AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT is dated as of August 18, 2005, by and among The Autoline
Group, Inc., a Utah corporation ("Parent"); Autoline Acquisition Corp., a
Nevada corporation and wholly-owned subsidiary of Parent ("Merger
Subsidiary"); GeNOsys, Inc., a Nevada corporation ("Company"); and the
shareholders of GeNOsys (the "Company Shareholders"). The foregoing are
sometimes collectively referred to as the "Parties."
WHEREAS, Company intends to engage in the bio-tech and bio-
pharmaceutical development business (the "Business"); and
WHEREAS, the Boards of Directors of Parent, Merger Subsidiary, Company
and Company Shareholders have approved the merger of the Merger Subsidiary
with and into 7Company (the "Merger") upon the terms and subject to the
conditions set forth herein; and
WHEREAS, the closing of the Merger is subject to the execution and
delivery of the Compromise and Settlement Agreement (the "Settlement
Agreement") by and among 1017975 Alberta Ltd., a corporation incorporated
under the laws of the Province of Alberta ("1017975"); the shareholders of
1017975, as set out on Schedule B to the Settlement Agreement (the "1017975
Shareholders"); Xxxx X. X. Xxxxxx ("Xxxxxx ) and Xxxxxxxx X. Xxxxxxxx
("Xxxxxxxx"), both of whom are directors and executive officers of GeNOsys,
and GeNOsys, a copy of which is attached hereto as Exhibit A and incorporated
herein by reference, and under which the Company is a third party beneficiary,
along with the execution and delivery of the Shareholder Consent to Proposed
Merger (the "Shareholder Consent"), a copy of which is attached hereto as
Exhibit B and incorporated herein by reference; and
WHEREAS, as a part of the execution and delivery of the Settlement
Agreement, Miller, Woodruff, Xxxxx Xxxxxxx ("Xxxxxxx") and Xxxxxxx Xxxxx
("Xxxxx") will execute and deliver a Technology Transfer Agreement (the
"Technology Transfer Agreement") that is attached hereto as Exhibit C and
incorporated herein by reference and by which Miller, Woodruff, Xxxxxxx and
Bayly will assign all of their right, title and interest in the technology
(the "Technology") listed in the Technology Agreement to GeNOsys; and
WHEREAS, as a condition to the Closing of the Merger (as defined below),
Xxxxx X. Xxxxxx, the Parent's President ("Doolin"), has agreed to indemnify
and hold Parent and Company harmless from and against all outstanding
liabilities of Parent existing or based upon matters related to Parent arising
prior to the Closing Date (as defined below) of the Merger; and
WHEREAS, the Parties desire to execute and deliver this Agreement and
all related, required or necessary documentation that may be reasonable
required to complete the Merger as contemplated by the Parties, including the
waiver of applicable dissenters' rights of appraisal ("Dissenters' Rights")
under the Nevada Act;
WHEREAS, for federal income tax purposes, it is intended that the Merger
will qualify as a reorganization within the meaning of Section 368(a)(1)(A)
and (a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code");
and
WHEREAS, the Parties desire to make certain representations, warranties,
and agreements in connection with the Merger and also to prescribe various
conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants, and agreements contained
herein, the Parties hereto agree as follows:
ARTICLE 1
THE MERGER; CONVERSION OF SHARES
1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.2 hereof), Merger
Subsidiary will be merged with and into Company in accordance with the
provisions of the Nevada Revised Statutes (the "Nevada Act"), whereupon the
separate corporate existence of Merger Subsidiary will cease, and Company will
continue as the surviving corporation (the "Surviving Corporation"). From and
after the Effective Time, the Surviving Corporation will possess all the
rights, privileges, powers, and franchises and be subject to all the
restrictions, disabilities, and duties of Company and Merger Subsidiary, all
as more fully described in the Nevada Act.
1.2 Effective Time. As soon as practicable after each of the
conditions set forth in Article 5 and Article 6 has been satisfied or waived,
Company and Merger Subsidiary will file, or cause to be filed, with the
Secretary of State of the State of Nevada, Articles of Merger for the Merger,
which Articles will be in the form required by and executed in accordance with
the applicable provisions of the Nevada Act. The Merger will become effective
at the time such filing is made or, if agreed to by Parent and Company, such
later time or date set forth in the Articles of Merger (the "Effective Time").
1.3 Closing.
(a) Unless this Agreement has been terminated and the
transactions contemplated herein have been abandoned pursuant to Article
7 hereof, the closing of the Merger (the "Closing") will take place at a
time and on a date (the "Closing Date") to be specified by the Parties,
which will be no later than September 30, 2005 (the "Termination Date");
provided, however, that all of the conditions provided for in Articles 5
and 6 hereof shall have been satisfied or waived by such date. The
Closing will be held at the offices of Xxxxxxx X. Xxxxxxxxxx, Esq., 455
East 500 South, #205, Salt Lake City, Utah, or such other place as the
Parties may agree, at which time and place the documents and instruments
necessary or appropriate to effect the transactions contemplated herein
will be exchanged by the Parties. Except as otherwise provided herein,
all actions taken at the Closing will be deemed to be taken
simultaneously.
(b) As conditions precedent to the Closing of the Merger, among
other such conditions that are set forth in Sections 5 and 6 hereof, (i)
the execution and delivery of the Settlement Agreement (Exhibit A
hereto); (ii) the execution and delivery of the Technolgy Transfer
Agreement (Exhibit C hereto); (iii) there are no dissenters,' rights
that have been perfected and all have been compromised or waived; and
(iv) Xxxxxx shall have executed and delivered the indemnification
agreement (the "Xxxxxx Indemnification Agreement") that is referenced in
Section 6.4(b) hereof.
1.4 Conversion of Interests. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Company and/or Merger Subsidiary:
(a) All of the shares of Company ("Company Common Stock") issued
and outstanding or issuable immediately prior to the Effective Time
(except for Company Common Stock referred to in Section 1.4(b) hereof)
will be converted into the right to receive an aggregate of 40,000,000
shares of common stock of Parent, par value $0.001 per share ("Parent
Common Stock"). The amount of Parent Common Stock into which shares of
Company Common Stock is converted is referred to herein as the "Merger
Consideration."
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is then owned beneficially
or of record by Parent, Merger Subsidiary, or any direct or indirect
subsidiary of Parent or Company will be canceled without payment of any
consideration therefor and without any conversion thereof. Furthermore,
at the Effective Time, one (1) share of Company Common Stock shall be
issued to Parent.
(c) Except as expressly set forth herein, each share of any
other equity interest of the Company (other than Company Common Stock)
will be canceled without payment of any consideration therefor and
without any conversion thereof.
(d) Each share of common stock of Merger Subsidiary, par value
$1.00 per share ("Merger Subsidiary Common Stock"), issued and
outstanding immediately prior to the Effective Time will be canceled as
of the Effective Time.
1.5 Exchange of Company Common Stock.
(a) At the Closing, all Company Shareholders Company Common
Stock that are outstanding immediately prior to the Effective Time will
be delivered to Parent ("Company Certificates"), together with
appropriate assignments signed by such holders, in exchange for the
number of whole shares of Parent Common Stock into which such interests
have been converted as provided in Section 1.4(a), and Company
Certificate(s) so surrendered will be canceled.
(b) All shares of Parent Common Stock issued upon the surrender
for exchange of shares of Company Common Stock in accordance with the
terms hereof will be deemed to have been issued in full satisfaction of
all rights pertaining to such Company Common Stock.
(c) As of the Effective Time, the holders of Company
Certificates representing shares of Company Common Stock will cease to
have any rights as Company Shareholders, except such rights, if any, as
they may have pursuant to the Nevada Act. Except as provided above,
until such Company Certificates are surrendered for exchange, each such
Company Certificate will, after the Effective Time, represent for all
purposes only the right to receive certificates representing the number
of whole shares of Parent Common Stock into which Company Common Stock
shall have been converted pursuant to the Merger as provided in Section
1.4(a).
(d) No fractional shares of Parent Common Stock will be issued
upon the surrender for exchange of Company Certificates; no dividend or
other distribution of Parent will relate to any fractional share; and
such fractional share interests will not entitle the owner thereof to
vote or to any rights of a shareholder of Parent. All fractional shares
of Parent Common Stock to which a holder of Company Common Stock
immediately prior to the Effective Time would otherwise be entitled, at
the Effective Time, will be aggregated if and to the extent multiple
Company Certificates of such holder are submitted together to Parent.
If a fractional share results from such aggregation, then such
fractional share will be rounded up to the nearest whole share and each
holder of shares of Company Common Stock Interests who otherwise would
be entitled to receive such fractional share of Parent Common Stock will
receive one whole share in lieu of such fractional share.
1.6 Articles of Incorporation of the Surviving Corporation. The
Articles of Incorporation of Company as in effect immediately prior to the
Effective Time will be the Articles of Incorporation of the Surviving
Corporation.
1.7 Bylaws of the Surviving Corporation. The Bylaws of Company, as in
effect immediately prior to the Effective Time, will be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
1.8 Directors and Officers of the Surviving Corporation and Parent.
(a) Directors and Officers of the Surviving Corporation. The
directors and officers of Company, as of the Effective Time, shall
continue as the directors of the Surviving Corporation.
(b) Directors of the Parent. The directors of Parent
immediately prior to the Effective Time shall appoint Xxxx X. X. Xxxxxx,
Xxxxx X. Xxxxx and Xxxxxxxx Xxxxxxx Xxxxxxxx to Parent's Board of
Directors, and thereafter resign effective as of the Effective Time, and
the officers of the Surviving Corporation shall be appointed by the new
directors, who shall be Xxxx X. X. Xxxxxx, President and Christie
Xxxxxxx Xxxxxxxx, Secretary/Treasurer.
1.9 Dissenting Interests. Company Shareholders who would have the
right to demand and perfect such holder's rights to dissent from the Merger
and to be paid the fair value of such holder's shares in accordance with
Sections 92A.300 to 92A.500 of the Nevada Act shall have waived all such
Dissenters' Rights as a condition to the Closing of the Merger.
1.10 Parent Common Stock Outstanding Immediately Prior and Following
the Closing of Merger. Immediately prior to the Closing of the Merger, Parent
shall have not more than 2,556,500 outstanding shares of Parent Common Stock,
and no outstanding options, warrants, calls or other rights to acquire
authorized but unissued Parent Common Stock or other securities of Parent;
immediately following the Closing of the Merger, and including the aforesaid
2,556,500 shares of Parent Common Stock and the 40,000,000 shares of Parent
Common Stock to be exchanged as Merger Consideration under the Merger, there
will be 42,556,500 outstanding shares of Parent Common Stock.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Company hereby represents and warrants to Parent as follows:
2.1 Disclosure Schedule. The disclosure schedule attached hereto as
Schedule 2.1 ("Company Disclosure Schedule") is divided into sections that
correspond to the sections of this Article 2. Company Disclosure Schedule
comprises a list of all exceptions to the truth and accuracy of, and of all
disclosures or descriptions required by, the representations and warranties
set forth in the remaining sections of this Article 2.
2.2 Corporate Organization, etc. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada with the requisite corporate power and authority to carry on its
business as it is now being conducted and to own, operate and lease its
properties and assets, is duly qualified or licensed to do business as a
foreign corporation in good standing in every other jurisdiction in which the
character or location of the properties and assets owned, leased or operated
by it or the conduct of its business requires such qualification or licensing,
except in such jurisdictions in which the failure to be so qualified or
licensed and in good standing would not, individually or in the aggregate,
have a Material Adverse Effect (as defined below) on Company. Company
Disclosure Schedule contains a list of all jurisdictions in which Company is
qualified or licensed to do business and includes complete and correct copies
of Company's articles of incorporation and bylaws. Company does not own or
control any capital stock of any corporation or any interest in any
partnership, joint venture or other entity.
2.3 Capitalization. The authorized capital securities of Company is
set forth in the Company Disclosure Schedule. The number of shares of Company
Common Stock outstanding, as of the date of this Agreement and as set forth in
Company Disclosure Schedule, represent all of the issued and outstanding
capital securities of Company. All issued and outstanding shares of Company
Common Stock are duly authorized, validly issued, fully paid and nonassessable
and are without, and were not issued in violation of, preemptive rights.
