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AGREEMENT AND PLAN OF EXCHANGE
BY AND BETWEEN
CATALYST COMMUNICATIONS, INC.
And
DNAPRINT GENOMICS, INC. AND ITS SHAREHOLDERS
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Dated: JULY 11, 2000
TABLE OF CONTENTS
1. Delivery of Shares of the Company .......................... 1
2. Consideration for Transfer of Shares ......................... 1
3. Miscellaneous Provisions Relating to Delivery of
`CLYC' Stock. ....................................... 1
4. Access to Books and Records .................................... 2
5. Closing.......................................................... 2
6. Representations and Warranties of the Shareholders ........... 2
a. Organization and Standing............................... 2
b. Subsidiaries, Etc....................................... 3
c. Capital Stock........................................... 3
d. Indebtedness............................................ 3
e. Financial Statements.................................... 3
f. Contracts and Other Commitments ...................... 3
g. Intellectual Property................................... 4
h. Assets.................................................. 4
i. Insurance............................................... 5
j. Employees............................................... 5
k. Employee Benefit Plans.................................. 6
l. ERISA................................................... 6
m. Litigation.............................................. 7
n. Accounts Receivable .................................... 7
o. Inventories............................................. 7
p. Purchase Commitments and Outstanding Bids............... 7
q. Real Estate............................................. 8
r. Changes, Dividends, Etc................................. 8
s. Tax Returns and Liabilities............................. 8
t. Breaches of Contracts, Etc.............................. 9
u. Title to Company Stock.................................. 9
v. Conflict of Interests................................... 9
w. Disclosure.............................................. 10
7. Representations and Warranties of CATALYST COMMUNICATIONS, INC.... 10
a. Organization and Standing ............................. 10
b. Capital Stock............................................ 10
c. Validity of Shares ...................................... 11
d. Changes, Dividends, Etc. ............................... 11
e. Authorization of Agreement ............................. 11
f. No Violation of Law, Etc................................. 11
g. Financial Statements..................................... 11
h. No Material Changes...................................... 11
8. Conditions & Obligations of `CATALYST COMMUNICATIONS, INC.' ...... 12
9. Conditions to Obligations of the Company and the Shareholders ... 14
10. Certain Covenants Prior to Closing .......................... 16
11. Survival of Representations and Warranties; Indemnification ..... 17
a. Survival................................................. 17
b. Indemnification by Company and Shareholders ............ 18
c. Indemnification by CLYC ............................... 18
d. Procedure for Indemnification ........................ 18
e. After - Tax Basis........................................ 19
12. Investment Representation ....................................... 20
13. Further Assurances................................................ 21
14. Expenses.......................................................... 21
15. Employees of the Company ...................................... 21
16. Directors......................................................... 21
17. Other Matters..................................................... 22
a. No Other Agreements .................................... 22
b. Amendment................................................ 22
c. Notices.................................................. 22
d. Specific Performance..................................... 22
e. Assignment............................................... 22
f. Paragraphs and Other Headings ....................... 22
g. Choice of Law............................................ 23
h. No Waiver................................................ 23
i. Severability............................................. 23
j. Counterparts............................................. 23
Exhibit "A"................................................................ 24
Exhibit "B"................................................................ 25
AGREEMENT AND PLAN OF EXCHANGE
AGREEMENT AND PLAN OF EXCHANGE (the "Agreement"), dated as of July 11,
2000, between Catalyst Communications, Inc., a Utah Corporation ("CLYC") and
DNAPrint genomics, Inc., a Florida Corporation (the "Company") and all of the
Shareholders of the Company whose names appear in Exhibit "A" hereto
("Shareholders").
WITNESSED:
WHEREAS, the Shareholders represent that they are the legal and
beneficial owners of all of the outstanding shares of capital stock of the
Company; and
WHEREAS, the Shareholders desire to exchange one hundred percent (100%)
of the capital stock of the Company for shares of Common Stock of `CLYC' and
`CLYC' desires to effect such exchange and purchase, all on the terms and
conditions hereinafter set forth in such a manner that the exchange will
constitute a tax-free reorganization pursuant to the provisions of Section
368(1)(B) of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the premises and the mutual
agreements and undertakings hereinafter set forth, the parties do hereby adopt
said plan of reorganization, and, in order to consummate said plan, do hereby
agree as follows:
1. DELIVERY OF SHARES OF THE COMPANY. The Shareholders agree to transfer and
deliver to `CLYC', and `CLYC' agrees to acquire one hundred percent (100%) of
the capital stock of the Company from the Shareholders as set forth in Exhibit
"A" attached hereto and by this reference made a part hereof.
2. CONSIDERATION FOR TRANSFER OF SHARES. Upon closing, CLYC agrees to issue two
million five hundred sixty thousand (2,560,000) post-reverse shares of its
common stock, and fund Company in accordance with Exhibit "C" hereto. Upon the
terms and subject to the representations and conditions set forth in such
Agreement, `CLYC' agrees to deliver said shares to the Shareholders upon
finalization of this Agreement. In addition, three million eight hundred forty
thousand (3,840,000) post-reverse shares (The "Escrowed Shares") of CLYC common
stock will be held in escrow for five (5) years, and will be released to the
Shareholders based upon the terms, conditions and achievements set forth in
Exhibit "D" attached hereto. CLYC anticipates a 1 for 30 reverse split of its
securities within the next twelve (12) months from the date of this Agreement.
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3. MISCELLANEOUS PROVISIONS RELATING TO DELIVERY OF CLYC'S COMMON STOCK. No
fractional shares of Common Stock of CLYC will be delivered and the number of
shares to be issued to any of the Shareholders will be rounded up to the nearest
whole share if the Shareholder is entitled to receive one-half or more of a
share and rounded down to the nearest whole share if the Shareholder is entitled
to receive less than one-half of a share.
4. ACCESS TO BOOKS AND RECORDS. Except as hereinafter provided, `CLYC' and its
officers, employees and agents, shall have full access at all reasonable times
from and after the date hereof to the plants, facilities, books and records of
the Company and the Company shall cooperate fully with `CLYC' to the end that it
may become familiar with the properties and business of the Company. `CLYC'
agrees to treat any information which is disclosed to `CLYC' by the Company and
is proprietary or confidential to the Company, as confidential information, and
in the event the Closing does not take place, all documents will be returned to
the Company and `CLYC' will not make or retain copies of any documents or make
use of any confidential information disclosed to it in the conduct of its
business.
5. CLOSING. The Closing of the exchange provided for herein will take place at
CLYC's office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ on July 11, 2000,
such date being herein referred to as the "Closing Date". At the Closing, the
Shareholders arranged to deliver to `CLYC' all certificates, assignments, and
other instruments which may be necessary, desirable, or appropriate in order to
transfer to `CLYC' all of the outstanding shares of capital stock of the
Company, all in form and substance reasonably satisfactory to counsel for
`CLYC'. At such Closing, `CLYC' shall deliver to the Company certificates
evidencing the shares of Common Stock of `CLYC' to be delivered to the
Shareholders pursuant to Paragraph 2 hereof, together with such other
instruments which may be necessary, desirable, or appropriate to accomplish such
transfers, all in form and substance satisfactory to the Shareholders.
6. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The Shareholders jointly
and severally represent and warrant to and agree with `CLYC' as follows:
A. ORGANIZATION AND STANDING. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida, with full corporate power to carry on its business as now being
conducted and to own and operate the property and assets now owned and
operated by it, and is duly qualified to transact business and in good
standing in each jurisdiction where the ownership of its properties or the
conduct of its business requires it to be licensed or qualified to do
business. The Company also delivered to `CLYC' a copy of its Articles of
Incorporation and all amendments thereto, certified by the Secretary of
State of the State of Florida, and a copy of its By-Laws as amended,
certified by its Secretary, which documents are complete and correct as of
the date of this Agreement.
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B. SUBSIDIARIES, ETC. The Company has no subsidiaries and is not party to
any partnership, joint venture of similar agreement, except as disclosed in
the schedule referred to in subparagraph (f) of Paragraph 6 hereof.
C. CAPITAL STOCK. The authorized capital stock of the Company consists of
105,000 shares of Common Stock, par value $.001, of which 105,000 shares
are issued and outstanding. All of said outstanding shares of the Company
have been duly authorized and validly issued, are fully paid and
non-assessable. There are no options, warrants or other agreements or
commitments which are now or may in the future obligate the Company to
issue or purchase any shares of its capital stock or other securities.
D. INDEBTEDNESS. The Company has delivered to `CLYC' a schedule, as
attached hereto (The "Indebtedness Schedule"), identified by reference to
this subparagraph, listing all promissory notes payable by the Company, all
agreements of the Company to borrow money from others, and all commitments
by others to lend money to the Company. As to each note, obligation to
borrow and loan commitment, such schedule accurately sets forth the
interest rate, terms of payment of principal and interest, identity of
security (if any) and any other material terms of such indebtedness. The
Company is not in default in any respect under, and is not otherwise, in
violation or contravention of, any of the terms or provisions of any note,
loan agreement, agreement to borrow money from others or any commitment by
others to lend money.
E. FINANCIAL STATEMENTS. The Company has delivered to `CLYC' a balance
sheet (the "Balance Sheet") of the Company as of December 31, 1999 (the
"Balance Sheet Date"). All of such financial statements are complete and
fairly present the financial position of the Company on the indicated dates
and the results of its present financial position of the Company on the
indicated dates and the results of its operations for the indicated
periods. All of such statements have been prepared on the tax basis of
accounting consistently applied. The Company has no liabilities, whether
absolute, accrued, contingent or otherwise, other than (i) liabilities
disclosed, (ii) incurred in "arms-length" transactions in the ordinary
course of business since the Balance Sheet Date and (iii) liabilities
disclosed in subparagraph (k) of this Paragraph 6 or the schedule referred
to in subparagraph (f) of this paragraph 6.
F. CONTRACTS AND OTHER COMMITMENTS. The Company has delivered to `CLYC' a
complete and accurate schedule, identified by reference to this
subparagraph, listing and briefly describing all Material Contracts. For
this purpose, the term "Material Contracts" shall be defined to mean (i)
all contracts and commitments out of the ordinary course of business; (ii)
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all contracts and commitments involving an obligation which cannot or, in
reasonable probability, will not be performed or terminated within sixty
(60) days from the date hereof; (iii) all bonus, incentive compensation,
pension, group insurance or employee welfare plans of any nature
whatsoever; (iv) all collective bargaining agreements or other contracts or
commitments to or with any labor unions or other employee representatives
or groups of employees; (v) employment contracts and other contracts,
agreements or commitments to or with individual employees, agents or
consultants extending for a period of more than three (3) months from the
date hereof or providing for earlier termination only upon the payment of a
penalty or equivalent thereof; or (vi) all other contracts or commitments
providing for payments based in any manner upon the sales, purchases or
profits of the Company. There has not been any material default in any
obligation to be performed by the Company under any material contract
listed on the said schedule, and the Company has not waived any material
right under any such material contract.
G. INTELLECTUAL PROPERTY. The Company owns, or is licensed or otherwise has
the full and exclusive rights to use, all patents, trademarks, trade names,
copyrights, technology, know-how, processes, names and likenesses used in
or necessary for the conduct of its business as heretofore conducted. The
Company has delivered to `CLYC' a complete and accurate schedule identified
by reference to this subparagraph, listing all domestic and foreign
patents, patent applications, licenses, formulae, trademarks, trade names
and copyrights owned or held by the Company and a summary of the terms of
all agreements relating to technology, know-how or processes which the
Company is licensed or authorized to use by others. Except as set forth in
this schedule, the Company has the sole and exclusive right to use the
patents, trademarks, trade names, copyright, technology, know-how,
processes, names and likenesses referred to therein, and the consummation
of the contemplated transactions will not alter or impair any such rights;
no claims have been asserted by any person to the use of any such patents,
trademarks, trade names, copyrights, technology, know-how, processes, names
and likenesses or challenging or questioning the validity or effectiveness
of any such licenses or agreements, and there is no valid basis for any
such claim and the use of such patents, trademarks, trade names,
copyrights, technology, know-how, processes, names and likenesses by the
Company does not infringe on the rights of any person.
H. ASSETS. The Company has delivered to `CLYC' a complete and accurate
schedule, identified by reference to this subparagraph, containing (i) a
complete legal description of all real property owned, leased or otherwise
used or occupied by the Company, (ii) a list of all banks and other
institutions in which the Company has any account or safe deposit showing
the identifying numbers and names of the persons authorized to draw thereon
or have access thereto, and (iii) a list of all capitalized machinery,
tools, equipment owned, leased or otherwise used by the Company. Except as
disclosed on the schedule referred to in subparagraph (f) of this Paragraph
6, except as disclosed in the schedule of assets supplied pursuant to this
subparagraph, and except as acquired after the date hereon on terms
approved by `CLYC', the Company and good and marketable title to all
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property and assets used in its business, including all property and assets
reflected in the schedule referred to in this subparagraph and in the
Balance Sheet and all properties and assets acquired after the Balance
Sheet Date (other than assets disposed of since the Balance Sheet Date in
the ordinary course of business), subject to no liens, mortgages, pledges,
encumbrances or charges of any kind. The machinery, equipment and other
facilities of the Company are in satisfactory operating condition and
repair for the business now conducted by the Company. At the Closing, the
Company will deliver to Buyer copies of all records, including all
signatures or authorization cards, pertaining to such safe deposit boxes
and bank accounts.
I. INSURANCE. The Company has delivered to `CLYC' a complete and accurate
schedule, identified by reference to this subparagraph, listing and briefly
describing all policies of fire, liability, life, workmen's compensation
and other insurance maintained by the Company. All such policies are in
full force and effect, all premiums with respect thereto covering all
periods up to and including the Closing Date have been paid or financed,
and no notice of cancellation or termination has been received with respect
to any such policy. Such policies are sufficient for compliance with all
requirements of law and all agreements to which the Company is a party; are
valid, outstanding and enforceable policies; provide adequate insurance
coverage for the assets and operations of the Company, will remain in full
force and effect through the Closing Date without the payment of additional
premiums, and will not in any way be affected by, or terminate or lapse by
reason of, the contemplated transactions. The schedule provided by the
Company identifies all risks that have been designated as being
self-insured. No insurance carrier has refused to insure any operations or
property assets of the Company, nor has any insurance carrier, which has
carried, or received any application for, any such insurance limited the
coverage during the last three (3) years.
