UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) August 11, 2006
NetFabric Holdings, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-21419 76- 307819
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(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
Three Stewart Court, Denville, NJ 07834
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code - (973) 887-2785
(Former Name or Former Address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO DEFINITIVE AGREEMENT.
On August 11, 2006 the Company entered into an Agreement and Plan of Acquisition
("Agreement") with Intrusion Detection Technologies, Inc. ("IDTI) and Utek
Corporation (UTEK). A copy of the Agreement is attached hereto as an exhibit.
The transaction closed simultaneously with the entering into the Agreement.
Pursuant to the Agreement, the Company acquired all of the issued and
outstanding shares of IDTI from UTEK in exchange for the issuance of 7,125,000
shares of restricted common stocks of the Company. In addition, the Company
issued 375,000 shares of restricted common stock to UTEK's consultant. IDTI
holds a license from a university for an Intrusion Detection software technology
that has the potential to encrypt binary programs and detect malicious code
which may be intentionally injected thereby removing it before it is executed.
The term of the licensing agreement is until the later of 15 years from the date
of filing of the licensed patents or the expiration of the last to expire
patent. IDTI will pay the university a royalty in an amount equal to five
percent of the net sales of licensed products. UTEK was granted piggyback
registration rights.
In connection with the transaction, the Company paid a consultant $50,000 of
cash and issued 750,000 shares of its common stock for services rendered.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSTION OF ASSETS
See Item 1.01
ITEM 3.02 UN REGISTERED SALES OF EQUITY SECURITIES
See Item 1.01
Item 9.01 Financial Statements And Exhibits
(a) None
(b) None
(c) Exhibits
99.1 Agreement and Plan of Acquisition by and between
Intrusion Detection Technologies, Inc., UTEK Corporation
and NetFabric Holdings, Inc.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NETFABRIC HOLDINGS, INC.
Date: August 16, 2006 By: /s/ Fahad Syed
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Name: Fahad Syed
Title: Chairman and CEO
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ACQUISITION OF INTRUSTION DETECTION TECHNOLOGIES, INC.
BY
NETFABRIC HOLDINGS, INC.
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AGREEMENT AND PLAN OF ACQUISITION
THIS AGREEMENT AND PLAN OF ACQUISITION (Agreement) is entered into by and
between Intrusion Detection Technologies, Inc., a Florida corporation, (IDTI),
UTEK CORPORATION, a Delaware corporation, (UTEK), and NetFabric Holdings, Inc.,
a Delaware corporation, (NFBH).
WHEREAS, UTEK owns 100% of the issued and outstanding shares of common
stock of IDTI (IDTI Shares); and
WHEREAS, before the Closing Date, IDTI will acquire the license for the
fields of use as described in the License Agreement as described and which are
attached hereto as part of Exhibit A and made a part of this Agreement (License
Agreement) and the rights to develop and market a 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 IDTI will be acquired by NFBH in a stockforstock exchange (Acquisition) in
accordance with the respective corporation laws of their state, upon
consummation of which all IDTI Shares will be owned by NFBH, and all issued and
outstanding IDTI Shares will be exchanged for common stock of NFBH 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 STOCKFORSTOCK 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 IDTI Shares shall
be acquired from UTEK by NFBH in accordance with the respective corporation laws
of their state and the provisions of this Agreement and the separate corporate
existence of IDTI, as a whollyowned subsidiary of NFBH, 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.
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1.02 Exchange of Stock. At the Effective Date, by virtue of the
Acquisition, all of the IDTI Shares that are issued and outstanding at the
Effective Date shall be exchanged for 7,500,000 unregistered shares of common
stock of NFBH and issued as follows:
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SHAREHOLDER NUMBER OF COMMON NFBH SHARES
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UTEK Corporation 7,125,000
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Aware Capital Consultants 375,000
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1.03 Effect of Acquisition.
(a) Rights in IDTI Cease. At and after the Effective Date, the
holder of each certificate of common stock of IDTI shall cease to have any
rights as a shareholder of IDTI.
(b) Closure of IDTI Shares Records. From and after the Effective
Date, the stock transfer books of IDTI shall be closed..
