STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of October 25, 2005, is entered
into by and between the undersigned stockholders of Kenna Technologies, Inc., a
Delaware 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 Kenna
Technologies, Inc., a Delaware 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, severally and not
jointly, 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 1,500,000 shares of the Buyer's
restricted common stock to the Shareholders in the amounts set forth on Exhibit
"A." All outstanding options of the Company shall be cancelled to the extent not
exercised prior to Closing. The Shareholders hereby irrevocably consent to the
foregoing and waive any additional rights they may have, including without
limitation under the Certificate of Designations of the Series A Preferred Stock
of the Company (including without limitation any liquidation preferences
contained therein) and the stockholders agreement of the Company (including
without limitation any rights of first refusal contained therein).
3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER REPRESENTATIVES. In order
to induce the Buyer to enter into this Agreement, Xxxxxxx Xxxxxxxx and Xxxx
Xxxxx Xxxxxx (the "Shareholder Representatives"), severally and not jointly
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 Delaware. 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 5,000,000 shares of common stock, of which 1,577,195 shares are
issued and outstanding and 1,000,000 shares of preferred stock, of which 549,465
Series A Preferred shares are issued and outstanding, provided that at or
immediately prior to Closing all of the Series A Preferred Shares and
convertible debt of Xxxxxxx and conversion rights of MedInnova are being
converted into 1,577,195 shares of common stock. 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.
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(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. Set forth on and attached hereto as
Schedule 3(e) are the following financial statements (collectively the "Company
Financial Statements") unaudited consolidated balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of December 31, 2002,
December 31, 2003, and December 31, 2004 and for the eight (8) months ended
August 31, 2005 (the "Most Recent Financial Statements") for the Company. 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, applied on a consistent basis throughout the
periods involved provided, however, that the Most Recent Financial Statements
are subject to normal year-end adjustments (which will not be material
individually or in the aggregate) and lack footnotes and other presentation
items. The Company has no liability or obligation that is not reflected or
reserved against on its balance sheet as of August 31, 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 or in connection with the proposed sale
contemplated hereby 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.
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(g) Real Property. Schedule 3(g) lists all real property owned or
leased by the Company.
(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) 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. The Company has 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.
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(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.
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(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 in all material respects
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 except for the extensions reflected on Schedule 3(n), 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.
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(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
August 31, 2005, the Company has conducted the operations of its business only
in the ordinary course, and has not (except as contemplated by this Agreement):
(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;
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(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) Subsidiaries. The Company has no wholly owned or partially owned
subsidiaries.
(u) 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.
(v) 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.
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(w) Accredited Investor. The Shareholders: (A) understand that any
securities issued by the Buyer hereunder will not be registered under the
Securities Act, or under any state securities laws, and are being offered and
sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (B) are acquiring any securities issued by the
Buyer solely for their own account for investment purposes, and not with a view
to the distribution thereof, (C) are sophisticated investors with knowledge and
experience in business and financial matters, (D) have received certain
information concerning the Buyer and have had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding any securities issued by the Buyer, (E) are able to bear the
economic risk and lack of liquidity inherent in holding any securities issued by
the Buyer, and (F) are accredited investors as defined under the rules
promulgated under the Securities Act and applicable state law.
3A. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. In order to induce the
Buyer to enter into this Agreement, the Shareholders severally and not jointly
represent and warrant to the Buyer as follows:
(a) 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.
(b) Accredited Investor. The Shareholders: (A) understand that any
securities issued by the Buyer hereunder will not be registered under the
Securities Act, or under any state securities laws, and are being offered and
sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (B) are acquiring any securities issued by the
Buyer solely for their own account for investment purposes, and not with a view
to the distribution thereof, (C) are sophisticated investors with knowledge and
experience in business and financial matters, (D) have received certain
information concerning the Buyer and have had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding any securities issued by the Buyer, (E) are able to bear the
economic risk and lack of liquidity inherent in holding any securities issued by
the Buyer, and (F) are accredited investors as defined under the rules
promulgated under the Securities Act and applicable state law.
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:
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(a) Existence and Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Utah. The Buyer has all requisite power and authority to own, operate and/or
license and lease its assets and to conduct its business as presently conducted.
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 in Buyer's SEC Reports (as
defined in Section 4(h), herein), there are no material 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.
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(f) Shares. All shares of the Buyer's restricted common stock that
are issued to Shareholders pursuant to Section 2, herein, will be duly
authorized, validly issued, fully paid, nonassessable and free of all preemptive
rights. The Company's common stock is eligible for quotation on the NASD OTCBB.
Subject to the accuracy of the representation made by the Shareholders in
Section 3(w), all of the Buyer's shares issued to the Shareholders were issued
in compliance with applicable federal and state securities laws.
