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ACQUISITION OF VIDEO PROCESSING TECHNOLOGIES, INC.
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by
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BROADCAST
INTERNATIONAL, INC.
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AGREEMENT AND PLAN OF ACQUISITION
This
Agreement and Plan of Acquisition (Agreement) is entered into
by
and between VIDEO PROCESSING TECHNOLOGIES, INC., a Florida
corporation,
(VPTI), UTEK CORPORATION, a Delaware corporation, (UTEK), and
BROADCAST
INTERNATIONAL, INC., a Utah corporation, (BCI)
WHEREAS,
UTEK owns 100% of the issued and outstanding shares of common
stock of VPTI (VPTI
Shares); and
WHEREAS,
before the Closing Date, VPTI will acquire the license for the
fields of use as described in the License Agreement as described
and which is
attached hereto as part of Exhibit A and made a part of this
Agreement
(License Agreement) and the rights to develop and market a patented
and
proprietary technology for the fields of uses specified in the
License
Agreement (Technology).
WHEREAS,
the parties desire to provide for the terms and conditions upon
which VPTI will be acquired by BCI in a stock-for-stock exchange
(Acquisition)
in accordance with the respective corporation laws of their state,
upon
consummation of which all VPTI Shares will be owned by BCI, and all
issued and
outstanding VPTI Shares will be exchanged for common stock of BCI
with terms
and conditions as set forth more fully in this Agreement; and
WHEREAS,
for federal income tax purposes, it is intended that the
Acquisition qualifies within the meaning of Section 368 (a)(1)(B)
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 by
this Agreement acknowledged, the parties agree as follows:
ARTICLE 1
THE STOCK-FOR-STOCK ACQUISITION
1.01
The Acquisition
(a)
Acquisition Agreement.
Subject to the terms and conditions
of this Agreement, at the Effective Date, as defined below, all
VPTI Shares
shall be acquired from UTEK by BCI in accordance with the
respective
corporation laws of their state and the provisions of this
Agreement and the
separate corporate existence of VPTI, as a wholly-owned subsidiary
of BCI,
shall continue after the closing.
(b)
Effective Date. The Acquisition shall become effective
(Effective Date) upon the execution of this Agreement and closing
of the
transaction.
Page 1 of 18
<PAGE>
1.02
Exchange of Stock. At
the Effective Date, by virtue of the
Acquisition, all of the VPTI Shares that are issued and outstanding
at the
Effective Date shall be exchanged for 994,063 unregistered shares
of common
stock of BCI (BCI Shares)(to be adjusted to a value of $2,344,000
based on the
last ten (10) day average of the closing stock price of BCI on the
day prior
to execution of this agreement), which by agreement of the
shareholders of
VPTI shall be issued as follows:
Shareholder
Number of BCI Shares
------------
--------------------
UTEK Corporation
944,360
Aware Capital Consultants
49,703
1.03
Effect of
Acquisition.
(a) Rights
in VPTI Cease. At and after the Effective Date, the
holder of each certificate of common stock of VPTI shall cease to
have any
rights as a shareholder of VPTI.
(b)
Closure of VPTI Shares Records. From and after the
Effective Date, the stock transfer books of VPTI shall be closed,
and there
shall be no further registration of stock transfers on the records
of VPTI.
1.04
Closing. Subject to
the terms and conditions of this Agreement,
the Closing of the Acquisition shall take place January 27,
2006.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.01
Representations and
Warranties of UTEK and VPTI. UTEK and VPTI
represent and warrant to BCI that the facts set forth below are
true and
correct:
(a) Organization. VPTI
and UTEK are corporations duly organized,
validly existing and in good standing under the laws of their
respective
states of incorporation, 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 articles of
incorporation,
bylaws and all corporate minutes of VPTI have been provided to BCI
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 Acquisition and the other transactions
contemplated by
this Agreement have been duly authorized by the board of directors
and
shareholders of VPTI and the board of directors of UTEK; no other
corporate
action by the respective parties is necessary in order to execute,
deliver,
consummate and perform their respective obligations hereunder; and
VPTI and
UTEK have all requisite corporate and other authority to execute
and deliver
this Agreement and consummate the transactions contemplated by this
Agreement.
