Agreement and Plan of Merger - Torvec Subsidiary Corp., UTEK Corp. and Ice Surface Development Inc.
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is entered into by and among
Torvec Subsidiary Corporation ("Subsidiary" or "Surviving Corporation" as the
context requires), a New York Corporation which is a wholly owned subsidiary of
Torvec, Inc., a New York Corporation ("Torvec"), UTEK Corporation, a Delaware
Corporation ("UTEK") and Ice Surface Development, Inc. (ISD) a Florida
Corporation and wholly owned subsidiary of UTEK.
WHEREAS, UTEK owns 100% of the outstanding shares of the capital stock of ISD;
and
WHEREAS, Torvec owns 100% of the outstanding shares of the capital stock of
Subsidiary; and
WHEREAS, ISD has negotiated with Dartmouth University (DARTMOUTH) and seeks to
acquire by the Closing Date, the exclusive worldwide license to develop and
market a proprietary technology that acts as an electronic system for modifying
ice adhesion as described in a US patent "Systems and methods for modifying ice
adhesion strength." Inventor: Victor F. Petrenko. US Patent Number US 6,027,075
and International Application Numbers: PCT/US98/12421, PCT/US99/28330 &
PCT/US99/25124 ("License"). DARTMOUTH is the owner of US Patent Number 6,027,075
and the associated PCT applications; and
WHEREAS, the parties desire to provide for the terms and conditions upon which
ISD will merge into Subsidiary in a statutory merger ("Merger") in accordance
with the New York State Business Corporation Law (the "BCL") and the Corporation
Law of the State of Florida (the "Florida Act"), upon consummation of which the
assets and business of ISD will be owned by Subsidiary, and all issued and
outstanding shares of capital stock of ISD will be exchanged for common stock of
Torvec with terms and conditions as set forth more fully herein; and
WHEREAS, for federal income tax purposes, it is intended that the Merger qualify
as a tax-free reorganization within the meaning of Sections 368 (a)(1)(A) and
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended ("Code").
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties agree as follows:
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ARTICLE I
THE MERGER
1.01 The Merger
(a) Agreement to Merge. Subject to the terms and conditions of this
Agreement, at the Effective Time, as defined below, ISD shall be merged with and
into Subsidiary in accordance with the provisions of this Agreement and the BCL;
the separate corporate existence of ISD shall cease; and Subsidiary shall
continue as the Surviving Corporation ("Surviving Corporation"). The constituent
corporations ("Constituent Corporations") to the Merger are Subsidiary and ISD.
The name of the Surviving Corporation, Torvec Subsidiary Corporation, shall be
changed by reason of the Merger into Ice Surface Development, Inc.
(b) Effective Time. The Merger shall become effective ("Effective
Time") upon filing of a Certificate of Merger ("Certificate of Merger") with the
Secretary of State of the State of New York in accordance with the applicable
provisions of the BCL.
(c) Effect of the Merger. At the Effective Time, the effect of the
merger shall be as provided herein and as set forth in Section 906 of the BCL
and Section 607 of the Florida Act. Without limiting the generality of the
foregoing and subject thereto, as of the Effective Time, all rights, powers,
privileges, franchises, licenses and permits of the Constituent Corporations and
all property, real, personal and mixed, shall be vested in the Surviving
Corporation; and all debts, duties, liabilities and claims of every kind,
character and description of the Constituent Corporations shall be debts,
duties, liabilities and claims of the Surviving Corporation and may be enforced
against the Surviving Corporation to the same extent as if such debts, duties,
liabilities and claims had been incurred by it originally. All rights of
creditors of the Constituent Corporations and all liens upon property of any
Constituent Corporation shall be preserved unimpaired and shall not be altered
in any way by reason of the Merger.
(d) Tax Consequences. It is intended that the merger and related
transactions shall constitute a reorganization within the meaning of Sections
368 (a) (1) (A) and 368(a)(2)(D) of the Code, the Agreement shall constitute a
"Plan of Reorganization" within the meaning of Treasury Regulation Section
1.368-2(g) and that Torvec, ISD and Subsidiary are "parties to a reorganization"
within the meaning of Section 368(b) of the Code. It is also intended that all
transactions contemplated herein shall be undertaken by the parties pursuant to
the Plan of Reorganization.
1.02 Conversion of Stock.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of the shareholder of ISD, all of the 1,000,000 shares of ISD
stock that are issued and outstanding at the Effective Time shall be converted
into 1,230,000 unregistered shares of common stock of Torvec which shall be
issued to UTEK (adjusted on the Closing Date so that such Torvec shares actually
issued shall equal the agreed upon value of $3,536,250, based upon the highest
bid price as reported on the OTC Bulletin Board by Bloomberg of Torvec's common
stock on the first business day immediately preceding the Closing Date).
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of the shareholder of Subsidiary, each issued and outstanding
share of Subsidiary shall continue unchanged and remain outstanding as a share
of common stock of Subsidiary.
(c) Notwithstanding any portion of this Agreement to the contrary, the
shareholders hereby wave any and all notice, presentment or demand for appraisal
rights, if any, under applicable law.
