AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER

 

BY AND AMONG

 

GENESIS CAPITAL CORPORATION OF NEVADA, GENESIS CAPITAL ACQUISITION CORP.,

 

LYFETEC, INC., THE SHAREHOLDERS OF GENESIS CAPITAL CORPORATION OF NEVADA,

 

MACADA HOLDING, INC.,

 

AND

 

THE SHAREHOLDERS OF MACADA

 

September __, 2009

 

Table of Contents

 

1. Definitions

3

 

2. The Merger

5

 

3. Representations And Warranties Of Lyfetec

8

 

4. Representations And Warranties Of Lyfetec Shareholders	13
5. Representations And Warranties Of Genesis, Genesis Sub And The Genesis Preferred Shareholders	14

 

6. Representations And Warranties Of Genesis Preferred Shareholders	18
7. Closing Conditions	18

 

8. Other Agreements

25

 

9. Closing

26

 

10. Termination

28

 

11. Indemnification, Remedies, Survival

28

 

12. General

29

 

 

 

THE SECURITIES TO WHICH THIS AGREEMENT AND PLAN OF MERGER RELATES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND WILL BE ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

AGREEMENT AND PLAN OF MERGER

 

This Agreement and Plan Of Merger is made effective as of the __ of                   , 2009 by and among Genesis Capital Corporation of Nevada, a Nevada Corporation (“ Genesis ”), Genesis Capital Acquisition Corp., a wholly-owned subsidiary of Genesis (“ Genesis Sub ”), Lyfetec, Inc., a Nevada corporation (“ Lyfetec ”), the undersigned preferred shareholders of Genesis as listed on Schedule 1 attached hereto (“ Genesis Preferred Shareholders ”), Macada Holding, Inc., the sole shareholder of Lyfetec (“ Macada ” or “ Lyfetec Shareholders ”) and the undersigned shareholders of Macada as listed on Schedule 2 attached hereto (“ Macada Shareholders ”)

 

RECITALS:

A. Genesis Sub is a wholly-owned subsidiary of Genesis;

B. The board of directors of each of Genesis and Lyfetec deem it advisable and in the best interests of their respective companies and shareholders that Lyfetec be merged with and into Genesis Sub, with Lyfetec remaining as the surviving corporation under the name “Lyfetec, Inc.”;

C. The boards of directors of each of Genesis, Genesis Sub, Macada and Lyfetec have approved this Agreement and Plan of Merger (the “ Agreement ”) and the transactions contemplated hereby; and

D. The Macada Shareholders, the Genesis Preferred Shareholders, Macada, Lyfetec, Genesis and Genesis Sub have approved the Agreement and the transactions contemplated hereby.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree each with the other as follows:

 

1.	DEFINITIONS

1.1 Definitions . The following terms have the following meanings, unless the context indicates otherwise:

(a)

“ Agreement ” means this Agreement and Plan of Merger, and all the exhibits, schedules and other documents attached to or referred to in this Agreement, and all amendments and supplements, if any, to this Agreement;

 

	(b)	“ Applicable Securities Legislation ” means all applicable securities legislation in all jurisdictions relevant to the issuance of the Genesis Shares;

 

 

(c)

“ Cash Consideration ” means $350,000 payable in accordance with the installment schedule set forth in Section 8.3.

 

	(d)	“ Closing ” means the completion of the Transaction, in accordance with Section 8 hereof, at which time the Closing Documents will be exchanged by the parties, except for those documents or other items specifically required to be exchanged at a later time;

 

(e)

“ Closing Date ” means _______, 2009, or a date mutually agreed upon by the parties hereto;

 

	(f)	“ Closing Documents ” means the papers, instruments and documents required to be executed and delivered at the Closing pursuant to this Agreement;

 

	(g)	“ Genesis ” means Genesis Capital Corporation of Nevada, a Nevada Corporation;

 

	(h)	“ Genesis Preferred Stock ” has the meaning ascribed to it in Section 2.3;

 

	(i)	“ Genesis Preferred Shareholders ” has the meaning ascribed to it in the preamble to this Agreement;

 

	(j)	“ Genesis Shares ” means up to   fully paid and non-assessable common shares of Genesis to be issued to the Lyfetec Shareholders on the Closing Date;

 

	(k)	“ Loss ” means any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs, and expenses, including without limitation, interest, penalties, fines and reasonable attorneys, accountants and other professional fees and expenses, but excluding any indirect, consequential or punitive damages suffered by Genesis or Lyfetec including damages for lost profits or lost business opportunities.

