SHARE
EXCHANGE AGREEMENT
This
SHARE
EXCHANGE AGREEMENT ,
dated as of February 18, 2008, is made by and among GENESIS
HOLDINGS, INC., a Nevada corporation (the "
Acquiror Company "),
BIOAUTHORIZE, INC., a Colorado corporation ("
Bioauthorize "),
and each of the persons listed on Exhibit A as a Bioauthorize
Shareholder (collectively, the "
Bioauthorize Shareholders ,"
and individually a "
Bioauthorize Shareholder ").
BACKGROUND
The
Bioauthorize Shareholders have agreed to transfer to the
Acquiror Company, and the Acquiror Company has agreed to
acquire from the Bioauthorize Shareholders, all of the issued
and outstanding shares of Bioauthorize (the "
Bioauthorize Shares "),
in exchange for 20,000,000 shares of the Acquiror Company's Common
Stock (the "
Exchange Shares "),
which Exchange Shares shall constitute 80% of the issued and
outstanding shares of Acquiror Company's Common Stock immediately
after the closing of the transactions contemplated herein, in each
case, on the terms and conditions as set forth herein.
ARTICLE I.
DEFINITIONS
Section
1.1 Unless
the context otherwise requires, the terms defined in
this
Article 1 will
have the meanings herein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any
of the terms herein defined.
"
Acquiror Company Balance Sheet "
means the Acquiror Company's unaudited condensed consolidated
balance sheet at September 30, 2007.
"
Acquiror Company Board "
means the Board of Directors of the Acquiror Company.
"
Acquiror Company Common Stock "
means the Acquiror Company's common stock, par value $0.001 per
share.
"
Acquiror Company Controlling Persons "
means Jason Pratte and Larry Don Bankston.
"
Acquiror Company Subsidiary "
means Genesis Land, Inc., a Nevada corporation that is wholly owned
by the Acquiror Company.
"
Affiliate "
means any Person that directly or indirectly controls, is
controlled by or is under common control with the indicated
Person.
"
Agreement "
means this Share Exchange Agreement, including all Schedules and
Exhibits hereto, as this Share Exchange Agreement may be from time
to time amended, modified or supplemented by agreement of the
parties.
"
Bioauthorize Board "
means the Board of Directors of Bioauthorize.
"
Bioauthorize Indemnifying Shareholders "
means Yada Schneider, Gerald Van Wie and Neil Van Wie.
"
Bioauthorize Shares "
means the 115,856 issued and outstanding shares of common stock of
Bioauthorize, and the 16,279 issued and outstanding shares of Class
A preferred stock of Bioauthorize, all of which are held of record
by the Bioauthorize Shareholders.
"
Closing Date "
has the meaning set forth in
Article III .
"
Code "
means the United States Internal Revenue Code of 1986, as
amended.
"
Commission "
means the United States Securities and Exchange Commission or any
other federal agency then administering the Securities Act or any
successor statute.
"
Company Indemnified Party "
has the meaning set forth in
Section 11.2 .
"
Contract "
means any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is
legally binding.
"
Damages "
means the actual losses, damages, liabilities, penalties, Taxes,
interest and expenses (including reasonable attorneys' fees and
disbursements and other out-of-pocket expenses and costs incurred
in connection with mitigating the Loss and investigating,
preparing, settling or defending any pending or threatened action,
claim or proceeding (including those brought by third
Persons)).
"
Disclosure Schedule "
means the several schedules referred to and identified herein,
setting forth certain disclosures, exceptions and other
information, data and documents referred to at various places
throughout this Agreement.
"
Environmental Laws "
means any Law or other requirement relating to the environment,
natural resources, or public or employee health and
safety.
"
Environmental Permit "
means all licenses, permits, authorizations, approvals, franchises
and rights required under any applicable Environmental Law or
Order.
"
Equity Security "
means any stock or similar security, including, without limitation,
securities containing equity features and securities containing
profit participation features, or any security convertible into or
exchangeable for, with or without consideration, any stock or
similar security, or any security carrying any warrant, right or
option to subscribe to or purchase any shares of capital stock, or
any such warrant or right.
"
ERISA "
means the United States Employee Retirement Income Security Act of
1974, as amended.
"
Exchange "
has the meaning set forth in
Section 2.1 .
"
Exchange Act "
means the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same are in effect from time to
time.
"
Exchange Shares "
means the shares of Acquiror Company Common Stock being issued to
the Bioauthorize Shareholders pursuant hereto.
"
Exhibits "
means the several exhibits referred to and identified in this
Agreement.
"
GAAP "
means, with respect to any Person, United States generally accepted
accounting principles applied on a consistent basis with such
Person's past practices.
"
Governmental Authority "
means any federal or national, state or provincial, municipal or
local government governmental authority, regulatory or
administrative agency, governmental commission, department, board,
bureau, agency or instrumentality, political subdivision,
commission, court, tribunal, official, arbitrator or arbitral body,
in each case whether United States or non-United States with
jurisdiction over any party hereto.
