EXHIBIT 99.1
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
EARTHSHELL CORPORATION,
EARTHSHELL TRIANGLE, INC.,
RENEWABLE PRODUCTS, INC.
and
RENEWABLE PRODUCTS LLC
Dated as of June 17, 2005
TABLE OF CONTENTS
1. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) EFFECT OF MERGER . . . . . . . . . . . . . . . . . . . . 2
(c) CONSUMMATION OF THE MERGER . . . . . . . . . . . . . . . 2
(d) CERTIFICATE OF INCORPORATION . . . . . . . . . . . . . . 2
(e) BY-LAWS . . . . . . . . . . . . . . . . . . . . . . . . . 2
(f) DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . 2
2. CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . . 2
(a) MERGERCO COMMON STOCK . . . . . . . . . . . . . . . . . . 3
(b) TARGET COMMON STOCK . . . . . . . . . . . . . . . . . . . 3
3. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) TIME AND PLACE OF CLOSING . . . . . . . . . . . . . . . . 3
(b) CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . 3
4. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER . . . . . . . . 3
(a) CORPORATE ORGANIZATION, QUALIFICATION . . . . . . . . . . 3
(b) POWER AND AUTHORITY . . . . . . . . . . . . . . . . . . . 4
(c) CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . 5
(e) CONSTITUENT DOCUMENTS; DIRECTORS AND OFFICERS . . . . . . 5
(f) FINANCIAL . . . . . . . . . . . . . . . . . . . . . . . . 5
(g) TITLE TO ASSETS . . . . . . . . . . . . . . . . . . . . . 6
(h) RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . 6
(i) CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . 7
(j) MATERIAL ADVERSE CHANGES . . . . . . . . . . . . . . . . 7
(k) CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . 7
(l) PERMITS . . . . . . . . . . . . . . . . . . . . . . . . . 8
(m) EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . 8
(n) EMPLOYEE RELATIONS . . . . . . . . . . . . . . . . . . . 8
(o) TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(p) LITIGATION . . . . . . . . . . . . . . . . . . . . . . . 9
(q) LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(r) ENVIRONMENTAL . . . . . . . . . . . . . . . . . . . . . . 10
(s) REAL ESTATE . . . . . . . . . . . . . . . . . . . . . . . 10
(t) INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . 11
(u) CAPITAL COMMITMENTS . . . . . . . . . . . . . . . . . . . 11
5. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO . . . . 11
(a) CORPORATE ORGANIZATION, QUALIFICATION . . . . . . . . . . 11
(b) POWER AND AUTHORITY . . . . . . . . . . . . . . . . . . . 12
(c) CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . 12
(e) CONSTITUENT DOCUMENTS . . . . . . . . . . . . . . . . . . 13
(f) SEC REPORTS AND FINANCIAL . . . . . . . . . . . . . . . . 14
(g) LITIGATION . . . . . . . . . . . . . . . . . . . . . . . 15
(h) CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . 15
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(i) INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . 15
(j) ENVIRONMENTAL . . . . . . . . . . . . . . . . . . . . . . 16
(k) EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . 16
(l) LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(m) CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . 16
(n) TITLE TO ASSETS . . . . . . . . . . . . . . . . . . . . . 17
(o) RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . 17
(p) PERMITS . . . . . . . . . . . . . . . . . . . . . . . . . 18
(q) MATERIAL ADVERSE CHANGES . . . . . . . . . . . . . . . . 18
(r) TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(s) EMPLOYEE RELATIONS . . . . . . . . . . . . . . . . . . . 18
6. CONDUCT PRIOR TO THE CLOSING . . . . . . . . . . . . . . . . . 19
(a) ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) PROVISION OF INFORMATION BY PARENT TO TARGET . . . . . . 19
(c) CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . 19
(e) NO INTENTIONAL ACTS . . . . . . . . . . . . . . . . . . . 21
(f) CERTIFICATE OF DESIGNATION . . . . . . . . . . . . . . . 21
7. CONDITIONS TO TARGET'S OBLIGATIONS . . . . . . . . . . . . . . 21
8. CONDITIONS TO PARENT'S OBLIGATIONS . . . . . . . . . . . . . . 22
9. RIGHT TO TERMINATE . . . . . . . . . . . . . . . . . . . . . . 23
10. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11. POST CLOSING AGREEMENTS . . . . . . . . . . . . . . . . . . . 23
(a) FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . 23
(b) MANAGEMENT OF SURVIVING CORPORATION . . . . . . . . . . . 24
(c) NET OPERATING LOSSES . . . . . . . . . . . . . . . . . . 24
12. DISCLOSURE OF CONFIDENTIAL INFORMATION . . . . . . . . . . . . 24
(a) OBLIGATION TO MAINTAIN CONFIDENTIALITY . . . . . . . . . 24
(b) INJUNCTIVE RELIEF . . . . . . . . . . . . . . . . . . . . 25
13. INDEMNIFICATION OBLIGATIONS OF PARENT . . . . . . . . . . . . 25
14. INDEMNIFICATION OBLIGATIONS OF STOCKHOLDER . . . . . . . . . . 26
15. ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . 26
16. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . 28
(d) ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . 28
(e) SURVIVAL; NON-WAIVER . . . . . . . . . . . . . . . . . . 28
(f) APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . 28
(g) CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . 28
(h) BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . 29
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(i) ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . 29
(j) AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . 29
(k) HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . 29
(l) SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . 29
(m) COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . 29
(n) NO STRICT CONSTRUCTION . . . . . . . . . . . . . . . . . 29
(o) GENDER . . . . . . . . . . . . . . . . . . . . . . . . . 29
(p) INTERPRETATION . . . . . . . . . . . . . . . . . . . . . 29
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INDEX OF TERMS
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . 2
Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Confidential . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Confidential Information . . . . . . . . . . . . . . . . . . . . . 24
Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . 2
Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . 10
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . 10
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . 8
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Mergerco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 12
Parent Financial Statements . . . . . . . . . . . . . . . . . . . . 14
Parent Interim Financial Statements . . . . . . . . . . . . . . . . 14
Parent Series B Preferred Stock . . . . . . . . . . . . . . . . . . 13
Parent Series C Preferred Stock . . . . . . . . . . . . . . . . . . 13
Parent Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Parent's and Mergerco's Ancillary Documents . . . . . . . . . . . . 12
Per Share Merger Consideration . . . . . . . . . . . . . . . . . . 3
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ReNewable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . 1
Target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Target Leased Premises . . . . . . . . . . . . . . . . . . . . . . 10
Target Share . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Target's Ancillary Documents . . . . . . . . . . . . . . . . . . . 4
Target's Interim Financial Statements . . . . . . . . . . . . . . . 6
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made as of
June 17, 2005, by and among EarthShell Corporation, a Delaware
corporation ("Parent"), EarthShell Triangle, Inc., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Mergerco"),
ReNewable Products, Inc., a Delaware corporation ("Target"), and
ReNewable Products LLC, a Delaware limited liability company and sole
stockholder of Target ("Stockholder").
R E C I T A L S
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A. Target is engaged in the business of manufacturing,
marketing and distributing biodegradable plates and bowls (the
"Business").
B. The Board of Directors of Parent deems it advisable and in
the best interests of Parent and its stockholders for Parent to enter
the Business through the acquisition of Target.
C. The Board of Directors of each of Parent, Mergerco and
Target has approved, and deems it advisable and in the best interests
of its respective stockholders to consummate, Parent's acquisition of
Target by means of a reverse merger of Mergerco with and into Target,
upon the terms and subject to the conditions set forth herein;
D. In furtherance thereof, the respective Boards of Directors
of Mergerco and Target have approved this Agreement in accordance with
the Delaware General Corporation Law, as amended ("DGCL"); and
E. The parties hereto intend that the Merger (as defined
herein) shall qualify for U.S. federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the U.S.
Internal Revenue Code of 1986, as amended (together with the rules and
regulations promulgated thereunder, the "Code").
A G R E E M E N T S
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Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. THE MERGER.
(a) GENERAL. Upon the terms and subject to the conditions
contained in this Agreement, at the Effective Time (as herein
defined) and in accordance with the DGCL, Mergerco shall be
merged with and into Target (the "Merger"), the separate
corporate existence of Mergerco shall cease and Target shall
continue as the surviving corporation under the corporate name
"ReNewable Products, Inc." (the "Surviving Corporation").
Mergerco and Target are sometimes referred to in this Agreement
as the "Constituent Corporations".
(b) EFFECT OF MERGER. Immediately following the Merger,
the Surviving Corporation shall (i) possess all rights,
privileges, immunities and franchises, both public and private,
of the Constituent Corporations, (ii) be vested with all
property, whether real, personal or mixed, and all debts due on
whatever account, and all other causes of action, and all and
every other interest belonging to or due to each of the
Constituent Corporations, and (iii) be responsible and liable for
all the obligations and liabilities of each of the Constituent
Corporations, all with the effect set forth in the DGCL.
(c) CONSUMMATION OF THE MERGER. At the Closing (as herein
defined), the parties shall cause to be filed with the Secretary
of State of the State of Delaware a certificate of merger and
other appropriate documents (such certificates and other
documents being hereinafter collectively referred to as the
"Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings,
recordings or publications required by the DGCL in connection
with the Merger. The Merger shall become effective (i) at the
time at which the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware or (ii) at such other
time specified in the Certificate of Merger (the "Effective
Time").
