AGREEMENT
CONCERNING THE EXCHANGE OF COMMON STOCK
BETWEEN
ZION ENTERPRISES, INC.
AND
GENISYS INFORMATION SYSTEMS, INC. AND
THE STOCKHOLDERS OF GENISYS INFORMATION SYSTEMS, INC.
INDEX
ARTICLE I - EXCHANGE OF SECURITIES 1
1.1 - Issuance of Shares 1
1.2 - Exemption from Registration 1
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF GENISYS 1
2.1 - Organization 1
2.2 - Capital 2
2.3 - Subsidiaries 2
2.4 - Directors and Officers 2
2.5 - Financial Statements 2
2.6 - Absence of Changes 2
2.7 - Absence of Undisclosed Liabilities 2
2.8 - Tax Returns 2
2.9 - Investigation of Financial Condition 2
2.10 - Trade Names and Rights 2
2.11 - Compliance with Laws 3
2.12 - Litigation 3
2.13 - Authority; Counsel 3
2.14 - Ability to Carry Out Obligations 3
2.15 - Full Disclosure 3
2.16 - Assets 3
2.17 - Material Contracts 3
2.18 - Indemnification 3
2.19 - Restricted Securities 4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF ZION 4
3.1 - Organization 4
3.2 - Capital 4
3.3 - Subsidiaries 4
3.4 - Directors and Officers 4
3.5 - Financial Statements 4
3.6 - Absence of Changes 4
3.7 - Absence of Undisclosed Liabilities 4
3.8 - Tax Returns 4
3.9 - Investigation of Financial Condition 5
3.10 - Trade Names and Rights 5
3.11 - Compliance with Laws 5
3.12 - Litigation 5
3.13 - Authority 5
3.14 - Ability to Carry Out Obligations 5
3.15 - Full Disclosure 5
3.16 - Assets and Liabilities 5
3.17 - Material Contracts 5
3.18 - Indemnification 5
ARTICLE IV - COVENANTS PRIOR AND SUBSEQUENT
TO CLOSING 6
4.1 - Investigative Rights 6
4.2 - Conduct of Business 6
4.3 - Continuing Relationship with Affiliated Companies 6
4.4 - Audited Financial Statements of GeniSys 6
4.5 - Offering of Zion Securities in Repayment of Loan 6
4.6 - Registration of Investor Shares 6
4.7 - Guarantee Regarding Bank Loan 7
ARTICLE V - CONDITIONS PRECEDENT TO ZION'S PERFORMANCE 7
5.1 - Conditions 7
5.2 - Accuracy of Representations 7
5.3 - Performance 7
5.4 - Absence of Litigation 7
5.5 - Officer's Certificate 7
5.6 - Certificate of Good Standing 7
5.7 - Guarantee of J. Xxxxxx Xxxx and Xxxxxxx X. Xxxx 7
ARTICLE VI - CONDITIONS PRECEDENT TO GENISYS'S PERFORMANCE 7
6.1 - Conditions 7
6.2 - Collateralized Loan 7
6.3 - Accuracy of Representations 7
6.4 - Performance 7
6.5 - Absence of Litigation 7
6.6 - Officer's Certificate 7
ARTICLE VII - CLOSING 8
7.1 - Closing 8
7.2 - Ownership of Zion 9
ARTICLE VIII- MISCELLANEOUS 9
8.1 - Captions and Headings 9
8.2 - No Oral Change 9
8.3 - Non-Waiver 9
8.4 - Time of Essence 9
8.5 - Entire Agreement 9
8.6 - Choice of Law 9
8.7 - Counterparts 10
8.8 - Notices 10
8.9 - Binding Effect 10
8.10 - Mutual Cooperation 10
8.11 - Finders 10
8.12 - Announcements 10
8.13 - Expenses 10
8.14 - Survival of Representations and Warranties 10
8.15 - Exhibits 10
8.16 - Binding Effect 10
Signatures 11
EXHIBITS
Allocation of Shares Exhibit 1.1
Subscription Agreement Exhibit 1.2
Financial Statements of GeniSys Exhibit 2.5
Tax Returns Exhibit 2.8
Litigation Involving GeniSys . Exhibit 2.12
Material Contracts of GeniSys Exhibit 2.17
Assets and Liabilities of Zion Exhibit 3.16
Material Contracts of Zion Exhibit 3.17
Financial Statements of Zion Exhibit 3.5
AGREEMENT
AGREEMENT made this 12th day of March, 1999, by and between ZION
ENTERPRISES, INC., a Colorado corporation ("Zion"), GENISYS INFORMATION
SYSTEMS, INC., a Colorado corporation ("GeniSys"), J. Xxxxxx Xxxx, Xxxxxxx X.