There are no shares of Company Common Stock or other equity securities of
Company outstanding or any securities convertible into or exchangeable for
such interests, securities or rights. Other than as set forth on Company
Disclosure Schedule and pursuant to this Agreement, there is no subscription,
option, warrant, call, right, contract, agreement, commitment, understanding
or arrangement to which Company is a party, or by which it is bound, with
respect to the issuance, sale, delivery or transfer of the capital securities
of Company, including any right of conversion or exchange under any security
or other instrument. Company has no subsidiaries.
2.4 Authorization, etc. Company has all requisite corporate power and
authority to enter into, execute, deliver, and perform its obligations under
this Agreement. This Agreement has been duly and validly executed and
delivered by Company and is the valid and binding legal obligation of Company
enforceable against Company in accordance with its terms, subject to
bankruptcy, moratorium, principles of equity and other limitations limiting
the rights of creditors generally.
2.5 Non-Contravention. Except as set forth in Company Disclosure
Schedule, neither the execution, delivery and performance of this Agreement,
and each other agreement to be entered into in connection with this Agreement,
nor the consummation of the transactions contemplated herein will:
(a) violate, contravene or be in conflict with any provision of
the articles of incorporation or bylaws of Company;
(b) be in conflict with, or constitute a default, however
defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a default), under, or cause or
permit the acceleration of the maturity of, or give rise to any right of
termination, cancellation, imposition of fees or penalties under any
debt, note, bond, lease, mortgage, indenture, license, obligation,
contract, commitment, franchise, permit, instrument or other agreement
or obligation to which Company is a party or by which Company or any of
Company's properties or assets is or may be bound;
(c) result in the creation or imposition of any pledge, lien,
security interest, restriction, option, claim or charge of any kind
whatsoever ("Encumbrances") upon any property or assets of Company under
any debt, obligation, contract, agreement or commitment to which Company
is a party or by which Company or any of Company's assets or properties
are bound; or
(d) materially violate any statute, treaty, law, judgment, writ,
injunction, decision, decree, order, regulation, ordinance or other
similar authoritative matters (referred to herein individually as a
"Law" and collectively as "Laws") of any foreign, federal, state or
local governmental or quasi-governmental, administrative, regulatory or
judicial court, department, commission, agency, board, bureau,
instrumentality or other authority (referred to herein individually as
an "Authority" and collectively as "Authorities").
2.6 Consents and Approvals. Except as set forth in Company Disclosure
Schedule, with respect to Company, no consent, approval, order or
authorization of or from, or registration, notification, declaration or filing
with ("Consent") any individual or entity, including without limitation any
Authority, is required in connection with the execution, delivery or
performance of this Agreement by Company or the consummation by Company of the
transactions contemplated herein.
2.7 Financial Statements. Company Disclosure Schedule contains a copy
of the financial statements of Company from the date of inception to June 30,
2005 (the "Financial Statements"). Except as disclosed therein or in Company
Disclosure Schedule, the aforesaid Financial Statements: (i) are in accordance
with the books and records of Company and have been prepared in conformity
with good accounting practices (except as stated therein or in the notes
thereto); and (ii) are true, complete and accurate in all material respects
and fairly present the financial position of Company as of the date thereof,
and the income or loss for the period then ended.
2.8 Absence of Undisclosed Liabilities. Company does not have any
material liabilities, obligations or claims of any kind whatsoever, whether
secured or unsecured, accrued or unaccrued, fixed or contingent, matured or
unmatured, known or unknown, direct or indirect, contingent or otherwise and
whether due or to become due (referred to herein individually as a
"Liability"and collectively as "Liabilities"), other than: (a) Liabilities
that are fully reflected or reserved for in the Balance Sheet; (b) Liabilities
that are set forth on the Company Disclosure Schedule; (c) Liabilities
incurred by Company in the ordinary course of business after the date of the
Balance Sheet and consistent with past practice; (d) Liabilities in an amount
not to exceed $50,000 individually or in the aggregate unless such amounts are
disclosed on Company Disclosure Schedule; or (e) Liabilities for express
executory obligations to be performed after the Closing under the contracts
described in Section 2.14 of Company Disclosure Schedule.
2.9 Absence of Certain Changes. Except as set forth in the Company
Disclosure Schedule, since June 30, 2005, Company has owned and operated its
assets, properties and business in the ordinary course of business and
consistent with past practice. Without limiting the generality of the
foregoing, subject to the aforesaid exceptions:
(a) Company has not experienced any change that has had or could
reasonably be expected to have a Material Adverse Effect on Company; and
(b) Company has not suffered (i) any loss, damage, destruction
or other property or casualty (whether or not covered by insurance) or
(ii) any loss of officers, employees, dealers, distributors, independent
contractors, customers or suppliers, which had or may reasonably be
expected to result in a Material Adverse Effect on Company.
2.10 Assets. Except as set forth in Company Disclosure Schedule,
Company has good and marketable title to all of its assets and properties,
whether or not reflected in the Balance Sheet or acquired after the date
thereof (except for properties sold or otherwise disposed of since the date
thereof in the ordinary course of business and consistent with past
practices), that relate to or are necessary for Company to conduct its
business and operations as currently conducted (collectively, the "Assets"),
free and clear of any mortgage, pledge, lien, security interest, conditional
or installment sales agreement, encumbrance, claim, easement, right of way,
tenancy, covenant, encroachment, restriction or charge of any kind or nature
(whether or not of record) (a "Lien"), other than (i) liens securing specific
Liabilities shown on the Balance Sheet with respect to which no breach,
violation or default exists; (ii) mechanics', carriers', workers' or other
like liens arising in the ordinary course of business; (iii) minor
imperfections of title that do not individually or in the aggregate, impair
the continued use and operation of the Assets to which they relate in the
operation of the Company as currently conducted; and (iv) liens for current
taxes not yet due and payable or being contested in good faith by appropriate
proceedings ("Permitted Liens").
2.11 Receivables and Payables.
(a) Except as set forth on Company Disclosure Schedule, all
accounts receivable of Company represent sales in the ordinary course of
business and, to Company's knowledge, are current and collectible net
of any reserves shown on the Balance Sheet and none of such receivables
is subject to any Lien other than a Permitted Lien.
(b) Except as set forth on Company Disclosure Schedule, all
payables by Company arose in bona fide transactions in the ordinary
course of business and no such payable is delinquent by more than sixty
(60) days beyond the due date in its payment.
2.12 Intellectual Property Rights. Company owns or has the
unrestricted right to use, and Company Disclosure Schedule contains a detailed
listing of, all patents, patent applications, patent rights, registered and
unregistered trademarks, trademark applications, tradenames, service marks,
service xxxx applications, copyrights, internet domain names, computer
programs and other computer software, inventions, know-how, trade secrets,
technology, proprietary processes, trade dress, software and formulae
(collectively, "Intellectual Property Rights") used in, or necessary for, the
operation of its Business as currently conducted or proposed to be conducted.
Except as set forth on Company Disclosure Schedule, to Company's knowledge,
the use of all Intellectual Property Rights necessary or required for the
conduct of the Business of Company as presently conducted and as proposed to
be conducted does not infringe or violate the Intellectual Property Rights of
any person or entity. Except as described on Company Disclosure Schedule, to
Company's knowledge: (a) Company does not own or use any Intellectual Property
Rights pursuant to any written license agreement; (b) Company has not granted
any person or entity any rights, pursuant to a written license agreement or
otherwise, to use the Intellectual Property Rights; and (c) Company owns, has
unrestricted right to use and has sole and exclusive possession of and has
good and valid title to, all of the Intellectual Property Rights, free and
clear of all Liens and Encumbrances. All license agreements relating to
Intellectual Property Rights are binding and there is not, under any of such
licenses, any existing default or event of default (or event which with notice
or lapse of time, or both, would constitute a default, or would constitute a
basis for a claim on non-performance) on the part of Company or, to the
knowledge of Company, any other party thereto.
2.13 Litigation. Except as set forth in Company Disclosure Schedule,
there is no legal, administrative, arbitration, or other proceeding, suit,
claim or action of any nature or investigation, review or audit of any kind,
or any judgment, decree, decision, injunction, writ or order pending, noticed,
scheduled, or, to the knowledge of Company, threatened or contemplated by or
against or involving Company, its assets, properties or business or its
directors, officers, agents or employees (but only in their capacity as such),
whether at law or in equity, before or by any person or entity or Authority,
or which questions or challenges the validity of this Agreement or any action
taken or to be taken by the Parties hereto pursuant to this Agreement or in
connection with the transactions contemplated herein.
2.14 Contracts and Commitments; No Default.
(a) Except as set forth in Company Disclosure Schedule, Company
is not a party to, nor are any of the Assets bound by, any written or
oral:
(i) employment, non-competition, consulting or severance
agreement, collective bargaining agreement, or pension, profit-
sharing, incentive compensation, deferred compensation, stock
purchase, stock option, stock appreciation right, group insurance,
severance pay or retirement plan or agreement;
(ii) indenture, mortgage, note, installment obligation,
agreement or other instrument relating to the borrowing of money
by the Company;
(iii) contract, agreement, lease (real or personal
property) or arrangement that (A) is not terminable on less than
30 days' notice without penalty, (B) is not over one year in
length of obligation of the Company, or (C) involves an obligation
of more than $50,000 over its term;
(iv) contract, agreement, commitment or license relating to
Intellectual Property Rights or contract, agreement or commitment
of any other type, whether or not fully performed, not otherwise
disclosed pursuant to this Section 2.14;
(v) obligation or requirement to provide funds to or make
any investment (in the form of a loan, capital contribution or
otherwise) in any person or entity; or
(vi) outstanding sales or purchase contracts, commitments
or proposals that will result in any material loss upon completion
or performance thereof after allowance for direct distribution
expenses, or bound by any outstanding contracts, bids, sales or
service proposals quoting prices that are not reasonably expected
to result in a normal profit.
(b) True and complete copies (or summaries, in the case of oral
items) of all agreements disclosed pursuant to this Section 2.14
("Company Contracts") have been provided to Parent for review. Except as
set forth in Company Disclosure Schedule, all of Company Contracts items
are valid and enforceable by and against Company in accordance with
their terms, and are in full force and effect. Company is not in
breach, violation or default, however defined, in the performance of any
of its obligations under any of Company Contracts, and no facts and
circumstances exist which, whether with the giving of due notice, lapse
of time, or both, would constitute such breach, violation or default
thereunder or thereof, and, to the knowledge of Company, no other
parties thereto are in a breach, violation or default, however defined,
thereunder or thereof, and no facts or circumstances exist which,
whether with the giving of due notice, lapse of time, or both, would
constitute such a breach, violation or default thereunder or thereof.
2.15 Compliance with Law; Permits and Other Operating Rights. Except
as set forth in Company Disclosure Schedule, the Assets, properties, business
and operations of Company are and have been in compliance in all respects with
all Laws applicable to Company's assets, properties, business and operations,
except where the failure to comply would not have a Material Adverse Effect.
Company possesses all material permits, licenses and other authorizations from
all Authorities necessary to permit it to operate its business in the manner
in which it presently is conducted and the consummation of the transactions
contemplated by this Agreement will not prevent Company from being able to
continue to use such permits and operating rights. Company has not received
notice of any violation of any such applicable Law, and is not in default with
respect to any order, writ, judgment, award, injunction or decree of any
Authority.
2.16 Brokers. Neither Company nor, to the knowledge of Company, any of
the its directors, officers or employees, has employed any broker, finder,
investment banker or financial advisor or incurred any liability for any
brokerage fee or commission, finder's fee or financial advisory fee, in
connection with the transactions contemplated hereby, nor is there any basis
known to Company for any such fee or commission to be claimed by any person or
entity.
2.17 Issuance of Parent Common Stock. To Company's knowledge, as of
the date of this Agreement and as of the Effective Time, no facts or
circumstances exist or will exist that could cause the issuance of Parent
Common Stock pursuant to the Merger to fail to meet the exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), as set forth in Rule 506 of Regulation D promulgated
thereunder.