 

(l)

“Lyfetec ” means Lyfetec, Inc.;

 

	(m)	“Lyfetec Common Stock ” has the meaning ascribed to it in Section 3.3

 

	(n)	“Lyfetec Financial Statements” has the meaning ascribed to it in Section 3.11

 

	(o)	“Lyfetec Shares ” means the                      shares of Lyfetec Common Stock held by the Lyfetec Shareholders, being all of the issued and outstanding common shares of Lyfetec beneficially held, either directly or indirectly, by the Lyfetec Shareholders;

 

(p)

“Lyfetec Shareholders ” has the meaning ascribed to it in the preamble to this Agreement;

 

	(q)	“Macada” means Macada Holding, Inc.;

 

	(r)	“New Preferred Stock” means the new series of Genesis convertible preferred stock to be issued to the Genesis Preferred Shareholders in connection with this Transaction;

 

	(s)	“ SEC ” means the United States Securities and Exchange Commission;

 

	(t)	“ Taxes ” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Internal Revenue Code 59A), customs duties,

 

		capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person.
	(u)	“ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

	(v)	“ Transaction ” means the merger of Lyfetec into Genesis Sub and the issuance of the Genesis Shares to the Lyfetec Shareholders;

 

	(w)	“ 1933 Act ” means the United States Securities Act of 1933, as amended;

 

	(x)	“ 1934 Act ” means the United States Securities Exchange Act of 1934, as amended; and,

 

	(y)	“ SEC Reports ” means the periodic and current reports filed by Genesis with the SEC pursuant to the 1934 Act.

 

	(z)	Schedules. The following schedules are attached to and form part of this Agreement:

 

Schedule 1	-	Genesis Preferred Shareholders
Schedule 2	-	Lyfetec Shareholders
Schedule 3	-	Directors and Officers of Lyfetec
Schedule 3.6	-	Lyfetec Subsidiaries
Schedule 4	-	Directors and Officers of Genesis
Schedule 5	-	Genesis Liabilities
Schedule 5.5	-	Genesis Shareholders
Schedule 6	-	Lyfetec Leases, Subleases, Claims, Capital Expenditures, Taxes and Other Property Interests
Schedule 7	-	Lyfetec Material Contracts and Liabilities
Schedule 8		Lyfetec Employees and Consultants
Schedule 9	-	Lyfetec Trademarks and Patents

1.2 Currency. All dollar amounts referred to in this Agreement are in United States funds, unless expressly stated otherwise.

2.	THE MERGER

2.1 Merger. On and subject to the terms and conditions of this Agreement, Lyfetec will merge with and into Genesis Sub (the “ Merger ”) at the Effective Time (as defined below). Lyfetec shall be the corporation surviving the Merger (the “ Surviving Corporation ”).

2.2 Effect of Merger.

	(a)	General . The Merger shall become effective on the date and at the time (the “ Effective Time ”) Lyfetec and Genesis Sub file the Certificate of Merger with the State of Nevada. The Merger shall have the effect set forth in the Nevada Corporations Code. Surviving Corporation may, at any time after the Effective Time, take any action (including

 

		executing and delivering any document) in the name and on behalf of either Lyfetec or Genesis Sub in order to carry out and effectuate the transactions contemplated by this Agreement.
	(b)	Certificate of Incorporation . The Certificate of Incorporation of Surviving Corporation shall be the Certificate of Incorporation of Lyfetec immediately prior to the Effective Time.

 

	(c)	Bylaws . The Bylaws of Surviving Corporation shall be the same Bylaws of Lyfetec immediately prior to the Effective Time.

 

	(d)	Directors and Officers . The directors and officers of Lyfetec shall be and remain the directors and officers of Surviving Corporation at and as of the Effective Time, each holding the office with the Surviving Corporation that he or she held with Lyfetec immediately prior to the Effective Time.

