Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made this
22nd day of August, 2003, by and among ESCAGENETICS CORPORATION, a Delaware
corporation having its principal place of business at 000 Xxxxxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 ("ESCAgenetics"), SHECOM ACQUISITION CORP.,
a Colorado corporation having its principal place of business at 00000 Xx Xxxxx
Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 ("Shecom Mergerco"), SHECOM CORPORATION, a
Colorado corporation having its principal place of business at 00000 Xx Xxxxx
Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 ("Shecom").
WHEREAS, Shecom has issued an aggregate of 21,257,737 shares ("Shares") of
its Common Stock, par value $.0001 per share; and
WHEREAS, ESCAgenetics is authorized to issue 100,000,000 shares of common
stock, par value $.0001 per share (the "ESCAgenetics Common Stock") of which
1,000,000 shares (the "Issued ESCAgenetics Shares") are issued and outstanding.
The ESCAgenetics Common Stock is referred to herein as the "ESCAgenetics
Shares"; and
WHEREAS, Shecom Mergerco is a wholly owned subsidiary of ESCAgenetics and
is authorized to issue 1,000 shares of common stock, par value $.01 (referred to
as the "Shecom Mergerco Shares"), all of which such Shecom Mergerco Shares are
issued and outstanding and owned by ESCAgenetics; and
WHEREAS, the respective Boards of Directors of ESCAgenetics, Shecom
Mergerco and Shecom (together with ESCAgenetics and Shecom Mergerco, the
"Companies") deem it advisable and generally to the advantage and welfare of the
Companies and their respective shareholders, that Shecom Mergerco be merged with
and into Shecom under the terms and conditions hereinafter set forth (the
"Merger"), the Merger to be effected pursuant to the Delaware General
Corporation Law and the Merger to be a tax free reorganization under Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises, covenants and conditions
hereof, the parties hereto do mutually agree as follows:
1. Votes on Merger and Related Matters. (a) Shecom Mergerco and Shecom (the
"Constituent Corporations") shall each, as soon as practicable but prior to
Closing (as defined below) (i) cause a special meeting of its shareholders to be
called to consider and vote upon the Merger on the terms and conditions
hereinafter set forth, or (ii) obtain written consent of such shareholders, as
applicable, as is necessary to approve the Merger. If the Merger is approved in
accordance with applicable law, subject to the further conditions and provisions
of this Agreement, a closing of this Agreement shall be held (the "Closing") and
a Certificate of Merger (the "Certificate of Merger"), and all other documents
or instruments deemed necessary or appropriate by the parties hereto to effect
the Merger, shall be executed and filed with the Secretary of State of the State
of Delaware as promptly as possible thereafter. The Certificate of Merger so
filed shall be substantially in the form of Exhibit A annexed hereto, with such
changes therein as the Board of Directors of each of Shecom Mergerco and Shecom
shall mutually approve.
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(b) As soon as practicable, ESCAgenetics shall use reasonable efforts
to obtain the written consent of its stockholders for the approval of (i) a
Certificate of Amendment to ESCAgenetics' Certificate of Incorporation to
approve the change of name of ESCAgenetics to "Shecom Corporation or a new
name to be determined (the "Name Change"). Approving the Name Change shall
not be a condition to the consummation of the Merger.
2. Representations, Warranties and Covenants of Shecom. Shecom represents,
warrants and covenants as follows, except to the extent set forth on the
schedule of exceptions in the form of Schedule A annexed hereto and made a part
hereof:
2.1 Organization; Capitalization. Shecom is, and on the effective date of
the Merger (the "Effective Date") will be, a duly organized and a validly
existing corporation in good standing under the laws of its state of formation.
There are issued and outstanding, and on the Effective Date there will be issued
and outstanding, only the Shares, all of which are, and on the Effective Date
will be, duly authorized and validly issued. There are, and on the Effective
Date there will be, no outstanding rights, options or warrants to purchase any
equity interest in Shecom, and there will be no other or any other issued or
outstanding securities of any nature convertible into or exercisable or
exchangeable for equity of Shecom. No person has any right of first refusal,
right of participation, or any similar right with respect to dispositions of the
Shares.
2.2 Authority. Shecom has, and on the Effective Date will have, full power
and authority to enter into this Agreement and, subject to any third party
approval in accordance with the laws of the State of Delaware, to consummate the
transactions contemplated hereby. This Agreement and the transactions
contemplated hereby have been duly approved by the Board of Directors of Shecom
and, prior to the Closing, by all stockholders of Shecom whose consent is
required under applicable law.
2.3 Binding Agreement. This Agreement has been duly executed and delivered
by Shecom and constitutes the legal, valid and binding obligation of Shecom,
enforceable against it in accordance with the terms hereof, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of rights hereunder
or general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
2.4 No Conflicts. The execution and delivery by Shecom of this Agreement,
the consummation and performance of the transactions herein contemplated, and
compliance with the terms of this Agreement by Shecom will not conflict with,
result in a breach of or constitute or give rise to a default under (i) any
indenture, mortgage, deed of trust or other agreement, instrument or contract to
which Shecom is now a party or by which it or any of its assets or properties
are bound; (ii) Shecom's certificate of incorporation and bylaws, in each case
as amended; or (iii) any law, order, rule, regulation, writ, injunction,
judgment or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over Linsang or any of its business or
properties wherein such breach could have a material adverse effect on Shecom or
any of its business or properties.
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2.5 Subsidiaries. Shecom does not have, and on the Effective Date will not
have, any subsidiaries, nor does it own any direct or indirect interest in any
other business entity.
2.6 Foreign Qualifications. Shecom is, and on the Effective Date will be,
qualified or licensed as a foreign corporation in all jurisdictions where its
business or ownership of assets so requires, except where the failure to be
qualified or licensed would not be reasonably expected to have a material
adverse effect on the business of Shecom. The business of Shecom does not
require it to be registered as an investment company or investment adviser, as
such terms are defined under the Investment Company Act of 1940 and the
Investment Advisers Act of 1940, each as amended.
2.7 Financial Statements. All financial statements of Shecom previously
delivered to ESCAgenetics, and attached hereto as Annex A (the "Financial
Statements") fairly present in all material respects the financial position,
results of operations and other information purported to be shown therein of
Shecom, at the dates and for the respective periods to which they apply. All
such financial statements have been prepared in conformity with generally
accepted accounting principles consistently applied throughout the periods
involved, and have been adjusted for all normal and recurring accruals.
2.8 No Adverse Events. Since the date of the Shecom Financial Statements,
otherwise as set forth therein:
(i) there has not been any material adverse change in the financial
position or condition of Shecom, its liabilities, assets or any
damage, loss or other change in circumstances materially affecting
Shecom, its business or assets or Shecom' right to carry on its
business, other than changes in the ordinary course of business or due
to general economic, industry or political conditions;
(ii) there has not been any damage, destruction, loss or other event
(whether or not covered by insurance) materially and adversely
affecting Shecom, its business or assets ;
(iii)there has not been any material increase in the compensation payable
or to become payable by Shecom to any of Shecom' officers, employees
or agents or any bonus, payment or arrangement made to or with any of
them;
(iv) Shecom's business has been and continues to be carried on in the
ordinary course;
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(v) Shecom has not discharged or satisfied or paid any lien or encumbrance
or obligation or liability other than current liabilities in the
ordinary course of business; and
(vi) no capital expenditures in excess of $50,000 individually or $200,000
in total have been authorized or made.
2.9 Ordinary Course of Business. Except for transactions occurring in the
ordinary course of business, there has not been, and on the Effective Date there
will not have been, any transactions involving Shecom since December 31, 2002 in
an amount in excess of $200,000.
2.10 Liabilities; Claims. There are, and on the Effective Date will be, no
liabilities (including, but not limited to, tax liabilities) or claims against
Shecom (whether such liabilities or claims are contingent or absolute, direct or
indirect, matured or unmatured) not appearing on the Financial Statements, other
than (i) liabilities incurred in the ordinary course of business since December
31, 2002, (ii) taxes accrued on earnings since December 31, 2002 which are not
yet due or payable, or (iii) liabilities which do not exceed $200,000.
2.11 Tax Returns. All federal, state, county and local income, excise,
property and other tax returns required to be filed by Shecom are true and
correct in all material respects and have been timely filed or extended through
timely filed requests for extension, and all required taxes, fees or assessments
have been paid or an adequate reserve therefore has been established in the
Financial Statements. The federal income tax returns and state and foreign
income tax returns of Shecom have not been audited by the Internal Revenue
Service ("IRS") or any other taxing authority within the past five (5) years.