(d) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Target, as in effect immediately prior to the
Effective Time, shall be, from and after the Effective Time, the
Certificate of Incorporation of the Surviving Corporation, until
thereafter altered, amended or repealed in accordance with
applicable law.
(e) BY-LAWS. The By-Laws of Target, as in effect
immediately prior to the Effective Time, shall be, from and after
the Effective Time, the By-Laws of the Surviving Corporation,
until thereafter altered, amended or repealed as provided therein
and in accordance with applicable law.
(f) DIRECTORS AND OFFICERS. The directors and officers of
Target in office immediately prior to the Effective Time shall
be, from and after the Effective Time, the directors and
officers, respectively, of the Surviving Corporation until the
earlier of their death, resignation or removal or until their
respective successors are duly elected or appointed or qualified,
as the case may be.
2. CONVERSION OF SECURITIES. As of the Effective Time, by
virtue of the Merger and without any action on the part of Target or
Mergerco or their respective stockholders:
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(a) MERGERCO COMMON STOCK. Each issued and outstanding
share of capital stock of Mergerco shall be converted into and
become one fully paid and non-assessable share of common stock,
par value $0.01 per share, of the Surviving Corporation.
(b) TARGET COMMON STOCK. Each share of capital stock of
Target (a "Target Share") issued and outstanding immediately
prior to the Effective Time (other than any such shares owned by
Target, which shall be cancelled) shall be converted into such
number of fully paid and non-assessable shares of Series C
Convertible Preferred Stock of Parent, par value $0.01 per share,
as is equal to the quotient obtained by dividing 8,000,000 by the
aggregate number of shares of capital stock of Target outstanding
at the Effective Time (the "Per Share Merger Consideration").
From and after the Effective Time, all of the certificates
representing the outstanding Target Shares shall be deemed to be
no longer outstanding, not be transferable on the books of the
Surviving Corporation, and shall represent solely the Per Share
Merger Consideration.
3. CLOSING.
(a) TIME AND PLACE OF CLOSING. The transaction
contemplated by this Agreement shall be consummated (the
"Closing") at 10:00 a.m., prevailing business time, at the
offices of Xxxxxx Xxxxxx LLP, 0000 Xxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx, 00000, within three business days of the later to occur
of (i) the satisfaction of all conditions to closing as set forth
in Sections 7 and 8 hereto (other than those conditions to be
satisfied at Closing) or (ii) the delivery by Target to Parent of
a written notice of Target's intent to effect the Merger and
consummate the transactions contemplated by this Agreement, or on
such other date, or at such other place, as shall be agreed upon
by Target and Parent. The date on which the Closing shall occur
in accordance with the preceding sentence is referred to in this
Agreement as the "Closing Date."
(b) CLOSING DELIVERIES. At the Closing, the parties shall
execute and deliver closing certificates, good standing
certificates, third party consents, and other documents and
instruments as are reasonably required in order to effectuate the
consummation of the transaction contemplated hereby, including
the documents and instruments set forth on EXHIBIT A attached
hereto.
4. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder
represents and warrants to Parent and Mergerco that:
(a) CORPORATE ORGANIZATION, QUALIFICATION. Target is a
corporation duly organized, existing and in good standing, under
the laws of the State of Delaware. Target has all necessary
corporate power and authority to conduct its business as its
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business is now being conducted. Target has qualified as a
foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business or the nature
or location of its assets requires such qualification, except
where the failure to be so qualified could not reasonably be
expected to, individually or in the aggregate, have a Material
Adverse Effect on Target. For purposes of this Agreement,
"Material Adverse Effect" means a material adverse effect (i) on
the condition (financial or otherwise), business, assets,
liabilities, properties or results of operations of Parent,
Target, Mergerco or Stockholder, as applicable, taken as a whole,
that is not a result of general changes in the economy or the
industries in which such entities operate, or (ii) on the ability
of Parent, Target, Mergerco or Stockholder, as applicable, to
perform any obligations hereunder or under the transactions
contemplated hereby such that the conditions set forth in
Sections 8 or 9 would not be satisfied.
(b) POWER AND AUTHORITY. This Agreement has been approved
by the boards of directors, or managers, as applicable, of Target
and Stockholder and, upon execution and delivery hereof, by the
Stockholder as the sole stockholder of Target. No other action
or approval is required by Target to authorize and approve this
Agreement and the Merger, and Target has and will have full
corporate power and authority to execute deliver and perform this
Agreement and all documents and instruments to be executed by
Target pursuant to this Agreement (collectively, the "Target's
Ancillary Documents"). This Agreement and Target's Ancillary
Documents have been duly executed and delivered by duly
authorized officers of Target. Neither the execution and
delivery of this Agreement and Target's Ancillary Documents by
Target, nor the consummation by Target of the transaction
contemplated hereby, will conflict with or result in a breach of
any of the terms, conditions or provisions of Target's
Certificate of Incorporation or By laws, or of any order, writ,
injunction, judgment or decree of any court or any governmental
authority or of any arbitration award binding on Target. The
execution, delivery and performance of this Agreement and the
Target Ancillary Documents by the Target and the consummation by
Target of the transactions contemplated thereby will not conflict
with or constitute a default (or an event which with notice or
lapse of time or both would become a default) under or give to
others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which
Target is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree applicable to Target or by
which any property or asset of Target is bound or affected.
(c) CONSENTS. No consent, authorization, order or approval
of, or filing or registration with, any governmental authority or
other person is required for the execution and delivery by Target
of this Agreement and Target's Ancillary Documents and the
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consummation by Target of the transactions contemplated by this
Agreement and Target's Ancillary Documents.
(d) CAPITALIZATION. The authorized capital stock of Target
prior to the Merger consists of 1,000 shares of common stock,
$0.01 par value per share, of which 100 shares are issued and
outstanding and owned of record and beneficially by Stockholder.
All of the issued and outstanding Target Shares have been validly
issued, are fully-paid and non-assessable. All of the issued and
outstanding Target Shares are free and clear of all claims,
actions, causes of action, suits, proceedings, debts, demands or
liabilities of any kind (collectively, "Claims"). There are no
outstanding subscriptions, options, warrants, rights (including
preemptive rights), calls, convertible securities or other
agreements or commitments of any character relating to the issued
or unissued capital stock or other securities of Target
obligating Target to issue any securities of any kind. The
issued and outstanding Target Shares were issued in compliance
with all applicable federal and state securities laws. There are
no stock appreciation rights, phantom stock or similar rights in
existence with respect to Target. Target has no subsidiaries.
(e) CONSTITUENT DOCUMENTS; DIRECTORS AND OFFICERS.
(i) True and complete copies of the Certificate of
Incorporation and all amendments thereto, the By-laws as
amended and currently in force, all stock records, and all
corporate minute books and records of Target have been
furnished for inspection by Parent. Said stock records
accurately reflect all share transactions and the current
stock ownership of Target. The corporate minute books and
records of Target contain true and complete copies of all
resolutions adopted by the stockholder or the board of
directors of Target, and any other action formally taken by
Target. Target is not in violation of its Certificate of
Incorporation or By-laws.
(ii) Section 4(e) of the Disclosure Schedule lists the
directors and officers of Target.
(f) FINANCIAL.
(i) Target's books, accounts and records are, and have
been, maintained in Target's usual, regular and ordinary
manner, in accordance with generally accepted accounting
practices, and all material transactions to which Target has
been a party are properly reflected therein.
(ii) Complete and accurate copies of the unaudited
consolidated balance sheet of Target as of April 30, 2005,
and the unaudited consolidated statement of income of the
Company and the Subsidiaries for the four month period then
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ended are included in Section 4(f) of the Disclosure
Schedule ("Target's Interim Financial Statements").
Target's Interim Financial Statements present accurately and
completely the financial position of Target as of the
respective dates thereof, and the results of operations and
cash flows of Target for the respective periods covered
thereby, in accordance with generally accepted accounting
principles ("GAAP"), consistently applied, except for the
omission of normal footnote disclosures required by GAAP and
subject to customary year end adjustments in the ordinary
course of business.
(iii) Target has no obligation or liability of any
nature whatsoever (direct or indirect, matured or unmatured,
absolute, accrued, contingent or otherwise), whether or not
required by GAAP to be provided or reserved against on a
balance sheet (all the foregoing herein collectively being
referred to as the "Liabilities") that would have a Material
Adverse Effect except for liabilities provided for or
reserved against in Target's Interim Financial Statements or
incurred in the ordinary course of business since the date
of Target's Interim Financial Statements.
(g) TITLE TO ASSETS. Target owns or leases all tangible
assets necessary for the conduct of its business as presently
conducted, and at the Closing Date Target will own or lease all
tangible assets necessary for the conduct of the business as
proposed to be conducted as of the Closing Date. Target has good
title to its assets, free and clear of any Claims. No unreleased
mortgage, trust deed, chattel mortgage, security agreement,
financing statement or other instrument encumbering any of
Target's assets has been recorded, filed, executed or delivered.