Xxxx and the shareholders of GeniSys who are listed on Exhibit 1.1 hereto and
have executed Subscription Agreements in the form attached in Exhibit 1.2
hereto.
WHEREAS, Zion desires to acquire all of the issued and outstanding shares
of common stock of GeniSys from the GeniSys shareholders in exchange for an
aggregate of 7,516,740 newly issued unregistered shares of the no par value
common stock of Zion;
WHEREAS, GeniSys desires to assist Zion in acquiring all of the issued
and outstanding shares of GeniSys pursuant to the terms of this Agreement; and
WHEREAS, all of the GeniSys shareholders, by execution of Exhibit 1.2
hereto, agree to exchange all 1,797,500 shares of GeniSys for 7,516,740 shares
of Zion.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
representations contained herein, the parties hereto agree as follows:
ARTICLE I
Exchange of Securities
1.1 Issuance of Shares. Subject to the terms and conditions of this
Agreement, Zion agrees to issue and exchange 7,516,740 fully paid and
nonassessable unregistered shares of its no par value common stock (the "Zion
Shares") ) for all issued and outstanding shares of the $.01 par value Class A
and Class B common stock of GeniSys (the "GeniSys Shares") held by the GeniSys
shareholders ("GeniSys Shareholders"). Exhibit 1.1 lists all GeniSys
Shareholders, their shareholdings in GeniSys and the number of Zion Shares to
be issued to them. All Zion Shares will be issued directly to the GeniSys
Shareholders on the Closing Date, as hereinafter defined.
1.2 Exemption from Registration. The parties hereto intend that all
Zion Shares to be issued to the GeniSys Shareholders shall be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Act"), pursuant to Section 4(2) of the Act and the rules and regulations
promulgated thereunder. In furtherance thereof, the GeniSys Shareholders will
execute and deliver to Zion on the Closing Date a Subscription Agreement in
the form set forth in Exhibit 1.2 hereto.
ARTICLE II
Representations and Warranties of GeniSys
GeniSys, J. Xxxxxx Xxxx and Xxxxxxx X. Xxxx hereby represent and warrant
to Zion that:
2.1 Organization. GeniSys is a corporation duly organized, validly
existing and in good standing under the laws of Colorado, has all necessary
corporate powers to own its properties and to carry on its business as now
owned and operated by it, and is duly qualified to do business and is in good
standing in each of the states where its business requires qualification.
2.2 Capital. The authorized capital stock of GeniSys consists solely of
11,010,000 shares of which 1,000,000 shares constitute $.01 par value
preferred stock, 10,000,000 shares constitute $.01 par value Class A Common
Stock and 10,000 shares constitute $.01 par value Class B Common Stock. There
currently are no shares of Preferred Stock, 1,787,500 shares of Class A Common
Stock and 10,000 shares of Class B Common Stock issued and outstanding. All
of the outstanding common stock of GeniSys is duly and validly issued, fully
paid and nonassessable. There are no outstanding subscriptions, options,
rights, warrants, debentures, instruments, convertible securities or other
agreements or commitments obligating GeniSys to issue or to transfer from
treasury any additional shares of its capital stock of any class.
2.3 Subsidiaries. GeniSys does not have any subsidiaries or own any
interest in any other enterprise.
2.4 Directors and Officers. The names and titles of all directors and
officers of GeniSys as of the date of this Agreement are as follows: J. Xxxxxx
Xxxx, President, Chief Executive Officer, Chairman and Director.
2.5 Financial Statements. Exhibit 2.5 hereto consists of the unaudited
financial statements of GeniSys for the year ended December 31, 1998 (the
"GeniSys Financial Statements"). The GeniSys Financial Statements have been
prepared in accordance with generally accepted accounting principles and
practices ("GAAP") consistently applied.