(g) Accredited Investor. The Buyer: (A) understand that any
securities purchased by the Buyer hereunder will not be registered under the
Securities Act, or under any state securities laws, and are being offered and
sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (B) is acquiring any securities purchased by the
Buyer solely for its own account for investment purposes, and not with a view to
the distribution thereof, (C) is a sophisticated investor with knowledge and
experience in business and financial matters, (D) has received certain
information concerning the Company and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding any securities purchased by the Buyer, (E) is able to bear
the economic risk and lack of liquidity inherent in holding any securities
purchased by the Buyer, and (F) is an Accredited Investor as defined under the
Securities Act and applicable state law.
(h) The Buyer has filed all reports required to be filed by it under
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including without limitation pursuant to Section 13(a) or 15(d)
thereof, for the three years preceding the date hereof (or such shorter period
as the Buyer was required by law to file such material) (the foregoing
materials, including the exhibits thereto and incorporated by reference therein,
being collectively referred to herein as the "SEC Reports" and, together with
the Disclosure Schedules to this Agreement, the "Disclosure Materials") on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed or deemed filed through incorporation by reference,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Buyer included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved ("GAAP"), except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Buyer and its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal year-end audit adjustments.
11
(i) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, and except as otherwise disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that has
had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Buyer has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Buyer's financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Buyer has not altered
its method of accounting, (iv) the Buyer has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock; (v) the Buyer has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Buyer stock option plans; and
(vi) the Buyer has not had any disagreement with its independent auditors that
would require public disclosure.
(j) Reorganization. The transactions contemplated hereby are
intended to be a reorganization within the meaning of Section 368(a)(i)(B) of
the Internal Revenue Code of 1986.
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 Shareholder
Representatives 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 any 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 $5,000;
(v) Use their best efforts to preserve the Company's
organization intact and maintain its relationships with its
employees, suppliers and customers;
12
(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 $1,000;
(b) Access and Information. Upon reasonable advance notice, the
Shareholder Representatives 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, subject to execution of appropriate confidentiality documents. The
Shareholder Representatives 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 Shareholder Representatives 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 earlier of (i) the Closing, or
(ii) the termination of the Agreement, the Shareholders Representatives shall
not, and the Shareholders Representatives 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 Shareholder Representatives 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.
13
(d) 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.
(e) 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 Shareholder Representatives 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 Shareholder Representatives 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 Shareholder Representatives 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 Shareholder Representatives 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 and the Shareholder Representatives contained
in this Agreement shall be true and correct on the Closing Date, and the
Shareholders and the Shareholder Representatives 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.
14
(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. Notwithstanding the foregoing, the Buyer understands
that the Company is currently insolvent and such insolvency shall not constitute
a Material Adverse Effect for any purpose of this Agreement.
(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 Shareholder Representatives, 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 Shareholder Representatives 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) 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.
(h) Employment Agreements. The Buyer shall have entered into
employment agreements in form and substance reasonably satisfactory to the
Buyer, with the Key Employees reflected on Schedule 6(h).
15
(i) Approvals. The Buyer shall have received all required government
approvals and certifications for operation of the Company's business.
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 Shareholder Representatives 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 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.
(e) Other Documents. The Shareholder Representatives shall have
received such other agreements, documents, and instruments as the Shareholder
Representatives may have reasonably requested to effect and evidence the
consummation of the transactions contemplated by the Agreement.
(f) Stock Certificates. The Shareholders shall have received stock
certificates for the shares of Buyer's common stock to be delivered hereunder in
the name of each Shareholder and in the amounts for each such Shareholder as set
forth on Exhibit A.
16
8. INDEMNIFICATION.
(a) General.
(i) Subject to the limitations contained herein, the
Shareholders shall, severally and not jointly, only with respect to
paragraph (i)(B) below, and the Shareholder Representatives shall,
severally and not jointly with respect to all the paragraphs below,
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 or the
Shareholder Representatives contained in this Agreement or any
certificate delivered pursuant hereto;
(B) resulting from any failure of such Shareholder to
have good and valid title to the Shares, free and clear of all
liens, claims, pledges, options, adverse claims or charges of
any nature whatsoever other than those imposed by applicable
securities laws; 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;
provided that all the foregoing obligations under this Section
8(a)(i) shall be subject to the limitations set forth in the
last sentence of Section 8(b).
(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"), 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; provided that all of the foregoing obligations under this
Section 8(a)(ii) shall be subject to the limitations set forth in
the last sentence of Section 8(b).
17
(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 Buyer Indemnified Party shall not be entitled to recover any sums
in excess of the consideration paid to the Shareholders for the Shares and that
any such recovery shall be limited to the Shares themselves without recourse to
monetary damages.
