AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
EDUCATIONAL STORYBOOKS INTERNATIONAL, INC.,
AND
EARTH CARE GLOBAL HOLDINGS, INC.
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter the
"Agreement") is entered into effective as of this day of
December, 1995, by and among Educational Storybooks
International, Inc., a Nevada corporation (hereinafter "ESB");
Xxxxxxx X. Xxxxx, the sole officer and director of ESB,
(hereinafter "Xxxxx") and Earth Care Global Holdings, Inc., a
Florida corporation (hereinafter "Earth Care").
RECITALS:
WHEREAS, ESB is in the process of forming a wholly-owned
subsidiary in the State of Nevada under the name Educational
Resources, Inc., (hereinafter "ERI") and the boards of directors
of ESB, ERI and Earth Care, respectively, deem it advisable and
in the best interests of such corporations and their respective
shareholders that ERI merge with and into Earth Care pursuant to
this Agreement and the Plan and Articles of Merger in the form
attached hereto as Exhibit "A" and pursuant to applicable
provisions of Florida and Nevada law (such transaction hereafter
referred to as the "Merger"). ERI and Earth Care are sometimes
hereinafter collectively referred to as the "Constituent
Corporations".
WHEREAS, ERI shall have an authorized capitalization
consisting of 5,000 shares of no par value common stock, of which
1,000 shares shall be issued and outstanding and owned by ESB as
of the date hereof; and Earth Care has an authorized
capitalization consisting of 1,000,000 shares of preferred stock,
$.01 par value, none of which shares are outstanding and
10,000,000 shares of common stock, $.01 par value ("Earth Care
Common Stock"), of which 743,137 shares shall be issued and
outstanding as of the Closing hereof. All of the outstanding
shares of Earth Care Common Stock are owned by the shareholders
of Earth Care as set forth on the attached Exhibit "B" (hereafter
"Earth Care Shareholders").
NOW THEREFORE, for the mutual consideration set out herein,
and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Plan of Reorganization. The parties hereto do hereby
agree that ERI shall be merged with and into Earth Care upon the
terms and conditions set forth herein. It is the intention of
the parties hereto that this transaction qualify as a tax-free
reorganization under Section 368(a)(2)(E) of the Internal Revenue
Code of 1986, as amended, and related sections thereunder.
2. Terms of Merger. In accordance with the provisions of
this Agreement and the requirements of applicable law, ERI shall
be merged with and into Earth Care as of the Effective Date (the
terms "Closing" and "Effective Date" are defined in Section 7
hereof),
Earth Care shall be the surviving corporation (the "Surviving
Corporation") and the separate existence of ERI shall cease when
the Merger shall become effective. Consummation of the Merger
shall be upon the following terms and subject to the following
conditions:
(a) Corporate Existence
(1) At the Effective Date, the Surviving Corporation
shall continue its corporate existence as a Florida
corporation and (i) it shall thereupon and thereafter
possess all rights, privileges, powers, franchises and
property (real, personal and mixed) of each of the
Constituent Corporations; (ii) all debts due to either of
the Constituent Corporations, on whatever account, all
causes in action and all other things belonging to either of
the Constituent Corporations shall be taken and deemed to be
transferred to and shall be vested in the Surviving
Corporation by virtue of the Merger without further act or
deed; and (iii) all rights of creditors and all liens upon
any property of any of the Constituent Corporations shall be
preserved unimpaired, limited in lien to the property
affected by such liens immediately prior to the Effective
Date, and all debts, liabilities and duties of the
Constituent Corporations shall thenceforth attach to the
Surviving Corporation.
(2) At the Effective Date, (i) the Articles of
Incorporation and the By-laws of Earth Care, as existing
immediately prior to the Effective Date, shall be the
Articles of Incorporation and By-Laws of the Surviving
Corporation; (ii) the members of the Board of Directors of
Earth Care holding office immediately prior to the Effective
Date shall remain as the members of the Board of Directors
of the Surviving Corporation (if on or after the Effective
Date a vacancy exists on the Board of Directors of the
Surviving Corporation, such vacancy may thereafter be filled
in a manner provided by law and the by-laws of the Surviving
Corporation); and (iii) until the Board of Directors of the
Surviving Corporation shall otherwise determine, all persons
who hold offices of Earth Care at the Effective Date shall
hold the same offices of the Surviving Corporation.
