EXHIBIT 10.2
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (this "AGREEMENT") is made and entered into
as of January 25, 2008, by and among The Quercus Trust ("QUERCUS"), and
WorldWater & Solar Technologies Corp., a Delaware corporation (the "COMPANY" or
"WWAT").
WHEREAS, Quercus is the owner of twenty-nine million ninety-two thousand
five hundred (29,092,500) shares of Common Stock of the Company, of which
twenty-one million five hundred twenty-nine thousand five hundred (21,529,500)
shares were acquired on the public market (the "PUBLIC STOCK") and seven million
five hundred thousand (7,500,000) shares were acquired pursuant to a Stock and
Warrant Purchase Agreement dated September 28, 2007 (the "PURCHASE AGREEMENT")
(the "PRIVATE PLACEMENT STOCK"); and
WHEREAS, the Company desires to exchange nineteen thousand seven hundred
(19,700) shares of its Series E Convertible Preferred Stock (hereinafter
described) for seven million five hundred thousand (7,500,000) shares of Private
Placement Stock and for twelve million two hundred thousand (12,200,000) shares
of Public Stock. Quercus is willing to effect such exchange on the terms set
forth herein; and
WHEREAS, the Company intends to effect the acquisition of Entech,
Incorporated in a transaction which will require the issuance of approximately
nineteen million seven hundred thousand (19,700,000) shares of Common Stock to
the shareholders of Entech (the "ENTECH ACQUISITION").
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
1. Exchange of Shares.
1.1 Exchange. The Company hereby agrees to issue to Quercus nineteen
thousand seven hundred (19,700) shares of its Series E Convertible Preferred
Stock ("SERIES E PREFERRED"), in the form, and containing the rights,
preferences and privileges set forth in Exhibit "A". Quercus hereby agrees to
transfer to the Company in exchange for the Series E Preferred a total of
nineteen million seven hundred thousand (19,700,000) shares of the Company's
Common Stock, consisting of seven million five hundred thousand (7,500,000)
shares of Private Placement Stock and twelve million two hundred thousand
(12,200,000) shares of Public Stock.
1.2 The Closing. The exchange of the Series E Preferred shall take place at
the offices of Salvo Landau Gruen & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location as the Company and
Quercus mutually agree, concurrently with the closing of the Entech Acquisition
(the "CLOSING"). At the Closing, upon transfer of the nineteen million seven
hundred thousand (19,700,000) shares of Common Stock to the Company, the Company
shall deliver to Quercus a certificate representing the Series E Preferred (the
"PREFERRED CERTIFICATE") against delivery to the Company of the certificate for
the Private Placement Stock and of twelve million two hundred thousand
(12,200,000) shares of the Public Stock, either electronically or manually. The
obligation of Quercus to consummate the exchange at the Closing is subject to
the performance by the Company of the covenants set forth in Sections 2.1 and
2.2 below and to the truth and accuracy of the representations and warranties of
the Company in Section 3 below.
2. Covenants of Company.
2.1 Certificate of Designation. The Company agrees to file the Certificate
of Designation in the form of Exhibit "A" attached hereto with the Delaware
Secretary of State prior to the Closing.
2.2 Condition of Closing. Quercus' obligations hereunder shall be subject
to the concurrent consummation of the Entech Acquisition. Quercus may waive this
condition in its sole and absolute discretion.
2.3 Amendment to Certificate of Incorporation. Quercus and the Company
agree and acknowledge that (i) the Company does not have currently authorized
sufficient shares of unissued Common Stock to allow for the conversion of the
Series E Preferred, (ii) the Company's board of directors (the "BOARD") has
approved an amendment ("AMENDMENT") to the Company's Certificate of
Incorporation to increase the authorized number of Common Stock to four hundred
twenty-five million (425,000,000), which would authorize sufficient shares of
Common Stock to allow the conversion of the Series E Preferred in full, (iii)
the Board has approved the holding of a meeting of Shareholders to consider and
approve the Amendment, and has voted to recommend to Shareholders that the
Amendment be approved, and (iv) the Company has authorized "blank check"
preferred stock with respect to which the Board has the power to designate the
rights, preferences and privileges. In light of the foregoing, the Company
agrees (x) to use best efforts to cause the Amendment to be approved by
Shareholders and filed with the Delaware Secretary of State as soon as
practicable, and to thereafter at all times cause there to be sufficient
authorized and unissued shares of Common Stock and other securities to allow the
Series E Preferred to be converted in full.
