contemplated by this Agreement, including the
operation of the Company's business by the Buyer, shall have been made or
obtained or shall have occurred.
(e) Compliance Certificate. The Shareholders shall have delivered to
the Buyer a certificate (without qualification as to knowledge or materiality or
otherwise except as may be set forth in the representations and warranties
themselves) to the effect that each of the conditions specified in Sections 6(a)
through 6(d) is satisfied in all respects.
(f) Secretary's Certificate. The Shareholders shall have caused to
be delivered to the Buyer a certificate of the Secretary of the Company, dated
as of the Closing Date, in form and substance reasonably satisfactory to the
Buyer, certifying (i) the names of the Company's officers, together with true
signatures of such officers; (ii) that the copies of the Articles of
Incorporation and Bylaws of the Company attached thereto are true, correct and
complete; and (iii) that the resolutions of the Board of Directors attached
thereto evidencing the approval of this Agreement and the transactions
contemplated herein were duly adopted, have not been amended or rescinded and
are in full force and effect.
(g) Legal Opinion. The Buyer shall have received an opinion of legal
counsel to the Shareholders, dated as of the Effective Time, in the form of
Exhibit A attached hereto.
(h) Resignations. The Buyer shall have received resignations, duly
executed, by all officers and directors of the Company, of their respective
positions with the Company, effective as of the Effective Time.
(i) Employment Agreements. The Buyer shall have received employment
offer letters in form reasonably satisfactory to the Buyer, duly executed by the
Key Employees.
(j) Financials. The Buyer's accountant shall have determined that
the Company's financial records are sufficient to permit the Buyer to prepare
and file any statements required by the Securities Exchange Act of 1934.
(k) Approvals. The Buyer shall have received all required government
approvals and certifications for operation of the Company's business.
(l) Due Diligence. The Buyer shall have completed its due diligence
investigation, to its reasonable satisfaction; provided, however, that if the
Buyer has not notified the Shareholders that this condition has not been
satisfied as of the end of the 90th day after the date of this Agreement, such
condition shall be deemed to have been waived.
(m) Other Documents. The Buyer shall have received such other
agreements, documents, and instruments as Buyer has reasonably requested to
effect and evidence the consummation of the transactions contemplated by this
Agreement.
7. CONDITIONS PRECEDENT TO SHAREHOLDERS' OBLIGATIONS. The obligations of
the Shareholders to consummate the transaction contemplated by this Agreement
are subject to the satisfaction of each of the following conditions on or before
the Closing Date:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Buyer contained in this Agreement shall be true and
correct on the Closing Date, and the Buyer shall have duly performed and
complied with all covenants and obligations required by this Agreement to be
performed or complied with by it on or before the Closing Date.
(b) Compliance Certificate. The Buyer shall have delivered to the
Shareholders a certificate (without qualification as to knowledge or materiality
or otherwise except as may be set forth in the representations and warranties
themselves) to the effect that the condition specified in Section 7(a) is
satisfied in all respects.
(c) Absence of Litigation. No action or proceeding shall be pending
by or before any court or other governmental body or agency seeking to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
(d) Secretary's Certificates. The Shareholders shall have received a
certificate of the Secretary of the Buyer, dated as of the Effective Time, in
form and substance reasonably satisfactory to the Shareholders, certifying (i)
the names of its officers authorized to sign this Agreement, the certificates
and the other documents and instruments delivered pursuant to this Agreement by
the Buyer, as the case may be, or any of its officers, together with true
signatures of such officers; (ii) that the copies of the Articles of
Incorporation and Bylaws attached thereto are true, correct and complete
(e) Other Documents. The Shareholders shall have received such other
agreements, documents, and instruments as the Shareholders may have reasonably
requested to effect and evidence the consummation of the transactions
contemplated by the Agreement.
8. INDEMNIFICATION.
(a) General.
