AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement"), dated as of
the 25th day of March, 2005, by and between Organic Xxxxx.xxx, Inc., a Nevada
corporation ("Organic"), and Inhibetex Therapeutics, Inc., a Colorado
corporation ("Inhibetex"), and the shareholders of Inhibetex ("Shareholders"),
with reference to the following:
A. Organic is a Nevada corporation organized on January 19, 2000.
Organic has authorized capital stock of 50,000,000 shares of common stock,
$.001 par value ("Organic Common Stock"), of which 2,323,000 shares are
issued and outstanding.
B. Inhibetex is a privately held corporation organized under the laws
of the State of Colorado on May 11, 2004. Inhibetex has authorized capital
stock of 210,000 shares, $.01 par value per share, 110,000 shares of which
are authorized for the issuance of common stock ("Inhibetex Common Stock")
and 100,000 of which are authorized for the issuance of preferred stock. Of
such shares, 104,000 shares of Inhibetex Common Stock and no shares of
preferred stock are issued and outstanding.
C. The respective Boards of Directors of Organic and Inhibetex have
deemed it advisable and in the best interests of Organic and Inhibetex and
their respective shareholders that Inhibetex be acquired by Organic,
pursuant to the terms and conditions set forth in this Agreement.
D. Organic and Inhibetex propose to enter into this Agreement which
provides among other things that all of the outstanding shares of Inhibetex
Common Stock be acquired by Organic, in exchange for 11,128,000 shares of
restricted Organic Common Stock and such additional items as more fully
described in the Agreement.
E. The parties desire the transaction to qualify as a tax-free
reorganization under Section 368 (a)(1)(B) of the Internal Revenue Code of
1986, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE ACQUISITION
1.01 At the Effective Time (as defined in Section 2.01), subject to the
terms and conditions herein, each share of Inhibetex Common Stock issued and
outstanding immediately prior to the Effective Time shall be acquired by Organic
in exchange for 107 fully paid and nonassessable restricted shares of Organic
Common Stock (the "Organic Shares") (the exchange of all shares of Inhibetex
Common Stock for Organic Shares shall constitute the "Exchange"). The Organic
Shares shall be issued as set forth in EXHIBIT A to this Agreement.
1.02 As of the Effective Time, each outstanding stock certificate that
immediately prior to the Effective Time represented shares of Inhibetex Common
Stock shall be deemed for all purposes to evidence ownership and to represent
the number of shares of Organic Common Stock for which such shares of Inhibetex
Common Stock have been exchanged pursuant to Section 1.01. The record holder of
each outstanding certificate representing shares of Inhibetex Common Stock
shall, after the Effective Time, be entitled to vote the shares of Organic
Common Stock for which such shares of Inhibetex Common Stock have been exchanged
on any matters on which the holders of Organic Common Stock are entitled to
vote. After the Effective Time, the holders of certificates evidencing
outstanding shares of Inhibetex Common Stock immediately prior to the Effective
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Time shall deliver such certificates of Inhibetex Common Stock, duly endorsed so
as to make Organic the sole holder thereof, free and clear of all claims, and
encumbrances and Organic shall deliver a transmittal letter directed to the
transfer agent of Organic directing the issuance of the Organic Shares to the
shareholders of Inhibetex as set forth on EXHIBIT A of this Agreement. Any
shares of Organic Common stock issued pursuant to this Agreement will not be
transferable except (a) pursuant to an effective registration statement under
the Securities Act or (b) upon receipt by Organic of a written opinion of
counsel for the holder reasonably satisfactory to Organic to the effect that the
proposed transfer is exempt from the registration requirements of the Securities
Act of 1933, as amended, and relevant state securities laws. Restrictive
legends shall be placed on all certificates representing Organic Common stock
issued pursuant to this Agreement as set forth in Section 11.02.
In the event any certificate for Inhibetex Common Stock has been lost,
stolen or destroyed, Organic shall issue and pay in exchange for such lost,
stolen or destroyed certificate, promptly following its receipt of an affidavit
of that fact by the holder thereof, such shares of Organic Common Stock as may
be required pursuant to this Agreement; provided that, such holder shall be
required to provide to Organic an executed indemnification agreement, in a form
reasonably acceptable to Organic, whereby such holder indemnifies Organic
against any loss or liability relating to Organic's issuance of certificates
pursuant to this paragraph.
1.03 At the Effective Time, all of Inhibetex's rights and obligations
under certain convertible debt securities issued by Inhibetex on or prior to the
date hereof, as identified on Schedule CC.1 (the "Convertible Securities") shall
be exchanged for like convertible securities of Organic dated as of the
Effective Date. On the Effective Date, each holder of a Convertible Security
shall deliver such Convertible Security to Organic and receive in exchange a
like convertible security of Organic. The Convertible Securities provide that
holders of the Convertible Securities may convert the outstanding principal and
interest on each such Convertible Security into shares of Inhibetex common stock
at a price per share equal to 75% of the average closing price of Inhibetex
common stock for the first 30 days immediately following the date Inhibetex
begins trading as a public company. As exchanged, the Convertible Securities
shall contain the same terms and conditions set forth therein, except that the
outstanding principal and interest on each Convertible Security shall be
convertible into shares of Organic common stock at a purchase price per share
equal to 75% of the average closing price of Organic common stock for the first
30 days immediately following the Effective Date.
1.04 Following the Effective Time, there will be a total of 13,451,000
shares of Organic Common Stock issued and outstanding.
1.05 Following the Effective Time, Inhibetex will be a wholly
owned subsidiary of Organic.
ARTICLE 2
THE CLOSING
2.01 Subject to the terms and conditions herein, the consummation of
the transactions contemplated by this Agreement (the "Closing") shall take place
at the offices of Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP on or before April 15, 2005
(the "Closing Date") or at such other place or date and time as may be agreed to
in writing by the parties hereto at the earliest practicable time after
satisfaction or waiver of the conditions hereof, but in no event later than
fifteen (15) days after such conditions have been satisfied or waived. On the
Closing Date, or as soon thereafter as practicable, to effect the Exchange, the
parties hereto will cause the Articles of Exchange to be filed with the Nevada
Secretary of State and a Statement of Share Exchange with the Colorado Secretary
of State in accordance with the laws of each such State. The Exchange shall be
effective at such time that the Articles of Exchange and Statement of Share
Exchange are filed with the Nevada Secretary of State and Colorado Secretary of
State, as applicable, or such later time that the parties specify in such
documents on file with each such State (the "Effective Time" or "Effective
Date").
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2.02 The following conditions are a part of this Agreement and must be
completed on or as of the Closing Date, or such other date specified by the
parties:
(a) Immediately after the Effective Time, Xxx X. Xxxxx, the sole
director of Organic immediately prior to the Effective Time, will appoint
Xxxxx Xxxx as a member of the Board of Directors of Organic. Immediately
following the appointment of Xx. Xxxx to the Board of Directors, Xxx X.
Xxxxx will resign as a member of the Board of Directors of Organic.
(b) Immediately after the Effective Time, Xxx X. Xxxxx, the sole
officer of Organic immediately prior to the Effective Time, will resign as
an officer of Organic and Xxxxx Xxxx will be appointed President of Organic
and Xxxxxx X. Xxxxx will be appointed Secretary and Treasurer of Organic.
(c) Prior to Closing, Organic shall obtain the necessary board and
shareholder approval to amend its Articles of Incorporation to (i) change
the name of the Company to Inhibetex Therapeutics Corporation, or such
similar name as is available in the State of Nevada and (ii) increase the
authorized common stock from 50,000,000 to 200,000,000, par value $.001 and
to add a class of preferred stock in the amount of 10,000,000 shares, $.001
par value with rights and preferences to be determined by the board of
directors.
(d) Prior to Closing, Organic shall obtain the necessary board and
shareholder approval to establish a Stock Option Plan and to reserve
1,950,000 shares of common stock for use pursuant to the Stock Option Plan.
(e) Prior to Closing, Organic shall obtain the necessary board and
shareholder approval to sell, spin-off or otherwise dispose of its
operations, including management, assets and liabilities, except as
otherwise set forth herein, and shall complete such sale, spin-off or other
disposition in a manner satisfactory to Inhibetex in its sole discretion.
(f) At Closing, Inhibetex will pay off all Organic loans plus
interest, estimated to be approximately $38,000. (See EXHIBIT C).