Neither the IRS nor any state, local or other taxing authority has proposed any
additional taxes, interest or penalties with respect to Shecom or any of its
operations or businesses. There are no pending, or to the knowledge of Shecom,
threatened, tax claims or assessments, and there are no pending, or to the
knowledge of Shecom, threatened, tax examinations by any taxing authorities.
Shecom has not given any waivers of rights (which are currently in effect) under
applicable statutes of limitations with respect to the federal income tax
returns of Shecom for any year.
2.12 Title to Assets. Except as provided for in the Financial Statements,
Shecom, has, and on the Effective Date will have, good and marketable title to
all of its furniture, fixtures, equipment and other assets owned by Shecom, and
such assets are owned free and clear of all security interests, pledges, liens,
restrictions and encumbrances of every kind and nature. Shecom is the owner of
its inventory as set forth in the Financial Statements and has good and
marketable title thereto. Except as provided in the Financial Statements,
Shecom's assets comprise all of the property and assets of its business, and no
other person or entity owns any assets used by Shecom in operating the business
of Shecom, whether under a lease, rental agreement or other arrangement.
2.13 Accounts Receivable. The accounts receivable as set forth in the
Financial Statements represent amounts due for goods sold or services rendered
by Shecom in the ordinary course of business and, except as reserved for in the
Financial Statements, Shecom believes are collectable in the ordinary course of
business, without any claims by the obligor for set-off or counter-claims.
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2.14 Material Contracts. A copy (or summary if oral) of all agreements,
contracts, arrangements, understandings and commitments, whether written or
oral, to which Shecom is or on the Effective Date will be, a party, or from
which Shecom will receive substantial benefits and which are material to Shecom
(collectively, "Shecom Contracts"), have been delivered to ESCAgenetics or its
counsel. Any Shecom Contracts entered into between the date hereof and the
Effective Date will be delivered to ESCAgenetics or its counsel prior to
Closing. The validity and enforceability of, and rights of Shecom contained in,
each such Shecom Contract shall not be adversely effected by the Merger or the
transactions contemplated hereby or any actions taken in furtherance hereof. To
its knowledge, Shecom is not in material default under any Shecom Contract.
2.15 Legal Proceedings. There are, and on the Effective Date there will be,
no legal, administrative, arbitral or other proceedings, claims, actions or
governmental investigations of any nature pending, or to Shecom's knowledge,
threatened, involving Shecom, individually or in the aggregate, in which an
unfavorable determination could result in suspension or termination of Shecom's
business or authority to conduct such business in any jurisdiction or could
result in the payment by Shecom of more than $200,000, or challenging the
validity or propriety of the transactions contemplated by this Agreement. Shecom
is not a party to any order, judgment or decree, which will, or might reasonably
be expected to, materially adversely affect the business, operations,
properties, assets or financial condition of Shecom.
2.16 Certain Transactions. Since December 31, 2002 there have been, and
through the Effective Date there will be (i) no bonuses or extraordinary
compensation to any of the officers or directors of Shecom, (ii) no loans made
to or any other transactions with any of the officers or directors of Shecom or
their families and (iii) no dividends or other distributions declared or paid by
Shecom.
2.17 Insurance. Shecom has, and on the Effective Date will have, maintained
casualty and liability policies and other insurance policies with respect to its
business which are appropriate and customary for businesses similar in size,
industry and risk profile. Copies of all of the policies of insurance and bonds
presently in force with respect to Shecom, including without limitation those
covering properties, buildings, machinery, equipment, worker's compensation,
officers and directors and public liability, have been made available to
ESCAgenetics. All such insurance is outstanding and in full force and effect,
with all premiums thereon duly paid, and Shecom has not received any notice of
cancellation of any such policies.
2.18 Intellectual Property. With the exception of the trademarked names of
"Shecom" and "Ikebana", Shecom has, and on the Effective Date will have, no
other patents, patent applications, trademarks, trademark registrations or
applications, trade names, copyrights, copyright registrations or applications,
or other intellectual property pending. To its knowledge, Shecom has not
infringed upon any third party's intellectual property.
2.19 Compliance with Laws. Shecom has, and on the Effective Date will have,
in all material respects operated its business and conducted its affairs in
compliance with all applicable laws, rules and regulations, except where the
failure to so comply did not have or would not be expected to have a material
adverse effect on its business or property.
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2.20 Related Party Contracts. There are, and on the Effective Date there
will be, no loans, leases or other Shecom Contracts outstanding between Shecom
and any of its officers, directors or any person related to or affiliated with
any such officers or directors.
2.21 Officer and Director Information. During the past five year period
neither Shecom, nor any of its officers or directors, nor any person intended
upon consummation of the Merger to be nominated by Shecom to become an officer
or director of ESCAgenetics or any successor entity or subsidiary, has been the
subject of:
(a) a petition under the Federal bankruptcy laws or any other
insolvency or moratorium law or has a receiver, fiscal agent or similar
officer been appointed by a court for the business or property of Shecom or
such person, or any partnership in which Shecom or any such person was a
general partner at or within two years before the time of such filing, or
any corporation or business association of which Shecom or any such person
was an executive officer at or within two years before the time of such
filing;
(b) a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations which do not
relate to driving while intoxicated or driving under the influence);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining Shecom or any such person from, or otherwise
limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
United States Commodity Futures Trading Commission or an associated
person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or
continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation
of Federal, state or other securities laws or commodities laws;
(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of Shecom
or any such person to engage in any activity described in the preceding
sub-paragraph, or to be associated with persons engaged in any such
activity;
(e) a finding by a court of competent jurisdiction in a civil action
or by the Securities and Exchange Commission (the "Commission") to have
violated any securities law, regulation or decree and the judgment in such
civil action or finding by the Commission has not been subsequently
reversed, suspended or vacated; or
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(f) a finding by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding has not
been subsequently reversed, suspended or vacated. All items described in
clauses (a) through (f) above are collectively referred to herein as "Bad
Events."
2.22 Benefit Plans. Shecom does not have any pension plan, profit sharing
or similar employee benefit plan.
2.23 Consents and Approvals. Except for the consent and approval of the
stockholders of Shecom and the filing of the Certificate of Merger, no consents
or approvals of, or filings or registrations with, any third party or any public
body or authority are necessary in connection with (i) the execution and
delivery by Shecom of this Agreement and (ii) the consummation by Shecom of the
Merger and of all other transactions contemplated hereby.
2.24 Finder's Fees. Except as may be provided pursuant to the agreements
that govern this agreement and financial activities undertaken on behalf of this
merger, Shecom knows of no person who rendered any service in connection with
the introduction of the Companies to any of the other Companies, for a "finder's
fee" or similar type of fee in connection with the Merger and the other
transactions contemplated hereby.
2.25 Employee Matters. No employees of Shecom are on strike or to the best
of Shecom's knowledge threatening any strike or work stoppage. Shecom does not
have any obligations under any collective bargaining or labor union agreements,
nor is Shecom involved in any material controversy with any of its employees or
any organization representing any of its employees. Shecom believes its
relationships with its employees are good.
2.26 Disclosure. None of the information supplied or to be supplied by or
about Shecom herein or for inclusion or incorporation by reference in any
information to be supplied to holders of ESCAgenetics Common Stock concerning
the Merger contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading.
2.27 Actions Prior to Closing. From the date hereof through the Closing,
Shecom shall not, other than in the ordinary course of business, consistent with
past practice, without due consent of ESCAgenetics:
(a) sell, lease, assign, transfer or otherwise dispose of any material
assets;
(b) agree to assume or assume, guarantee, endorse or otherwise in any
way be or become responsible or liable for, directly or indirectly, any
material contingent obligation;
(c) participate or engage in any discussions or negotiations with any
person regarding, or enter into any transaction concerning, a merger, stock
exchange or consolidation, other than with the other parties hereto, or
liquidate or dissolve itself (or suffer any liquidation or dissolution) or
convey, sell, lease, transfer or otherwise dispose of, in one transaction
or a series of related transactions, all or a substantial part of its
property, business, assets or, capital stock or securities convertible into
equity, or make any material change in the present method of conducting
business;
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(d) make any amendment to its certificate of incorporation or bylaws;
(e) enter into or amend any employment agreements or increase the
salary or bonus of any existing employee;
(f) create, incur, assume or suffer to exist, any mortgage, pledge,
lien, charge, security interest or encumbrance of any kind upon any of its
property, assets, income or profits, whether now owned or hereafter
acquired;
(g) declare or authorize any dividends or distributions on any shares
of capital stock of Shecom.
2.28 Charter Documents. The charter documents of Shecom have not been
altered since its incorporation, except as filed in the record books of Shecom.
