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EXHIBIT 2.3
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STOCK PURCHASE AGREEMENT
ENTERED INTO MARCH ____, 2001
BETWEEN
ERESOURCE CAPITAL GROUP, INC.
AND
▇▇▇▇▇▇▇ HOLDINGS, INC.
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TABLE OF CONTENTS
ARTICLE I. SALE AND PURCHASE OF THE LST SHARES................................................. 1
1.1 Sale and Purchase................................................................... 1
1.2 Closing............................................................................. 1
1.3 Purchase Price...................................................................... 1
1.4 Rights of Former Stockholders....................................................... 2
1.5 Other Agreements.................................................................... 2
1.6 Basic Agreements and Transaction Defined............................................ 2
1.7 Portion of eRCG Shares Contingent; Sale of eRCG Shares.............................. 2
ARTICLE II. REPRESENTATIONS AND WARRANTIES...................................................... 3
2.1. Representations and Warranties of Seller............................................ 3
2.2. Representations and Warranties Concerning LST....................................... 4
2.3. Representations and Warranties of Purchaser......................................... 7
ARTICLE III. COVENANTS........................................................................... 8
3.1. Mutual Covenants.................................................................... 8
3.2. Seller's Covenants.................................................................. 9
3.3. No Shop............................................................................. 9
3.4. Public Announcements................................................................ 10
3.5. Confidentiality..................................................................... 10
ARTICLE IV. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER
TO CLOSE............................................................................ 10
4.1. Compliance with Seller's Representations, Warranties and Covenants.................. 10
4.2. No Adverse Change................................................................... 10
4.3. No Legal Proceedings................................................................ 10
4.4 Documents to be Delivered by Seller................................................. 10
4.5 Consents............................................................................ 11
4.6 Listing of eRCG Shares.............................................................. 11
4.7 Amendment of Stock Option Plan...................................................... 11
4.8 Cancellation of Outstanding Options................................................. 11
4.9 Sale by Other LST Stockholders...................................................... 11
4.10 Consummation of Private Placement by LST............................................ 11
4.11 Investigation....................................................................... 11
ARTICLE V. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER TO CLOSE.......................... 12
5.1. Compliance with Purchaser's Representations, Warranties and Covenants............... 12
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5.2. No Legal Proceedings................................................................ 12
5.3. Other Agreements.................................................................... 12
5.4. Payments............................................................................ 12
ARTICLE VI. TERMINATION......................................................................... 12
6.1. Termination and Abandonment......................................................... 12
ARTICLE VII. MISCELLANEOUS....................................................................... 13
7.1. Survival............................................................................ 13
7.2. Binding Effect of the Basic Agreements; No Third Party Beneficiaries................ 13
7.3. Governing Law....................................................................... 13
7.4. Notices............................................................................. 13
7.5. Headings............................................................................ 14
7.6. Severability........................................................................ 14
7.7. Expenses............................................................................ 14
7.8. Integration; Interpretation......................................................... 14
7.9. Amendments.......................................................................... 14
7.10. Variation of Pronouns............................................................... 14
7.11 Waivers............................................................................. 14
7.12. Counterparts; Facsimile Signatures.................................................. 15
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("AGREEMENT") is entered into this __ day
of March, 2001, between ERESOURCE CAPITAL GROUP, INC., a Delaware corporation
("PURCHASER"), and ▇▇▇▇▇▇▇ HOLDINGS, INC., a Delaware corporation ("SELLER") and
a stockholder of LST, INC., a Delaware corporation d/b/a LifeStyle Technologies
("LST").
WHEREAS, Seller is the record and beneficial owner of Two Million Four
Hundred Fifty Thousand (2,450,000) shares ("LST SHARES") of LST's common stock,
par value $.001 per share ("LST COMMON STOCK"), representing approximately 29%
of the issued capital stock of LST; and
WHEREAS, Seller desires to sell the LST Shares to Purchaser, and
Purchaser desires to purchase the LST Shares, upon the terms and conditions set
forth herein.
NOW, THEREFORE in consideration of the mutual promises and covenants
contained herein, and for other good valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, and subject to the
accuracy of the representations and warranties of the parties, the parties
hereto agree as follows:
I.
SALE AND PURCHASE OF THE LST SHARES
1.1 SALE AND PURCHASE. Subject to the terms and conditions hereof,
at the Closing (as defined in Section 1.2 hereof), Seller agrees to sell,
assign, transfer, convey and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, the LST Shares.
1.2 CLOSING. The purchase shall be consummated at a closing
("CLOSING") to take place at the offices of Purchaser on the date and time on
which the last of the conditions specified in Articles IV and V hereof have been
satisfied or waived, or such other place, time or date as may be mutually agreed
upon by the parties hereto.