2.6 Absence of Changes. Since December 31, 1998, there has not been any
change in the financial condition or operations of GeniSys, except for changes
in the ordinary course of business, which changes have not in the aggregate
been materially adverse.
2.7 Absence of Undisclosed Liabilities. As of the date of GeniSys's
most recent balance sheet included in Exhibit 2.5, GeniSys did not have any
material debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, that is
not reflected in such balance sheet except for those debts, liabilities and
obligations in the ordinary course of business.
2.8 Tax Returns. Within the times and in the manner prescribed by law,
GeniSys has filed all federal, state and local tax returns required by law and
has paid all taxes, assessments and penalties due and payable except for the
year 1997 for which no tax returns have been filed and there may be taxes due
as set forth in Exhibit 2.8. No filings are currently due and no taxes have
been paid for 1998 but GeniSys anticipates minimal taxes as disclosed in
Exhibit 2.8. There are no present disputes of any nature payable by GeniSys.
2.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, Zion
and its legal counsel and accountants shall have the opportunity to meet with
GeniSys's accountants and attorneys to discuss the financial condition of
GeniSys. GeniSys shall make available to Zion all books and records of
GeniSys.
2.10 Trade Names and Rights. GeniSys owns and holds all necessary
trademarks, service marks, trade names, copyrights, patents and proprietary
information and other rights necessary or material to its business as now
conducted or proposed to be conducted.
2.11 Compliance with Laws. GeniSys has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and
regulations affecting its properties or the operation of its business where
the failure to comply or any violation would have a material adverse effect on
GeniSys and has disclosed any and all such non-compliances and/or violations
to Zion.
2.12 Litigation. GeniSys is not a defendant in any suit, action,
arbitration or legal, administrative or other proceeding, or governmental
investigation which is pending or, to the best knowledge of GeniSys,
threatened against or affecting GeniSys or its business, assets or financial
condition where the failure to disclose would have a material adverse effect
on GeniSys, except as disclosed in Exhibit 2.12. GeniSys is not in default
with respect to any order, writ, injunction or decree of any federal, state,
local or foreign court, department, agency or instrumentality applicable to
it. GeniSys is not engaged in any material litigation to recover monies due
to it.
2.13 Authority; Counsel. The Board of Directors of GeniSys has
authorized the execution of this Agreement and the consummation of the
transactions contemplated herein, and GeniSys has full power and authority to
execute, deliver and perform this Agreement, and this Agreement is a legal,
valid and binding obligation of GeniSys and is enforceable in accordance with
its terms and conditions. By execution of Exhibit 1.2, all of the GeniSys
Shareholders have agreed to and have approved the terms of this Agreement.
2.14 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by GeniSys and the performance by GeniSys of its obligations
hereunder in the time and manner contemplated will not cause, constitute or
conflict with or result in (a) any breach or violation of any of the
provisions of or constitute a default under any license, indenture, mortgage,
instrument, article of incorporation, bylaw, or other agreement or instrument
to which GeniSys is a party, or by which it may be bound, nor will any
consents or authorizations of any party other than those hereto be required,
(b) an event that would permit any party to any agreement or instrument to
terminate it or to accelerate the maturity of any indebtedness or other
obligation of GeniSys, or (c) an event that would result in the creation or
imposition of any lien, charge or encumbrance on any asset of GeniSys.
2.15 Full Disclosure. None of the representations and warranties made
by GeniSys herein or in any exhibit, certificate or memorandum furnished or to
be furnished by GeniSys, or on its behalf, contains or will contain any untrue
statement of material fact or omit any material fact the omission of which
would be misleading.
2.16 Assets. GeniSys has good and marketable title to all of its
property, free and clear of all liens, claims and encumbrances, except as
otherwise indicated in Exhibit 2.5.
2.17 Material Contracts. GeniSys's only material contracts are those
disclosed in Exhibit 2.17 attached hereto.
2.18 Indemnification. GeniSys agrees to indemnify, defend and hold Zion
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorney fees, that it shall
incur or suffer, which arise out of, result from or relate to any breach of,
or failure by GeniSys to perform any of its representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished by GeniSys under this
Agreement.