2.29 Corporate Minute Books. The corporate minute books of Shecom are
complete and the minutes and consents contained therein accurately reflect the
actions that were taken at a duly called and held meeting or by consent without
a meeting. All actions by Shecom which required director or shareholder approval
are reflected on the corporate minute books of Shecom. Shecom is not in
violation or breach of, or in default with respect to, any term of its
Certificate of Incorporation (or other charter documents) or by-laws.
3. Representations, Warranties and Covenants Regarding Shecom Mergerco.
ESCAgenetics and Shecom Mergerco each jointly and severally represents, warrants
and covenants as follows with respect to Shecom Mergerco:
3.1 Organization; Capitalization. Shecom Mergerco is, and on the Effective
Date will be, a duly organized and validly existing corporation in good standing
under the laws of the State of Delaware, authorized to issue only the Shecom
Mergerco Shares. On the Effective Date there will be issued and outstanding all
of the Shecom Mergerco Shares, which shall be fully paid and nonassessable and
all of which shall be owned solely by ESCAgenetics. There are no, and on the
Effective Date there will be no, issued or outstanding options or warrants to
purchase Shecom Mergerco Shares or any issued or outstanding securities of any
nature convertible into Shecom Mergerco Shares, or any agreements or
understandings to issue any Shecom Mergerco Shares, options or warrants.
3.2 Authority. Shecom Mergerco has, and on the Effective Date will have,
full power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the transactions
contemplated hereby have been duly approved by the Board of Directors of Shecom
Mergerco.
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3.3 No Business Activity. Shecom Mergerco has been organized solely for the
purpose of consummating the Merger and, since its inception, has had no business
activity of any nature other than those related to its organization or as
contemplated by this Agreement.
3.4 Issuance of Securities. Since its inception, Shecom Mergerco has not
issued or committed itself to issue, and to the Effective Date will not issue or
commit to issue, any Shecom Mergerco Shares or any options, rights, warrants, or
other securities convertible into Shecom Mergerco Shares, except for the
issuance of the Shecom Mergerco Shares to ESCAgenetics.
3.5 Consents and Approvals. Except for the consent and approval of the
Board of Directors and shareholder of Shecom Mergerco, and the filing of the
Certificate of Merger, no consents or approvals of, or filings or registrations
with, any third party or any public body or authority are necessary in
connection with (i) the execution and delivery by Shecom Mergerco of this
Agreement and (ii) the consummation by Shecom Mergerco of the Merger and the
other transactions contemplated hereby.
3.6 No Conflicts. The execution and delivery by Shecom Mergerco of this
Agreement, the consummation and performance of the transactions herein
contemplated, and compliance with the terms of this Agreement by Shecom Mergerco
will not conflict with, result in a breach of or constitute or give rise to a
default under any indenture, mortgage, deed of trust or other agreement,
instrument or contract to which Shecom Mergerco is now a party or by which it or
any of its assets or properties are bound or its Certificate of Incorporation or
the bylaws of Shecom Mergerco, or any law, order, rule or regulation, writ,
injunction, judgment or decree of any government, governmental instrumentality
or court, domestic or foreign, having jurisdiction over Shecom Mergerco or any
of its businesses or properties.
3.7 Subsidiaries. Shecom Mergerco has, and on the Effective Date will have,
no subsidiaries, nor does it own any direct or indirect interest in any other
business entity.
3.8 Financial Condition. Except for (i) the incurring of expenses of its
organization, (ii) the issuance of the Shecom Mergerco Shares to ESCAgenetics,
(iii) the incurring of expenses relating to this Agreement and the consummation
of the transactions contemplated by this Agreement, and (iv) the consummation of
the Merger, Shecom Mergerco has had, and on the Effective Date will have had, no
business and no financial or other transactions of any nature whatsoever.
3.9 Liabilities. Shecom Mergerco has, and on the Effective Date will have,
no liabilities (including, but not limited to, tax liabilities) nor are there,
or on the Effective Date will there be, any claims against Shecom Mergerco
(whether such liabilities or claims are contingent or absolute, direct or
indirect, and matured or unmatured) except for liabilities for its organization
expenses or expenses incurred in connection with the Merger and the consummation
of the transactions contemplated by this Agreement.
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3.10 Assets. Shecom Mergerco has, and on the Effective Date will have no
fixtures,
furniture, equipment, inventory, accounts receivable or other assets.
3.11 Contracts. Shecom Mergerco has, and on the Effective Date will have,
no contracts or commitments to which it is, or on the Effective Date will be, a
party, except for this Agreement and other documents and instruments
contemplated hereby in connection with the Merger.
3.12 Legal Proceedings. There are, and on the Effective Date there will be,
no legal, administrative, arbitral or other proceedings, claims, actions or
governmental investigations of any nature against Shecom Mergerco, or
challenging the validity or propriety of the transactions contemplated by this
Agreement and, to Shecom Mergerco's best knowledge, there is no reasonable basis
for any other proceeding, claim, action or governmental investigation against
Shecom Mergerco. Shecom Mergerco is not a party to any order, judgment or decree
which will, or might reasonably be expected to, materially adversely affect the
business, operations, properties, assets or financial condition of Shecom
Mergerco.
3.13 Employee Matters; Related Party Transactions. Since the inception of
Shecom Mergerco there have been, and to the Effective Date there will be (i) no
salaried or otherwise compensated employees and no bonuses paid to any officer
or director of Shecom Mergerco; (ii) no loans made to or any transactions with
any officer or director of Shecom Mergerco; (iii) no dividends or other
distributions declared or paid by Shecom Mergerco; and (iv) no purchase by
Shecom Mergerco of any Shecom Mergerco Shares.
3.14 Intellectual Property. Shecom Mergerco has no patents, patent
applications, trademarks, trademark registrations, trade names, copyrights,
copyright registrations or applications therefore or any other intellectual
property.
3.15 Compliance with Laws. Since its inception, Shecom Mergerco has, and on
the Effective Date will have, in all material respects conducted its affairs in
compliance with all applicable laws, rules and regulations.
3.16 Officer and Director Information. During the past five year period, no
officer or director of Shecom Mergerco has been the subject of any Bad Event.
3.17 Benefit Plans. Shecom Mergerco has no pension plan, profit sharing or
similar
employee benefit plan.
3.18 Finder's Fees. Shecom Mergerco knows of no person who rendered any
service in connection with the introduction of the Companies to any of the other
Companies, for a "finder's fee" or similar type of fee in connection with the
Merger and the other transactions contemplated hereby.
3.19 Charter Documents. The charter documents of Shecom Mergerco have not
been altered since its incorporation, except as filed in the record books of
Shecom Mergerco.
3.20 Corporate Minute Books. The corporate minute books of Shecom Mergerco
are complete and the minutes and consents contained therein accurately reflect
the actions that were taken at a duly called and held meeting or by consent
without a meeting. All actions by Shecom Mergerco which required director or
stockholder approval are reflected on the corporate minute books of Shecom
Mergerco. Shecom Mergerco is not in violation or breach of, or in default with
respect to, any term of its Certificate of Incorporation (or other charter
documents) or by-laws.
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4. Representations, Warranties and Covenants of ESCAgenetics. ESCAgenetics
represents, warrants and covenants as follows, except to the extent set forth in
the Schedule of Exceptions in the form of Schedule B annexed hereto and made
part hereof ("ESCAgenetics Schedule of Exceptions"):
4.1 Organization; Capitalization. ESCAgenetics is a duly organized and
validly existing corporation in good standing under the laws of the State of
Delaware, authorized to issue an aggregate of 100,000,000 shares of ESCAgenetics
Common and no other shares of capital stock. On the Effective Date, giving
effect to the Reverse Split and the Merger, there will be issued and outstanding
approximately 5,587,038 shares of ESCAgenetics Common Stock, all of which such
issued and outstanding shares will be validly issued, fully paid and
nonassessable. In the event the stockholders do not approve the Reverse Split
and the Reverse Split has not occurred, on the Effective Date there will be
issued and outstanding no more than 100,000,000 shares of ESCAgenetics Common
Stock, all of which such issued and outstanding shares will be validly issued,
fully paid and nonassessable. On the Effective Date, there will be no other
issued and outstanding shares of capital stock of ESCAgenetics, except for the
Issued ESCAgenetics Shares. Except as contemplated by this Agreement, on the
Effective Date there will be no issued or outstanding securities and no issued
or outstanding options, warrants or other rights, or commitments or agreements
of any kind, contingent or otherwise, to purchase or otherwise acquire
ESCAgenetics Shares or any issued or outstanding securities of any nature
convertible into ESCAgenetics Shares. There is no proxy or any other agreement,
arrangement or understanding of any kind authorized, effective or outstanding
which restricts, limits or otherwise affects the right to vote any ESCAgenetics
Shares.