2.18 Books and Records. The books of account, minute books, stock
record books, and other material records of Company, all of which have been
made available to Parent, are complete and correct in all material respects
and have been maintained in accordance with reasonable business practices.
The minute books of Company contain accurate and complete records of all
formal meetings held of, and corporate action taken by, the directors and
officers, the managers and committees of the managers of Company. At the
Closing, all of those books and records will be in the possession of Company.
2.19 Business Generally; Accuracy of Information. No representation or
warranty made by Company in this Agreement, Company Disclosure Schedule, or in
any document, agreement or certificate furnished or to be furnished to Parent
at the Closing by or on behalf of Company in connection with any of the
transactions contemplated by this Agreement contains or will contain any
untrue statement of material fact or omit or will omit to state any material
fact necessary in order to make the statements herein or therein not
misleading in light of the circumstances in which they are made, and all of
the foregoing completely and correctly present the information required or
purported to be set forth herein or therein.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND THE MERGER SUBSIDIARY
Parent and Merger Subsidiary represent and warrant to Company as
follows:
3.1 Disclosure Schedule. The disclosure schedule attached hereto as
Schedule 3.1 ("Parent Disclosure Schedule") is divided into sections that
correspond to the sections of this Article 3. Parent Disclosure Schedule
comprises a list of all exceptions to the truth and accuracy of, and of all
disclosures or descriptions required by, the representations and warranties
set forth in the remaining sections of this Article 3.
3.2 Corporate Organization, Standing and Power. Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Utah; and Merger Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada. Each of Parent and Merger Subsidiary has all corporate power and
authority to own its properties and to carry on its business as now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect on Parent and Merger Subsidiary. Parent owns all of the
outstanding capital stock of Merger Subsidiary. Parent does not own or
control any capital stock of any corporation or any interest in any
partnership, joint venture or other entity, other than Merger Subsidiary and
The Autoline Group 2, Inc., a Utah corporation, in which its principal
operations are now conducted.
3.3 Authorization. Each of Parent and the Merger Subsidiary has all
the requisite corporate power and authority to enter into this Agreement and
to carry out the transactions contemplated herein. The Board of Directors of
Parent and the Merger Subsidiary, and Parent as the sole shareholder of the
Merger Subsidiary, have taken all action required by law, their respective
articles of incorporation and bylaws or otherwise to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein. This Agreement is the valid and binding
legal obligation of Parent and the Merger Subsidiary enforceable against each
of them in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or similar laws
that affect creditors' rights generally.
3.4 Capitalization. The authorized capital securities of Parent and
Merger Subsidiary are set forth in the Parent Disclosure Schedule. The number
of shares of Parent Common Stock, as of the date of this Agreement and as set
forth in Parent Disclosure Schedule, represent all of the issued and
outstanding capital securities of the Parent. All issued and outstanding
shares of Parent Common Stock are duly authorized, validly issued, fully paid
and nonassessable and are without, and were not issued in violation of,
preemptive rights. There are no shares of Parent Common Stock or other equity
securities of Parent outstanding or any securities convertible into or
exchangeable for such interests, securities or rights. Other than as set
forth on the Parent Disclosure Schedule and pursuant to this Agreement, there
is no subscription, option, warrant, call, right, contract, agreement,
commitment, understanding or arrangement to which Parent is a party, or by
which it is bound, with respect to the issuance, sale, delivery or transfer of
the capital securities of Parent, including any right of conversion or
exchange under any security or other instrument.
3.5 Non-Contravention. Neither the execution, delivery and
performance of this Agreement nor the consummation of the transactions
contemplated herein will:
(a) violate any provision of the articles of incorporation or
bylaws of Parent or the Merger Subsidiary; or
(b) be in conflict with, or constitute a default, however
defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a default), under, or cause or
permit the acceleration of the maturity of, or give rise to, any right
of termination, cancellation, imposition of fees or penalties under, any
debt, note, bond, lease, mortgage, indenture, license, obligation,
contract, commitment, franchise, permit, instrument or other agreement
or obligation to which Parent or the Merger Subsidiary is a party or by
which Parent or the Merger Subsidiary or any of their respective
properties or assets is or may be bound;
(c) result in the creation or imposition of any Encumbrance upon
any property or assets of Parent or the Merger Subsidiary under any
debt, obligation, contract, agreement or commitment to which Parent or
the Merger Subsidiary is a party or by which Parent or the Merger
Subsidiary or any of their respective assets or properties is or may be
bound; or
(d) violate any Law of any Authority.
3.6 Consents and Approvals. No Consent is required by any person or
entity, including without limitation any Authority, in connection with the
execution, delivery and performance by Parent or Merger Subsidiary of this
Agreement, or the consummation of the transactions contemplated herein, other
than any Consent which, if not made or obtained, will not, individually or in
the aggregate, have a Material Adverse Effect on the business of Parent or
Merger Subsidiary.
3.7 Valid Issuance. Parent Common Stock to be issued in connection
with the Merger will be duly authorized and, when issued, delivered and paid
for as provided in this Agreement, will be validly issued, fully paid and non-
assessable.
3.8 SEC Filings; Financial Statements.
(a) Parent has delivered or made available to the Company
accurate and complete copies (excluding copies of exhibits) of each
report, registration statement and definitive proxy and information
statements filed by Parent with the SEC (collectively, with all
information incorporated by reference therein or deemed to be
incorporated by reference therein, "Parent SEC Documents"). All
statements, reports, schedules, forms and other documents required to
have been filed by Parent with the SEC have been so filed on a timely
basis. As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing): (i) each of Parent SEC Documents complied in all
material respects with the applicable requirements of the Securities Act
or the Securities Exchange Act of 1934, as amended (the "Exchange Act");
and (ii) none of Parent SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(b) The financial statements contained in Parent SEC Documents:
(i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared
in accordance with GAAP applied on a consistent basis throughout the
periods covered (except as may be indicated in the notes to such
financial statements and, in the case of unaudited statements, as
permitted by Form 10-QSB of the SEC); and (iii) fairly present, in all
material respects, the consolidated financial position of Parent and its
consolidated subsidiaries as of the respective dates thereof and the
consolidated results of operations of Parent and its consolidated
subsidiaries for the periods covered thereby. All adjustments
considered necessary for a fair presentation of the financial statements
have been included.
3.9 No Liabilities. Parent does not have any Liabilities, except for
(i) Liabilities expressly stated in the most recent balance sheet included in
Parent SEC Documents or the notes thereto, or (ii) other Liabilities which do
not exceed $1,000 in the aggregate, except as set forth in Schedule 3.9
hereof.
3.10 No Assets. As of the Closing, Parent will not have any assets or
operations of any kind, except as identified in the most recent balance sheet
and notes thereto included in Parent SEC Documents or Parent Disclosure
Schedule.
3.11 Absence of Certain Changes. Except as set forth in Parent SEC
Documents, Parent has owned and operated its assets, properties and business
in the ordinary course of business and consistent with past practice. Without
limiting the generality of the foregoing, subject to the aforesaid exceptions,
Parent has not experienced any change that has had or could reasonably be
expected to have a Material Adverse Effect on the Parent.
3.12 Litigation. Except as disclosed in Parent SEC Documents, there is
no legal, administrative, arbitration, or other proceeding, suit, claim or
action of any nature or investigation, review or audit of any kind, or any
judgment, decree, decision, injunction, writ or order pending, noticed,
scheduled, or, to the knowledge of Parent or the Merger Subsidiary, threatened
or contemplated by or against or involving the Parent, its assets, properties
or business or its directors, officers, agents or employees (but only in their
capacity as such), whether at law or in equity, before or by any person or
entity or Authority, or which questions or challenges the validity of this
Agreement or any action taken or to be taken by the Parties hereto pursuant to
this Agreement or in connection with the transactions contemplated herein.
3.13 Contracts and Commitments; No Default. Parent is not a party to,
nor are any of its Assets bound by, any contract (a "Parent Contract") that is
not disclosed in Parent SEC Documents. Except as disclosed in Parent SEC
Documents, none of Parent Contracts contains a provision requiring the consent
of any party with respect to the consummation of the transactions contemplated
by this Agreement. Parent is not in breach, violation or default, however
defined, in the performance of any of its obligations under any of Parent
Contracts, and no facts and circumstances exist which, whether with the giving
of due notice, lapse of time, or both, would constitute such breach, violation
or default thereunder or thereof, and, to the knowledge of Parent, no other
parties thereto are in a breach, violation or default, however defined,
thereunder or thereof, and no facts or circumstances exist which, whether with
the giving of due notice, lapse of time, or both, would constitute such a
breach, violation or default thereunder or thereof.
3.14 No Broker or Finder. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or any of the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent.
3.15 Intercompany And Affiliate Transactions; Insider Interests.
Except as expressly identified in Parent SEC Documents or in the Consent of
Directors of Parent approving the Merger which has been executed and provided
to Company and deposited pursuant to the Escrow Agreement prior to execution,
there are, and during the last two years there have been, no transactions,
agreements or arrangements of any kind, direct or indirect, between Parent, on
the one hand, and any director, officer, employee, stockholder, or affiliate
of Parent, on the other hand, including, without limitation, loans, guarantees
or pledges to, by or for the Parent or from, to, by or for any of such
persons, that are effected with all corporate consents and approvals necessary
under controlling law, and currently in effect.
ARTICLE 4
COVENANTS OF THE PARTIES
4.1 Conduct of Business. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing Date, Company
and Parent will each conduct its business and operations according to its
ordinary and usual course of business consistent with past practices. Without
limiting the generality of the foregoing, and, except as otherwise expressly
provided in this Agreement or as otherwise disclosed on Parent Disclosure
Schedule or Company Disclosure Schedule, respectively, prior to the Closing
Date, without the prior written consent of the other Parties, not to be
unreasonably delayed, Parent and Company each will not:
(a) amend its articles of incorporation or bylaws;
(b) issue, reissue, sell, deliver or pledge or authorize or
propose the issuance, reissuance, sale, delivery or pledge of shares of
capital stock of any class, or securities convertible into capital stock
of any class, or any rights, warrants or options to acquire any
convertible securities or capital stock;
(c) adjust, split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, any shares of its capital stock, or any of its other
securities;
(d) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock, redeem or otherwise acquire any shares of
its capital stock or other securities, alter any term of any of its
outstanding securities;
(e) (i) except as required under any employment agreement,
increase in any manner the compensation of any of its directors,
officers or other employees; (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or permitted
by any existing plan, agreement or arrangement to any such director,
officer or employee, whether past or present; or (iii) commit itself to
any additional pension, profit-sharing, bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, retirement or other employee benefit
plan, agreement or arrangement, or to any employment agreement or
consulting agreement (arising out of prior employment ) with or for the
benefit of any person, or, except to the extent required to comply with
applicable law, amend any of such plans or any of such agreements in
existence on the date of this Agreement;
(f) hire any additional personnel;
(g) incur, assume, suffer or become subject to, whether directly
or by way of guarantee or otherwise, any Liabilities which, individually
or in the aggregate, exceed $10,000 in the case of Parent or $50,000 in
the case of Company;
(h) make or enter into any commitment for capital expenditures
in excess of $10,000 in the case of Parent or $50,000 in the case of
Company;
(i) pay, lend or advance any amount to, or sell, transfer or
lease any properties or assets (real, personal or mixed, tangible or
intangible) to, or enter into any agreement or arrangement with, any of
its officers or directors or any affiliate or associate of any of its
officers or directors;
(j) terminate, enter into or amend in any material respect any
contract, agreement, lease, license or commitment, or take any action or
omit to take any action which will cause a breach, violation or default
(however defined) under any contract, except in the ordinary course of
business and consistent with past practice;
(k) acquire any of the business or assets of any other person or
entity;
(l) permit any of its current insurance (or reinsurance)
policies to be cancelled or terminated or any of the coverage thereunder
to lapse, unless simultaneously with such termination, cancellation or
lapse, replacement policies providing coverage equal to or greater than
coverage remaining under those cancelled, terminated or lapsed are in
full force and effect;
(m) enter into other material agreements, commitments or
contracts not in the ordinary course of business or in excess of current
requirements;
(n) settle or compromise any suit, claim or dispute, or
threatened suit, claim or dispute (other than any settlement or
compromise having no effect upon the Company, its assets, operations or
financial position); or
(o) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty in
this Agreement untrue or incorrect in any material respect.