2.4 Filing Amendment. The Company agrees to use best efforts to obtain SEC
approval of its proxy statement, to obtain shareholder approval of the Amendment
and to file the Amendment with the Delaware Secretary of State as soon as
practicable following the Closing (the "FILING DEADLINE").
3. Representations and Warranties of Company. Except for compliance with
the requirements contained in Sections 2.1 and 2.3, the Company hereby
represents and warrants to Quercus that:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has full corporate power and authority to
own and hold its properties and to conduct its business. The Company is duly
licensed or qualified to do business, and in good standing, in each jurisdiction
in which the nature of its business requires licensing, qualification or good
standing, except for any failure to be so licensed or qualified or in good
standing that would not have a material adverse effect on (i) the Company, (ii)
its consolidated results of operations, assets, or financial condition, (iii)
its ability to perform its obligations under this Agreement or (iv) the Series E
Preferred (a "MATERIAL ADVERSE EFFECT").
3.2 Consents and Approvals. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, regional, state or local governmental authority on the part of the
Company is required in connection with the consummation of the transactions
contemplated by this Agreement except for filings with the State of Delaware
relating to the Entech Acquisition.
3.3 Authorization. The Company has full corporate power and authority to
execute, deliver and enter into this Agreement and to consummate the
transactions contemplated hereby. All action on the part of the Company
necessary for the authorization, execution, delivery and performance of this
Agreement by the Company, the authorization, sale, issuance and delivery of the
Series E Preferred, and the Common Stock issuable upon the conversion of the
Series E Preferred (the "CONVERSION SHARES") and the performance of the
Company's obligations hereunder has been taken. The Conversion Shares have been
duly authorized and, when issued and paid for in accordance with this Agreement,
will be validly issued, fully paid and non-assessable and will be free and clear
of all liens imposed by or through the Company other than restrictions imposed
by this Agreement and applicable securities laws. This Agreement has been duly
executed and delivered by the Company, and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and by general equitable principles,
or (ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
3.4 Compliance With Other Instruments.
(a) The execution and delivery by the Company of this Agreement and the
consummation of the transactions contemplated hereby will not (i) result in the
violation of any provision of the Certificate of Incorporation or By-laws of the
Company, (ii) result in any violation of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental
authority to or by which the Company is bound, (iii) trigger the increase in the
rights of any holder of the Company's outstanding debt or equity securities,
including securities converted with such securities, (iv) conflict with, or
result in a breach or violation of, any of the terms or provisions of, or
constitute (with due notice or lapse of time or both) a default under, any
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement to which the Company is a party or by which it is bound or to which
any of its properties or assets is subject, nor result in the creation or
imposition of any lien upon any of the properties or assets of the Company, in
the cases of clauses (ii) and (iii) above, only to the extent such conflict,
breach, violation, default or lien reasonably could, individually or in the
aggregate, have or result in a Material Adverse Effect.
(b) No consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority remains to be obtained or is
otherwise required to be obtained by the Company in connection with the
authorization, execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby, including, without limitation the issue
and sale of the Series E Preferred and the Conversion Shares, except filings as
may be required to be made by the Company with (i) the United States Securities
and Exchange Commission ("SEC") and (ii) state "blue sky" or other securities
regulatory authorities.
3.5 Material Adverse Changes. Since June 30, 2007, there has not occurred
any event or events which, singly or in the aggregate, have had or are
reasonably expected to have, a Material Adverse Effect upon the business,
operations or financial condition of the Company.
3.6 Issuance of Securities. Since September 28, 2007, the Company has not
issued any capital stock, or any securities convertible into, or exchangeable
for, capital stock, or entered into any written or oral commitment with respect
thereto, except for its agreement of merger in connection with the Entech
Acquisition.
4. Representations and Warranties of Quercus. Quercus hereby represents and
warrants to, and agrees with, the Company that:
4.1 Restricted Securities. Quercus understands that (i) the Series E
Preferred and the Conversion Shares are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering, (ii) under such laws
and applicable regulations such securities may be resold without registration
under federal and state securities laws only in certain limited circumstances,
and (iii) the Company may require a legal opinion of Quercus' counsel with
respect to unregistered transfers.