4.2 Binding Agreement. This Agreement and the transactions contemplated
hereby have been duly approved by the Board of Directors of ESCAgenetics. This
Agreement has been duly executed and delivered by ESCAgenetics and constitutes
the legal, valid and binding obligation of ESCAgenetics enforceable against it
in accordance with the terms hereof, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of rights hereunder or general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.3 Recent Business Operations. The business of ESCAgenetics and the
ESCAgenetics Subsidiaries (as hereinafter defined), since January 1, 1996 has
been limited solely to the search for an acquisition or merger partner and
certain transactions described in its filings with the Commission since January
1, 1996, and except for transactions related to conversion of debt or other
obligations and merger or acquisition activities of one of its subsidiaries, it
has not engaged in any other business or activity since January 1, 1996.
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4.4 Foreign Qualifications. ESCAgenetics is, and on the Effective Date will
be, duly authorized, qualified and licensed under any and all applicable laws,
regulations, ordinances or orders of public authorities to carry on its business
in the places and in the manner as presently conducted. The business of
ESCAgenetics does not require it to be registered as an investment company or
investment advisor, as such terms are defined under the Investment Company Act
and the Investment Advisors Act of 1940.
4.5 Subsidiaries. ESCAgenetics has, and on the Effective Date will have, no
subsidiaries, except for Shecom Mergerco, PHYTOpharmaceuticals, Inc. and SRE
ESCAgenetics Corporation (the "ESCAgenetics Subsidiaries"), nor does it own any
direct or indirect interest in any other business entity.
4.6 Financial Statements. The financial statements of ESCAgenetics,
consisting of its Balance Sheets, Statement of Operations, Statement of
Stockholders' Equity and Statement of Cash Flows, all as at or for periods
ending September 30, 2002 and June 30, 2002, and all together with accompanying
notes, if any, are complete and correct in all material respects, present fairly
the financial position of ESCAgenetics, the results of operations and changes in
financial position for the period covered thereby, and were prepared in
accordance with generally accepted accounting principles consistently applied,
and have been adjusted for all normal and recurring accruals. All the financial
statements referenced herein regarding ESCAgenetics are collectively referred to
as the "ESCAgenetics Financial Statements", all of which have been delivered to
Shecom and are true, correct and complete in all material respects.
4.7 No Adverse Changes. There has not been, and on the Effective Date there
will not have been, any material change in the financial condition of
ESCAgenetics and the ESCAgenetics Subsidiaries from that set forth in the
ESCAgenetics Financial Statements except for (i) transactions in the ordinary
course of business, (ii) transactions relating to this Agreement, and (iii) the
incurring of expenses and liabilities relating to this Agreement.
4.8 Liabilities. There are, and on the Effective Date will be, no
liabilities (including, but not limited to, tax liabilities) or claims against
ESCAgenetics or the ESCAgenetics Subsidiaries (whether such liabilities or
claims are contingent or absolute, direct or indirect, accrued or unaccrued and
matured or unmatured) not appearing on the ESCAgenetics Financial Statements,
except for (i) liabilities for expenses incurred relating to this Agreement and
the consummation of the transactions contemplated hereby and (ii) liabilities
and commitments incurred or made in the ordinary course of ESCAgenetics's
business or taxes incurred on earnings since December 31, 2002.
4.9 Tax Returns. All Federal, state, county and local income, excise,
property or other tax returns required to be filed by ESCAgenetics and the
ESCAgenetics Subsidiaries have been timely filed and all required taxes, fees
and assessments have been paid or an adequate reserve therefore has been
provided for in the ESCAgenetics Financial Statements. The federal income tax
returns and state and foreign income tax returns of ESCAgenetics and the
ESCAgenetics Subsidiaries have not been audited by the IRS or any other taxing
authority within the past five (5) years. Neither the IRS nor any state, local
or other taxing authority has proposed any additional taxes, interest or
penalties with respect to ESCAgenetics, or any of its operations or businesses
or the ESCAgenetics Subsidiaries. There are no pending, or to the knowledge of
ESCAgenetics, threatened, tax claims or assessments, and there are no pending,
or to the knowledge of ESCAgenetics, threatened, tax examinations by any taxing
authorities. Neither ESCAgenetics or the ESCAgenetics Subsidiaries has given any
waivers of rights (which are currently in effect) under applicable statutes of
limitations with respect to the federal income tax returns of ESCAgenetics and
the ESCAgenetics Subsidiaries for any year.
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4.10 Assets. ESCAgenetics and the ESCAgenetics Subsidiaries have, and on
the Effective Date will have, no fixtures, furniture, equipment, inventory,
accounts receivable or other assets.
4.11 Material Contracts. ESCAgenetics and the ESCAgenetics Subsidiaries
each have, and on the Effective Date will have, no material contracts to which
it is, or on the Effective Date will be, a party.
4.12 No Conflicts. The execution and delivery by ESCAgenetics of this
Agreement, the consummation and performance of the transactions herein
contemplated and compliance with the terms of this Agreement by ESCAgenetics
will not conflict with, result in a breach of or constitute a default under (i)
any indenture, mortgage, deed of trust or other agreement, instrument or
contract to which ESCAgenetics or the ESCAgenetics Subsidiaries is now a party
or by which it or any of its assets or properties is bound; (ii) the Certificate
of Incorporation or the bylaws of ESCAgenetics and the ESCAgenetics
Subsidiaries, in each case as amended; or (iii) any law, order, rule,
regulation, writ, injunction, judgment or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over
ESCAgenetics or the ESCAgenetics Subsidiaries or any of their respective
business or properties.
4.13 Legal Proceedings. There are, and on the Effective Date there will be,
no legal, administrative, arbitral or other proceedings, claims, actions or
governmental investigations of any nature pending or to ESCAgenetics's knowledge
threatened, against ESCAgenetics or any of the ESCAgenetics Subsidiaries,
including, but not limited to any shareholder claims or derivative actions, or
challenging the validity or propriety of the transactions contemplated by this
Agreement, and, to ESCAgenetics's best knowledge, there is no reasonable basis
for any proceeding, claim, action or governmental investigation against
ESCAgenetics or any of the ESCAgenetics Subsidiaries. ESCAgenetics and the
ESCAgenetics Subsidiaries are not a party to any order, judgment or decree.
4.14 Certain Transactions. There have been, and to the Effective Date there
will be (i) no salaried or otherwise compensated employees and no bonuses paid
to any officer or director of ESCAgenetics or the ESCAgenetics Subsidiaries;
(ii) no loans made to or transactions with any officer or director of
ESCAgenetics or the ESCAgenetics Subsidiaries; (iii) no dividends or other
distributions declared or paid by ESCAgenetics; and (iv) no purchase by
ESCAgenetics or any third party of any of the ESCAgenetics Shares.
4.15 Issuances of Securities. ESCAgenetics has not, except for the Issued
ESCAgenetics Shares, issued or committed itself to issue, and to the Effective
Date will not issue or commit itself to issue, any ESCAgenetics Shares or any
options, rights, warrants, or other securities convertible into ESCAgenetics
Shares, except as contemplated by this Agreement.
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4.16 Intellectual Property. ESCAgenetics and the ESCAgenetics Subsidiaries
have no patents, patent applications, trademarks, trademark registrations, trade
names, copyrights, copyright registrations or applications therefore.
ESCAgenetics has no knowledge of any infringements by ESCAgenetics or the
ESCAgenetics Subsidiaries of any third party's intellectual property.
4.17 Compliance with Laws. ESCAgenetics and the ESCAgenetics Subsidiaries
have, and on the Effective Date will have, in all material respects operated
their respective business and conducted their affairs in compliance with all
applicable laws, rules and regulations, except where the failure to so comply
did not have and would not be expected to have a material adverse effect on its
business or property. To the best of its knowledge, ESCAgenetics and the
ESCAgenetics Subsidiaries are not in violation of any Federal, state or local
environmental law or regulation.
4.18 Related Party Transactions. On the Effective Date there will be no
loans, leases, commitments, arrangements or other contracts of any kind or
nature outstanding between (i) ESCAgenetics or any of the ESCAgenetics
Subsidiaries or (ii) any officer or director of ESCAgenetics or the ESCAgenetics
Subsidiaries or any person related to or affiliated with any officer or director
of ESCAgenetics or any of the ESCAgenetics Subsidiaries.
4.19 Officers and Directors. During the past five year period, no current
officer or director of ESCAgenetics or the ESCAgenetics Subsidiaries has been
the subject of any Bad Event.
4.20 Employee Benefit Plans. ESCAgenetics and the ESCAgenetics Subsidiaries
have no pension plan, profit sharing or similar employee benefit plan.