2.19 Restricted Securities. GeniSys and the GeniSys Shareholders, by
execution of this Agreement and of Exhibit 1.2, respectively acknowledge that
all of the shares of Zion to be issued hereunder are restricted securities and
none of such shares of Zion may be sold or publicly traded except in
accordance with the provisions of the Securities Act of 1933, as amended.
ARTICLE III
Representations and Warranties of Zion
Zion represents and warrants to GeniSys that:
3.1 Organization. Zion is a corporation duly organized, validly
existing and in good standing under the laws of Colorado, has all necessary
corporate powers to own its properties and to carry on its business as now
owned and operated by it, and is duly qualified to do business and is in good
standing in each of the states where its business requires qualification.
3.2 Capital. The authorized capital stock of Zion consists of (i)
25,000,000 shares of no par value common stock, of which 976,200 shares of
common stock are currently issued and outstanding, and (ii) 10,000,000 shares
of no par value preferred stock, none of which are outstanding. All of the
outstanding common stock is duly and validly issued, fully paid and
nonassessable. There are no other outstanding subscriptions, options, rights,
warrants, debentures, instruments, convertible securities or other agreements
or commitments obligating Zion to issue or to transfer from treasury any
additional shares of its capital stock of any class, except as set forth in
this Section 3.2.
3.3 Subsidiaries. Zion does not have any subsidiaries or own any
interest in any other enterprise.
3.4 Directors and Officers. Xxxxxxx Xxxxxx, Xx. is Zion's President and
a director, Xxxx XxXxxx is Zion's Secretary/Treasurer and a director and Xxxx
X. Agron is a director of Zion.
3.5 Financial Statements. Exhibit 3.5 hereto consists of the audited
financial statements of Zion for the period ended October 31, 1998 (the "Zion
Financial Statements"). The Zion Financial Statements have been prepared in
accordance with generally accepted accounting principles and practices
consistently followed by Zion throughout the period indicated, and fairly
present the financial position of Zion as of the date of the balance sheet
included in the Zion Financial Statements and the results of operations for
the period indicated.
3.6 Absence of Changes. Since October 31, 1998, there has not been any
change in the financial condition or operations of Zion.
3.7 Absence of Undisclosed Liabilities. Except as otherwise disclosed
in this Agreement, as of the date hereof and as of the Closing Date, Zion did
not have and will not have any material debt, liability or obligation of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due, that is not reflected in such balance sheet.
3.8 Tax Returns. Zion is current with all any federal, state and local
tax returns required by law and has paid all taxes, assessments, and penalties
due and payable.
3.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, GeniSys
and its legal counsel and accountants shall have the opportunity to meet with
Zion's accountants and attorneys to discuss the financial condition of Zion.
Zion shall make available to GeniSys all books and records of Zion.
3.10 Trade Names and Rights. Zion does not own nor use any patent,
trademark, service xxxx, trade name or copyright in its business.
3.11 Compliance with Laws. Zion has complied with, and is not in
violation of, applicable federal, state or local statutes, laws or regulations
affecting its properties or the operation of its business, including all
federal and state securities laws.
3.12 Litigation. Zion is not a party in any suit, action, arbitration,
or legal, administrative or other proceeding, or governmental investigation
which is pending or, to the best knowledge of Zion, threatened against or
affecting Zion or its business, assets or financial condition. Zion is not in
default with respect to any order, writ, injunction or decree of any federal,
state, local or foreign court, department, agency or instrumentality
applicable to it. Zion is not engaged in any material litigation to recover
monies due to it.
3.13 Authority. The Board of Directors of Zion, has authorized the
execution of this Agreement and the transactions contemplated herein, and Zion
has full power and authority to execute, deliver and perform this Agreement,
and this Agreement is the legal, valid and binding obligation of Zion, and is
enforceable in accordance with its terms and conditions.
3.14 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by Zion and the performance by Zion of its obligations
hereunder will not cause, constitute or conflict with or result in (a) any
breach or violation of any of the provisions of or constitute a default under
any license, indenture, mortgage, instrument, article of incorporation, bylaw
or other agreement or instrument to which Zion is a party, or by which it may
be bound, nor will any consents or authorization of any party other than those
hereto be required, (b) an event that would permit any party to any agreement
or instrument to terminate it or to accelerate the maturity of any
indebtedness or other obligation of Zion, or (c) an event that would result in
the creation or imposition of any lien, charge or encumbrance on any asset of
Zion.