Nothing herein shall prevent Company from operating its business in the
ordinary course and consistent with past practice.
4.2 Full Access. Throughout the period prior to Closing, each of the
Parties will afford to the other and its directors, officers, employees,
counsel, accountants, investment advisors and other authorized representatives
and agents, reasonable access to the facilities, properties, books and records
of the Parties in order that the other may have full opportunity to make such
investigations as it will desire to make of the affairs of the disclosing
Parties. Each of the Parties will furnish such additional financial and
operating data and other information as the other will, from time to time,
reasonably request, including without limitation access to the working papers
of its independent certified public accountants; provided, however, that any
such investigation will not affect or otherwise diminish or obviate in any
respect any of the representations and warranties of the disclosing Parties.
4.3 Confidentiality. Each of the Parties hereto agrees that it will
not use, or permit the use of, any of the information relating to any other
party hereto furnished to it in connection with the transactions contemplated
herein ("Information") in a manner or for a purpose detrimental to such other
party or otherwise than in connection with the transaction, and that they will
not disclose, divulge, provide or make accessible (collectively, "Disclose"),
or permit the Disclosure of, any of the Information to any person or entity,
other than their respective directors, officers, employees, investment
advisors, accountants, counsel and other authorized representatives and
agents, except as may be required by judicial or administrative process or, in
the opinion of such party's counsel, by other requirements of Law; provided,
however, that prior to any Disclosure of any Information permitted hereunder,
the disclosing party will first obtain the recipients' undertaking to comply
with the provisions of this Section with respect to such information. The
term "Information" as used herein will not include any information relating to
a party that the party disclosing such information can show: (i) to have been
in its possession prior to its receipt from another party hereto; (ii) to be
now or to later become generally available to the public through no fault of
the disclosing party; (iii) to have been available to the public at the time
of its receipt by the disclosing party; (iv) to have been received separately
by the disclosing party in an unrestricted manner from a person entitled to
disclose such information; or (v) to have been developed independently by the
disclosing party without regard to any information received in connection with
this transaction. Each of the Parties hereto also agrees to promptly return
to the party from whom it originally received such information all original
and duplicate copies of written materials containing Information should the
transactions contemplated herein not occur. All Parties hereto will be deemed
to have satisfied each' obligations to hold the Information confidential if
each exercises the same care as each takes with respect to each's own similar
information.
4.4 Filings; Consents; Removal of Objections. Subject to the terms
and conditions herein provided, the Parties hereto will use their best efforts
to take or cause to be taken all actions and do or cause to be done all things
necessary, proper or advisable under applicable Laws to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated
hereby, including without limitation obtaining all Consents of any person or
entity, whether private or governmental, required in connection with the
consummation of the transactions contemplated herein. In furtherance, and not
in limitation of the foregoing, it is the intent of the Parties to consummate
the transactions contemplated herein at the earliest practicable time, and
they respectively agree to exert commercially reasonable efforts to that end,
including without limitation: (i) the removal or satisfaction, if possible, of
any objections to the validity or legality of the transactions contemplated
herein; and (ii) the satisfaction of the conditions to consummation of the
transactions contemplated hereby.
4.5 Further Assurances; Cooperation; Notification.
(a) Each of the Parties hereto will, before, at and after
Closing, execute and deliver such instruments and take such other
actions as the other party or Parties, as the case may be, may
reasonably require in order to carry out the intent of this Agreement.
Without limiting the generality of the foregoing, at any time after the
Closing, at the reasonable request of Parent and without further
consideration, Company will execute and deliver such instruments of
sale, transfer, conveyance, assignment and confirmation and take such
action as Parent may reasonably deem necessary or desirable in order to
more effectively consummate the transactions contemplated hereby.
(b) At all times from the date hereof until the Closing, each of
the Parties will promptly notify the other in writing of the occurrence
of any event which it reasonably believes will or may result in a
failure by such party to satisfy the conditions specified in this
Article 4.
4.6 Supplements to Disclosure Schedule. Prior to the Closing, each of
the Parties will supplement or amend each's respective Disclosure Schedule
with respect to any event or development which, if existing or occurring at or
prior to the date of this Agreement, would have been required to be set forth
or described in the Disclosure Schedule or which is necessary to correct any
information in the Disclosure Schedule or in any representation and warranty
of the Company which has been rendered inaccurate by reason of such event or
development. For purposes of determining the accuracy as of the date hereof
of the representations and warranties of the Company contained in Article 2
hereof or Parent in Article 3 hereof in order to determine the fulfillment of
the conditions set forth herein, the Disclosure Schedule of each party will be
deemed to exclude any information contained in any supplement or amendment
hereto delivered after the delivery of the Disclosure Schedule.
4.7 Public Announcements. None of the Parties hereto will make any
public announcement with respect to the transactions contemplated herein
without the prior written consent of the other Parties, which consent will not
be unreasonably withheld or delayed; provided, however, that any of the
Parties hereto may at any time make any announcements that are required by
applicable Law so long as the party so required to make an announcement
promptly upon learning of such requirement notifies the other Parties of such
requirement and discusses with the other Parties in good faith the exact
proposed wording of any such announcement.
4.8 Satisfaction of Conditions Precedent. Each party will use
commercially reasonable efforts to satisfy or cause to be satisfied all the
conditions precedent that are applicable to them, and to cause the
transactions contemplated by this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all material consents and
authorizations of third parties and to make filings with, and give all notices
to, third parties that may be necessary or reasonably required on its part in
order to effect the transactions contemplated hereby.
4.9 Resignation of Officers And Directors. At the Closing, the pre-
Closing officers and directors of Parent shall submit their written
resignations from such offices effective as of the Closing.. Prior to their
resignations, the pre-Closing directors of Parent shall appoint to the board
of directors of Parent, the officers of Parent and the Advisory of Parent,
those persons indicated in Section 1.8(b), effective as of the Closing.
4.10 Waiver of Dissenters Rights. Company Shareholders shall have
waived Dissenters' Rights under the Nevada Act.
ARTICLE 5
CONDITIONS TO THE OBLIGATIONS OF PARENT
AND MERGER SUBSIDIARY
Notwithstanding any other provision of this Agreement to the contrary,
the obligation of Parent and Merger Subsidiary to effect the transactions
contemplated herein will be subject to the satisfaction at or prior to the
Closing, or waiver by Parent, of each of the following conditions:
5.1 Representations and Warranties True. The representations and
warranties of Company contained in this Agreement, including without
limitation in Company Disclosure Schedule initially delivered to Parent as
Schedule 2.1 (and not including any changes or additions delivered to Parent
pursuant to Section 4.6), will be true, complete and accurate in all material
respects as of the date when made and at and as of the Closing Date as though
such representations and warranties were made at and as of such time, except
for changes specifically permitted or contemplated by this Agreement, and
except insofar as the representations and warranties relate expressly and
solely to a particular date or period, in which case they will be true and
correct at the Closing with respect to such date or period.
5.2 Performance. Company will have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by the Company on
or prior to the Closing.
5.3 Required Approvals and Consents.
(a) All action required by law and otherwise to be taken by the
shareholders of Company to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will have been duly and validly taken.
(b) All Consents of or from all Authorities required hereunder
to consummate the transactions contemplated herein, will have been
delivered, made or obtained, and Parent will have received copies
thereof.
5.4 Agreements and Documents. Parent and Merger Subsidiary will have
received the following agreements and documents, each of which will be in full
force and effect:
(a) a certificate executed on behalf of Company by its Chief
Executive Officer confirming that the conditions set forth in Sections
5.1, 5.2, 5.3, 5.5, 5.6 and 5.7 have been duly satisfied;
(b) the Settlement Agreement (Exhibit A hereto);
(c) the Technology Transfer Agreement (Exhibit C hereto);
(d) Xxxxxx shall have executed and delivered the Xxxxxx
Indemnification Agreement that is referenced in Section 6.4(b) hereof;
and.
(e) a Shareholder Written Consent to Proposed Merger in the form
of Exhibit B executed by all Company Shareholders.
5.5 Adverse Changes. No material adverse change will have occurred in
the business, financial condition, prospects, assets or operations of Company
since June 30, 2005, except as set forth on Schedule 5.5 attached hereto.
5.6 No Proceeding or Litigation. No suit, action, investigation,
inquiry or other proceeding by any Authority or other person or entity will
have been instituted or threatened which delays or questions the validity or
legality of the transactions contemplated hereby or which, if successfully
asserted, would, in the reasonable judgment of Parent, individually or in the
aggregate, otherwise have a Material Adverse Effect on the Company's business,
financial condition, prospects, assets or operations or prevent or delay the
consummation of the transactions contemplated by this Agreement.
5.7 Legislation. No Law will have been enacted which prohibits,
restricts or delays the consummation of the transactions contemplated hereby
or any of the conditions to the consummation of such transaction.
5.8 Appropriate Documentation. Parent will have received, in a form
and substance reasonably satisfactory to Parent, dated the Closing Date, all
certificates and other documents, instruments and writings to evidence the
fulfillment of the conditions set forth in this Article 5 as Parent may
reasonably request, along with duly executed copies of the Transaction
Documents by the Parties and the Company Certificates.
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF COMPANY
Notwithstanding anything in this Agreement to the contrary, the
obligation of Company to effect the transactions contemplated herein will be
subject to the satisfaction at or prior to the Closing of each of the
following conditions:
6.1 Representations and Warranties True. The representations and
warranties of Parent contained in this Agreement will be true, complete and
accurate in all material respects as of the date when made and at and as of
the Closing, as though such representations and warranties were made at and as
of such time, except for changes permitted or contemplated in this Agreement,
and except insofar as the representations and warranties relate expressly and
solely to a particular date or period, in which case they will be true and
correct at the Closing with respect to such date or period.
6.2 Performance. Parent will have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by Parent at or
prior to the Closing, including the obligations of the pre-Close officers and
directors of Parent set forth in Section 4.9.
6.3 Required Approvals and Consents.
(a) All action required by law and otherwise to be taken by the
directors and stockholders of the Parent to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will have been duly and validly taken.
(b) All Consents of or from all Authorities required hereunder
to consummate the transactions contemplated herein, will have been
delivered, made or obtained, and the Company will have received copies
thereof.
6.4 Agreements and Documents. The Company will have received the
following agreements and documents, each of which will be in full force and
effect:
(a) a certificate executed on behalf of Parent by its Chief
Executive Officer confirming that the conditions set forth in Sections
6.1, 6.2, 6.3, 6.5, 6.6 and 6.7 have been duly satisfied;
(b) the duly executed and delivered Indemnification Agreement of
Xxxxxx that is attached hereto as Schedule 6.4(b) and incorporated
herein by reference, together with all executed and delivered schedules
or exhibits thereto;
(c) resolutions of the board of directors of Parent and the
board of directors and sole stockholder of Merger Subsidiary, certified
by the secretary of Parent, approving the transactions contemplated by
this Agreement, including the Merger, the issuance of the Merger
Consideration and the matters referred to in Section 1.8(b) of this
Agreement.
6.5 Adverse Changes. No material adverse change will have occurred in
the business, financial condition, prospects, assets or operations of Parent
since June 30, 2005.
6.6 No Proceeding or Litigation. No suit, action, investigation,
inquiry or other proceeding by any Authority or other person or entity will
have been instituted or threatened which delays or questions the validity or
legality of the transactions contemplated hereby or which, if successfully
asserted, would, in the reasonable judgment of the Company, individually or in
the aggregate, otherwise have a Material Adverse Effect on Parent's business,
financial condition, prospects, assets or operations or prevent or delay the
consummation of the transactions contemplated by this Agreement.
6.7 Legislation. No Law will have been enacted which prohibits,
restricts or delays the consummation of the transactions contemplated hereby
or any of the conditions to the consummation of such transaction.
6.8 Appropriate Documentation. The Company will have received, in a
form and substance reasonably satisfactory to Company, dated the Closing Date,
all certificates and other documents, instruments and writings to evidence the
fulfillment of the conditions set forth in this Article 6 as the Company may
reasonably request, along with duly executed copies of the Transaction
Documents by the Parties.