4.21 Consents. Except for the consent and approval of the Board of
Directors of ESCAgenetics and Shecom Mergerco, the filing of the Certificate of
Merger and the filing of Commission Form 8-K, no consents or approvals of, or
filings or registrations with, any third party or any public body or authority
are necessary in connection with (i) the execution and delivery by ESCAgenetics
of this Agreement or (ii) the consummation by ESCAgenetics of the Merger and the
other transactions contemplated hereby. ESCAgenetics has, and on the Effective
Date will have, full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
4.22 Finder's Fees. ESCAgenetics knows of no person who rendered any
service in connection with the introduction of the Companies to any of the other
Companies, for a "finder's fee" or similar type of fee in connection with the
Merger and the other transactions contemplated hereby.
4.23 Employees. ESCAgenetics and the ESCAgenetics Subsidiaries have no
employees.
4.24 Disclosure. None of the information supplied or to be supplied by or
about ESCAgenetics or the ESCAgenetics Subsidiaries to Shecom concerning the
Merger contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
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4.25 Registration. The ESCAgenetics Common Stock is, and at the Effective
Date will be, validly registered as a class pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
4.26 Listing and Maintenance Requirements. The ESCAgenetics Common Stock is
listed on the NASD OTCBB. ESCAgenetics has not, in the 24 months preceding the
date hereof, received notice from the NASD OTCBB or any other market or exchange
on which the ESCAgenetics Common Stock is or has been listed or quoted to the
effect that ESCAgenetics is not in compliance with the listing or maintenance
requirements of such market. ESCAgenetics is, and has no reason to believe that
it will not in the foreseeable future continue to be, in compliance with all
such listing and maintenance requirements. ESCAgenetics has not, in the 24
months preceding the date hereof, received notice any notice of violations or
delisting from the Commission.
4.27 SEC Reports; Financial Statements. ESCAgenetics has filed all reports
required to be filed by it under the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, since the effective date of its registration statement filed with
the Commission on Form 10-SB (the foregoing materials being collectively
referred to herein as the "SEC Reports" on a timely basis or has received a
valid extension of such time of filing and has filed any such SEC Reports prior
to the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated hereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of ESCAgenetics included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the ESCAgenetics and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
4.28 Internal Accounting Controls. ESCAgenetics and the ESCAgenetics
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. There
are no disagreements of any kind presently existing, or reasonably anticipated
by ESCAgenetics to arise, between the accountants and lawyers formerly or
presently employed by ESCAgenetics, which could reasonably be expected to delay
the transactions contemplated hereby, including the filing of Form 8-K following
the Effective Date, and ESCAgenetics is current with respect to any fees owed to
its accountants and lawyers. ESCAgenetics has established disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
ESCAgenetics and designed such disclosure controls and procedures to ensure that
material information relating to ESCAgenetics, including its subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which ESCAgenetics's Form 10-K (or 10-KSB) or
10-Q (or 10-QSB), as the case may be, is being prepared. The ESCAgenetics's
certifying officers have evaluated the effectiveness of ESCAgenetics's controls
and procedures as of a date within 90 days prior to the filing date of the Form
10-KSB for the year ended September 30, 2002 (such date, the "Evaluation Date").
ESCAgenetics presented in the Form 10-KSB for the year ended September 30, 2002
the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in ESCAgenetics's internal controls (as such term is defined in Item
307(b) of Regulation S-K under the Exchange Act) or, to ESCAgenetics's and its
certifying officer's knowledge, in other factors that could significantly affect
the ESCAgenetics's internal controls.
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4.29 Charter Documents. The charter documents of ESCAgenetics and its
subsidiaries have not been altered since the incorporation of each,
respectively, except as filed in the record books of ESCAgenetics.
4.30 Corporate Minute Books. The corporate minute books of ESCAgenetics and
its subsidiaries are complete and each of the minutes and consents contained
therein accurately reflect the actions that were taken at a duly called and held
meeting or by consent without a meeting. All actions by ESCAgenetics and its
subsidiaries which required director or stockholder approval are reflected on
the corporate minute books of ESCAgenetics and its subsidiaries. ESCAgenetics
and its subsidiaries are not in violation or breach of, or in default with
respect to, any term of their respective Certificates of Incorporation (or other
charter documents) or by-laws.
5. Representations to Survive Closing. All of the representations,
covenants and warranties contained in this Agreement (including all statements
contained in any certificate or other instrument delivered by or on behalf of
ESCAgenetics, Shecom Mergerco, the ESCAgenetics Stockholders, the Shecom
Stockholder or Shecom pursuant hereto or in connection with the transactions
contemplated hereby) shall survive the Closing for a period of two (2) years
from the Effective Date.
6. Surviving Corporations. The surviving entity in the Merger shall be
Shecom. Shecom's name, identities, certificate of incorporation, bylaws,
existence, purposes, powers, objects, franchises, rights and immunities shall be
unaffected and unimpaired by the Merger, except as described in the Certificate
of Merger.
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7. Treatment of Securities of Constituent Corporations in the Merger. The
terms and conditions of the Merger, the mode of carrying the same into effect,
and the manner and basis of converting the securities of each of the Constituent
Corporations are as follows:
7.1 Treatment of Shares. At the Effective Date, in the event the Reverse
Split has become effective, the Shares shall be converted by virtue of the
Merger, into an aggregate of approximately 4,375,000 shares of ESCAgenetics
Common Stock ("Shecom Shares"), on the basis of .1865 shares of ESCAgenetics
Common Stock for each Share, without any action on the part of the holders
thereof. In the event the Reverse Split has not become effective on or before
the Effective Date the Shares shall be converted by virtue of the Merger, and at
the Effective Date, into an aggregate of 21,875,000 shares of ESCAgenetics
Common Stock, on the basis of .9325 shares of ESCAgenetics Common Stock for each
Share, without any action on the part of the holders thereof. In the event the
Reverse Split has not taken place on or before the Effective Date, the
conversion of the Shares into shares of ESCAgenetics Common Stock shall be
performed in accordance with this Section, and the Shecom Shares issuable to the
Shecom shareholders shall be issued as follows: (1) as soon as practicable after
the Effective Date, ESCAgenetics shall cause to be issued to the Shecom
shareholders a total of 4,375,000, and (2) thereafter, ESCAgenetics shall use
its best efforts to: (A) obtain stockholder approval to amend its certificate of
incorporation to increase the authorized shares of common stock so as to permit
the additional share issuance and reservation required by this subparagraph, and
(B) cause to be issued to the Shecom shareholders an additional 458,656,193
shares and approximately 108,010,474 shares to be reserved for issuance pursuant
to Section 7.2 below. The ESCAgenetics Stockholders, by their signatures hereto,
agree to vote in favor of any such amendment to the certificate of incorporation
required by this subsection. Upon such surrender, Shares so surrendered shall be
owned of record and beneficially by ESCAgenetics. Upon conversion, any
fractional ESCAgenetics Common Stock resulting from conversion shall be rounded
up to the next highest whole number.
7.2 Treatment of Shecom Options and Convertible Debt. Up to 0 currently
existing options to purchase Shares and 0 Shares issuable upon convertible debt
convertible shall be replaced at closing by options and convertible debt to
purchase ESCAgenetics Common Stock on the same basis of conversion as set forth
in Section 7.1 above.
7.3 Existence of Shecom Mergerco. The separate existence and corporate
organization of Shecom Mergerco, except insofar as it may be continued by
statute, shall cease on Effective Date and Shecom shall become a wholly owned
subsidiary of ESCAgenetics.
8. Rights and Liabilities of Surviving Corporation in Merger. On and after
the Effective Date, Shecom, as the surviving corporation of the Merger, shall
succeed to and possess, without further act or deed, all of the estate, rights,
privileges, powers and franchises, both public and private, and all of the
property, real, personal, and mixed, of Shecom Mergerco; all debts due to Shecom
Mergerco on whatever account shall be vested in Shecom; all claims, demands,
property, rights, privileges, powers, franchises and every other interest of
Shecom Mergerco shall be as effectively the property of Shecom as they were of
Shecom Mergerco; the title to any real estate by deed or otherwise in Shecom
Mergerco shall not revert or be in any way impaired by reason of the Merger, but
shall be vested in Shecom; all rights of creditors and all liens upon any
property of Shecom Mergerco shall be preserved unimpaired, limited in lien to
the property affected by such lien at the Effective Date; and all debts,
liabilities and duties of Shecom Mergerco shall thenceforth attach to Shecom and
may be enforced against it to the same extent as if such debts, liabilities and
duties had been incurred or contracted by it.