(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) Right of Set-Off. With respect to any claims by the Buyer for
indemnification under this Section 8, the Buyer shall be entitled to a right of
offset against the shares delivered to such Shareholder as contemplated by and
limited in the last proviso of Section 8(a)(i). Such right of offset shall be
exercised by written notice to the party or parties against which the right of
offset is taken, which notice shall be given in accordance with the requirements
of Section 11(c) of this Agreement and shall indicate the total amount of such
offset.
18
(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. RESTRICTIVE COVENANTS.
(a) Noncompetition. For a period of three years after the Closing,
the Shareholder Representatives shall not, directly or indirectly, in the United
States of America, enter into, engage in, be employed by or consult with any
business in connection with the manufacture or sale of any product or service in
competition with Buyer and its subsidiaries and affiliates. The prohibition of
this Section 9 shall apply to all activities of the Shareholder Representatives,
whether as individuals or a corporation acting on their behalf, or as
independent contractors, partners or joint venturers, consultants or as
officers, directors, stockholders, agents, employees or as a salesman for any
person, firm, partnership, corporation or other entity. The foregoing
restrictions shall not apply to the ownership of no more than two percent of the
outstanding securities of any company whose stock is traded on a national
securities exchange or is quoted in the Automated Quotation System of the
National Association of Securities Dealers (NASDAQ).
(b) Nonsolicitation. For a period of three years from and after the
Closing, the Shareholder Representatives each agree that they will refrain from
soliciting and will not, either directly or indirectly, as independent
contractors, employees, consultants, agents, partners or joint venturers, or as
an officer, director, stockholder, agent or employee of any firm, person,
partnership or corporation, or otherwise, solicit the employees of Buyer or its
affiliates (as defined in the regulations promulgated by the Securities and
Exchange Commission under the Securities Act of 1933) to leave the service of
their employer.
19
(c) Extension. The period of time during which a Shareholder
Representative is prohibited from engaging in the business practices specified
in Sections 9(a) and 9(b) of this Agreement shall be extended by any length of
time during which the Shareholder Representative is in breach of said Sections
9(a) or 9(b).
(d) Enforcement.
(i) It is agreed and understood by and among the parties to
this Agreement that the restrictive covenants set forth in Sections
9(a) and 9(b) of this Agreement are each individually essential
elements of this Agreement and that, but for the agreement of the
Shareholder Representatives each to comply with such covenants, the
Buyer would not have agreed to enter into this Agreement. Such
covenants of the Shareholder Representatives shall be construed as
agreements independent of any other provision of this Agreement.
(ii) It is agreed by the parties to this Agreement that if any
portion of the restrictive covenants set forth in Sections 9(a) and
9(b) of this Agreement is held to be unreasonable, arbitrary or
against public policy, then each such covenant shall be considered
divisible both as to time and geographical area, with each month of
a specified period being deemed a separate period of time and each
county within each state being deemed a separate geographical area,
it being the intention of the parties that a lesser period of time
or geographical area shall be enforced so long as the same is not
unreasonable, arbitrary or against public policy. The parties to
this Agreement agree that, in the event any court of competent
jurisdiction determines that a specified time period or a specified
geographical area is unreasonable, arbitrary or against public
policy, a lesser time period or geographical area which is
determined to be reasonable, nonarbitrary and not against public
policy may be enforced against the Shareholder Representatives.
(iii) The parties hereto agree that damages at law will be an
insufficient remedy to Buyer in the event that the restrictive
covenants of Sections 9(a) and 9(b) of this Agreement are violated
and that, in addition to any remedies or rights that may be
available to Buyer, Buyer shall also be entitled, upon application
to a court of competent jurisdiction, to obtain injunctive relief to
enforce the provisions of this Section 9.
10. TERMINATION.
(a) Termination. This Agreement may be terminated at any time prior
to the Closing:
(i) By the mutual written consent of the parties;
20
(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
(v) by either party if the transactions contemplated hereby
have not been consummated on or before September 30, 2005 through no
fault of the terminating party.
(b) Effect on Obligations. Termination of this Agreement pursuant to
this Section 10 shall terminate all obligations of the parties hereunder, except
for the obligations under Sections 11(b) (with respect to publicity), and 5(f)
(with respect to confidentiality); provided, however, that termination pursuant
to subparagraphs (ii) or (iii) of Section 10(a) hereof shall not relieve the
defaulting or breaching party from any liability to the other party hereto.
11. MISCELLANEOUS.
(a) Expenses. Each of the parties to this Agreement shall pay its
own expenses in connection with this Agreement and the transaction contemplated
hereby; provided, however, the Company shall, at Closing, pay in cash the legal,
accounting and other closing/transactional fees and costs of the Company
(including without limitation the fees and expenses of Xxxxxxxx Xxxxx & Deutsch
LLP, counsel to the Company) up to $18,000, and the Buyer hereby guarantees and
agrees to cause the Company to make the foregoing payment.