(h) RELATED PARTY TRANSACTIONS. Except as set forth on
Section 4(h) of the Disclosure Schedule, no Affiliate (as herein
defined) of Target: (i) owns or leases any property or right,
whether tangible or intangible, which is used by Target; (ii) has
any claim or cause of action against Target; (iii) owes any money
to Target or is owed money by Target; except future amounts owed
under agreements set forth on Section 4(h) of the Disclosure
Schedule; (iv) is a party to any contract or other arrangement,
written or oral, with Target; or (v) provides services or
resources to Target or is dependent on services or resources
provided by Target. Section 4(h) of the Disclosure Schedule sets
forth every business relationship (other than normal employment
relationships) between Target, on the one hand, and Target's
present or former officers, directors, employees or shareholders
or members of their families (or any entity in which any of them
has a material financial interest, directly or indirectly), on
the other hand, and attaches copies of all written agreements
relating to such relationships. Parent and Mergerco acknowledge
receipt of these agreements and their acceptance of the terms of
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each such agreement. No Affiliate of Target is engaged in any
business which competes with the Business. As used herein,
"Affiliate" means any person, association or organization that
directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with
another person, association or organization, and the term
"control" means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies
of a person, association or organization, whether through the
ownership of voting securities or equity interests, by contract
or otherwise.
(i) CONDUCT OF BUSINESS. Except in connection with the
capitalization of Target as contemplated by Section 8(e) hereof,
since the date of Target's Interim Financial Statements, Target
has not: (i) sold or in any way transferred or otherwise disposed
of any of its assets or property, except for cash applied in
payment of liabilities in the usual and ordinary course of
business; (ii) suffered any casualty, damage, destruction or
loss, or any material interruption in use, of any material assets
or property (whether or not covered by insurance), on account of
fire, flood, riot, strike or other hazard or act of God;
(iii) made or suffered any material change in the conduct or
nature of any aspect of its business; (iv) waived any right or
canceled or compromised any debt or claim, other than in the
ordinary course of business; (v) increased the compensation
payable to any salaried employee except in the ordinary course of
business consistent with past practices; (vi) paid, declared or
set aside any dividend or other distribution on its securities of
any class or purchased, exchanged or redeemed any of its
securities of any class; (vii) made any change in accounting
methods, principles or practices; or (viii) without limitation by
the enumeration of any of the foregoing, except for the execution
of this Agreement, entered into any transaction other than in the
usual and ordinary course of business.
(j) MATERIAL ADVERSE CHANGES. Since the date of Target's
Interim Financial Statements, Target has not suffered or, to
Target's knowledge been threatened with any material adverse
change in the business, operations, assets, liabilities,
financial condition or prospects, including, without limiting the
generality of the foregoing, the existence or threat of any labor
dispute, or any material adverse change in, or material loss of,
any relationship between Target, on the one hand, and any of its
customers, suppliers, advisors, or key employees, on the other
hand.
(k) CONTRACTS. Except as set forth on Section 4(h) of the
Disclosure Schedule, Target is a not party to or bound by: (i)
any agreement relating to the incurrence of indebtedness
(including sale leaseback and capitalized lease transactions and
similar financing transactions) proving for payment or repayment
-7-
in excess of $100,000; (ii) any "material contract" (as such term
is defined in Item 601(b)(10) of Regulation S-K) or (iii) any
non-competition agreement which purports to limit in any material
respect the manner in which or the localities in which all or any
portion of its business is or would be conducted (collectively,
"Material Contracts"). All Material Contracts and all other
contracts or instruments to which Target is a party or is bound
are in full force and binding upon the parties thereto. No
default by Target has occurred thereunder, Target has performed
all of its obligations thereunder on a timely basis, and, to
Target's knowledge, no default by the other contracting parties
has occurred thereunder. To Target's knowledge, no event,
occurrence or condition exists which, with the lapse of time, the
giving of notice, or both, or the happening of any further event
or condition, would become a default by Target thereunder.
Complete and accurate copies of all Material Contracts (including
any amendments or supplements thereto) have previously been made
available to Parent.
(l) PERMITS. Target possesses all material certificates,
authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct its
business ("Permits"), and Target has not received any notice of
proceedings relating to revocation or modification of any such
certificate, authorization or permit.
(m) EMPLOYEE BENEFITS.
(i) Section 4(m)(i) of the Disclosure Schedule lists
all Benefit Plans that cover any employee of Target.
(ii) Each Benefit Plan of Target subject to the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), complies in all material respects and has been
administered in compliance in all material respects with
(A) the provisions of ERISA; (B) all provisions of the Code,
applicable to secure the intended tax consequences; (C) all
applicable state and federal securities laws; and (D) all
other applicable laws, rules and regulations.
(iii) "BENEFIT PLANS" shall mean each incentive
compensation, stock purchase, stock option, and other equity
compensation plan, program or arrangement, each severance or
termination pay, medical, surgical, hospitalization, life
and other "welfare" plan, fund or program within the meaning
of Section 3(1) of ERISA.
(n) EMPLOYEE RELATIONS. Target is not involved in any
labor dispute nor, to the knowledge of Target, is any such
dispute threatened. None of Target's employees is a member of a
union.
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(o) TAXES. Target has filed all Returns (as herein
defined) required to be filed with respect to Taxes (as herein
defined) and financial results of Target. All such Returns were
correct and complete in all material respects. All Taxes payable
by Target, whether or not shown on any Return, have been paid in
full, and Target has fully complied with all applicable tax laws
and agreements. The liabilities for Taxes reflected on the
Target Interim Financial Statements are in accordance with GAAP
and are sufficient for payment of all Taxes of Target that are
accrued through the date of such financial statements and not yet
due and payable. Target has and will have no accrued liability
for Taxes in respect of taxable periods or portions thereof
following the date of the Target Interim Financial Statements and
ending on or before the Closing Date other than Taxes incurred in
the ordinary course of business consistent with past practice as
reflected on their Returns. Target has withheld and paid all
Taxes or other amounts required to have been withheld and paid in
connection with amounts paid or owing to any employee. Target
has no subsidiaries, is not a party to any Tax allocation or Tax
sharing or Tax indemnification agreement, has never been a member
of any affiliated group within the meaning of Section 1504(a) of
the Code, or any similar provision of state, local or foreign
law. No claim has ever been made by an authority in a
jurisdiction where Target does not file Returns that Target is or
may be subject to taxation by that jurisdiction. There is no
dispute or claim concerning any liability for Taxes of Target
claimed or raised by any taxing authority, and, there is no
pending or, to Target's knowledge, threatened or anticipated
audits or other investigations in respect of Taxes of Target.
During the five-year period ending on the date of this Agreement,
Target was not a distributing corporation or a controlled
corporation in a transaction intended to be governed by Section
355 of the Code. The transaction contemplated herein is not
subject to the tax withholding provisions of section 3406 of the
Code, or of Subchapter A of Chapter 3 of the Code, or of any
other provision of law. For purposes of this Agreement, "Taxes"
(and, with correlative meanings, "Tax" and "Taxable") means all
Federal, state, local, foreign and other net income, gross
income, gross receipts, sales, estimated, use, ad valorem,
transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property (including personal property),
windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatever, together with any
interest and any penalties, additions to tax or additional
amounts with respect thereto, and "Returns" shall mean all
returns, declarations, reports, statements and other documents
required to be filed in respect of Taxes.
(p) LITIGATION. There is no (i) litigation or proceeding,
in law or in equity; (ii) proceedings or governmental
investigations before any commission or other administrative
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authority; or (iii) claim made by any person or entity, in any
case described in clauses (i), (ii) and (iii) above, pending, or,
to Target's knowledge, threatened, against Target, its directors
or officers, or with respect to or affecting Target's operations,
business, products, sales practices or financial condition or
related to the consummation of the transaction contemplated
hereby.
(q) LAWS. Target is not a party to, or bound by, any
decree, order or arbitration award (or agreement entered into in
any administrative, judicial or arbitration proceeding with any
governmental authority) with respect to its properties, assets,
personnel or business activities. Target is not in material
violation of, in material noncompliance with, or materially
delinquent in respect to, any decree, order or arbitration award
or law or statute, or regulation of or agreement with, any
Federal, state or local governmental authority (or to which its
properties, assets, personnel, business activities or real estate
are subject or to which it, itself, is subject), including laws,
statutes and regulations relating to equal employment
opportunities, fair employment practices, unfair labor practices,
terms of employment, occupational health and safety, wages and
hours and discrimination, and zoning ordinances and building
codes.
(r) ENVIRONMENTAL. To the knowledge of Target, Target:
(i) is in material compliance with any and all applicable
foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) has received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct the Business
("Environmental Permits") and (iii) is in compliance with all
terms and conditions of such Environmental Laws and Environmental
Permits.
(s) REAL ESTATE.
(i) Target does not own any real property.
(ii) Target does not lease any real property other than
the premises identified on Section 4(h) of the Disclosure
Schedule as being so leased (the "Target Leased Premises").
The Target Leased Premises are leased to Target pursuant to
a written lease, complete copies of which, including all
amendments thereto, have been delivered to Parent. The
lease for the Target Leased Premises is in full force and
effect and all rentals, royalties or other payments accruing
and due and to be paid thereunder prior to the date hereof
have been fully paid. To Target's knowledge, no event,
occurrence or condition exists which, with the lapse of
-10-
time, the giving of notice, or both, or the happening of any
further event or condition, would become a default
thereunder.