J. EMPLOYEES. The Company has delivered to `CLYC' complete and accurate
schedules, identified by reference to this subparagraph, listing each
salaried employee of the Company, together with each employee who is paid
on an hourly basis and showing their respective rates of compensation
(including bonuses, if any) and fringe benefits (including vacation time
accrued to the Balance Sheet Date). The Company has paid in full to its
employees all wages, salaries, commissions, bonuses and other direct
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compensation for all services employed by them, other than amounts that
have not yet become payable in accordance with the Company's customary
practices. Except as set forth in the schedule, the Company is not liable
for any severance pay or other payments on account of termination of any
former employee except as listed in this schedule, is in compliance with
all applicable laws respecting employment and employment practices, and
terms and conditions of employment and wages and hours.
K. EMPLOYEE BENEFIT PLANS. Except as set forth in a complete and accurate
schedule and identified by reference to this subparagraph delivered to
`CLYC', the Company does not have, none of its employees are covered by,
and the Company does not have any obligation with respect to, any bonus,
deferred compensation, pension, profit-sharing, retirement, insurance,
stock purchase, stock option, or other fringe benefit plan, arrangement or
practice, or any other employee benefit plan (as defined in subparagraph
(1), whether formal or informal (collectively "Plans"). The schedule
contains an accurate and complete description of, and sets forth the annual
amount payable pursuant to, each of those Plans, and the Balance Sheets
(which hereinafter shall refer to an unaudited balance sheet of the
Company) reflect in the aggregate an accrual of all amounts accrued but
unpaid under such Plans as of their respective dates. The Company has
performed and complied with all of its obligations under or with respect to
such Plans and such Plans have operated in accordance with their terms. The
Company has no commitment, whether formal or informal and whether legally
binding or not, to create any additional Plans.
L. ERISA. The Company has delivered to `CLYC' a schedule of all Plans
disclosed or required to be disclosed in subsection (k) above that are
employee benefit plans and any related trust agreements (collectively,
"Target Plans"). The schedule lists, and the Company shall provide `CLYC'
with copies of, (a) the most recent Internal Revenue Section determination
letter relating to each of the Target Plans (and none of the Target Plans
has been amended or modified since the date of the determination letter
relating to it and each of the Target Plans has been operated in accordance
with the description contained in such determination letter), (b) the most
recent annual report (Form 5500 Series) and accompanying schedules of each
of the Target Plans filed with the Department of Labor pursuant to ERISA,
(c) the most recent certified financial statements of each of the Target
Plans as of the date thereof, and there have been no material changes in
the assets or liabilities associated with such Target Plans since the date
of such financial statements. The Company has delivered to `CLYC' copies
of, and the schedule lists, all actuarial reports with respect to the
Target Plans, which reports are complete and accurate. Except as set forth
in the schedule, there are no accrued unpaid contributions to any of the
Target Plans. The Target Plans have operated in accordance with the
applicable requirements of ERISA and the Code. No reportable event (as
defined in section 4043(e) of ERISA), prohibited transactions (as defined
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in section 406 of ERISA or section 4975 of the Code), accumulated funding
deficiency (as defined in section 302 of ERISA) or plan termination (as
defined in Title IV of ERISA or section 411(d) of the Code) has occurred
with respect to any of the Target Plans. Except as set forth in the
schedule, no filing, application or other matters with respect to any of
the Target Plans is pending with the Internal Revenue Service, Pension
Benefit Guaranty corporation, United States Department of Labor or other
governmental body, none of the Target Plans has been terminated, the
Pension Benefit Guaranty Corporation has not taken any action to terminate
any of the Target Plans and no trustee has been appointed by any court to
administer any of the Target Plans. None of the Target Plans has been
amended since the date of the Balance Sheets or will be amended prior to
the Closing Date.
M. LITIGATION. Except as identified in a complete and accurate schedule,
identified by reference to this subparagraph and delivered to `CLYC', the
Company is not engaged in or threatened with any legal action or other
proceeding before any court or administrative agency. The Company has not
violated any laws, regulations or order applicable to its business or
activities, and the conduct of the present business of the Company at the
present location is in conformity with all zoning and building code
requirements.
N. ACCOUNTS RECEIVABLE. All accounts receivable of the Company, whether or
not reflected in the Balance Sheets or the Interim Balance Sheet, represent
sales actually made in the ordinary course of business, and are current and
collectible net of any reserves shown on the Balance Sheets or the Interim
Balance Sheet (which reserves are adequate and were calculated consistent
with past practice). Subject to such reserves, each of the accounts
receivable has been collected in full or will be collected in full, without
any set-off, within ninety (90) days after the day on which it first
becomes due and payable.
O. INVENTORIES. All inventory of the Company, whether or not reflected in
the Balance Sheets or the Interim Balance Sheet, consists of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Balance Sheets
or the Interim Balance Sheet. All inventories not written off have been
recorded at the lower of average cost or market. The quantities of each
type of inventory (whether raw materials, work-in-process, or finished
goods) are not excessive, but are reasonable and warranted in the present
circumstances of the Company. All work in process and finished goods
inventory is free from any defect or other deficiency.
P. PURCHASE COMMITMENTS AND OUTSTANDING BIDS. No purchase commitment of the
Company is in excess of normal, ordinary and usual requirements of its
business, or was made at any price in excess of the then current market
price, or contains terms and conditions more onerous than those usually and
customary in the industry. In the aggregate, the outstanding bids, sales
proposals, contracts or unfilled orders of the Company (i) will not (based
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on today's costs and reasonably foreseeable increases in such costs)
require the Company to supply goods or services at cost to the Company in
excess of the revenues to be received therefrom, and (ii) quote prices
which include a ▇▇▇▇-up over reasonably estimated costs consistent with
past ▇▇▇▇-ups on similar business.
Q. REAL ESTATE. The Company shall have delivered to `CLYC' a schedule
identified by reference to this subparagraph listing all contracts or
commitments affecting ownership of, title to, use of, or any interest in
real estate. All such leases of real property are valid, binding, and
enforceable in accordance with their terms, and are in full force and
effect; there are no existing defaults (or events which, with notice or
lapse of time or both, would constitute a default) by the Company, and all
lessors under such leases have consented (where such consent is necessary)
to the consummation of the contemplated transactions without requiring
modification in the rights or obligations of the lessee under such leases
and all such consents are listed in the schedule provided to `CLYC'. The
Company has delivered executed counterpart copies of all consents referred
to in the preceding sentence to `CLYC'.