(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.
21
(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:
------------------ -------
Xxxxxxx Xxxxxxxx Xxxxxxxx Xxxxx & Deutsch LLP
0000 Xxxxx Xxxx, #000 000 Xxxxx Xxxxxx, 00xx xxxxx
Xxxx Xxxxxxx XX 00000 Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Esq.
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 and construed
exclusively by the laws of the State of Florida, which law shall govern the
interpretation, validity and effect of this Agreement.
(e) Choice of Forum. Exclusive jurisdiction and venue shall lie with
the courts of competent jurisdiction in Sarasota County, Florida.
(f) Attorneys' Fees. In the event of any dispute arising out of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees
and costs from the non-prevailing party. Such fees and costs shall be payable up
to and including final appeal.
22
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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.
(l) 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.
(m) 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.
(n) Commercially Reasonable Efforts. Each party agrees to use
commercially reasonable efforts to satisfy the conditions to the Closing set
forth in this Agreement and otherwise to consummate the transactions
contemplated by this Agreement.
23
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/Xxxxxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxxxx
------------------------------------ -----------------------------
Xxxxxxx Xxxxxxxx Xxxxxxx Xxxxxxx, President
/s/Xxxxx Xxxxxx /s/Xxxxxx Xxxx
------------------------------------ -----------------------------
Xxxxx Xxxxxx Xxxxxx Xxxx
/s/Xxxxx Xxxxxxx /s/Xxxxx Xxxxxxx
------------------------------------ -----------------------------
Xxxxx Xxxxxxx Xxxxx Xxxxxxx
Founders' Group
/s/Xxxxxxx Xxxxxxx By: /s/Xxxxxxxxxxx XxXxxxxxx
------------------------------------ -----------------------------
Xxxxxxx Xxxxxxx Xxxxxxxxxxx XxXxxxxxx
/s/Xxxxx Xxxxxxxx /s/Xxxxx Xxxxxxx
------------------------------------ -----------------------------
Xxxxx Xxxxxxxx Xxxxx Xxxxxxx
/s/Xxxxx Xxxxxxx /s/Xxxxx XxXxxxxxx
------------------------------------ -----------------------------
Xxxxx Xxxxxxx Xxxxx XxXxxxxxx
/s/Xxxxxxx Xxxxxxx /s/Xxxxxxxxx X. Xxxxxx
------------------------------------ -----------------------------
Xxxxxxx Xxxxxxx Xxxxxxxxx X. Xxxxxx
/s/Xxxxx Xxxxxxx /s/Xxxxxxxxxxx X. XxXxxxxxx
------------------------------------ -----------------------------
Xxxxx Xxxxxxx Xxxxxxxxxxx X. XxXxxxxxx
/s/Xxxxx Xxxxxx /s/Xxxxx Xxxxxxxx
------------------------------------ -----------------------------
Xxxxx Xxxxxx Xxxxx Xxxxxxxx
24
Calco Partnership
By: /s/Xxxxxxx Xxxxxxxx /s/Xxxx XxXxxxxxx
------------------------------------ -----------------------------
Xxxxxxx Xxxxxxxx Xxxx XxXxxxxxx
/s/Xxxxxxxx Xxxxxx /s/Xxxxxx Xxxxx
------------------------------------ -----------------------------
Xxxxxxxx Xxxxxx Xxxxxx Xxxxx
/s/Xxxxxx X. Xxxxxx /s/Xxxxxx X. Xxxxxxx
------------------------------------ -----------------------------
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxxx
/s/Xxxxxx Xxxxx /s/Xxxxxx Xxxxxx, M.D.
------------------------------------ -----------------------------
Xxxxxx Xxxxx Xxxxxx Xxxxxx, M.D.
/s/Xxxxxx X. Xxxxx /s/Xxxxxxxx Xxxxxxxxx
------------------------------------ -----------------------------
Xxxxxx X. Xxxxx Xxxxxxxx Xxxxxxxxx
/s/Xxxxx Xxxx /s/Xxxxxxx X. Xxxxxxx
------------------------------------ -----------------------------
Xxxxx Xxxx Xxxxxxx X. Xxxxxxx
/s/Xxxxxx Xxxxx /s/Xxxxxx Xxxxx
------------------------------------ -----------------------------
Xxxxxx Xxxxx Xxxxxx Xxxxx
/s/Xxxxxxxxx Xxxxx /s/Xxxxx X. Xxx
------------------------------------ -----------------------------
Xxxxxxxxx Xxxxx Xxxxx X. Xxx
Xxxxxxx Limited Partnership MedInnova Partners, Inc.