"
Indebtedness "
means any obligation, contingent or otherwise. Any obligation
secured by a Lien on, or payable out of the proceeds of, or
production from, property of the relevant party will be deemed to
be Indebtedness.
"
Intellectual Property "
means all industrial and intellectual property, including, without
limitation, all United States and non-United States patents, patent
applications, patent rights, trademarks, trademark applications,
common law trademarks, Internet domain names, trade names, service
marks, service mark applications, common law service marks, and the
goodwill associated therewith, copyrights, in both published and
unpublished works, whether registered or unregistered, copyright
applications, franchises, licenses, know-how, trade secrets,
technical data, designs, customer lists, confidential and
proprietary information, processes and formulae, all computer
software programs or applications, layouts, inventions, development
tools and all documentation and media constituting, describing or
relating to the above, including manuals, memoranda, and records,
whether such intellectual property has been created, applied for or
obtained anywhere throughout the world.
"
Intellectual Property Assets "
has the meaning set forth in
Section 5.17 below.
"
Laws "
means, with respect to any Person, any United States or non-United
States federal, national, state, provincial, local, municipal,
international, multilateral or other law (including common law),
constitution, statute, code, ordinance, rule, regulation or treaty
applicable to such Person.
"
Lien "
means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including, without limitation, any conditional
sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction and
including any lien or charge arising by Law.
"
Material Acquiror Company Contract "
means any and all agreements, contracts, arrangements, leases,
commitments or otherwise, of the Acquiror Company, of the type and
nature that the Acquiror Company is required to file with the
Commission.
"
Material Adverse Effect "
means, when used with respect to the Acquiror Company or
Bioauthorize, as the case may be, any change, effect or
circumstance which, individually or in the aggregate, would
reasonably be expected to (a) have a material adverse effect on the
business, assets, financial condition or results of operations of
the Acquiror Company or Bioauthorize, as the case may be, in each
case taken as a whole or (b) materially impair the ability of the
Acquiror Company or Bioauthorize (or the Bioauthorize
Shareholders), as the case may be, to perform its (or their)
obligations under this Agreement, excluding any change, effect or
circumstance resulting from (i) the announcement, pendency or
consummation of the transactions contemplated by this Agreement,
(ii) changes in the United States securities markets generally, or
(iii) changes in general economic, currency exchange rate,
political or regulatory conditions in industries in which the
Acquiror Company or Bioauthorize, as the case may be,
operate.
"
Order "
means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any
Governmental Authority.
"
Ordinary Course of Business "
means an action taken by a Person will be deemed to have been taken
in the "
Ordinary Course of Business "
only if:
(a) such
action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of
such Person;
(b) such
action is not required to be authorized by the board of directors
of such Person (or by any Person or group of Persons exercising
similar authority); and
(c) such
action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority); in
the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such
Person.
"
Organizational Documents "
means (a) the articles or certificate of incorporation and the
bylaws of a corporation; (b) the partnership agreement and any
statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of
a limited partnership; (d) the articles or certificate of formation
and operating agreement of a limited liability company; (e) any
other document performing a similar function to the documents
specified in clauses (a), (b), (c) and (d) adopted or filed in
connection with the creation, formation or organization of a
Person; and (f) any and all amendments to any of the
foregoing.
"
Permitted Liens "
means (a) Liens for Taxes not yet payable or in respect of which
the validity thereof is being contested in good faith by
appropriate proceedings and for the payment of which the relevant
Person has made adequate reserves; (b) Liens in respect of pledges
or deposits under workmen's compensation laws or similar Laws,
carriers, warehousemen, mechanics, laborers and materialmen and
similar Liens, if the obligations secured by such Liens are not
then delinquent or are being contested in good faith by appropriate
proceedings conducted and for the payment of which the relevant
Person has made adequate reserves; (c) statutory Liens incidental
to the conduct of the business of the relevant Person which were
not incurred in connection with the borrowing of money or the
obtaining of advances or credits and that do not in the aggregate
materially detract from the value of its property or materially
impair the use thereof in the operation of its business; and (d)
Liens that would not have a Material Adverse Effect.
"
Person "
means all natural persons, corporations, business trusts,
associations, companies, general partnerships, limited
partnerships, limited liability companies, joint ventures and other
entities, governments, agencies and political
subdivisions.
"
Proceeding "
means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative or
investigative) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental
Authority.
"
Related Person "
means, with respect to a particular individual:
(a) each
other member of such individual's Family;
(b) any
Person that is directly or indirectly controlled by such individual
or one or more members of such individual's Family;
(c) any
Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest;
and
(d) any
Person with respect to which such individual or one or more members
of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With
respect to a specified Person other than an
individual:
(a) any
Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any
Person that holds a Material Interest in such specified
Person;
(c) each
Person that serves as a director, officer, partner, executor, or
trustee of such specified Person (or in a similar
capacity);
(d) any
Person in which such specified Person holds a Material
Interest;
(e) any
Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity);
and
(f) any
Related Person of any individual described in clause (b) or
(c).