R. CHANGES, DIVIDENDS, ETC. Since the Balance Sheet Date there has been no
material adverse change in the condition (financial or otherwise), physical
assets, capitalization or business of the Company, no dividend or other
distribution declared, paid or made on any of the shares of the Company's
capital stock, no direct or indirect redemption, purchase or other
acquisition by the Company of any shares of its capital stock, no damage,
destruction or loss (whether or not covered by insurance) adversely
affecting the properties, business or prospects of the Company, no increase
in the rate of compensation payable or to become payable to any officer or
other employee of the Company (except as disclosed in the schedule referred
to in subparagraph (j) of the Paragraph 6 or approved in writing by `CLYC',
no significant labor disturbances, and no other event or condition which
materially and adversely affects the business of the Company. Since the
Balance Sheet Date, the business of the Company has been conducted
diligently and in the ordinary course; the Company has not sold or
transferred any of its property or assets except in the ordinary course of
business, and no contracts have been entered into by the Company except in
the ordinary course of business or with the written approval of `CLYC'.
S. TAX RETURNS AND LIABILITIES. The Company has filed on a timely basis all
tax returns that are or were required to be filed pursuant to the laws,
regulations or administrative requirements of each governmental body with
taxing power of it or its assets. The Company has delivered to `CLYC' all
such Tax Returns filed since the Company's inception. The Company has paid,
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all Taxes that have or may have become due pursuant to those Tax Returns,
or otherwise, or pursuant to any assessment received by the Company, except
such Taxes, if any, as are set forth in a schedule and are being contested
in good faith and as to which adequate reserves (determined in accordance
with the tax basis of accounting consistently applied) have been provided
for in the Balance Sheets and Interim Balance Sheets.
T. BREACHES OF CONTRACTS, ETC. Neither the execution nor the delivery of
this Agreement by the Company, nor the performance of any of its
obligations hereunder, will result in a breach or violation of any term or
provision of or constitute a default under any indenture, mortgage or other
agreement or instrument to which the Company is a party. Neither the
execution nor the delivery of this Agreement by the Shareholders, nor the
performance of any of their obligations hereunder, will result in a breach
or violation of any term or provision of or constitute a default under any
indenture, mortgage, or other agreement which any of them is bound, or any
law or order, rule, regulation, writ, injunction or decree of any
government, governmental instrumentality or court having jurisdiction over
the Shareholders or any of their assets or rights, or results in the
creation or imposition of any lien, charge or encumbrance of any kind
whatsoever on any of such assets or rights.
U. TITLE TO COMPANY STOCK. Each of the Shareholders represents and warrants
for themselves and not for the others; that this Agreement has been duly
executed and delivered by the Shareholder(s) and is, as to themselves, a
valid agreement binding upon them in accordance with its terms; that he
individually has valid title to the shares of capital stock of the Company
set forth opposite their name in Exhibit "A" hereto, with full right, power
and authority to transfer, sell and deliver such shares pursuant to this
Agreement; and that, upon delivery of their shares pursuant to this
Agreement, `CLYC' will receive valid and marketable title to their shares,
free and clear of all voting or other trust arrangements, liens,
encumbrances, restrictions, and adverse claims, whether existing or
contingent.
V. CONFLICT OF INTERESTS. Neither the Company nor any of its affiliates (as
this term is defined in the Securities Act of 1933 [the "1933 Act"] and in
the rules and regulations promulgated by the Securities and Exchange
Commission ["SEC"] thereunder) has, either directly or indirectly, (i) an
interest in any corporation, partnership, proprietorship, association or
other person or entity which produces or sells those products and services
which are produced or sold by the Company, or (ii) a beneficial interest in
any contract or agreement to which the Company is a party or by which the
Company may be bound. For the purpose of this subparagraph, there shall be
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disregarded any interest which arises solely from the ownership of less
than a five percent (5%) equity interest in a corporation which has a class
of securities regularly traded on any securities exchange or in the
over-the-counter market, or quoted on any inter dealer quotation system.
W. DISCLOSURE. No representations or warranties by the Shareholders or the
Company in this Agreement and no statement contained in any document
(including, without limitation, financial statements, the schedules),
certificate, or other writing furnished or to be furnished to `CLYC' or any
of its representatives pursuant to the provisions hereof or in connection
with the contemplated transactions, contains or will contain any untrue
statement of material fact or omits or will not state any material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they are made, not misleading. Documents
delivered or to be delivered to `CLYC' pursuant to this Agreement are or
will be true and complete copies of what they purport to be. There is no
fact known to the officers, directors or employees of the Company unknown
to `CLYC' on the date of this Agreement that may affect or does affect in a
materially adverse manner CLYC's ability to conduct the business of the
Company substantially as conducted prior to such date.
7. REPRESENTATIONS AND WARRANTIES OF CLYC. CLYC represents and warrants to and
agrees with the Company as follows:
A. ORGANIZATION AND STANDING. CLYC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah, with
full corporate power to carry on its business as now being conducted and to
own and operate the property and assets now owned and operated by it, and
is duly qualified to transact business and in good standing in each
jurisdiction where the ownership of its properties or the conduct of its
business requires it to be licensed or qualified to do business.
B. CAPITAL STOCK. The authorized capital stock of `CLYC' consists of two
hundred million (200,000,000) shares of Common Stock, $0.01 par value, one
hundred ninety-two million three hundred sixty thousand nine hundred
eighty-six (192,360,986) shares of Common Stock are presently issued and
outstanding. All of said outstanding shares are validly issued, fully paid
and non-assessable. CLYC is filing the necessary paperwork to increase the
authorized capital stock of `CLYC' to five hundred million (500,000,000)
shares of Common Stock.
C. VALIDITY OF SHARES. The shares of Common Stock to be delivered by CLYC
pursuant to this Agreement will, when so delivered, be validly issued and
outstanding, fully paid and non-assessable.
D. CHANGES, DIVIDENDS, ETC. Prior to the Closing hereunder, `CLYC' will not
split, combine or otherwise change or reclassify its outstanding Common
Stock or declare or distribute any cash or stock dividend upon such Common
Stock.
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E. AUTHORIZATION OF AGREEMENT. CLYC's Board of Directors has duly
authorized the execution, delivery and performance of this Agreement by
CLYC has been duly authorized by CLYC's Board of Directors, and will not
result in any breach of or violate or constitute a default under its
Articles of Incorporation or By-Laws or any indenture, mortgage or other
agreement or instrument to which it is a party.
F. NO VIOLATION OF LAW, ETC. Neither the execution, nor the delivery of
this Agreement by CLYC, nor the performance of any of its obligations
hereunder will result in a breach or violation of any law, order, rule,
regulation, writ, injunction or decree or any governmental instrumentality
or court having jurisdiction over CLYC or any of its assets or rights, or
result in the creation or imposition of any lien, charge or encumbrance of
any kind whatever on any of such assets or rights.
G. FINANCIAL STATEMENTS. `CLYC" has delivered to the Company its initial
balance sheet as of May 1, 2000, and the related statement of shareholder
equity. Such financial statements have been initialed by officers of `CLYC'
and the Company for identification. Such financial statements are complete,
have been prepared in accordance with the tax basis of accounting
consistently applied and fairly present the consolidated financial position
of `CLYC' at such date, and the results of its operations for the period
therein specified.
H. NO MATERIAL CHANGES. Since July 1, 2000, there has been no material
change in the condition (financial or otherwise), assets, liabilities,
capitalization or business of `CLYC', which have not been disclosed to the
Company.