(g) At Closing, Inhibetex will warrant and provide evidence that it is
a party in good standing to that certain Cooperative Research and
Development Agreement between Inhibetex and the VA Medical Center in Tampa,
Florida.
(h) Within thirty (30) days after Closing, Inhibetex will apply for a
listing with Standard and Poor's.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ORGANIC
Organic hereby represents and warrants to Inhibetex as follows:
3.01 Attached hereto is each of the following:
(a) Financial Statements. Audited financial statements of Organic
including, but not limited to, balance sheets and profit and loss statements
from the fiscal years ended December 31, 2003 and 2004, prepared in accordance
with generally accepted accounting principles and which fairly present the
financial condition of Organic at the dates thereof. (SCHEDULE A)
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(b) Property. An accurate list and description of all property, real or
personal, owned by Organic of a value equal to or greater than $1,000.00.
(SCHEDULE B)
(c) Liens and Liabilities. A complete and accurate list of all material
liens, encumbrances, easements, security interests or similar interests in or on
any of the assets listed on Schedule A. (SCHEDULE C) A complete and accurate
list of all debts, liabilities and obligations of Organic incurred or owing as
of the date of this Agreement. (SCHEDULE C.1)
(d) Leases and Contracts. A complete and accurate list describing all
material terms of each lease (whether of real or personal property) and each
contract, promissory note, mortgage, license, franchise, or other written
agreement to which Organic is a party which involves or can reasonably be
expected to involve aggregate future payments or receipts by Organic (whether by
the terms of such lease, contract, promissory note, license, franchise or other
written agreement or as a result of a guarantee of the payment of or indemnity
against the failure to pay same) of $1,000.00 or more annually during the
twelve-month period ended December 31, 2004 or any consecutive twelve-month
period thereafter, except any of said instruments which terminate or are
cancelable without penalty during such twelve-month period. (SCHEDULE D)
(e) Loan Agreements. Complete and accurate copies of all loan agreements
and other documents with respect to obligations of Organic for the repayment of
borrowed money. (SCHEDULE E)
(f) Consents Required. A complete list of all agreements wherein consent to
the transaction herein contemplated is required to avoid a default thereunder;
or where notice of such transaction is required at or subsequent to Closing, or
where consent to an acquisition, consolidation, or sale of all or substantially
all of the assets is required to avoid a default thereunder. (SCHEDULE F)
(g) Corporate Records. Complete and accurate copies of (i) the Certificate
and Articles of Incorporation, (ii) Bylaws and (iii) all minute books, stock
record books and other records of Organic together with all amendments thereto
to the date hereof. (SCHEDULE G)
(h) Shareholders. A complete list of all persons or entities of record
holding capital stock of Organic (as certified by Organic's transfer agent) or
any rights to subscribe for, acquire, or receive shares of the capital stock of
Organic (whether warrants, calls, options, or conversion rights), including
copies of all stock option plans whether qualified or nonqualified, and other
similar agreements. (SCHEDULE H)
(i) Officers and Directors. A complete and current list of all Officers and
Directors of Organic, each of whom shall resign effective as of the Effective
Date. (SCHEDULE I)
(j) Salary Schedule. A complete and accurate list (in all material
respects) of the names and the current salary rate for each present employee of
Organic who received $1,000.00 or more in aggregate compensation from Organic
whether in salary, bonus or otherwise, during the year 2004, or who is presently
scheduled to receive compensation from Organic whether in a salary, bonus or
otherwise in excess of $1,000.00 during the year ending December 2005, including
in each case the amount of compensation received or scheduled to be received,
and a schedule of the hourly rates of all other employees listed according to
departments. All such employees are "at will" employees of Organic. (SCHEDULE J)
(k) Litigation. A complete and accurate list (in all material respects) of
all material civil, criminal, administrative, arbitration or other such
proceedings or investigations (including without limitations unfair labor
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practice matters, labor organization activities, environmental matters and civil
rights violations) pending or, to the knowledge of Organic threatened, which
may materially and adversely affect Organic. (SCHEDULE K)
(l) Tax Returns. Accurate copies of all Federal, State and local tax
returns for Organic for the fiscal years ending December 31, 2003 and 2004.
(SCHEDULE L)
(m) Agency Reports. Copies of all material reports or filings (and a list
of the categories of reports or filings made on a regular basis) made by Organic
under ERISA, EEOC, FDA and all other governmental agencies (federal, state or
local) during the last fiscal year. (SCHEDULE M)
(n) Banks. A true and complete list (in all material respects), as of the
date of this Agreement, showing (1) the name of each bank in which Organic has
an account or safe deposit box, and (2) the names and addresses of all
signatories. (SCHEDULE N)
(o) Jurisdictions Where Qualified. A list of all jurisdictions wherein
Organic is qualified to do business and is in good standing. (SCHEDULE O)
(p) Subsidiaries. A complete list of all subsidiaries of Organic. (SCHEDULE
P) The term "Subsidiary" or "Subsidiaries" shall include corporations,
unincorporated associations, partnerships, joint ventures, or similar entities
in which Organic has an interest, direct or indirect.
(q) Union Matters. An accurate list and description (in all material
respects) of all union contracts and collective bargaining agreements of
Organic, if any. (SCHEDULE Q)
(r) Employee and Consultant Contracts. A complete and accurate list of all
employee and consultant contracts which Organic may have, other than those
listed in the schedule on Union Matters. (SCHEDULE R)
(s) Employee Benefit Plans. Complete and accurate copies of all salary,
stock options, bonus, incentive compensation, deferred compensation, profit
sharing, retirement, pension, group insurance, disability, death benefit or
other benefit plans, trust agreements or arrangements of Organic in effect on
the date hereof or to become effective after the date thereof, together with
copies of any determination letters issued by the Internal Revenue Service with
respect thereto. (SCHEDULE S)
(t) Insurance Policies. A complete and accurate list (in all material
respects) and a description of all material insurance policies naming Organic as
an insured or beneficiary or as a loss payable payee or for which Organic has
paid all or part of the premium in force on the date hereof, specifying any
notice or other information possessed by Organic regarding possible claims
thereunder, cancellation thereof or premium increases thereon, including any
policies now in effect naming Organic as beneficiary covering the business
activities of Organic. (SCHEDULE T)
(u) Customers. A complete and accurate list (in all material respects) of
the customers of Organic, including presently effective contracts of Organic or
to be assigned to Organic, accounting for the principle revenues of Organic,
indicating the dollar amounts of gross income of each such customer for the
period ended December 31, 2004. (SCHEDULE U)
(v) Licenses and Permits. A complete list of all licenses, permits and
other authorizations of Organic. (SCHEDULE V)
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3.02 Organization, Standing and Power. Organic is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada with all requisite corporate power to own or lease its properties and
carry on its businesses as are now being conducted.
3.03 Qualification. Organic is duly qualified and is licensed as a foreign
corporation authorized to do business in each jurisdiction wherein it conducts
business operations. Such jurisdictions, which are the only jurisdictions in
which Organic is duly qualified and licensed as a foreign corporation, are shown
in Schedule O.
3.04 Capitalization of Organic. The authorized capital stock of Organic
consists of 50,000,000 shares of Common Stock, $.001 par value, of which the
only shares issued and outstanding are 2,323,000 issued to shareholders listed
on Schedule H, which shares were duly authorized, validly issued and fully paid
and nonassessable, and were issued in accordance with the registration or
qualification provisions of the Securities Act of 1933, as amended (the "Act")
and any relevant state securities laws or pursuant to valid exemptions
therefrom. There are no preemptive rights with respect to the Organic Common
Stock and the shares of Organic Common Stock are free from restrictions on
transfer (except as required by law) or any options, liens, pledges, security
interests, encumbrances or charges of any kind. Organic has no other equity
securities or securities containing equity features authorized, issued or
outstanding. Except as identified on Schedule H hereto, there are no agreements
or other rights or arrangements existing which provide for the sale or issuance
of capital stock by Organic, and there are no rights, subscriptions, warrants,
options, conversion rights or other agreements of any kind outstanding to
purchase or otherwise acquire from Organic any shares of capital stock or other
securities of Organic. There are no agreements or other obligations (contingent
or otherwise) which may require Organic to repurchase or otherwise acquire any
shares of its capital stock. Organic does not own, and is not a party to a
contract to acquire, any equity securities or other securities of any entity or
director or indirect equity or ownership interest in any other entity. Organic
is not a party to, and there do not exist any voting trusts, proxies, or other
contracts with respect to the voting of shares of capital stock of Organic.