For
purposes of this definition, (a) the "
Family "
of an individual includes (i) the individual, (ii) the individual's
spouse and former spouses, (iii) any other natural person who is
related to the individual or the individual's spouse within the
second degree, and (iv) any other natural person who resides with
such individual, and (b) "
Material Interest "
means direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 5% of
the outstanding voting power of a Person or equity securities or
other equity interests representing at least 5% of the outstanding
equity securities or equity interests in a Person.
"
Rule 144 "
means Rule 144 under the Securities Act, as the same may be amended
from time to time, or any similar or successor rule or regulation
hereafter adopted by the Commission.
“
Schedule 14F Filing ”
means an information statement to be filed by the Acquiror Company
on Schedule 14F under the Exchange Act following the
Closing.
"
SEC Documents "
has the meaning set forth in
Section 6.26 .
"
Section 4(2) "
means Section 4(2) of the Securities Act, as the same may be
amended from time to time, or any successor statute.
"
Securities Act "
means the Securities Act of 1933, as amended, or any similar or
successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same will be in effect at the
time.
"
Subsidiary "
means, with respect to any Person, any other Person of which such
Person (a) beneficially owns, either directly or indirectly, more
than 50% of (i) the total combined voting power of all classes of
voting securities of such Person, (ii) the total combined equity
interests, or (iii) the capital or profit interests of such Person;
or (b) otherwise has the power to control such Person.
"
Survival Period "
has the meaning set forth in
Section 11.1 .
"
Tax "
or "
Taxes "
means all United
States, other
applicable federal, state or local taxes, charges, fees, levies,
imposts, duties and other assessments, as applicable, including,
but not limited to, any income, alternative minimum or add-on,
estimated, gross income, gross receipts, sales, use, transfer,
transactions, intangibles, ad valorem, value-added, franchise,
registration, title, license, capital, paid-up capital, profits,
withholding, payroll, employment, unemployment, excise, severance,
stamp, occupation, premium, real property, recording, personal
property, federal highway use, commercial rent, environmental
(including, but not limited to, taxes under Section 59A of the
Code) or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties or additions to
tax with respect to any of the foregoing.
"
Tax Group "
means any United States and other applicable federal, state, local
or foreign consolidated, affiliated, combined, unitary or other
similar group of which the Acquiror Company is now or was formerly
a member.
"
Tax Return "
means any return, declaration, report, claim for refund or credit,
information return, statement or other similar document filed with
any Governmental Authority with respect to Taxes, including any
schedule or attachment thereto, and including any amendment
thereof.
"
Transaction Documents "
means, collectively, all agreements, instruments and other
documents to be executed and delivered in connection with the
transactions contemplated by this Agreement.
"
United States "
means the United States of America.
"
United States Dollars "
or "
US $ "
or "
$ "
means the currency of the United States of America.
ARTICLE II.
EXCHANGE OF BIOAUTHORIZE SHARES AND SHARE
CONSIDERATION
Section
2.1
Share Exchange .
At the Closing, each Bioauthorize Shareholder shall transfer to the
Acquiror Company the number of Bioauthorize Shares set forth
opposite each such Bioauthorize Shareholder's name on
Exhibit A ,
and, in consideration therefor, the Acquiror Company shall issue to
such Bioauthorize Shareholder the number of Exchange Shares set
forth opposite each Bioauthorize Shareholder's name on
Exhibit A (the
"
Exchange "),
which issuance by the Acquiror Company shall be effected by
delivery of stock certificates representing the Exchange Shares to
the Bioauthorize Shareholders within seven (7) days following the
Closing.
Section
2.2
Tax Withholding .
The Acquiror Company shall be entitled to deduct and withhold from
the Exchange Shares otherwise deliverable to the Bioauthorize
Shareholders pursuant to this Agreement such amounts as the
Acquiror Company is required to deduct and withhold with respect to
the making of such payment under the Code or any provision of
state, local, or foreign Tax Law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the Bioauthorize
Shareholder in respect of which such deduction and withholding was
made.
Section
2.3
Section 368 Reorganization .
For United States federal income tax purposes, the Exchange is
intended to constitute a "reorganization" within the meaning of
Section 368(a)(1)(B) of the Code. The parties to this Agreement
hereby adopt this Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United
States Treasury Regulations. Notwithstanding the foregoing or
anything else to the contrary contained in this Agreement, the
parties acknowledge and agree that no party is making any
representation or warranty as to the qualification of the Exchange
as a reorganization under Section 368 of the Code or as to the
effect, if any, that any transaction consummated prior to the
Closing Date has or may have on any such reorganization status. The
parties acknowledge and agree that each (i) has had the opportunity
to obtain independent legal and tax advice with respect to the
transaction contemplated by this Agreement, and (ii) is responsible
for paying its own Taxes, including without limitation, any adverse
Tax consequences that may result if the transaction contemplated by
this Agreement is not determined to qualify as a reorganization
under Section 368 of the Code.
