SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
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Date of Report: February 14, 2000
GENETIC VECTORS, INC.
(Exact Name of Registrant as Specified in Charter)
FLORIDA 0-21739 65-0324710
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5201 N.W. 77TH AVENUE, SUITE 100, MIAMI, FLORIDA 33166
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (305) 716-0000
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 15, 2000, Genetic Vectors, Inc., a Florida corporation
("Genetic Vectors"), completed its acquisition of all of the outstanding shares
of capital stock of DNA Sciences, Inc., a California corporation ("DNA
Sciences"), from the shareholders of DNA Sciences for 450,000 shares of common
stock, par value $0.001 per share, of Genetic Vectors. The amount of
consideration to be paid for the shares of DNA Sciences was determined in
arms-length negotiations between Genetic Vectors and the shareholders of DNA
Sciences. As a result of the acquisition, DNA Sciences is a wholly-owned
subsidiary of Genetic Vectors.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) & (b) Genetic Vectors intends to provide the financial information
required by this Item 7 in connection with the acquisition of DNA Sciences by
filing an amendment to this Form 8-K. Such amendment will be filed within sixty
days from the date this Report was required to be filed with the Securities and
Exchange Commission.
(c) Attached as Exhibit 2.1 to this Report is the Stock Purchase Agreement
among Genetic Vectors, DNA Sciences and the shareholders of DNA Sciences, dated
January 15, 2000.
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EXHIBIT INDEX
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EXHIBIT
NO. DESCRIPTION
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2.1 Stock Purchase Agreement among Genetic Vectors, DNA
Sciences and the shareholders of DNA Sciences, dated
January 15, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENETIC VECTORS, INC.
Date: February 14, 2000 By: /s/ Mead M. McCabe, Jr.
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Name: Mead M. McCabe, Jr.
Its: President
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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into
as of January 15, 2000, by and among GENETIC VECTORS, INC., a Florida
corporation ("GVEC"), DNA SCIENCES, INC., a California corporation ("DNA
SCIENCES"), and the persons listed as "SHAREHOLDERS" on the signature pages
hereto (each a "SHAREHOLDER" and collectively the "SHAREHOLDERS").
RECITALS:
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A. The Shareholders own all of the outstanding common stock (the "DNA
SCIENCES COMMON STOCK") of DNA Sciences, which constitutes all of the issued and
outstanding capital stock of DNA Sciences.
B. The Shareholders desire to exchange all the outstanding shares (the
"DNA SCIENCES SHARES") of DNA Sciences Common Stock for newly-issued shares of
common stock of GVEC (the "GVEC COMMON STOCK"), on the terms and conditions set
forth herein. This transaction is intended to be tax-free under the Internal
Revenue Code of 1986, as amended (the "CODE").
AGREEMENT:
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NOW, THEREFORE, in consideration of the mutual agreements, covenants and
premises set forth herein for certain other good and valuable consideration, the
receipt and adequacy which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. STOCK PURCHASE, PURCHASE PRICE AND RELATED TRANSACTIONS.
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1.1. PURCHASE PRICE AND SALE. GVEC shall acquire and the Shareholders
shall sell to GVEC one-hundred percent (100%) of the capital stock of DNA
Sciences in exchange for the issuance of the number of shares of GVEC Common
Stock as set forth in Section 2 hereof.
1.2. PURCHASE PRICE. In consideration of the purchase by GVEC of the
DNA Sciences Common Stock, GVEC shall issue newly issued shares of GVEC Common
Stock to the Shareholders in the denominations set forth opposite each
Shareholder's name on Schedule A attached hereto in exchange for all of the DNA
Sciences Shares. The total number of shares of GVEC Common Stock issued to all
the Shareholders shall be four-hundred-fifty-thousand (450,000) shares (the
"PURCHASE PRICE").
1.3. CLOSING AND EFFECTIVE DATE. The closing shall occur as soon as
practicable after the satisfaction of the conditions precedent set forth in
Sections 6, 7 and 8 hereof, but in no event later than January 31, 2000 (the
"CLOSING"). The date of Closing is referred to herein as the "CLOSING DATE." The
Closing shall take place at the principal offices of GVEC's counsel, or at such
other place as may be mutually agreed upon by GVEC and the Shareholders. At the
Closing, (i) the Shareholders shall deliver to GVEC all original stock
certificates representing DNA Sciences Common Stock, together with stock powers
duly executed in blank; and (ii) GVEC shall issue and deliver the Purchase Price
to the Shareholders.
1.4. FRACTIONAL SHARES; LOST CERTIFICATES. Neither certificates nor
scrip for fractional shares of GVEC Common Stock shall be issued. Any fractional
interest in GVEC Common Stock to be issued pursuant this Agreement shall be
rounded up or down to the nearest whole share. GVEC shall deliver the pro-rata
portion of the Purchase Price attributable to any certificate which has been
lost or destroyed upon receipt of evidence satisfactory to GVEC and its counsel
of ownership of the shares of DNA Sciences Common Stock represented thereby and
of appropriate indemnification to GVEC.
2. ADDITIONAL AGREEMENTS.
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2.1. ACCESS AND INSPECTION. Each party hereto has allowed the other
parties (as applicable) and their authorized representatives full access to all
of the properties, books, contracts, commitments and records of the other party
for the purpose of making such investigations as each party has reasonably
requested in connection with the transactions contemplated hereby.
2.2. CONFIDENTIAL TREATMENT OF INFORMATION. From and after the date
hereof, the parties hereto shall and shall cause their representatives to hold
in confidence this Agreement (including the Schedules hereto), all matters
relating hereto and all data and information obtained with respect to the other
parties or their business, except such data or information as is published or is
a matter of public record, or as compelled by legal process. In the event this
Agreement is terminated pursuant to Section 10 hereof, each party shall promptly
return to the other(s) any statements, documents, schedules, exhibits or other
written information obtained from them in connection with this Agreement, and
shall not retain any copies thereof.
2.3. NONCOMPETITION.
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2.3.1. COMPETITIVE BUSINESS. From and after the Closing Date and
for a period of four (4) years thereafter (the "RESTRICTED PERIOD"), no
Shareholder (with the exception of Daniel Cook, who is not bound by this section
) shall directly or indirectly compete with GVEC by owning, managing,
controlling or participating in the ownership, management or control of or be
employed by or engaged in any Competitive Business (as defined herein) in any
location in the United States in which GVEC is doing business. As used herein, a
"COMPETITIVE BUSINESS" is any other corporation, partnership, proprietorship,
firm or other business entity which is engaged in a "core business of GVEC". A
"core business of GVEC" is the development, manufacture, distribution or sale of
a particular type of product, reagent or kit involved in the detection or
preparation of nucleic acids in which GVEC or DNA Sciences has invested or
expended more than Two Hundred Thousand Dollars ($200,000) in the eighteen (18)
months prior to the
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"Measurement Date" (as defined herein). The MEASUREMENT DATE shall be the point
in time during the Restricted Period that a Shareholder becomes associated with
a Competitive Business whether such association is by employment, engagement or
by directly or indirectly owning, managing, controlling or participating in the
ownership, management or control of a Competitive Business. In the event of any
period of investment or expenditure which commenced less than eighteen (18)
months from the Measurement Date the amount invested or expended shall be
annualized for such eighteen (18) month period.