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1.03 Rights in ISD.
(a) Rights in ISD Cease. At and after the Effective Time, the holder of
each certificate of common stock of ISD shall cease to have any rights as a
shareholder of ISD.
(b) Closure of ISD Stock Records. From and after the Effective Time,
the stock transfer books of ISD shall be closed, and there shall be no further
registration of stock transfers on the records of ISD.
1.04 Certificate of Incorporation of the Surviving Corporation. The
Certificate of Incorporation of the Surviving Corporation shall be amended by
reason of the Merger to change the name of the Surviving Corporation to Ice
Surface Development, Inc.
1.05 Bylaws of the Surviving Corporation. The Bylaws of the Surviving
Corporation shall not be changed by reason of the Merger.
1.06 Closing. Subject to the terms and conditions of this Agreement, the
Closing of the Merger shall take place telephonically on November 29, 2000, at
10:00AM EST or on another date and time as the parties mutually shall agree
("Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01 General Representations and Warranties of UTEK and ISD. UTEK and ISD
represent and warrant to Torvec and Subsidiary that the facts set forth below
are true and correct:
(a) Organization. ISD and UTEK are corporations duly organized, validly
existing and in good standing under the laws of their respective States, and
they have the requisite power and authority to conduct their business and
consummate the transactions contemplated by this Agreement. True, correct and
complete copies of the Article of Incorporation, by laws and all minutes of ISD
have been provided to Torvec and such documents are presently in effect and have
not been amended or modified.
(b) Authorization. The execution of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby have been duly
authorized by the Board of Directors of UTEK and the Board of Directors and
shareholders of ISD; no other corporate action by the respective parties is
necessary in order to execute, deliver, consummate and perform their respective
obligations hereunder; and ISD and UTEK have all requisite corporate and other
authority to execute and deliver this Agreement and consummate the transactions
contemplated hereby.
(c) Capitalization. The authorized capital of ISD consists of 1,000,000
shares of common stock, par value $.01 per share; at the date hereof, 1,000,000
shares of common stock were issued and outstanding and no shares were held in
its treasury. UTEK owns all 1,000,000 shares. All issued and outstanding shares
of common stock of ISD have been duly and validly issued and are fully paid and
non-assessable shares and have not been issued in violation of any preemptive or
other rights of any other person or any applicable laws. ISD is not authorized
to issue any preferred stock. All dividends on ISD stock which have been
declared prior to the date of this Agreement have been paid in full. There are
no outstanding options, warrants, commitments, calls or other rights or
agreements requiring it to issue any shares of ISD common stock or securities
convertible into shares of ISD's common stock to anyone for any reason
whatsoever. None of the ISD stock is subject to any change, claim, condition,
interest, lien, pledge, option, security interest or other encumbrance or
restriction, including any restriction on use, voting, transfer, receipt of
income or exercise of any other attribute of ownership.
(d) Binding Effect. The execution, delivery, performance and
consummation of this Agreement, the Merger and the transactions contemplated
hereby will not violate any obligation to which ISD or UTEK is a party and will
not create a default hereunder; and this Agreement constitutes a legal, valid
and binding obligation of ISD, enforceable in accordance with its terms, except
as the enforcement may be limited by bankruptcy, insolvency, moratorium, or
similar laws affecting creditor's rights generally and by the availability of
injunctive relief, specific performance or other equitable remedies.
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(e) Litigation Relating to this Agreement. There are no suits, actions
or proceedings pending or to the best knowledge of ISD or UTEK threatened which
seek to enjoin the Merger or the transactions contemplated by this Agreement or
which, if adversely decided, would have a materially adverse effect on the
business, results of operations, assets, prospects, the Patent, the Patent
Applications, the License Agreement, the Research Agreement or the results of
the operations of ISD.
(f) No Conflicting Agreements. Neither the execution and delivery of
this Agreement nor the fulfillment of or compliance by ISD or UTEK with the
terms or provisions hereof nor all other documents or agreements contemplated
hereby and the consummation of the transaction contemplated by this Agreement
will result in a breach of the terms, conditions or provisions of, or constitute
a default under, or result in a violation of, ISD's or UTEK's corporate charter
or bylaws, the Patent, the Patent Applications, the License Agreement, the
Research Agreement or any agreement, contract, instrument, order, judgment or
decree to which ISD is a party or by which ISD or any of its assets is bound, or
violate any provision of any applicable law, rule or regulation or any order,
decree, writ or injunction of any court or government entity which materially
affects its assets or business.
(g) Consents. No consent from or approval of any court, governmental
entity or any other person is necessary in connection with execution and
delivery of this Agreement by ISD and UTEK or performance of the obligations of
ISD and UTEK hereunder or under any other agreement to which ISD or UTEK is a
party; and the consummation of the transactions contemplated by this Agreement
will not require the approval of any entity or person in order to prevent the
termination of the Patent, the Patent Applications, the License Agreement, the
Research Agreement or any other material right, privilege, license or agreement
relating to ISD or its assets or business.