(b) re-Merger Events and Recapitalizations.
(1) ESB shall have completed the sale of 700,000 post
split shares of its common stock in a limited offering (the
"Limited Offering") for an aggregate amount of $1,000,000,
which funds shall be on deposit in an escrow account prior
to Closing and shall be disbursed at Closing simultaneous
with the acquisition of Earth Care.
(2) ESB shall have completed the distribution to its
existing shareholders of 950,000 Series A and 950,000 Series
B Warrants to purchase shares of ESB common stock at $2.50
and $4.50 per share, respectively, exercisable at any time
prior to June 30, 1998. The form of the Series A and Series
B Warrants are attached hereto as Exhibit "D". The Warrants
shall not be exercisable unless a current registration
statement is in effect. The Warrants shall be redeemable at
$.01 per Warrant upon 30 day written notice and if the
closing bid price of the common stock equals or exceeds
$4.00 per share for the Series A Warrant and $6.00 per share
for the Series B Warrant at any time for twenty consecutive
trading days.
(3) ESB shall have effectuated a recapitalization
involving a 1 for 16 reverse stock split (the "ESB Reverse
Stock Split") wherein at or prior to closing the Merger, it
shall have 950,000 shares of its common stock issued and
outstanding and no other shares of capital stock issued or
outstanding not taking into account shares sold in the
Limited Offering.
(4) Earth Care shall have completed the issuance of
its shares of common stock including conversion of notes,
payment for expenses, payment for employee compensation,
rights offering and other similar matters as set forth on
Exhibit "B", so that it shall have 743,197 shares
outstanding at the Closing including 20,000 shares issued to
Trinity American Corp.
(c) Conversion of Securities.
As of the Effective Date and without any action on the
part of ESB, ERI, Earth Care or the holders of any of the
securities of any of these corporations each of the following
shall occur:
(1) Immediately prior to Closing, Earth Care shall
have 743,197 shares of Earth Care Common Stock outstanding.
Each share of Earth Care Common Stock issued and outstanding
immediately prior to the Effective Date shall be converted
into 5.6463 shares of ESB Common Stock (after giving effect
to the ESB Reverse Stock Split) or an aggregate of 4,196,316
ESB shares. The holders of these 743,197 Earth shares of
Common Stock are hereinafter referred to as the "Earth Care
Historical Shareholders. All such shares of Earth Care
Common Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each
certificate previously evidencing any such shares shall
thereafter represent the right to receive, upon the
surrender of such certificate in accordance with the
provisions of Section 3 hereof, certificates evidencing such
number of shares of ESB Common Stock into which such shares
of Earth Care Common Stock were converted. The holders of
such certificates previously evidencing shares of Earth Care
Common Stock Earth Care outstanding immediately prior to the
Effective Date shall cease to have any rights with respect
to such shares of Earth Care Common Stock except as
otherwise provided herein or by law;
(2) 353,684 shares of ESB Common Stock shall be
reserved for issuance upon exercise of an existing option
held by Magellan Finance Corp. (the "Magellan Option"). In
the event the Magellan Option is not exercised in whole or
in part, then those shares reserved for the Magellan Option
but not purchased by exercise of said option shall be issued
on a pro rata basis to the Earth Care Historical
Shareholders in proportion to the Earth Care shares they
owned at Closing. It is agreed that the Magellan Option
expires on December 31, 1996.