Notwithstanding the above, any Shareholder may become employed by or engaged by
a "Competitive Business" so long as the Shareholder (a) was not directly
involved with or participating in the areas of "core business of GVEC" which
makes the other business a "Competitive Business", or (b) if the Shareholder is
not involved, directly, in that part of the Competitive Business which is
competitive with the "core business of GVEC." In addition, a Shareholder may be
employed by or engaged by any business which after the Closing Date becomes a
"Competitive Business," if the employment or engagement occurred prior to GVEC
entering into a new "core business of GVEC" (whether by acquisition or through
GVEC's own initiative), which caused such other business to become a Competitive
Business. Also, this section is not violated if a Shareholder owns no more than
5% of the stock of any publicly traded Competitive Business. Finally, Richard
Tullis is currently employed by Aethlon Medical, Inc., a publicly held company,
which the Corporation acknowledges is not a Competitive Business.
2.3.2. NON-INTERFERENCE. From and after the date hereof and
during the Restricted Period, no Shareholder shall induce or solicit any
employee of GVEC or any person doing business with GVEC to terminate his or her
employment or business relationship with GVEC or otherwise interfere with any
such relationship.
2.3.3. CONFIDENTIALITY. The Shareholders agree and acknowledge
that, by reason of the nature of the Shareholders' ownership interest in GVEC,
each Shareholder will have or may have access to and become informed of
confidential and secret information which is a competitive asset of GVEC
("CONFIDENTIAL INFORMATION"), including without limitation, technology, any
lists of customers, financial statistics, research data or any other statistics
and plans contained in profit plans, capital plans, critical issue plans,
strategic plans or marketing or operation plans or other trade secrets of GVEC
and any of the foregoing which belong to any person or company but to which the
Shareholders have had access by reason of their relationship with GVEC. The
Shareholders agree faithfully to keep in strict confidence, and not, either
directly or indirectly, to make known, divulge, reveal, furnish, make available
or use any such Confidential Information. The Shareholders acknowledge that all
manuals, instruction books, price lists, information and records and other
information and aids relating to GVEC's business, and any and all other
documents containing Confidential Information furnished to the Shareholders by
GVEC or otherwise acquired or developed by the Shareholders, shall at all times
be the property of GVEC. Upon the termination of this Agreement, each
Shareholder shall return to GVEC any such property or documents which are in
their possession, custody or control, but the Shareholders' obligation of
confidentiality shall survive such termination and unless any such Confidential
Information shall have become, through no fault of the Shareholder, generally
known to the trade. The obligations of the Shareholder under this subsection are
in addition to, and not in limitation or preemption of, all other obligations of
confidentiality which the Shareholder may have to GVEC under general legal or
equitable principles or under an Employment Agreement (as hereinafter defined).
Notwithstanding the above, however, GVEC acknowledges that each Shareholder has
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extensive experience in the genual industry in which GVEC operates, and these
restrictions are not intended to prevent a Shareholder from using his knowledge
of the industry. These restrictions only apply to technology which is owned by
GVEC, or was learned by a Shareholder as a shareholder of GVEC.
2.3.4. NO SOLICITATION OF COMPETING TRANSACTIONS. From and after
the date hereof until the later of the Closing Date or the termination of this
Agreement, the Shareholders will not, directly or indirectly, and will instruct
their respective representatives not to, directly or indirectly, solicit or
initiate (including by way of furnishing nonpublic information), or take any
other action knowingly to facilitate, any inquiries or the making of any
proposal or offer that constitutes: (a) a merger, consolidation, share exchange,
business combination or other similar transaction; (b) a sale, lease, exchange,
transfer or other disposition of any significant assets of DNA Sciences, other
than in the ordinary course of business or sales of obsolete materials; or (c)
an acquisition of any DNA Sciences capital stock (collectively, a "COMPETING
TRANSACTION"), or enter into or maintain or continue discussions or negotiate
with any person or entity in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of their representatives to take any such action. DNA
Sciences immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted with respect to a
Competing Transaction.
2.3.5. REMEDIES. It is expressly agreed by the Shareholders and
GVEC that the provisions in this Section 2 are reasonable for purposes of
preserving for GVEC its business, goodwill and Confidential Information. It is
also agreed that if any provision is found by a court having jurisdiction to be
unreasonable because of scope, area or time, then that provision shall be
amended to correspond in scope, area and time to that considered reasonable by a
court and as amended shall be enforced and the remaining provisions shall remain
effective. In the event any breach of these provisions by any Shareholder, the
parties recognize and acknowledge that a remedy at law will be inadequate and
GVEC may suffer irreparable injury. The Shareholders consent to injunctive and
other appropriate equitable relief without the posting of a bond upon the
institution of proceedings therefor by GVEC in order to protect GVEC's rights.
Such relief shall be in addition to any other relief to which GVEC may be
entitled at law, in equity, or under any other agreement between each
Shareholder and GVEC. The provisions of this Section 2.3 (including the
subsections) shall survive the termination of this Agreement.
2.4. PUBLIC ANNOUNCEMENTS. The parties will consult with each other
before issuing any press releases or otherwise making any public statement with
respect to this Agreement or any of the transactions contemplated hereby and no
party will issue any such press release or make any such public statement
without the prior written consent of the other parties, except as may be
required by law or by the rules and regulations of any governmental authority or
securities exchange.
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2.5. SECURITIES LAW MATTERS.
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2.5.1. PRIVATE PLACEMENT. The issuance of the GVEC Shares to the
Shareholders hereunder shall not be registered under the Securities Act of 1933,
as amended, (the "SECURITIES ACT") by reason of the exemption provided by
Section 4(2) thereof, and such shares may not be further transferred unless such
transfer is registered under applicable securities laws or, in the opinion of
GVEC's counsel, such transfer complies with an exemption from such registration.
All certificates evidencing the GVEC Shares to be issued to Shareholders shall
be legended to reflect the foregoing restriction.
2.6. FURTHER ASSURANCES. The parties shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Agreement, including
without limitation, all necessary stock powers and such other instruments of
transfer as may be necessary or desirable to transfer ownership of the DNA
Sciences Common Stock to GVEC and to consummate the transactions contemplated by
this Agreement.
2.7. EMPLOYMENT AGREEMENTS. At Closing, Eric Wilkinson and Jerome
Streifel shall execute and deliver an employment agreement (each, an "EMPLOYMENT
Agreement") with GVEC in the form attached hereto as EXHIBITS "C" AND "D".
Subsequent to the Closing, DNA Sciences and Richard H. Tullis shall use
reasonable efforts to negotiate a consulting agreement acceptable to both
parties.
2.8. PIGGY-BACK REGISTRATION. Subject to the approval of any
applicable underwriter, each Shareholder shall have piggy-back registration
rights, for up to twenty percent (20%) of the shares of GVEC he then owns, in
each subsequent registration of GVEC shares.
2.9. CONSISTENT TAX FILING POSITION. Each of the parties hereto shall
file all Federal income tax returns in a manner consistent with the intended
tax-free nature of this transaction.
3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE SHAREHOLDERS AND DNA
SCIENCES.
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To further induce GVEC to enter into this Agreement and to consummate the
transactions contemplated hereby, DNA Sciences and the Shareholders each hereby
jointly and severally represent and warrant to and covenant with GVEC as
follows:
3.1. ORGANIZATION AND QUALIFICATION: ABSENCE OF SUBSIDIARIES. DNA
Sciences is a corporation duly organized and validly existing and in good
standing under the laws of the State of California and has the requisite power
and authority to own, lease and operate its properties and to carry on its
business as it is currently being conducted. DNA Sciences is in good standing in
the State of California. DNA Sciences is duly qualified or licensed and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
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or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have a
material adverse effect on the business, properties, assets, financial
condition, prospects or future business of DNA Sciences (collectively, "DNA
SCIENCES MATERIAL ADVERSE EFFECT"). DNA Sciences does not have any Subsidiaries
nor an equity interest in any partnerships or joint venture arrangements or
other business entity.