(h) Title to Assets. Exhibit A set forth a true and complete list of
all assets whether real personal, mixed, tangible or intangible, owned by ISD.
ISD has or will by the Closing Date have good and marketable title to its
assets, free and clear of all liens, claims, charges, mortgages, options,
security agreements and other encumbrances of every kind or nature whatsoever.
All of the tangible assets of ISD have been operated in accordance with
customary operating practices generally acceptable in its industry to which and
have been maintained and are in good working order and repair in the ordinary
course of business, subject only to reasonable and ordinary wear and tear.
(i) Intellectual Property
(a) The TECHNOLOGY is owned by DARTMOUTH. DARTMOUTH has all right,
power, authority and ownership and entitlement to file, prosecute and maintain
in effect the Patent and the Patent Applications with respect to the Invention
listed in Exhibit A hereto; and
(b) The TECHNOLOGY was invented by Victor F. Petrenko while he was
employed at DARTMOUTH, and he has assigned his interests in the TECHNOLOGY to
DARTMOUTH;
(c) Exhibit A sets forth a brief description of all of ISD's right,
title and interest in and to all intellectual property rights, including but not
limited to, inventions (whether patentable or not), discoveries, trade secrets,
technology, technical information, proprietary information, processes, know-how,
designs, United States and foreign patents and patent applications (and all
reissues, divisions, renewals, extensions, provisionals, continuations, and
continuations-in-part thereof), trade names, logos, trademarks, service marks,
trademark and service marks registrations, copyrights, copyright registrations,
and all computer software, data and databases owned by or licensed to ISD
(collectively "Intellectual Property"). ISD has or will have by the Closing
Date, good and exclusive licensee interests to the Intellectual Property free
and clear of all liens, claims, conditions, charges, equitable interests, or
other encumbrances or restrictions, with the exception of those outlined in the
License Agreement between ISD and DARTMOUTH. To ISD's knowledge, ISD has not
infringed nor is infringing any Intellectual Property owned or used by another
person or entity. However, ISD has not conducted any infringement investigations
and provides no warrantees or assurances that the Licensed Technology does not
infringe any other parties' technology. There are no pending or threatened
actions against ISD for infringement of any such Intellectual Property. The
License Agreement dated November 28, 2000 from DARTMOUTH to ISD licensing
certain Intellectual Property more particularly described Exhibit A ("License
Agreement") for the use of any Intellectual Property owned by or licensed by
third parties to ISD as described in Exhibit A are in full force and effect and
following the consummation of the transactions contemplated by this Agreement
shall remain in full force and effect and legal, valid, binding and enforceable
in accordance with their respective terms.
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(1) Torvec acknowledges and understands that ISD and UTEK make no
representations and provide no assurances that rights contained in the License
Agreement does not, and will not in the future, infringe or otherwise violate
the rights of others, and
(2) Except as otherwise expressly set forth in this Agreement, ISD
and UTEK make no representations and extend no warranties of any kind, either
express or implied, including but not limited to warranties of merchantability,
fitness for a particular purpose, non-infringement and validity of said patent
rights.
(j) Liabilities of ISD. ISD has no assets, no liabilities or
obligations of any kind, character or description except those created by the
License Agreement with DARTMOUTH and the Research Agreement with DARTMOUTH,
final copies of which have been provided to Torvec (Exhibit A).
(k) Financial Statements. The unaudited financial statements of ISD,
including a Balance Sheet attached as (Exhibit B) is in all respects complete
and correct and present fairly its financial position and the results of its
operations on the dates and for the periods shown therein; provided, however,
that interim financial statements are subject to customary year-end adjustments
and accruals that, in the aggregate, will not have a material adverse effect on
the overall financial condition or results of its operations. ISD has not
engaged in any business not reflected in its financial statements. There have
been no material adverse changes in the nature of its business, prospects, the
value of assets or the financial condition since the date of its financial
statements. There are no outstanding obligations or liabilities of ISD except as
specifically set forth in the ISD financial statements and the License Agreement
and the Research Agreement with DARTMOUTH.
(l) Taxes. All returns, reports, statements and other similar filings
required to be filed by ISD with respect to any federal, state, local or foreign
taxes, assessments, interests, penalties, deficiencies, fees and other
governmental charges or impositions have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such tax returns and other
related filings are required to be filed; all such tax returns properly reflect
all liabilities of ISD for taxes for the periods, property or events covered
thereby; and all taxes, whether or not reflected on those tax returns, and all
taxes claimed to be due from ISD by any taxing authority, have been properly
paid. ISD has not received any notice of assessment or proposed assessment in
connection with any tax returns, nor is ISD a party to or to the best of its
knowledge, expected to become a party to any pending or threatened action or
proceeding, assessment or collection of taxes. ISD has not extended or waived
the application of any statute of limitations of any jurisdiction regarding the
assessment or collection of any taxes. There are no tax liens (other than any
lien which arises by operation of law for current taxes not yet due and payable)
on any of its assets. There is no basis for any additional assessment of taxes,
interest or penalties. ISD has made all deposits required by law to be made with
respect to employees' withholding and other employment taxes, including without
limitation the portion of such deposits relating to taxes imposed upon ISD. ISD
is not and has never been a party to any tax sharing agreements with any other
person or entity.