(c) Capitalization.
The authorized capital
of VPTI consists of
1,000 shares of common stock with a par value $.01 per share. At
the date of
this Agreement, 1,000 VPTI Shares are issued and outstanding as
follows:
Page 2 of 18
<PAGE>
Shareholder
Number of VPTI Shares
------------
----------------------
UTEK Corporation
1000
All issued and outstanding VPTI Shares 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.
VPTI is not authorized to issue any preferred stock. All dividends
on VPTI
Shares 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 VPTI to issue any VPTI
Shares or
securities convertible into VPTI Shares to anyone for any reason
whatsoever.
None of the VPTI Shares 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 Acquisition and the
transactions
contemplated by this Agreement will not violate any obligation to
which VPTI
or UTEK is a party and will not create a default under any such
obligation or
under any agreement to which VPTI or UTEK is a party. This Agreement
constitutes a legal, valid and binding obligation of VPTI,
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.
(e)
Litigation Relating to this Agreement. There are no suits,
actions or proceedings pending or, to the best of VPTI and UTEK's
knowledge,
information and belief, threatened, which seek to enjoin the
Acquisition 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 or prospects of VPTI.
(f) No
Conflicting Agreements. Neither the execution and
delivery of this Agreement nor the fulfillment of or compliance by
VPTI or
UTEK with the terms or provisions of this Agreement nor all other
documents or
agreements contemplated by this Agreement 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, VPTI or UTEK's articles of incorporation or
bylaws, the
Technology, the License Agreement, or any agreement, contract,
instrument,
order, judgment or decree to which VPTI or UTEK is a party or by
which VPTI or
UTEK or any of their respective 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 their
respective assets or businesses.
Page 3 of 18
<PAGE>
(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 VPTI and UTEK or
performance of
the obligations of VPTI and UTEK hereunder or under any other
agreement to
which VPTI 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 Technology, the
License
Agreement, or any other material right, privilege, license or
agreement
relating to VPTI or its assets or business.
(h) Title
to Assets. VPTI has or has agreed to enter into the
agreements as listed on Exhibit A attached hereto. These agreements
and the
assets shown on the balance sheet of attached Exhibit B are the
sole assets of
VPTI. VPTI has or will by 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.
(i)
Intellectual Property
(1) The
University of California, San Diego (UCSD) owns
the Technology and has all right, power, authority and ownership
and
entitlement to file, prosecute and maintain in effect the Patent
applications
with respect to the Inventions listed in Exhibit A hereto.
(2) The
License Agreement between UCSD and VPTI covering
the Inventions is legal, valid, binding and will be enforceable in
accordance
with its terms as contained in Exhibit A.
(3) Except
as otherwise set forth in this Agreement, BCI
acknowledges and understands that VPTI and UTEK make no
representations and
provide no assurances that the rights to the Technology and
Intellectual
Property contained in the License Agreement do not, and will not in
the
future, infringe or otherwise violate the rights of third parties,
and
(4) Except
as otherwise expressly set forth in this
Agreement, VPTI 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 the Intellectual Property.
(j)
Liabilities of VPTI. VPTI has no assets, no liabilities or
obligations of any kind, character or description except those
listed on the
attached schedules and exhibits.
(k)
Financial Statements. The unaudited financial statements of
VPTI, including a balance sheet, attached as Exhibit B and made a
part of this
Agreement, are, in all respects, complete and correct and present
fairly
VPTI's financial position and the results of its operations on the
dates and
for the periods shown in this Agreement; 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. VPTI
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, and on the Closing Date there will be
no,
outstanding obligations or liabilities of VPTI except as
specifically set
forth in the financial statements and the other attached schedules
and
exhibits. There is no
information known to VPTI or UTEK that would prevent
the financial statements of VPTI from being audited in accordance
with
generally accepted accounting principles.