3.15 Full Disclosure. None of the representations and warranties made
by Zion herein, or in any exhibit, certificate or memorandum furnished or to
be furnished by Zion or on its behalf, contains or will contain any untrue
statement of material fact or omit any material fact the omission of which
would be misleading.
3.16 Assets. Zion has no assets or liabilities except these listed in
Exhibit 3.16.
3.17 Material Contracts. Zion has no material contracts except these
listed in Exhibit 3.17.
3.18 Indemnification. Zion agrees to indemnify, defend and hold GeniSys
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties, and reasonable attorney fees, that it shall
incur or suffer, which arise out of, result from or relate to any breach of,
or failure by Zion to perform any of its representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished by Zion under this
Agreement.
ARTICLE IV
Covenants Prior and Subsequent to Closing
4.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsel, accountants, auditors and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request.
4.2 Conduct of Business. Prior to the Closing Date, each party shall
conduct its business in the normal course and shall not sell, pledge or assign
any assets without the prior written approval of the other party, except in
the normal course of business. Neither party shall amend its Articles of
Incorporation or Bylaws (except as may be described in this Agreement),
declare dividends, redeem or sell stock or other securities, incur additional
or newly-funded liabilities, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet
receivable for less than its stated amount, pay more on any liability than its
stated amount, or enter into any other transaction other than in the normal
course of business.
4.3 Continuing Relationships with Affiliated Companies. It is
acknowledged that J. Xxxxxx Xxxx is also a principal of Xxxx International and
PMSI ("Xxxx Companies") that currently provide services and products similar
to the that of GeniSys. J. Xxxxxx Xxxx agrees, after Closing, not to divert
any clients or potential clients from GeniSys to either of the Xxxx Companies.
4.4. Audited Financial Statements of GeniSys. Within forty five (45)
days of the Closing Date, GeniSys will complete audited financial statements
for the year ended December 31, 1998 and the period ending March 31, 1999.
All such statements shall be prepared in accordance with generally accepted
accounting practices. The foregoing forty five (45) days may be extended by
written agreement between Zion and Zion's current President, Xxxxxxx Xxxxxx,
Xx.
4.5 Offering of Zion Securities in Repayment of Loans. Zion is in the
process of borrowing up to $550,000 from certain individuals and entities (the
"Investors") which it has or will in turn loan to GeniSys. Following the
Closing Date, Zion will exchange up to 1,395,939 shares of its Common Stock
for $550,000 (or $.394 per share) in full payment of the Investors' loans to
Zion. Upon conversion of the loans to shares of Common Stock, the loans by
the Investors to Zion and the Zion loan to GeniSys will be canceled.
4.6 Registration of Investors Shares. GeniSys and J. Xxxxxx Xxxx agree
that within forty five (45) days of the Closing Date they will cause Zion to
file an SB-2 Registration Statement with the Securities and Exchange
Commission to register the shares of Zion Common Stock issued in conversion of
the Investor loans mentioned in Section 4.5 above. The foregoing forty five
(45) days may be extended by written agreement between Zion, J. Xxxxxx Xxxx
and Zion's current President, Xxxxxxx Xxxxxx, Xx. It is further agreed that
no other shares of Zion Common Stock will be registered pursuant to this SB-2
Registration Statement ("SB-2") unless (i) such shares are being offered as
part of an equity offering for cash pursuant to the SB-2 and/or (ii) such
shares are sold in any private placement subsequent to the closing at a price
if not less than $.394 per share and a maximum of an aggregate of $250,000 is
raised in all such private placements and the current President of Zion,
Xxxxxxx Xxxxxx, Xx. agrees in writing to the inclusion of the private
placement shares in the SB-2. Further, it is agreed that the Investors
referenced in Section 4.5 above shall have the opportunity to participate in
the purchase of one-half of all private placements referenced in 4.6 (ii)
herein.