3.05 Authority. The execution and delivery of this Agreement and
consummation of the transactions contemplated herein have been duly authorized
by all necessary corporate actions, including but not limited to duly and
validly authorized action and approval by the Board of Directors, on the part of
Organic. This Agreement constitutes the valid and binding obligation of Organic
enforceable against it in accordance with its terms, subject to the principles
of equity applicable to the availability of the remedy of specific performance.
This Agreement has been duly executed by Organic and the execution and delivery
of this Agreement and the consummation of the transactions contemplated by this
Agreement shall not result in any breach of any terms or provisions of Organic's
Certificate and Articles of Incorporation or Bylaws or of any other agreement,
court order or instrument to which Organic is a party or bound by.
3.06 Absence of Undisclosed Liabilities. Organic has no material
liabilities of any nature, whether fixed, absolute, contingent or accrued, which
were not reflected on the financial statements set forth in Schedule A or
otherwise disclosed in this Agreement or any of the Schedules or Exhibits
attached hereto. As of the Effective Time, Organic shall have no assets or
liabilities other than those resulting from the acquisition of Inhibetex, except
those to be paid by Inhibetex listed on Exhibit C.
3.07 Absence of Changes. Since December 31, 2004 there has not been any
material adverse change in the condition (financial or otherwise), assets,
liabilities, earnings or business of Organic, except for changes resulting from
completion of those transactions described in Section 2.02(e) and Section 5.01.
3.08 Tax Matters. All taxes and other assessments and levies which Organic
is required by law to withhold or to collect have been duly withheld and
collected, and have been paid over to the proper government authorities or are
held by Organic in separate bank accounts for such payment or are represented by
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depository receipts, and all such withholdings and collections and all other
payments due in connection therewith (including, without limitation, employment
taxes, both the employee's and employer's share) have been paid over to the
government or placed in a separate and segregated bank account for such purpose.
There are no known deficiencies in income taxes for any periods and all returns,
declarations, reports, estimates and statements required have been filed. There
are no liens or taxes upon any assets of Organic, except taxes not yet due.
Further, the representations and warranties as to absence of undisclosed
liabilities contained in Section 3.06 includes any and all tax liabilities of
whatsoever kind or nature (including, without limitation, all federal, state,
local and foreign income, profit, franchise, sales, use and property taxes) due
or to become due, incurred in respect of or measured by Organic income or
business prior to the Effective Date.
3.09 Title to Assets. Except for liens set forth in Schedule C, Organic is
the sole unconditional owner of, with good and marketable title to, all assets
listed in the schedules as owned by it and all other property and assets are
free and clear of all mortgages, liens, pledges, charges or encumbrances of any
nature whatsoever.
3.10 Books and Records. The books of account, minute books, stock record
books, and other records of Organic, complete copies of which have been made
available to Inhibetex, have been properly kept and contain no inaccuracies
except for inaccuracies that would not, individually or in the aggregate,
reasonably be expected to have a material effect on Organic or Inhibetex.
3.11 Agreements in Force and Effect. Except as set forth in Schedules D and
E, all material contracts, agreements, plans, promissory notes, mortgages,
leases, policies, licenses, franchises or similar instruments to which Organic
is a party are valid and in full force and effect on the date hereof, and
Organic has not breached any material provision of, and is not in default in any
material respect under the terms of, any such contract, agreement, plan,
promissory note, mortgage, lease, policy, license, franchise or similar
instrument which breach or default would have a material adverse effect upon the
business, operations or financial condition of Organic.
3.12 Legal Proceedings, Etc. Except as set forth in Schedule K, there are
no civil, criminal, administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of either Organic or the
shareholders thereof, threatened, in which, individually or in the aggregate, an
adverse determination would materially and adversely affect the assets,
properties, business or income of Organic. Organic has substantially complied
with, and is not in default in any material respect under, any laws, ordinances,
requirements, regulations or orders applicable to its businesses.
3.13 Governmental Regulation. To the knowledge of Organic and except as set
forth in Schedule K, Organic is not in violation of or in default with respect
to any applicable law or any applicable rule, regulation, order, writ or decree
of any court or any governmental commission, board, bureau, agency or
instrumentality, or delinquent with respect to any report required to be filed
with any governmental commission, board, bureau, agency or instrumentality which
violation or default could have a material adverse effect upon the business,
operations or financial condition of Organic.
3.14 Brokers and Finders. Organic shall be solely responsible for payment
to any broker or finder retained by Organic for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated herein.
Organic has not agreed to pay any fees or commissions to any party.
3.15 Accuracy of Information. No representation or warranty by Organic
contained in this Agreement and no statement contained in any certificate or
other instrument delivered or to be delivered to Inhibetex pursuant hereto or in
connection with the transactions contemplated hereby (including without
limitation all Schedules and exhibits hereto) contains or will contain any
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untrue statement of material fact or omits or will omit to state any material
fact necessary in order to make the statements contained herein or therein not
misleading.
3.16 Subsidiaries. Except as listed in Schedule P, Organic does not have
any other subsidiaries or own capital stock of any other corporation.
3.17 Consents. Except as listed in Schedule F, no consent or approval of,
or registration, qualification or filing with, any governmental authority or
other person is required to be obtained or accomplished by Organic or any
shareholder thereof in connection with the consummation of the transactions
contemplated hereby.
3.18 Employees. Except as listed in Schedule R, (i) no Organic employee or
group of employees has any plans to terminate his, her or its employment; (ii)
Organic has no material labor relations problem pending and its labor relations
are satisfactory; (iii) there are no workers' compensation claims pending
against Organic nor is Organic aware of any facts that would give rise to such a
claim; and (iv) no employee of Organic is subject to any secrecy or
noncompetition agreement or any other agreement or restriction of any kind that
would impede in any way the ability of such employee to carry out fully all
activities of such employee in furtherance of the business of Organic or
Inhibetex.
3.19 Environmental Matters. None of the operations of Organic involves the
generation, transportation, treatment, storage or disposal of hazardous waste,
as defined under 40 C.F.R. Parts 260-270 or any state, local or foreign
equivalent.
3.20 Improper Payments. Neither Organic, nor any person acting on behalf of
Organic has made any payment or otherwise transmitted anything of value,
directly or indirectly, to (a) any official or any government or agency or
political subdivision thereof for the purpose of influencing any decision
affecting the business of Organic (b) any customer, supplier or competitor of
Organic or employee of such customer, supplier or competitor, for the purpose of
obtaining, retaining or directing business for Organic or (c) any political
party or any candidate for elective political office nor has any fund or other
asset of Organic been maintained that was not fully and accurately recorded on
the books of account of Organic.
3.21 Copies of Documents. Organic has made available for inspection and
copying by Inhibetex and its duly authorized representatives, and will continue
to do so at all times, true and correct copies of all documents which it has
filed with the Securities and Exchange Commission and all other governmental
agencies which are material to the terms and conditions contained in this
Agreement. Furthermore, all filings by Organic with the Securities and Exchange
Commission, and all other governmental agencies, including but not limited to
the Internal Revenue Service, have contained information which is true and
correct, to the best knowledge of the Board of Directors of Organic, in all
material respects and did not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made therein
not misleading or which could have any material adverse effect upon the
financial condition or operations of Organic or adversely affect the objectives
of this Agreement with respect to Inhibetex including, but not limited to, the
issuance and subsequent trading of the shares of Organic Common Stock to be
received hereby, subject to compliance by the shareholders of Inhibetex with
applicable law. Organic has made all necessary filings with the Securities and
Exchange Commission and other governmental agencies.
3.22 Valid Issuance of Securities. The Organic Common Stock, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid and
non-assessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and under applicable state and
federal securities laws.
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3.23 Directors, Officers and Controlling Shareholders. No director, officer
or controlling shareholder of Organic has been subject to a criminal proceeding,
bankruptcy, Securities and Exchange Commission or NASD censure in the last five
years nor is any such individual under investigation for any of the above.
3.24 Related Party Transactions. Except as otherwise disclosed in its
public filings with the Securities and Exchange Commission, no employee, officer
or director of Organic or member of his or her immediate family is indebted to
Organic, nor is Organic indebted (or committed to make loans or extend or
guarantee credit) to any of them. No member of the immediate family of any
officer or director of Organic is directly or indirectly interested in any
material contract with Organic. No employee, officer or director of Organic, or
member of the immediately family of any such employee, officer or director, has
any direct or indirect interest in a competitor, supplier or customer of Organic
or other party with which Organic transacts business.