(3) Any shares of Earth Care Common Stock held in the
treasury of Earth Care immediately prior to the Effective
Date shall automatically be canceled and extinguished
without any conversion thereof and no payment shall be made
with respect thereto;
(4) Each share of capital stock of ERI issued and
outstanding immediately prior to the Effective Date shall be
converted into one share of common stock of the Surviving
Corporation and thereafter each stock certificate of ERI
shall evidence ownership of shares of common stock of the
Surviving Corporation;
(5) The 950,000 shares of ESB Common Stock (after
giving effect to the ESB Reverse Stock Split) previously
issued and outstanding prior to the Merger will remain
outstanding and the 700,000 shares of ESB Common Stock
(after giving effect to the ESB Reverse Stock Split) sold in
the Limited Offering shall be issued at Closing;
(6) Earth Care shall have no other securities or
instruments convertible into or exercisable for shares of
Earth Care Common Stock except for convertible promissory
notes issued in the private placement.
(d) Post-Merger Events.
Immediately after the Effective Date, ESB shall file an
amendment to its articles of incorporation with the Secretary of
State of the State of Nevada in substantially the form attached
hereto as Exhibit "D" effecting the amendment to its certificate
of incorporation to change its name to "U.S. Plastic Lumber
Corp." or such other name as is selected by Earth Care and to
accomplish the other matters agreed to by the parties hereto.
(e) Other Matters.
(1) Except for the recapitalization of ESB, including
the ESB Reverse Stock Split, there shall be no stock
dividend, stock split, recapitalization, or exchange of
shares with respect to or rights issued in respect of, ESB's
capital stock after the date hereof and there shall be no
dividends paid on ESB's capital stock after the date hereof,
in each case through and including the Effective Date.
(2) Earth Care shall have received all requisite
director and shareholder approval of all matters set forth
herein and no shareholder of Earth Care shall have exercised
any dissenters rights under applicable corporate law.
(3) ESB shall have received all requisite shareholder
approval of the matters set forth herein.
3. Delivery of Shares; Exchange of Other Securities. On or
as soon as practicable after the Effective Date, Earth Care will
use its best efforts to cause the Earth Care Stockholders to
surrender for cancellation certificates representing their shares
of Earth Care Common Stock, against delivery of certificates
representing the shares of ESB Common Stock for which the shares
of Earth Care Common Stock are to be converted in the Merger.
Until surrendered and exchanged as herein provided, each
outstanding certificate which, prior to the Effective Date,
represented a Earth Care certificate shall be deemed for all
corporate purposes to evidence ownership of the same number of
shares of ESB Common Stock into which the Earth Care certificate
shall have been so converted.
4. Earn Out Shares. The Earth Care Historical Shareholders
shall be entitled to receive on a pro rata basis an aggregate of
2,000,000 additional shares of ESB common stock at any time prior
to December 31, 2000, in the event that Earth Care, on a
consolidated basis, reaches net sales (less returns) or
production of at least 2,000,000 pounds of plastic lumber product
per month for three consecutive months. These shares shall be
issued to the Earth Care Historical Shareholders on the basis of
2.6911 shares for every one Earth Care share of Common Stock they
owned at Closing.
5. Representations of Earth Care. Earth Care hereby
represents and warrants as follows with respect to Earth Care and
its subsidiaries which warranties and representations shall also
be true as of the Effective Date:
(a) Except as noted on Exhibit "B", the Earth Care
Stockholders listed on the attached Exhibit "B" are the sole
owners of record and beneficially of the issued and
outstanding securities of Earth Care.
(b) Earth Care has no outstanding or authorized
capital stock, warrants, options or convertible securities
other than as described in Exhibit B, attached hereto.
(c) The current unaudited financial statements as of
September 30, 1995, and the audited consolidated financial
statements as of December 31, 1994 and 1993, of Earth Care
which have been delivered to ESB (hereinafter collectively
referred to as the "Earth Care Financial Statements") are
complete, accurate and fairly present the financial
condition of Earth Care as of the dates thereof and the
results of its operations for the periods covered, subject,
in the case of the unaudited interim statements, to normal
year-end audit adjustments. There are no material
liabilities or obligations, either fixed or contingent, not
disclosed in the Earth Care Financial Statements or in any
exhibit thereto or notes thereto other than contracts or
obligations in the ordinary course of business; and no such
contracts or obligations in the ordinary course of business
constitute liens or other liabilities which materially alter
the financial condition of Earth Care as reflected in the
Earth Care Financial Statements. Earth Care has good title
to all assets shown on the Earth Care Financial Statements
subject only to dispositions and other transactions in the
ordinary course of business, the disclosures set forth
therein and liens and encumbrances of record. The year end
audited financial statement of Earth Care for the years
ended December 31, 1994 and 1993, have been prepared in
accordance with generally accepted accounting principles
consistently applied (except as may be indicated therein or
in the notes thereto).