Section
2.4
Directors and Officers of the Acquiror Company at the Closing
Date .
Effective as of the Closing Date, one director of the Acquiror
Company shall resign and the remaining two directors of the
Acquiror Company shall appoint Yada Schneider as a member of the
Acquiror Company Board. Also effective as of the Closing Date, the
directors of the Acquiror Company shall appoint the following
officers of the Acquiror Company - Yada Schneider, President and
CEO, G. Neil Van Wie, Vice President and CFO, and Gerald B. Van
Wie, Vice President and COO, and all current officers of the
Acquiror Company shall resign.
ARTICLE III.
CLOSING DATE
The
closing of the Exchange will occur on February 18, 2008 or at
such later or earlier date as all of the closing conditions
set forth in
Articles VIII and IX have
been satisfied or waived and as the parties have unanimously agreed
(the "
Closing Date ").
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE
BIOAUTHORIZE
SHAREHOLDERS
Each
Bioauthorize Shareholder, severally and not jointly, hereby
represents and warrants to the Acquiror Company that the
statements contained in this
Article IV are
correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of
this Agreement throughout this
Article IV ),
except as set forth in the Disclosure Schedule accompanying this
Agreement and initialed by the parties (the "
Disclosure Schedule ").
The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in
this
Article IV .
Section
4.1
Authority .
Such Bioauthorize Shareholder has the right, power, authority and
capacity to execute and deliver this Agreement and each of the
Transaction Documents to which such Bioauthorize Shareholder is a
party, to consummate the transactions contemplated by this
Agreement and each of the Transaction Documents to which such
Bioauthorize Shareholder is a party, and to perform such
Bioauthorize Shareholder's obligations under this Agreement and
each of the Transaction Documents to which such Bioauthorize
Shareholder is a party. This Agreement has been, and each of the
Transaction Documents to which such Bioauthorize Shareholder is a
party will be, duly and validly authorized and approved, executed
and delivered by such Bioauthorize Shareholder. Assuming this
Agreement and the Transaction Documents have been duly and validly
authorized, executed and delivered by the parties thereto other
than such Bioauthorize Shareholder, this Agreement is, and each of
the Transaction Documents to which such Bioauthorize Shareholder is
a party have been, duly authorized, executed and delivered by such
Bioauthorize Shareholder and constitutes the legal, valid and
binding obligation of such Bioauthorize Shareholder, enforceable
against such Bioauthorize Shareholder in accordance with their
respective terms, except as such enforcement is limited by general
equitable principles, or by bankruptcy, insolvency and other
similar Laws affecting the enforcement of creditors rights
generally.
Section
4.2
No Conflict .
Neither the execution or delivery by such Bioauthorize Shareholder
of this Agreement or any Transaction Document to which such
Bioauthorize Shareholder is a party, nor the consummation or
performance by such Bioauthorize Shareholder of the transactions
contemplated hereby or thereby will, directly or indirectly,
contravene, conflict with, constitute a default (or an event or
condition which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or
acceleration of, any agreement or instrument to which such
Bioauthorize Shareholder is a party or by which the properties or
assets of such Bioauthorize Shareholder are bound; or (c)
contravene, conflict with, or result in a violation of, any Law or
Order to which such Bioauthorize Shareholder, or any of the
properties or assets of such Bioauthorize Shareholder, may be
subject.
Section
4.3
Ownership of Bioauthorize Shares. Such
Bioauthorize Shareholder owns, of record and beneficially, and has
good, valid and indefeasible title to and the right to transfer to
the Acquiror Company pursuant to this Agreement, such Bioauthorize
Shareholder's Bioauthorize Shares free and clear of any and all
Liens. There are no options, rights, voting trusts, shareholder
agreements or any other contracts or understandings to which such
Bioauthorize Shareholder is a party or by which such Bioauthorize
Shareholder or such Bioauthorize Shareholder's Bioauthorize Shares
are bound with respect to the issuance, sale, transfer, voting or
registration of such Bioauthorize Shareholder's Bioauthorize
Shares except
for that certain Shareholder Agreement dated May 10, 2007 and
subsequently amended (the “
Shareholder Agreement ”)
to which the BioAuthorize Shareholders Yada Schneider, Gerald B.
Van Wie, G. Neil Van Wie and MOFI are
each a party. To the extent that the provisions of the Shareholder
Agreement apply to the transfer of the BioAuthorize Shares held by
the BioAuthorize Shareholders Yada Schneider, Gerald B. Van Wie, G.
