Exhibit 99.1
LETTER OF INTENT
9/26/06
This Letter of Intent is intended to serve as an outline of the basic terms upon
which Organetix, Inc., a Delaware corporation publicly trading on the OTC market
will purchase, through a wholly owned subsidiary, 100% of the issued and
outstanding shares of Volius, Inc. through a merger transaction (the "Merger")
while simultaneously raising between $4 million and $6 million in equity capital
(the "Financing"). This Letter of Intent should not be construed as a binding
commitment. The terms and conditions set forth herein are based on preliminary
and limited information provided by Volius, Inc and are subject to change
pending the completion of due diligence process, the approval of the Board of
Directors of both companies and the execution of definitive agreements.
Company: Volius, Inc. ("Volius")
Acquirer: Organetix ("OGTX" or the "Company"), a Delaware Corp.
Structure of
Acquisition
Reverse Merger Tax-free reorganization under Internal Revenue Code
ss.368(a)(1)(A) by means of the merger of Volius into a
company wholly owned by OGTX ("Merger Sub"). The
transaction between Volius and OGTX shall sometimes be
referred to hereafter as the "Merger."
Surviving Entity Volius would be the surviving company of the merger with
and into the Merger Sub and would be maintained as a
separate wholly-owned subsidiary of OGTX. OGTX would
have no other business other than the business of
Volius. OGTX's name would be changed to "Volius Group,
Inc." if available and the Merger Sub to Volius, Inc.
Consideration OGTX will buy 100% of the shares of Volius by issuing
that number of shares of OGTX equal to 50.5% or
approximately 63,511,270 after taking into account the
cancellation of 23,500,000 shares of outstanding OGTX
commons stock which will occur within 30 days. After
such cancellation OGTX shall have 62,882,447 shares
outstanding on a fully diluted basis prior to the
Merger. At the completion of the Financing (assuming
$4,000,000 was raised at $0.17 per share, described
below), the former Volius shareholders would own 42.4%
of the shares of OGTX, as a total of 149,893,717 shares
would then be outstanding on a fully diluted basis.
However, the valuation of Volius, Inc. shares may be
subject to change should material events occur within
the business of Volius, Inc. at anytime prior to the
signing of the definitive merger agreement.
Structure and Terms
of Financing
Financing A private placement of a minimum 80 and maximum 120
units (the "Units") at a purchase price of $50,000 per
Unit (the "Purchase Price"). Each Unit consisting of
between 294,118 and 166,666 shares of OGTX Common Stock
depending on final pricing terms. Upon mutual agreement,
the Company and Volius may agree to decrease the minimum
number of Units and to increase the maximum number of
Units. Fractional Units may be issued by OGTX.
Registration Rights
and Listing Within 40 days from the closing of the minimum number of
Units and the Merger (the "Filing Date"), the Company
shall file a Registration Statement on Form SB-2 (or any
other applicable form used exclusively for this
offering) covering the shares of Common Stock comprising
the Units. The Company will use best efforts to have it
declared effective (the "Effective Date") by the
Securities Exchange Commission ("SEC") within 100 days
following the Filing Date.
Investors Select accredited and institutional investors (the
"Investors").
Documentation and
Process
Closing in Escrow Within 180 days of this Letter of Intent, the parties
shall draft documents relating to the Financing
including a Subscription Agreement incorporating the
terms of the Financing set forth above and an escrow
agreement with a mutually agreed escrow agent (the
"Financing Escrow Agent"). The Financing Escrow Agent
shall act as escrow agent in connection with the
Financing (the "Financing Escrow"), receiving the
proceeds from the Investors and holding the related
Financing documents (the "Financing Documents").
Within 180 days of this Letter of Intent, the Company,
the Merger Sub and Volius shall negotiate and execute a
definitive merger agreement and related documents and
certificates (the "Merger Documents"), which shall
provide, as a condition of closing of the Merger, that
the Financing Escrow Agent has received from Investors a
minimum of $4 million of the Financing.
The Financing Escrow shall be broken and the Merger
closed (the "Closing Date") upon:
(i) the Financing Escrow Agent's certification, made
by March 31, 2007, to the Company and Volius that
the Financing Escrow Agent has received executed
subscription agreements and funds for a minimum of
$4 million of the Financing (subject to the
parties right to lower the minimum as described
above).
(ii) respective counsel to the parties hereto certify
to the Financing Escrow Agent that all of the
conditions to the Merger have been satisfied.
If the Financing Escrow Agent fails to deliver such
certification by March 31, 2007 (the "Termination
Date"), and the Company and OGTX have not agreed to
extend such date, then the Merger Agreement shall be
null and void. Respective counsel to the parties hereto
shall return all escrowed securities to the respective
owners thereof and do such other things as required
under the Merger Agreement. The Financing Escrow Agent
shall return any funds held in escrow to the respective
Investors and do such other things as required under the
Financing Escrow Agreement.
If deemed necessary by the parties hereto, the parties
shall prepare, as soon as reasonably possible, a
Confidential Private Placement ("CPP") disclosure
document (presenting the Company as if the Merger had
already taken place and disclosing the merger and escrow
agreements) to allow the Company and its placement
agents to commence and timely close the Financing.
However, the CPP delivery date may be extended upon the
mutual agreement in writing of the parties hereto
Terms and Provisions The Merger and Financing Documents shall include normal
provisions including, without limitation,
representations, warranties, covenants, agreements and
remedies as are appropriate to preserve and protect the
economic benefits intended to be conveyed to and from
the Company, Merger Sub, Volius and the Investors
pursuant hereto.
Volius' Termination
Rights Until such time that a definitive merger agreement is
entered into by both parties, Volius has the right to
terminate this Letter of Intent at any time with or
without cause.
Audit Each party shall commence an audit as soon as possible
and otherwise take such action as may be necessary to
allow the parties to file a Registration Statement with
the Securities and Exchange Commission as soon as
possible after the Closing.
Audit and Legal Fee: Each party shall be liable for their legal and
accounting fees.
Advisors For a term expiring December 31, 2007, the Company has
engaged the services of Lusierna Management Ltd., and
others (collectively, the "Agents") under which in
addition to shares of OGTX issued in connection with
structuring the reverse merger (included in the
62,882,447 shares total outstanding prior to the
issuance of Volius shares), the Agents shall be paid a
mutually agreeable fee.
Disclosure of Letter
of Intent: Within four days of execution of this Letter of Intent,
OGTX shall file with the United States Securities and
Exchange Commission a current report on Form 8-K as well
as a press release in form and substance acceptable to
both parties.
Applicable Law This Letter of Intent shall be governed by and construed
and enforced in accordance with the laws of the State of
New York, without regard to conflicts of laws
principles.
Contacts Dr. David F. Hostelley
Chief Executive Officer
Organetix, Inc.
9974 Huntington Park Drive
Strongsville, Ohio 44136
Tel. 440-238-8316
Fax. 440-238-8346
Stanislav Chernikov
Chief Executive Officer
Volius Inc.
Synergy Center - Suite 7
4200 W. Jemes Road
Los Alamos, NM 87544
Tel. 505-663-5359
Fax.505-663-5356
To confirm your agreement with these basic terms, please fax an executed copy of
this Letter of Intent to our office
Organetix, Inc.
By: /s/ Dr. David F. Hostelley Date: September 26, 2006
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Name: Dr. David F. Hostelley
Title: Chief Executive Officer
Volius, Inc.
By: /s/ Stanislav Chernikov Date: September 26, 2006
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Name: Stanislav Chernikov
Title: Chief Executive Officer