(d) Since September 30, 1995, there have not been any
material adverse changes in the financial position of Earth
Care except changes arising in the ordinary course of
business, which changes will in no event materially and
adversely affect the financial position of Earth Care.
(e) Earth Care is not a party to any material pending
litigation (other than as described in writing on an exhibit
attached hereto) or, to its best knowledge, any governmental
investigation or proceeding, not reflected in the Earth Care
Financial Statements, and to its best knowledge, no material
litigation, claims, assessments or any governmental
proceedings are threatened against Earth Care.
(f) Earth Care is in good standing in its state of
incorporation, and is in good standing and duly qualified to
do business in each state where required to be so qualified
except where the failure to so qualify would have no
material negative impact on Earth Care.
(g) Earth Care has (or, by the Effective Date, will
have filed) all material tax, governmental and/or related
forms and reports (or extensions thereof) due or required to
be filed and has (or will have) paid or made adequate
provisions for all taxes or assessments which have become
due as of the Effective Date.
(h) Earth Care has not materially breached any
material agreement to which it is a party. Earth Care has
previously given ESB copies or access thereto of all
material contracts, commitments and/or agreements to which
Earth Care is a party including all relationships or
dealings with related parties or affiliates.
(i) Earth Care has no subsidiary corporations except
Earth Care Products of America, Inc., Earth Care Products of
Tennessee, Inc. and Earth Care Products of New Jersey, Inc.
(j) Earth Care has made its corporate financial
records, minute books, and other corporate documents and
records available for review to present management of ESB
prior to the Effective Date, during reasonable business
hours and on reasonable notice.
(k) The execution of this Agreement does not
materially violate or breach any material agreement or
contract to which Earth Care is a party and has been duly
authorized by all appropriate and necessary corporate action
and Earth Care, to the extent required, has obtained all
necessary approvals or consents required by any agreement to
which Earth Care is a party.
(l) All information regarding Earth Care which has
been provided by Earth Care for use by ESB in its proxy
statement or otherwise is true, complete and accurate in all
material respects.
6. Representations of ESB. ESB, ERI and Xxxxx hereby
jointly and severally represent and warrant as follows, each of
which representations and warranties shall continue to be true as
of the Effective Date:
(a) As of the Effective Date, the shares of ESB Common
Stock, to be issued and delivered to the Earth Care
Shareholders hereunder will, when so issued and delivered,
constitute, duly authorized, validly and legally issued
shares of ESB capital stock, fully-paid and nonassessable.
(b) ESB Common Stock issuable upon exercise of Assumed
Securities as defined herein has been duly authorized for
issuance and reserved by ESB and will, when issued, against
payment therefor, be validly issued and outstanding and
fully paid and nonassessable.
(c) ESB and ERI have the corporate power to enter into
this Agreement and to perform their respective obligations
hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby
have been duly authorized by the respective Boards of
Directors of ESB and ERI. The execution and performance of
this Agreement will not constitute a material breach of any
agreement, indenture, mortgage, license or other instrument
or document to which ESB or ERI is a party and will not
violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to ESB, ERI or their properties. The
execution and performance of this Agreement will not violate
or conflict with any provision of the respective
certificates of incorporation or by-laws of ESB or ERI.