(m) Absence of Certain Changes or Events. From November 14, 2000 to the
Closing Date, ISD has not, and without the written consent of Torvec, it will
not have:
(i) Sold, encumbered, assigned, let lapsed or transferred any of
its material assets including without limitation its Intellectual Property, or
its interest in the Patent, the Patent Applications, the License Agreement, the
Research Agreement or any other material asset; or
(ii) Amended or terminated the License Agreement, the Research
Agreement or other material contract or done any act or omitted to do any act
which would cause the breach of the License Agreement, the Research Agreement or
any other material contract; or
(iii) Suffered any damage, destruction or loss whether or not in
control of ISD; or
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(iv) Made any commitments or agreements for capital expenditures or
otherwise; or
(v) Entered into any transaction or made any commitment not
disclosed to Torvec; or
(vi) Incurred any material obligation or liability for borrowed
money; or
(vii) Suffered any other event of any character, which it is
reasonable to expect, would adversely affect the future condition (financial or
otherwise), assets or liabilities or business of ISD.
(n) Material Contracts. Exhibit A contains a true and complete list of
all contracts entered into and binding upon ISD. Complete and accurate copies of
all material agreements, contracts and commitments of the following types,
whether written or oral to which it is a party or is bound ("Contracts"), has
been provided to Torvec or Subsidiary and such agreements are in full force and
effect without modifications or amendment and constitute the legally valid and
binding obligations of ISD in accordance with their respective terms and will
continue to be valid and enforceable following the Merger. ISD is not in default
of any of the Contracts. In addition:
(i) There are no outstanding unpaid promissory notes, mortgages,
indentures, deeds of trust, security agreements and other agreements and
instruments relating to the borrowing of money by or any extension of credit to
ISD; and
(ii) There are no outstanding operating agreements, lease
agreements or similar agreements by which ISD is bound; and
(iii) The complete final drafts of the Patent, the Patent
Applications, License Agreement and the Research Agreement with all schedules,
exhibits and amendments relating thereto have been provided to Torvec; and
(iv) Except as set forth in (iii) above, there are no outstanding
licenses to or from others of any Intellectual Property and trade names; and
(v) There are no outstanding contracts or commitments to sell,
lease or otherwise dispose of any of ISD's property; and
(vi) There are no breaches of any Contract.
(o) Compliance with Laws. ISD is in compliance with all applicable
laws, rules, regulations and orders promulgated by any federal, state or local
government body or agency relating to its business and operations. ISD owns all
franchises, licenses, permits, easements, rights, applications, filings,
registration and other authorizations which are necessary for it to conduct
business, all of which are valid and in full force and effect and ISD is in full
compliance therewith.
(p) Litigation. To the best knowledge of ISD, there is no suit, action
or any arbitration, administrative, legal or other proceeding of any kind or
character, or any governmental investigation pending or threatened against ISD,
the Patent, the Patent Applications, the License Agreement or the Research
Agreement affecting its assets or business (financial or otherwise) and ISD is
not in violation of or in default with respect to any judgment, order, decree or
other finding of any court or government authority. There are no pending or
threatened actions or proceedings before any court, arbitrator or administrative
agency, which would, if adversely determined, individually or in the aggregate,
materially and adversely affect its assets or business.
(q) Employees. ISD has no and never had any employees. ISD is not a
party to or bound by any employment agreement or any collective bargaining
agreement with respect to any employees. ISD is not in violation of any law,
regulation relating to employment of employees.
(r) Knowledge of Adverse Effects. Neither ISD or UTEK has any knowledge
of any existing or threatened occurrence, action or development which could
cause a material adverse effect on ISD or its business, assets or condition
(financial or otherwise) or prospects, the Patent, the Patent Applications, the
License Agreement or the Research Agreement.
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(s) Employee Benefit Plans. There are no and have never been any
employee benefit plans, and there are no commitments to create any, including
without limitation as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended, in effect, and there are no outstanding or
un-funded liabilities nor will the execution of this Agreement and the actions
contemplated herein result in any obligation or liability to any present or
former employee.
(t) Books and Records. The books and records of ISD are complete and
accurate in all material respects, fairly present its business and operations,
have been maintained in accordance with good business practices, and applicable
legal requirements, and accurately reflect in all material respects its
business, financial condition and liabilities.
(u) No Broker's Fees. Neither UTEK nor ISD has incurred any finder's,
broker's, investment banking, financial, advisory or other similar fees or
obligations in connection with this Agreement or the transactions contemplated
thereby.
(v) Full Disclosure. All representations or warranties of UTEK and ISD
are true, correct and complete in all material respects to the best of our
knowledge on the date hereof and shall be true, correct and complete in all
material respects as of the Closing Date as if they were made on such date. No
statement made by either of them herein or in the exhibits hereto or any
document delivered by either of them or on their behalf pursuant to this
Agreement contains an untrue statement of material fact or omits to state all
material facts necessary to make the statements therein not misleading in any
material respect in light of the circumstances in which they were made.