ARTICLE 7
TERMINATION AND ABANDONMENT
7.1 Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Closing by the written consent of Company and Parent.
7.2 Termination by Either Company or Parent. This Agreement may be
terminated by either Company or Parent if the Closing is not consummated by
the Termination Date (provided that the right to terminate this Agreement
under this Section 7.2 will not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of or resulted
in the failure of the Closing to occur on or before such date).
7.3 Termination by Parent. This Agreement may be terminated at any
time prior to the Closing by Parent if any of the conditions provided for in
Article 5 have not been met or waived by Parent in writing prior to the
Closing.
7.4 Termination by the Company. This Agreement may be terminated
prior to the Closing by action of Company if any of the conditions provided
for in Article 6 have not been met or waived by Company in writing prior to
the Closing.
7.5 Procedure and Effect of Termination. In the event of termination
of this Agreement and abandonment of the transactions contemplated hereby by
Company or Parent pursuant to this Article 7, written notice thereof will be
given to all other Parties and this Agreement will terminate and the
transactions contemplated hereby will be abandoned, without further action by
any of the Parties hereto. If this Agreement is terminated as provided
herein:
(a) Each of the Parties will, upon request, redeliver all
documents, work papers and other material of the other Parties relating
to the transactions contemplated hereby, whether obtained before or
after the execution hereof, to the party furnishing the same;
(b) No party will have any liability for a breach of any
representation, warranty, agreement, covenant or the provision of this
Agreement, unless such breach was due to a willful or bad faith action
or omission of such party or any representative, agent, employee or
independent contractor thereof; and
(c) All filings, applications and other submissions made
pursuant to the terms of this Agreement will, to the extent practicable,
be withdrawn from the agency or other person to which made.
ARTICLE 8
MISCELLANEOUS PROVISIONS
8.1 Expenses. Parent and Company will each bear their own costs and
expenses relating to the transactions contemplated hereby, including without
limitation, fees and expenses of legal counsel, accountants, investment
bankers, brokers or finders, printers, copiers, consultants or other
representatives for the services used, hired or connected with the
transactions contemplated hereby.
8.2 Survival. The representations and warranties of the Parties shall
survive the Closing for a period of one (1) year.
8.3 Amendment and Modification. Subject to applicable Law, this
Agreement may be amended or modified by the Parties hereto at any time with
respect to any of the terms contained herein; provided, however, that all such
amendments and modifications must be in writing duly executed by all of the
Parties hereto.
8.4 Waiver of Compliance; Consents. Any failure of a party to comply
with any obligation, covenant, agreement or condition herein may be expressly
waived in writing by the party entitled hereby to such compliance, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition will not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No single or partial
exercise of a right or remedy will preclude any other or further exercise
thereof or of any other right or remedy hereunder. Whenever this Agreement
requires or permits the consent by or on behalf of a party, such consent will
be given in writing in the same manner as for waivers of compliance.
8.5 No Third Party Beneficiaries. Nothing in this Agreement will
entitle any person or entity (other than a party hereto and his, her or its
respective successors and assigns permitted hereby) to any claim, cause of
action, remedy or right of any kind.
8.6 Notices. All notices, requests, demands and other communications
required or permitted hereunder will be made in writing and will be deemed to
have been duly given and effective: (i) on the date of delivery, if delivered
personally; (ii) on the earlier of the fourth (4th) day after mailing or the
date of the return receipt acknowledgement, if mailed, postage prepaid, by
certified or registered mail, return receipt requested; or (iii) on the date
of transmission, if sent by facsimile, telecopy, telegraph, telex or other
similar telegraphic communications equipment, or to such other person or
address as the Company will furnish to the other Parties hereto in writing in
accordance with this subsection.
If to Company prior to the Merger: With a copy to:
GeNOsys, Inc. Xxxxxx X. Xxxxxxxxxxx
0000 X. Xxxxxxxxx Xxx Xxxxxxxxxxx Xxxxxxxxx
Xxxxx, Xxxx 00000 Suite #1310, 00000 000X Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0 Xxxxxx
or to such other person or address as either Company or Company Shareholders
will furnish to the other Parties hereto in writing in accordance with this
subsection.
If to Parent or Merger Subsidiary
prior to the Merger: With a copy to:
Autoline Group, Inc. Xxxxxxx X. Xxxxxxxxxx, Esq.
0000 Xxxxx 000 Xxxx, #000 000 Xxxx 000 Xxxxx, Xxxxx #000
Xxxx Xxxx Xxxx, Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000
or to such other person or address as Parent will furnish to the other Parties
hereto in writing in accordance with this subsection.
8.7 Assignment. This Agreement and all of the provisions hereof
will be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor
any of the rights, interests or obligations hereunder will be assigned
(whether voluntarily, involuntarily, by operation of law or otherwise) by any
of the Parties hereto without the prior written consent of the other Parties.
8.8 Governing Law. This Agreement and the legal relations among the
Parties hereto will be governed by and construed in accordance with the
internal substantive laws of the State of Nevada (without regard to the laws
of conflict that might otherwise apply) as to all matters, including without
limitation matters of validity, construction, effect, performance and
remedies.
8.9 Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
8.10 Headings. The table of contents and the headings of the sections
and subsections of this Agreement are inserted for convenience only and will
not constitute a part hereof.
8.11 Entire Agreement. This Agreement, the Disclosure Schedules and
the exhibits and other writings referred to in this Agreement or in the
Disclosure Schedules or any such exhibit or other writing are part of this
Agreement, together they embody the entire agreement and understanding of the
Parties hereto in respect of the transactions contemplated by this Agreement
and together they are referred to as this Agreement or the Transaction
Documents. There are no restrictions, promises, warranties, agreements,
covenants or undertakings, other than those expressly set forth or referred to
in this Agreement. This Agreement supersedes all prior agreements and
understandings between the Parties with respect to the transaction or
transactions contemplated by this Agreement. Provisions of this Agreement
will be interpreted to be valid and enforceable under applicable Law to the
extent that such interpretation does not materially alter this Agreement;
provided, however, that if any such provision becomes invalid or unenforceable
under applicable Law such provision will be stricken to the extent necessary
and the remainder of such provisions and the remainder of this Agreement will
continue in full force and effect.
8.12 Definition of Material Adverse Effect. "Material Adverse Effect"
with respect to a party means a material adverse change in or effect on the
business, operations, financial condition, properties or liabilities of that
party taken as a whole; provided, however, that a Material Adverse Effect will
not be deemed to include (i) changes as a result of the announcement of this
transaction, (ii) events or conditions arising from changes in general
business or economic conditions or (iii) changes in generally accepted
accounting principles.
Signature Page to Follow
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
THE AUTOLINE GROUP, INC.
By: /s/Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, President
GENOSYS, INC.
By:/s/Xxxx X. X. Xxxxxx
Xxxx X. X. Xxxxxx, President
AUTOLINE ACQUISITION CORP.
By: /s/Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, President
EXHIBIT A
Compromise and Settlement Agreement
COMPROMISE AND SETTLEMENT AGREEMENT
THIS AGREEMENT made and entered into as of August 8, 2005, by and
among 1017975 Alberta Ltd., (a corporation incorporated under the laws of the
Province of Alberta) ("1017975"), the shareholders of 1017975, as set out
below, (the "Shareholders"), Xxxx X. X. Xxxxxx, of Edmonton, Alberta
("Xxxxxx"), Xxxxxxxx X. Xxxxxxxx, of Edmonton, Alberta ("Xxxxxxxx") and
GeNOsys, Inc., a Utah corporation (the "Company") (sometimes collectively
called the "Parties," or individually, a "Party").
WITNESSETH:
1.
Purpose
The Parties acknowledge that there presently exists a substantial,
irreconcilable dispute among them, and without admitting or acknowledging the
accuracy and truthfulness of the claims of any other Party, these Parties have
determined it to be in their mutual best interests to resolve any such dispute
as herein provided. Therefore, the purpose of this Agreement is to compromise
and settle any and all claims or causes of action of any type or nature
whatsoever or matters otherwise related to the dispute described in Section 2
herein below (the "Dispute"), by, between and among the Parties hereto and
their respective successors, officers or agents, employees and stockholders.
2.
Statement of Dispute
2.1 1017975, Xxxxxx and Xxxxxxxx had made statements to the
Shareholders that 1017975 had acquired or had the right to acquire certain
patents and other intellectual property rights, which may have included some
or all of the rights described in Schedule "A" hereto (the "Rights").
2.2 1017975 did not in fact own or have the right to acquire
any or all of the Rights, which at all times rested and continue to rest with
Xxxxxx and Xxxxxxxx.
2.3 The Company wishes to acquire all interest in the Rights
from Xxxxxx and Xxxxxxxx; to then merge with Autoline Group, Inc., a Utah
corporation ("Autoline"); and the Company and Autoline wish to ensure that
neither 1017975 nor its Shareholders exert any claim to the Rights.
3.
Terms of Settlement
3.1 The Company shall issue to the Shareholders an aggregate
total of 2,746,944 shares (the "Settlement Shares") of its common stock that
are "restricted securities", and the Shareholders shall have "piggy-back
registration rights" that will require the Company at no cost to 1017975 to
include these shares for resale on behalf of the Shareholders or their
designees in any registration statement (excluding registration statements on
Form S-8 or S-3) filed by the Company or any successor within two years of the
date of this Agreement with the United States Securities and Exchange
Commission.
3.3 The Settlement Shares shall be issued to the Shareholders
in the proportions set out in Schedule "B" hereto.
3.4. The Company represents that after giving effect to the
issuance of the Settlement Shares, and other share issuances to be completed
contemporaneously therewith, the Company shall have a total of 40,000,000
shares of its common stock outstanding.
3.5 Each of the Shareholders shall become a stockholder of
record of the Company on the execution and delivery of this Agreement,
subject, however, to each such Shareholder executing and delivering to the
Company the Shareholder Written Consent of Proposed Merger that accompanies
the Shareholders Letter dated July 15, 2005 (the "Shareholders Letter"), that
accompanies this Agreement and by which each Shareholder will be adopting and
approving the merger with Autoline so that the Settlement Shares will be
exchanged for the same number of shares of Autoline and with substantially the
same rights as the Settlement Shares, all as described in the Shareholders
Letter.
3.6 The Parties each agree that all claims and causes related
to the Dispute, whether direct or indirect, actual or apparent, related to
damages for misrepresentations, omissions, losses or expenses or otherwise,
are hereby compromised and settled, and that Autoline shall be a third party
beneficiary to this Agreement.
3.7 Each of the Parties hereto agrees to indemnify and hold
harmless the other Parties hereto against and from any claims or causes
brought by any successor, director, officer, agent, employee, stockholder or
debtor, creditor or professional of any Party who makes any claims or attempts
to make any claims for any cause against any other Party hereto based upon or
arising out of the Dispute described herein.
4.
Change of Facts
Each of the Parties hereto acknowledges that to the best of its
personal knowledge and belief, the facts and circumstances as known to each
under which this Agreement has been executed and entered into are true,
accurate and complete in all material respects, and each Party further
acknowledges that such facts or circumstances may in the future prove to be
different, and each assumes the risk of any such facts or circumstances
proving to be otherwise than those understood at the time of the execution of
this Agreement.
1017975 Alberta Ltd.
Date: August 8, 2005 By: /s/Xxxxxxxx X. Xxxxxxxx
President
GeNOsys, Inc.
Date: August 8, 2005 By: /s/Xxxx X. X. Xxxxxx
President
SCHEDULE "A"
1. Canadian Patent Application,
Serial No. 2,413,834, Filed December 10, 2002
NITRIC OXIDE GAS GENERATOR
2. Canada Design Registration
Patent No. 104685, Issued November 23, 2004
MEDICAL GAS GENERATOR
EXHIBIT B
Shareholder Consent to Proposed Merger
IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.
SHAREHOLDER WRITTEN CONSENT TO PROPOSED MERGER
and
INVESTMENT REPRESENTATIONS LETTER
Autoline Group, Inc.
0000 Xxxxx 000 Xxxx #000
Xxxx Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, President
Xxxxx Xxxxxx, Secretary
GeNOsys, Inc.