(d) ESB has delivered to Earth Care a true and
complete copy of its unaudited financial statements for the
nine months ended September 30, 1995, and audited financial
statements for the year ended December 31, 1994 ("ESB
Financial Statements"). The ESB Financial Statements have
been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and
fairly present the financial position of ESB as of the dates
thereof and the results of its operations and changes in
financial position for the periods then ended subject, in
the case of the unaudited interim financial statements, to
normal year-end audit adjustments. ERI has no financial
statements because it is newly formed for the purpose of
effectuating this Merger and it has no assets, liabilities,
contracts or obligations of any kind. ESB has no
subsidiaries except for ERI, and ERI has no subsidiaries.
(e) Since September 30, 1995, there have not been any
material adverse changes in the financial condition of ESB.
(f) Neither ESB nor ERI is a party to or the subject
of any pending litigation, claims, or governmental
investigation or proceeding not reflected in the ESB
Financial Statements or otherwise disclosed herein, and
there are no lawsuits, claims, assessments, investigations,
or similar matters, to the best knowledge of Xxxxx,
threatened or contemplated against or affecting ESB, or its
properties.
(g) ESB and ERI are each duly organized, validly
existing and in good standing under the laws of the
jurisdiction of their incorporation; each has the corporate
power to own its property and to carry on its business as
now being conducted and is duly qualified to do business in
any jurisdiction where so required except where the failure
to so qualify would have no material negative impact.
(h) ESB and ERI have filed all federal, state, county
and local income, excise, property and other tax,
governmental and/or related returns, forms, or reports,
which are due or required to be filed by it prior to the
date hereof and have paid or made adequate provision in the
ESB Financial Statements for the payment of all taxes, fees,
or assessments which have or may become due pursuant to such
returns or pursuant to any assessments received. Neither
ESB nor ERI is delinquent or obligated for any tax, penalty,
interest, delinquency or charge.
(i) ESB's authorized capital stock shall, at Closing,
consist of: (i) 50,000,000 shares of Common Stock, $.0001
par value, of which 950,000 shares shall be issued and
outstanding, and 5,000,000 shares of $.001 par value
preferred stock, no shares of which shall be outstanding
(not considering the 700,000 shares to be sold in the
Limited Offering). ERI's capitalization shall consist of
5,000 shares of no par value common stock ("ERI's Common
Stock"), of which 1,000 shares shall be outstanding, all of
which shall be owned by ESB, free and clear of all liens,
claims and encumbrances. All outstanding shares of capital
stock of ESB are validly issued, fully paid and
nonassessable. There are no existing options, calls,
warrants, preemptive rights or commitments of any character
relating to the issued or unissued capital stock or other
securities of either ESB or ERI.
(j) ESB and ERI have (and at the Closing they will
have) disclosed in writing all events, conditions and facts
materially affecting the business, financial conditions or
results of operations of either ESB or ERI.
(k) The corporate financial records, minute books, and
other documents and records of ESB and ERI have been made
available to Earth Care prior to the Closing.
(l) ESB has not breached, nor is there any pending, or
to the knowledge of management, any threatened claim that
ESB has breached, any of the terms or conditions of any
agreements, contracts or commitments to which it is a party
or by which it or its properties is bound. The execution
and performance hereof will not violate any provisions of
applicable law or any agreement to which ESB is subject.
ESB hereby represents that it is not a party to any material
contract or commitment other than appointment documents with
its transfer agent, and that it has disclosed to Earth Care
all relationships or dealings with related parties or
affiliates.
(m) ESB has complied with the provisions for
registration under the Securities Act of 1933 and all
applicable blue sky laws in connection with its initial
public stock offering. There are no outstanding, pending or
threatened stop orders or other actions or investigations
relating thereto.
(n) The ESB Common Stock is eligible for quotation on
the NASD Electronic Bulletin Board and there are no stop
orders in effect with respect thereto.
(o) All information regarding ESB which has been
provided to Earth Care, will be used in the ESB Proxy
Statement or otherwise used in connection with the Limited
Offering is true, complete and accurate in all material
respects.
7. Closing. The Closing of the transactions contemplated
herein shall take place on such date (the "Closing") as mutually
determined by the parties hereto when all conditions precedent
have been met and all required documents have been delivered,
which Closing shall be no later than February 15, 1996, unless
extended by mutual consent of all parties hereto. The "Effective
Date" of the Merger shall be that date on which executed copies
of the attached Plan and Articles of Merger are filed with the
Secretary of State of Florida and Nevada.