2.02 General Representations and Warranties of Torvec and Subsidiary. Torvec
and Subsidiary represent and warrant to UTEK and ISD that the facts set forth
are true and correct.
(a) Organization. Torvec and Subsidiary are corporations duly
organized, validly existing and in good standing under the laws of New York, are
qualified to do business as a foreign corporation in each other jurisdiction in
which the conduct of its business or the ownership of its properties require
such qualification, and have all requisite power and authority to conduct their
business and operate properties.
(b) Authorization. The execution of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby have been duly
authorized by the Board of Directors of Torvec and the Board of Directors and
shareholders of Subsidiary; no other corporate action on their respective parts
is necessary in order to execute, deliver, consummate and perform their
obligations hereunder; and they have all requisite corporate and other authority
to execute and deliver this Agreement and consummate the transactions
contemplated hereby.
(c)(1) Capitalization of Torvec. The authorized capital of Torvec
consists of 40,000,000 shares of common stock, par value $0.01 per share and
100,000,000 shares of preferred stock, par value $0.01 per share. At the
Effective Time of the Merger, up to 22,600,060 shares (21,370,060 current shares
+ 1,230,000 (to be adjusted prior to actual issuance as described in Section
1.02 (a) hereof) newly issued shares for the Merger) of its common stock will be
issued and outstanding immediately after the Effective Time. All issued and
outstanding shares of common stock of Torvec have been duly and validly issued
and are fully paid and non-assessable shares and have not been issued in
violation of any preemptive or other rights of any other person or any
applicable laws.
(c)(2) Capitalization of Subsidiary. The authorized capital of
Subsidiary is 200 common shares, par value $0.01 per share, all of which are
issued, outstanding and held by Torvec.
(d) Binding Effect. The execution, delivery, performance and
consummation of the Merger and the transactions contemplated hereby will not
violate any obligation to which Torvec or Subsidiary is a party and will not
create a default hereunder, and this Agreement constitutes a legal, valid and
binding obligation of Torvec and Subsidiary, enforceable in accordance with its
terms, except as the enforcement may be limited by bankruptcy, insolvency,
moratorium, or similar laws affecting creditor's rights generally and by the
availability of injunctive relief, specific performance or other equitable
remedies.
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(e) Litigation Relating to this Agreement. There are no suits, actions
or proceedings pending or to their knowledge threatened which seek to enjoin the
Merger or the transactions contemplated by this Agreement or which, if adversely
decided, would have a materially adverse effect on its business, results of
operations, assets, prospects or the results of its operations of Torvec or
Subsidiary.
(f) No Conflicting Agreements. Neither the execution and delivery of
this Agreement nor the fulfillment of or compliance by Torvec and Subsidiary
with the terms or provisions thereof will result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in a
violation of, their respective corporate charters or bylaws, or any agreement,
contract, instrument, order, judgment or decree to which they are a party or by
which they or any of their assets are bound, or violate any provision of any
applicable law, rule or regulation or any order, decree, writ or injunction of
any court or governmental entity which materially affects their assets or
business.
(g) Consents. Assuming the correctness of UTEK's and ISD's
representations, no consent from or approval of any court, governmental entity
or any other person is necessary in connection with the execution and delivery
of this Agreement and performance of the obligations of Torvec and Subsidiary
hereunder or under any other agreement to which Torvec or Subsidiary is a party;
and the consummation of the transactions contemplated by this Agreement will not
require the approval of any entity or person in order to prevent the termination
of any material right, privilege, license or agreement relating to Torvec and
Subsidiary or their assets or business.
(h) Financial Statements. The audited and unaudited financial
statements of Torvec attached as Exhibit C present fairly its financial position
and the results of its operations on the dates and for the periods shown
therein; provided, however, that interim financial statements are subject to
customary year-end adjustments and accruals that, in the aggregate, will not
have a material adverse effect on the overall financial condition or results of
its operations. Torvec has not engaged in any business not reflected in its
financial statements. There have been no material adverse changes in the nature
of its business, prospects, the value of assets or the financial condition since
the date of its financial statements. There are no outstanding obligations or
liabilities of Torvec except as specifically set forth in the Torvec financial
statements.
(i) Full Disclosure. All representations or warranties of Torvec and
Subsidiary are true, correct and complete in all material respects on the date
hereof and shall be true, correct and complete in all material respects as of
the Closing as if they were made on such date. No statement made by either of
them herein or in the exhibits hereto or any document delivered by either of
them or on their behalf pursuant to this Agreement contains an untrue statement
of material fact or omits to state all material facts necessary to make the
statements therein not misleading in any material respect in light of the
circumstances in which they were made.
(j) Compliance with Laws. Torvec and Subsidiary are in compliance with
all applicable laws, rules, regulations and orders promulgated by any federal,
state or local government body or agency relating to its business and
operations.