3.2. CAPITALIZATION AND RELATED MATTERS.
3.2.1. SHARES; CAPITALIZATION. The authorized capital stock of
DNA Sciences consists solely of 3,000,000 shares of common stock, of which
1,000,000 shares are issued and outstanding and none are held in its treasury.
All of the DNA Sciences Shares are owned of record, legally and beneficially by
the Shareholders. The DNA Sciences Shares are free and clear of any and all
security interests, encumbrances, and rights of any kind or nature whatsoever
(collectively, "ENCUMBRANCES"), and upon delivery of the DNA Sciences Shares
hereunder, GVEC will acquire title thereto, free and clear of any and all
Encumbrances. Other than voting rights, redemption rights and such other rights
conferred by DNA Sciences' charter documents and by applicable California
statutes, there exist no Securities Rights (as defined herein) with respect to
the DNA Sciences Shares. All rights and powers to vote the DNA Sciences Shares
are held exclusively by the Shareholders. All of the DNA Sciences Shares are
validly issued, fully paid and nonassessable, were not issued in violation of
the terms of any agreement or other understanding, and were issued in compliance
with all applicable federal and state securities or "BLUE SKY" laws and
regulations. The certificates representing the DNA Sciences Shares to be
delivered to GVEC at the Closing are, and the signatures and endorsements
thereof or stock powers relating thereto will be, valid and genuine. For the
purposes of this section, "SECURITIES RIGHTS" means, with respect to the DNA
Sciences Shares (whether issued or unissued) or any other securities convertible
into or exchangeable for DNA Sciences Shares, and includes all written or
unwritten contractual rights relating to the issuance, sale, assignment,
transfer, purchase, redemption, conversion, exchange, registration or voting of
the DNA Sciences Shares and all rights conferred by DNA Science's governing
documents and by any applicable agreement.
3.2.2. LIABILITIES AND OBLIGATIONS. To the Shareholders'
knowledge, DNA Sciences has no debt, obligation or liability, absolute, fixed,
contingent or otherwise, of any nature whatsoever, whether due or to become due,
including any unasserted claim, whether incurred directly or by any predecessor
thereto, and whether arising out of any act, omission, transaction,
circumstance, sale of goods or services, state of facts or other condition,
which individually or in the aggregate would have a DNA Sciences Material
Adverse Effect except: (i) those reflected or reserved against on the DNA
Sciences' Financial Statements (as defined herein) in the amounts shown therein;
(ii) those that have arisen in the ordinary course of business of DNA Sciences
after the Balance Sheet Date (as defined herein) through the Closing Date, none
of which, individually or in the aggregate, has had or will have a DNA Sciences
Material Adverse Effect on the business or financial condition of DNA Sciences;
and (iii) those set forth in SCHEDULE 3.6.
3.3. CERTIFICATE OF INCORPORATION AND BY-LAWS. DNA Sciences has
heretofore made available to GVEC a complete and correct copy of the Certificate
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of Incorporation and the By-Laws of DNA Sciences. Such Certificate of
Incorporation and By-Laws are in full force and effect.
3.4. AUTHORITY RELATIVE TO THIS AGREEMENT. DNA Sciences and each
Shareholder has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated by this Agreement. Each Shareholder has full right
and capacity to enter into this Agreement and to carry out his obligations
hereunder. The execution and deliver of this Agreement by DNA Sciences and each
Shareholder, the performance by each such Shareholder of his obligations
hereunder and the consummation by DNA Sciences of the transactions contemplated
by this Agreement have been duly authorized by all necessary action on the part
of DNA Sciences or such Shareholders are necessary to authorize this Agreement
or to consummate the transactions contemplated by this Agreement. This Agreement
has been duly and validly executed and delivered by DNA Sciences and each
Shareholder and constitutes the legal, valid and binding obligations of DNA
Sciences and each Shareholder, enforceable against DNA Sciences and each
Shareholder in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or other similar laws
of general application affecting the enforcement of creditors' rights generally.
3.5. PERMITS AND LICENSES; COMPLIANCE. To the best knowledge of each
Shareholder and DNA Sciences, DNA Sciences is in possession of all permits and
licenses necessary for the conduct of its business and, as of the date hereof,
no suspension or cancellation of any such permits or licenses is pending or, to
the knowledge of each Shareholder and DNA Sciences after reasonable
investigation, threatened, except where the failure to possess, or the
suspension or cancellation of, any such permits or licenses would not,
individually or in the aggregate, have a DNA Sciences Material Adverse Effect.
To the best knowledge of each Shareholder and DNA Sciences, DNA Sciences is not
in conflict with, or in default or violation of, (a) any law applicable to DNA
Sciences or by which any property or asset of DNA Sciences is bound or (b) any
permit or license, other than conflicts or violations which, individually or in
the aggregate, would not have a DNA Sciences Material Adverse Effect.
3.6. FINANCIAL STATEMENTS. True and complete copies of (a) the
audited balance sheet of DNA Sciences for the fiscal period ended as of
September 30, 1999 (the "BALANCE SHEET DATE") and the related audited statements
of income, retained earnings and cash flow for the period from May 10, 1999
through September 30, 1999, with all related notes and schedules thereto,
accompanied by the reports thereon by DNA Sciences' Accountants (collectively
referred to herein as the "DNA SCIENCES' AUDITED FINANCIAL STATEMENTS") and (b)
the unaudited balance sheets of DNA Sciences for each of October and November,
1999 and the related statements of income of DNA Sciences (collectively referred
to herein as the "DNA SCIENCES INTERIM FINANCIAL STATEMENTS and together with
the DNA Sciences Audited Financial Statements are collectively referred to as
the "DNA SCIENCES FINANCIAL Statements") have been delivered by DNA Sciences
prior to Closing. The DNA Sciences Financial Statements (i) were prepared in
accordance with the books of account and other financial records of DNA
Sciences, (ii) present fairly the financial condition and results of operations
of DNA Sciences as of the dates thereof or for the periods covered thereby,
(iii) have been prepared in accordance with U.S. GAAP (except as may be
indicated in the notes thereto) applied on a basis consistent with the past
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practices of DNA Sciences and (iv) include all adjustments (consisting only of
normal recurring accruals) that are necessary for a fair presentation of the
financial condition of DNA Sciences and the results of the operations of DNA
Sciences as of the dates thereof or for the periods covered thereby (subject, in
the case of DNA Sciences Interim Financial Statement, to normal recurring
year-end adjustments).
3.7. ABSENCE OF LITIGATION. There is no legal or administrative
action or proceeding pending or, to the knowledge of DNA Sciences or the
individual Shareholders after reasonable investigation, threatened against DNA
Sciences or any property or asset of DNA Sciences.
3.8. EMPLOYEE BENEFIT MATTERS.
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3.8.1. BENEFIT PLANS. There are no employee benefit plans (as
defined in Section 3(3) of ERISA) and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements.
3.9. INTELLECTUAL PROPERTY.
3.9.1. All of the customer lists, products, product know-how and
technology used by DNA Sciences in the conduct of its business as set forth on
Schedule 3.9.1 (the "DNA SCIENCES INTELLECTUAL PROPERTY") will be transferred to
GVEC upon the completion of the transaction contemplated by this Agreement.