0000 X. Xxxxxxxxx Xxx
Xxxxx, Xxxx 00000
Attention: Xxxx X. X. Xxxxxx, President
Xxxxxxxx X. Xxxxxxxx, Secretary
Ladies and Gentlemen:
This Written Consent and Investment Representations Letter (the "Consent")
is being executed and delivered in connection with the proposed merger of
GeNOsys Acquisition Corp. a Nevada corporation and wholly-owned subsidiary of
Autoline Group, Inc. (respectively, "Merger Subsidiary" and "Autoline"), into
GeNOsys, Inc., a Nevada corporation ("GeNOsys") by the shareholders of GeNOsys
(the "Shareholders").
1. The undersigned (the "Shareholder"), pursuant to authority to act
without a meeting in accordance with the Nevada Revised Statutes (the "NRS")
consents to the taking of the actions and adopts the resolutions set out
below:
WHEREAS, there has been presented to the Shareholders a merger proposal
(the "Merger Proposal"), to be completed by and among GeNOsys, Merger
Subsidiary and Autoline, the parent of Merger Subsidiary.
RESOLVED, that the Shareholder hereby approves and authorizes the
reverse triangular merger of Subsidiary into GeNOsys (the "Merger") whereby
all of the issued and outstanding shares of GeNOsys shall be converted into
shares of Autoline common stock on a one for one basis (the "Shares").
RESOLVED FURTHER, that the Shareholder hereby approves the Merger
Proposal whereby Merger Subsidiary shall merge into GeNOsys and GeNOsys will
thereafter issue one (1) share of its common stock to Autoline to become a
wholly-owned subsidiary of Autoline on the terms and subject to the conditions
set forth in the Merger Proposal presented to the Shareholders.
RESOLVED FURTHER, that the Shareholder hereby authorizes the appropriate
officers of GeNOsys, to execute, acknowledge and deliver the definitive merger
agreement (the "Merger Agreement"), with such changes, modifications,
deletions and additions as such officers may determine necessary or
appropriate, the execution, acknowledgement and delivery of the Merger
Agreement by such officers to constitute conclusive proof of such
determination by such officers.
RESOLVED FURTHER, that the appropriate officers of GeNOsys are hereby
authorized, empowered and directed to do or cause to be done any and all such
further acts and things, to execute any and all such further documents as they
may deem necessary or advisable to effect the provisions of the Merger
Agreement, the Merger, and to carry out the intent and accomplish the purposes
of the foregoing resolutions.
2. Under Nevada law, all Shareholders are eligible to exercise
dissenters' rights in connection with the proposed Merger, as described in
greater detail in the Summary of Dissenters' Rights attached hereto as Exhibit
B (the "Summary"). The Shareholder hereby expressly acknowledges receipt of
the Summary; acknowledges that he fully understands such dissenters' rights as
presented in the Summary; and he further understands and agrees that
his/her/its execution and delivery of this Shareholder Written Consent to
Proposed Merger and Investment Representations Letter will constitute a waiver
of such Dissenters' Rights, without qualification.
3. By execution below, the Shareholder acknowledges that both GeNOsys
and Autoline are relying upon the accuracy and completeness of the
representations contained herein in complying with its obligations under
applicable laws.
4. In connection with the issuance of the Shares pursuant to the
proposed Merger, the Shareholder hereby acknowledges and represents as
follows:
(a) That the Shareholder is a "sophisticated investor," meaning,
that the Shareholder, either alone or with the assistance of the
Shareholder's own professional advisor who is unaffiliated with and who
is not compensated by GeNOsys or Autoline or any of their affiliates has
such knowledge and experience in financial and business matters that the
Shareholder is capable of evaluating the merits and risks of an
investment in the Shares, has the capacity to protect the Shareholder's
own interests in connection with an investment in the Shares and has the
net worth to undertake such risks such that the Shareholder could be
reasonably assumed to have the capacity to protect his own interests in
connection with a purchase of the Shares;
(b) That the Shareholder has been given full and complete access
to information regarding Autoline, as outlined in the Merger Proposal
set forth in the Shareholders Letter dated July 15, 2005, and has
utilized such access to the Shareholder's satisfaction for the purpose
of obtaining such information regarding Autoline as the Shareholder has
reasonably requested; and, particularly, the Shareholder has been given
reasonable opportunity to ask questions of, and receive answers from,
representatives of Autoline concerning the terms and conditions of the
Merger and to obtain any additional information, to the extent
reasonably available. Autoline has requested that the Shareholder seek
advice from its own legal counsel, accountant or investment advisor on
the risks associated with the Merger Proposal;
(c) That the Shareholder recognizes that Autoline and GeNOsys
have limited operating histories that include operating losses and are
dependent on their ability to raise new capital and that the Shares as
an investment involves a high degree of risk that could result in a
complete loss of the investment, including, but not limited to, the risk
of economic losses from operations of Autoline and GeNOsys;
(d) That the Shareholder has reviewed or has been given full and
complete access to the historical financial statements of Autoline as of
and for the period ended March 31, 2005; and
(e) That the Shareholder realizes that (i) the Shares issued in
connection with the Merger are a long-term investment; (ii) the
Shareholder must bear the economic risk of investment for an indefinite
period of time because the Shares have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") or under the
securities laws of any other jurisdiction and, therefore, the Shares
cannot be resold unless they are subsequently registered under said laws
or exemptions from such registrations are available; and (iii) that the
transferability of the Shares is restricted and that a legend may be
placed on any certificate representing the Shares substantially to the
following effect:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF A CURRENT AND
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT WITH
RESPECT TO SUCH SHARES, OR AN OPINION OF THE ISSUER'S
COUNSEL TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
UNDER THE 1933 ACT.
4. The Shareholder represents and warrants that the Shares are being
issued to the Shareholder in the Shareholder's name solely for the
Shareholder's own beneficial interest and not as nominee for, or on behalf of,
or for the beneficial interest of, or with the intention to transfer to, any
other person, trust or organization. The Shareholder further represents that
the Shareholder is acquiring these securities for investment and not with a
view towards resale or distribution.
5. The Shareholder acknowledges that the issuance of the Shares in
connection with the Merger is subject to the Federal securities laws of the
United States, and that, pursuant to the U.S. Federal securities laws and
state securities laws, the Shares may be acquired only by persons who come
within the definition of an "Accredited Investor" as that term is defined in
Rule 501(a) of Regulation D promulgated under the 1933 Act. Furthermore, if
the Shareholder is an accredited investor, the Shareholder has acknowledged
that it qualifies as an "Accredited Investor" by checking the appropriate
category below:
Category I: ______ The Shareholder is an individual (not a partnership,
corporation, etc.) whose individual net worth, or
joint net worth with the Shareholder's spouse,
presently exceeds U.S.$1,000,000.
Explanation. In calculation of net worth the
Shareholder may include equity in personal property
and real estate, including the Shareholder's principal
residence, cash, short-term investments, stocks and
securities. Equity in personal property and real
estate should be based on the fair market value of
such property less debt secured by such property.
Category II:_____ The Shareholder is an individual (not a partnership,
corporation, etc.) who had an individual income in
excess of U.S. $200,000 in 2003 and 2004, or joint
income with the Shareholder's spouse in excess of
$300,000 in 2003 and 2004, and has a reasonable
expectation of reaching the same income level in 2004.
Category III:_____ The Shareholder otherwise meets the definition of
"Accredited Investors" as defined in Section
230.501(a) of the Act.
6. The Shareholder, if other than an individual, makes the following
additional representations:
(a) The Shareholder was not organized for the specific purpose of
acquiring the Shares; and
(b) This Letter of Investment Intent has been duly authorized by all
necessary action on the part of the Shareholder, has been duly executed
by an authorized representative of the Shareholder, and is legal, valid
and binding obligations of the Shareholder enforceable in accordance
with its terms.
7. The Shareholder, if an individual, is not a person resident of the
United States, and if an entity, is not organized under the laws of the United
States:
Check, if Applicable:_____
SUBJECT TO THE CLOSING OF THE MERGER PROPOSAL, PLEASE ISSUE MY SHARES OF
COMMON STOCK IN THE REORGANIZED COMPANY AS FOLLOWS:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
SIGNATURES
Executed this day of , 2005.
The Shareholder hereby represents he has read this entire Written
Consent and Investment Representations Letter.
SHAREHOLDER:
______________________________ _______________________________________
Signature Name
_______________________________________
Address (City, State or Province
_______________________________________
Country or Province
_______________________________________
Number of Shares Owned
U.S. Tax Identification or Social
Security No.
(if any)
( )
Telephone Number
Exhibit A
Attached hereto is a copy of the Agreement and Plan of Merger
Exhibit B
Summary of Dissenters' Rights
GeNOsys is governed under the laws of the State of Nevada, and,
accordingly, is governed by the provisions of the NRS. Pursuant to the
relevant sections of the NRS, the shareholders of GeNOsys have the right to an
appraisal of the value of their shares in connection with the proposed Merger.
Sections 92A.300 to 92A.500 the NRS entitle any shareholder of GeNOsys
who objects to the proposed Merger and who follows the procedures prescribed
by Section 92A.440 to receive cash equal to the "fair value" of such
shareholder's shares of GeNOsys. Set forth below is a summary of the
procedures relating to the exercise of such dissenters' rights. This summary
does not purport to be a complete statement of dissenters' rights and is
qualified in its entirety by reference to Sections 92A.300 to 92A.500 of the
NRS, which are reproduced in full as Appendix A attached to this Summary of
Dissenters' Rights and to any amendments to such provisions as may be adopted
after the date of this Summary Dissenters' Rights.
Any shareholder contemplating the possibility of dissenting from the
proposed Merger should carefully review the text of Appendix A (particularly
the specified procedural steps required to perfect the dissenters' rights,
which are complex) and should also consult such shareholder's legal counsel.
Such rights will be lost if the procedural requirements of Section 92A.440 of
the NRS are not fully and precisely satisfied.
The NRS provides dissenters' rights for any shareholder of GeNOsys who
objects to the proposed Merger and who meets the requisite statutory
requirements contained in the NRS. Under the NRS, any shareholder of GeNOsys
who does not sign the Written Consent and Investment Representations Letter
shall be entitled, if the proposed Merger is approved and the actions
contemplated by the proposed Merger are consummated, to receive a cash payment
of the fair value of such shareholder's shares of Company stock upon
compliance with the applicable statutory procedural requirements. A
shareholder who executes the Written Consent and Investment Representations
Letter will have no dissenters' rights with respect thereto. A shareholder
who does not satisfy each of the requirements of Section 92A.440 of the NRS is
not entitled to payment for such shareholder's shares of Company stock under
the dissenters' rights provisions of the NRS and will be bound by the terms
governing the subject transaction.
If the proposed Merger is approved, GeNOsys must send written notice to
all shareholders who did not execute the Written Consent and Investment
Representations Letter as described above. The notice must be sent no later
than 10 days after the effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates
to what extent the transfer of the shares will be restricted after the demand
for payment is received;
(c) Supply a form for demanding payment that includes the date of
the first announcement to the news media or to the stockholders of the terms
of the proposed action and requires that the person asserting dissenter's
rights certify whether or not he acquired beneficial ownership of the shares
before that date;
(d) Set a date by which the subject corporation must receive the
demand
for payment, which may not be less than 30 nor more than 60 days after the
date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
Prior to the effective time of the consummation of the actions
contemplated by the proposed Merger, a shareholder exercising dissenters'
rights retains all other rights of a shareholder of GeNOsys. From and after
such effective time, dissenting shareholders will no longer be entitled to any
rights of a shareholder of GeNOsys, including, but not limited to, the right
to receive notice of meetings, to vote at any meetings or to receive
dividends, and will only be entitled to any rights to appraisal as provided by
the NRS.