Neil Van Wie and Members Only Financial, Inc., an Arizona
corporation (collectively, the “
Consenting Shareholders ”),
in the Exchange, the Consenting Shareholders hereby waive
application of the Shareholder Agreement to the Exchange and
consent to the transfer of the BioAuthorize Shares by each of the
Consenting Shareholders. At the Closing Date, the Acquiror Company
will acquire good, valid and marketable title to such Bioauthorize
Shareholder's Bioauthorize Shares free and clear of any and all
Liens.
Section
4.4
Litigation .
There is no pending Proceeding against such Bioauthorize
Shareholder that challenges, or may have the effect of preventing,
delaying or making illegal, or otherwise interfering with, any of
the transactions contemplated by this Agreement and, to the
knowledge of such Bioauthorize Shareholder, no such Proceeding has
been threatened, and no event or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the
commencement of any such Proceeding.
Section
4.5
No Brokers or Finders .
Except as disclosed in
Schedule 4.5 ,
no Person has, or as a result of the transactions contemplated
herein will have, any right or valid claim against such
Bioauthorize Shareholder for any commission, fee or other
compensation as a finder or broker, or in any similar
capacity.
Section
4.6
Investment Representations .
(a)
Unregistered Shares .
Each Bioauthorize Shareholder understands and agrees that the
Exchange Shares to be issued pursuant to this Agreement have not
been registered under the Securities Act or the securities laws of
any state of the United States or any foreign country and that the
issuance of the Exchange Shares is being effected in reliance upon
an exemption from registration afforded under Section 4(2) of the
Securities Act for transactions by an issuer not involving a public
offering.
(b)
Stock Legends .
Each Bioauthorize Shareholder hereby agrees with the Acquiror
Company to the inclusion, as applicable of the following legends,
or legends substantially similar, on the certificates for the
Exchange Shares and any other legend required under any applicable
Law, including, without limitation, any United States state
corporate and state securities law, or contract:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"
ACT "),
OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE
SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE ISSUER AN OPINION OF COUNSEL, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE ISSUER, THAT
SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND APPLICABLE STATE SECURITIES LAWS.
(c)
Opinion .
No Bioauthorize Shareholder will transfer any or all of the
Exchange Shares absent an effective registration statement under
the Securities Act and applicable state securities laws covering
the disposition of such Bioauthorize Shareholder's Exchange Shares,
without first providing the Acquiror Company with an opinion of
counsel (which counsel and opinion are reasonably satisfactory to
the Acquiror Company) to the effect that such transfer will be
exempt from the registration and the prospectus delivery
requirements of the Securities Act and the registration or
qualification requirements of any applicable United States state
securities laws.
(d)
Consent .
Each Bioauthorize Shareholder understands and acknowledges that the
Acquiror Company may refuse to transfer the Exchange Shares, unless
such Bioauthorize Shareholder complies with this
Section 4.6 .
Each Bioauthorize Shareholder consents to the Acquiror Company
making a notation on its records or giving instructions to any
transfer agent of the Acquiror Company's Common Stock in order to
implement the restrictions on transfer of the Exchange
Shares.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BIOAUTHORIZE AND THE
BIOAUTHORIZE INDEMNIFYING SHAREHOLDERS
Bioauthorize
and the Bioauthorize Indemnifying Shareholders, jointly and
severally, represent and warrant to the Acquiror Company and
the Acquiror Company Controlling Persons that the statements
contained in this
Article V are
correct and complete as of the date of this Agreement and will be
correct and complete (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout
this
Article V ),
except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this
Article V .
Section
5.1
Organization and Qualification .
Bioauthorize is duly organized and validly existing under the laws
of the state of Colorado, has all requisite authority and power
(corporate and other), governmental licenses, authorizations,
consents and approvals to carry on its business as presently
conducted and as contemplated to be conducted, to own, hold and
operate its properties and assets as now owned, held and operated
by it, to enter into this Agreement, to carry out the provisions
hereof except where the failure to be so organized, existing and,
if applicable, in good standing or to have such authority or power
will not, in the aggregate, either (i) have a Material Adverse
Effect on Bioauthorize or (ii) materially impair the ability of the
Bioauthorize Shareholders each to perform their material
obligations under this Agreement. Bioauthorize is duly qualified,
licensed or domesticated as a foreign corporation in good standing
in each jurisdiction wherein the nature of its activities or its
properties owned or leased makes such qualification, licensing or
domestication necessary, except where the failure to be so
qualified, licensed or domesticated will not have a Material
Adverse Effect. Set forth on
Schedule 5.1 is
a list of those jurisdictions in which Bioauthorize presently
conducts its business or owns, holds and operates its properties
and assets.
Section
5.2
Subsidiaries .
Bioauthorize does not own directly or indirectly, any equity or
other ownership interest in any Person.
Section
5.3
Articles of Incorporation and Bylaws .
True, correct and complete copies of the Organizational Documents
of Bioauthorize have been delivered to the Acquiror Company prior
to the execution of this Agreement, and no action has been taken to
amend or repeal such Organizational Documents. Bioauthorize is not
in violation or breach of any of the provisions of its
Organizational Documents, except for such violations or breaches as
would not have a Material Adverse Effect.