3.9.2. No claim has been asserted to the best knowledge of each
Shareholder and DNA Sciences that the use of DNA Sciences Intellectual Property
or the conduct of the business of DNA Sciences does or may infringe upon such
rights of any third party.
3.9.3. DNA Sciences is the owner of the entire, title and
interest in and to the Intellectual Property, free and clear of all
Encumbrances, and has the right to use, all DNA Sciences Intellectual Property
in the continued operations of DNA Sciences.
3.9.4. The DNA Sciences Intellectual Property has not been
adjudged invalid or unenforceable in whole or part by any governmental
authority.
3.9.5. To the knowledge of DNA Sciences and the individual
Shareholders after reasonable investigation, no person or entity is engaging in
any activity that infringes upon DNA Sciences Intellectual Property or upon the
rights of DNA Sciences therein. The consummation of the transactions
contemplated by this Agreement will not result in the termination or impairment
of any of DNA Sciences Intellectual Property.
3.9.6. DNA Sciences has not granted to, nor received from, any
third party any license or sublicense of intellectual property.
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3.10. TAXES. DNA Sciences has (a) filed all federal, state,
local and foreign tax (as defined herein) returns required to be filed by it
prior to the date of this Agreement (taking into account extensions), (b) paid
or accrued all Taxes shown to be due on such returns and paid all applicable AD
VALOREM and value added Taxes as are due, and(c) paid or accrued all Taxes for
which a notice of assessment or collection has been received (other than amounts
being contested in good faith by appropriate proceedings), except in the case of
clause (a), (b) or (c) for such filings, payments or accruals which would not,
individually or in the aggregate, have a DNA Sciences Material Adverse Effect.
DNA Sciences has open years for federal, state and local income Tax returns only
for 1999. DNA Sciences has not received from any governmental authority any
written notice of proposed adjustment, deficiency or underpayment of any Taxes,
which notice has not been satisfied by payment or been withdrawn, and there are
no material claims that have been asserted or threatened relating to such Taxes
against DNA Sciences. DNA Sciences has withheld or collected and paid over to
the appropriate governmental authorities (or is properly holding for such
payment) all Taxes required by law to be withheld or collected, except for
amounts which would not, individually or in the aggregate, have a DNA Sciences
Material Adverse Effect. DNA Sciences has not made an election under Section
341(f) of the Code. DNA Sciences has not been and is not subject to Taxes
imposed by (i) Section 1371 of the Code, (ii) Section 1375 of the Code, or (iii)
Section 1374 of the Code. For purposes of this Agreement, "TAX" or "TAXES" means
any and all taxes, fees, levies, duties, tariffs, imposts and other charges of
any kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any government or
taxing authority, including, without limitation: taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature or excise, withholding, AD VALOREM, stamp, transfer, value
added or gains taxes, license, registration and documentation fees, and custom
duties, tariffs and similar charges.
3.11. ASSETS.
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3.11.1. Except as disclosed in SCHEDULE 3.11.1, and excluding
any DNA Sciences Intellectual Property which is covered in Section 3.9 hereof,
DNA Sciences owns, leases or has the right to use all the properties and assets,
including, without limitation, the real property and personal property, used in
the conduct of its business or otherwise owned, leased, or used by DNA Sciences
and, with respect to contract rights, is a party to and enjoys the right to the
benefits of all contracts, agreements and other arrangements used or intended to
be used by DNA Sciences or in or relating to the conduct of its business (all
such properties, assets and contract rights being the "ASSETS"). DNA Sciences
has good and marketable title to, or, in the case of leased or subleased Assets,
valid and subsisting leasehold interests in, all the Assets, free and clear of
all Encumbrances.
3.11.2. The Assets constitute all the properties, assets and
rights forming a part of, used or held in, and all such properties, assets and
rights as are necessary in the conduct of, the business of DNA Sciences as it is
currently conducted. DNA Sciences has caused the Assets to be maintained in
accordance with good business practice, and all the Assets are in good operating
condition and repair, normal wear and tear excepted.
3.12. EXECUTION; NO INCONSISTENT AGREEMENTS; ETC. The execution and
delivery of this Agreement by the Shareholders and DNA Sciences does not, and
the consummation of the transactions contemplated hereby will not,
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constitute a breach or violation of the charter or by-laws of DNA Sciences, or a
default under any of the terms, conditions or provisions of (or an act or
omission that would give rise to any right of termination, cancellation or
acceleration under) any material note, bond, mortgage, lease, indenture,
agreement or obligation to which DNA Sciences or any Shareholder is a party,
pursuant to which DNA Sciences or any Shareholder otherwise receives benefits,
or to which any of the properties of DNA Sciences or any Shareholder is subject.
3.13. CORPORATE RECORDS. The statutory records, including the stock
register and minute books of DNA Sciences, fully reflect all issuances,
transfers and redemptions of their capital stock, correctly show and will
correctly show the total number of shares of its capital stock issued and
outstanding on the date hereof and on the Closing Date, the charter or other
organizational documents and all amendments thereto, and their by-laws as
amended and currently in force.
3.14. ABSENCE OF CHANGES. Except as described in SCHEDULE 3.14, from
the Balance Sheet Date to the date of this Agreement:
3.14.1. to the best knowledge of each Shareholder and DNA
Sciences, there has been no adverse change in the business, assets, liabilities,
results of operations or financial condition of DNA Sciences or its
relationships with suppliers, customers, employees, lessors or others, other
than changes in the ordinary course of business, none of which, singularly or in
the aggregate, have had or will have a DNA Sciences Material Adverse Effect; and
3.14.2. DNA Sciences has complied with the covenants and
restrictions set forth in Section 5 to the same extent as if this Agreement had
been executed on, and had been in effect since the Balance Sheet Date.
3.15. COMPLIANCE WITH LAW. The business and activities of DNA
Sciences have at all times been conducted in accordance with its articles of
incorporation and by-laws and, to the best knowledge of each Shareholder and DNA
Sciences, any applicable law, regulation, ordinance, order, license, permit,
rule, injunction or other restriction or ruling of any court or administrative
or governmental agency, ministry, or body, except where the failure to do so
would not result in a DNA Sciences Material Adverse Effect.
3.16. CONTINGENCIES. There are no actions, suits, claims or
proceedings pending, or, to the knowledge of DNA Sciences and each Shareholder
after reasonable investigation, threatened against, by or affecting DNA Sciences
in any court or before any arbitrator or governmental agency that may have a DNA
Sciences Material Adverse Effect or which could adversely affect the right or
ability of DNA Sciences to consummate the transactions contemplated hereby. To
the knowledge of each Shareholder after reasonable investigation, there is no
10
valid basis upon which any such action, suit, claim, or proceeding may be
commenced or asserted against DNA Sciences. There are no unsatisfied judgments
against DNA Sciences and no consent decrees or similar agreements to which DNA
Sciences is subject and which could have a DNA Sciences Material Adverse Effect.
3.17. MATERIAL CONTRACTS. There are no contracts of DNA Sciences
which involve consideration in excess of the equivalent of $10,000 or have a
term of one year or more (collectively, the "MATERIAL CONTRACTS").
3.18. INSURANCE. SCHEDULE 3.18 contains a complete list of all
policies of insurance presently maintained by DNA Sciences, all of which are,
and will be maintained through the Closing Date, in full force and effect, and
all premiums due thereon have been paid. DNA Sciences has received no notices of
cancellation with respect thereto. DNA Sciences has heretofore delivered to GVEC
or its representatives a true, correct and complete copy of each such insurance
policy.