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9. Further Assurances of Title. As and when requested by Shecom, or by any
of its successors or assigns, Shecom Mergerco shall execute and deliver, or
cause to be executed and delivered, all such deeds and instruments and will take
or cause to be taken all such further action as Shecom may deem necessary or
desirable in order to vest in and confirm to Shecom title to and possession of
the property acquired by Shecom by reason or as a result of the Merger, and
otherwise to carry out the intent and purposes hereof, and the officers,
directors of Shecom and ESCAgenetics, as applicable, are fully authorized in the
name of Shecom or ESCAgenetics or otherwise to take any and all such action.
10. Conditions of Obligations of Shecom Mergerco and ESCAgenetics. The
obligation of Shecom Mergerco and ESCAgenetics to consummate the Merger is
subject to the following conditions prior to the Effective Date:
10.1 Compliance with Representations and Warranties. Shecom shall be in
compliance with its representations, warranties and covenants contained herein
in all material respects, and Shecom Mergerco and ESCAgenetics each shall
receive from Shecom certificates to such effect from the President of Shecom as
of the Effective Date.
10.2 Losses. Shecom shall not have suffered a loss on account of fire,
flood, accident or other calamity of such a character as to interfere materially
with the continuous operation of its business or materially affect adversely its
condition, financial or otherwise, regardless of whether or not such loss shall
have been insured.
10.3 No Material Adverse Change. Except as disclosed in this Agreement or
in the schedules annexed hereto, no material adverse change in the aggregate
shall have occurred in the financial condition, business, properties, assets,
liabilities, results of operations or prospects of Shecom since December 31,
2002.
10.4 Disposition of Assets. None of the properties or assets of Shecom
shall have been sold or otherwise disposed of other than in the ordinary course
of business in accordance with past practice during such period, except with the
prior written consent of ESCAgenetics.
10.5 Conditions. Shecom shall have performed and complied with the
provisions and conditions of this Agreement on its part to be performed and
complied with.
10.6 Filings and Approvals. All applicable filings and regulatory approvals
required to be made or obtained by Shecom have been made or obtained.
10.7 Other Approvals. This Agreement and the transactions contemplated
hereby shall have been approved by appropriate action of the Board of Directors
and stockholders, as required, of Shecom and resolutions to that effect to
ESCAgenetics and its counsel, shall have been delivered to ESCAgenetics.
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10.8 Compliance with Securities Laws. There shall have been full compliance
with the applicable securities or "blue sky" laws and regulations of any state
or other governmental body having jurisdiction over the Merger.
10.9 Opinions of Counsel. ESCAgenetics shall have received an opinion from
counsel to Shecom in form and substance reasonably satisfactory to
ESCAgenetics's counsel.
10.10 Investment Representation. Shecom shall have obtained an instrument,
in the form annexed hereto as Exhibit B, from the stockholders of Shecom,
including a representation that the shares of ESCAgenetics Common Stock being
acquired as a result of the transactions contemplated by this Agreement are
being acquired for investment purposes only and not with a view to, or sale in
connection with, any distribution within the meaning of the Securities Act.
11. Conditions of Obligations of Shecom. The obligations of Shecom to
consummate the Merger are subject to the following conditions prior to the
Effective Date:
11.1 Compliance with Representations and Warranties. Shecom Mergerco and
ESCAgenetics shall be in compliance with their respective representations,
warranties and covenants contained herein, and Shecom shall have received from
each of Shecom Mergerco and ESCAgenetics a certificate to such effect from their
respective Presidents as of the Effective Date.
11.2 Losses. Shecom Mergerco and ESCAgenetics shall not have suffered any
loss on account of fire, flood, accident or other calamity of such a character
as to interfere materially with the continuous operation of their respective
businesses or materially adversely affect their respective condition, financial
or otherwise, regardless of whether or not such loss shall have been insured.
11.3 No Material Transactions. No material transactions shall have been
entered into by Shecom Mergerco or ESCAgenetics, other than transactions in the
ordinary course of business, since December 31, 2002, other than as referred to
in this Agreement or in connection herewith, except with the prior written
consent of Shecom.
11.4 No Material Adverse Change; Due Diligence. No material adverse change
shall have occurred in the financial condition, business, properties, assets,
liabilities, results of operations or prospects of Shecom Mergerco or
ESCAgenetics since December 31, 2002, other than as referred to in this
Agreement.
11.5 Disposal of Assets. None of the properties or assets of Shecom
Mergerco or ESCAgenetics shall have been sold or otherwise disposed of, other
than in the ordinary course of business since December 31, 2002, except with the
written consent of Shecom.
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11.6 Compliance with Conditions. Shecom Mergerco and ESCAgenetics shall
each have performed and complied with the provisions and conditions of this
Agreement on its part to be performed and complied with.
11.7 Filings and Approvals. All applicable filings required to be made and
regulatory approvals, as well as any other third party approvals, obtained by
ESCAgenetics have been made or obtained, including the filing of required
information pursuant to Section 14(f) of the Exchange Act with the Commission.
11.8 Board Resignations. ESCAgenetics shall have held a meeting of its
Board of Directors at which meeting all of its directors except one (the
"ESCAgenetics Board Member") shall have resigned seriatim and the persons
designated by Shecom shall have been elected as directors of ESCAgenetics, to
fill the vacancies created thereby all subject to the consummation of the
Merger. Upon such election, the ESCAgenetics Board Member shall resign.
11.9 Opinions. Shecom shall have received opinions from counsel to Shecom
Mergerco and ESCAgenetics in form and substance reasonably satisfactory to
Shecom's counsel.
11.10 Certifying Officers. The current Chief Executive Officer and Chief
Financial Officer of ESCAgenetics shall each have agreed to provide to the
appropriate officers of ESCAgenetics following the Merger, a letter, in form and
substance satisfactory to Shecom, containing the certifications required under
the Xxxxxxxx-Xxxxx Act of 2002, with respect to any filings to be made with the
Commission after the Merger that include financial statements or information
about the pre-Merger operations of ESCAgenetics.
11.11 10-QSB and Tax Returns. ESCAgenetics shall have timely filed its
quarterly report on Form 10-QSB, for the quarter June 30, 2003, with the
Commission and shall have filed all tax returns and paid all applicable taxes
for the year ended September 30, 2002.
Compliance with the provisions of this Section 11 shall be evidenced by the
certificates of the respective Presidents and Secretaries of each of Shecom
Mergerco and ESCAgenetics to be delivered at Closing.
12. Other Covenants.
12.1 Amendment of ESCAgenetics Certificate of Incorporation. The
ESCAgenetics Stockholders each agrees that he will vote all shares of
ESCAgenetics capital stock beneficially owned or controlled by him in favor of
the amendment of ESCAgenetics's Certificate of Incorporation to change its
corporate name to Shecom Corporation.
12.2 Election of Directors. A new board of directors shall be formed
consisting of not less than five (5) directors which shall include Raju Shewa,
Xxxxxxx Xxxx and three additional directors to be determined prior to closing.
The ESCAgenetics Stockholders each agree that, for a period of three years
following the Closing, he will vote all shares of ESCAgenetics capital stock
beneficially owned or controlled by him in favor of the nominated board of
directors designated at the time of closing and reasonably acceptable to the
ESCAgenetics Board of Directors, as members of the Board of Directors of
ESCAgenetics.
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12.3 Indemnification. (a) The ESCAgenetics Stockholders, jointly and
severally, agree to indemnify and hold harmless Shecom, its affiliates and
stockholders, directors, officers, employees, agents, successors in interest,
assigns and representatives from and against any and all losses, claims, damages
or liabilities or expenses (including reasonable attorneys' fees) which may be
incurred or suffered by any such party and which, directly or indirectly, arise
out of or result from the operations of ESCAgenetics prior to the Effective
Date, including, without limitation, any breaches of representations, warranties
and covenants of ESCAgenetics contained herein. The ESCAgenetics Stockholders'
indemnity obligations under this Section 12.3(a) shall be limited, in the
aggregate, to $100,000.
(b) Shecom and the Shecom Stockholder, jointly and severally, agree to
indemnify and hold harmless ESCAgenetics and the ESCAgenetics Stockholders,
directors, officers, employees, agents, successors in interest, assigns and
representatives from and against any and all losses, claims, damages or
liabilities or expenses (including reasonable attorneys' fees) which may be
incurred or suffered by ESCAgenetics or the ESCAgenetics Stockholders which,
directly or indirectly, arise out of or result from the operations of Shecom
prior to the Effective Date including, without limitation, any breaches of
representations, warranties and covenants of ESCAgenetics contained herein. The
Shecom Stockholder's indemnity obligations under this Section 12.3(b) shall be
limited, in the aggregate, to $100,000.