Section
5.4
Authorization and Validity of this Agreement and the Transaction
Documents .
The recording of the transfer of the Bioauthorize Shares and the
delivery of new certificates representing the Bioauthorize Shares
registered in the name of Acquiror Company are within
Bioauthorize's corporate powers, have been duly authorized by all
necessary corporate action, do not require from the Bioauthorize
Board or Bioauthorize Shareholders any consent or approval that has
not been validly and lawfully obtained, and require no
authorization, consent, approval, license, exemption of or filing
or registration with any Governmental Authority, as the case may
be, except for those that, if not obtained or made would not have a
Material Adverse Effect.
Section
5.5
No Violations .
None of the execution, delivery or performance by Bioauthorize of
this Agreement or any Transaction Document to which Bioauthorize is
a party, nor the consummation by Bioauthorize of the transactions
contemplated hereby violates any provision of its Organizational
Documents, or violates or conflicts with, or constitutes a default
(or an event or condition which, with notice or lapse of time or
both, would constitute a default) under, or results in the
termination or acceleration of, or results in the creation of
imposition of any Lien under, any agreement or instrument to which
Bioauthorize is a party or by which Bioauthorize is or will be
bound or subject, or violates any Laws.
Section
5.6
Binding Obligations .
Assuming this Agreement has been duly and validly authorized,
executed and delivered by the Acquiror Company and the Bioauthorize
Shareholders, this Agreement is and all agreements or instruments
contemplated hereby to which Bioauthorize is a party, will be, duly
authorized, executed and delivered by Bioauthorize and are the
legal, valid and binding Agreement of Bioauthorize and are
enforceable against Bioauthorize in accordance with their
respective terms, except as such enforcement is limited by general
equitable principles, or by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors rights
generally.
Section
5.7
Capitalization and Related Matters .
(a)
Capitalization .
The authorized capital stock of Bioauthorize consists of 20,000,000
shares of common stock, $0.01 par value each, 10,000,000 shares of
class A preferred stock, $0.001 par value each, and 10,000,000
shares of a series of blank check preferred stock, par value
$0.0001 per share each. There are no outstanding or authorized
options, warrants, calls, subscriptions, rights (including any
preemptive rights or rights of first refusal), agreements or
commitments of any character obligating Bioauthorize to issue any
stock or any other Equity Securities of Bioauthorize. All issued
and outstanding shares of Bioauthorize's capital stock are duly
authorized, validly issued, fully paid and nonassessable and have
not been issued in violation of any preemptive or similar
rights.
(b)
No Redemption Requirements .
There are no outstanding contractual obligations (contingent or
otherwise) of Bioauthorize to retire, repurchase, redeem or
otherwise acquire any outstanding shares of capital stock of, or
other Equity Securities in, Bioauthorize or to provide funds to or
make any investment (in the form of a loan, capital contribution or
otherwise) in any other Person.
(c)
Due Authorization .
The exchange of the Bioauthorize Shares has been duly authorized,
and the Bioauthorize Shares have been validly issued and are fully
paid and nonassessable.
(d)
Shareholders .
Exhibit A contains
a true and complete list of the names and addresses of the record
and beneficial holders of all of the outstanding capital stock of
Bioauthorize. No holder of Bioauthorize Shares or any other Equity
Security of Bioauthorize or any other Person is entitled to any
preemptive right, right of first refusal or similar right as a
result of the issuance of the Bioauthorize Shares, the transactions
contemplated hereby or otherwise. There is no voting trust,
agreement or arrangement among any of the Bioauthorize Shareholders
of any capital stock of Bioauthorize affecting the exercise of the
voting rights of any such capital stock.
Section
5.8
Compliance with Laws; No Defaults .
Except as would not have a Material Adverse Effect, the business
and operations of Bioauthorize has been and is being conducted in
accordance with all applicable Laws and all applicable Orders of
all Governmental Authorities. Except as would not have a Material
Adverse Effect, Bioauthorize is not, and is not alleged to be, in
violation of, or (with or without notice or lapse of time or both)
in default under, or in breach of, any term or provision of its
Organizational Documents or of any indenture, loan or credit
agreement, note, deed of trust, mortgage, security agreement or
other material agreement, lease, license or other instrument,
commitment, obligation or arrangement to which Bioauthorize is a
party or by which any of Bioauthorize's properties, assets or
rights are bound or affected. To the knowledge of Bioauthorize, no
other party to any material contract, agreement, lease, license,
commitment, instrument or other obligation to which Bioauthorize is
a party is (with or without notice or lapse of time or both) in
default thereunder or in breach of any term thereof. Bioauthorize
is not subject to any obligation or restriction of any kind or
character, nor is there, to the knowledge of Bioauthorize, any
event or circumstance relating to Bioauthorize that materially and
adversely affects in any way its business, properties, assets or
prospects or that would prevent or make burdensome its performance
of or compliance with all or any part of this Agreement or the
consummation of the transactions contemplated hereby or
thereby.