(t) INTELLECTUAL PROPERTY. Subject to the last sentence of
this Section 4(t), Target owns or possesses adequate rights or
licenses to use all trademarks, trade names, service marks,
service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct the
Business as now conducted. Subject to the last sentence of this
Section 4(t), Target does not have any knowledge of any
infringement by Target of trademark, tradename rights, patents,
patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secret or other
similar rights of others, and to the knowledge of Target, there
is no claim, action or proceeding being made or brought against,
or to the knowledge of Target, threatened against Target
regarding trademark, tradename, patents, patent rights,
invention, copyright, license, service names, service marks,
service xxxx registrations, trade secret or other infringement,
and Target and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
Notwithstanding the foregoing, neither Target nor Stockholder
makes any representation or warranty relating to any intellectual
property or rights licensed to Target by Parent or any of its
Affiliates.
(u) CAPITAL COMMITMENTS. Stockholder's investors have
committed at least Twelve Million Dollars ($12,000,000) of
capital to Stockholder. As of the date of this Agreement,
Stockholder has received from its investors, and invested in
Target, Six Million Dollars ($6,000,000) of capital. Target will
receive, and will invest in Target, the balance of its investors'
capital commitments within thirty (30) days of the date hereof.
5. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO.
Parent and Mergerco jointly and severally represent and warrant to
Target and Stockholder as follows:
(a) CORPORATE ORGANIZATION, QUALIFICATION. Parent and
Mergerco are each corporations duly organized, existing and in
good standing, under the laws of the State of Delaware. Each of
Parent and Mergerco has all necessary power and authority to
conduct its business as its business is now being conducted.
Each of Parent and Mergerco has qualified as a foreign
corporation, and is in good standing, under the laws of all
jurisdictions where the nature of the Business or the nature or
location of its assets requires such qualification, except where
the failure to be so qualified could not reasonably be expected
to, individually or in the aggregate, have a Material Adverse
Effect on Parent. Except as set forth in the SEC Documents,
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Parent neither owns nor controls, directly or indirectly, any
interest in any corporation, limited liability company,
partnership or other entity.
(b) POWER AND AUTHORITY. This Agreement has been approved
by Parent's and Mergerco's board of directors and by Parent as
sole stockholder of Mergerco. No other action or approval,
including approval by Parent's stockholders, is required by
Parent to authorize and approve this Agreement and the Merger,
and each of Parent and Mergerco has and will have full corporate
power and authority to execute deliver and perform this Agreement
and all documents and instruments to be executed by Parent or
Mergerco pursuant to this Agreement (collectively, the "Parent's
and Mergerco's Ancillary Documents"). This Agreement and
Parent's and Mergerco's Ancillary Documents have been duly
executed and delivered by duly authorized officers of Parent or
Mergerco, as applicable. Neither the execution and delivery of
this Agreement and Parent's and Mergerco's Ancillary Documents by
Parent and Mergerco, respectively, nor the consummation by Parent
and Mergerco of the transaction contemplated hereby, will
conflict with or result in a breach of any of the terms,
conditions or provisions of Parent's or Mergerco's Certificate of
Incorporation or By laws, or of any order, writ, injunction,
judgment or decree of any court or any governmental authority or
of any arbitration award binding on Parent or Mergerco. The
execution, delivery and performance of this Agreement and
Parent's or Mergerco's Ancillary Documents by Parent and Mergerco
and the consummation by Parent and Mergerco of the transactions
contemplated thereby will not conflict with or constitute a
default (or an event which with notice or lapse of time or both
would become a default) under or give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which Parent or any of its
subsidiaries is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations of The National
Association of Securities Dealers Inc.'s OTC Bulletin Board on
which the Parent Common Stock is quoted) applicable to Parent or
any of its subsidiaries or by which any property or asset of
Parent or Mergerco is bound or affected.
(c) CONSENTS. No consent, authorization, order or approval
of, or filing or registration with, any governmental authority or
other person is required for the execution and delivery by Parent
or Mergerco of this Agreement and Parent's and Mergerco's
Ancillary Documents and the consummation by Parent and Mergerco
of the transaction contemplated by this Agreement and Parent's
and Mergerco's Ancillary Documents.
(d) CAPITALIZATION. The authorized capital stock of Parent
consists of (i) 40,000,000 shares of common stock, $0.01 par
value per share ("Parent Common Stock"), of which 18,234,615
-12-
shares are issued and outstanding, and (ii) 10,000,000 shares of
Preferred Stock, of which 100 shares are designated Series B
Convertible Preferred Stock (the "Parent Series B Preferred
Stock") and 8,000,000 shares will, upon filing of the Certificate
of Designation attached hereto as EXHIBIT G (the "Certificate of
Designation"), be designated Series C Convertible Preferred Stock
(the "Parent Series C Preferred Stock"). One hundred shares of
Parent Series B Preferred Stock and no shares of Parent Series C
Preferred Stock are issued and outstanding. The Parent Common
Stock, Parent Series B Preferred Stock and Parent Series C
Preferred Stock shall be referred to collectively herein as the
"Parent Stock". All of the issued and outstanding shares of
Parent Stock (or shares which will be issued and outstanding as
of the Effective Time) have been validly issued, are fully-paid
and non-assessable. Section 5(d) of the Disclosure Schedule sets
forth a complete and accurate list (including the number of
shares of Parent Stock issuable thereunder) of all outstanding
oral or written subscriptions, options, warrants, rights
(including preemptive rights), calls, convertible securities or
other agreements or commitments of any character relating to the
issued or unissued capital stock or other securities of Parent
obligating Parent to issue any securities of any kind, including
Parent Stock. The issued and outstanding shares of Parent Common
Stock were issued in compliance with all applicable federal and
state securities laws. Except as set forth on Section 5(d) of
the Disclosure Schedule, there are no stock appreciation rights,
phantom stock or similar rights in existence with respect to
Parent. Except as set forth on Section 5(d) of the Disclosure
Schedule, (x) there are no outstanding debt securities of Parent,
(y) there are no agreements or arrangements under which Parent is
obligated to register for sale any of their securities under the
Securities Act, and (z) there are no outstanding registration
statements and there are no outstanding comment letters from the
Securities Exchange Commission or other regulatory agency.
Section 5(d) of the Disclosure Schedule sets forth a complete and
accurate list of any (1) written or oral agreement, security or
instrument containing anti-dilution or similar provisions or
rights that prohibit the issuance of Parent Common Stock (or
securities convertible or exchangeable into Parent Common Stock)
or that prohibit such issuances at less than a certain price or
that result in the right to receive additional shares of Parent
Common Stock as a result of such issuances and (2) such
agreements, securities or instruments that have resulted, or upon
consummation of the transactions contemplated by this Agreement
will result, in an increase in the number of outstanding
securities of Parent pursuant to such provisions, and sets forth
any increases in the outstanding securities of Parent that have
or will result therefrom.
(e) CONSTITUENT DOCUMENTS. True and complete copies of the
Certificates of Incorporation and all amendments thereto, the By-
laws as amended and currently in force, all stock records, and
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all corporate minute books and records of Parent and Mergerco
have been furnished for inspection by Target. Said records of
Parent Stock (or securities convertible or exchangeable into
Parent Stock) and Mergerco accurately reflect all share
transactions and the current ownership of Parent Stock (or
securities convertible or exchangeable into Parent Stock) and
Mergerco. The corporate minute books and records of Parent and
Mergerco contain true and complete copies of all resolutions
adopted by the stockholder or the board of directors of Parent,
and any other action formally taken by Parent.
(f) SEC REPORTS AND FINANCIAL.
(i) Except as set forth on Schedule 5(f) of the
Disclosure Schedule, since January 1, 2002, Parent has
timely filed, all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC
under Securities Exchange Act of 1934, as amended (the
"Exchange Act")(all such documents to be referred to
collectively as "SEC Documents").
(ii) As of their respective dates, the SEC Documents
did not contain any untrue statement of material fact or
omit to state a material fact required to be stated therein
necessary to make the statements made therein, in light of
the circumstances under which they were made.
(iii) Parent's books, accounts and records are, and
have been, maintained in Parent's usual, regular and
ordinary manner, in accordance with generally accepted
accounting practices, and all material transactions to which
Parent has been a party are properly reflected therein.
(iv) Complete and accurate copies of the audited
consolidated balance sheet and statement of income, retained
earnings, and cash flows, and notes to financial statements
(together with any supplementary information thereto) of
Parent, all as of and for the year ended December 31, 2004,
are included in the SEC Documents (the "Parent Financial
Statements"). Complete and accurate copies of the unaudited
consolidated balance sheet of Parent as of March 31, 2005,
and the unaudited consolidated statement of income of the
Company and the Subsidiaries for the three month period then
ended have also been provided to Target (the "Parent Interim
Financial Statements"). The Parent Financial Statements and
Parent Interim Financial Statements, have been prepared
from, and are in accordance with, the books and records of
Parent and its consolidated subsidiaries, have been prepared
in accordance with GAAP, consistently applied during the
period involved (except as may be stated in the notes
thereto) and fairly present in all material respects the
consolidated financial position and the consolidated results
-14-
of operations and cash flows (and changes in financial
position, if any) of Parent and its consolidated
subsidiaries as of the times and for the periods referred to
therein.