3.19. EMPLOYMENT AND LABOR MATTERS. SCHEDULE 3.19 sets forth the
name, position, employment date, and current compensation (base and bonus) of
each employee of DNA Sciences. DNA Sciences is not a party to any collective
bargaining agreement or agreement of any kind with any union or labor
organization. There has not been any attempt by any union or other labor
organization to organize the employees of DNA Sciences at any time.
3.20. ENVIRONMENTAL MATTERS. DNA Sciences is not in violation, in any
material respect, of any Environmental Law (as defined herein); DNA Sciences has
received all permits and approvals with respect to emissions into the
environment and the proper collection, storage, transport, distribution or
disposal of Wastes (as defined herein) and other materials required for the
operation of its business at present operating levels; and DNA Sciences is not
liable or responsible for any clean up, fines, liability or expense arising
under any Environmental Law, as a result of the disposal of Wastes or other
materials in or on the property of DNA Sciences (whether owned or leased), or in
or on any other property, including property no longer owned, leased or used by
DNA Sciences. As used herein, (A) "ENVIRONMENTAL LAWS" means, collectively, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, as amended, the
Clean Air Act, as amended, the Clean Water Act, as amended, any other
"SUPERFUND" or "SUPERLIEN" law or any other federal, or applicable state or
local statute, law, ordinance, code, rule, regulation, order or decree (foreign
or domestic) regulating, relating to, or imposing liability or standards of
conduct concerning, Wastes, or the environment; and (b) "WASTES" means and
includes any hazardous, toxic or dangerous waste, liquid, substance or material
(including petroleum products and derivatives), the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law.
3.21. INVENTORIES. The amounts stated as inventories of DNA Sciences
on the DNA Sciences Financial Statements reflect fairly the products, materials
and supplies and spare parts held by them on each respective date for its use or
11
for sale to customers. The inventory shown on the DNA Sciences Financial
Statements (i) represents items of a quality and quantity usable and saleable in
the ordinary course of business, and (ii) conforms in all material respects to
customary trade standards for such inventory in DNA Science's current markets.
The quantity and quality of the inventory of DNA Sciences as of the Closing Date
shall be the same as that existing as of the Balance Sheet Date, except for
changes occurring in the ordinary course of business, none of which shall have a
DNA Sciences Material Adverse Effect. DNA Sciences has not given and shall not
give, prior to the Closing Date, any express written warranty with respect to
any goods or products sold.
3.22. RECEIVABLES. Except as set forth in SCHEDULE 3.22, all notes
receivable and accounts receivable shown on the DNA Sciences Financial
Statements and all such receivables now held by DNA Sciences were and are valid
and collectible obligations of the respective makers thereof and were not and
are not subject to any offset or counterclaim; except for a portion of such
receivables, not to exceed the amount, if any, shown as the allowance for bad
debt on the DNA Sciences Financial Statements, which may prove not to be
collectible.
3.23. AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except as set
forth in SCHEDULE 3.23, DNA Sciences is not, and since the date of the DNA
Sciences Balance Sheet has not been, a party to any contract, agreement, lease
or transaction with, or any other commitment to, (i) a Shareholder, (ii) any
person related by blood, adoption or marriage to Shareholder, (iii) any director
or officer of DNA Sciences, (iv) any corporation or other entity in which any of
the foregoing parties has, directly or indirectly, at least five percent (5.0%)
beneficial interest in the capital stock or other type of equity interest in
such corporation or other entity, or (v) any partnership in which any such party
is a general partner or a limited partner having a five percent (5%) or more
interest therein (any or all of the foregoing being herein referred to as a
"RELATED PARTY" and collectively as the "RELATED PARTIES"). Without limiting the
generality of the foregoing, except as set forth in SCHEDULE 3.23, (A) no
Related Party, directly or indirectly, owns or controls any assets or properties
which are or have since the date of the DNA Sciences Balance Sheet been used in
the business of DNA Sciences, and (B) no Related Party, directly or indirectly,
engages in or has any significant interest in or connection with any business:
(1) which is or which, since inception of DNA Sciences, has been a competitor,
customer or supplier of, or has done business with, DNA Sciences, or (2) which
as of the date hereof sells or distributes products or provides services which
are similar or related to the products or services of DNA Sciences.
3.24. FULL DISCLOSURE. No representation or warranty of DNA Sciences
or the Shareholders contained in this Agreement, and none of the statements or
information concerning DNA Sciences contained in this Agreement and the Exhibits
and Schedules hereto, contains or will contain any untrue statement of a
material fact nor will such representations, warranties, covenants or statements
taken as a whole omit 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.
3.25. ACKNOWLEDGMENT OF RECEIPT OF DISCLOSURE MATERIALS. Each
Shareholder has received and reviewed copies of the following disclosure
12
documents filed by GVEC with the Securities and Exchange Commission
(collectively, the "SEC DOCUMENTS"): (1) Reports on Form 10-QSB for the three
month period ended March 31, 1999, June 30, 1999 and September 30, 1999; and (2)
Annual Report on 10-KSB for the year ended December 31, 1998.
4. REPRESENTATIONS AND WARRANTIES OF GVEC.
--------------------------------------
To induce DNA Sciences and the Shareholders to enter into this Agreement
and to consummate the transactions contemplated hereby, GVEC represents and
warrants to and covenants with DNA Sciences and the Shareholders as follows:
4.1. ORGANIZATION. GVEC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. GVEC is
entitled to own or lease its properties and to carry on its business as and in
the places where such business is now conducted, and GVEC is duly licensed and
qualified in all jurisdictions where the character of the property owned by it
or the nature of the business transacted by it makes such license or
qualification necessary, except where such failure would not result in a
material adverse effect on GVEC.
4.2. CAPITALIZATION AND RELATED MATTERS.
----------------------------------
4.2.1. GVEC has authorized capital stock consisting of
100,000,000 shares of common stock, $.001 par value per share, of which
3,199,843 shares were issued and outstanding as of November 15, 1999. The GVEC
Shares will be, as of the Closing Date, duly and validly authorized and issued,
and fully paid and non-assessable, and will be issued to the Shareholders free
of all Encumbrances, claims and liens whatsoever.
4.2.2. Except as set forth in Form 10Q-SB for the three-month
period ended September 30, 1999 and except as set forth on Schedule 4.2.2
hereof, GVEC does not have outstanding any securities convertible into capital
stock, nor any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock or securities convertible into its capital stock.
4.3. EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.
------------------------------------------
4.3.1. The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been or will be prior
to the Closing Date duly and validly authorized and approved by GVEC and this
Agreement is a valid and binding agreement of GVEC, enforceable against GVEC in
accordance with its terms, except as such enforcement may be limited by
bankruptcy or similar laws affecting the enforcement of creditors' rights
generally, and the availability of equitable remedies.
4.3.2. The execution and delivery of this Agreement by GVEC does
not, and the consummation of the transactions contemplated hereby will not,
constitute a breach or violation of the charter or by-laws of GVEC, or a default
under any of the terms, conditions or provisions of (or an act or omission that
would give rise to any right of termination, cancellation or acceleration under)
any material note, bond, mortgage, lease, indenture, agreement or obligation to
13
which GVEC is a party, pursuant to which it otherwise receives benefits, or by
which any of its properties may be bound.