Section
5.9
Certain Proceedings .
There is no pending Proceeding that has been
commenced
against Bioauthorize and that challenges, or may have the effect of
preventing, delaying, making
illegal, or otherwise interfering with, any of the transactions
contemplated by this Agreement. To Bioauthorize's knowledge, no
such Proceeding has been threatened.
Section
5.10
No Brokers or Finders .
Except as disclosed in
Schedule 5.10 ,
no Person has, or as a result of the transactions contemplated
hereby will have, any right or valid claim against Bioauthorize for
any commission, fee or other compensation as a finder or broker, or
in any similar capacity.
Section
5.11
Title to and Condition of Properties .
Bioauthorize owns or holds under valid leases or other rights to
use all real property, plants, machinery and equipment necessary
for the conduct of the business of Bioauthorize as presently
conducted, except where the failure to own or hold such property,
plants, machinery and equipment would not have a Material Adverse
Effect.
Section
5.12
Books And Records .
The
minute books of Bioauthorize contain accurate and complete records
of all meetings held of, and corporate action taken by, the
shareholders, the Bioauthorize Board, and committees of the
Bioauthorize Board, and no meeting of any such shareholders,
Bioauthorize Board, or committee has been held for which minutes
have not been prepared and are not contained in such minute books.
At the Closing Date, all of those books and records will be in the
possession of Bioauthorize.
Section
5.13
No Undisclosed Liabilities .
Except
as set forth in
Schedule 5.13 ,
Bioauthorize has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued,
contingent, or otherwise) except for current liabilities incurred
in the Ordinary Course of Business.
Section
5.14
Taxes.
(a) Except
as set forth in
Schedule 5.14 ,
Bioauthorize filed or caused to be filed (on a timely basis since
inception of Bioauthorize) all Tax Returns that are or were
required to be filed by or with respect to it, either separately or
as a member of a group of corporations, pursuant to applicable
Laws. Bioauthorize has delivered to Acquiror Company copies of all
such Tax Returns filed since inception of Bioauthorize.
Bioauthorize has paid all taxes that have become due pursuant to
those Tax Returns or otherwise, or pursuant to any assessment
received by Bioauthorize, except such taxes, if any, as are listed
in
Schedule 5.14 and
are being contested in good faith.
(b) The
charges, accruals, and reserves with respect to Taxes on the
respective books of Bioauthorize are adequate (determined in
accordance with GAAP) and are at least equal to Bioauthorize 's
liability for Taxes. All taxes that Bioauthorize is or was required
by Laws to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper
Governmental Authority or other Person.
(c) All
Tax Returns filed by (or that include on a consolidated basis)
Bioauthorize are true, correct, and complete. There is no tax
sharing agreement that will require any payment by Bioauthorize
after the date of this Agreement.
Section
5.15
Contracts; No Defaults .
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(a) |
Schedule 5.15 contains
a complete and accurate list of:
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(i)
each
Contract that involves performance of services or delivery of
goods or materials by Bioauthorize of an amount or value in
excess of $10,000;
(ii)
each
Contract that involves performance of services or delivery of
goods or materials to Bioauthorize of an amount or value in
excess of $10,000;
(iii)
each
Contract that was not entered into in the Ordinary Course of
Business and that involves expenditures or receipts of
Bioauthorize in excess of $10,000;
(iv)
each
lease, rental or occupancy agreement, license, installment and
conditional sale agreement, and other Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold
or other interest in, any real or personal property (except
personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of
less than $10,000 and with terms of less than one
year);
(v)
each
licensing agreement or other Contract with respect to patents,
trademarks, copyrights, or other intellectual property,
including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property
Assets;
(vi)
each
collective bargaining agreement and other Contract to or with
any labor union or other employee representative of a group of
employees;
(vii)
each
joint venture, partnership, and other Contract (however named)
involving a sharing of profits, losses, costs, or liabilities
by Bioauthorize with any other Person;
(viii)
each
Contract containing covenants that in any way purport to
restrict the business activity of Bioauthorize or any
Affiliate of Bioauthorize or limit the freedom of Bioauthorize
or any Affiliate of Bioauthorize to engage in any line of
business or to compete with any Person;
(ix)
each
Contract providing for payments to or by any Person based on
sales, purchases, or profits, other than direct payments for
goods;
(x)
each
power of attorney that is currently effective and
outstanding;
(xi)
each
Contract entered into other than in the Ordinary Course of
Business that contains or provides for an express undertaking
by Bioauthorize to be responsible for consequential
damages;
(xii)
each
Contract for capital expenditures in excess of
$10,000;
(xiii)
each
written warranty, guaranty, or other similar undertaking with
respect to contractual performance extended by Bioauthorize
other than in the Ordinary Course of Business;
and
(xiv)
each
amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
(xv)
Schedule 5.15 sets
forth reasonably complete details concerning such Contracts,
including the parties to the Contracts and the amount of the
remaining commitment of Bioauthorize under the
Contracts.