(k) Litigation. Except as set forth in Exhibit D, to the best knowledge
of Torvec and Subsidiary, there is no suit, action or any arbitration,
administrative, legal or other proceeding of any kind or character, or any
governmental investigation pending or threatened against Torvec or Subsidiary
materially affecting their assets or business (financial or otherwise), and
Torvec and Subsidiary are not in violation of or in default with respect to any
judgment, order, decree or other finding of any court or government authority.
Except as set forth in Exhibit D, there are no pending or threatened actions or
proceedings before any court, arbitrator or administrative agency, which would,
if adversely determined, individually or in the aggregate, materially and
adversely affect their assets or business.
2.03 Investment Representations of UTEK. UTEK represents and warrants to
Torvec that:
(a) General. It has such knowledge and experience in financial and
business matters as to be capable of evaluating the risks and merits of an
investment in the shares ("Shares") of common stock of Torvec pursuant to the
Merger. It is able to bear the economic risk of the investment in the Shares,
including the risk of a total loss of the investment in the Shares. The
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acquisition of the Shares is for its own account and is for investment and not
with a view to the distribution thereof. Except as permitted by law, it has a no
present intention of selling, transferring or otherwise disposing in any way of
all or any portion of the Shares. All information that it has supplied to Torvec
is true and correct. It has conducted all investigations and due diligence
concerning Torvec to evaluate the risks inherent in accepting and holding the
Shares which it deems appropriate, and it has found all such information
obtained fully acceptable. It has had an opportunity to ask questions of the
officers and directors of Torvec concerning the Shares and the business and
financial condition of and prospects for Torvec, and the officers and directors
Torvec have adequately answered all questions asked and made all relevant
information available to them. UTEK is an "accredited investor," as the term is
defined in Regulation D, promulgated under the Securities Act of 1933, as
amended.
(b) Stock Transfer Restrictions. UTEK acknowledges that the Shares will
not be registered and UTEK will not be permitted to sell or otherwise transfer
the Shares in any transaction in contravention of the following legend, which
will be imprinted in substantially the following form on each certificate(s)
representing the Shares:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE SHALL BE MADE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF SAID ACT AND IS IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.
ARTICLE III
TRANSACTIONS PRIOR TO CLOSING
3.01. Corporate Approvals. Prior to Closing, each of the parties shall submit
this Agreement to its Board of Directors and, if necessary, to its shareholders,
and obtain approval thereof. Copies of corporate actions taken shall be provided
to each party.
3.02 Access to Information. Each party agrees to permit upon reasonable
notice the attorneys, accountants, and other representatives of the other
parties reasonable access during normal business hours to its properties and its
books and records to make reasonable investigations with respect to its affairs,
and to make its officers and employees available to answer questions and provide
additional information as reasonably requested.
3.03 Expenses. Each party agrees to bear its own expenses in connection with
the negotiation and consummation of the Merger and the transactions contemplated
hereby.
3.04 Covenants. Except as permitted in writing, each party agrees that it
will:
(i) Use its good faith efforts to obtain all requisite licenses,
permits, consents, approvals and authorizations necessary in order to consummate
the Merger;
(ii) Notify the other parties upon the occurrence of any event which
would have a materially adverse effect upon the Merger or the transactions
contemplated hereby or upon the business, assets or results of operations; and
(iii) Not modify its corporate structure, except as necessary or
advisable in order to consummate the Merger and the transactions contemplated
hereby.
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<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT
4.01 The obligation of the parties to consummate the Merger and the
transactions contemplated hereby are subject to the following conditions that
may be waived to the extent permitted by law:
(a) Each party must obtain the approval of its Board of Directors and
ISD and Subsidiary must obtain approval of their shareholders in accordance with
applicable law, and such approval shall not have been rescinded or restricted;
and
(b) Each party shall obtain all requisite licenses, permits, consents,
authorizations and approvals required to complete the Merger and the
transactions contemplated hereby; and
(c) There shall be no claim or litigation instituted or threatened in
writing by any person or government authority seeking to restrain or prohibit
any of the contemplated transactions contemplated hereby or challenge the right,
title and interest of UTEK in the ISD stock or the right of ISD or UTEK to
consummate the merger contemplated hereunder; and
(d) The representations and warranties of the parties shall be true and
correct in all material respects at the Effective Time; and
(e) The License Agreement is valid and in full force and effect without
any default therein; and
(f) The Research Agreement is valid and in full force and effect
without any default therein; and
(g) Immediately prior to the execution of this Agreement, and pursuant
to the Research Agreement, UTEK will pay $165,000 to DARTMOUTH to cover the
required sponsored research program for refinement of the technology; and
(h) Torvec or Subsidiary shall have received at or prior to the Closing
Date each of the following:
(1) the stock certificates representing the ISD Stock, duly
endorsed (or accompanied by duly executed stock powers) by UTEK for
cancellation;
(2) all documentation relating to the ISD's business, all in form
and substance satisfactory to Torvec.;
(3) such contracts, files and other data and documents pertaining
to ISD's business as Torvec may reasonably request;
(4) copies of the general ledgers and books of account of ISD, and
all federal, state and local income, franchise, property and other tax returns
filed by ISD since inception of ISD;
(5) certificates of (i) the Secretary of State of the State of
Florida as to the legal existence and good standing, as applicable, (including
tax) of ISD in Florida;
(6) certificates of the Secretary of ISD and UTEK, respectively,
attesting to the incumbency of respectively, ISD's and UTEK's officers, the
authenticity of the resolutions authorizing the transactions contemplated by the
Agreement, and the authenticity and continuing validity of their charter
documents and accompanied by certified copies of such charter documents;
(7) the original minute books of ISD, including the articles or
certificate of incorporation and bylaws of ISD, and all other documents filed
therein;
(8) all consents, assignments or related documents of conveyance to
give Torvec the benefit of the transactions contemplated hereunder;
(9) such documents as may be needed to accomplish the Closing under
the corporate laws of the states of incorporation of Torvec, Subsidiary and ISD,
and
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<PAGE>
(10) such other documents, instruments or certificates as Torvec,
Subsidiary or their counsel may reasonably request.