8. Conditions Precedent to the Obligations of Earth Care.
All obligations of Earth Care under this Agreement are subject to
the fulfillment, prior to or as of the Closing and/or the
Effective Date, as indicated below, of each of the following
conditions:
(a) The representations and warranties by or on behalf
of Xxxxx, ESB, and ERI contained in this Agreement or in any
certificate or document delivered pursuant to the provisions
hereof shall be true in all material respects at and as of
the Closing and Effective Date as though such
representations and warranties were made at and as of such
time.
(b) ESB and ERI shall have performed and complied with
all covenants, agreements, and conditions set forth in, and
shall have executed and delivered all documents required by
this Agreement to be performed or complied with or executed
and delivered by them prior to or at the Closing.
(c) On or before the Closing, the board of directors
of ESB and ERI, and ESB as sole shareholder of ERI shall
have approved in accordance with applicable state
corporation law the execution and delivery of this Agreement
and the consummation of the transactions contemplated
herein.
(d) On or before the Closing Date, ESB and ERI shall
have delivered certified copies of resolutions of the sole
shareholder and sole director of ERI and of the board of
directors and shareholders of ESB approving and authorizing
the execution, delivery and performance of this Agreement
and authorizing all of the necessary and proper action to
enable ESB and ERI to comply with the terms of this
Agreement including the election of Earth Care's nominees to
the Board of Directors of ESB and all matters outlined
herein.
(e) ESB's stockholders shall have duly approved all
applicable matters described in this Agreement in accordance
with applicable law.
(f) ESB shall have raised at least $1,000,000 in its
Limited Offering.
(g) The Merger shall be permitted by applicable state
law and ESB shall have sufficient shares of its capital
stock authorized to complete the Merger.
(h) At Closing, the existing sole officer and director
of ESB shall have resigned in writing from all positions as
a director and officer of ESB upon the election and
appointment of the Earth Care nominees.
(i) At the Closing, all instruments and documents
delivered to Earth Care Shareholders pursuant to the
provisions hereof shall be reasonably satisfactory to legal
counsel for Earth Care.
(j) At the Closing, upon consummation of the Merger,
ESB shall have the authorized capital as described in
paragraph 6(i) hereof.
(k) The shares of restricted ESB capital stock to be
issued to Earth Care Shareholders at Closing will be validly
issued, nonassessable and fully-paid under Nevada
corporation law and will be issued in a nonpublic offering
and isolated transaction in compliance with all federal,
state and applicable securities laws.
(l) Earth Care shall have received the advice of its
tax advisor that this transaction is a tax free
reorganization as to the exchanging Earth Care shareholders.
(m) Earth Care shall have received all necessary and
required approvals and consents from required parties and
its shareholders.
(n) At the Closing, ESB and ERI shall have delivered
to Earth Care an opinion of its counsel dated as of the
Closing to the effect that:
(i) ESB and ERI, each is a corporation duly
organized, validly existing and in good standing under
the laws of the jurisdiction of incorporation;
(ii) This Agreement has been duly authorized,
executed and delivered by ESB and ERI and is a valid
and binding obligation of ESB and ERI enforceable in
accordance with its terms;
(iii) ESB and ERI each through its Board of
Directors and stockholders have taken all corporate
action necessary for performance under this Agreement;
(iv) The documents executed and delivered to
Earth Care and Earth Care Shareholders hereunder are
valid and binding in accordance with their terms and
vest in Earth Care Shareholders, as the case may be,
all right, title and interest in and to the shares of
ESB's Common Stock to be issued pursuant to Section 2
hereof, and the shares of ESB capital stock when issued
will be duly and validly issued, fully-paid and
nonassessable; and
(v) ESB and ERI each has the corporate power to
execute, deliver and perform under this Agreement.
(vi) Legal counsel for ESB and ERI is not aware
of any liabilities, claims or lawsuits involving ESB or
ERI.