By:/s/Xxxx X. Xxxxxxx By: /s/X.X. Xxxxxxxxx
------------------------------------ -----------------------------
Xxxx X. Xxxxxxx, General Partner X.X. Xxxxxxxxx, CEO
25
EXHIBIT A
-------------------------------------------------------------------------------------------------------------------
Shareholder Kenna Shares % Common DNAG Shares
Common Shareholders
Xxxxxxx Xxxxxxxx 462,500 29.324% 219,932
Xxxxx Xxxxxx 462,500 29.324% 219,932
Xxxxxx Xxxx 312,488 19.813% 148,597
Xxxxx Xxxxxxx 44,118 2.797% 20,979
Xxxxx Xxxxxxx 44,118 2.797% 20,979
Xxxxxxx Xxxxxxx 44,118 2.797% 20,979
Founders' Group 132,353 8.392% 62,938
Xxxxx Xxxxxxxx 37,500 2.378% 17,832
Xxxxx Xxxxxxx 15,000 0.951% 7,133
Xxxxx Xxxxxxx 7,500 0.476% 3,566
Xxxxxxx Xxxxxxx 7,500 0.476% 3,566
Xxxxx XxXxxxxxx 7,500 0.476% 3,566
Total Common Shares 1,577,195 750,000
Preferred Shareholders Kenna Shares % Preferred DNAG Shares
Xxxxxxx Xxxxxxx & Xxxxxxxxx X. Xxxxxx as JTTEN 4,417 0.804% 6,029
Xxxxx Xxxxxxx 4,417 0.804% 6,029
Xxxxxxxxxxx X. XxXxxxxxx 35,335 6.431% 48,231
Xxxxx Xxxxxx and Xxxxx Xxxxxxxx 35,335 6.431% 48,231
Calco (Xxxxxxx Xxxxxxxx) 35,335 6.431% 48,231
Xxxx XxXxxxxxx 8,834 1.608% 12,058
Xxxxxxxx Xxxxxx 8,834 1.608% 12,058
Xxxxxx Xxxxxx Xxxxx, PH.D. 4,417 0.804% 6,029
Xxxxx Xxxxxxx 17,668 3.215% 24,116
Xxxxxx X. Xxxxxx 35,335 6.431% 48,231
Xxxxxx X. Xxxxxxx 8,834 1.608% 12,058
Xxxxx X. XxXxxxxxx, MD & Xxxxxxx XxXxxxxxx 17,668 3.215% 24,116
Xxxxxx Xxxxx 35,335 6.431% 48,231
Xxxxxx Xxxxxx, MD 4,417 0.804% 6,029
Xxxxxx X. Xxxxx Xx LLC(1) 11,778 2.144% 16,077
Xxxxxxxx Xxxxxxxxx 11,778 2.144% 16,077
Xxxxx Xxxx 11,778 2.144% 16,077
Xxxxxxx X. Xxxxxxx 8,834 1.608% 12,058
Xxxxxx Xxxxx 35,335 6.431% 48,231
Xxxxxx and Xxxxxxxxx Xxxxx 8,834 1.608% 12,058
AK Investments(2) 35,335 6.431% 48,231
Xxxxx Xxxxxxx 8,834 1.608% 12,058
Converted Debt
Eastman Family Fund 45,936 8.360% 62,701
MedInnova 114,841 20.900% 156,754
549,465; provided
that the
foregoing are
being
automatically
converted into
1,577,195 common
shares
immediately prior
Total Preferred to Closing 100.000% 750,000
2,126,660 (pre
conversion of
Preferred shares
into 1,577,195
Total Issued Shares common shares 1,500,000
-------------------------------------------------------------------------------------------------------------------
26
(1)This partnership distributed March 2005 to:
Xxxxxx Xxxxx 11,778
Xxxxxxxx Xxxxxxxx 11,778
Xxxxx Xxxx 11,778
(2)Transferred to Xxx Xxx 12/04
27
SCHEDULE 3(c)
Capitalization
------------------------------------------------------------------
Kenna Capitalization Table 9.1.05
Common Shareholders Shares Percentage
Ownership
Xxxxxxx Xxxxxxxx 462,500 21.7%
Xxxxx Xxxxxx 462,500 21.7%
Xxxxxx Xxxx 312,488 14.7%
Co-Founders 132,354 6.2%
Founders' Group 132,353 6.2%
Xxxxx Xxxxxxxx 37,500 1.8%
Xxxxx Xxxxxxx 15,000 0.7%
Xxxxx Xxxxxxx 7,500 0.4%
Xxxxxxx Xxxxxxx 7,500 0.4%
Xxxxx XxXxxxxxx 7,500 0.4%
Preferred Shareholders 549,465 25.8%
Total 2,126,660
------------------------------------------------------------------
All shares of Kenna Technologies distributed under the Kenna Technologies Stock
Plan of 2000.