3.25 Tax-Free Reorganization. Neither Organic nor any of its officers and
directors has through the date of this Agreement taken or agreed to take any
action that would prevent the Exchange contemplated by this Agreement from
qualifying as a reorganization under Section 368(a) of the Code.
3.26 Full Disclosure. The representations and warranties of Organic
contained in this Agreement (and in any schedule, exhibit, certificate or other
instrument to be delivered under this Agreement) are true and correct in all
material respects, and such representations and warranties do not omit any
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. There is no fact
of which Organic has knowledge that has not been disclosed to Inhibetex pursuant
to this Agreement, including the schedules hereto, all taken together as a
whole, which has had or could reasonably be expected to have a material adverse
effect on Organic or Inhibetex or materially adversely affect the ability of
Organic to consummate in a timely manner the transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
INHIBETEX THERAPEUTICS, INC.
Inhibetex hereby represents and warrants to Organic as follows:
4.01 Inhibetex shall deliver to Organic, on or before Closing, the
following:
(a) Financial Statements. Audited (in the case of the fiscal year
periods) and unaudited (for the quarterly period) financial statements of
Inhibetex including, but not limited to, balance sheets, income statements,
statements of stockholders' equity and statements of cash flows as at and
for the fiscal year ended December 31, 2004, prepared in accordance with
generally accepted accounting principles, consistently applied, and which
fairly present the financial condition and results of operations of
Inhibetex at the dates thereof and for the periods presented. (SCHEDULE AA)
(b) Property. An accurate list and description of all property, real
or personal owned by Inhibetex of a value equal to or greater than
$1,000.00. (SCHEDULE BB)
(c) Liens and Liabilities. A complete and accurate list of all
material liens, encumbrances, easements, security interests or similar
interests in or on any of the assets listed on Schedule AA. (SCHEDULE CC) A
complete and accurate list of all debts, liabilities and obligations of
Inhibetex incurred or owing as of the date of this Agreement. (SCHEDULE
CC.1)
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(d) Leases and Contracts. A complete and accurate list describing all
material terms of material leases (whether of real or personal property)
and each contract, promissory note, mortgage, license, franchise, or other
written agreement to which Inhibetex is a party which involves or can
reasonably be expected to involve aggregate future payments or receipts by
Inhibetex (whether by the terms of such lease, contract, promissory note,
license, franchise or other written agreement or as a result of a guarantee
of the payment of or indemnity against the failure to pay same) of
$1,000.00 or more annually during the twelve-month period ended December
31, 2004 or any consecutive twelve-month period thereafter, except any of
said instruments which terminate or are cancelable without penalty during
such twelve-month period. (SCHEDULE DD)
(e) Loan Agreements. Complete and accurate copies of all loan
agreements and other documents with respect to obligations of Inhibetex for
the repayment of borrowed money. (SCHEDULE EE)
(f) Consents Required. A complete list of all agreements wherein
consent to the transaction herein contemplated is required to avoid a
default thereunder; or where notice of such transaction is required at or
subsequent to Closing, or where consent to an acquisition, consolidation,
or sale of all or substantially all of the assets is required to avoid a
default thereunder. (SCHEDULE FF)
(g) Articles and Bylaws. Complete and accurate copies of the Articles
of Incorporation and Bylaws of Inhibetex, together with all amendments
thereto to the date hereof. (SCHEDULE GG)
(h) Shareholders. A complete list of all persons or entities of record
holding capital stock of Inhibetex or any rights to subscribe for, acquire,
or receive shares of the capital stock of Inhibetex (whether warrants,
calls, options, or conversion rights), including copies of all stock option
plans whether qualified or nonqualified, and other similar agreements.
(SCHEDULE HH)
(i) Officers and Directors. A complete and current list of all
officers and Directors of Inhibetex. (SCHEDULE II)
(j) Salary Schedule. A complete and accurate list (in all material
respects) of the names and the current salary rate or each present employee
of Inhibetex who received $1,000 or more in aggregate compensation from
Inhibetex whether in salary, bonus or otherwise, during the year 2004, or
who is presently scheduled to receive from Inhibetex a salary in excess of
$1,000.00 during the year ending December 31, 2005, including in each case
the amount of compensation received or scheduled to be received, and a
schedule of the hourly rates of all other employees listed according to
departments. (SCHEDULE JJ)
(k) Litigation. A complete and accurate list (in all material
respects) of all material civil, criminal, administrative, arbitration or
other such proceedings or investigations (including without limitations
unfair labor practice matters, labor organization activities, environmental
matters and civil rights violations) pending or, to the knowledge of
Inhibetex threatened, which may materially and adversely affect Inhibetex.
(SCHEDULE KK)
(l) Tax Returns. Accurate copies of all Federal and State tax returns
for Inhibetex, if any. (SCHEDULE LL)
(m) Agency Reports. Copies of all material reports or filings (and a
list of the categories of reports or filings made on a regular basis) made
by Inhibetex under ERISA, EEOC, FDA and all other governmental agencies
(federal, state or local). (SCHEDULE MM)
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(n) Banks. A true and complete list (in all material respects), as of
the date of this Agreement, showing (1) the name of each bank in which
Inhibetex has an account or safe deposit box, and (2) the names and
addresses of all signatories. (SCHEDULE NN)
(o) Jurisdictions Where Qualified. A list of all jurisdictions wherein
Inhibetex is qualified to do business and is in good standing. (SCHEDULE
OO)
(p) Subsidiaries. A complete list of all subsidiaries of Inhibetex.
(SCHEDULE PP) The term "Subsidiary" or "Subsidiaries" shall include
corporations, unincorporated associations, partnerships, joint ventures, or
similar entities in which Inhibetex has an interest, direct or indirect.
(q) Union Matters. An accurate list and description (in all material
respects of union contracts and collective bargaining agreements of
Inhibetex, if any. (SCHEDULE QQ)
(r) Employee and Consultant Contracts. A complete and accurate list of
all employee and consultant contracts which Inhibetex has. (SCHEDULE RR)
(s) Employee Benefit Plans. Complete and accurate copies of all
salary, stock option, bonus, incentive compensation, deferred compensation,
profit sharing, retirement, pension, group insurance, disability, death
benefit or other benefit plans, trust agreements or arrangements of
Inhibetex in effect on the date hereof or to become effective after the
date thereof, together with copies of any determination letters issued by
the Internal Revenue Service with respect thereto. (SCHEDULE SS)
(t) Insurance Policies. A complete and accurate list (in all material
respects) and description of all material insurance policies naming
Inhibetex as an insured or beneficiary or as a loss payable payee or for
which Inhibetex has paid all or part of the premium in force on the date
hereof, specifying any notice or other information possessed by Inhibetex
regarding possible claims thereunder, cancellation thereof or premium
increases thereon, including any policies now in effect naming Inhibetex as
beneficiary covering the business activities of Inhibetex. (SCHEDULE TT)
(u) Customers. A complete and accurate list (in all material respects)
of the customers of Inhibetex, including all presently effective contracts
of Inhibetex to be assigned to Inhibetex, accounting for the principle
revenues of Inhibetex, indicating the dollar amounts of gross revenues of
each such customer for the period ended as of a recent date. (SCHEDULE UU)
(v) Licenses and Permits. A complete list of all licenses, permits and
other authorizations of Inhibetex. (SCHEDULE VV)
4.02 Organization, Standing and Power. Inhibetex is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado with all requisite corporate power to own or lease its properties and
carry on its business as is now being conducted.
4.03 Qualification. Inhibetex is duly qualified and licensed as a foreign
corporation authorized to do business in each jurisdiction wherein it conducts
business operations. Such jurisdictions, which are the only jurisdictions in
which Inhibetex is duly qualified and licensed as a foreign corporation, is
shown in Schedule OO.
4.04 Capitalization of Inhibetex. The authorized capital stock of Inhibetex
consists of 110,000 shares of Common Stock, par value $.01 per share, of which
the only shares issued and outstanding are 104,000 shares issued to the
shareholders listed on Schedule HH, which shares were duly authorized, validly
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issued and fully paid and nonassessable. There are no preemptive rights with
respect to the Inhibetex Common Stock and the shares of Inhibetex Common Stock
are free from restrictions on transfer or any options, liens, pledges, security
interests, encumbrances or charges of any kind. Except as identified on Schedule
CC.1, (i) Inhibetex has no other equity securities or securities containing
equity features authorized, issued or outstanding, (ii) there are no agreements
or other rights or arrangements existing which provide for the sale or issuance
of capital stock by Inhibetex, and (iii) there are no rights, subscriptions,
warrants, options, conversion rights or other agreements of any kind outstanding
to purchase or otherwise acquire from Inhibetex any shares of capital stock or
other securities of Inhibetex. There are no agreements or other obligations
(contingent or otherwise) which may require Inhibetex to repurchase or otherwise
acquire any shares of its capital stock. Inhibetex does not own, and is not a
party to a contract to acquire, any equity securities or other securities of any
entity or director or indirect equity or ownership interest in any other entity.