(vii) In connection with the issuance of ESB
securities to persons who were purchasers in the
private placement The shares of ESB Common Stock
issuable upon conversion of the Convertible Promissory
Notes have been duly authorized for issuance and
reserved by ESB and will, when issued and delivered,
against payment of the consideration therefor, be
validly issued and outstanding, fully paid and
nonassessable, and will not be subject to preemptive
rights.
9. Conditions Precedent to the Obligations of ESB and
ERI. All obligations of ESB and ERI under this Agreement are
subject to the fulfillment, prior to or at the Closing, of each
of the following conditions:
(a) The representations and warranties by Earth Care
contained in this Agreement or in any certificate or
document delivered pursuant to the provisions hereof shall
be true in all material respects at and as of the Closing as
though such representations and warranties were made at and
as of such time.
(b) Earth Care shall have performed and complied with,
in all material respects, all covenants, agreements, and
conditions required by this Agreement to be performed or
complied with by them prior to or at the Closing;
(c) Earth Care shall deliver on behalf of its
shareholders other than purchasers in the private placement,
a letter commonly known as an "Investment Letter," in
substantially the form attached hereto as Exhibit "F",
acknowledging that the shares of ESB Common Stock are being
acquired for investment purposes.
(d) ESB shall have received at least $1,000,000 in its
Limited Offering.
(e) Earth Care shall deliver an opinion of its legal
counsel to the effect that:
(i) Earth Care and its subsidiaries is each a
corporation duly organized, validly existing and in
good standing under the laws of the state of its
incorporation and is duly qualified to do business in
any jurisdiction where so required except where the
failure to so qualify would have no material adverse
impact on the company;
(ii) Earth Care and its subsidiaries each has the
corporate power to carry on its business as now being
conducted; and
(iii) This Agreement has been duly authorized,
executed and delivered by Earth Care.
10. Indemnification. For a period of two years from the
Closing Xxxxx, ESB and ERI agree to jointly and severally
indemnify and hold harmless Earth Care, and Earth Care agrees to
indemnify and hold harmless Xxxxx, ESB and ERI, at all times
after the date of this Agreement against and in respect of any
liability, damage or deficiency, all actions, suits, proceedings,
demands, assessments, judgments, costs and expenses including
attorney's fees incident to any of the foregoing, resulting from
any material misrepresentations made by an indemnifying party to
an indemnified party, an indemnifying party's breach of covenant
or warranty or an indemnifying party's nonfulfillment of any
agreement hereunder, or from any material misrepresentation in or
omission from any certificate furnished or to be furnished
hereunder.
11. Nature and Survival of Representations. All
representations, warranties and covenants made by any party in
this Agreement shall survive the Closing and the consummation of
the transactions contemplated hereby for two years from the
Closing. All of the parties hereto are executing and carrying
out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements
contained in this Agreement and not upon any investigation upon
which it might have made or any representation, warranty,
agreement, promise or information, written or oral, made by the
other party or any other person other than as specifically set
forth herein.
12. Documents at Closing. At the Closing, the following
documents shall be delivered:
(a) Earth Care will deliver, or will cause to be delivered,
to ESB the following:
(i) a certificate executed by the President and
Secretary of Earth Care to the effect that all
representations and warranties made by Earth Care under
this Agreement are true and correct as of the Closing,
the same as though originally given to ESB or ERI on
said date;
(ii) a certificate from the state of
incorporation of Earth Care dated at or about the
Closing to the effect that Earth Care is in good
standing under the laws of said state;
(iii) Investment Letters in the form attached
hereto as Exhibit "F" executed by each historical Earth
Care Shareholder;
(iv) such other instruments, documents and
certificates, if any, as are required to be delivered
pursuant to the provisions of this Agreement;
(v) executed copies of the Plan and Articles of
Merger for filing; and certified copies of resolutions
by the shareholders and directors of Earth Care
authorizing this transaction; and
(vi) all other items, the delivery of which is a
condition precedent to the obligations of ESB and ERI,
as set forth herein.