1.04 Closing. Subject to the terms and conditions of this Agreement, the
Closing of the Acquisition shall take place on the Effective Date (the "Closing
Date").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.01 Representations and Warranties of UTEK and IDTI. UTEK and IDTI
represent and warrant to NFBH that the facts set forth below are true and
correct as of the Effective Date:
(a) Organization. IDTI 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 IDTI have been provided to NFBH 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 IDTI 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 IDTI 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 IDTI consists of
1,000,000 shares of common stock with a par value $.01 per share. At the date of
this Agreement, 1,000 IDTI Shares are issued and outstanding as follows:
All issued and outstanding IDTI Shares have been duly and validly issued and are
fully paid and nonassessable shares and have not been issued in violation of
any preemptive or other rights of any other person or any applicable laws. IDTI
is not authorized to issue any preferred stock. All dividends on IDTI 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 IDTI to issue any IDTI Shares or securities
convertible into IDTI Shares to anyone for any reason whatsoever. None of the
IDTI 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.
Page 2 of 18
(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 IDTI or
UTEK is a party and will not create a default under any such obligation or under
any agreement to which IDTI or UTEK is a party. This Agreement constitutes a
legal, valid and binding obligation of IDTI, 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 IDTI 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 IDTI.
(f) No Conflicting Agreements. Neither the execution and delivery of
this Agreement nor the fulfillment of or compliance by IDTI 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,
IDTI or UTEK's articles of incorporation or bylaws, the Technology, the License
Agreement, or any agreement, contract, instrument, order, judgment or decree to
which IDTI or UTEK is a party or by which IDTI 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.
(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 IDTI and UTEK or performance of the obligations of
IDTI and UTEK hereunder or under any other agreement to which IDTI 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 IDTI or its assets or
business.
(h) Title to Assets. IDTI 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
IDTI. IDTI 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 Virginia Patent Foundation (UVAPF) owns
the Technology and has all right, power, authority and ownership and entitlement
to file, prosecute and maintain in effect the Patent application with respect to
the Inventions listed in Exhibit A hereto.
Page 3 of 18
(2) The License Agreement between UVAPF and IDTI 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, NFBH
acknowledges and understands that IDTI 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,
IDTI 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, noninfringement and validity
of the Intellectual Property.
(j) Liabilities of IDTI. IDTI 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
IDTI, 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 IDTI'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 yearend adjustments and accruals that, in
the aggregate, will not have a material adverse effect on the overall financial
condition or results of its operations. IDTI 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 IDTI except as specifically set forth in the financial statements and the
other attached schedules and exhibits. There is no information known to IDTI or
UTEK that would prevent the financial statements of IDTI from being audited in
accordance with generally accepted accounting principles.
(l) Taxes. All returns, reports, statements and other similar
filings required to be filed by IDTI 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 IDTI 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 IDTI by any taxing
authority, have been properly paid, except to the extent reflected on IDTI's
financial statements, where IDTI 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. IDTI has not
received any notice of assessment or proposed assessment in connection with any
tax returns, nor is IDTI 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. IDTI 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. IDTI 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 IDTI.
IDTI 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, IDTI has not, and without
the written consent of NFBH, it will not have:
Page 4 of 18
(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 IDTI;
(4) Made any commitments or agreements for capital
expenditures or otherwise;
(5) Entered into any transaction or made any commitment not
disclosed to NFBH;
(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 IDTI; or
(8) Taken any action, which could reasonably be foreseen to
make any of the representations or warranties made by IDTI 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 IDTI and a
third party. A complete and accurate copy 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 NFBH 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 IDTI in
accordance with their respective terms and will continue to be valid and
enforceable following the Acquisition. IDTI is not in default of any of the
Contracts. In addition:
(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 IDTI; and
(2) There are no outstanding operating agreements, lease
agreements or similar agreements by which IDTI is bound; and
(3) The complete final drafts of the License Agreement have
been provided to NFBH; 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 IDTI's property; and
Page 5 of 18
(6) There are no breaches of any agreement to which IDTI is a
party.
(o) Compliance with Laws. IDTI 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 IDTI or UTEK,
threatened against IDTI, the Technology, or License Agreement, affecting its
assets or business (financial or otherwise), and neither IDTI 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 IDTI 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, individually or in
the aggregate, materially and adversely affect the assets or business of IDTI or
the transactions contemplated.
(q) Employees. IDTI has no and never had any employees. IDTI is not
a party to or bound by any employment agreement or any collective bargaining
agreement with respect to any employees. IDTI is not in violation of any law,
regulation relating to employment of employees.