 

	(e)	Conversion of Securities . At and as of the Effective Time, the Lyfetec Shares shall be converted into the right to receive Genesis Shares (for each Lyfetec Shareholder a fractional share resulting from conversion of its aggregate holdings will be rounded up to the nearest whole share) which Genesis Shares will be issued to the Lyfetec Shareholders. No Lyfetec securities shall be deemed to be outstanding after the Effective Time of the Merger or to have any rights other than those described and provided for in this Section 2 at and after the Effective Time.

 

	(f)	Conversion of Genesis Sub Securities . At and as of the Effective Time, all Genesis Sub Securities held by Genesis shall be converted into _______________ shares of common stock of the Surviving Corporation, as such are constituted immediately following the Effective Time, and shall be registered in the name of Genesis and the Surviving Corporation shall be a wholly owned subsidiary of Genesis.

 

	(g)	Dissenting Shares. Each outstanding Lyfetec share, the holder of which has not approved the Transaction or executed this Agreement and demanded and perfected its demand for payment of the fair value of its shares in accordance with the Nevada Corporations Code (“ Appraisal Rights ”) and has not effectively withdrawn or lost its right to such payment (“ Dissenting Shares ”) shall not be converted into or represent a right to receive Genesis Shares pursuant to Section 2.2(e) hereof, and the holder thereof shall be entitled only to such rights as are granted by the Appraisal Rights. Each holder of Dissenting Shares who becomes entitled to payment for its Lyfetec Shares pursuant to Appraisal Rights shall receive payment therefor from the Surviving Corporation (but only after the amount thereof shall have been agreed upon or finally determined pursuant to the Appraisal Rights).

 

	(h)	Effect of Merger. On the Effective Date, the Surviving Corporation, without further act, deed or other transfer, shall retain or succeed to, as the case may be, and possess and be vested with all the rights, privileges, immunities, powers, franchises and authority, of a public as well as of a private nature, of Lyfetec and Genesis Sub; all property of every description and every interest therein, and all debts and other obligations of or belonging to or due to each of Lyfetec or Genesis Sub on whatever account shall thereafter be taken and deemed to be held by or transferred to, as the case may be, or invested in the Surviving Corporation without further act or deed, title to any real estate, or any interest therein vested in Lyfetec or Genesis Sub, shall not revert or in any way be impaired by

 

reason of this merger; and all of the rights of creditors of Lyfetec and Genesis Sub shall be preserved unimpaired, and all liens upon the property of Lyfetec and Genesis Sub shall be preserved unimpaired, and all debts, liabilities, obligations and duties of the respective corporations shall thenceforth remain with or be attached to, as the case may be, the Surviving Corporation and may be enforced against it to the same extent as if all of said debts, liabilities, obligations and duties had been incurred or contracted by it.

2.3 Effect on Genesis Preferred Stock . Upon the terms and conditions of this Agreement, at such time as the Cash Consideration has been paid as set forth in Section 8.3 and without the need for any further action on the part of Genesis Sub, Genesis, Lyfetec or any of their respective stockholders, each share of Genesis Preferred Stock (hereinafter referred to as “ Genesis Preferred Stock ”) (other than the Series C Preferred Stock) outstanding immediately prior to the Effective Time shall be deemed cancelled and converted into the right to receive a pro rata portion of the Cash Consideration. Until properly delivered to Genesis, any certificate evidencing shares of Genesis Preferred Stock (a “ Certificate ”) shall be deemed for all purposes to evidence only the right to receive the consideration described in this Section 2.3.

2.4 New Series C Preferred Stock. Upon the terms and conditions of this Agreement, at the Effective Time, Genesis shall authorize and issue to the Genesis Preferred Shareholders 500,000 shares of newly created Series C Convertible Preferred Stock,                 ,000 of which shall be redeemable by Genesis at anytime for $200,000 and after 12 months after issuance is convertible into                    shares of Genesis Common Stock. Genesis shall guarantee that the Series C Preferred Stock shall entitle the holder thereof to a minimum $200,000 cash either through the redemption payments described above and/or the sale of the common stock issued upon the conversion of the Series C Preferred Stock.