28
SCHEDULE 3(d)
Effect of Agreement
No Disclosures
29
SCHEDULE 3(e)
Financials
Financial Statements of the Kenna Technology as of 8/31/05
------------------------------------------------------------------
Balance Sheet Aug 31, 05
------------
ASSETS
Current Assets
Checking/Savings
1003 o Progress Operating (1/01) 1,216.57
------------
Total Checking/Savings 1,216.57
------------
Total Current Assets 1,216.57
Fixed Assets
1603 o Computer Equipment 18,710.69
1703 o A/D - Computer Equipment -18,710.69
------------
Total Fixed Assets 0.00
------------
TOTAL ASSETS 1,216.57
============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
2000 o Accounts Payable 650.00
------------
Total Accounts Payable 650.00
Other Current Liabilities
2201 o Notes Payable - Current 350,000.00
------------
Total Other Current Liabilities 350,000.00
------------
Total Current Liabilities 350,650.00
------------
Total Liabilities 350,650.00
Equity
3001 o Preferred Stock - Series A 1,187,606.90
3101 o Common Stock 17,207.61
3900 o Retained Earnings -1,708,260.18
Net Income 154,012.24
------------
Total Equity -349,433.43
------------
TOTAL LIABILITIES & EQUITY 1,216.57
============
------------------------------------------------------------------
30
------------------------------------------------------------------
P&L Statement Jan - Aug 05
-------------
Ordinary Income/Expense
Expense
6004 o Consultants - Bus Dev & Mktg -17,000.00
6501 o Salaries Exp - R&D -73,423.00
7001 o Salaries Exp - G&A -33,751.97
7300 o Accounting Fees -27,150.00
7320 o Legal Fees, Corp -4,249.02
7330 o Fees & Permits 553.00
7400 o Bank Service Fees 103.29
7425 o Internet/email Expense 219.30
7520 o Depre Exp - Computer Equip 626.16
8530 o Corp Tax Expense - Non-Income 60.00
-------------
Total Expense -154,012.24
-------------
Net Ordinary Income 154,012.24
-------------
Net Income 154,012.24
=============
------------------------------------------------------------------
31
2004 Financial Statements
------------------------------------------------------------------
Kenna Technologies Balance
Sheet Dec 31, 04
-------------
ASSETS
Current Assets
Checking/Savings
1003 o Progress Operating (1/01) 2,818.95
-------------
Total Checking/Savings 2,818.95
Accounts Receivable
1200 o Accounts Receivable 3,240.00
-------------
Total Accounts Receivable 3,240.00
-------------
Total Current Assets 6,058.95
Fixed Assets
1603 o Computer Equipment 18,710.69
1703 o A/D - Computer Equipment -18,084.53
-------------
Total Fixed Assets 626.16
-------------
TOTAL ASSETS 6,685.11
=============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
2000 o Accounts Payable 8,155.81
-------------
Total Accounts Payable 8,155.81
Other Current Liabilities
2201 o Notes Payable - Current 350,000.00
2301 o Accrued Expenses 151,974.97
-------------
Total Other Current Liabilities 501,974.97
-------------
Total Current Liabilities 510,130.78
-------------
Total Liabilities 510,130.78
Equity
3001 o Preferred Stock - Series A 1,187,606.90
3101 o Common Stock 17,207.61
3900 o Retained Earnings -1,708,778.55
Net Income 518.37
-------------
Total Equity -503,445.67
-------------
TOTAL LIABILITIES & EQUITY 6,685.11
=============
------------------------------------------------------------------
32
------------------------------------------------------------------
Kenna Technologies P&L Jan - Dec
04
---------
Ordinary Income/Expense
Income
4001 o Biofusion Model Contract Revenu 4,722.67
4010 o Grant Revenue 16,500.00
4015 o Consulting Income 28,820.00
5003 o Project Expense Reimbursement 429.25
---------
Total Income 50,471.92
Cost of Goods Sold
5002 o Project Expenses 1,600.00
---------
Total COGS 1,600.00
---------
Gross Profit 48,871.92
Expense
6004 o Consultants - Bus Dev & Mktg 4,000.00
6504 o Consulting Exp, Prod Devel 37,670.00
6505 o Bus Meals & Ent, Prod Devel 67.84
6506 o Travel & Ent-Oth, Prod Devel 935.45
7300 o Accounting Fees 650.00
7330 o Fees & Permits 468.00
7400 o Bank Service Fees 166.23
7425 o Internet/email Expense 979.64
7430 o Meetings & Conferences -750.00
7435 o Office Supplies Exp 238.98
7442 o Temporary Office Support 794.50
7445 o Travel & Ent, Oth-G&A 350.46
7450 o Travel, Meals & Entertainment 8.63
7455 o Telephone Expense 573.09
7460 o Postage & Freight, G&A 640.11