Inhibetex is not a party to, and there do not exist any voting trusts, proxies,
or other contracts with respect to the voting of shares of capital stock of
Inhibetex.
4.05 Authority. The execution and delivery of this Agreement and
consummation of the transactions contemplated herein have been duly authorized
by all necessary corporate action, including but not limited to duly and validly
authorized action and approval by the Board of Directors, on the part of
Inhibetex. This Agreement constitutes the valid and binding obligation of
Inhibetex, enforceable against it in accordance with its terms, subject to the
principles of equity applicable to the availability of the remedy of specific
performance. This Agreement has been duly executed by Inhibetex and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement shall not result in any breach of
any terms or provisions of Inhibetex's Articles of Incorporation or Bylaws or of
any other agreement, court order or instrument to which Inhibetex is a party or
bound.
4.06 Absence of Undisclosed Liabilities. Inhibetex has no material
liabilities of any nature, whether fixed, absolute, contingent or accrued, which
were not reflected on the financial statements set forth in Schedule AA or
otherwise disclosed in this Agreement or any of the Schedules or Exhibits
attached hereto.
4.07 Absence of Changes. Since inception, there has not been any material
adverse change in the condition (financial or otherwise), assets, liabilities,
earnings or business of Inhibetex, except for changes resulting from completion
of those transactions described in Section 5.02.
4.08 Tax Matters. All taxes and other assessments and levies which
Inhibetex is required by law to withhold or to collect have been duly withheld
and collected, and have been paid over to the proper government authorities or
are held by Inhibetex in separate bank accounts for such payment or are
represented by depository receipts, and all such withholdings and collections
and all other payments due in connection therewith (including, without
limitation, employment taxes, both the employee's and employer's share) have
been paid over to the government or placed in a separate and segregated bank
account for such purpose. There are no known deficiencies in income taxes for
any periods and all returns, declarations, reports, estimates and statements
required have been timely filed. There are no liens or taxes upon any assets of
Inhibetex, except taxes not yet due. Further, the representations and warranties
as to absence of undisclosed liabilities contained in Section 4.06 includes any
and all tax liabilities of whatsoever kind or nature (including, without
limitation, all federal, state, local and foreign income, profit, franchise,
sales, use and property taxes) due or to become due, incurred in respect of or
measured by Inhibetex income or business prior to the Effective Time.
4.09 Title to Assets. Except for liens set forth in Schedule CC, Inhibetex
is the sole and unconditional owner of, with good and marketable title to, all
the assets and patents listed in the schedules as owned by them and all other
property and assets are free and clear of all mortgages, liens, pledges, charges
or encumbrances of any nature whatsoever.
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4.10 Books and Records. The books of account, minute books, stock record
books, and other records of Inhibetex, complete copies of which have been made
available to Organic, have been properly kept and contain no inaccuracies except
for inaccuracies that would not, individually or in the aggregate, reasonably be
expected to have a material effect on Organic or Inhibetex.
4.11 Agreements in Force and Effect. Except as set forth in Schedules DD
and EE, all material contracts, agreements, plans, promissory notes, mortgages,
leases, policies, licenses, franchises or similar instruments to which Inhibetex
is a party are valid and in full force and effect on the date hereof, and
Inhibetex has not breached any material provision of, and is not in default in
any material respect under the terms of, any such contract, agreement, plan,
promissory note, mortgage, lease, policy, license, franchise or similar
instrument which breach or default would have a material adverse effect upon the
business, operations or financial condition of Inhibetex.
4.12 Legal Proceedings, Etc. There are no civil, criminal, administrative,
arbitration or other such proceedings or investigations pending or, to the
knowledge of Inhibetex , threatened, in which, individually or in the aggregate,
an adverse determination would materially and adversely affect the assets,
properties, business or income of Inhibetex. Inhibetex has substantially
complied with, and is not in default in any material respect under, any laws,
ordinances, requirements, regulations or orders applicable to its businesses.
4.13 Governmental Regulation. To the knowledge of Inhibetex, Inhibetex is
not in violation of or in default with respect to any applicable law or any
applicable rule, regulation, order, writ or decree of any court or any
governmental commission, board, bureau, agency or instrumentality, or delinquent
with respect to any report required to be filed with any governmental
commission, board, bureau, agency or instrumentality which violation or default
could have a material adverse effect upon the business, operations or financial
condition of Inhibetex.
4.14 Broker and Finders. Inhibetex shall be solely responsible for payment
to any broker or finder retained by Inhibetex for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated
herein.
4.15 Accuracy of Information. No representation or warranty by Inhibetex
contained in this Agreement and no statement contained in any certificate or
other instrument delivered or to be delivered to Organic pursuant hereto or in
connection with the transactions contemplated hereby (including without
limitation all Schedules and Exhibits hereto) contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary in order to make the statements contained herein or therein not
misleading.
4.16 Subsidiaries. Inhibetex does not have any other subsidiaries or
own capital stock representing ten percent (10%) or more of the issued and
outstanding stock of any other corporation.
4.17 Consents. No consent or approval of, or registration, qualification or
filing with, any other governmental authority or other person is required to be
obtained or accomplished by Inhibetex or any shareholder thereof, in connection
with the consummation of the transactions contemplated hereby.
4.18 Employees. (i) No Inhibetex employee or group of employees has any
plans to terminate his, her or its employment; (ii) Inhibetex has no material
labor relations problem pending and its labor relations are satisfactory; (iii)
there are no workers' compensation claims pending against Inhibetex nor is
Inhibetex aware of any facts that would give rise to such a claim; and (iv) no
employee of Inhibetex is subject to any secrecy or noncompetition agreement or
any other agreement or restriction of any kind that would impede in any way the
ability of such employee to carry out fully all activities of such employee in
furtherance of the business of Organic or Inhibetex.
13
4.19 Improper Payments. No person acting on behalf of Inhibetex has made
any payment or otherwise transmitted anything of value, directly or indirectly,
to (a) any official or any government or agency or political subdivision thereof
for the purpose of influencing any decision affecting the business of Inhibetex
, or (b) any political party or any candidate for elective political office, nor
has any fund or other asset of Inhibetex been maintained that was not fully and
accurately recorded on the books of account of Inhibetex.
4.20 Copies of Documents. Inhibetex has made available for inspection and
copying by Organic and its duly authorized representatives, and will continue to
do so at all times, true and correct copies of all documents which it has filed
with any governmental agencies which are material to the terms and conditions
contained in this Agreement. Furthermore, all filings by Inhibetex with
governmental agencies, including but not limited to the Internal Revenue
Service, have contained information which is true and correct in all material
respects and did not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein not
misleading or which could have any material adverse effect upon the financial
condition or operations of Inhibetex or adversely affect the objectives of this
Agreement.
4.21 Investment Intent of Shareholders. To the knowledge of Inhibetex, the
shares of Organic being acquired by each respective Inhibetex shareholder
pursuant to this Agreement for his or her own account and for investment and not
with a view to the public resale or distribution of such shares and further
acknowledges that the shares being issued have not been registered under the
Securities Act and are "restricted securities" as that term is defined in Rule
144 promulgated under the Securities Act and must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available.
4.22 Directors, Officers and Controlling Shareholders. No director, officer
and controlling shareholder of Inhibetex has been subject to a criminal
proceeding, bankruptcy, Securities and Exchange Commission or NASD censure in
the last five years nor is any such individual under investigation for any of
the above.
4.23 Related Party Transactions. Except as identified on Schedule DD, no
employee, officer or director of Inhibetex or member of his or her immediate
family is indebted to Inhibetex, nor is Inhibetex indebted (or committed to make
loans or extend or guarantee credit) to any of them. No member of the immediate
family of any officer or director of Inhibetex is directly or indirectly
interested in any material contract with Inhibetex. No employee, officer or
director of Inhibetex, or member of the immediately family of any such employee,
officer or director, has any direct or indirect interest in a competitor,
supplier or customer of Inhibetex or other party with which Inhibetex transacts
business.