2.5 Procedure for Exchange of Shares. Immediately after the Effective Time, Genesis shall mail or cause to be mailed by certified mail to the former Lyfetec Shareholders at their addresses as they appear on the books and records of Lyfetec a letter of transmittal for the Lyfetec Shareholders to use in surrendering the certificates representing their Lyfetec Shares in exchange for certificates representing the Genesis Shares to which they are entitled pursuant to the conversion under Section 2.2(e) hereof. The Genesis Shares issued to the former Lyfetec Shareholders shall be, as of the Effective Time, fully paid and non-assessable. The Shareholders agree to abide by all applicable resale restrictions and hold periods imposed by Applicable Securities Legislation. All certificates representing the Genesis Shares issued on Closing when issued, will be endorsed with restrictive legends substantially in the same form as the following legend pursuant to the 1933 Act, in order to reflect the fact that these are restricted securities and will be issued to the Shareholders pursuant to applicable exemptions from the registration requirements of the 1933 Act:

“NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND WERE ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”

 

 

2.6 Restricted Shares. Lyfetec and the Lyfetec Shareholders acknowledge that the Genesis Shares issued pursuant to the terms and conditions set forth in this Agreement will have such hold periods as are required under Applicable Securities Legislation and as a result may not be sold, transferred or otherwise disposed of, except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with all Applicable Securities Legislation. Each Shareholder agrees that he has been given an opportunity to seek and obtain independent legal advice as to the resale restrictions applicable in their jurisdiction of residence, and under U.S. or other Applicable Securities Legislation generally. Genesis has not undertaken, and will have no obligation, to register any of the Genesis Shares under the 1933 Act.

2.7 Exemptions. The Lyfetec Shareholders acknowledge that Genesis has advised such Shareholders that Genesis is relying on an exemption from the prospectus and registration requirements of the Applicable Securities Legislation, and, as a consequence, said Shareholders will not be entitled to certain protections, rights and remedies available under Applicable Securities Legislation, including statutory rights of rescission or damages, and the Shareholders will not receive information that would otherwise be required to be provided to the Shareholders pursuant to Applicable Securities Legislation.

 

3.	REPRESENTATIONS AND WARRANTIES OF LYFETEC

Except as set forth in the disclosure schedules to be delivered to Genesis by Lyfetec on the date hereof (which disclosure schedules will be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Section 3), Lyfetec represents and warrants to Genesis, and acknowledges that Genesis is relying upon such representations and warranties, in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Genesis, as follows:

3.1 Organization and Good Standing. Lyfetec is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power and authority to own, lease and to carry on its business as now being conducted.

3.2 Authority. Lyfetec has all requisite corporate power and authority to execute and deliver this Agreement and any other document contemplated by this Agreement (collectively, the “ Lyfetec Documents ”) to be signed by Lyfetec and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of the Lyfetec Documents by Lyfetec and the consummation of the transactions contemplated hereby have been duly authorized by Lyfetec’s board of directors and the Lyfetec shareholders. No other corporate or shareholder proceedings on the part of Lyfetec is necessary to authorize such documents or to consummate the transactions contemplated hereby. This Agreement has been, and the other Lyfetec Documents when executed and delivered by Lyfetec will be, duly executed and delivered by Lyfetec and this Agreement is, and the other Lyfetec Documents when executed and delivered by Lyfetec as contemplated hereby will be, valid and binding obligations of Lyfetec enforceable in accordance with their respective terms except:

	(a)	as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally;

 

	(b)	as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies; and

 

	(c)	as limited by public policy.

3.3 Capitalization of Lyfetec. The entire authorized capital stock and other equity securities of Lyfetec consists of                    shares of common stock,   par value (the “ Lyfetec Common Stock ”). There are                      shares of Lyfetec Common Stock issued and outstanding as of the date of this Agreement.  All of the issued and outstanding shares of Lyfetec Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with the general corporate laws of the State of Nevada and its articles and bylaws.  There are no agreements to which Lyfetec is a party purporting to restrict the transfer of the Lyfetec Common Stock, no voting agreements, shareholders’ agreements, voting trusts, or other arrangements restricting or affecting the voting of the Lyfetec Common Stock.