(r) Adverse Effect. Neither IDTI nor UTEK has any knowledge of any
or threatened existing occurrence, action or development that could cause a
material adverse effect on IDTI or its business, assets or condition (financial
or otherwise) or prospects.
(s) Employee Benefit Plans. IDTI states that 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 unfunded liabilities nor will the execution of this Agreement and
the actions contemplated in this Agreement result in any obligation or liability
to any present or former employee.
(t) Books and Records. The books and records of IDTI 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 IDTI has incurred any
investment banking, advisory or other similar fees or obligations in connection
with this Agreement or the transactions contemplated by this Agreement.
(v) Full Disclosure. All representations or warranties of UTEK and
IDTI are true, correct and complete in all material respects to the best of our
knowledge on the date of this Agreement 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 them in this Agreement or in the exhibits to this
Agreement or any document delivered by 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 in this Agreement not misleading
in any material respect in light of the circumstances in which they were made.
2.02 Representations and Warranties of NFBH. NFBH represents and warrants
to UTEK and IDTI that the facts set forth are true and correct as of the
Effective Date.
Page 6 of 18
(a) Organization. NFBH is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, is qualified to do
business as a foreign corporation in other jurisdictions 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 its business and operate
properties.
(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 of NFBH; 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 by this Agreement.
(c) Capitalization. The authorized capital of NFBH consists of
100,000,000 (OneHundred Million) shares of common stock with a par value $0.001
per share (NFBH Common Shares) and on the Effective Date of the Acquisition
74,293,883 (Seventy Four Million, Two Hundred NinetyThree Thousand, Eight
Hundred EightyThree) NFBH Shares (which will include the 7,500,000 (Seven
Million, Five Hundred Thousand) NFBH Common Shares issued at the closing of the
Acquisition) will be issued and outstanding. All issued and outstanding NFBH
Shares have been duly and validly issued and are fully paid and nonassessable
shares and have not been issued in violation of any preemptive or other rights
of any other person or any applicable laws..
(d) Anti Dilution Adjustments. UTEK currently owns 26,666 common
shares of NFBH and will be acquiring an additional 7,125,000 unregistered shares
of NFBH totaling 7,151,666 registered and unregistered shares; and based on a
total of 7,151,666 issued shares this total will represent a 7.8% ownership
position in NFBH shares on an "as if converted basis For a period of twelve
months from the Effective Date of this Agreement, the aggregate number of shares
of Stock that Utek has received shall be adjusted proportionately by the Board
of Directors of NFBH for any increase in the number of outstanding shares of
Stock resulting from the issuance of any additional shares, options, warrants or
convertible debt by the Company to any of its current list of management and
directors as of the Effective Date for other than monetary or economic
consideration or issuance pursuant to exercise options, warrants or convertible
debt or issuance of options pursuant to the Company's stock option plan.
For purposes in this Agreement, "as if converted basis" shall mean total
outstanding common shares after giving effect to the conversion of all
outstanding equity securities including preferred stock or other convertible
instruments.
(e) Binding Effect. The execution, delivery, performance and
consummation of the Acquisition and the transactions contemplated by this
Agreement will not violate any obligation to which NFBH is a party and will not
create a default hereunder, and this Agreement constitutes a legal, valid and
binding obligation of NFBH, 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.
(f) Litigation Relating to this Agreement. There are no suits,
actions or proceedings pending or to its knowledge 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 its
business, results of operations, assets, prospects or the results of its
operations of NFBH.
Page 7 of 18
(g) No Conflicting Agreements. Neither the execution and delivery of
this Agreement nor the fulfillment of or compliance by NFBH with the terms or
provisions of this Agreement will result in a breach of the terms, conditions or
provisions of, or constitute 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 it is a party or by which it or any of its
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 its assets or business.
(h) Consents. Assuming the correctness of UTEK and IDTI's
representations, no consent from or approval of any court, governmental entity
or any other person is necessary in connection with its execution and delivery
of this Agreement; 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 NFBH or its assets or business.
(i) Financial Statements. The unaudited financial statements of NFBH
attached as Exhibit C present fairly its 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
yearend adjustments and accruals that, in the aggregate, will not have a
material adverse effect on the overall financial condition or results of its
operations. NFBH 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 NFBH except as specifically set forth in the NFBH financial
statements.