(v) Parent has no Liabilities that would have a
Material Adverse Effect except for liabilities provided for
or reserved against in the Parent Interim Financial
Statements.
(g) LITIGATION. Except as set forth on Section 5(g) of the
Disclosure Schedule or as disclosed in the SEC Documents, there
is no (i) litigation or proceeding, in law or in equity;
(ii) proceedings or governmental investigations before any
commission or other administrative authority; or (iii) claim made
by any person or entity, in any case described in clauses (i),
(ii) and (iii) above, pending, or, to Parent's knowledge,
threatened, against Parent, Parent's directors or officers, or
with respect to or affecting Parent's operations, business,
products, sales practices or financial condition or related to
the consummation of the transaction contemplated hereby.
(h) CONTRACTS. Except as set forth in Section 5(h) of the
Disclosure Schedule, or as disclosed in the SEC Documents, Parent
is a not party to or bound by any Material Contract. All
Material Contracts and all other contracts or instruments to
which Parent is a party or is bound are in full force and binding
upon the parties thereto. No default by Parent has occurred
thereunder, Parent has performed all of its obligations
thereunder on a timely basis, and, to Parent's knowledge, no
default by the other contracting parties has occurred thereunder.
To Parent's knowledge, no event, occurrence or condition exists
which, with the lapse of time, the giving of notice, or both, or
the happening of any further event or condition, would become a
default by Parent thereunder. Complete and accurate copies of
all Material Contracts (including any amendments or supplements
thereto) have previously been delivered to Target. Parent is not
a party to or otherwise bound by any registration rights or
similar agreements that would conflict with or otherwise affect,
limit or cut-back the terms and rights granted to Stockholder
under the Registration Rights Agreement to be entered into as of
the Effective Time by Stockholder and Parent.
(i) INTELLECTUAL PROPERTY. Parent owns or possesses
adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names,
patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights
necessary to conduct their respective businesses as now
conducted. Parent does not have any knowledge of any
infringement by Parent of trademark, tradename rights, patents,
patent rights, copyrights, inventions, licenses, service names,
-15-
service marks, service xxxx registrations, trade secret or other
similar rights of others, and to the knowledge of Parent, there
is no claim, action or proceeding being made or brought against,
or to the knowledge of Parent, threatened against Parent
regarding trademark, tradename, patents, patent rights,
invention, copyright, license, service names, service marks,
service xxxx registrations, trade secret or other infringement,
and Parent is unaware of any facts or circumstances which might
give rise to any of the foregoing.
(j) ENVIRONMENTAL. To the knowledge of Parent, Parent
(i) is in material compliance with any and all Environmental Laws
(ii) has received all Environmental Permits and (iii) is in
compliance with all terms and conditions of such Environmental
Laws and Environmental Permits.
(k) EMPLOYEE BENEFITS. Except as set forth on Section 5(k)
of the Disclosure Schedule, all Benefit Plans that cover any
employee of Parent have been fully disclosed in the SEC
Documents. Each Benefit Plan of Parent subject to ERISA complies
in all material respects and has been administered in compliance
in all material respects with (A) the provisions of ERISA (B) all
provisions of the Code, applicable to secure the intended tax
consequences (C) all applicable state and federal securities laws
and (D) all other applicable laws, rules and regulations.
(l) LAWS. Parent is not a party to, or bound by, any
decree, order or arbitration award (or agreement entered into in
any administrative, judicial or arbitration proceeding with any
governmental authority) with respect to its properties, assets,
personnel or business activities. Parent is not in material
violation of, in material noncompliance with, or materially
delinquent in respect to, any decree, order or arbitration award
or law or statute, or regulation of or agreement with, any
Federal, state or local governmental authority (or to which its
properties, assets, personnel, business activities or real estate
are subject or to which it, itself, is subject), including laws,
statutes and regulations relating to equal employment
opportunities, fair employment practices, unfair labor practices,
terms of employment, occupational health and safety, wages and
hours and discrimination, zoning ordinances and building codes
and food and drug safety.
(m) CONDUCT OF BUSINESS. Except as set forth on Section
5(m) of the Disclosure Schedule, since the date of Parent's
Interim Financial Statements, Parent has not (i) sold or in any
way transferred or otherwise disposed of any of its assets or
property, except for cash applied in payment of liabilities in
the usual and ordinary course of business; (ii) suffered any
casualty, damage, destruction or loss, or any material
interruption in use, of any material assets or property (whether
or not covered by insurance), on account of fire, flood, riot,
-16-
strike or other hazard or act of God; (iii) made or suffered any
material change in the conduct or nature of any aspect of its
business; (iv) waived any right or canceled or compromised any
debt or claim, other than in the ordinary course of business;
(v) made (or committed to make) capital expenditures in an amount
which exceeds $50,000 for any item or $250,000 in the aggregate;
(vi) increased the compensation payable to any salaried employee
except in the ordinary course of business consistent with past
practices; (vii) hired or terminated any employee who has an
annual salary in excess of $50,000; (viii) borrowed any money or
issued any bonds, debentures, notes or other corporate securities
evidencing money borrowed; (ix) paid, declared or set aside any
dividend or other distribution on its securities of any class or
purchased, exchanged or redeemed any of its securities of any
class; (x) made any change in accounting methods, principles or
practices; (xi) purchased any asset (whether or not in the
ordinary course of business) for a cost in excess of $50,000; or
(xii) without limitation by the enumeration of any of the
foregoing, except for the execution of this Agreement, entered
into any transaction other than in the usual and ordinary course
of business.
(n) TITLE TO ASSETS. Parent owns or leases all tangible
assets necessary for the conduct of its business as presently
conducted and as proposed to be conducted as of the Closing Date.
Parent has good title to its assets, free and clear of any
Claims, except as set forth on Section 5(n) of the Disclosure
Schedule. No unreleased mortgage, trust deed, chattel mortgage,
security agreement, financing statement or other instrument
encumbering any of Parent's assets has been recorded, filed,
executed or delivered.
(o) RELATED PARTY TRANSACTIONS. Except as set forth on
Section 5(o) of the Disclosure Schedule or as disclosed in the
SEC Documents, no Affiliate of Parent: (i) owns any property or
right, whether tangible or intangible, which is used by Parent,
(ii) has any claim or cause of action against Parent; (iii) owes
any money to Parent or is owed money by Parent; (iv) is a party
to any contract or other arrangement, written or oral, with
Parent; or (v) provides services or resources to Parent or is
dependent on services or resources provided by Parent. Section
5(o) of the Disclosure Schedule sets forth every business
relationship (other than normal employment relationships) between
Parent, on the one hand, and Parent's (or any subsidiary of
Parent's) present or former officers, directors, employees or
shareholders or members of their families (or any entity in which
any of them has a material financial interest, directly or
indirectly), on the other hand, including any agreement or
arrangement between Parent and E. Khashoggi Industries LLC
("EKI") and Affiliates of EKI.
-17-
(p) PERMITS. Parent possess all material certificates,
authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct
their respective businesses and Parent has not received any
notice of proceedings relating to revocation or modification of
any such certificate, authorization or permit.
(q) MATERIAL ADVERSE CHANGES. Since December 31, 2004,
Parent has not suffered or, to Parent's knowledge, been
threatened with any material adverse change in the business,
operations, assets, liabilities, financial condition or
prospects, including, without limiting the generality of the
foregoing, the existence or threat of any labor dispute, or any
material adverse change in, or material loss of, any relationship
between Parent, on the one hand, and any of its (or its
licensee's) customers, suppliers, licensors, licensees, advisors,
or key employees, on the other hand.
(r) TAXES. Except as set forth in the SEC Documents or as
set forth on Section 5(r) of the Disclosure Schedule, Parent has
filed all Returns required to be filed with respect to Taxes and
financial results of Parent. All such Returns were correct and
complete in all material respects. All Taxes payable by Parent,
whether or not shown on any Return, have been paid in full, and
Parent has fully complied with all applicable tax laws and
agreements. No claim has ever been made by an authority in a
jurisdiction where Parent does not file Returns that Parent is or
may be subject to taxation by that jurisdiction. Parent has
withheld and paid all Taxes or other amounts required to have
been withheld and paid in connection with amounts paid or owing
to any employee. There is no dispute or claim concerning any
liability for Taxes of Parent claimed or raised by any taxing
authority, and, there is no pending or, to Parent's knowledge,
threatened or anticipated audits or other investigations in
respect of Taxes of Parent. The transaction contemplated herein
is not subject to the tax withholding provisions of section 3406
of the Code, or of Subchapter A of Chapter 3 of the Code, or of
any other provision of law. As of December 31, 2003, Parent's
consolidated net operating loss carryforward for U.S. income tax
purposes and for each state to which Parent is obligated to file
tax returns is set forth in Section 5(r) of the Disclosure
Schedule. Since such date, there has been no material reduction
to such net operating loss carry forwards. The transactions
contemplated by this Agreement will not result in any reduction
in Parent's consolidated Federal net operating loss carryover
under Code section 382 or under any applicable state income tax
law.