4.4. FINANCIAL STATEMENTS. Prior to Closing, GVEC shall deliver to
DNA Sciences the audited balance sheets of GVEC as of December 31, 1998 and
December 31, 1997, and the audited statement of income for the two fiscal years
ended December 31, 1998 and 1997 and the three months ended June 30, 1999 and
September 30, 1999 (collectively, the "GVEC FINANCIAL STATEMENTS"). The GVEC
Financial Statements have been prepared in accordance with GAAP, applied on a
consistent basis (except that the unaudited statements do not contain all the
disclosures required by GAAP). Since September 30, 1999, there has been no
material adverse change in the assets or liabilities, in the business or
condition, financial or otherwise, of the GVEC, or in its results of operations.
4.5. LIABILITIES. GVEC has no material debt, liability or obligation
of any kind, whether accrued, absolute, contingent or otherwise, except (i)
those reflected on the GVEC Financial Statements, including the notes thereto,
and (ii) the liabilities incurred in the ordinary course of business since
September 30, 1999.
4.6. CONTINGENCIES. There are no actions, suits, claims or
proceedings pending or, to GVEC's knowledge, threatened, against, by or
affecting GVEC in any court or before any arbitrator or governmental agency
which could have a material adverse effect on GVEC or which could materially and
adversely affect the right or ability of the GVEC to consummate the transactions
contemplated hereby. To the knowledge of GVEC, there is no valid basis upon
which any such action, suit, claim or proceeding may be commenced or asserted
against the GVEC. There are no unsatisfied judgments against GVEC and no consent
decrees or similar agreements to which GVEC is subject and which could have a
material adverse effect on GVEC or which could materially and adversely affect
the right or ability of the GVEC to consummate the transactions contemplated
hereby. GVEC's operations are contingent upon its ability to obtain additional
financing. Additional information related to GVEC's financing is contained in
its 10-QSB for the three months ended September 30, 1999.
4.7. FULL DISCLOSURE. No representation or warranty of GVEC contained
in this Agreement, and none of the statements or information concerning GVEC
contained in this Agreement and the Schedules, contains or will contain any
untrue statement of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit 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.
5. CONDUCT OF BUSINESS OF DNA SCIENCES PENDING CLOSING.
---------------------------------------------------
5.1. DNA Sciences and the Shareholders covenant and agree that,
between the date hereof and the Closing Date, the business of DNA Sciences shall
be conducted only in the ordinary course and consistent with past practice.
14
5.2. NO MATERIAL CHANGES. Except as contemplated in this Section 5.2,
DNA Sciences shall not materially alter its organization, capitalization, or
financial structure, practices or operations. Without limiting the generality of
the foregoing:
(a) no change shall be made in the articles of
incorporation or by-laws of DNA Sciences;
(b) no change shall be made in the authorized or issued
capital stock of DNA Sciences;
(c) DNA Sciences shall not issue or grant any right or
option to purchase or otherwise acquire any of its capital stock or other
securities;
(d) no dividend or other distribution or payment shall be
declared or made with respect to any of the capital stock of DNA Sciences; and
(e) no change shall be made which affects DNA Science's
banking arrangements.
5.3. COMPENSATION. No increase shall be made in the compensation or
employee benefits payable or to become payable to any director, officer,
employee or agent of DNA Sciences, and no bonus or profit-share payment or other
arrangement (whether current or deferred) shall be made to or with any such
director, officer, employee or agent, except in the ordinary course of business
and consistent with prior practices.
5.4. NOTIFICATION. Each party to this Agreement shall promptly notify
the other parties in writing of the occurrence, or threatened occurrence, of any
event that would constitute a breach or violation of this Agreement by any party
or that would cause any representation or warranty made by the notifying party
in this Agreement to be false or misleading in any respect. The Shareholders
shall promptly notify GVEC of any event of which any Shareholder obtains
knowledge which could have a Material Adverse Effect.
6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
----------------------------------------
The obligation of the parties hereto to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing, of each of the following conditions; any or all of which may be waived
in whole or in part by the joint agreement of the parties hereto:
6.1. ABSENCE OF ACTIONS. No action or proceeding shall have been
brought or threatened before any court or administrative agency to prevent the
consummation or to seek damages in a material amount by reason of the
transactions contemplated hereby, and no governmental authority shall have
asserted that the within transactions (or any other pending transaction
involving GVEC, the Shareholders or DNA Sciences when considered in light of the
effect of the within transactions) shall constitute a violation of law or give
rise to material liability on the part of the Shareholders, DNA Sciences or
GVEC.
15
6.2. CONSENTS. The parties shall have received from any suppliers,
lessors, lenders, lien holders or governmental authorities, bodies or agencies
having jurisdiction over the transactions contemplated by this Agreement, or any
part hereof, such consents, authorizations and approvals as are necessary for
the consummation hereof, including without limitation the consents listed on
SCHEDULE 6.2.
7. CONDITIONS TO OBLIGATIONS OF GVEC.
---------------------------------
All obligations of GVEC to consummate the transactions contemplated by
this Agreement are subject to the fulfillment and satisfaction of each and every
of the following conditions on or prior to the Closing, any or all of which may
be waived in whole or in part by GVEC:
7.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 3 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
DNA Sciences or the Shareholders in connection with the transactions
contemplated by this Agreement shall be true, correct and complete in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects) as of the date when made and shall be deemed to be made again at and
as of the Closing Date and shall be true, correct and complete at and as of such
time in all material respects (except for representations and warranties which
are by their terms qualified by materiality, which shall be true, correct and
complete in all respects).
7.2. COMPLIANCE WITH AGREEMENTS AND CONDITIONS. DNA Sciences and the
Shareholders shall have performed and complied with all material agreements and
conditions required by this Agreement to be performed or complied with by them
prior to or on the Closing Date.
7.3. ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change
in the business, assets, financial condition, or prospects of DNA Sciences shall
have occurred, no substantial part of the assets of DNA Sciences not
substantially covered by insurance shall have been destroyed due to fire or
other casualty, and no event shall have occurred which has had or will have a
DNA Sciences Material Adverse Effect..
7.4. CERTIFICATE OF DNA SCIENCES AND SHAREHOLDERS. DNA Sciences and
the Shareholders shall have executed and delivered, or caused to be executed and
delivered, to GVEC one or more certificates, dated the Closing Date, certifying
in such detail as GVEC may reasonably request to the fulfillment and
satisfaction of the conditions specified in Sections 7.1 through 7.3 above.
8. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS.
---------------------------------------------
All of the obligations of the Shareholders to consummate the transactions
contemplated by this Agreement are subject to the fulfillment and satisfaction
16
of each and every of the following conditions on or prior to the Closing, any or
all of which may be waived in whole or in part, by the Shareholders:
8.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 4 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
GVEC in connection with the transactions contemplated by this Agreement shall be
true and correct in all material respects (except for representations and
warranties which are by their terms qualified by materiality, which shall be
true, correct and complete in all respects) when made and shall be deemed to be
made again at and as of the Closing Date and shall be true at and as of such
time in all material respects (except for representations and warranties which
are by their terms qualified by materiality, which shall be true, correct and
complete in all respects).
8.2. COMPLIANCE WITH AGREEMENTS AND CONDITIONS. GVEC shall have
performed and complied with all material agreements and conditions required by
this Agreement to be performed or complied with by GVEC prior to or on the
Closing Date.
8.3. ABSENCE OF MATERIAL ADVERSE CHANGES. No material adverse change
in the business, assets, financial condition, or prospects of GVEC, taken as a
whole, shall have occurred, no substantial part of the assets of GVEC, taken as
a whole, shall have been destroyed due to fire or other casualty, and no event
shall have occurred which has had, or will have a material adverse effect on the
business, assets, financial condition or prospects of GVEC and its subsidiaries,
taken as a whole.