(j) Full Disclosure. All representations or warranties of NFBH are
true, correct and complete in all material respects on the date of this
Agreement 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 them in
this Agreement or in the exhibits to this Agreement or any document delivered by
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 in this Agreement not misleading in any material respect in light of
the circumstances in which they were made.
(k) Compliance with Laws. NFBH 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 to the extent
material to NFBH's business.
(l) 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 NFBH, threatened
against NFBH materially affecting its assets or business (financial or
otherwise), and NFBH 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. NFBH has no knowledge of any existing or threatened occurrence, action
or development that could cause a material adverse affect on NFBH or its
business, assets or condition (financial or otherwise) or prospects.
(m) Development. NFBH agrees and warrants that it has the expertise
necessary to and has had the opportunity to independently evaluate the
inventions of the Licensed Technology and develop same for the market.
(n) Investment Company Status NFBH is not an investment company,
either registered or unregistered.
Page 8 of 18
2.03 Investment Representations of UTEK. UTEK represents and warrants to
NFBH 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 NFBH Shares pursuant to the Acquisition. It is able to bear the
economic risk of the investment in NFBH Shares, including the risk of a total
loss of the investment in NFBH Shares. The acquisition of NFBH Shares is for its
own account and is for investment and not with a view to the distribution of
this Agreement. Except a 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 at the present time. All information that it has supplied to NFBH is
true and correct. It has conducted all investigations and due diligence
concerning NFBH 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
officer and directors of NFBH concerning NFBH Shares and the business and
financial condition of and prospects for NFBH, and the officers and directors of
NFBH 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, and the rules and regulations thereunder.
(b) Stock Transfer Restrictions. UTEK acknowledges that the NFBH
Shares will not be registered and UTEK will not be permitted to sell or
otherwise transfer the NFBH Shares in any transaction in contravention of the
following legend, which will be imprinted in substantially the following form on
the stock certificate representing NFBH Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), OR UNDER THE SECURITIES LAWS
OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED PURSUANT TO THE PROVISION
OF THE ACT AND THE LAWS OF SUCH STATES UNDER WHOSE LAWS A TRANSFER OF SECURITIES
WOULD BE SUBJECT TO A REGISTRATION REQUIREMENT, UNLESS UTEK CORPORATION HAS
OBTAINED AN OPINION OF COUNSEL STATING THAT SUCH DISPOSITION IS IN COMPLIANCE
WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
(c) Legend. Subject to Rule 144 restrictions, 24 months following
the stock acquisition described herein, NFBH agrees to and shall direct its
transfer agent to remove the above legend upon the issuance by UTEK's legal
counsel that the above legend can be removed from UTEK's shares. NFBH agrees to
and promptly shall provide any information requested by UTEK or UTEK's counsel
and to make further direction to its transfer agent as necessary for such
issuance of an opinion regarding removal of the legend or the sale of such
restricted shares under Rule 144 or other available exemption from registration.
A letter affecting the issuance of the certificate without the restrictive
legend two years from the date of closing is attached as Exhibit D, subject to
compliance with Rule 144 restrictions.
(d) In the event that NFBH fails to direct its transfer agent to
remove the legend within thirty (30) days of request by UTEK, NFBH shall be
liable to an additional fee of ten percent (10%) of the current value of the
shares held by UTEK, as well as any and all attorney fees and costs that UTEK
may incur as a result of NFBH failing to comply in this request.
(e) Stock Transfer Restrictions. UTEK shall have piggyback
registration rights until they are eligible for resale under Rule 144 for all of
the common shares it will receive in this transaction. This right shall not
apply to registration statements made on Form S8 or Form S4 or where the party
holding the demand registration right objects to the inclusion of these shares
in a registration.
Page 9 of 18
ARTICLE 3
TRANSACTIONS PRIOR TO CLOSING
3.01. Corporate Approvals. Prior to Closing Date, each of the parties
shall submit this Agreement to its board of directors and when necessary, its
respective shareholders and obtain approval of this Agreement. 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 Acquisition and the transactions
contemplated by this Agreement.