After the effective time of the consummation of the actions contemplated
by the proposed Merger, or upon receipt of a valid demand for payment,
whichever is later, GeNOsys must remit to each dissenting shareholder who
complied with the requirements of the NRS the amount GeNOsys estimates to be
the fair value of such shareholder's shares of stock, plus interest accrued
from the effective time of the sale to the date of payment. The payment also
must be accompanied by certain financial data relating to GeNOsys, GeNOsys'
estimate of the fair value of the shares and a description of the method used
to reach such estimate, and a copy of the applicable provisions of the NRS
with a brief description of the procedures to be followed in demanding
supplemental payment. The dissenting shareholder may decline the offer and
demand payment for the fair value of GeNOsys' stock. The dissenting
shareholder waives his right to demand payment unless he notifies GeNOsys of
his demand in writing within 30 days after GeNOsys makes or offers payment for
his shares.
If demand for payment remains unsettled, GeNOsys shall, within 60 days
after receiving the demand, file in court a petition requesting that the court
determine the fair value of GeNOsys' stock. If the proceeding is not filed
within the 60 day period, GeNOsys shall pay each dissenter whose demand
remains unsettled the amount demanded.
The court may appoint one or more appraisers to receive evidence and
make recommendations to the court on the amount of the fair value of the
shares. The court shall determine whether the dissenting shareholder has
complied with the requirements of Section 92A.440 of the NRS and shall
determine the fair value of the shares, taking into account any and all
factors the court finds relevant.
Costs of the court proceeding shall be determined by the court and
assessed against GeNOsys, except that part or all of the costs may be assessed
against any dissenting shareholders whose actions in demanding supplemental
payments are found by the court to be arbitrary, vexatious or not in good
faith.
If the court finds that GeNOsys did not substantially comply with the
relevant provisions of the NRS, the court may assess the fees and expenses, if
any, of attorneys or experts as the court deems equitable against GeNOsys.
Such fees and expenses may also be assessed against any party in bringing the
proceedings if the court finds that such party has acted arbitrarily,
vexatiously or not in good faith, and may be awarded to a party injured by
those actions. The court may award, in its discretion, fees and expenses of
an attorney for the dissenting shareholders out of the amount awarded to such
shareholders, if any.
A shareholder of record may assert dissenters' rights as to fewer than
all of the shares registered in such shareholder's name only if he or she
dissents with respect to all shares beneficially owned by any one beneficial
shareholder and notifies GeNOsys in writing of the name and address of each
person on whose behalf he or she asserts dissenters' rights. The rights of
such a partial dissenting shareholder are determined as if the shares as to
which he or she dissents and his or her other shares were registered in the
names of different shareholders.
Appendix A
SECTIONS 92A.300 to 92A.500 OF THE NEVADA REVISED STATUTES
Set forth below are Sections 92A.300 to 92A.500 of the Nevada Revised
Statutes, which provide that shareholders may dissent from, and obtain the
fair value of their shares in the event of certain corporate actions, and
establish procedures for the exercise of such dissenters' rights.
RIGHTS OF DISSENTING OWNERS
NRS 92A.300 Definitions. As used in NRS 92A.300 to 92A.500, inclusive,
unless the context otherwise requires, the words and terms defined in NRS
92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those
sections.
(Added to NRS by 1995, 2086)
NRS 92A.305 "Beneficial stockholder" defined. "Beneficial stockholder"
means a person who is a beneficial owner of shares held in a voting trust or
by a nominee as the stockholder of record.
(Added to NRS by 1995, 2087)
NRS 92A.310 "Corporate action" defined. "Corporate action" means the
action of a domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.315 "Dissenter" defined. "Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.400 to
92A.480, inclusive.
(Added to NRS by 1995, 2087; A 1999, 1631)
NRS 92A.320 "Fair value" defined. "Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
(Added to NRS by 1995, 2087)
NRS 92A.325 "Stockholder" defined. "Stockholder" means a stockholder of
record or a beneficial stockholder of a domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.330 "Stockholder of record" defined. "Stockholder of record"
means the person in whose name shares are registered in the records of a
domestic corporation or the beneficial owner of shares to the extent of the
rights granted by a nominee's certificate on file with the domestic
corporation.
(Added to NRS by 1995, 2087)
NRS 92A.335 "Subject corporation" defined. "Subject corporation" means
the domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective
or the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
(Added to NRS by 1995, 2087)
NRS 92A.340 Computation of interest. Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
action until the date of payment, at the average rate currently paid by the
entity on its principal bank loans or, if it has no bank loans, at a rate that
is fair and equitable under all of the circumstances.
(Added to NRS by 1995, 2087)
NRS 92A.350 Rights of dissenting partner of domestic limited
partnership. A partnership agreement of a domestic limited partnership or,
unless otherwise provided in the partnership agreement, an agreement of merger
or exchange, may provide that contractual rights with respect to the
partnership interest of a dissenting general or limited partner of a domestic
limited partnership are available for any class or group of partnership
interests in connection with any merger or exchange in which the domestic
limited partnership is a constituent entity.
(Added to NRS by 1995, 2088)
NRS 92A.360 Rights of dissenting member of domestic limited-liability
company. The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
(Added to NRS by 1995, 2088)
NRS 92A.370 Rights of dissenting member of domestic nonprofit
corporation.
1. Except as otherwise provided in subsection 2, and unless otherwise
provided in the articles or bylaws, any member of any constituent domestic
nonprofit corporation who voted against the merger may, without prior notice,
but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his
resignation and is thereby entitled to those rights, if any, which would have
existed if there had been no merger and the membership had been terminated or
the member had been expelled.
2. Unless otherwise provided in its articles of incorporation or
bylaws, no member of a domestic nonprofit corporation, including, but not
limited to, a cooperative corporation, which supplies services described in
chapter 704 of NRS to its members only, and no person who is a member of a
domestic nonprofit corporation as a condition of or by reason of the ownership
of an interest in real property, may resign and dissent pursuant to subsection
1.
(Added to NRS by 1995, 2088)
NRS 92A.380 Right of stockholder to dissent from certain corporate
actions and to obtain payment for shares.
1. Except as otherwise provided in NRS 92A.370 and 92A.390, any
stockholder is entitled to dissent from, and obtain payment of the fair value
of his shares in the event of any of the following corporate actions:
(a) Consummation of a conversion or plan of merger to which the domestic
corporation is a constituent entity:
(1) If approval by the stockholders is required for the
conversion or merger by NRS 92A.120 to 92A.160, inclusive, or the articles of
incorporation, regardless of whether the stockholder is entitled to vote on
the conversion or plan of merger; or
(2) If the domestic corporation is a subsidiary and is merged
with its parent pursuant to NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic corporation
is a constituent entity as the corporation whose subject owner's interests
will be acquired, if his shares are to be acquired in the plan of exchange.
(c) Any corporate action taken pursuant to a vote of the stockholders to
the extent that the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting stockholders are entitled
to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment pursuant
to NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
(Added to NRS by 1995, 2087; A 2001, 1414, 3199; 2003, 3189)
NRS 92A.390 Limitations on right of dissent: Stockholders of certain
classes or series; action of stockholders not required for plan of merger.
1. There is no right of dissent with respect to a plan of merger or
exchange in favor of stockholders of any class or series which, at the record
date fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting at which the plan of merger or exchange is to be acted on,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or held
by at least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the shares
provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu
of fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the
plan of merger or exchange, were either listed on a national securities
exchange, included in the national market system by the National Association
of Securities Dealers, Inc., or held of record by a least 2,000 holders of
owner's interests of record; or
(2) A combination of cash and owner's interests of the kind
described in sub-subparagraphs (I) and (II) of subparagraph (1) of paragraph
(b).
2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require action
of the stockholders of the surviving domestic corporation under NRS 92A.130.
(Added to NRS by 1995, 2088)
NRS 92A.400 Limitations on right of dissent: Assertion as to portions
only to shares registered to stockholder; assertion by beneficial stockholder.
1. A stockholder of record may assert dissenter's rights as to fewer
than all of the shares registered in his name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf
he asserts dissenter's rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he dissents and his
other shares were registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares
held on his behalf only if:
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the beneficial
stockholder or over which he has power to direct the vote.
(Added to NRS by 1995, 2089)
NRS 92A.410 Notification of stockholders regarding right of dissent.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those
sections.
2. If the corporate action creating dissenters' rights is taken by
written consent of the stockholders or without a vote of the stockholders, the
domestic corporation shall notify in writing all stockholders entitled to
assert dissenters' rights that the action was taken and send them the
dissenter's notice described in NRS 92A.430.
(Added to NRS by 1995, 2089; A 1997, 730)
NRS 92A.420 Prerequisites to demand for payment for shares.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to
assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1
and NRS 92A.400 is not entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2089; 1999, 1631)
NRS 92A.430 Dissenter's notice: Delivery to stockholders entitled to
assert rights; contents.
1. If a proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, the subject corporation shall deliver a
written dissenter's notice to all stockholders who satisfied the requirements
to assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to what
extent the transfer of the shares will be restricted after the demand for
payment is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of
the proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the subject corporation must receive the demand
for payment, which may not be less than 30 nor more than 60 days after the
date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
(Added to NRS by 1995, 2089)
NRS 92A.440 Demand for payment and deposit of certificates; retention of
rights of stockholder.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he or the beneficial owner on whose behalf he is
dissenting, as the case may be, acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
2. The stockholder who demands payment and deposits his certificates,
if any, before the proposed corporate action is taken retains all other rights
of a stockholder until those rights are cancelled or modified by the taking of
the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2090; A 1997, 730; 2003, 3189)
NRS 92A.450 Uncertificated shares: Authority to restrict transfer after
demand for payment; retention of rights of stockholder.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are cancelled or modified by the taking of the proposed corporate
action.
(Added to NRS by 1995, 2090)
NRS 92A.460 Payment for shares: General requirements.
1. Except as otherwise provided in NRS 92A.470, within 30 days after
receipt of a demand for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount the subject corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the subject corporation under this subsection may be enforced by
the district court:
(a) Of the county where the corporation's registered office is located;
or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement of
income for that year, a statement of changes in the stockholders' equity for
that year and the latest available interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair value
of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under NRS
92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
(Added to NRS by 1995, 2090)
NRS 92A.470 Payment for shares: Shares acquired on or after date of
dissenter's notice.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment,
after taking the proposed action, it shall estimate the fair value of the
shares, plus accrued interest, and shall offer to pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
subject corporation shall send with its offer a statement of its estimate of
the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenters' right to demand payment
pursuant to NRS 92A.480.
(Added to NRS by 1995, 2091)
NRS 92A.480 Dissenter's estimate of fair value: Notification of subject
corporation; demand for payment of estimate.
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value
of his shares and interest due, if he believes that the amount paid pursuant
to NRS 92A.460 or offered pursuant to NRS 92A.470 is less than the fair value
of his shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing
within 30 days after the subject corporation made or offered payment for his
shares.
(Added to NRS by 1995, 2091)
NRS 92A.490 Legal proceeding to determine fair value: Duties of subject
corporation; powers of court; rights of dissenter.
1. If a demand for payment remains unsettled, the subject corporation
shall commence a proceeding within 60 days after receiving the demand and
petition the court to determine the fair value of the shares and accrued
interest. If the subject corporation does not commence the proceeding within
the 60-day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it
shall commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy
of the petition. Nonresidents may be served by registered or certified mail or
by publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced
under subsection 2 is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or any amendment thereto. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to
a judgment:
(a) For the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the subject corporation;
or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment pursuant
to NRS 92A.470.
(Added to NRS by 1995, 2091)
NRS 92A.500 Legal proceeding to determine fair value: Assessment of
costs and fees.
1. The court in a proceeding to determine fair value shall determine
all of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable,
to the extent the court finds the dissenters acted arbitrarily, vexatiously or
not in good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if
the court finds the subject corporation did not substantially comply with the
requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.
3. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that
the fees for those services should not be assessed against the subject
corporation, the court may award to those counsel reasonable fees to be paid
out of the amounts awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court
may
assess the costs against the subject corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court
finds that such parties did not act in good faith in instituting the
proceeding.