8.4. COMPLIANCE WITH SECTION 3.25. GVEC shall have delivered to the
Shareholders copies of documents set forth in SECTION 3.25 hereof.
8.5. CERTIFICATE OF GVEC. GVEC shall have delivered to the
Shareholders a certificate, executed by an executive officer and dated the
Closing Date, certifying in such detail as counsel for the Shareholder may
reasonably request to the fulfillment and satisfaction of the conditions
specified in SECTIONS 8.1 through 8.4 above.
9. INDEMNIFICATION.
---------------
9.1. INDEMNIFICATION BY SHAREHOLDERS AND DNA SCIENCES. Subject to
Section 9.5, the Shareholders and DNA Sciences (hereinafter collectively called
the "Indemnitor") shall jointly and severally defend, indemnify and hold
harmless GVEC, its direct and indirect parent corporations, subsidiaries
(including DNA Sciences after Closing) and affiliates, their officers,
directors, employees and agents (hereinafter collectively called "INDEMNITEES")
against and in respect of any and all loss, damage, liability, fine, penalty,
cost and expense, including reasonable attorneys' fees and amounts paid in
settlement (collectively, "INDEMNIFIED LOSSES"), suffered or incurred by any
Indemnitee by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any agreement of any Shareholder or DNA Sciences contained in
this Agreement or in any certificate, schedule, instrument or document delivered
17
to GVEC by or on behalf of the Shareholders or DNA Sciences pursuant to the
provisions of this Agreement (without regard to materiality thresholds contained
therein); and
(b) any liabilities of DNA Sciences of any nature
whatsoever (including tax liability, penalties and interest), whether accrued,
absolute, contingent or otherwise, (i) existing as of the date of the DNA
Sciences Balance Sheet, and required to be shown therein in accordance with
GAAP, to the extent not reflected or reserved against in full in the DNA
Sciences Balance Sheet; or (ii) arising or occurring between the DNA Sciences
Balance Sheet Date and the Closing Date, except for liabilities arising in the
ordinary course of business, none of which shall have a DNA Sciences Material
Adverse Effect.
9.2. INDEMNIFICATION BY GVEC. Subject to Section 9.5, GVEC
(hereinafter called the "INDEMNITOR") shall defend, indemnify and hold harmless
each Shareholder and DNA Sciences (hereinafter called "INDEMNITEE") against and
in respect of any and all loss, damage, liability, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement (collectively,
"INDEMNIFIED LOSSES"), suffered or incurred by Indemnitee by reason of or
arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any material agreement of GVEC contained in this Agreement or
in any other certificate, schedule, instrument or document delivered to the
Shareholders by or on behalf of GVEC pursuant to the provisions of this
Agreement; and
(b) any liabilities of any nature whatsoever (including
tax liability, penalties and interest), whether accrued, absolute, contingent or
otherwise, arising from GVEC's ownership or operation of DNA Sciences after
Closing, but only so long as such liability is not the result of an act or
omission, of DNA Sciences, or any Shareholder occurring prior to Closing.
9.3. DEFENSE OF CLAIMS.
9.3.1. Should any claim or action by a third party arise after
the Closing Date for which an Indemnitor is liable under the terms of this
Agreement, the Indemnitee shall notify Indemnitor within ten (10) days after
such claim or action arises and is known to Indemnitee, and shall give the
Indemnitor a reasonable opportunity to participate in any proceedings and to
settle or defend any such claim or action. The expenses of all proceedings,
contests or lawsuits with respect to such claims or actions shall be borne by
the Indemnitor. If the Indemnitor wishes to assume the defense of such claim or
action, the Indemnitor shall give written notice to the Indemnitees within ten
(10) days after notice from the Indemnitees of such claim or action, and the
Indemnitor shall thereafter assume the defense of any such claim or liability,
through counsel reasonably satisfactory to the Indemnitees, provided that
Indemnitees may participate in such defense at their own expense, and the
Indemnitor shall, in any event, have the right to control the defense of the
claim or action.
9.3.2. If the Indemnitor shall not assume the defense of, or if
after so assuming it shall fail to defend, any such claim or action, the
18
Indemnitees may defend against any such claim or action in such manner as they
may deem appropriate and the Indemnitees may settle such claim or litigation on
such terms as they may deem appropriate but subject to the Indemnitor's
approval, such approval not to be unreasonably withheld; provided, however, that
any such settlement shall be deemed approved by the Indemnitor if the Indemnitor
fails to object thereto, by written notice to the Indemnitees, within fifteen
(15) days after the Indemnitor's receipt of a written summary of such
settlement. The Indemnitor shall promptly reimburse the Indemnitees for the
amount of all expenses, legal and otherwise, incurred by the Indemnitees in
connection with the defense and settlement of such claim or action.
9.3.3. If a non-appealable judgment is rendered against any of
the Indemnitees in any action covered by the indemnification hereunder, or any
lien attaches to any of the assets of any of the Indemnitees, the Indemnitor
shall immediately upon such entry or attachment pay such judgment in full or
discharge such lien unless, at the expense and direction of the Indemnitor, an
appeal is taken under which the execution of the judgment or satisfaction of the
lien is stayed. If and when a final judgment is rendered in any such action, the
Indemnitor shall forthwith pay such judgment or discharge such lien before any
of the Indemnitees is compelled to do so.
9.4. WAIVER. The failure of any Indemnitee to give any notice or to
take any action hereunder shall not be deemed a waiver of any of the rights of
such Indemnitee hereunder, except to the extent that Indemnitor is actually
prejudiced by such failure.
9.5. LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything to the
contrary contained in this Agreement:
9.5.1. TIME LIMITATION. No party shall be responsible hereunder
for any Indemnified Loss unless the Indemnitee shall have provided such party
with written notice containing a reasonable description of the claim, action or
circumstances giving rise to such Indemnified Loss within one (1) year after the
Closing Date (the "INDEMNITY NOTICE PERIOD"); provided, however, that:
(a) there shall be no limit on the Indemnity Notice Period
for indemnity claims: (i) against Shareholders for Indemnified Losses arising or
resulting from a breach of a representation or warranty of Shareholders relating
to Environmental Laws, Taxes or any liability of DNA Sciences arising prior to
the Closing and relating to the handling or disposal of Wastes or the failure to
comply with any Environmental Law; and (ii) against any party based on fraud,
intentional breach or misrepresentation.
9.5.2. CAPS ON LOSSES. The aggregate liability of the
Shareholders after Closing for Indemnified Losses shall not exceed the aggregate
GVEC Common Stock issued to the Shareholders, with each Shareholder's share of
the aggregate liability limited to GVEC Common Stock issued to such Shareholder.
In the event of a claim of liability, the value of such shares shall be
determined based on the average closing price of the GVEC Common Stock for the
ten (10) day period prior to the determination of the amount of the Indemnified
Loss. The aggregate liability of GVEC after Closing for Indemnified Losses shall
not exceed an amount equal to the Purchase Price.