12.4 Post-Merger Operations of Shecom. If, within the earlier of (i) two
years from the Effective Date or (ii) the date that the New Note is paid in full
(such earlier of the foregoing two clauses, the "Trigger Date"), Shecom shall
permanently cease all business operations for a period in excess of sixty days,
or any proceeding shall be instituted by or against Shecom seeking to adjudicate
it bankrupt or insolvent, or seeking liquidation, winding up, protection, relief
or composition of it or its debts under any law relating to bankruptcy,
insolvency or relief of debtors, or seeking the entry of an order for relief or
for the appointment of a receiver, trustee or other similar official for it or
for any substantial part of its property, and in the case of any such proceeding
instituted against Shecom (but not instituted by Shecom), either such proceeding
shall remain undismissed or unstayed for a period of ninety (90) days or any of
the actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee or
other similar official for, Shecom or any substantial part of its property)
shall be granted or shall occur, then the parties hereto agree to unwind this
transaction, whereby (i) the Shecom Shares, to the extent not previously sold or
transferred by a current stockholder of Shecom, shall be returned to
ESCAgenetics and cancelled, (ii) the Shares and the business, assets,
liabilities and operations of Shecom are returned to the pre-Merger stockholders
of Shecom and (iii) the New Note shall be cancelled or returned to ESCAgenetics,
such that Shecom and the pre-Merger stockholders of Shecom shall have no
obligations with respect to such New Note. The Shecom Stockholder agrees not to
sell, transfer or otherwise dispose of his Shecom Shares to any third party in a
private transaction prior to the Trigger Date, unless such third party agrees to
be bound by the provisions of this Section 12.4. The Shecom Stockholder shall be
permitted to sell his Shecom Shares pursuant to Rule 144 of the Securities Act
prior to and following the Trigger Date.
21
12.5 Covenants Not to Xxx. (a) The ESCAgenetics Stockholders, on behalf of
themselves and each of their respective affiliates, successors and assigns, each
irrevocably covenant and agree that they shall forever refrain from initiating,
filing, instituting, maintaining, or proceeding upon, or encouraging, advising,
or voluntarily assisting any other person or entity to initiate, institute,
maintain, or proceed upon, any claims, demands, obligations, liabilities,
indebtednesses, breaches of contract, breaches of duty or any relationship,
acts, omissions, misfeasance, malfeasance, cause or causes of actions, debts,
sums of money, accounts, compensations, contracts, controversies, promises,
damages, costs, attorneys' fees, losses and expenses, of every type, kind,
nature, description or character, and irrespective of how, why, or by reason of
what facts, whether heretofore, now existing or hereafter arising, or which
could, might, or may be claimed to exist, or whatever kind or name, whether
known or unknown, suspected or unsuspected, liquidated or unliquidated, each as
though fully set forth herein at length, against ESCAgenetics (or its current or
former officers, directors, agents or employees), which in any way arise out of,
are connected with or related to the operations of ESCAgenetics prior to the
Effective Date.
(b) The Shecom Stockholder irrevocably covenants and agrees that he shall
forever refrain from initiating, filing, instituting, maintaining, or proceeding
upon, or encouraging, advising, or voluntarily assisting any other person or
entity to initiate, institute, maintain, or proceed upon, any claims, demands,
obligations, liabilities, indebtednesses, breaches of contract, breaches of duty
or any relationship, acts, omissions, misfeasance, malfeasance, cause or causes
of actions, debts, sums of money, accounts, compensations, contracts,
controversies, promises, damages, costs, attorneys' fees, losses and expenses,
of every type, kind, nature, description or character, and irrespective of how,
why, or by reason of what facts, whether heretofore, now existing or hereafter
arising, or which could, might, or may be claimed to exist, or whatever kind or
name, whether known or unknown, suspected or unsuspected, liquidated or
unliquidated, each as though fully set forth herein at length, against
ESCAgenetics or Shecom (or their respective officers, directors, agents or
employees), which in any way arise out of, are connected with or related to the
operations of Shecom prior to the Effective Date.
13. Abandonment. This Agreement and the Merger may be abandoned (a) by any
of the Companies, acting by its Board of Directors, at any time prior to its
adoption by the stockholders, if such adoption is required, (b) by any of the
Companies, acting by its Board of Directors, by written notice to the other
parties hereto, at any time in the event of the failure of any condition in
favor of such entity as to which the consummation of the Merger is subject, or
(c) by the consent of all the Companies, acting each by its Board of Directors,
at any time prior to the Effective Date. In the event of abandonment of this
Agreement, the same shall become wholly void and of no effect, and there shall
be no further liability or obligation hereunder on the part of any of the
Companies, their respective Boards of Directors or any other party to this
Agreement.
14. Closing or Termination. In the event the Closing of this Agreement
shall not take place due to failure of any condition of Closing required herein,
then any party shall have the right to terminate this Agreement, in which event
no party shall have any further right or obligation as against any other. If
Shecom shall fail to close for any reason other than failure of any condition of
Closing required herein to be performed on the part of ESCAgenetics or Shecom
Mergerco, Shecom shall pay to ESCAgenetics a break-up fee of $250,000 in cash.
If ESCAgenetics or Shecom Mergerco shall fail to close for any reason other than
failure of any condition of Closing required herein to be performed on the part
of Shecom, ESCAgenetics shall pay to Shecom a break-up fee of $250,000 in cash.
Notwithstanding anything in this section to the contrary Shecom shall not be
liable to ESCAgenetics for a break-up fee if it has terminated this Agreement
pursuant to Sections 12.6 or 12.7 and ESCAgenetics shall not be liable to Shecom
for a break-up fee if it has terminated this Agreement pursuant to Sections 12.6
or 12.7.
22
15. Delivery of Corporate Proceedings of ESCAgenetics and Shecom Mergerco.
At the Closing, ESCAgenetics and Shecom Mergerco shall deliver to counsel for
Shecom the originals of all of the corporate proceedings of ESCAgenetics and
Shecom Mergerco, duly certified by their respective Secretaries, relating to
this Agreement and Shecom shall deliver to counsel for ESCAgenetics the
originals of all of the corporate proceedings of Shecom, duly certified by their
respective Secretaries, relating to this Agreement.
16. Limitation of Liability. The representations and warranties made by any
party to this Agreement are intended to be relied upon only by the other parties
to this Agreement and by no other person. Nothing contained in this Agreement
shall be deemed to confer upon any person not a party to this Agreement any
third party beneficiary rights or any other rights of any nature whatsoever.
17. Further Instruments and Actions. Each party shall deliver such further
instruments and take such further action as may be reasonably requested by any
other in order to carry out the intent and purposes of this Agreement.
18. Governing Law. This Agreement is being delivered and is intended to be
performed in the State of New York, and shall be construed and enforced in
accordance with the laws of such state, without regard to conflicts of laws
thereof.
19. Notices. All notices or other communications to be sent by any party to
this Agreement to any other party to this Agreement shall be sent by certified
mail, personal delivery or nationwide overnight courier to the addresses
hereinbefore designated, or such other addresses as may hereafter be designated
in writing by a party. Notice shall be deemed given and received on the date of
actual delivery to the address specified thereon.
20. Binding Agreement. This Agreement represents the entire agreement among
the parties hereto with respect to the matters described herein and is binding
upon and shall inure to the benefit of the parties hereto and their legal
representatives, successors and permitted assigns. This Agreement may not be
assigned and, except as stated herein, may not be altered or amended except in
writing executed by all of the parties hereto.
21. Counterparts. This Agreement may be executed in counterparts, all of
which, when taken together, shall constitute the entire Agreement.
23
22. Severability. The provisions of this Agreement shall be severable, so
that the unenforceability, validity or legality of any one provision shall not
affect the enforceability, validity or legality of the remaining provisions
hereof.
23. Joint Drafting. This Agreement shall be deemed to have been drafted
jointly by the parties hereto, and no inference or interpretation against any
party shall be made solely by virtue of such party allegedly having been the
draftsperson of this Agreement.
24. Reliance on Certificates. In rendering any opinion referred to herein,
counsel for the parties hereto may rely, as to any factual matters involved in
their respective opinions, on certificates of public officials and of corporate
and company officers, and on such other evidence as such counsel may reasonably
deem appropriate and, as to the matters governed by the laws of jurisdictions
other than the United States or the State of Delaware, an opinion of local
counsel in such other jurisdiction(s), which counsel shall be satisfactory to
the other parties in the exercise of their reasonable discretion.
25. Public Announcements. All parties hereto agree that any public
announcement, press release or other public disclosure of the signing of this
Agreement shall be made jointly and only after all parties hereto have reviewed
and approved the language and timing of such disclosure, except as such
disclosure may be required pursuant to any legal obligation or order of any
court having proper jurisdiction over any of the parties hereto.