3.4 Shareholders of Lyfetec Common Stock. The Lyfetec Shareholders, as listed in Schedule 1 to this Agreement, are the only registered holders of the Lyfetec Shares.

3.5 Directors and Officers of Lyfetec . The duly elected or appointed directors and officers of Lyfetec are as set out in Schedule 3 to this Agreement.

3.6 Subsidiaries .

	(a)	Schedule 3.6 to this Agreement sets forth: (i) the name of each corporation, partnership, joint venture or other entity in which the Lyfetec has, directly or indirectly, an equity interest representing 50% or more of the capital stock thereof or other equity interests therein (individually, a “ Subsidiary ” and, collectively, the “ Subsidiaries ”); (ii) the number and type of outstanding equity securities of each Subsidiary and a list of the holders thereof; (iii) the jurisdiction of organization of each Subsidiary; (iv) the names of the officers and directors of each Subsidiary; and (v) the jurisdictions in which each Subsidiary is qualified or holds licenses to do business as a foreign corporation or other entity.

 

(b)

Each Subsidiary is a corporation duly organized, validly existing and in corporate and tax good standing under the laws of the jurisdiction of its incorporation. Each Subsidiary is duly qualified to conduct business and is in corporate and tax good standing under the laws of each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties requires such qualification. Each Subsidiary has all requisite power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. Lyfetec has delivered to Genesis complete and accurate copies of the charter, By-laws or other organizational documents of each Subsidiary. No Subsidiary is in default under or in violation of any provision of its charter, By-laws or other organizational documents. All of the issued and outstanding shares of capital stock of each Subsidiary are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. All shares of each Subsidiary that are held of record or owned beneficially by either Lyfetec or any Subsidiary are held or owned free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), claims, security interests, options, warrants, rights, contracts, calls, commitments, equities and demands. There are no outstanding or authorized options, warrants, rights, agreements or commitments to which Lyfetec or any Subsidiary is a party or which are binding on any of them providing for the issuance, disposition or acquisition of any capital stock of any Subsidiary. There are no outstanding stock appreciation, phantom stock or similar rights with respect to any Subsidiary. There are no voting trusts, proxies

 

		or other agreements or understandings with respect to the voting of any capital stock of any Subsidiary.
	(c)	Lyfetec does not control directly or indirectly or have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other business association which is not a Subsidiary.

3.7 Non-Contravention. Neither the execution, delivery and performance of this Agreement, nor the consummation of the Transaction, will:

	(a)	conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the material properties or assets of Lyfetec under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Lyfetec, or any of its material property or assets;

 

	(b)	violate any provision of the articles or bylaws of Lyfetec; or

 

	(c)	violate any order, writ, injunction, decree, statute, rule, or regulation of any court or governmental or regulatory authority applicable to Lyfetec or any of its material property or assets.

3.8 Actions and Proceedings. There is no action, suit, judgment, claim, demand or proceeding outstanding or pending, or threatened against or affecting Lyfetec or which involves any of the business, or the properties or assets of Lyfetec that, if adversely resolved or determined, would have a material adverse effect on the business, operations, assets, properties, prospects, or conditions of Lyfetec taken as a whole (a “ Lyfetec Material Adverse Effect ”).

3.9 Compliance .

	(a)	Lyfetec is in compliance with, is not in default or violation in any material respect under, and has not been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule, decree or other applicable regulation to the business or operations of Lyfetec;

 

	(b)	Lyfetec is not subject to any judgment, order or decree entered in any lawsuit or proceeding applicable to its business and operations that would constitute a Lyfetec Material Adverse Effect; and

 

	(c)	Lyfetec has operated in material compliance with all laws, rules, statutes, ordinances, orders and regulations applicable to its business. Lyfetec has not received any notice of any violation thereof, nor is Lyfetec aware of any valid basis therefore.

3.10 Filings, Consents and Approvals. To the best knowledge of Lyfetec , no filing or registration with, no notice to and no permit, authorization, consent, or approval of any public or governmental body or authority or other person or entity is necessary for the consummation by Lyfetec of the Transaction contemplated by this Agreement or to enable Lyfetec to continue to

 

conduct its business after the Closing Date in a manner which is consistent with that in which the business is presently conducted.