19
9.5.3. INDEMNIFICATION BASKET. No party shall have any liability
hereunder for Indemnified Losses after Closing, with respect to a breach of the
representations and warranties contained herein, until the aggregate of all
Indemnified Losses for which the Shareholders and DNA Sciences as a group or
GVEC, as applicable, are responsible under this Agreement exceeds $50,000 (the
"BASKET"); provided that once this Basket amount is exceeded for the
Shareholders and DNA Sciences as a group or GVEC, as applicable, the responsible
party or parties shall be responsible for all Indemnified Losses, from the first
dollar as if such Basket never existed; and further provided that this Section
9.5.3 shall not limit in any respect indemnity claims: (i) based upon fraud,
intentional breach or misrepresentation; (ii) arising from a breach by the
Indemnitor of any covenant contained in Sections 2.2 and 2.3 hereof; or (iii)
arising from a breach by the Shareholders of any representation or warranty
contained in Section 3.2 hereto.
10. TERMINATION.
-----------
10.1. TERMINATION. This Agreement may be terminated at any time
on or prior to the Closing:
(a) By mutual consent of the parties hereto; or
(b) At the election of GVEC if: (i) a Shareholder or DNA
Sciences has breached or failed to perform or comply with any of their
representations, warranties, covenants or obligations under this Agreement; or
(ii) any of the conditions precedent set forth in Section 6 or 7 is not
satisfied as and when required by this Agreement; or (iii) the Closing has not
been consummated by January 31, 2000; or
(c) At the election of the Shareholders if: (i) GVEC has
breached or failed to perform or comply with any of its representations,
warranties, covenants or obligations under this Agreement; or (ii) any of the
conditions precedent set forth in Section 6 or 8 is not satisfied as and when
required by this Agreement; or (iii) if the Closing has not been consummated by
January 31, 2000.
10.2. MANNER AND EFFECT OF TERMINATION. Written notice of any
termination ("TERMINATION NOTICE") pursuant to this Section 10 shall be given by
the party electing termination of this Agreement ("TERMINATING PARTY") to the
other party or parties (collectively, the "TERMINATED PARTY"), and such notice
shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of ten (10) days after receipt of
Termination Notice to cure the matters giving rise to such termination to the
reasonable satisfaction of the Terminating Party. If the matters giving rise to
termination are not cured as required hereby, this Agreement shall be terminated
effective as of the close of business on the tenth (10th) day following the
Terminated Party's receipt of Termination Notice. Upon termination of this
Agreement prior to the consummation of the Closing and in accordance with the
terms hereof, this Agreement shall become void and of no effect, and none of the
parties shall have any liability to the others, except that nothing contained
herein shall relieve any party from: (i) its obligations under Sections 2.2 and
2.3; or (ii) liability for its intentional breach of any representation,
warranty or covenant contained herein, or its intentional failure to comply with
the terms and conditions of this Agreement or to perform its obligations
hereunder.
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11. MISCELLANEOUS.
-------------
11.1. NOTICES.
11.1.1. All notices, requests, demands, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given upon delivery if delivered in person or if sent by Federal
Express (or similar recognized overnight courier service) to the parties at the
following addresses:
If to Shareholders: To the addresses contained on the
signatures page of this Agreement
With a copy to: William R. Soderstrom, Esq.
622 North Water Street
Suite 500
Milwaukee, Wisconsin 53202-4978
If to the GVEC: Genetic Vectors, Inc.
5201 N.W. 77th Avenue, Suite 100
Miami, Florida 33166
Attention: Mead M. McCabe, Jr.
With a copy to: Clayton E. Parker, Esq.
Kirkpatrick & Lockhart LLP
201 S. Biscayne Blvd.
Suite 2000, Miami Center
Miami, Florida 33131
11.1.2. Notices may also be given in any other manner permitted
by law, effective upon actual receipt. Any party may change the address to which
notices, requests, demands or other communications to such party shall be
delivered or mailed by giving notice thereof to the other parties hereto in the
manner provided herein.
11.2. SURVIVAL. The representations, warranties, agreements and
indemnifications of the parties contained in this Agreement or in any writing
delivered pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by the parties and the consummation
of the transactions contemplated herein and shall continue in full force and
effect and survive after the Closing, subject to the limitations of Section 9.5.
11.3. COUNTERPARTS; INTERPRETATION. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, and all of which shall constitute one instrument. This Agreement
supersedes all prior discussions and agreements between the parties with respect
to the subject matter hereof, and this Agreement contains the sole and entire
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agreement among the parties with respect to the matters covered hereby. All
Schedules and Exhibits hereto shall be deemed a part of this Agreement. This
Agreement shall not be altered or amended except by a written instrument signed
by or on behalf of all of the parties hereto. No ambiguity in any provision
hereof shall be construed against a party by reason of the fact it was drafted
by such party or its counsel. For purposes of this Agreement "HEREIN," "HEREBY,"
"HEREOF," "HEREUNDER," "HEREWITH," "HEREAFTER" and "HEREINAFTER" and similar
words refer to this Agreement in its entirety, and not to any particular
subsection or paragraph. References to "INCLUDING" means including without
limiting the generality of any description preceding such term. Nothing
expressed or implied in this Agreement is intended, or shall be construed, to
confer upon or give any person other than the parties hereto any rights or
remedies under or by reason of this Agreement.
11.4. GOVERNING LAW. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Florida, without regard to principles of conflicts of laws thereof.
11.5. PARTIAL INVALIDITY AND SEVERABILITY. All rights and
restrictions contained herein may be exercised and shall be applicable and
binding only to the extent that they do not violate any applicable laws and are
intended to be limited to the extent necessary to render this Agreement legal,
valid and enforceable. If any terms of this Agreement not essential to the
commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a court of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof shall constitute their agreement with
respect to the subject matter hereof and all such remaining terms shall remain
in full force and effect. To the extent legally permissible, any illegal,
invalid or unenforceable provision of this Agreement shall be replaced by a
valid provision which will implement the commercial purpose of the illegal,
invalid or unenforceable provision.
11.6. WAIVER. Any term or condition of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof, but only if
such waiver is evidenced by a writing signed by such party. No failure on the
part of a party hereto to exercise, and no delay in exercising, any right, power
or remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.
11.7. HEADINGS. The headings as to contents of particular paragraphs
of this Agreement are inserted for convenience only and shall not be construed
as a part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
11.8. EXPENSES. Except as otherwise expressly provided herein, all
legal and other costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by GVEC or the
Shareholders as each party incurs such expenses, and none of such expenses shall
be charged to or paid by DNA Sciences.
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11.9. FINDER'S FEES. GVEC represents to the Shareholders that no
broker, agent, finder or other party has been retained by it in connection with
the transactions contemplated hereby and that no other fee or commission has
been agreed by the GVEC to be paid for or on account of the transactions
contemplated hereby. The Shareholders represent to GVEC that no broker, agent,
finder or other party has been retained by Shareholders or DNA Sciences in
`connection with the transactions contemplated hereby and that no other fee or
commission has been agreed by the Shareholders or DNA Sciences to be paid for or
on account of the transactions contemplated hereby.
11.10. GENDER. Where the context requires, the use of the singular
form herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.
11.11. ACCEPTANCE BY FAX. This Agreement shall be accepted, effective
and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.
11.12. ATTORNEYS' FEES. In the event of any litigation or other
proceeding arising out of or in connection with this Agreement, the prevailing
party or parties shall be entitled to recover its or their reasonable attorneys'
fees and court costs from the other party or parties.
11.13. NO JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement or caused this Stock Purchase Agreement to be duly executed by their
duly authorized officers as of the date first above written.
GENETIC VECTORS, INC.
By:_____________________________
Name:___________________________
Title:__________________________
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DNA SCIENCES, INC.
By:________________________
Name:______________________
Title:_____________________
SHAREHOLDERS:
____________________________________ ____________________________________
Address:____________________________ Address:____________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
Address:____________________________ Address:____________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
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