(i) The Shareholders shall indemnify the Buyer in respect of,
and hold the Buyer harmless against, any and all debts, obligations
and other liabilities, monetary damages, fines, fees, penalties,
interest obligations, deficiencies, losses and expenses (including
without limitation amounts paid in settlement, interest, court
costs, costs of investigators, reasonable fees and expenses of
attorneys, accountants, financial advisors and other experts, and
other expenses of litigation) incurred or suffered by the Buyer or
the Company ("Buyer Damages"):
(A) resulting from, or relating to any
misrepresentation, breach of warranty or failure to perform
any covenant or agreement of the Shareholders contained in
this Agreement or any certificate delivered pursuant hereto;
(B) resulting from any failure of the Shareholders to
have good, valid and marketable title to the Shares, free and
clear of all liens, claims, pledges, options, adverse claims
or charges of any nature whatsoever; or
(C) resulting from any claim by any current or former
security holder of the Company, or any other person, firm,
corporation or entity, seeking to assert, or based upon: (I)
ownership or a right to ownership of any shares of capital
stock of the Company which is claimed to have arisen prior to
the Closing; (II) any rights of a shareholder of the Company,
including, without limitation, rights with respect to any
option, preemptive rights or rights to notice or to vote, in
each case with respect to capital stock of the Company owned
or claimed to have been owned prior to the Closing; (III) any
rights under the Articles of Incorporation or Bylaws of the
Company as in effect at any time prior to the Closing; or (IV)
any claim that his, her or its shares of the Company were
wrongfully repurchased by the Company prior to the Closing.
(ii) The Buyer shall indemnify the Shareholders in respect of,
and hold the Shareholders harmless against, any and all debts,
obligations and other liabilities, monetary damages, fines, fees,
penalties, interest obligations, deficiencies, losses and expenses
(including without limitation amounts paid in settlement, interest,
court costs, costs of investigation, fees and expenses of attorneys,
accountants, financial advisors and other experts, and other
expenses of litigation) incurred or suffered by the Shareholders
("Shareholders Damages" and collectively with the Buyer Damages, the
"Damages"), resulting from, relating to or constituting any
misrepresentation, breach of warranty or failure to perform any
covenant or agreement of the Buyer contained in this Agreement.
(b) Claims for Indemnification. Whenever any claim shall arise for
indemnification under this Section 8, the party entitled to indemnification (the
"Indemnified Party") shall notify the party against whom indemnification is
sought (the "Indemnifying Party") in writing of the facts constituting the basis
for such claim. Such notice shall specify all facts known to the Indemnified
Party giving rise to such indemnification right and the amount or an estimate of
the amount of the liability arising therefrom. The right to indemnification
hereunder and the amount or the estimated amount thereof, as set forth in such
notice, shall be deemed agreed to by the Indemnifying Party unless, within 15
days after the receipt of such notice, the Indemnified Party is notified in
writing that the Indemnifying Party disputes the right to indemnification as set
forth or estimated in such notice. Notwithstanding the foregoing, the parties
agree that the Indemnified Party shall not be entitled to make any claim or
claims hereunder until the aggregate value of such claim or claims exceeds
$5,000.
(c) Right to Defend; Third-Party Claims. If the facts giving rise to
any such indemnification right involve any actual or threatened claim or demand
by any third party against the Indemnified Party or any possible claim by the
Indemnified Party against any third party, such claim by or against a third
party shall be referred to as a "Third-Party Claim." If the Indemnifying Party
gives the Indemnified Party an agreement in writing, in form and substance
reasonably satisfactory to counsel to the Indemnified Party, agreeing to
indemnify and save the Indemnified Party harmless from all costs and liability
arising from any Third-Party Claim, the Indemnifying Party may at its own
expense undertake full responsibility for the defense or prosecution of such
Third-Party Claim and may contest or settle it on such terms as it may choose.
If the Indemnifying Party fails to deliver such an agreement of indemnity to the
Indemnified Party, (1) the Indemnifying Party at its own expense may
nevertheless participate with the Indemnified Party in the defense or
prosecution of the Third-Party Claim and in any and all settlement negotiations
relating thereto, and (2) the Indemnified Party may contest or settle the
Third-Party Claim on such terms at it may choose, although the Indemnified Party
shall not reach a settlement until he has consulted in good faith with the
Indemnifying Party. Any such participation shall not relieve the Indemnifying
Party of his obligations to indemnify the Indemnified Party under this Section
8.
(d) Escrow of Payments. With respect to any claims by the Buyer for
indemnification under this Section 8, the Buyer may withhold issuance of any
common stock under any option agreement to the Shareholders until such time as
the indemnification claim is resolved.
(e) Survival.
(i) The representations, warranties and covenants set forth in
this Agreement (the "Representations") shall survive the Closing and
the consummation of the transactions contemplated by this Agreement
and continue until twelve months after the Effective Time (the
"Termination Date"). If notice of a Claim is given in accordance
with this Section 8 before the Termination Date, then the
Representation applicable to such Claim shall survive until, but
only for purposes of, the resolution of such Claim.