8. CONDITIONS AND OBLIGATIONS OF CLYC. The obligations of `CLYC' under this
Agreement are of the following conditions precedent:
a. All representations and warranties of the Shareholders and the Company
contained herein and in any certificate or other investment delivered
pursuant to the provisions hereof, or in connection with the transactions
contemplated hereby, shall be true on the Closing Date with the same force
and effect as though such representations and warranties had been made on
the Closing Date.
b. The Shareholders and the Company shall have performed and complied with
all of the terms, covenants and conditions of this Agreement to be
performed or complied with by them, respectively, on or before the Closing
Date.
11
c. The Directors of the Company shall have taken all necessary action to
authorize the execution and performance of this Agreement, and the Company
shall have delivered to `CLYC' true and complete copies, certified by the
Secretary, of Resolutions of its Board of Directors evidencing such action.
d. The Shares of CLYC's Common Stock, $0.01 par value, which are to be
delivered within thirty (30) days from the Closing Date to the Shareholders
in accordance with the terms hereof shall have been listed or authorized to
be listed on the Exhibit "B".
e. The Shareholders and the Company shall have delivered to `CLYC' such
certificates dated as of the Closing Date. Certifying in such detail as
`CLYC' may reasonably request to the fulfillment of the conditions
specified in this Paragraph 8. No legend or other reference to any
purported encumbrance shall appear on any certificate. The delivery of
certificates to `CLYC' provided in Paragraph 2 will result in CLYC's
immediate acquisition of record and beneficial ownership of the Shares,
free and clear of all encumbrances (which term shall be hereinafter defined
as any security interest, mortgage, lien charge, adverse claim or
restriction of any kind, including, but not limited to, any restriction on
the use, voting, transfer, receipt of income or other exercise of any
attributes of ownership).
f. Upon request, The Company shall have delivered to `CLYC' an opinion of
its counsel for the Shareholders and the Company, dated as of the Closing
Date, to the effect that:
i. The Company is duly organized, validly existing and in good
standing under the laws of the State of Florida, with full corporate
power and authority to enter into and perform its obligations under
this Agreement, to own and hold its properties owned and leased and to
carry on the business in which it is engaged, and is legally qualified
to do business as a foreign corporation in good standing in each
jurisdiction wherein the nature of its activities or its properties
owned or leased makes such qualification necessary.
ii. The execution, delivery and performance of this Agreement and the
instruments executed and delivered to `CLYC' pursuant to this
Agreement by the Company, have been duly and validly authorized and
approved (as required by law and the terms of this Agreement) by the
Company's Board of Directors and this Agreement and such instruments
have been duly executed and delivered by the Company and the
Shareholders and constitute the valid and binding obligation of the
Company and the Shareholders, respectively, enforceable in accordance
with their respective terms, except as limited by bankruptcy,
insolvency and other laws affecting the enforcement or creditor's
rights.
12
iii. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein will not result
in any breach or violation of any of the terms or provisions of, or
constitute a default under, the Company's Articles of Incorporation or
By-Laws, or, to the knowledge of such counsel, any term or provision
of any indenture, mortgage, deed of trust, lease, loan agreement,
security agreement, or other agreement, instrument, commitment or
arrangement, to which the Company or any of its Shareholders is a
party or by which the Company or any of the Shareholders is bound or
to which any of the Company's properties is subject.
iv. The Company is authorized by its Articles of Incorporation to
issue 105,000 shares of capital stock, all of which are duly
authorized, validly issued and outstanding, fully paid or
non-assessable, and the issuance and sale of such shares did not to
the knowledge of such counsel violate the 1933 Act or the rules and
regulations of the SEC thereunder or any applicable state securities
or Blue Sky Laws. The Company has no other authorized or outstanding
series or class of capital stock or other securities, or outstanding
options, warrants or other rights to acquire securities of the
Company. The Shareholders are the record and beneficial owners of the
respective number of shares of the Company's capital stock set forth
opposite their names in Exhibit "A" hereto.
v. Insofar as is known to such counsel, all assignments, powers and
other documents necessary to effect the transfer and delivery of the
outstanding shares of capital stock of the Company to `CLYC' as
provided for herein have been duly executed and delivered by the
Shareholders and are adequate to transfer to `CLYC' valid and
marketable title to said shares.
vi. Such counsel has no knowledge of any litigation, proceeding or
governmental investigation or labor dispute or labor trouble, pending
or threatened against the Company, except matters specifically
mentioned in the schedule required by subparagraph (m) of Paragraph 6
above.
In rendering such opinion, such counsel may rely on certificates of public
officials and upon certificates of officers of the Company and the Shareholders
and upon opinions of counsel retained by the Company or the Shareholders in
States other than California, copies of which certificates and opinion shall be
furnished to `CLYC'.
g. No action or proceeding by any governmental body or agency shall have
been threatened, asserted or instituted to restrain or prohibit the
carrying out of the transactions contemplated by this Agreement.
h. All corporate and other proceedings and action taken in connection with
the transactions contemplated by this Agreement and all certificates,
opinions, agreements, instruments, and documents mentioned in this
Paragraph 8 or incident to any such transaction shall be reasonably
satisfactory in form and substance to `CLYC'.
13
The conditions contained in this Paragraph 8 are included herein for the benefit
of `CLYC' and, without constituting a waiver of any of its rights hereunder, may
be waived, in whole or in part, by `CLYC'.
9. CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS. The Company
and the Shareholders under this Agreement are subject to the fulfillment, on or
before the Closing Date, of the following conditions:
a. All representations and warranties of `CLYC' contained herein and in any
certificate or other instrument delivered pursuant to the provisions
hereof, or in connection with the transactions contemplated hereby, shall
be true on the Closing Date with the same force and effect as though such
representations and warranties had been made on the Closing Date.
b. `CLYC' shall have performed and complied with all of the terms,
covenants and conditions of this Agreement to be performed or complied with
by it on or before the Closing Date.
c. `CLYC' shall have delivered to the Shareholders a certificate of its
President or a Vice President and its Secretary or an Assistant Secretary,
dated as of the Closing Date, certifying in such detail as the Shareholders
may reasonably request to the fulfillment of the conditions specified in
this Paragraph 9.
d. The Shares of CLYC's Common Stock, $0.01 par value, which are to be
issued to the Shareholders within thirty (30) days from the Closing Date in
accordance with the terms hereof shall have been listed or authorized for
listing on the Exhibit "B".
e. The Board of Directors of `CLYC' shall have taken all necessary action
to authorize the execution and performance of this Agreement, including the
delivery of shares of Common Stock of `CLYC' to the Shareholders in
accordance with this Agreement, and `CLYC' shall have delivered to the
Shareholders true and complete copies certified by its Secretary or
Assistant Secretary, of Resolutions of its Board of Directors evidencing
such action.
f. `CLYC' shall represent to the Shareholders that:
i. `CLYC' is a corporation duly organized, validly existing and in
good standing under the laws of the State of Utah, with an authorized
capitalization as set forth in subparagraph (b) of Paragraph 7 of this
Agreement, with full corporate power
14
and authority to enter into and perform its obligations under this
Agreement, to own and hold its properties owned and leased and to
carry on the business in which it is engaged.
ii. The Execution, delivery and performance of this Agreement by
`CLYC' have been duly and validly authorized and approved (as required
by law and by the terms of this Agreement) by CLYC's Board of
Directors and this Agreement has been duly executed and delivered by
`CLYC' and constitutes the valid and binding obligation of `CLYC' in
accordance with its terms, except as limited by bankruptcy,
insolvency, and other laws affecting the enforcement of creditors'
rights.
iii. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein will not result
in any breach or violation of any of the terms or provisions of, or
constitute a default under, the Articles of Incorporation or By-Laws
of `CLYC' or, to the knowledge of such counsel, any statue, law,
order, rule or regulation of any court of governmental agency or body
having jurisdiction over `CLYC' or any of its activities or properties
or, to the knowledge of such counsel, any term or provision of any
indenture, mortgage, security agreement, or other agreement,
instrument, commitment or arrangement, to which `CLYC' is a party or
by which it is bound or to which its property is subject.