5. This section does not preclude any party in a proceeding
commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
(Added to NRS by 1995, 2092)
EXHIBIT C
Technology Transfer Agreement
BETWEEN:
XXXX X. X. XXXXXX, XXXXXXXX X. XXXXXXXX, XXXXX XXXXXXX, XXXXXXX
XXXXX, of
(hereinafter called the "Vendors")
OF THE FIRST PART
- and -
GeNOsys, INC., a Nevada corporation
(hereinafter called "GeNOsys")
OF THE SECOND PART
TECHNOLOGY TRANSFER AGREEMENT
WHEREAS the Vendors own the intellectual property rights (herein called
the "Technology Rights") to those technologies described in the patents,
patent applications, and design registration and design application described
in Schedule "A" hereto;
AND WHEREAS the Vendors have agreed to transfer the Technology Rights
to GeNOsys, and GeNOsys has agreed to purchase the Technology Rights from the
Vendors, on the terms described herein;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
premises and of the mutual covenants and agreements herein contained, the
parties hereto agree as follows:
1. The Vendors agree to and do hereby sell, assign and transfer to
GeNOsys, and GeNOsys agrees to and does hereby purchase from the Vendors, the
Technology Rights, upon the terms and conditions set out in this Agreement.
2. The purchase price for the Technology Rights shall be $20, which shall
be paid by the issuance to the Vendors of a total of 200,000 shares in the
common stock of GeNOsys (the "GeNOsys Shares").
3. The GeNOsys Shares shall be issued to the Vendors in the following
proportions:
Name of Vendor Number of Shares
Xxxx X. X. Xxxxxx 75,000
Xxxxxxxx Xxxxxxxx 75,000
Xxxxx Xxxxxxx 25,000
Xxxxxxx Xxxxx 25,000
4. The parties acknowledge that GeNOsys and certain of the Vendors have
entered into a Settlement Agreement respecting which certain other parties
have released any claims that they may have to certain of the Technology
Rights. The Vendors represent and warrant to GeNOsys that, with the execution
and completion of the above said Settlement Agreement, the Vendors have the
full right and authority to enter into this Agreement and to transfer the
Technology Rights to GeNOsys.
5. The parties agree to do all such other things and execute such other
documents that may be required to give full force and effect to this Agreement
including, but not limited to, executing assignments of the patents, patent
applications, design registration and design application set out in Schedule
"A" hereto. The Vendors agree that unless and until such time as the
Technology Rights and the registrations evidencing the same have been
transferred into the name of GeNOsys that the Vendors shall hold the same as
bare trustee for GeNOsys.
6. This Agreement shall be governed and construed in accordance with the
laws of the Province of Alberta and the Federal laws of Canada applicable
therein.
7. This Agreement may not be assigned by any of the parties without the
consent of the other parties to this Agreement.
8. This Agreement sets out the entire agreement of the parties with respect
to the subject matters hereof and supersedes and replaces all prior or
contemporaneous agreements, understandings and negotiations respecting the
subject matters hereof.
9. This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and permitted assigns.
IN WITNESS WHEREOF the parties hereto have properly executed this
Agreement as of the day and year first above written.
GeNOsys, INC.
Per: /s/Xxxx X. X. Xxxxxx
XXXX X. X. XXXXXX, President
/s/Xxxx X. X. Xxxxxx
XXXX X. X. XXXXXX
/s/Xxxxxxxx X. Xxxxxxxx
XXXXXXXX X. XXXXXXXX
/s/Xxxxx Xxxxxxx
XXXXX XXXXXXX
/s/Xxxxxxx Xxxxx
XXXXXXX XXXXX
SCHEDULE "A"
1. Canadian Patent Application,
Serial No. 2,413,834, Filed December 10, 2002
NITRIC OXIDE GAS GENERATOR
2. Canada Design Registration
Patent No. 104685, Issued November 23, 0000
XXXXXXX XXX XXXXXXXXX
0. Xxxxxx Xxxxxx Patent Application
Serial No. 10/733,805, Filed December 10, 2003
NITRIC OXIDE GAS GENERATOR
4. Canadian Patent Application
Serial No. 2,423,678, Filed March 27, 2003
METHOD OF INDUCING BLEEDING AFTER DENTAL SURGERY
5. United States Patent Application
Serial No. 10/811,778, Filed March 29, 2004
METHOD OF INDUCING BLEEDING AFTER DENTAL SURGERY
6. United States Design Application
Serial No. 29/204,287, Filed April 27, 2004
MEDICAL GAS GENERATOR
SCHEDULE 2.1
Company Disclosure Schedule
2.1 Disclosure Schedule.
2.2 Corporate Organization, etc.
No exceptions.
2.3 Capitalization.
Authorized: 50,000,000 at $0.0001 par value
Outstanding: 40,000,000
2.4 Authorization, etc.
No exceptions.
2.5 Non-Contravention.
No exceptions.
2.6 Consents and Approvals.
No exceptions.
2.7 Financial Statements.
See the Unaudited Financial Statements of the Company for the
period ended June 30, 2005, attached hereto.
2.8 Absence of Undisclosed Liabilities.
No exceptions.
2.9 Absence of Certain Changes.
No exceptions.
2.10 Assets.
No exceptions.
2.11 Receivables and Payables.
No exceptions.
2.12 Intellectual Property Rights.
See the Technology Transfer Agreement between Xxxx X. X.
Xxxxxx, Xxxxxxxx X. Xxxxxxxx, Xxxxx Xxxxxxx and Xxxxxxx
Xxxxx ("Vendors") and the Company.
2.13 Litigation.
No exceptions.
2.14 Contracts and Commitments; No Default.
(a) Compromise and Settlement Agreement
(b) Technology Transfer Agreement
(c) Consulting Agreement with Xxxxx Consulting Services, Inc.
2.15 Compliance with Law; Permits and Other Operating Rights.
No exceptions.
2.16 Brokers.
No exceptions.
2.17 Issuance of Parent Common Stock.
No exceptions.
2.18 Books and Records.
No exceptions.
2.19 Business Generally; Accuracy of Information.
No exceptions.
SCHEDULE 3.1
Parent Disclosure Schedule
3.1 Disclosure Schedule.
3.2 Corporate Organization, Standing and Power
No exceptions.
3.3 Authorization
No exceptions.
3.4 Capitalization
Authorized: Common: 50,000,000 at $0.001 par value
Outstanding: Common: 2,556,500
Post Merger:
Issued pursuant to Merger:
Issued to GeNOsys
Stockholders: 40,000,000
Outstanding 42,556,500
3.5 Non-Contravention
No exceptions.
3.6 Consents and Approvals
No exceptions.
3.7 Valid Issuance
No exceptions.
3.8 SEC Filings; Financial Statement
No exceptions.
3.9 No Liabilities
No exceptions.
3.10 No Assets
No exceptions.
3.11 Absence of Certain Changes
No exceptions.
3.12 Litigation
No exceptions.
3.13 Contracts and Commitments; No Default
Engagement Letter of Xxxxxxx X. Xxxxxxxxxx, Esq.
Indemnification Agreement of Xxxxx X. Xxxxxx
3.14 No Broker or Finder
No exceptions.
3.15 Intercompany And Affiliate Transactions; Insider Interests
No exceptions.
SCHEDULE 6.4(b)
Xxxxxx Indemnification Agreement
GeNOsys, Inc.
0000 X. Xxxxxxxxx Xxx
Xxxxx, Xxxx 00000
Attention: Xxxx X. X. Xxxxxx, President
The Autoline Group, Inc.
0000 Xxxxx 000 Xxxx, #000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx, President
Re: Indemnification Agreement respecting Section 6.4(b)
and Exhibit 6.4(b) of the Agreement and Plan of Merger
("Merger Agreement"), among GeNOsys, Inc., a Nevada
corporation ("GeNOsys"), Autoline Acquisition Corp., a
Nevada corporation ("Merger Subsidiary"), and The
Autoline Group, Inc., a Utah corporation ("Autoline");
and the payment of the sum of $25,000 to Xxxxx X.
Xxxxxx ("Xxxxxx")
Gentlemen:
In consideration of the closing of the Merger Agreement, and for the
additional sum of $25,000 to be paid by Autoline, Xxxxxx agrees to pay and
indemnify and hold Autoline and GeNOsys harmless from and against any and all
claims or past liabilities of any type or nature whatsoever of Autoline,
including without limitation (i) any and all attorney fees owing to Xxxxxxx X.
Xxxxxxxxxx, Esq., Xxxxxxx X. Xxxxxxxxxx, Esq. and Xxxxxxx X. Xxxxxxxxxx, (ii)
any and all accountant fees owing to Xxxxxxx XxXxxxxxxx, and (iii) any and all
other liabilities existing or arising before the closing (the "Closing") of
the Merger Agreement. Autoline shall have thirty (30) days within which to
pay such sum, and at the sole option of Autoline, such sum may be paid by the
conveyance to Xxxxxx of all of the outstanding stock of The Autoline Group 2,
Inc., a Utah corporation and wholly-owned subsidiary of Autoline, together
with all right, title and interest in and to the name "Autoline Group." If
payment is made in this fashion, Xxxxxx hereby agrees to accept such payment
as full satisfaction of any requirement for payment of any additional sum and
Xxxxxx shall also assume and pay all liabilities of any type or nature
whatsoever regarding The Autoline Group 2, and indemnify and hold Autoline and
GeNOsys harmless therefrom.
As additional consideration for the Closing of the Merger Agreement,
Xxxxxx represents that the information contained in the reports and/or
registration statements of Autoline that have been filed with the Securities
and Exchange Commission (the "SEC Reports") as of the date hereof are true and
correct in every material respect and do not contain any misstatement of a
material fact or omit to state a material fact required or necessary to be
stated therein that would make the statements made therein not misleading:
1. Xxxxxx hereby agrees to indemnify and hold GeNOsys, its officers,
directors, employees and agents and each person, if any, who
controls GeNOsys within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "Securities Act") or
Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the stockholders of GeNOsys and, following the
Closing, Autoline and all of its then officers, directors,
employees and agents and each person, if any, who then controls
Autoline within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, harmless from and against any and
all past liabilities of any type or nature whatsoever of Autoline
existing at the Closing or arising after the Closing but relating
to acts or omissions occurring prior to Closing, which includes
any and all expenses related to the defense, compromise or
settlement of any action with respect to such liabilities.
2. In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant hereto (the
"Indemnified Party"), the Indemnified Party shall promptly notify
Xxxxxx in writing. A delay in giving notice shall only relieve
Xxxxxx of liability to the extent Xxxxxx suffers actual prejudice
because of the delay. Xxxxxx shall have the right, at its option
and expense, to participate in the defense of such a proceeding or
claim, but not to control the defense, negotiation or settlement
thereof, which control shall at all times rest with the
Indemnified Party. The parties hereto agree to cooperate fully
with each other in connection with the defense, negotiation or
settlement of any such proceeding or claim.
3. The parties agree that all of the representations and warranties
contained herein shall survive the Closing and continue to be
binding regardless of any investigation made at any time by any
party.
4. At any time, and from time to time, each party will execute such
additional instruments and take such action as may be reasonably
requested by the other party to carry out the intent and purposes
of this Agreement.
5. Any failure on the part of any party hereto to comply with any of
its obligations, agreements or conditions hereunder may be waived
in writing by the party to whom such compliance is owed.
6. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given if delivered in person or
sent by prepaid first-class registered or certified mail, return
receipt requested, as follows:
If to Xxxxxx: 0000 X Xxxx Xxxxxx #000-000
Xxx Xxxxx, XX 00000
If to GeNOsys: 0000 X. Xxxxxxxxx Xxx
Xxxxx, Xxxx 00000
If to Autoline: 0000 Xxxxx 000 Xxxx, #000
Xxxx Xxxx Xxxx, Xxxx 00000
7. This Agreement constitutes the entire agreement between the
parties and supersedes and cancels any other agreement,
representation or communication, whether oral or written, between
the parties hereto relating to the transaction contemplated herein
or the subject matter hereof.
8. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Utah, without giving
effect to principles of conflicts of laws; and any action to
enforce this Agreement shall only be brought in the state and
federal courts that are situated in Salt Lake County, Utah.
9. This Agreement shall inure to the benefit of, and be binding upon,
the parties hereto and their successors and assigns.
10. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
11. In the event of default hereunder by either party, the prevailing
party in any proceeding to enforce this Agreement shall be
entitled to recover attorney's fees and costs and such other
damages as may have been caused by the default of the defaulting
party.
Dated: August 17, 2005 /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