(ii) Notwithstanding the provisions of Section 8(e)(i) above,
with respect to any Claims for indemnification by an Indemnified
Person based on, arising from, resulting from or related to fraud or
willful misrepresentation, the Representations shall survive the
Termination Date and shall remain in force and effect for the
duration of the applicable statute of limitations. All
Representations shall be deemed to be material and relied upon by
the party or parties to whom they were made, notwithstanding any
investigation or inspection made by or on behalf of such party or
parties.
9. TERMINATION.
(a) Termination. This Agreement may be terminated at any time prior
to the Closing:
(i) By the mutual written consent of the parties;
(ii) By the Buyer (if it is not then in breach of any term of
this Agreement), if the Shareholders: (A) fail to perform in any
material respect the agreements contained herein required to be
performed on or prior to the Closing, or (B) materially breach any
of their representations or warranties contained herein, which
failure or breach is not cured within ten (10) days after the Buyer
shall have notified the Shareholders of its intent to terminate this
Agreement pursuant to this subparagraph;
(iii) By the Shareholders (if they are not then in breach of
any term of this Agreement), if the Buyer: (A) fails to perform in
any material respect its agreements contained herein required to be
performed on or prior to the Closing, or (ii) materially breaches
any of its representations or warranties contained herein, which
failure or breach is not cured within ten (10) days after the
Shareholders have notified the Buyer of their intent to terminate
this Agreement pursuant to this subparagraph;
(iv) By either party, if there is any order, writ, injunction
or decree of any court or governmental or regulatory agency binding
on such party which prohibits or restrains such party from
consummating the transactions contemplated hereby; or
(b) Effect on Obligations. Termination of this Agreement pursuant to
this Section 9 shall terminate all obligations of the parties hereunder, except
for the obligations under Sections 10(a) (with respect to expenses), 10(b) (with
respect to publicity), and 5(g) (with respect to confidentiality); provided,
however, that termination pursuant to subparagraphs (ii) or (iii) of Section
9(a) hereof shall not relieve the defaulting or breaching party from any
liability to the other party hereto.
10. MISCELLANEOUS.
(a) Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, whether or not the sale of the Shares contemplated
herein is consummated. No expense incurred herein shall constitute an expense of
the Company.
(b) Publicity. No party to this Agreement shall issue any press
release or public disclosure relating to the subject matter of this Agreement or
the terms hereof without the prior written approval of the parties.
(c) Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered three
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
If to Buyer: Copy to:
----------- -------
Xxxxxxx Xxxxxxx Xxxxxx X. Xxxxxxx, Esq.
DNAPrint genomics, Inc. Xxxxxx X. XxXxxxxx, P.A.
000 Xxxxxxxx Xxxxxx 0000 Xxx xx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxx, XX 00000
(000) 000-0000
If to Shareholders: Copy to:
------------------ -------
Xxxxx X. Xxxxx, Ph.D. Xxxxxxx X. Xxxxx, Esq.
Trace Genetics, Inc. X.X. Xxx 0000
0000 Xxxxx Xx., Xxx. 000 Xxxxxxxx, XX 00000
Xxxxxxxx, XX 00000
Any party to this Agreement may give any notice, request, demand, claim, or
other communication hereunder using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail,
or electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner set forth in this Agreement.
(d) Governing Law. This Agreement shall be governed by the laws of
the State of Florida.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by any of the parties hereto without
the prior written consent of all other parties hereto, and any purported
assignment without such consent shall be void.
(g) Headings. The headings contained in this Agreement are solely
for the purpose of reference, are not part of this Agreement and shall not in
any way affect the meaning or interpretation of this Agreement.
(h) Amendments. Any waiver, amendment, modification or supplement of
or to any term or condition of this Agreement shall be effective only if in
writing and signed by all parties hereto, and the parties hereto waive the right
to amend the provisions of this Section orally. No waiver of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(i) Severability. In the event that any provision in this Agreement
shall be determined to be invalid, illegal or unenforceable in any respect, the
remaining provisions of this Agreement shall not be in any way impaired, the
illegal, invalid or unenforceable provision shall be fully severed from this
Agreement, and there shall be automatically added in lieu thereof a provision as
similar in terms and intent to such severed provision as may be legal, valid and
enforceable.
(j) Entire Agreement. This Agreement, and the Schedules and Exhibits
hereto, constitute the entire Agreement between the parties hereto pertaining to
the subject matter hereof, and supersede all prior and contemporaneous
agreements and understandings between the parties with respect to such subject
matter.