(11) Torvec shall have completed due diligence investigation of ISD
to Torvec's satisfaction in their sole discretion.
(12) Torvec shall have received the resignation effective as of the
Closing Date of each Director and Officer of ISD.
ARTICLE V
LIMITATIONS
5.01 Survival of Representations and Warranties.
(1) The representations and warranties made by UTEK and ISD shall
survive for a period of 1 year after Closing Date, and thereafter all such
representation and warranties shall be extinguished, except with respect to
claims then pending for which specific notice has been given during such 1 year
period.
(2) The representations and warranties made by Torvec and
Subsidiary shall survive for a period of 1 year after Closing Date, and
thereafter all such representations and warranties shall be extinguished, except
with respect to claims then pending for which specific notice has been given
during such 1 year period.
5.02 Limitations on Liability. Notwithstanding any other provision hereto
the contrary, neither party hereto shall be liable to the other party for any
cost, damage, expense, liability or loss under the indemnification provision set
forth in section 5.03 hereof until after the sum of all amounts individually
when added to all other such amounts in the aggregate exceeds $500, and then
such liability shall apply only to matters in excess of $500.
5.03 Indemnification. Indemnification by UTEK. UTEK agrees to defend,
indemnify and hold Torvec and Subsidiary harmless from and against any and all
claims, actions, damages, obligations, losses, liabilities, costs, and expenses
(including attorneys' fees and expenses) (collectively, "Losses") arising out of
or resulting from a misrepresentation, breach or warranty, or breach or
non-fulfillment of any covenant of ISD or UTEK contained herein or in the
Exhibits annexed hereto or in any other documents or instruments furnished or to
be furnished by ISD or UTEK pursuant hereto or in connection with the
transaction contemplated hereby or thereby, whether asserted by Torvec in its
own right or asserted against by any third-party, or any allegation which, if
true, would constitute a misrepresentation or breach or non-fulfillment of any
such covenant of ISD or UTEK.
5.04 Indemnification by Torvec. Torvec and Subsidiary shall indemnify,
defend and hold harmless UTEK from and against any and all Losses incurred by
UTEK which arise out of or result from misrepresentation, breach of warranty or
breach or non-fulfillment of any covenant of Torvec contained herein or in the
Exhibits annexed hereto or in any other documents or instruments furnished by
Torvec pursuant hereto or in connection with the transactions contemplated
hereby or thereby.
ARTICLE VI
REMEDIES
6.01 Specific Performance. Each party's obligations under this Agreement is
unique. If any party should default in its obligations under this Agreement, the
parties each acknowledge that it would be extremely impracticable to measure the
resulting damages; accordingly, the non-defaulting party, in addition to any
other available rights or remedies, may sue in equity for specific performance,
and the parties each expressly waive the defense that a remedy in damages will
be adequate.
6.02 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or they may be
entitled.
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<PAGE>
ARTICLE VII
ARBITRATION
In the event a dispute arises with respect to the interpretation or effect of
this Agreement or concerning the rights or obligations of the parties hereto,
the parties agree to negotiate in good faith with reasonable diligence in an
effort to resolve the dispute in a mutually acceptable manner. Failing to reach
a resolution thereof, either party shall have the right to submit the dispute to
be settled by arbitration under the Commercial Rules of Arbitration of the
American Arbitration Association. The parties agree that all arbitration shall
be conducted in Tampa, Florida, unless the parties mutually agree to the
contrary. The cost of arbitration shall be borne by the party against whom the
award is rendered or, if in the interest of fairness, as allocated in accordance
with the judgment of the arbitrators. All awards in arbitration made in good
faith and not infected with fraud or other misconduct shall be final and
binding. The arbitrators shall be selected as follows: one by Torvec, one by
UTEK and a third by the two selected arbitrators. The third arbitrator shall be
the chairman of the panel.
ARTICLE VIII
MISCELLANEOUS
8.01 No Assignment. No party may assign this Agreement or any right or
obligation of it hereunder without the prior written consent of the other
parties hereto. No permitted assignment shall relieve a party of its obligations
under this Agreement without the separate written consent of the other parties.