4.7 Guarantee Regarding Bank Loan. There is currently a loan from
Central Bank - Houston, Texas, with a balance of $248,650.17 secured by the
assets of GeniSys and Xxxx International, Inc. ("Xxxx"), of which $202,070.09
is a debt of GeniSys and $46,580.08 is a debt of Xxxx. J. Xxxxxx Xxxx and
Xxxxxxx X. Xxxx agree to guarantee that Central Bank will not assert a claim
against or execute upon GeniSys assets for any debts of Xxxx and shall
indemnify Zion from any losses or damages, including but not limited to
attorney's fees and court costs resulting from any claim by Central Bank or
the holder of Central Bank's loan position against GeniSys' assets for
indebtedness of Xxxx.
ARTICLE V
Conditions Precedent to Zion's Performance
5.1 Conditions. Zion's obligations hereunder shall be subject to the
satisfaction at or before the Closing of all the conditions set forth in this
Article V. Zion may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Zion of any other condition of or any of Zion's
other rights or remedies, at law or in equity, if GeniSys shall be in default
of any of its representations, warranties or covenants under this Agreement.
5.2 Accuracy of Representations. All representations and warranties by
GeniSys in this Agreement or in any written statement that shall be delivered
to Zion by GeniSys under this Agreement shall be true and accurate on and as
of the Closing Date as though made at that time.
5.3 Performance. GeniSys shall have performed, satisfied and complied
with all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date.
5.4 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against GeniSys on or before the Closing Date, except
as disclosed in Section 2.12 above.
5.5 Officer's Certificate. GeniSys shall have delivered to Zion a
certificate dated the Closing Date and signed by J. Xxxxxx Xxxx as the Chief
Executive Officer of GeniSys certifying that each of the conditions specified
in this Article has been fulfilled and that all of the representations set
forth in Article II are true and correct as of the Closing Date.
5.6 Certificate of Good Standing. GeniSys shall have delivered to Zion a
certificate of corporate good standing of GeniSys dated within 60 days of the
date of Closing.
5.7 Guarantee of J. Xxxxxx Xxxx and Xxxxxxx X. Xxxx. GeniSys shall have
delivered to Zion the personal guarantee set forth in Section 4.7 above.
ARTICLE VI
Conditions Precedent to GeniSys's Performance
6.1 Conditions. GeniSys's obligations hereunder shall be subject to the
satisfaction at or before the Closing of all the conditions set forth in this
Article VI. GeniSys may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by GeniSys of any other condition of or
any of GeniSys's rights or remedies, at law or in equity, if Zion shall be in
default of any of its representations, warranties or covenants under this
Agreement.
6.2 Accuracy of Representations. All representations and warranties by
Zion in this Agreement or in any written statement that shall be delivered to
GeniSys by Zion under this Agreement shall be true and accurate on and as of
the Closing Date as though made at that time.
6.3 Performance. Zion shall have performed, satisfied and complied with
all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date.
6.4 Absence of Litigation. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against Zion on or before the Closing Date.
6.5 Officer's Certificate. Zion shall have delivered to GeniSys a
certificate dated the Closing Date and signed by Xxxxxxx Xxxxxx, Xx., as the
Chief Executive Officer of Zion, certifying that each of the conditions
specified in this Article has been fulfilled and that all of the
representations set forth in Article III are true and correct as of the
Closing Date.
6.6 Certificate of Good Standing. Zion shall have delivered to GeniSys a
certificate of corporate good standing of Zion dated within 60 days of the
date of Closing.
ARTICLE VII
Closing
7.1 Closing. The Closing of this Agreement shall be held at the Law
Offices of Xxxxxxx X. Xxxxxx, at any mutually agreeable time and date (the
"Closing Date") on March 12, 1999, unless extended by mutual agreement. At
the Closing:
(a) GeniSys shall deliver to Zion copies of Exhibit 1.2 executed by
all of the GeniSys Shareholders together with certificates representing all
outstanding GeniSys Shares duly endorsed to Zion;
(b) Zion shall deliver to the GeniSys Shareholders 7,516,740 shares
of Zion common stock, for which the GeniSys Shares have been exchanged,
pursuant to the share computations set forth in Exhibit 1.1 hereto;
(c) Zion shall deliver to GeniSys (i) Xxxxxxx Xxxxxx, Jr's
certificate described in Section 6.5 and (ii) a signed consent of Zion's
directors, approving this Agreement and each matter to be approved under this
Agreement and (iii) Certificate of Good Standing of Zion.