26. Consent. Whenever consent is required to be given by any of the
Companies to any of the other Companies hereunder in connection with any matter
contemplated hereby, such consent shall not be unreasonably withheld, delayed or
conditioned.
24
IN WITNESS WHEREOF, the parties hereto have made and executed this
Agreement as of the day and year first above written.
ESCAGENETICS CORPORATION,
a Delaware corporation
By:-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
SHECOM ACQUISITION CORPORATION,
a Delaware corporation
By:-------------------------------------
Name: Xxxxxxx X. Trad
Title: President
SHECOM CORPORATION,
a Colorado corporation
By:-------------------------------------
Name: Xxxxxxx X. Trad
Title: President
25
Schedule A Shecom Schedule of Exceptions
Schedule B ESCAgenetics Schedule of Exceptions
Exhibit A Certificate of Merger
26
AMENDMENT
TO
AGREEMENT AND PLAN OF REORGANIZATION
Reference is hereby made to that certain Agreement and Plan of
Reorganization dated August 22, 2003 (the "Merger Agreement") by and among
ESCAgenetics Corporation, a Delaware corporation having its principal place of
business at 000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000
("ESCAgenetics"), Shecom Acquisition Corp., a Colorado corporation having its
principal place of business at 00000 Xx Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx
00000 ("Shecom Mergerco") and Shecom Corporation, a Colorado corporation having
its principal place of business at 00000 Xx Xxxxx Xxxxxx, Xxxxx Xxxxx,
Xxxxxxxxxx 00000 ("Shecom"). All capitalized terms used herein, but not
otherwise defined herein, shall have the meanings ascribed to them in the Merger
Agreement.
WHEREAS, the parties to the Merger Agreement desire to amend certain terms
of the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Amendments. (A) Section 2.1 of the Merger Agreement is hereby amended by
deleting such section in its entirety and replacing it with the following:
2.1 Organization; Capitalization. Shecom is, and on the effective date of
the Merger (the "Effective Date") will be, a duly organized and a validly
existing corporation in good standing under the laws of the State of Colorado.
Except as set forth below, there are no issued and outstanding securities of
Shecom other than the Shecom Shares, and on the Effective Date there will be
issued and outstanding only the 21,257,737 Shecom Shares, all of which are, and
on the Effective Date will be, duly authorized and validly issued. There are,
and on the Effective Date there will be, no outstanding rights, options or
warrants to purchase any equity interest in Shecom, and there will be no other
or any other issued or outstanding securities of any nature convertible into or
exercisable or exchangeable for equity of Shecom, other than the warrants to
purchase 2,200,000 Shecom Shares. Other than the foregoing, no person has any
right of first refusal, right of participation, or any similar right with
respect to dispositions of the Shares.
(B) Section 4.1 of the Merger Agreement is hereby amended by deleting
such section in its entirety and replacing it with the following:
4.1 Organization; Capitalization. ESCAgenetics is a duly organized and
validly existing corporation in good standing under the laws of the State of
Delaware, authorized to issue an aggregate of 100,000,000 shares of ESCAgenetics
Shares and no other shares of capital stock. There are as of the execution date
of this Amendment an aggregate of 1,000,000 ESCAgenetics Shares issued and
outstanding.
On the Effective Date, giving effect to the Merger and the issuance of the
19,823,438 Merger Shares (as hereinafter defined), there will except as set
forth below be issued and outstanding approximately 20,823,438 ESCAgenetics
Shares, all of which such issued and outstanding shares will be validly issued,
fully paid and non-assessable, and 2,015,619 ESCAgenetics Shares reserved for
issuance pursuant to Section 7.3 hereof, for an aggregate of approximately
21,875,057 ESCAgenetics Shares on a fully diluted basis.
On the Effective Date, there will be no other issued and outstanding shares of
capital stock of ESCAgenetics, except for the 2,125,000 ESCAgenetics Shares to
be issued to certain entities and/or individuals in connection with the Merger,
for an aggregate of approximately 25,000,057 ESCAgenetics Shares issued and
outstanding immediately subsequent to the Closing of the Merger and all
transaction and developments contemplated by the Merger Agreement, as amended
hereby.
Except as contemplated by this Agreement, on the Effective Date there will be no
issued or outstanding securities and no issued or outstanding options, warrants
or other rights, or commitments or agreements of any kind, contingent or
otherwise, to purchase or otherwise acquire ESCAgenetics Shares or any issued or
outstanding securities of any nature convertible into ESCAgenetics Shares.
1
There is no proxy or any other agreement, arrangement or understanding of any
kind authorized, effective or outstanding which restricts, limits or otherwise
affects the right to vote any ESCAgenetics Shares.
(C) Section 4.15 of the Merger Agreement is hereby deleted in its entirety
and replaced with the following:
4.15 Issuances of Securities. ESCAgenetics has not, except for the Issued
ESCAgenetics Shares, issued or committed itself to issue, and to the Effective
Date will not issue or commit itself to issue, any ESCAgenetics Shares or any
options, rights, warrants, or other securities convertible into or exercisable
for ESCAgenetics Shares, except as contemplated by this Agreement.
(D) Section 7.1 of the Merger Agreement is hereby deleted in its entirety
and replaced with the following::
7.1 ESCAgenetics Shares to be Issued. At and as of the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof:
(i) each outstanding share of common stock of Shecom, $.0001 par value per share
(the "Shecom Shares"), shall be converted into the right to receive 0.9325258146
shares of common stock of the Company, $.0001 par value per share (the
"ESCAgenetics Shares"); and the ESCAgenetics Shares issued upon such conversion,
being 19,823,438 shares in the aggregate, are referred to herein as the "Merger
Shares"), and (ii) each dissenting share shall be converted into the right to
receive payment from Shecom with respect thereto in accordance the law of the
State of Colorado. As a result of the foregoing, the Merger Shares shall be
allocated among the holders of the Shecom Shares on a pro rata basis (which
shall be amended by the Parties immediately prior to the Effective Time in order
to give effect to exercises, if any, of Outstanding Options (as defined below)
subsequent to the date hereof).
The ratio of 0.9325258146 ESCAgenetics Shares to one Shecom Share is
referred to herein as the "Conversion Ratio." The Conversion Ratio equals the
fraction (i) having a numerator equal to 21,875,000, and (ii) having a
denominator equal to 23,457,737, the aggregate number of currently issued and
outstanding Shecom Shares in addition to such Shecom Shares as would be issued
upon exercise of the Shecom Outstanding Warrants (as hereinafter defined). The
Conversion Ratio shall be subject to equitable adjustment in the event of any
stock split, stock dividend, reverse stock split, or other change in the number
of ESCAgenetics and Shecom Shares outstanding (other than in connection with the
exercise of the Outstanding Warrants).
(E) A new Section 7.2 shall be inserted to read as follows:
7.2 Exchange of Outstanding Warrants. Subject to the terms and conditions
set forth in this Agreement, at and as of the Effective Time, each of the
2,200,000 outstanding warrants to acquire Shecom Shares set forth on Section 2.1
above (which shall, if necessary, be amended by the parties as of the Effective
Date) that remain outstanding as of the Effective Time (collectively the "Shecom
Outstanding Warrants"), shall be converted by ESCAgenetics into warrants to
acquire 2,051,619 ESCAgenetics Shares based on the Conversion Ratio of
0.09325258146.
(F) A new Section 7.3 shall be inserted to read as follows:
7.3 ESCAgenetics Shares to be Reserved. Subject to the terms and conditions
set forth in this Agreement, at and after the Closing, ESCAgenetics shall
reserve such number of ESCAgenetics Shares as are required for issuance in
connection with the exercise of the Shecom Outstanding Warrants, including any
adjustments by reason of the anti-dilution provisions contained therein.
(F) Section 7.2 of the Merger Agreement is hereby deleted in its entirety.
(G) Section 7.3 of the Merger Agreement is hereby renumbered 7.4.
2
(H) Section 14 of the Merger Agreement is hereby amended by deleting
therefrom the last sentence in its entirety.
Except for the specific changes provided for in this section, all terms and
conditions of the Merger Agreement shall remain and are in full force and
effect.
2. Governing Law. This Amendment shall be governed by and construed in.
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.
3. Miscellaneous. This Amendment shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
3
IN WITNESS WHEREOF, each of the following parties have caused this
Amendment to be duly executed as of the 24th day of September 2003.
ESCAGENETICS CORPORATION,
a Delaware corporation
By:-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
SHECOM ACQUISITION CORPORATION,
a Colorado corporation
By:----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
SHECOM CORPORATION,
a Colorado corporation
By:----------------------------------------
Name: Xxxxxxx X. Trad
Title: President