7520 o Depre Exp - Computer Equip 1,500.62
8530 o Corp Tax Expense - Non-Income 60.00
---------
Total Expense 48,353.55
---------
Net Ordinary Income 518.37
---------
Net Income 518.37
=========
------------------------------------------------------------------
33
2003 Financial Statements
------------------------------------------------------------------
Kenna Technologies Balance Sheet Dec 31, 03
-------------
ASSETS
Current Assets
Checking/Savings
1003 o Progress Operating (1/01) 2,175.45
------------
Total Checking/Savings 2,175.45
------------
Total Current Assets 2,175.45
Fixed Assets
1603 o Computer Equipment 18,710.69
1703 o A/D - Computer Equipment -16,583.91
------------
Total Fixed Assets 2,126.78
------------
TOTAL ASSETS 4,302.23
============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
2000 o Accounts Payable 4,749.20
------------
Total Accounts Payable 4,749.20
Other Current Liabilities
2201 o Notes Payable - Current 350,000.00
2301 o Accrued Expenses 153,517.07
------------
Total Other Current Liabilities 503,517.07
------------
Total Current Liabilities 508,266.27
------------
Total Liabilities 508,266.27
Equity
3001 o Preferred Stock - Series A 1,187,606.90
3101 o Common Stock 17,207.61
3900 o Retained Earnings -1,693,840.78
Net Income -14,937.77
------------
Total Equity -503,964.04
------------
TOTAL LIABILITIES & EQUITY 4,302.23
============
------------------------------------------------------------------
34
2002 Financial Statements
------------------------------------------------------------------
Kenna Technologies Balance Sheet Dec 31, '02
-------------
ASSETS
Current Assets
Checking/Savings
1003 o Progress Operating (1/01) 28,697.81
-------------
Total Checking/Savings 28,697.81
Accounts Receivable
1200 o Accounts Receivable 15,000.00
-------------
Total Accounts Receivable 15,000.00
Other Current Assets
1304 o Prepaid Expense - Other 757.20
1320 o Advances to Employees 1,117.65
-------------
Total Other Current Assets 1,874.85
-------------
Total Current Assets 45,572.66
Fixed Assets
1603 o Computer Equipment 18,710.69
1703 o A/D - Computer Equipment -12,876.43
-------------
Total Fixed Assets 5,834.26
-------------
TOTAL ASSETS 51,406.92
=============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
2000 o Accounts Payable 11,336.15
-------------
Total Accounts Payable 11,336.15
Other Current Liabilities
2201 o Notes Payable - Current 350,000.00
2301 o Accrued Expenses 171,203.74
2400 o Deferred Revenue 7,142.86
-------------
Total Other Current Liabilities 528,346.60
-------------
Total Current Liabilities 539,682.75
-------------
Total Liabilities 539,682.75
Equity
3001 o Preferred Stock - Series A 1,187,606.90
3101 o Common Stock 17,207.61
3900 o Retained Earnings -1,122,472.13
Net Income -570,618.21
-------------
Total Equity -488,275.83
-------------
TOTAL LIABILITIES & EQUITY 51,406.92
=============
------------------------------------------------------------------
35
2002 Financial Statements
------------------------------------------------------------------
Kenna Technologies P&L 12 Months Ended 12/31/02
------------------------------------
Variance
Actual $ %
Revenue
Deal Income 72,857 (177,143) -70.9%
Interest Income 231 (5,769) -96.2%
Total Revenue 73,088 (182,912) -71.5%
Cost of Sales 21,123 141,377 87.0%
Total Gross Profit 51,965 (41,535) -44.4%
GP % 71.1%
Expenses
Business Dev & Marketing 146,640 41,652 22.1%
Product Development 278,398 638,002 69.6%
General & Admin 197,546 114,387 36.7%
Total Expenses 622,584 794,041 56.1%
Operating Profit (Loss) (570,619) 752,506 56.9%
Taxes 0 0 0.0%
Net Income ($570,619) $ 752,506 56.9%
------------------------------------------------------------------
36
SCHEDULE 3(f)
Assets
Material Property
1 IBM ThinkPad Notebook R32 computer (X. Xxxxxxxx office) Serial # AK-V9ClW
purchased 2003
1 Dell Inspiron Notebook computer
Inspiron 4000 - DS/N TW-0791UH-12800-131-1552
OfficeJet G85 - S/N SGE07E1F86
See also, Schedule 3(j)
37
SCHEDULE 3(g)
Real Property
1. Real Property owned: None
2. Real Property leased: None
38
SCHEDULE 3(h)
Contracts and Leases
See Schedule 3(j)
39
SCHEDULE 3(i)
Receivables
None
40
SCHEDULE 3(j)
Intellectual Property
Patents:
US Patent #5,808,918 issued September 15, 1998
Inventor(s): Xxxx, P et al Assignee: Interleukin Genetics, Inc.