(k) Risk of Loss. The risk of loss, damage or condemnation of any of
the Company Assets from any cause whatsoever shall be borne by the Shareholders
at all times prior to the Effective Time.
(l) Best Efforts. Each party agrees to use its best efforts to
satisfy the conditions to the Closing set forth in this Agreement and otherwise
to consummate the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the date first above written.
DNAPrint genomics, Inc.
/s/ Xxxxx Xxxxx By: /s/ Xxxxxxx Xxxxxxx
----------------------------- -----------------------------
Xxxxx Xxxxx Xxxxxxx Xxxxxxx, President
/s/ Xxxxx Xxxxxxxx /s/ Xxxxxx Xxxxx
----------------------------- ---------------------------------
Xxxxx Xxxxxxxx Xxxxxx Xxxxx
/s/ Anand Chopra /s/ Xxxxxx Xxxxx
----------------------------- ---------------------------------
Anand Chopra Xxxxxx Xxxxx
/s/ Xxxxxxxx Xxxxxx /s/ Xxxxxxxx Xxxxx
----------------------------- ---------------------------------
Xxxxxxxx Xxxxxx Xxxxxxxx Xxxxx
/s/ Xxxxx Xxxxxxxx /s/ Xxxx Xxxxxxxx
----------------------------- ---------------------------------
Xxxxx Xxxxxxxx Xxxx Xxxxxxxx
/s/ Xxxxx Xxxxx /s/ Xxxxxx Xxxxx
----------------------------- ---------------------------------
Xxxxx Xxxxx Xxxxxx Xxxxx
/s/ Xxxxxx Xxxxx /s/ Xxxxx Xxxxx
----------------------------- ---------------------------------
Xxxxxx Xxxxx Xxxxx Xxxxx
/s/ Xxxx XxXxxxxxx /s/ Xxxxx Xxxxxx
----------------------------- ---------------------------------
Xxxx XxXxxxxxx Xxxxx Xxxxxx
EXHIBIT A
1. Distribution of 25,000,000 shares of DNAPrint stock to Trace Genetics
Shareholders.
---------------------------------------------------------
Trace Genetics Shareholder DNAPrint Stock to
receive
---------------------------------------------------------
Xxxxxx Xxxxx 14,044,903
---------------------------------------------------------
Xxxxxx Xxxxx 5,617,958
---------------------------------------------------------
Xxxxxxxx Xxxxxx 1,685,389
---------------------------------------------------------
Xxxxx and Xxxxxx Xxxxx 1,404,553
---------------------------------------------------------
Xxxxxxxx X. Xxxxx 561,791
---------------------------------------------------------
Xxxxxx and Xxxxx Xxxxx 561,791
---------------------------------------------------------
Xxxxx Xxxxxxxx 280,904
---------------------------------------------------------
Xxxx Xxxxxxxx 280,904
---------------------------------------------------------
Xxxx XxXxxxxxx 280,904
---------------------------------------------------------
Xxxxx Xxxxxx 280,904
---------------------------------------------------------
2. The warrant for 5,000,000 shares of DNAPrint stock at $0.02/share will be
divided as follows:
---------------------------------------------------------
Trace Genetics Shareholder DNAPrint Options to
receive
---------------------------------------------------------
Xxxxx Xxxxx 2,917,270
---------------------------------------------------------
Xxxxx Xxxxxxxx 1,088,534
---------------------------------------------------------
Anand Chopra 348,331
---------------------------------------------------------
Xxxxxx Xxxxx 362,844
---------------------------------------------------------
Xxxxxx Xxxxx 145,138
---------------------------------------------------------
Xxxxxxxx Xxxxxx 43,541
---------------------------------------------------------
Xxxxx and Xxxxxx Xxxxx 36,286
---------------------------------------------------------
Xxxxxxxx X. Xxxxx 14,514
---------------------------------------------------------
Xxxxxx and Xxxxx Xxxxx 14,514
---------------------------------------------------------
Xxxxx Xxxxxxxx 7,257
---------------------------------------------------------
Xxxx Xxxxxxxx 7,257
---------------------------------------------------------
Xxxx XxXxxxxxx 7,257
---------------------------------------------------------
Xxxxx Xxxxxx 7,257
---------------------------------------------------------
EXHIBIT B
Opinion Letter (delivered at closing)