15
iv. The shares of `CLYC' to be delivered to the Shareholders within
thirty (30) days from the Closing Date pursuant to Paragraph 2 hereof,
have been duly authorized and upon such delivery will be validly
issued, fully paid, non-assessable and listed or authorized for
listing on the Exhibit "B".
g. No action or proceeding by any governmental body or agency shall have
been threatened, asserted or instituted to restrain or prohibit the
carrying out of the transactions contemplated by this Agreement.
h. All corporate and other proceedings and actions taken in connection with
the transactions contemplated hereby and all certificates opinions,
agreements, instruments and documents mentioned in this Paragraph 9 or
incident to any such transaction shall be satisfactory in form and
substance to the Shareholders and their counsel.
The conditions contained in this Paragraph 9 are included herein for the benefit
of the Shareholders and, without constituting a waiver of any of its rights
hereunder, may be waived, in whole or in part, by the Shareholders.
10. CERTAIN COVENANTS PRIOR TO CLOSING.
a. The Shareholders will use their best efforts, and take such other action
as may be necessary, to fulfill all of the conditions contained in
Paragraph 8 hereof and to authorize and consummate, and cause the Company
to authorize and consummate, all of the transactions herein contemplated.
b. `CLYC' will use its best efforts, and take such other action as may be
necessary, to fulfill all of the conditions contained in Paragraph 9 hereof
and to authorize and consummate all of the transactions herein
contemplated.
c. Between the date of this Agreement and the Closing Date, the Company and
Shareholders shall (a) give `CLYC' and its authorized representatives full
access to all offices, warehouses and other facilities and properties of
the Company and to the books and records of the Company (and permit `CLYC'
to make copies thereof), (b) permit `CLYC' to make inspections thereof, and
(c) cause its officers and its advisors (including, without limitation, its
auditors, attorneys, financial advisors and other consultants, agents and
advisors) to furnish `CLYC' with such financial and operating data and
other information with respect to the business and properties of the
Company, and to discuss with `CLYC' and its authorized representatives the
affairs of the Company, all as `CLYC' may from time to time reasonably
request.
16
d. Between the date of this Agreement and the Closing Date, the Company and
Shareholders shall give notice to `CLYC' promptly upon the Company or
Shareholders becoming aware of (a) any inaccuracy of a representation or
warranty set forth in any schedule or (b) any event or state of facts that,
if it had occurred or existed on or prior to the date of this Agreement,
would have caused any such representation and warranty to be inaccurate,
any such notice to describe such inaccuracy, event or state of facts in
reasonable detail.
e. Between the date of this Agreement and the Closing Date, the Company and
Shareholders shall cause (a) copies of all reports and other documents
given to the members of the Board of Directors (or any committee thereof)
of the Company to be delivered to `CLYC' at the same time and (b) copies of
the minutes of all meetings of, and actions taken without a meeting by, the
Board of Directors (or any committee thereof) of the Company to be
delivered to `CLYC' promptly after the preparation thereof. Between the
date of this Agreement and the Closing, the Company and Shareholders shall
give `CLYC' at least three (3) days prior notice of any meeting of or
action to be taken without a meeting by, the Board of Directors or
committee thereof, of the Company and shall cause the Company to permit one
individual designated by `CLYC' to attend each such meeting as an observer.
f. Between the date of this Agreement and the Closing Date, `CLYC', the
Company and Shareholders shall discuss and coordinate with respect to any
public filing or announcement concerning any of the contemplated
transactions.
g. `CLYC' and Shareholders shall cause the Company to, (a) file with
applicable regulatory authorities the applications and related documents
required to be filed by them (and prosecute diligently and related
proceedings) in order to consummate the contemplated transactions and (b)
cooperate with the others as they may reasonably request in connection with
the following.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
A. SURVIVAL. All representations, warranties and agreements contained in
this Agreement shall survive the Closing notwithstanding any investigation
conducted with respect thereto; however, a party shall have no liability
with respect to a representation and warranty, or an agreement to be
performed or complied with prior to the Closing Date, to the extent that
the inaccuracy of such representation and warranty or the failure to
perform and comply with such agreement was not intentional and was
disclosed in a schedule delivered pursuant to this Agreement.
17
B. INDEMNIFICATION BY COMPANY AND SHAREHOLDERS. The Company and
Shareholders, jointly and severally, shall indemnify and hold harmless
`CLYC', and shall reimburse `CLYC' for any loss, liability, claim, damage,
expense (including, but not limited to, costs of investigation and defense
and reasonable attorneys' fees) or diminution of value (collectively
"Damages") arising from or in connection with, (a) any inaccuracy in any of
the representations and warranties of the Company or Shareholders in this
Agreement, or any actions, omissions or state of facts inconsistent with
any such representation or warranty, (b) any failure by the Company or
Shareholders to perform or comply with any agreement in this Agreement, (c)
any claim by any person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have
been made by any such person with the Company or any Shareholder (or any
person acting on their behalf) in connection with any of the contemplated
transactions.
C. INDEMNIFICATION BY `CLYC'. `CLYC' shall indemnify and hold harmless the
Company and Shareholders, and shall reimburse the Company and Shareholders
for, any Damages arising from or in connection with (a) any inaccuracy in
any of the representations and warranties of `CLYC' in this Agreement, or
any actions, omissions or state of facts inconsistent with any such
representation or warranty, (b) any failure by `CLYC' to perform or comply
with any agreement in this Agreement, or (c) any claim by any person for
brokerage or finder's fees or commissions or similar payments based upon
any agreement or understanding alleged to have been made by such person
with `CLYC' (or any person acting on its behalf) in connection with any of
the contemplated transactions without having been discussed by the Company.