4.2 Accredited Investor. Quercus represents that it is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act.
4.3 Legends. Quercus understands that the certificates evidencing the
Series E Preferred Stock will bear substantially the following legends: THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF
SUCH SECURITIES ACT.
4.4 Investment Purposes. The securities will be acquired for investment for
Quercus' own account, not as a nominee or agent, an not with a view to the
public resale or distribution thereof within the meaning of the federal or state
securities laws, and Quercus has no present intention of selling, granting any
participation in, or otherwise distributing the same. Quercus further represents
that he or it does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the securities.
5. Certain Covenants of WWAT. The provisions of Section 4 of that certain
Stock and Warrant Purchase Agreement between Quercus and the Company dated
September 28, 2007 (the "PURCHASE AGREEMENT") are hereby incorporated by
reference and shall apply to seven million five hundred thousand (7,500,000)
shares of Common Stock from time to time owned by Quercus, whether such Common
Stock constitutes part of the Public Shares or constitutes Conversion Shares.
6. Indemnification. The provisions of Section 5 of the Purchase Agreement
are hereby incorporated by reference and shall apply to the transactions
contemplated by this Agreement.
7. Survival of Representations and Warranties. All representations,
warranties and agreements made by WWAT and Quercus in this Agreement or in any
certificate or other instrument delivered pursuant hereto shall survive the
Closing and any investigation and discovery by WWAT or by Quercus, as the case
may be, made at any time with respect thereto; provided, however, that, other
than with respect to Section 3.6 (for which there shall be no time limit),
neither Quercus nor WWAT shall have any liability to the other for any
misrepresentation, inaccuracy or omission in any representation or warranty, or
any breach of any representation or warranty, unless the party asserting a claim
with respect to any thereof gives to the other written notice of such claim on
or before the date which is two (2) years following the Closing Date.
8. Miscellaneous.
8.1 Entire Agreement. This Agreement contains the entire agreement among
the parties with respect to the exchange contemplated hereby.
8.2 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Delaware.
8.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.4 Severability. The invalidity of any portion hereof shall not affect the
validity, force, or effect of the remaining portions hereof. If it is ever held
that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, the parties agree that a court of competent
jurisdiction may enforce such restriction to the maximum extent permitted by law
against those for whom it may be enforceable, and each party hereby consents and
agrees that such scope may be judicially modified accordingly in any proceeding
brought to enforce such restriction.
8.5 Further Assurances. The parties hereto shall, without additional
consideration, execute and deliver or cause to be executed and delivered such
further instruments and shall take or cause to be taken such further actions as
are necessary to carry out more effectively the intent and purpose of this
Agreement.
8.6 Successors and Assigns. Except as otherwise provided herein, the terms
and conditions of Section 5 of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the parties (including
transferees of any securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
8.7 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
8.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
address as set forth on the signature page hereof or at such other address as
such party may designate by ten (10) days advance written notice to the other
parties hereto.
8.9 Finder's Fee. Each party represents that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction. Quercus agrees to indemnify and to hold harmless the Company from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which Quercus or any of its trustees, employees or
representatives is responsible. The Company agrees to indemnify and hold
harmless Quercus from any liability for any commission or compensation in the
nature of a finders' fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
8.10 Expenses. The Company shall pay all costs and expenses that it incurs
with respect to its negotiation, execution, delivery and performance of this
Agreement and, if the Closing is effected, shall pay the actual legal fees and
costs of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Fields Claman & Machtinger LLP, counsel to Quercus,
in an amount not to exceed Five Thousand Dollars ($5,000). If any action at law
or in equity is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
8.11 Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and Quercus. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding, and each
future holder of all such securities and the Company.
8.12 Aggregation of Stock. All shares of Common Stock held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
PURCHASER:
THE QUERCUS TRUST
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Trustee
Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
A109 - PMB ▇▇▇
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COMPANY:
WORLDWATER & SOLAR TECHNOLOGIES CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Chief Executive Officer
Address:
Pennington Business Park
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EXHIBIT "A"
CERTIFICATE OF DESIGNATION