(s) EMPLOYEE RELATIONS. Parent is not involved in any
labor dispute nor, to the knowledge of Parent, is any such
dispute threatened. None of Parent's employees is a member of a
union.
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6. CONDUCT PRIOR TO THE CLOSING. Between the date hereof and
the Closing Date:
(a) ACCESS. Each party to this Agreement shall and shall
cause (as applicable) its subsidiaries to give to the officers,
employees, agents, attorneys, consultants, accountants and
lenders of the other parties hereto reasonable access during
normal business hours to all of the properties, books, contracts,
documents, records and personnel of each such party and shall
furnish to the other parties hereto and such persons as such
other parties shall designate such information as such persons
may at any time and from time to time reasonably request in order
to permit each such party to complete its respective due
diligence investigation pertaining to the transactions
contemplated by this Agreement. All such information shall be
subject to the confidentiality provisions set forth in Section 12
hereof.
(b) PROVISION OF INFORMATION BY PARENT TO TARGET. In
addition to the covenants set forth in Section 6(a) above, Parent
shall also provide to Target:
(i) All financial information pertaining to Parent as
is provided to the Board of Directors and other members of
management of Parent, including monthly financial reports,
budgets, and financial projections; and
(ii) Any information regarding EKI and the financial,
business and other agreements and arrangements in place by
and between Parent and EKI, or its Affiliates, as Target may
request.
(c) CONSENTS. Each party hereto shall use its best efforts
and make every good faith attempt and shall cooperate with each
other to obtain all consents to the consummation of the
transaction contemplated hereby under or with respect to, any
contract, lease, agreement, purchase order, sales order or other
instrument, or Permit, where the consummation of the transaction
contemplated hereby would be prohibited or constitute an event of
default, or grounds for acceleration or termination, in the
absence of such consent (the "Consents").
(d) CONDUCT OF BUSINESS. Each party hereto shall carry on
its business in the usual and ordinary course, consistent with
past practices and shall use its best efforts to preserve its
business and the goodwill of its customers, suppliers and others
with which each such party has business relations and to retain
its business organizational capability. Without limiting the
foregoing, without the prior written consent of the other parties
hereto, and without limiting the generality of any other
provision of this Agreement, no party hereto shall: (i) amend its
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Certificate of Incorporation or By-laws (except, in the case of
Parent, in connection with the Certificate of Designation and the
decrease or increase in the number of directors); (ii) make any
change in its authorized shares of stock, (iii) issue any shares
of stock of any class, or issue or become a party to any
subscriptions, warrants, rights, options, convertible securities
or other agreements or commitments of any character relating to
the issued or unissued capital stock of any party hereto or any
subsidiary thereof, or to other equity securities of any such
party, or grant any stock appreciation or similar rights, except,
in the case of Parent, upon the exercise or conversion of
options, warrants or other convertible securities outstanding as
of the date hereof; (iv) make distributions of any kind to EKI
other than those expressly disclosed to Target prior to the
Closing; (v) incur, assume or guarantee any long-term or short-
term indebtedness; (vi) directly or indirectly, enter into,
assume or amend any contract, agreement, obligation, lease,
license or commitment other than in the usual and ordinary course
of business in accordance with past practices; (vii) make any
change to its accounting methods or principles, or make any Tax
elections; and (viii) pay, declare, accrue or set aside any
dividends or any other distributions, in cash, property or
otherwise, on its securities of any class or purchase, exchange
or redeem any of its securities of any class. Notwithstanding
the foregoing, nothing in this Section 6(d) shall prohibit (A)
Target from taking such action and entering into such agreements
and other transactions, including incurring indebtedness, as are
necessary or advisable in connection with the fit-up of the
Lebanon facility, the acquisition of 16 plate making machines and
the commercial operation of such machines and the sale of
products, or negotiating, finalizing and entering into employment
agreements with certain key employees of Target, which may
include the terms set forth on Section 6(d)(A) of the Disclosure
Schedule or (B) Parent from (x) issuing additional shares of
Parent Common Stock to Cornell Capital Partners, LP pursuant to
the Standby Equity Distribution Agreement dated as of March 23,
2005 between Parent and Cornell Capital Partners, LP, as in
effect on the date of this Agreement, or (y) issuing additional
shares of Parent Common Stock to Defined Portfolio Management,
LLC in a "PIPE" transaction having the following terms: (1)
Parent may issue up to 4,000,000 shares of Parent Common Stock at
$4.00 per share or the then market price, but in no event less
than $3.00 per share; (2) in connection with such issuance,
Parent may issue a warrant exercisable for not more than three
years for up to 500,000 shares of Parent Common Stock at an
exercise price of at least $5.00 per share; (3) the proceeds of
any such transaction shall be used to discharge indebtedness of
Target (including indebtedness that is convertible into Parent
Common Stock) or to redeem other securities of Parent that are
convertible into Parent Common Stock; (4) such PIPE transaction
shall not contain any terms or conditions requiring the consent
of Defined Portfolio Management, LLC or any other party to the
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transactions contemplated by this Agreement; and (5) any such
PIPE transaction shall not be reasonably likely to interfere with
the consummation of the transactions contemplated by this
Agreement. Parent shall provide Stockholder with copies of all
documentation relating to any proposed PIPE transaction at least
fifteen (15) days prior to entering into any definitive
agreements regarding such transaction.
(e) NO INTENTIONAL ACTS. No party shall intentionally
perform any act which, if performed, or omit to perform any act
which, if omitted to be performed, would prevent or excuse the
performance of this Agreement by any party hereto or which would
result in any representation or warranty herein contained of said
party being untrue in any material respect as if originally made
on and as of the Closing Date.
(f) CERTIFICATE OF DESIGNATION. Parent will file the
Certificate of Designation with the Secretary of State of the
State of Delaware.
7. CONDITIONS TO TARGET'S OBLIGATIONS. The obligation of
Target to close the transactions contemplated hereby is subject to the
satisfaction or waiver of all of the following conditions on or prior
to the Closing Date:
(a) Each and every representation and warranty made by
Parent and Mergerco shall have been true and correct in all
material respects when made and shall be true and correct in all
material respects as if originally made on and as of the Closing
Date, except for changes resulting from actions permitted under
Section 6 hereof or as agreed to by Stockholder.
(b) All obligations of Parent and Mergerco to be performed
hereunder through, and including on, the Closing Date (including
all obligations which Parent and would be required to perform at
the Closing if the transaction contemplated hereby was
consummated) shall have been performed.
(c) No suit, proceeding or investigation shall have been
commenced or threatened by any governmental authority or private
person on any grounds to restrain, enjoin or hinder, or to seek
material damages on account of, the consummation of the
transaction contemplated hereby.
(d) Parent shall have delivered to Target the written
opinion of Xxxxxx Xxxx & Xxxxxxxx LLP, counsel for Parent, dated
as of the Closing Date, in substantially the form of EXHIBIT B
attached hereto.
(e) All of the Consents listed on EXHIBIT C shall have been
obtained and delivered to Target.
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8. CONDITIONS TO PARENT'S OBLIGATIONS. The obligation of
Parent and Mergerco to close the transaction contemplated hereby is
subject to the fulfillment of all of the following conditions on or
prior to the Closing Date:
(a) Each and every representation and warranty made by
Stockholder shall have been true and correct in all material
respects when made and shall be true and correct in all material
respects as if originally made on and as of the Closing Date
except for changes resulting from actions permitted under Section
6 hereof or as agreed to by Parent.
(b) All obligations of Target to be performed hereunder
through, and including on, the Closing Date (including all
obligations which Target would be required to perform at the
Closing if the transaction contemplated hereby was consummated)
shall have been performed.
(c) All of the Consents listed on EXHIBIT D shall have been
obtained and delivered to Parent.
(d) No suit, proceeding or investigation shall have been
commenced or threatened by any governmental authority or private
person on any grounds to restrain, enjoin or hinder, or to seek
material damages on account of, the consummation of the
transaction contemplated hereby.
(e) Target shall have provided evidence of (i) its payment
under Purchase Order Number CE-00001, which provides Target with
16 ATW/DTE Modules installed and operational with full support
equipment including but not limited to mixing equipment to
support at least 16 Modules, conveyors and stackers for at least
9" plates and 12 oz bowls; (ii) installed electrical, air and
water systems in the Lebanon, Missouri facility for operational
support of such machines; (iii) financing in an amount equal to
$1,000,000 plus or minus any amount due or owed under the
Purchase Order for start-up costs, closing costs, initial
operating losses and working capital, plus amounts available
under one or more credit facilities, if needed, to provide
additional funding to support ongoing working capital needs; and
(iv) compliance with Section 4(u) hereof. Target shall also
provide (A) confirmation that (1) the 16 plate making machines
have passed such completion tests as are set forth in the
Purchase Order and (2) royalties have been accrued or paid to
Parent pursuant to the Sublicense Agreement by and between Parent
and Target, and (B) a pro forma balance sheet as of the Closing
demonstrating that Target's equity and debt financing are
adequate to operate the 16 modules without additional funding
being required from Parent.