3.11 Lyfetec Financial Statements . Lyfetec has provided to Genesis: (a) the audited consolidated balance sheets and statements of income, changes in stockholders’ equity and cash flows of Lyfeted as of and for each of the last three fiscal years; (b) the unaudited consolidated balance sheet and statements of income, changes in stockholders’ equity and cash flows as of and for the fiscal quarters ending after the most recent fiscal year. Such financial statements (collectively, the “ Lyfetec Financial Statements ”) have been prepared on an accrual basis and on a consistent basis throughout the periods covered thereby, fairly present the financial condition, results of operations and cash flows of Lyfetec and the Subsidiaries as of the respective dates thereof and for the periods referred to therein and are consistent with the books and records of Lyfetec and the Subsidiaries; provided, however, that the Lyfetec Financial Statements referred to in clause (b) above are subject to normal recurring year-end adjustments (which will not be material).

3.12 Absence of Undisclosed Liabilities. Except as disclosed in this Agreement or in the Lyfetec Financial Statements, Lyfetec does not have any liabilities or obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise that could in the aggregate exceed $20,000, which have not heretofore been paid or discharged. For purposes of this Agreement, the term “ liabilities ” includes, any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, asserted choate or inchoate, liquidated or unliquidated, secured or unsecured.

3.13 Absence of Changes. Except as disclosed in this Agreement, in Schedule 6 or in the Lyfetec Financial Statements, Lyfetec has not:

	(a)	failed to pay or discharge when due any liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties;

 

	(b)	sold, encumbered, assigned or transferred any material fixed assets or properties except for ordinary course business transactions consistent with past practice;

 

	(c)	created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the material assets or properties of Lyfetec to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever;

 

	(d)	made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or cancelled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, other than in the ordinary course of business;

 

	(e)	declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares or equity securities;

 

	(f)	suffered any damage, destruction or loss, whether or not covered by insurance, that materially and adversely effects its business, operations, assets, properties or prospects;

 

	(g)	suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise);

 

	(h)	received notice or had knowledge of any actual or threatened labor trouble, termination, resignation, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects;

 

	(i)	made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate $5,000, except such as may be involved in ordinary repair, maintenance or replacement of its assets;

 

	(j)	other than in the ordinary course of business, increase the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or directors or made any increase in, or any addition to, other benefits to which any of its employees or directors may be entitled other than to increase salaries of certain employees to market rates; or

 

	(k)	agreed, whether in writing or orally, to do any of the foregoing.

3.14 Personal Property. Lyfetec possess, and has good and marketable title of all property necessary for the continued operation of the business of Lyfetec and as presently conducted and as represented to Genesis. All such property is used in the business of Lyfetec. All such property is in reasonably good operating condition, and is reasonably fit for the purposes for which such property is presently used. All material equipment, furniture, fixtures and other tangible personal property and assets owned or leased by Lyfetec are owned by Lyfetec free and clear of all liens, security interests, charges, encumbrances, and other adverse claims, except as disclosed in Schedule 6 to this Agreement.

3.15 Intellectual Property. Lyfetec does not have any intellectual property other as disclosed on Schedule 9.

3.16 Real Property. Lyfetec does not own any real property but has a month to month lease on its office space. Each of the leases, subleases, claims, capital expenditures, Taxes or other real property interests (collectively, the “ Leases ”) to which Lyfetec is a party or is bound, as set out in Schedule 6 to this Agreement, is legal, valid, binding, enforceable and in full force and effect in all material respects. The Leases will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms on the Closing Date. Lyfetec has not assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the Leases or the leasehold property pursuant thereto.

3.17 Material Contracts and Transactions. Schedule 7 to this Agreement lists each material contract, agreement, license, permit, arrangement, commitment, instrument or contract to which Lyfetec is a party (each, a “ Contract ”). The continuation and validity of each Contract will in no way be affected by the consummation of the Transaction contemplated by this Agreement. There exists no actual or threatened termination, cancellation, or limitation of, or any amendment, modification, or change to any Contract.

3.18 Certain Transactions. Lyfetec is not a guarantor or indemnitor of any indebtedness of any third party, including any person, firm or corporation.