4.24 Tax-Free Reorganization. Neither Inhibetex nor any of its officers and
directors has through the date of this Agreement taken or agreed to take any
action that would prevent the Exchange contemplated herein from qualifying as a
reorganization under Section 368(a) of the Code.
4.25 Full Disclosure. The representations and warranties of Inhibetex
contained in this Agreement (and in any schedule, exhibit, certificate or other
instrument to be delivered under this Agreement) are true and correct in all
material respects, and such representations and warranties do not omit any
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. There is no fact
of which Inhibetex has knowledge that has not been disclosed to Organic pursuant
to this Agreement, including the schedules hereto, all taken together as a
whole, which has had or could reasonably be expected to have a material adverse
effect on Organic or Inhibetex or materially adversely affect the ability of
Inhibetex to consummate in a timely manner the transactions contemplated hereby.
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ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME OF THE ACQUISITION
5.01 Conduct and Transactions of Organic. During the period from the
date hereof to the Effective Date, Organic shall:
(a) Except as set forth in Section 2.02(e), conduct its operations in
the ordinary course of business, including but not limited to, paying all
obligations as they mature, complying with all applicable tax laws, filing
all tax returns required to be filed and paying all taxes due;
(b) Maintain its records and books of account in a manner that fairly
and correctly reflects its income, expenses, assets and liabilities.
Organic shall not during such period, except in the ordinary course of
business, without the prior written consent of Inhibetex:
(c) Except as otherwise contemplated or required by this Agreement,
sell, dispose of or encumber any of its properties or assets;
(d) Except as set forth in paragraph 5.01(c) above, declare or pay any
dividends on shares of its capital stock or make any other distribution of
assets to the holders thereof;
(e) Except as set forth in paragraph 5.01(d) above, issue, reissue or
sell, or issue capital stock of Organic or options or rights to subscribe
to, or enter into any contract or commitment to issue, reissue or sell, any
shares of its capital stock or acquire or agree to acquire any shares of
its capital stock;
(f) Except as otherwise contemplated and required by this Agreement,
amend its Articles of Incorporation or merge or consolidate with or into
any other corporation or sell all or substantially all of its assets or
change in any manner the rights of its capital stock or other securities;
(g) Except as contemplated or required by this Agreement, pay or incur
any obligation or liability, direct or contingent, of more than $1,000;
(h) Incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise become responsible for obligations of any other party,
or make loans or advances to any other party;
(i) Make any material change in its insurance coverage;
(j) Increase in any manner the compensation, direct or indirect, of
any of its officers or executive employees; except in accordance with
existing employment contracts;
(k) Enter into any agreement or make any commitment to any labor union
or organization;
(l) Make any capital expenditures.
5.02 Conduct and Transactions of Inhibetex. During the period from the
date hereof to Effective Date, Inhibetex shall:
15
(a) Obtain an investment letter from each shareholder of Inhibetex in
a form substantially like that attached hereto as EXHIBIT B.
(b) Conduct the operations of Inhibetex in the ordinary course of
business.
Inhibetex shall not during such period, except in the ordinary course
of business, without the prior written consent of Organic:
(c) Except as otherwise contemplated or required by this Agreement,
enter negotiations, sell, dispose of or encumber any of the properties or
assets of Inhibetex;
(d) Declare or pay any dividends on shares of its capital stock or
make any other distribution of assets to the holders thereof;
(e) Issue, reissue or sell, or issue capital stock of Inhibetex or
options or rights to subscribe to, or enter into any contract or commitment
to issue, reissue or sell, any shares of its capital stock or acquire or
agree to acquire any shares of its capital stock;
(f) Except as otherwise contemplated and required by this Agreement,
amend its Articles of Incorporation or merge or consolidate with or into
any other corporation or sell all or substantially all of its assets or
change in any manner the rights of its capital stock or other securities;
(g) Except as otherwise contemplated and required by this Agreement,
pay or incur any obligation or liability, direct or contingent, of more
than $1,000;
(h) Incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise become responsible for obligations of any other party,
or make loans or advances to any other party;
(i) Make any material change in its insurance coverage;
(j) Increase in any manner the compensation, direct or indirect, of
any of its officers or executive employees; except in accordance with
existing employment contracts;
(k) Enter into any agreement or make any commitment to any labor union
or organization;
(l) Make any material capital expenditures in excess of $1,000.00. (m)
Allow any of the foregoing actions to be taken by any subsidiary of
Inhibetex.
ARTICLE 6
RIGHTS OF INSPECTION
6.01 Due Diligence; Access to Information; Confidentiality.
(a) Between the date hereof and the Closing Date, Organic and
Inhibetex shall afford to the other party and their authorized
representatives the opportunity to conduct and complete a due diligence
investigation of the other party as described herein. In light of the
foregoing, each party shall permit the other party full access on
reasonable notice and at reasonable hours to its properties and shall
disclose and make available (together with the right to copy) to the other
16
party and its officers, employees, attorneys, accountants and other
representatives (hereinafter collectively referred to as
"Representatives"), all books, papers, and records relating to the assets,
-----------------
stock, properties, operations, obligations and liabilities of such party
and its subsidiaries, including, without limitation, all books of account
(including, without limitation, the general ledger), tax records, minute
books of directors' and stockholders' meetings, organizational documents,
bylaws, contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files (including, without limitation,
legal research memoranda), attorney's audit response letters, documents
relating to assets and title thereto (including, without limitation,
abstracts, title insurance policies, surveys, environmental reports,
opinions of title and other information relating to the real and personal
property), plans affecting employees, securities transfer records and
stockholder lists, and any books, papers and records (collectively referred
to herein as "Evaluated Material") relating to other assets or business
---------------------
activities in which such party may have a reasonable interest, and
otherwise provide such assistance as is reasonably requested in order that
each party may have a full opportunity to make such investigation and
evaluation as it shall reasonably desire to make of the business and
affairs of the other party; provided, however, that the foregoing rights
granted to each party shall, whether or not and regardless of the extent to
which the same are exercised, in no way affect the nature or scope of the
representations, warranties and covenants of the respective party set forth
herein. In addition, each party and its Representatives shall cooperate
fully (including providing introductions, where necessary) with such other
party to enable the party to contact third parties, including customers,
prospective customers, specified agencies or others as the party deems
reasonably necessary to complete its due diligence; provided that such
party agrees not to initiate such contacts without the prior approval of
the other party, which approval will not be unreasonably withheld.
(b) Organic and Inhibetex agree that each such party will not use the
Evaluation Material for any purpose other than in connection with the
transactions contemplated hereunder. Each agrees not to disclose or allow
disclosure to others of any Evaluation Material, except to such party's
Affiliates or Representatives, in each case, to the extent necessary to
permit such Affiliate or Representative to assist such party in connection
with the transactions contemplated hereunder. Each agrees that it will,
within ten (10) days of the other party's request, re-deliver to such party
all copies of that party's Evaluation Material in its possession or that of
its affiliates or Representatives if the Exchange contemplated by this
Agreement does not close as contemplated herein.
(c) In the event any party or anyone to whom Evaluation Material has
been transmitted in accordance with the terms herein is requested in
connection with any proceeding to disclose any Evaluation Material, such
party will give the other party prompt notice of such request so that the
other party may seek an appropriate protective order or other remedy or
waive compliance with this Agreement, and such party will cooperate with
the other party to obtain such protective order. In the event such
protective order is not obtained, the other party waives compliance with
the relevant provisions of this Section, such party (or such person to whom
such request is directed) will furnish only that portion of the Evaluation
Material which is required to be disclosed.
(d) Notwithstanding any of the foregoing, if prior to Closing, for any
reason, the transactions contemplated by this Agreement are not
consummated, neither Organic nor Inhibetex nor any of their Representatives
shall disclose to third parties or otherwise use any Evaluation Material or
other confidential information received from the other party in the course
of investigating, negotiating, and performing the transactions contemplated
by this Agreement; provided, however, that nothing shall be deemed to be
confidential information which:
(i) is or becomes generally available to the public other than
as a result of a disclosure by such party, its affiliates or
Representatives;
17
(ii) was available to such party on a non-confidential basis
prior to its disclosure;
(iii) becomes available to such party on a non-confidential basis
from a source other than the other party or its agents,
advisors or Representatives;
(iv) developed by such party independently of any disclosure by
the other party; or
(v) is disclosed in compliance with Section 6.01(c).