(d) GeniSys shall deliver to Zion (i) J. Xxxxxx Xxxx'x certificate
described in Section 5.5 (ii) a signed consent and/or minutes of its directors
approving this Agreement and each matter to be approved under this Agreement
and (iii) Certificate of Good Standing of GeniSys.
(e) GeniSys shall deliver to Zion the personal guarantee set forth
in Section 4.7 above.
7.2 Ownership of Zion. Following the Closing, excluding the Zion shares
being issued to the Investors in accordance with Section 4.5 above, the stock
ownership of Zion shares shall be as follows:
GeniSys Shareholders 7,516,740 shares
Zion Shareholders 976,200 shares
Total 8,492,940 shares
ARTICLE VIII
Miscellaneous
8.1 Captions and Headings. The article and section headings throughout
this Agreement are for convenience and reference only and shall not define,
limit or add to the meaning of any provision of this Agreement.
8.2 No Oral Change. This Agreement and any provision hereof may not be
waived, changed, modified or discharged orally, but only by an agreement in
writing signed by the party against whom enforcement of any such waiver,
change, modification or discharge is sought.
8.3 Non-Waiver. The failure of any party to insist in any one or more
cases upon the performance of any of the provisions, covenants or conditions
of this Agreement or to exercise any option herein contained shall not be
construed as a waiver or relinquishment for the future of any such provisions,
covenants or conditions. No waiver by any party of one breach by another
party shall be construed as a waiver with respect to any other subsequent
breach.
8.4 Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
8.5 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto and supersedes all prior
negotiations, agreements and understandings.
8.6 Choice of Law. This Agreement has been executed by all parties in
the State of Colorado and shall be governed by and construed and enforced
pursuant with the laws of the State of Colorado (without regard to any
conflict of laws or principals). All actions, suits and proceedings arising
out of or in connection with this Agreement shall be brought in the courts in
the State of Colorado which shall be the exclusive forum therefor. The
parties hereby irrevocably submit to the in personam jurisdiction and process
of the courts in the State of Colorado.
8.7 Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.8 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice
is to be given, or on the third day after mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed as follows:
Zion: Zion Enterprises, Inc.
00 Xxxx Xxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx, Xx.
GeniSys: GeniSys Information Systems, Inc.
000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: J. Xxxxxx Xxxx
8.9 Binding Effect. This Agreement shall inure to and be binding upon
the heirs, executors, personal representatives, successors and assigns of each
of the parties to this Agreement.
8.10 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement and shall execute such other
and further documents and take such other and further actions as may be
necessary or convenient to effect the transaction described herein.
8.11 Finders. The parties hereto represent that no finder has brought
about this Agreement, and no finder's fee has been paid or is payable by
either party.
8.12 Announcements. The parties will consult and cooperate with each
other as to the timing and content of any public announcements regarding this
Agreement.
8.13 Expenses. Each party will pay its own legal, accounting and other
out-of-pocket expenses incurred in connection with this Agreement.
8.14 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the parties set forth in this
Agreement or in any instrument, certificate, opinion or other writing
providing for in it, shall survive the Closing and remain in force for twelve
(12) months thereafter.
8.15 Exhibits. As of the execution hereof, the parties have provided
each other with the Exhibits described herein. Any material changes to the
Exhibits shall be immediately disclosed to the other party.
8.16 Binding Effect. This Agreement is a binding agreement on all
parties and is enforceable by its terms.
In witness whereof, the parties have executed this Agreement on the date
indicated above.
ZION ENTERPRISES, INC. GENISYS INFORMATION SYSTEMS, INC.
By: By:
-------------------------- ----------------------------
Xxxxxxx Xxxxxx, Xx., J. Xxxxxx Xxxx, Chief
President Executive Officer
J. XXXXXX XXXX XXXXXXX X. XXXX
------------------------------- ----------------------------------
J. Xxxxxx Xxxx Xxxxxxx X. Xxxx
EXHIBIT 1.1
SCHEDULE OF GENISYS SHAREHOLDERS
AND
ALLOCATION OF ZION SHARES
Number of Zion
Name of Number of GeniSys Common Shares
GeniSys Shareholder Shares Exchanged To Be Issued
------------------- ----------------- --------------
Xxxxxxx Xxxx 1,609,000 (Class A) 6,732,221
J. Xxxxxx Xxxx 10,000 (Class B) 41,841
Xxxxxxx Xxxxxxx 145,000 (Class A) 606,695
Xxxx Xxxxxxxxxx 32,500 (Class A) 135,983
--------- ----------
Total 1,796,500 7,516,740
EXHIBIT 1.2
SUBSCRIPTION AGREEMENT
In connection with my exchange of no par value common stock of GeniSys
Corporation ("GeniSys") for the no par value common stock (the "Common Stock")
of Zion Enterprises, Inc. ("Zion"), I acknowledge the matters set forth below
and promise that the statements made herein are true. I understand that Zion
is relying on my truthfulness in issuing the Common Stock to me.