(b) Except
as set forth in
Schedule 5.15 :
(i)
no
officer, director or shareholder who owns in excess of five
percent (5%) of the capital stock of Bioauthorize (and no
Related Person of the foregoing) has nor may it acquire any
rights under, any Contract that relates to the business of, or
any of the assets owned or used by, Bioauthorize;
and
(ii)
no
officer, director, agent, employee, consultant, or contractor
of Bioauthorize is bound by any Contract that purports to
limit the ability of such officer, director, agent, employee,
consultant, or contractor to (A) engage in or continue any
conduct, activity, or practice relating to the business of
Bioauthorize, or (B) assign to Bioauthorize or to any other
Person any rights to any invention, improvement, or
discovery.
(c) Except
as set forth in
Schedule 5.15 ,
each Contract identified or required to be identified in
Schedule 5.15 is
in full force and effect and is valid and enforceable in accordance
with its terms.
(d) Except
as set forth in
Schedule 5.15 :
(i)
Bioauthorize
is, and at all times since inception has been, in full
compliance with all applicable terms and requirements of each
Contract under which Bioauthorize has or had any obligation or
liability or by which Bioauthorize or any of the assets owned
or used by Bioauthorize is or was bound;
(ii)
each
other Person that has or had any obligation or liability under
any Contract under which Bioauthorize has or had any rights
is, and at all times since inception has been, in full
compliance with all applicable terms and requirements of such
Contract;
(iii)
no
event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict
with, or result in a violation or breach of, or give
Bioauthorize or any other Person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or
modify, any Contract; and
(iv)
Bioauthorize
has not given to or received from any other Person, at any
time since inception, any notice or other communication
(whether oral or written) regarding any actual, alleged,
possible, or potential violation or breach of, or default
under, any Contract.
(e) There
are no renegotiations of, attempts to renegotiate or outstanding
rights to renegotiate any material amounts paid or payable to
Bioauthorize under current or completed Contracts with any Person
and no such Person has made written demand for such
renegotiation.
Section
5.16
Employees .
(a)
Schedule 5.16 contains
a complete and accurate list of the following information for each
employee or director of Bioauthorize, including each employee on
leave of absence or layoff status; employer; name; job title;
current compensation paid or payable and any change in compensation
since December 31, 2006; vacation accrued; and service credited for
purposes of vesting and eligibility to participate under
Bioauthorize's pension, retirement, profit-sharing, thrift-savings,
deferred compensation, stock bonus, stock option, cash bonus,
employee stock ownership (including investment credit or payroll
stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, employee pension benefit plan or employee welfare
benefit plan, or any other employee benefit plan or any plan for
directors.
(b) No
employee or director of Bioauthorize is a party to, or is otherwise
bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement,
between such employee or director and any other Person ("
Proprietary Rights Agreement ")
that in any way adversely affects or will affect (i) the
performance of his duties as an employee or director of
Bioauthorize, or (ii) the ability of Bioauthorize to conduct its
business, including any Proprietary Rights Agreement with
Bioauthorize by any such employee or director. No employee of
Bioauthorize has terminated employment since December 31,
2006.
Section
5.17
Intellectual Property .
(a)
Intellectual Property Assets .
The term "Intellectual Property Assets" includes:
(i)
Bioauthorize's
name, all fictional business names, trading names, registered
and unregistered trademarks, service marks, and applications
(collectively, "
Marks ");
(ii)
all
patents, patent applications, and inventions and discoveries
that may be patentable (collectively, "
Patents ");
(iii)
all
copyrights in both published works and unpublished works
(collectively, "
Copyrights ");
(iv)
all
rights in mask works (collectively, "
Rights in Mask Works ");
and
(v)
all
know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively,
"
Trade Secrets ");
owned, used, or licensed by Bioauthorize as licensee or
licensor.
(b)
Agreements .
Schedule 5.17 contains
a complete and accurate list and summary description, including any
royalties paid or received by Bioauthorize, of all Contracts
relating to the Intellectual Property Assets to which Bioauthorize
is a party or by which Bioauthorize is bound, except for any
license implied by the sale of a product and perpetual, paid-up
licenses for commonly available software programs with a value of
less than $10,000 under which Bioauthorize is the licensee. There
are no outstanding and no threatened disputes or disagreements with
respect to any such agreement.
(c)
Know-How Necessary for the Business .
(i)
The
Intellectual Property Assets are all those necessary for the
operation of Bioauthorize's business as it is currently
conducted or as reflected in the business plan given to
Acquiror Company by Bioauthorize. Bioauthorize is the owner of
all right, title, and interest in and to each o
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