This provision shall not prohibit the disclosure of information required to
be made under federal or state securities laws. If any disclosure is so
required, the party making such disclosure shall consult with the other party
prior to making such disclosure, and the parties shall use all reasonable
efforts, acting in good faith, to agree upon a text for such disclosure which is
satisfactory to both parties.
6.02 Organic and Inhibetex each agree that money damages would not be
sufficient to remedy any breach by the other party of this Section, and that, in
addition to all other remedies, each party against which a breach of this
Section has been committed shall be entitled to specific performance and
injunctive or other equitable relief as a remedy of such breach.
ARTICLE 7
CONDITIONS TO CLOSING
7.01 Conditions to Obligations of Inhibetex. The obligation of
Inhibetex to perform this Agreement is subject to the satisfaction of the
following conditions on or before the Closing unless waived in writing by
Inhibetex.
(a) Representations and Warranties. There shall be no information
disclosed in the schedules delivered by Organic, which in the opinion of
Inhibetex, would materially adversely affect the proposed transaction and
intent of the parties as set forth in this Agreement. The representations
and warranties of Organic set forth in Article 3 hereof shall be true and
correct in all material respects as of the date of this Agreement and as of
the Closing as though made on and as of the Closing, except as otherwise
permitted by this Agreement.
(b) Performance of Obligations. Organic shall have in all material
respects performed all agreements required to be performed by it under this
Agreement and shall have performed in all material respects any actions
contemplated by this Agreement prior to or on the Closing and Organic shall
have complied in all material respects with the course of conduct required
by this Agreement.
(c) Corporate Action. Organic shall have furnished minutes, certified
copies of corporate resolutions and/or other documentary evidence
satisfactory to counsel for Inhibetex that Organic has submitted with this
Agreement and any other documents required hereby to such parties for
approval as provided by applicable law.
(d) Consents. Execution of this Agreement by the shareholders of
Inhibetex and any consents necessary for or approval of any party listed on
any Schedule delivered by Organic whose consent or approval is required
pursuant thereto shall have been obtained.
(e) Statutory Requirements. All statutory requirements for the valid
consummation by Organic of the transactions contemplated by this Agreement
shall have been fulfilled.
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(f) Governmental Approval. All authorizations, consents, approvals,
permits and orders of all federal and state governmental agencies required
to be obtained by Organic for consummation of the transactions contemplated
by this Agreement shall have been obtained.
(g) Market Condition. Up to and including the Closing Date, Organic
shall have maintained its listing on the OTC Bulletin Board, without any
trading and quotation halts or other notices of deficiency received by or
imposed against Organic.
(h) Changes in Financial Condition of Organic. There shall not have
occurred any material adverse change in the financial condition or in the
operations of the business of Organic, except expenditures in furtherance
of this Agreement.
(i) Absence of Pending Litigation. Organic is not engaged in or
threatened with any suit, action, or legal, administrative or other
proceedings or governmental investigations pertaining to this Agreement or
the consummation of the transactions contemplated hereunder.
(j) Authorization for Issuance of Stock. Inhibetex shall have received
in form and substance satisfactory to counsel for Inhibetex a letter
instructing and authorizing the Registrar and Transfer Agent for the shares
of common stock of Organic to issue stock certificates representing
ownership of Organic common stock to Inhibetex shareholders in accordance
with the terms of this Agreement and a letter from said Registrar and
Transfer Agent acknowledging receipt of the letter of instruction and
stating to the effect that the Registrar and Transfer Agent holds adequate
supplies of stock certificates necessary to comply with the letter of
instruction and the terms and conditions of this Agreement.
(k) Books and records. Organic shall delivery to Inhibetex all books
and records of Organic.
(l) Shareholder Approval. The Organic shareholders shall have approved
this Agreement and Plan of Reorganization.
7.02 Conditions to Obligations of Organic. The obligation of Organic
to perform this Agreement is subject to the satisfaction of the following
conditions on or before the Closing unless waived in writing by Organic.
(a) Representations and Warranties. There shall be no information
disclosed in the schedules delivered by Inhibetex, which in the opinion of
Organic, would materially adversely affect the proposed transaction and
intent of the parties as set forth in this Agreement. The representations
and warranties of Inhibetex set forth in Article 4 hereof shall be true and
correct in all material respects as of the date of this Agreement and as of
the Closing as though made on and as of the Closing, except as otherwise
permitted by this Agreement.
(b) Performance of Obligations. Inhibetex shall have in all material
respects performed all agreements required to be performed by it under this
Agreement and shall have performed in all material respects any actions
contemplated by this Agreement prior to or on the Closing and Inhibetex
shall have complied in all respects with the course of conduct required by
this Agreement.
(c) Corporate Action. Inhibetex shall have furnished minutes,
certified copies of corporate resolutions and/or other documentary evidence
satisfactory to Counsel for Organic that Inhibetex has submitted with this
Agreement and any other documents required hereby to such parties for
approval as provided by applicable law.
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(d) Consents. Any consents necessary for or approval of any party
listed on any Schedule delivered by Inhibetex, whose consent or approval is
required pursuant thereto, shall have been obtained.
(e) Financial Statements. Organic shall have been furnished with an
Audited (in the case of the fiscal year periods) and unaudited (for the
quarterly period) financial statements of Inhibetex including, but not
limited to, balance sheets, income statements, statements of stockholders'
equity and statements of cash flows as at and for the fiscal years ended
December 31, 2003 and 2004, prepared in accordance with generally accepted
accounting principles, consistently applied, and which fairly present the
financial condition and results of operations of Inhibetex at the dates
thereof and for the periods presented.
(f) Statutory Requirements. All statutory requirements for the valid
consummation by Inhibetex of the transactions contemplated by this
Agreement shall have been fulfilled.
(g) Governmental Approval. All authorizations, consents, approvals,
permits and orders of all federal and state governmental agencies required
to be obtained by Inhibetex for consummation of the transactions
contemplated by this Agreement shall have been obtained.
(h) Employment Agreements. Existing Inhibetex employment agreements
will have been delivered to counsel for Organic.
(i) Changes in Financial Condition of Inhibetex. There shall not have
occurred any material adverse change in the financial condition or in the
operations of the business of Inhibetex, except expenditures in furtherance
of this Agreement.
(j) Absence of Pending Litigation. Inhibetex is not engaged in or
threatened with any suit, action, or legal, administrative or other
proceedings or governmental investigations pertaining to this Agreement or
the consummation of the transactions contemplated hereunder.
(k) Shareholder Approval. The Inhibetex shareholders shall have
approved this Agreement and Plan of Reorganization.
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.01 Covenant of Further Assurance. The parties covenant and agree
that they shall, from time to time, execute and deliver or cause to be executed
and delivered all such further instruments of conveyance, transfer, assignments,
receipts and other instruments, and shall take or cause to be taken such further
or other actions as the other party or parties to this Agreement may reasonably
deem necessary in order to carry out the purposes and intent of this Agreement.
ARTICLE 9
NATURE OF REPRESENTATIONS
9.01 All statements contained in any written certificate, schedule,
exhibit or other written instrument delivered by Organic or Inhibetex pursuant
hereto, or otherwise adopted by Organic, by its written approval, or by
Inhibetex by its written approval, or in connection with the transactions
contemplated hereby, shall be deemed representations and warranties by Organic
or Inhibetex as the case may be. All representations, warranties and agreements
made by either party shall survive for the period of the applicable statute of
limitations.
20
ARTICLE 10
TERMINATION OF AGREEMENT AND
ABANDONMENT OF REORGANIZATION
10.01 Termination. Anything herein to the contrary notwithstanding,
this Agreement and any agreement executed as required hereunder and the
acquisition contemplated hereby may be terminated at any time before the Closing
as follows:
(a) By mutual written consent of the Boards of Directors of Organic
and Inhibetex.
(b) By the Board of Directors of Organic if any of the conditions set
forth in Section 7.02 shall not have been satisfied by the Closing Date.
(c) By the Board of Directors of Inhibetex if any of the conditions
set forth in Section 7.01 shall not have been satisfied by the Closing
Date.
(d) By the Board of Directors of Inhibetex if this Agreement and Plan
of Reorganization is not duly approved by the stockholders of Inhibetex
following a vote of the stockholders of Inhibetex.