(f) Target shall have delivered to Parent the written
opinion of Xxxxxx Xxxxxx LLP, counsel to Target, dated as of the
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Closing Date, in substantially the form of EXHIBIT E attached
hereto.
(g) To the extent the directors and officers of Target
shall no longer be the persons identified on Section 4(e) of the
Disclosure Schedule, such successor directors and officers shall
be reasonably acceptable to Parent.
9. RIGHT TO TERMINATE. Anything to the contrary herein
notwithstanding, this Agreement and the transaction contemplated
hereby may be terminated at any time prior to the Closing by prompt
notice given in accordance with Section 15(b):
(a) By mutual consent;
(b) by Target at any time prior to the Closing for any
reason; and
(c) by either Target or Parent if the Closing shall not
have occurred at or before 11:59 p.m., on March 31, 2006;
provided, however, that the right to terminate this Agreement
under this Section 9(c) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement
has been the cause of or resulted in the failure of the Closing
to occur on or prior to the aforesaid date.
10. REMEDIES. In the event of a breach of this Agreement before
Closing, the non-breaching party shall not be limited to the remedy of
termination of this Agreement, but shall be entitled to pursue all
available legal and equitable rights and remedies, and shall be
entitled to recover all of its reasonable costs and expenses incurred
in pursuing them (including reasonable attorneys' fees).
11. POST CLOSING AGREEMENTS. From and after the Closing:
(a) FURTHER ASSURANCES. The parties shall execute such
further documents, and perform such further acts, as may be
necessary to consummate the transactions contemplated hereby, on
the terms herein contained, and to otherwise comply with the
terms of this Agreement. In furtherance of the foregoing, if, at
any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any deeds, bills of sale,
assignments or assurances or any other acts or things are
reasonably necessary, desirable or proper (i) to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its
right, title and interest in, to or under any of the rights,
privileges, powers, permits, licenses, franchises, properties or
assets of either of Parent or Target, or (ii) otherwise to carry
out the purposes of this Agreement, the Surviving Corporation and
its proper officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of
either Parent or Target, all such deeds, bills of sale,
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assignments and assurances and do, in the name and on behalf of
such corporations, all such other acts and things as may be
necessary, desirable or proper to vest, perfect or confirm the
Surviving Corporation's right, title and interest in, to and
under any of the rights, privileges, powers, permits, franchises,
properties or assets of such corporations and otherwise to carry
out the purposes of this Agreement.
(b) MANAGEMENT OF SURVIVING CORPORATION. Surviving
Corporation shall operate as an independent subsidiary of Parent,
operating as an independent licensee of Parent subject to the
terms and conditions of the Sublicense Agreement between Parent
and Target, but shall report to the Board of Directors of Parent
for budgetary and strategic approval.
(c) NET OPERATING LOSSES. Following the Closing, Parent
will make commercially reasonable efforts not to take any action
that will result in a change of control that will trigger the
limitations set forth in Section 382 of the Code.
12. DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) OBLIGATION TO MAINTAIN CONFIDENTIALITY. Parent,
Mergerco, Target and Stockholder each agree that for the longest
period permitted by law following the date of this Agreement,
such party shall, and shall cause such party's Affiliates to,
maintain all Confidential Information of the other parties in
confidence and shall not disclose any such Confidential
Information to anyone outside of the parties hereto, and such
party shall, and shall cause such party's Affiliates to, not use
any Confidential Information for its own benefit or the benefit
of any third party. Nothing in this Agreement, however, shall
prohibit such party from using or disclosing Confidential
Information to the extent required by law. If such party is
required by applicable law to disclose any Confidential
Information, such party shall (1) provide the applicable party
hereto with prompt notice before such disclosure in order that
such party may attempt to obtain a protective order or other
assurance that confidential treatment will be accorded such
information and (2) cooperate with the applicable party hereto in
attempting to obtain such order or assurance. "Confidential
Information" means information regarding Parent, its
subsidiaries, Target, Stockholder or the Business to the extent
it is Confidential, including the following: (1) information
regarding Parent's or Target's or the Business' operations,
assets, liabilities or financial condition; (2) information
regarding Parent's, Target's or the Business' pricing, sales,
merchandising, marketing, capital expenditures, costs, joint
ventures, business alliances, purchasing or manufacturing;
(3) information regarding Parent's, Target's or the Business'
other employees or sales representatives, including their
identities, responsibilities, competence and compensation;
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(4) customer lists or other information regarding Parent's,
Target's or the Business' current or prospective customers,
including information regarding their identities, contact persons
and purchasing patterns; (5) information regarding Parent's,
Target's or the Business'' current or prospective vendors,
suppliers, distributors or other business partners;
(6) forecasts, projections, budgets and business plans regarding
Parent, Target or the Business; (7) information regarding
Parent's, Target's or the Business' planned or pending
acquisitions, divestitures or other business combinations;
(8) Parent's, Target's or the Business' trade secrets and
proprietary information; (9) technical information, patent
disclosures and applications, copyright, applications, sketches,
drawings, blueprints, models, know-how, discoveries, inventions,
improvements, techniques, processes, business methods, equipment,
algorithms, software programs, software source documents and
formulae, in each case regarding Parent's, Target's or the
Business' current, future or proposed products or services
(including information concerning Target's research, experiment
work, development, design details and specifications, and
engineering); and (10) Parent's, Target's or the Business'
website designs, website content, proposed domain names, and data
bases. "Confidential" means not generally available to the
public. Information shall not be considered to be generally
available to the public if it is made public in violation of this
Agreement or by a third party who has no lawful right to disclose
the information or who does so in violation of any contractual,
legal or fiduciary obligation to Target.
(b) INJUNCTIVE RELIEF. Parent, Mergerco, Target and
Stockholder each specifically recognizes that any breach of
Section 12 hereof will cause irreparable injury to the other
parties and that actual damages may be difficult to ascertain,
and in any event, may be inadequate. Accordingly (and without
limiting the availability of legal or equitable, including
injunctive, remedies under any other provisions of this
Agreement), the parties agree that in the event of any such
breach, the party alleging damage by such breach shall be
entitled to seek injunctive relief in addition to such other
legal and equitable remedies that may be available. Parent,
Mergerco, Target and Stockholder each recognize that the
territorial, time and scope limitations in Section 12 hereof are
reasonable and properly required for the protection of Parent,
Mergerco, Target and Stockholder and in the event that any of
such limitation or the absence of such time limitation, is deemed
to be unreasonable by a court of competent jurisdiction, each
such party agrees and submits to the imposition of such a
limitation as said court shall deem reasonable.
13. INDEMNIFICATION OBLIGATIONS OF PARENT. From and after the
Closing, Parent shall defend, indemnify, save and keep harmless
Stockholder and its officers, directors, shareholders, managers,
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members, successors and permitted assigns against and from all Damages
(as herein defined) sustained or incurred by any of them resulting
from or arising out of or by virtue of: (a) any inaccuracy in or
breach of any representation and warranty made by Parent or Mergerco
in this Agreement or in any closing document delivered to Target or
Stockholder in connection with this Agreement, for as long as such
representation and warranty survives; or (b) any breach by Parent or
failure by Parent to comply with, any of its covenants or obligations
under this Agreement. As used in this Agreement, the term "Damages"
shall mean all liabilities, demands, claims, actions or causes of
action, regulatory, legislative or judicial proceedings or
investigations, assessments, levies, losses, fines, penalties,
damages, costs and expenses, including reasonable attorneys',
accountants', investigators', and experts' fees and expenses,
sustained or incurred in connection with the defense or investigation
of any claim.
14. INDEMNIFICATION OBLIGATIONS OF STOCKHOLDER. From and after
the Closing, Stockholder shall defend, indemnify, save and keep
harmless Parent from all Damages sustained or incurred by Parent
resulting from or arising out of or by virtue of: (a) any inaccuracy
in or breach of any representation and warranty made by Stockholder in
this Agreement or in any closing document delivered to Parent by
Stockholder in connection with this Agreement, for as long as such
representation and warranty survives; or (b) any breach by Target of,
or failure by Target to comply with, any of its covenants or
obligations under this Agreement. For a period of two (2) years
following the Closing, prior to making any distribution of shares of
Series C Convertible Preferred Stock of Parent or Parent Common Stock
to any of its members (other than a distribution in exchange for fair
consideration), Stockholder shall obtain such member's agreement to
assume a pro rata share of Stockholder's indemnification obligations
under the preceding sentence, based on the number of shares
distributed to such member.
15. ARBITRATION. In the event that following the Closing there
is any dispute with respect to any claim made by a party seeking
indemnification hereunder, the parties shall negotiate in good faith
to resolve such dispute within fifteen (15) days of notice thereof.