D. PROCEDURE FOR INDEMNIFICATION. Promptly after receipt by an indemnified
party of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying
party under such section, give notice to the indemnifying party of the
commencement thereof, but the failure so to notify the indemnifying party
shall not relieve it of any liability that it may have to any indemnified
party except to the extent the indemnifying party demonstrates that the
defense of such action is prejudiced thereby. In case any such action shall
be brought against an indemnified party and it shall give notice to the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it shall
wish, to assume the defense thereof with counsel satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party under such section for any fees of other counsel or any
other expenses, in each case subsequently incurred by such indemnified
party in connection with the defense thereof, other than reasonable costs
of investigation. If an indemnifying party assumes the defense of such an
action, (a) no compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's consent, which shall not
be unreasonably withheld unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any person and no effect
18
on any other claims that may be made against the indemnified party and (b)
the indemnifying party shall have no liability with respect to any
compromise or settlement thereof effected without its consent, which shall
not be unreasonably withheld. If notice is given to an indemnifying party
of the commencement of any action and it does not, within ten (10) days
after indemnified party's notice is given, give notice to the indemnified
party of its election to assume the defense thereof, the indemnifying party
shall be bound by any determination made in such action or any compromise
or settlement thereof effected by the indemnified party. Notwithstanding
the foregoing, if an indemnified party determines in good faith that there
is a reasonable probability that an action may adversely affect it other
than as a result of monetary damages, such indemnified party may, by notice
to the indemnifying party, assume the exclusive right to defend, compromise
or settle such action, but the indemnifying party shall not be bound by any
determination of an action so defended or any compromise or settlement
thereof effected without its consent, which shall not be unreasonably
withheld.
E. AFTER-TAX BASIS. In determining the Damages suffered by any person, the
amount thereof shall be reduced by any tax benefit realized by such person
as a result of the incidence of such Damages. Any payment required by this
Paragraph 11 (for indemnification or otherwise) in respect of the Damages
suffered by any person shall be in an amount that after deducting any tax
cost incurred by the person receiving that payment equal the amount
required to be paid as determined under the applicable provisions (other
than this sentence) of this Paragraph 11. The tax benefit realized by a
person by reason of any payment or other matter shall be the amount by
which (a) the aggregate federal and state income and franchise taxes that
would have been, but for such payment or other matter, payable by such
person for the fiscal year, if any, in which such payment or other matter
is taken into account ("but-for tax") exceeds (b) the aggregate federal and
state income and franchise taxes actually payable by such person for such
fiscal year ("actual tax") and the tax cost of any payment shall be the
amount by which the actual tax exceeds but-for tax.
f. Notwithstanding anything above contained to the contrary in Paragraph
11, (i) none of the provisions of this Paragraph 11 shall apply to any
liability (whether by `CLYC' to one or more of the Shareholders or by one
or more the Shareholders to `CLYC') arising out of or by virtue of the
Provisions of Paragraph 12 below or any violation of the provisions of
Paragraph 12, and (ii) the provisions of said Paragraph 12 shall survive
the Closing Date.
19
12. INVESTMENT REPRESENTATION. Each of the Shareholders acknowledges his/her
understanding that the shares of CLYC's Common Stock to be delivered to the
Shareholders pursuant to this Agreement will not be registered pursuant to the
1933 Act and each of the Shareholders further represents to and agrees with
`CLYC' as follows:
a. He/she is acquiring the shares of CLYC's Common Stock pursuant to this
Agreement for his/her own private personal investment account and with no
present intention of reselling or distributing such shares or any portion
thereof to others.
b. They fully comprehend that in connection with the issuance of shares of
CLYC's Common Stock pursuant to this Agreement, `CLYC' is relying to a
material degree on the representations, warranties and covenants contained
herein, and with such realization he/she authorizes `CLYC' to act as it may
see fit in full reliance hereon.
c. He/she agrees that none of such shares will be transferred or
distributed unless (i) they are covered by an effective Registration
Statement prepared in accordance with the 1933 Act and are distributed in a
manner complying with the 1933 Act and with the Rules and Regulations
promulgated thereunder; or (ii) they may be transferred in accordance with
Rule 144 of the Rules and Regulations pursuant to the 1933 Act (or such
similar Rule as may be applicable to such shares at the time of transfer)
so long as such transfer strictly complies with said Rule 144 and with such
procedures as `CLYC' may reasonably establish in connection therewith; or
(iii) there is first delivered to `CLYC' the written legal opinion of legal
counsel in form and substance reasonably satisfactory to CLYC's legal
counsel or a "no action letter" from SEC indicating that any of the
provisions of the 1933 Act and the Rules and Regulations promulgated
thereunder. In the event such legal opinion is based upon the exemption now
contained in Section 4(2) of the 1933 Act, the person acquiring shares or
some portion thereof shall execute and deliver to `CLYC' a letter agreement
complying with the 1933 Act and the Rules and Regulations promulgated
thereunder.
d. He/she hereby agrees that the certificate(s) representing such shares
may bear a legend, as set forth below, setting forth the restrictions upon
transfer which are contained in the foregoing subparagraph (c) and that
`CLYC' may deliver to its transfer agents a "stop transfer order" directing
the transfer agents not to effect any transfer of such shares without
having received the permission of `CLYC' and evidence of compliance with
applicable provisions of the 1933 Act and the terms of this Agreement.
20
The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") and
are "restricted securities" as that term is defined in Rule
144 under the Act. The shares may not be offered for sale,
sold or otherwise transferred except pursuant to an exemption
from registration under the Act, the availability of which is
to be established to the satisfaction of `CLYC'.
e. He/she hereby agrees that to indemnify `CLYC' against and hold it
harmless from all losses, liabilities, costs and expenses (including
reasonable attorneys' fees) which shall arise as a result of a sale or
distribution by him/her of such shares or any portion thereof in violation
of the 1933 Act or the terms of this Agreement.
13. FURTHER ASSURANCES.
a. At the request of `CLYC', and without further consideration, the Company
and Shareholders will execute and deliver such additional instruments of
transfer and will take such other action as `CLYC' reasonably may request
in order more effectively to transfer to `CLYC' full ownership and control
of the Company.
b. At the request of one or more of the Shareholders, and without further
consideration, `CLYC' will execute and deliver such additional instruments
and will take such other actions as Shareholders may reasonably request in
order more effectively to carry out the transaction contemplated hereby.
14. EXPENSES. CLYC shall bear the expenses incident to the preparation,
negotiation and delivery of this Agreement and the performance of its
obligations hereunder.
15. EMPLOYEES OF THE COMPANY. `CLYC' agrees to maintain the employment of all of
the company's employees in their present positions, with the same salary and
seniority.
16. DIRECTORS. One (1) seat on the Board of Directors of `CLYC' may be made
available to the Company. Should one seat be made available to Company, CLYC
shall select one person to serve CLYC, under its by-laws, as a Board of
Director.
21
17. OTHER MATTERS.
A. NO OTHER AGREEMENTS. All terms and conditions of this Agreement are set
forth herein, and there are no warranties, agreements or understandings,
express or implied, except those expressly set forth herein.
B. AMENDMENT. This Agreement may be amended only by a written instrument
executed on behalf of CLYC, the Company and the Shareholders.
C. NOTICES. Any notice or other communication required or permitted to be
given hereunder shall be deemed properly given if personally delivered or
deposited in the United States mail, registered or certified and postage
prepaid, addressed to the Company or the Shareholders at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other addresses as may
from time to time be designated by the respective parties in writing.