3.04 Covenants. Except as permitted in writing, each party agrees that it
will:
(a) Use its good faith efforts to obtain all requisite licenses,
permits, consents, approvals and authorizations necessary in order to consummate
the Acquisition; and
(b) Notify the other parties upon the occurrence of any event which
would have a materially adverse effect upon the Acquisition or the transactions
contemplated by this Agreement or upon the business, assets or results of
operations; and
(c) Not modify its corporate structure, except as necessary or
advisable in order to consummate the Acquisition and the transactions
contemplated by this Agreement.
ARTICLE 4
CONDITIONS PRECEDENT
The obligation of the parties to consummate the Acquisition and the
transactions contemplated by this Agreement are subject to the following
conditions that may be waived, to the extent permitted by law:
4.01. Each party must obtain the approval of its board of directors and
such approval shall not have been rescinded or restricted.
4.02. Each party shall obtain all requisite licenses, permits, consents,
authorizations and approvals required to complete the Acquisition and the
transactions contemplated by this Agreement.
4.03. 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 by this Agreement or
challenges the right, title and interest of UTEK in the IDTI Shares or the right
of IDTI or UTEK to consummate the Acquisition contemplated hereunder.
4.04. The representations and warranties of the parties shall be true and
correct in all material respects at the Effective Date.
Page 10 of 18
4.05. The Technology and Intellectual Property has been prosecuted in good
faith with reasonable diligence.
4.06. To the best knowledge of UTEK and IDTI, the License Agreement are
valid and in full force and effect without any default in this Agreement.
4.07. NFBH shall have received, at or within 5 days of Closing Date, each
of the following:
(a) the stock certificates representing the IDTI Shares, duly
endorsed (or accompanied by duly executed stock powers) by UTEK for
cancellation;
(b) all documentation relating to IDTI's business, all in a form and
substance satisfactory to NFBH;
(c) such agreements, files and other data and documents pertaining
to IDTI's business as NFBH may reasonably request, including the fully executed
License Agreement;
(d) copies of the general ledgers and books of account of IDTI, and
all federal, state and local income, franchise, property and other tax returns
filed by IDTI since the inception of IDTI;
(e) 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 IDTI in Florida;
(f) the original corporate minute books of IDTI, including the
articles of incorporation and bylaws of IDTI, and all other documents filed in
this Agreement;
(g) all consents, assignments or related documents of conveyance to
give NFBH the benefit of the transactions contemplated hereunder;
(h) such documents as may be needed to accomplish the Closing under
the corporate laws of the states of incorporation of NFBH and IDTI, and
(i) such other documents, instruments or certificates as NFBH, or
their counsel may reasonably request.
4.08. NFBH shall have completed due diligence investigation of IDTI to
NFBH's satisfaction in their sole discretion.
4.09. NFBH shall receive the resignation effective the Closing Date of
each director and officer of IDTI.
ARTICLE 5
INDEMNIFICATION AND LIABILITY LIMITATION
5.01. Survival of Representations and Warranties.
(a) The representations and warranties made by UTEK and IDTI shall
survive for a period of 1 year after the 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 1year
period.
Page 11 of 18
(b) The representations and warranties made by NFBH shall survive
for a period of 1 year after the 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 1year
period.
5.02 LIMITATIONS ON LIABILITY. NFBH agrees that UTEK shall not be liable
under this agreement to NFBH or their respective successor's assigns or
affiliates except where damages result directly from the gross negligence or
willful misconduct of UTEK or its employees. In no event shall UTEK's liability
exceed the total amount of the fees paid to UTEK under this agreement, nor shall
UTEK be liable for incidental or consequential damages of any kind. NFBH shall
indemnify UTEK, and hold UTEK harmless against any and all claims by third
parties for losses, damages or liabilities, including reasonable attorneys fees
and expenses ("Losses"), arising in any manner out of or in connection with the
rendering of services by UTEK under this Agreement, unless it is finally
judicially determined that such Losses resulted from the gross negligence or
willful misconduct of UTEK. The terms of this paragraph shall survive the
termination of this agreement and shall apply to any controlling person,
director, officer, employee or affiliate of UTEK.
5.03 INDEMNIFICATION. NFBH agrees to indemnify and hold harmless UTEK and
its subsidiaries and affiliates and each of its and their officers, directors,
principals, shareholders, agents, independent contactors and employees
(collectively "Indemnified Persons") from and against any and all claims,
liabilities, damages, obligations, costs and expenses (including reasonable
attorneys' fees and expenses and costs of investigation) arising out of or
relating to matters or arising from this Agreement, except to the extent that
any such claim, liability, obligation, damage, cost or expense shall have been
determined by final nonappealable order of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of the Indemnified
Person or Persons in respect of whom such liability is asserted.