8.02 Binding Effect. This Agreement shall be binding upon and enure to the
benefit of the parties and their respective permitted successors and assigns.
Each party agrees that it will comply with all applicable laws, rules and
regulations in the execution and performance of its obligations under this
Agreement.
8.03 Governing Law. This Agreement shall be governed by and construct in
accordance with the laws of the State of Florida without regard to principles of
conflicts of law.
8.04 Entire Agreement. This document constitutes a complete and entire
agreement among the parties with reference to the subject matters set forth
herein. No statement or agreement, oral or written, made prior to or at the
execution hereof and no prior course of dealing or practice by either party
shall vary or modify the terms set forth herein without the prior consent of the
other parties hereto.
8.05 Amendments. This Agreement may be amended only by a written document
signed by the parties.
8.06 Notices. Notices or other communications required to be made in
connection with this Agreement shall be delivered to the parties at the address
set forth below or at such other address as may be changed from time to time by
giving written notice to the other parties.
8.07 Enforceability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
8.08 Execution in Counterparts; Facsimile Signatures. This Agreement may be
executed in multiple counterparts, each of which shall constitute one and a
single Agreement. Any facsimile signature of any part hereto or to any other
agreement or document executed in connection hereof should constitute a legal,
valid and binding execution by such parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by a duly authorized Officer(s) this 29 day of November, 2000.
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<PAGE>
TORVEC SUBSIDIARY CORPORATION TORVEC, INC.
BY: /S/ KEITH E. GLEASMAN BY: /S/ KEITH E. GLEASMAN
------------------------- ------------------------
Keith E. Gleasman
President
ICE SURFACE DEVELOPMENT, INC. UTEK CORPORATION
BY: /S/ UWE REISCHL BY: /S/ CLIFFORD M. GROSS
------------------------- ------------------------
Clifford M. Gross, Ph.D.
Chief Executive Officer
[UTEK CORPORATION
CORPORATE
SEAL
1999 DELAWARE]
STATE OF NEW YORK )
) ss.:
COUNTY OF MONROE )
On the 29th day of November, in the year 2000, before me personally
came Keith E. Gleasman to me known, who, being by me duly sworn, did depose and
say that he resides in 11 McCoone Woods Drive, Fairport, N.Y. 14450 (if the
place of residence is in a city, include the street and street number, if any,
thereof); that he is the (president or other officer or director or attorney in
fact duly appointed) of TORVEC SUBSIDIARY CORPORATION, the corporation described
in and which executed the above instrument; and that he signed his name thereto
by authority of the board of directors of said corporation.
/S/ RICHARD B. SULLIVAN
-----------------------
Notary Public
RICHARD B. SULLIVAN
Notary Public, State of New York
Monroe County
Commission Expires June 30, 2002
----
STATE OF NEW YORK )
) ss.:
COUNTY OF MONROE )
On the 29th day of November, in the year 2000, before me personally
came KEITH E. GLEASMAN, to me known, who, being by me duly sworn, did depose and
say that he resides in 11 McCoone Woods Drive, Fairport, N.Y. 14450 (if the
place of residence is in a city, include the street and street number, if any,
thereof); that he is the President of TORVEC, INC., the corporation described in
and which executed the above instrument; and that he signed his name thereto by
authority of the board of directors of said corporation.
Page 40 of 42
<PAGE>
/S/ RICHARD B. SULLIVAN
-----------------------
Notary Public
RICHARD B. SULLIVAN
Notary Public, State of New York
Monroe County
Commission Expires June 30, 2002
----
STATE OF FLORIDA )
) ss.:
COUNTY OF HILLSBOROUGH )
On the 29th day of November, in the year 2000, before me personally
came Clifford M. Gross to me known, who, being by me duly sworn, did depose and
say that he resides in Plant City, Florida (if the place of residence is in a
city, include the street and street number, if any, thereof); that he is the
(president or other officer or director or attorney in fact duly appointed) of
ICE SURFACE DEVELOPMENT, INC., the corporation described in and which executed
the above instrument; and that he signed his name thereto by authority of the
board of directors of said corporation.
/S/ DIANE WILES
---------------
Notary Public
[SEAL] M. DIANE WILES
MY COMMISSION # CC 936750
EXPIRES: May 15, 2004
Bonded Thru Notary Public Underwriters
STATE OF FLORIDA )
) ss.:
COUNTY OF HILLSBOROUGH )
On the 29th day of November, in the year 2000, before me personally
came Uwe Reischl to me known, who, being by me duly sworn, did depose and say
that he resides in Tampa, Florida (if the place of residence is in a city,
include the street and street number, if any, thereof); that he is the
(president or other officer or director or attorney in fact duly appointed) of
UTEK CORPORATION, the corporation described in and which executed the above
instrument; and that he signed his name thereto by authority of the board of
directors of said corporation.
/S/ DIANE WILES
---------------
Notary Public
[SEAL] M. DIANE WILES
MY COMMISSION # CC 936750
EXPIRES: May 15, 2004
Bonded Thru Notary Public Underwriters
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