(vii) the legal opinion required by Section 9(e)
hereof.
(b) ESB and ERI will deliver or cause to be delivered to
Earth Care:
(i) stock certificates and warrants representing
those securities of ESB to be issued as a part of the
exchange as described in Section 2 hereof;
(ii) a certificate of the President/Secretary of
ESB and ERI, respectively, to the effect that all
representations and warranties of ESB and ERI made
under this Agreement are true and correct as of the
Closing, the same as though originally given to Earth
Care on said date;
(iii) certified copies of resolutions adopted by
ESB's and ERI's Board of Directors and ESB's and ERI's
Stockholders authorizing the Merger and all related
matters;
(iv) certificates from the jurisdiction of
incorporation of ESB and ERI dated at or about the
Closing Date that each of said companies are in good
standing under the laws of said state;
(v) opinion of ESB's counsel as described in
Section 9(n) above;
(vi) such other instruments and documents as are
required to be delivered pursuant to the provisions of
this Agreement;
(vii) resignation of all of the officers and
directors of ESB and ERI; and
(viii) all other items, the delivery of which is
a condition precedent to the obligations of Earth Care,
as set forth in Section 8 hereof.
13. Finder's Fees. Xxxxx, ESB and ERI, jointly and
severally, represent and warrant to Earth Care, and Earth Care
represents and warrants to each of Xxxxx, ESB and ERI, that none
of them, or any party acting on their behalf, has incurred any
liabilities, either express or implied, to any "broker" of
"finder" or similar person in connection with this Agreement or
any of the transactions contemplated hereby. In this regard,
Xxxxx, ESB and ERI, jointly and severally, on the one hand, and
Earth Care on the other hand, will indemnify and hold the other
harmless from any claim, loss, cost or expense whatsoever
(including reasonable fees and disbursements of counsel) from or
relating to any such express or implied liability.
14. Miscellaneous.
(a) Further Assurances. At any time, and from time to
time, after the Effective Date, each party will execute such
additional instruments and take such action as may be
reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this
Agreement.
(b) Waiver. Any failure on the part of any party
hereto to comply with any of its obligations, agreements or
conditions hereunder may be waived in writing by the party
to whom such compliance is owed.
(c) Termination. All obligations hereunder may be
terminated at the discretion of either party's Board of
Directors if (i) the closing conditions specified in
Sections 8 and 9 are not met by January 31, 1996, unless
extended, or (ii) any of the representations and warranties
made herein have been materially breached.
(d) Amendment. This Agreement may be amended only in
writing as agreed to by all parties hereto.
(e) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have
been given if delivered in person or sent by prepaid first
class registered or certified mail, return receipt
requested.
(f) Headings. The section and subsection headings in
this Agreement are inserted for convenience only and shall
not affect in any way the meaning or interpretation of this
Agreement.
(g) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(h) Binding Effect. This Agreement shall be binding
upon the parties hereto and inure to the benefit of the
parties, their respective heirs, administrators, executors,
successors and assigns.
(i) Entire Agreement. This Agreement and the attached
Exhibits including the Plan and Articles of Merger attached
hereto as Exhibit "A" is the entire agreement of the parties
covering everything agreed upon or understood in the
transaction. There are no oral promises, conditions,
representations, understandings, interpretations or terms of
any kind as conditions or inducements to the execution
hereof.
(j) Time. Time is of the essence.
(k) Severability. If any part of this Agreement is
deemed to be unenforceable the balance of the Agreement
shall remain in full force and effect.
(l) Responsibility and Costs. Regardless of whether
the Merger is consummated all fees, expenses and out-of-
pocket costs, including without limitation, fees and
disbursements of counsel, financial advisors and
accountants, incurred by the parties hereto shall be borne
solely and entirely by the party that has incurred such
costs and expenses.
IN WITNESS WHEREOF, the parties have executed this Agreement
the day and year first above written.
EDUCATIONAL STORYBOOKS INTERNATIONAL,INC.
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, President/Secretary
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, individually
EARTH CARE GLOBAL HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Chairman