Hierarchical Biological Modeling System and Method as restricted to three of
five original claims upon re-examination at the USPTO in 2001.
US Patent # 6,108,635 issued August 22, 2000 Integrated disease information
system.
Inventor(s): Xxxxxx, XX et al Assignee: Interleukin Genetics, Inc.
Trademarks, Tradenames:
KNOWLEDGEFUSION(R) Serial Number 78/035045 registered June 10, 2003 to Kenna
Technologies.
BIOFUSION(R) Serial Number 74677459 registered November 5, 1996. Registered to
Interleukin Genetics and permission to use granted under ILGN/Kenna Technologies
License Agreement of August 18, 2000.
Computer Models
1. BoneFusion(TM) a computational simulation of bone remodeling.
2. CellCycleFusion, a computational simulation of the biochemical
controls and pathways cell proliferation, homeostasis and programmed
cell death; the cell cycle.
3. Tox/Redox, a computational simulation model of the biochemical
pathways in the liver controlling the production of energy and
metabolism of some toxic chemicals.
4. Macrophage model, a a computational simulation model of the immune
cell type.
5. Osteoporosis DPE: a statistical and graphic model of individual
disease progression tailored to specific patient factors.
6. Periodontal DPE: a statistical and graphic model of individual
disease progression tailored to specific patient factors.
41
SCHEDULE 3(k)
Company Software
Windows Office XP: Product Key: HjWy2-64PCT-WT86H-9GQ3R-DPH3Y
Extend V5.0 Licenses:
5714308 - 7639
5714308 -8003
5714308 -8409
MindManager
MS4M-MM1-ES12-DD6M-34BA
42
SCHEDULE 3(l)
Litigation
None
43
SCHEDULE 3(m)
Compliance with Laws
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.
Permits and Licenses
General Assignment and Xxxx of Sale with Interleukin Genetics, Inc. Dated August
18, 2000
This license provides Kenna Technologies with a license to practice the art
covered by the following patents and trademarks (see also schedule 3j):
US Patent #5,808,918 issued September 15, 1998
Inventor(s): Xxxx, P et al Assignee: Interleukin Genetics, Inc.
Hierarchical Biological Modeling System and Method as restricted to three of
five original claims upon re-examination at the USPTO in 2001.
US Patent # 6,108,635 issued August 22, 2000 Integrated disease information
system.
Inventor(s): Xxxxxx, XX et al Assignee: Interleukin Genetics, Inc.
BIOFUSION(R) Serial Number 74677459 registered November 5, 1996. Registered to
Interleukin Genetics and permission to use granted under ILGN/Kenna Technologies
License Agreement of August 18, 2000.
The Agreement also acknowledges the sale to Kenna of specific computational
model assets which were developed at Interleukin Genetics by Xxxxx Xxxxxx and
Xxxxxx Xxxx:
The BioFusion models and all components thereof for Osteoporosis, Periodontal
Disease (Bridge), Otitis Media as well as component parts which are not part of
a working model: components of a Macrophage Cellular Model, a Toxicology and
Coronary Artery Disease models.
44
SCHEDULE 3(o)
Insurance
Kenna Technologies currently has no insurance policies.
45
SCHEDULE 3(p)
Employment Matters
There are no contracts, litigation, obligations to employees, consultants, or
directors of Kenna Technologies.
Current Employees:
Xxxxxxx X. Xxxxxxxx, PhD., CEO; base salary $150,000; all past and current
compensation, including stock options, waived.
Xxxxx Xxxxxx, PhD., Chief Technology Officer; base salary $150,000, all past and
current compensation, including stock options, waived.
Current Directors:
Xxxxxxx Xxxxxxxx, Ph.D. President
Xxxxx Xxxxxx, Ph.D., Secretary
Xxxxx XxXxxxxxx, MD, Director
Xxxxx Xxxxxxx, MD., PhD, Director
46
SCHEDULE 3(q)
Employee Benefits
There are no employee benefit plans.
47
SCHEDULE 3(r)
Absence of Changes
No changes.
48
SCHEDULE 3(s)
Related Party Transactions
None
49
SCHEDULE 4(b)
Buyer Required Consents
None.
50
SCHEDULE 5(a)
Conduct of Business
No disclosures.
51
SCHEDULE 6(h)
Key Employees
Xxxxxxx X. Xxxxxxxx, Ph.X.
Xxxxx X. Xxxxxx, Ph.D.
52