I understand that the Common Stock is being issued to me in a private
transaction in exchange for my shares of GeniSys and in reliance upon the
exemption provided in section 4(2) of the Securities Act of 1933, as amended
(the "Act") for non-public offerings and pursuant to a Share Exchange
Agreement between Zion and GeniSys. I understand that the Zion Common Stock
is "restricted" under applicable securities laws and may not be sold by me
except in a registered offering (which may not ever occur) or in a private
transaction like this one. I know this is an illiquid investment and that
therefore I may be required to hold the Common Stock for an indefinite period
of time, but under no circumstances less than one year from the date of its
issuance.
I am acquiring the Common Stock solely for my own account, for long-term
investment purposes only and not with a view to sale or other distribution. I
agree not to dispose of any Common Stock unless and until counsel for Zion
shall have determined that the intended disposition is permissible and does
not violate the Act, any applicable state securities laws or rules and
regulations promulgated thereunder.
All information, financial and otherwise, or documentation pertaining to
all aspects of my acquisition of the Common Stock and the activities and
financial information of Zion has been made available to me and my
representatives, if any, and I have had ample opportunity to meet with and ask
questions of senior officers of Zion, and I have received satisfactory answers
to any questions I asked.
In acquiring the Common Stock, I have reviewed the Agreement Concerning
the Exchange of Common Stock between GeniSys and Zion and the Exhibits thereto
and have made an independent investigation of Zion. I am an experienced
investor, have made speculative investments in the past and am capable of
analyzing the merits of an investment in the Common Stock.
I understand that the Common Stock is highly speculative, involves a
great degree of risk and should only be acquired by individuals who can afford
to lose their entire investment. Nevertheless, I consider this a suitable
investment for me because I have adequate financial resources and income to
maintain my current standard of living even after my acquisition of the Common
Stock. I know that Zion is merely a "shell" company with no assets or
liabilities, its financial affairs can fluctuate dramatically from time to
time, and that although I could lose my entire investment, I am acquiring the
Common Stock because I believe the potential rewards are commensurate with the
risk. Even if the Common Stock became worthless, I could still maintain my
standard of living without significant hardship on me or my family.
Dated as of this _____ day of _______________________, 1999.
-----------------------------------
Signature
-----------------------------------
Name, Please Print
-----------------------------------
Residence Address
-----------------------------------
City, State and Zip Code
-----------------------------------
Area Code and Telephone Number
-----------------------------------
Social Security Number
-----------------------------------
Number of GeniSys Shares Exchanged
EXHIBIT 3.16
ASSETS AND LIABILITIES OF ZION
The only asset of Zion is a promissory note (the "GeniSys Note") dated
February 17, 1999 reflecting a loan by Zion as Lender and GeniSys as Borrower
in the principal amount of up to $550,000.
The only liabilities of Zion are promissory notes executed by Zion to
certain individuals and entities (the "Investors") currently in the total
principal amount of $505,000 and which, at Closing, shall not exceed the
principal amount of $550,000. All principal amounts borrowed by Zion from the
Investors prior to Closing shall be loaned to GeniSys pursuant to the GeniSys
Note and the Loan Agreement between GeniSys and Zion.
EXHIBIT 3.17
MATERIAL CONTRACTS OF ZION
The only material contract of Zion is a Loan Agreement dated February 17,
1999 between Zion as Lender and GeniSys as Borrower whereby Zion agrees to
loan to GeniSys up to $550,000 in accordance with the terms and conditions of
the Loan Agreement, a copy of which is attached to this Exhibit 3.17.