D. SPECIFIC PERFORMANCE. The parties acknowledge that the subject matter of
this Agreement (i.e., the business and assets of the Company) is unique and
that no adequate remedy of law would be available for breach of this
Agreement. Accordingly, each party agrees that the other parties will be
entitled to an appropriate decree of specific performance or other
equitable remedies to enforce this Agreement (without any bond or other
security being required) and each party waives the defense in any action or
proceeding brought to enforce this Agreement that there exists an adequate
remedy at law.
E. ASSIGNMENT. Except as specifically permitted by the terms of this
Agreement, neither this Agreement nor any right created hereby shall be
assignable by CLYC. The Company or the Shareholders (or their respective
successors in interest) without the prior written consent of all other
parties hereto and any such attempted assignment shall be void. Nothing in
this agreement, expressed or implied, is intended to convert upon any
person, other than the parties hereto; any rights or remedies under or by
reason of this Agreement. Notwithstanding any other provisions herein to
the contrary, the right of each of the Shareholders to receive shares of
CLYC's Common Stock pursuant to Paragraph 2 hereof shall not be assignable
except upon the death of such Shareholder by testamentary disposition or
the law of intestate succession.
F. PARAGRAPHS AND OTHER HEADINGS. Paragraphs or other headings contained in
this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
22
G. CHOICE OF LAW. It is the intention of the parties that the laws of the
State of Florida should govern the validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties
of the parties.
H. NO WAIVER. The failure of any party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must
be in writing.
I. SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid,
illegal or unenforceable, the same shall not affect any other provisions of
this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provisions had never been contained herein.
J. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
DNAPRINT GENOMICS, INC.
-------------------------------------
-------------------------------------
CHIEF SCIENTIFIC OFFICER
CATALYST COMMUNICATIONS, INC.
-------------------------------------
-------------------------------------
CHAIRMAN
23
E X H I B I T "A"
List of DNAPrint genomics, Inc. Shareholders
OUTSTANDING NUMBER OF
SHAREHOLDER NAME DNAPRINT GENOMICS, INC. SHARES
▇▇▇▇ ▇▇▇▇▇▇▇▇ 27,500
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 27,500
▇▇▇▇ ▇▇▇▇▇, III 50,000
Total Shares 105,000
Percentages 100%
24
E X H I B I T "B"
SECTION I.
Issuance of 2,560,000 post-reverse shares of CLYC common stock to DNAPrint
genomics, Inc. shareholders at closing will be as follows:
SHAREHOLDER NAME NUMBER OF `CLYC' SHARES
_Tony Frudakis___________________ _____670,476____________
_George Frudakis_________________ _____670,476____________
_Carl ▇▇▇▇▇, III_________________ _____1,219,048___________
Total Shares ____2,560,000____
SECTION II.
OPERATION OF THE PORTFOLIO OF ESCROWED SHARES
The three million eight hundred forty thousand (3,840,000) post-reverse
shares of CLYC common stock held in escrow will be released to the Shareholders
according to the terms, conditions and achievements set forth in Exhibit "D"
attached hereto.
The shares shall be issued to the below listed shareholders in the
following percentages:
SHAREHOLDER NAME PERCENTAGE
_TONY FRUDAKIS__________________ _________26.2%__________
_GEORGE FRUDAKIS________________ _________26.2%__________
_CARL ▇▇▇▇▇, III___________________ _________47.6%__________
25
EXHIBIT "C"
SECTION I.
FUNDING
CLYC shall fund Company based on the following schedule. Each scheduled payment
will be made on the fifteenth (15TH) day of the month. Should the fifteenth
(15TH) day of the month fall on a weekend or legal holiday, payment will be made
the following Monday or the following business day subsequent to the holiday.
MONTH PAYMENT
JULY, 2000* $118,508.00
AUGUST, 2000 $ 75,883.00
SEPTEMBER, 2000 $ 77,700.00
OCTOBER, 2000 $ 67,095.00
NOVEMBER, 2000 $ 69,510.00
DECEMBER, 2000 $ 94,552.00
JANUARY, 2000 $ 84,630.00
FEBRUARY, 2001 $ 73,762.00
MARCH, 2001 $ 76,598.00
APRIL, 2001 $ 74,812.00
MAY, 2001 $ 74,865.00
JUNE, 2001 $ 75,915.00
* DNAPRINT GENOMICS, INC. HAS BEEN PROVIDED $37,000.00 OF THE JULY, 2000
FUNDING PRIOR TO CLOSING.
Second year funding to Company will be determined prior to July 15, 2001. To
determine the amounts and timing of second year funding, the Company must
illustrate that it is a viable business concern, and must achieve certain
scientific successes. These successes include but are not limited to: the
favorable publishing of information in scientific publications in peer reviewed
journals or books; significant patents and/or patents pending; a significant
alliance or alliances with an organization or organizations that create a
positive effect on the securities of the encompassing public entity; and
invitations to present the Company's scientific results at industry recognized
conferences.
26
EXHIBIT "D"
SECTION I.
COMPANY AND SHAREHOLDER EARN-OUT
The Company and Shareholders shall be entitled to an earn-out based upon the
performance and achievement of the Company. Said earn-out is understood and
agreed to be as follows:
Three million eight hundred forty thousand (3,840,000) post-reverse shares of
`CLYC' stock will be held in escrow for five (5) years. All or a portion of the
above stated shares of `CLYC' escrowed stock will be released to the
shareholders quarterly based upon either of the following two (2) formulae. It
is understood and agreed that only one (1) formula will be used to determine the
amount of the potential earn-out, i.e., the two (2) methods cannot be combined
to determine the earn-out.
Company must either achieve gross profits for earn out as follows:
One (1) share of `CLYC' stock for every thirty-three cents (33(cent)) worth of
gross profit produced by the Company. This method shall be referred to as the
gross profit method.
OR
Company may be appraised from time to time, not more than three (3) times during
the earn-out period, by a mutually acceptable independent firm. Valuation of
Company by said firm must meet or exceed the dollar levels outlined below in
order for cross-referenced earn-out to be effected. Earn-out below is based on
said quarterly release of shares and is not cumulative.
COMPANY VALUATION `CLYC' EARN-OUT SHARES
$5,000,000 384,000 CLYC SHARES
$10,000,000 768,000 CLYC SHARES
$15,000,000 1,152,000 CLYC SHARES
$20,000,000 1,536,000 CLYC SHARES
$25,000,000 1,920,000 CLYC SHARES
$30,000,000 2,304,000 CLYC SHARES
$35,000,000 2,688,000 CLYC SHARES
$40,000,000 3,072,000 CLYC SHARES
$45,000,000 3,456,000 CLYC SHARES
$50,000,000 3,840,000 CLYC SHARES
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SECTION II.
EMPLOYEE INCENTIVES
`CLYC' will allocate six hundred forty thousand (640,000) post-reverse shares of
`CLYC' stock to Company to attract new employees. Said shares will be equivalent
to approximately five percent (5%) of the issued and outstanding shares of CLYC.
Said shares will be held in escrow as per the terms and conditions of Article 2
of the Agreement and Plan of Exchange attached hereto.
Any and all employee incentive offers must be approved, in writing, by the Board
of Directors of `CLYC' prior to being offered to any potential or new employee.
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