Page 4 of 18
<PAGE>
(l)
Taxes. All returns, reports, statements and other similar
filings required to be filed by VPTI 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 VPTI for taxes for the
periods,
property or events covered by this Agreement; and all taxes,
whether or not
reflected on those tax returns, and all taxes claimed to be due
from VPTI by
any taxing authority, have been properly paid, except to the extent
reflected
on VPTI's financial statements, where VPTI has contested in good
faith by
appropriate proceedings and reserves have been established on its
financial
statements to the full extent if the contest is adversely decided
against it.
VPTI has not received any notice of assessment or proposed
assessment in
connection with any tax returns, nor is VPTI 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. VPTI 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. VPTI 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 VPTI. VPTI 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 the date of the
full execution of the Term Sheet until the Closing Date, VPTI has
not, and
without the written consent of BCI, it will not have:
(1) Sold, encumbered,
assigned let lapsed or transferred
any of its material assets, including without limitation the
Intellectual
Property, the License Agreement or any other material asset;
(2)
Amended or terminated the License Agreement or other
material agreement or done any act or omitted to do any act which
would cause
the breach of the License Agreement or any other material
agreement;
(3)
Suffered any damage, destruction or loss whether or
not in control of VPTI;
(4) Made
any commitments or agreements for capital
expenditures or otherwise;
(5)
Entered into any transaction or made any commitment
not disclosed to BCI;
(6)
Incurred any material obligation or liability for
borrowed money;
(7)
Suffered any other event of any character, which is
reasonable to expect, would adversely affect the future condition
(financial
or otherwise) assets or liabilities or business of VPTI; or
(8) Taken
any action, which could reasonably be foreseen
to make any of the representations or warranties made by VPTI or
UTEK untrue
as of the date of this Agreement or as of the Closing Date.
(n)
Material Agreements. Exhibit A attached contains a true and
complete list of all contemplated and executed agreements between
VPTI and a
third party. A 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
BCI and such
agreements are or will be at the Closing Date, in full force and
effect
without modifications or amendment and constitute the legally valid
and
binding obligations of VPTI in accordance with their respective
terms and will
continue to be valid and enforceable following the Acquisition.
VPTI is not in
default of any of the Contracts. In addition:
Page 5 of 18
<PAGE>
(1) There
are no outstanding unpaid promissory notes,
mortgages, indentures, deed of trust, security agreements and other
agreements
and instruments relating to the borrowing of money by or any
extension of
credit to VPTI; and
(2) There are no
outstanding operating agreements, lease
agreements or similar agreements by which VPTI is bound; and
(3) The
complete final drafts of the License Agreement
have has been provided to BCI; and
(4) Except
as set forth in (3) above, there are no
outstanding licenses to or from others of any intellectual property
and trade
names; and
(5) There
are no outstanding agreements or commitments to
sell, lease or otherwise dispose of any of VPTI's property; and
(6) There
are no breaches of any agreement to which VPTI
is a party.
(o)
Compliance with Laws. VPTI 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.
(p)
Litigation. There is
no suit, action or any arbitration,
administrative, legal or other proceeding of any kind or character,
or any
governmental investigation pending or to the best knowledge of VPTI
or UTEK,
threatened against VPTI, the Technology, or Patent License
Agreement,
affecting its assets or business (financial or otherwise), and
neither VPTI
nor UTEK is in violation of or in default with respect to any
judgment, order,
decree or other finding of any court or government authority
relating to the
assets, business or properties of VPTI or the transactions
contemplated
hereby. There are no pending or threatened actions or proceedings
before any
court, arbitrator or administrative agency, which would, if
adversely
determined,