ARTICLE 6
REMEDIES
6.01 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.
ARTICLE 7
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 to this
Agreement, 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 of this Agreement, 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, unless the parties mutually agree to the contrary such arbitration shall
be conducted in Tampa, Florida. 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
NFBH, one by UTEK and a third by the two selected arbitrators. The third
arbitrator shall be the chairman of the panel.
Page 12 of 18
ARTICLE 8
MISCELLANEOUS
8.01. No party may assign this Agreement or any right or obligation of it
hereunder without the prior written consent of the other parties to this
Agreement. No permitted assignment shall relieve a party of its obligations
under this Agreement without the separate written consent of the other parties.
8.02. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective permitted successors and assigns.
8.03. 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.
8.04. 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.
8.05. This document constitutes a complete and entire agreement among the
parties with reference to the subject matters set forth in this Agreement. No
statement or agreement, oral or written, made prior to or at the execution of
this Agreement and no prior course of dealing or practice by either party shall
vary or modify the terms set forth in this Agreement without the prior consent
of the other parties to this Agreement. This Agreement may be amended only by a
written document signed by the parties.
8.06. Notices or other communications required to be made in connection
with this Agreement shall be sent by U.S. mail, certified, return receipt
requested, personally delivered or sent by express delivery service and
delivered to the parties at the addresses 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. 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. This Agreement may be executed in multiple counterparts, each of
which shall constitute one and a single Agreement.
8.09 Any facsimile signature of any part to this Agreement or to any other
agreement or document executed in connection of this Agreement should constitute
a legal, valid and binding execution by such parties.
(SIGNATURES ON THE FOLLOWING PAGE)
Page 13 of 18
NETFABRIC HOLDINGS, INC. INTRUSION DETECTION TECHNOLOGIES, INC.
By:/s/ Fahad Syed By: /s/ Joel Edelson
------------------------------------ ----------------------------
Fahad Syed Joel Edelson
Chairman and Chief Executive Officer President
Address: Address:
3 Stewart Court 2109 East Palm Avenue
Denville, New Jersey 07834 Tampa, Florida 33605
Date: August 11, 2006 Date: August 11, 2006
UTEK CORPORATION
By: /s/ Clifford M. Gross, Ph.D.
-----------------------------
Clifford M. Gross, Ph.D.
Chief Executive Officer
Address:
2109 East Palm Avenue
Tampa, Florida 33605
Date: August 11, 2006
UTEK CORPORATION
By:/s/ Doug Schaedler
------------------
Doug Schaedler
Chief Compliance Officer
Address:
2109 East Palm Avenue
Tampa, Florida 33605
Date: August 11, 2006
Page 14 of 18
EXHIBIT A
OUTSTANDING AGREEMENTS
FROM THE UNIVERSITY OF VIRGINIA PATENT FOUNDATION
1) LICENSE AGREEMENT
Page 15 of 18
EXHIBIT B
INTRUSION DETECTION TECHNOLOGIES, INC.
FINANCIAL STATEMENTS AS OF
Page 16 of 18
EXHIBIT C
NETFABRIC HOLDINGS, INC.
UnAudited Financial Statements
for NetFabric Holdings, Inc.
for the fiscal quarter ended March 31, 2006
Page 17 of 18
EXHIBIT D
NETFABRIC HOLDINGS, INC.
Stock Transfer Letter
|Company logo|
August _____, 2006
Securities Transfer Corporation
P.O. Box 701629
Dallas, TX 75370
Dear Sir or Madam:
Re: Transfer of NetFabric Holdings, Inc. Stock to UTEK Corporation
This letter does hereby authorize Securities Transfer Corporation, upon request
by UTEK Corporation or its authorized agent, to issue to UTEK Corporation a new
stock certificate representing 7,125,000shares in NetFabric Holdings, Inc. These
new shares issued shall be issued without a restricted transfer legend.
The authorization for this letter shall become effective two years from the date
of this letter.
Signed,
Fahad Syed
Chairman and Chief Executive Officer
Page 18 of 18