In the event that the parties cannot settle such dispute within such
time, either party may submit such dispute to binding arbitration by
notifying the other party, in writing, of such submission. Each party
shall have the right to be represented by counsel and shall have the
right to discovery to the full extent permitted by the rules governing
civil litigation in the state of Delaware. Such party submitting a
dispute for binding arbitration shall submit a demand which shall set
forth a statement of the nature of the dispute, the amount involved
and the remedies sought. The arbitration shall be conducted by
JAMS/Endispute in either Chicago, Illinois or New York, New York,
under the arbitration rules and procedures of JAMS/Endispute, and any
judgment on the award rendered by the arbitrator(s) shall be final and
binding may be entered in any court having jurisdiction thereof. Any
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such arbitration shall be conducted by a panel of three (3) neutral
and impartial arbitrators, as selected and administered by
JAMS/Endispute. The arbitrators designated hereunder shall not now or
in the three years preceding such arbitration, be an employee,
consultant, officer, director or shareholder of any party or have now
or in the three (3) years preceding such arbitration, have any
business relationship with any party. Within ten (10) calendar days
after the arbitrators are appointed, the arbitrators shall schedule
the arbitration for a hearing to commence on a the earliest mutually
convenient date, but not later than fifteen (15) days after the time
the hearing is scheduled. The hearing shall commence reasonably
promptly after the arbitrator is appointed and shall continue from day
to day until completed. The decision of the arbitrator shall be final
and binding on the parties and not subject to appeal in any court of
law.
16. MISCELLANEOUS.
(a) PUBLICITY. Except as otherwise required by law, the
parties hereto shall refrain from, and shall cause their
representatives to refrain from, directly or indirectly, making
any press release or other public disclosure or otherwise
informing any customer, supplier or other person with which
Parent or Target has a business relationship, with respect to the
transactions contemplated by this Agreement, without giving the
other party twenty-four hours prior written notice of the content
of such proposed release or disclosure.
(b) NOTICES. All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by
facsimile, by nationally recognized private courier, or by United
States mail. Notices delivered by mail shall be deemed given
three (3) business days after being deposited in the United
States mail, postage prepaid, registered or certified mail.
Notices delivered by hand, by facsimile, or by nationally
recognized private carrier shall be deemed given on the first
business day following receipt; provided, however, that a notice
delivered by facsimile shall only be effective if such notice is
also delivered by hand, or deposited in the United States mail,
postage prepaid, registered or certified mail, on or before two
(2) business days following its delivery by facsimile. All
notices shall be addressed as follows: (1) if to Parent,
addressed to EarthShell Corporation, 0000 Xxxxx Xxxxxx, Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000, attention Xxxxx X. Xxxxxx,
telecopier: (000) 000-0000, with a copy to Xxxxxx Xxxx &
Xxxxxxxx LLP, 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx
00000-0000 attention Xxxxxx X. Xxxxxxxxxx, Esq., telecopier:
(000) 000-0000; and (2) if to Target or Stockholder, addressed to
ReNewable Products, LLC, 000 Xxxxx Xxxxxxxxx Xxxx., Xx. Xxxxx, XX
00000, telecopier: (000) 000-0000, attention: Xxxxx X. Xxxxxx
with a copy to Xxxxxx Xxxxxx LLP, 0000 Xxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx, 00000, telecopier: (000) 000-0000, attention: Xxxxx X.
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Xxxxx, Esq.; and/or (3) to such other respective addresses and/or
addressees as may be designated by notice given in accordance
with the provisions of this Section 15(b).
(c) FEES AND EXPENSES. Each party hereto shall bear all
fees and expenses incurred by such party in connection with,
relating to or arising out of the execution, delivery and
performance of this Agreement and the consummation of the
transaction contemplated hereby, including attorneys',
accountants' and other professional fees and expenses.
(d) ENTIRE AGREEMENT. This Agreement and the instruments
to be delivered by the parties pursuant to the provisions hereof
constitute the entire agreement between the parties. Each
exhibit, and the Disclosure Schedule, shall be considered
incorporated into this Agreement.
(e) SURVIVAL; NON-WAIVER. All representations and
warranties shall survive the Closing for a period of two (2)
years, regardless of any investigation or lack of investigation
by any of the parties hereto. For purposes of the Closing, the
parties shall be deemed to have remade their respective
representations and warranties as of the Closing, except for
those representations and warranties that speak as of a
particular date. The failure in any one or more instances of a
party to insist upon performance of any of the terms, covenants
or conditions of this Agreement, to exercise any right or
privilege in this Agreement conferred, or the waiver by said
party of any breach of any of the terms, covenants or conditions
of this Agreement, shall not be construed as a subsequent waiver
of any such terms, covenants, conditions, right or privileges,
but the same shall continue and remain in full force and effect
as if no such forbearance or waiver had occurred. No waiver
shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.
(f) APPLICABLE LAW. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the internal
laws of the State of Delaware applicable to contracts made in
that State, without regard to any conflict of law principles of
the State of Delaware.
(g) CONSENT TO JURISDICTION. The parties hereto
irrevocably consent and submit to the exclusive jurisdiction of
any local, state or federal court within the County of New Castle
in the State of Delaware for enforcement of this Agreement. The
parties hereto irrevocably waive any objection they may have to
venue in the defense of an inconvenient forum to the maintenance
of such actions or proceedings to enforce this Agreement.
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(h) BINDING EFFECT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their
successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to confer on any person other
than the parties hereto, and their respective successors and
permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
(i) ASSIGNMENT. This Agreement shall not be assignable by
any party without the prior written consent of all parties.
(j) AMENDMENTS. This Agreement shall not be modified or
amended except pursuant to an instrument in writing executed and
delivered on behalf of each of the parties hereto.
(k) HEADINGS. The headings contained in this Agreement are
for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.
(l) SEVERABILITY. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, and this Agreement
shall be reformed, construed and enforced in such jurisdiction so
as to best give effect to the intent of the parties under this
Agreement.
(m) COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which is deemed to be an original
and all of which taken together constitute one and the same
agreement.
(n) NO STRICT CONSTRUCTION. The parties hereto jointly
participated in the negotiation and drafting of this Agreement.
The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their collective
mutual intent, this Agreement shall be construed as if drafted
jointly by the parties hereto, and no rule of strict construction
shall be applied against any Person.
(o) GENDER. As used in this Agreement, the masculine,
feminine or neuter gender shall be deemed to include the others
whenever the context so indicates or requires.
(p) INTERPRETATION. Whenever the term "include" or
"including" is used in this Agreement, it shall mean "including,
without limitation," (whether or not such language is
specifically set forth) and shall not be deemed to limit the
range of possibilities to those items specifically enumerated.
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The words "hereof", "herein" and "hereunder" and words of similar
import refer to this Agreement as a whole and not to any
particular provision. "Knowledge" of Parent, or other words of
similar import such as "to Parent's knowledge," shall mean the
actual conscious knowledge of Xxxxx Xxxxxx, Xxxxx Xxxxxx and
Xxxxx Xxxxxxx after reasonable investigation. Terms defined in
the singular have a comparable meaning when used in the plural
and vice versa.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
EARTHSHELL CORPORATION
By: Xxxxx X. Xxxxxx
________________________________
Name: Xxxxx X. Xxxxxx
Its: CEO
By: Xxxxx Xxxxxxx
________________________________
Name: Xxxxx Xxxxxxx
Its: CFO
EARTHSHELL TRIANGLE, INC.
By: Xxxxx X. Xxxxxx
________________________________
Name: Xxxxx X. Xxxxxx
Its: CEO
RENEWABLE PRODUCTS, INC.
By: Xxxxx X. Xxxxxx
________________________________
Name: Xxxxx X. Xxxxxx
Its: VP
RENEWABLE PRODUCTS LLC
By: Xxxxx X. Xxxxxx
________________________________
Name: Xxxxx X. Xxxxxx
Its: VP
-31-
EXHIBIT A
CLOSING DELIVERIES
------------------
1. Target's Deliveries
-------------------
(a) Registration and Investor Rights Agreement, by and among
Parent and Stockholder
(b) Copies of Certificate of Incorporation and By-laws,
certified by the Secretary of State of the State of Delaware
and the Secretary of Target
(c) Merger Certificate
(d) Certificate of Good Standing issued by the State of Delaware
and Missouri
(e) Closing Certificate including incumbency
2. Parent's Deliveries
-------------------
(a) Registration and Investor Rights Agreement by and among
Parent and Stockholder
(b) EKI Lock-up Agreement in the form attached hereto as Exhibit
F
(c) Copies of Certificate of Incorporation and By-laws for
Parent and Mergerco, certified by the Secretary of State of
the State of Delaware and the Secretary of Parent and
Mergerco, as applicable and the Secretary of Mergerco
(d) Merger Certificate
(e) Certificate of Good Standing issued by the State of Delaware
and the State of California for Parent and Mergerco
(f) Certificates representing Parent Series C Preferred Stock
A-1
EXHIBIT B
FORM OF PARENT'S LEGAL OPINION
------------------------------
SEE ATTACHED
B-1
EXHIBIT C
MATERIAL CONSENTS TO BE OBTAINED BY PARENT
------------------------------------------
1. Consent of Cornell Capital Partners, LP
C-1
EXHIBIT D
MATERIAL CONSENTS TO BE OBTAINED BY TARGET
------------------------------------------
None.
D-1
EXHIBIT E
FORM OF TARGET'S LEGAL OPINION
------------------------------
SEE ATTACHED
E-1
EXHIBIT F
EKI LOCK-UP AGREEMENT
---------------------
SEE ATTACHED
F-1
EXHIBIT G
CERTIFICATE OF DESIGNATION
--------------------------
SEE ATTACHED
G-1