(e) By either of the Boards of Directors of Organic or Inhibetex if
the Closing Date is not on or before March 31, 2005, or such later date as
Organic and Inhibetex may mutually agree (except that a party seeking to
terminate this Agreement pursuant to this clause may not do so if the
failure to consummate the Exchange contemplated by this Agreement by such
date shall be due to the action or failure to act of the party seeking to
terminate the Agreement in breach of such party's obligations under this
Agreement).
10.02 Termination of Obligations and Waiver of Conditions; Payment of
Expenses. In the event this Agreement and the acquisition are terminated and
abandoned pursuant to this Article 10 hereof, this Agreement shall become void
and of no force and effect and there shall be no liability on the part of any of
the parties hereto, or their respective directors, officers, shareholders or
controlling persons to each other. For the costs and expenses incident to its
negotiation and preparation of this Agreement and any of the documents
evidencing the transactions contemplated hereby, including fees, expenses and
disbursements of counsel, Organic shareholders shall bear the expenses incurred
by Organic, and Inhibetex shareholders shall bear the expenses incurred by
Inhibetex.
ARTICLE 11
EXCHANGE OF SHARES
11.01 Exchange of Shares. At the Effective Time, Organic shall issue a
letter to the transfer agent of Organic with a copy of the resolution of the
Board of Directors of Organic authorizing and directing the issuance of Organic
shares as set forth on EXHIBIT A to this Agreement.
11.02 Restrictions on Shares Issued to Inhibetex. Due to the fact that
Inhibetex will receive shares of Organic Common Stock in connection with the
acquisition which have not been registered under the 1933 Act by virtue of the
exemption provided in Section 4(2) of such Act, those shares of Organic will
contain the following legend:
The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares have been
acquired for investment and may not be sold or offered for sale
21
in the absence of an effective Registration Statement for the
shares under the Securities Act of 1933 or an opinion of counsel
to the Corporation that such registration is not required.
ARTICLE 12
MISCELLANEOUS
12.01 Construction. This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada excluding the conflicts of laws.
12.02 Expenses. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
12.03 Notices. All notices necessary or appropriate under this
Agreement shall be effective when personally delivered or deposited in the
United States mail, postage prepaid, certified or registered, return receipt
requested, and addressed to the parties last known address which addresses are
currently as follows:
If to "Organic" If to "Inhibetex"
Organic Xxxxx.xxx, Inc. Inhibetex Therapeutics, Inc.
000 Xxxx 00xx Xxx., Xxxxx 000 0000 Xxxx Xxxxxxxx Xxx.
Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
With copies to: With copies to:
Xxxxxx X. Xxxxxxxxx, Esq. Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
0 Xxxx Xxxxxxxx, Xxxxx 000 3300 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000 00 Xxxxx Xxxxxxx Xxxxxx
Fax: 000-000-0000 Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
12.04 Amendment and Waiver. The parties hereby may, by mutual
agreement in writing signed by or on behalf of each party, amend this Agreement
in any respect. Any term or provision of this Agreement may be waived in
writing signed by an authorized officer at any time by the party against which
such waiver is to be charged, such waiver right shall include, but not be
limited to, the right of either party to:
(a) Extend the time for the performance of any of the obligations of
the other;
(b) Waive any inaccuracies in representations by the other contained
in this Agreement or in any document delivered pursuant hereto;
(c) Waive compliance by the other with any of the covenants contained
in this Agreement, and performance of any obligations by the other; and
(d) Waive the fulfillment of any condition that is precedent to the
performance by the party so waiving of any of its obligations under this
Agreement.
Any writing on the part of a party relating to such amendment, extension or
waiver as provided in this Section 12.04 shall be valid if authorized or
ratified by the Board of Directors of such party.
22
12.05 Remedies not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies by
Organic or Inhibetex shall not constitute a waiver of the right to pursue other
available remedies.
12.06 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.07 Benefit. This Agreement shall be binding upon, and inure to
the benefit of, the respective successors and assigns of Organic and Inhibetex
and its shareholders.
12.08 Entire Agreement. This Agreement and the Schedules and
Exhibits attached hereto, represent the entire agreement of the undersigned
regarding the subject matter hereof, and supersedes all prior written or oral
understandings or agreements between the parties.
12.09 Captions and Section Headings. Captions and section headings
used herein are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
Executed as of the date first written above.
Organic Xxxxx.xxx, Inc. Inhibetex Therapeutics, Inc.
By: /s/ Xxx X. Xxxxx By: /s/ Xxxxx Xxxx
-------------------------- -----------------------
Xxx X. Xxxxx, President Xxxxx Xxxx, President
23
EXHIBIT A
Name of Shareholder Number of Shares
------------------- ----------------
A-1
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER:
ISSUER: Organic Xxxxx.xxx, Inc.
SECURITY: Common Stock, par value $.001
QUANTITY: _______ Shares (the "Securities")
In connection with the purchase of the above-listed Securities of the
Company, I, the purchaser represent to the Company the following:
(1) Investment. I am aware of the Company's business affairs and
-----------
financial condition. I am purchasing the Securities for investment for my own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933 (as
Amended). These securities have not been registered under the Securities Act by
reason of a specific exemption therefrom, which exemption depends on, among
other things, the bona fide nature of the investment intent as expressed herein.
In this connection I understand that, in view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
my representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities or for the period of one year or any other fixed period in the
future.
(2) Restrictions on Transfer Under Securities Act. I further
---------------------------------------------------
acknowledge and understand that the Securities must be held indefinitely unless
they are subsequently registered under the Securities Act or unless an exemption
from such registration is available. Moreover, I understand that the Company is
under no obligation to register the Securities. In addition, I understand that
the certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or unless
the Company receives an opinion of counsel reasonably satisfactory to the
Company that such registration is not required.
(3) Sales Under Rule 144. I am aware of the adoption of Rule 144 by
--------------------
the SEC promulgated under the Securities Act, which in substance permits limited
public resale of securities acquired in a non- public offering subject to the
satisfaction of certain conditions, including: (i) the availability of certain
current public information about the Company, (ii) the resale being made through
a broker in an unsolicited "broker's transaction" or in transactions directly
with a " market maker," and (iv) the amount of securities sold during any
three-month period not exceeding specified limitations (generally 1% of the
total shares outstanding).
(4) Limitations on Rule 144. I further acknowledge and understand that
------------------------
the Company is not now, and at any time I wish to sell the Securities may not
be, satisfying the public information requirement of Rule 144, and, in such
case, I would be precluded from selling the Securities under Rule 144 even if
the minimum holding period had been satisfied.
(5) Sales Not Under Rule 144. I further acknowledge that, if all
----------------------------
the requirements of Rule 144 are not met, then Regulation A, or some other
registration exemption will be required; and that, although Rule 144 is not
exclusive, the staff of the Commission has expressed its opinion (i) that
persons proposing to sell private placement securities other than in a
registered offering or exemption from registration is available for such offers
B-1
or sales, and (ii) that such persons and the brokers who participate in the
transactions do so their own risk.
(6) Stop Transfer Instructions. I further understand that stop
----------------------------
transfer instructions will be in effect with respect to the transfer of the
Securities consistent with the above.
(7) Additional Representations and Warranties. In addition, I represent
-----------------------------------------
and warrant:
(i) That I have had the opportunity to ask questions of, and
receive answers from, the Company ( or any person acting on its
behalf) concerning the Company and my proposed investment in the
Securities;
(ii) That I have concluded that I have sufficient information
upon which to base my decision to acquire the Securities;
(iii) That I have made my own determination of the value of the
Securities and have not relied upon any statements, representations or
warranties of the Company regarding the value of the Securities or the
business prospects of the Company;
(iv) That I understand that in acquiring the Securities, I am
making a highly speculative investment with the knowledge that the
Company is in the initial stages of development;
(v) That I am capable of bearing the economic risk and burdens of
the investment, the possibility of complete loss of all of the
investment, and the possible inability to readily liquidate the
investment due to the lack of public market; and
(vi) That I understand that, in selling and transferring the
Securities, the Company had relied upon an exemption from the
registration requirements of the Securities Act and that, in an
attempt to effect compliance with all the conditions of such
exemption, the Company is relying in good faith upon all of my
foregoing representations and warranties.
SIGNATURE OF PURCHASER
Date: ----------------------- -----------------------------------------
-----------------------------------------
Printed Name
Address:
-----------------------------------------
-----------------------------------------
B-2
EXHIBIT C
LIABILITIES TO BE PAID BY INHIBETEX
C-1