 

3.19 No Brokers. Lyfetec has not incurred any obligation or liability to any party for any brokerage fees, agent’s commissions, or finder’s fees in connection with the Transaction contemplated by this Agreement.

3.20 Completeness of Disclosure. No representation or warranty by Lyfetec in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to Genesis pursuant hereto contains or will contain any untrue statement of a material fact.

4.	REPRESENTATIONS AND WARRANTIES OF LYFETEC SHAREHOLDERS

Each of the Lyfetec Shareholders (the “ Securityholders ”), where applicable, represent and warrant to Genesis and Genesis Sub, and acknowledges that Genesis and Genesis Sub are relying upon such representations and warranties, in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Genesis or Genesis Sub, as follows:

	(a)	Each Securityholder is the registered and beneficial owner of the number of Lyfetec Shares or Options listed next to his or her name in Schedule 1 to this Agreement and each Securityholder has no interest, legal or beneficial, direct or indirect, in any other shares of, or the assets or business of Lyfetec;

 

	(b)	Each Securityholder party to this Agreement has completed and executed an Accredited Investor Certificate in the form attached as Schedule 7 to this Agreement, and agrees that the representations set out in such schedule as executed by such Securityholder are true as of the date of this Agreement and will be true and correct as of the Closing Date;

 

	(c)	Schedule 2 to this Agreement contains a true and complete list of each Securityholder’s name and address;

 

	(d)	Immediately prior to and at the Closing, the Securityholder shall be the legal and beneficial owner of the number of Lyfetec Shares or Options listed next to his or her name in Schedule 1 to this Agreement and on the Closing Date, the Securityholder shall transfer to Genesis the Lyfetec Shares free and clear of all liens, restrictions, covenants or adverse claims of any kind or character;

 

	(e)	There are no written instruments, buy-sell agreements, voting agreements or other agreements by and between or among Lyfetec, the Securityholder or any other person, imposing any restrictions upon the transfer, prohibiting the transfer of or otherwise pertaining to Lyfetec Shares or the ownership thereof; and

 

	(f)	Each of the Securityholders has the legal power and authority to execute and deliver this Agreement and all other documents required to be executed and delivered by the Securityholders hereunder, to consummate the transactions hereby contemplated, and to take all other actions required to be taken by such party pursuant to the provisions hereof.

 

5.	REPRESENTATIONS AND WARRANTIES OF GENESIS, GENESIS SUB AND THE GENESIS PREFERRED SHAREHOLDERS

Each of Genesis, Genesis Sub and the Genesis Preferred Shareholders jointly and severally represent and warrant to Lyfetec and the Lyfetec Shareholders and acknowledges that Lyfetec and the Lyfetec Shareholders are relying upon such representations and warranties in connection with the execution,

 

delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Lyfetec or the Lyfetec Shareholders, as follows:

5.1 Organization and Good Standing. Each of Genesis and Genesis Sub are duly incorporated, organized, validly existing and in good standing under the laws of the state of their respective incorporation, and have all requisite corporate power and authority to own, lease and to carry on their respective business as now being conducted.

5.2 Authority. Each of Genesis, Genesis Sub and the Genesis Preferred Shareholders have all requisite corporate power and authority to consummate the Transaction and to execute and deliver this Agreement and any other document contemplated by this Agreement (collectively, the “ Genesis Documents ”) to be signed by each of Genesis, Genesis Sub and the Genesis Preferred Shareholders and to perform their respective obligations hereunder and to consummate the Transaction contemplated hereby. The execution and delivery of each of the Genesis Documents by each of Genesis, Genesis Sub and the Genesis Preferred Shareholders and the consummation by each of Genesis, Genesis Sub and the Genesis Preferred Shareholders of the Transaction contemplated hereby have been duly authorized by their respective boards of directors and shareholders of Genesis Sub and no other corporate or shareholder proceedings on the part of Genesis, Genesis Sub or the Genesis Preferred Shareholders is necessary to authorize such documents or to consummate the Transaction contemplated hereby. This Agreement has been, and the other Genesis Documents when executed and delivered by each of Genesis, Genesis Sub and the Genesis Preferred