1.3 PURCHASE PRICE. The purchase price ("PURCHASE PRICE") for the
LST Shares shall be One Dollar and Thirty cents ($1.30) per share, payable in
restricted shares (the "ERCG SHARES") of Purchaser's common stock, par value
$.04 per share (the "ERCG COMMON STOCK"), with the value of each Purchaser's
Share being equal to the average for the five (5) trading days immediately
preceding the Closing Date of the daily closing price of eRCG Common Stock as
reported by the American Stock Exchange (the "AVERAGE SHARE PRICE"); provided,
however, that if the Average Share Price is less than One Dollar ($1.00), then
the Average Share Price shall be deemed to be One Dollar ($1.00) for purposes of
calculating the Purchase Price due Seller. The Purchase Price shall be paid at
Closing, by issuance and delivery of the eRCG Shares to Seller, with Seller
receiving cash in lieu of any fractional eRCG Share that Seller may be entitled
to receive pursuant to this Section 1.3. Purchaser will give stop transfer
instructions to its transfer agent with respect to the eRCG Shares and there
will be placed on the certificate(s) representing such eRCG Shares a restrictive
legend.
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1.4 RIGHTS OF FORMER STOCKHOLDERS. Until surrendered for exchange,
each certificate representing LST Shares shall from and after the Closing
represent for all purposes only the right to receive the Purchase Price. Seller
will not be entitled to vote or give its consent after the Closing at any
meeting or action by written consent of Purchaser's stockholders until it has
exchanged its certificates representing the LST Shares for certificates
representing the eRCG Shares.
1.5 OTHER AGREEMENTS. At the Closing, the indicated parties shall
deliver the following additional agreements:
(a) Seller shall deliver to Purchaser stock
certificate(s) representing all of the LST Shares held by Seller, duly
endorsed to Purchaser in blank or accompanied by duly executed stock
power(s), transferring such LST Shares from Seller to Purchaser;
(b) Seller shall deliver to Purchaser an executed
counterpart signature page to the Investment Representation Agreement,
substantially in the form attached hereto as Exhibit 1.5(b); and
(c) Purchaser and Seller shall each deliver an executed
counterpart signature page to the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit 1.5(c).
1.6 BASIC AGREEMENTS AND TRANSACTION DEFINED. This Agreement and
other agreements listed in paragraph 1.5, are sometimes referred to as the
"Basic Agreements." The transaction contemplated by the Basic Agreement and the
agreements with the other stockholders of LST are sometimes referred to as the
"Transaction".
1.7 PORTION OF ERCG SHARES CONTINGENT; SALE OF ERCG SHARES.
(a) Notwithstanding Section 1.3 hereof, the delivery by
Purchaser to Seller of One Million (1,000,000) eRCG Shares that Seller is
entitled to receive pursuant to such Section 1.3 (the "CONTINGENT
CONSIDERATION") is contingent upon LST meeting or exceeding the specified
performance milestones at specified milestone dates through March 31, 2002 as
set forth in Exhibit 1.7 attached hereto. Provided LST meets all the performance
milestones, the Contingent Consideration shall be payable in equal installments
set forth on Exhibit 1.7 attached hereto that correspond with each performance
milestone within thirty (30) days of Purchaser's receipt and confirmation of
financial statements and reasonable supporting documentation from LST (the
"CONTINGENT PAYMENT DATE") associated with such performance milestone. If LST
does not meet a specified performance milestone, then Purchaser is not obligated
to deliver to Seller the Contingent Consideration installment on the specified
milestone date. However, the performance milestones are cumulative in nature,
and, therefore, if LST does not meet an earlier performance milestone but does
meet a subsequent performance milestone, then, upon the Contingent Payment Date
corresponding to the subsequent performance milestone, Purchaser shall deliver
to Seller the installment of Contingent Consideration for the performance
milestone that LST met as well as the installment of Contingent Consideration
for the earlier performance
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milestone that LST failed to meet.
(b) Seller hereby agrees that for a period commencing on the
Closing and ending on the three (3) year anniversary thereof, the number of
shares of eRCG Common Stock sold by or for the account of Seller (whether or not
(i) such shares are now owned by Seller or are acquired by Seller after the date
hereof or (ii) such shares are restricted or unrestricted securities under
applicable securities laws) on any day (the "SALES DATE") shall not exceed ten
percent (10%) of the average five (5) day reported volume of trading of eRCG's
Common Stock on all national securities exchanges and/or reported through the
automated evaluation system of a registered securities association preceding the
Sales Date.
SELLER EXPRESSLY ACKNOWLEDGES AND AGREES THAT THE OTHER STOCKHOLDERS OF
LST ARE NOT SUBJECT TO THE PROVISIONS OF THIS SECTION 1.7 OR CERTAIN OTHER
PROVISIONS OF THIS AGREEMENT.
II.
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF SELLER. With such
exceptions, if any, as may be set forth in a letter (the "SELLER DISCLOSURE
LETTER") to be delivered by Seller to Purchaser on the date hereof, Seller
represents and warrants to Purchaser as follows:
(a) TITLE TO THE LST SHARES. At Closing, Seller shall own
of record and beneficially the LST Shares free and clear of all liens,
encumbrances, pledges, claims, options, charges and assessments of any
nature whatsoever, with full right and lawful authority to transfer the
LST Shares to Purchaser. No person has any preemptive rights or rights
of first refusal with respect to any of the LST Shares. There exists no
voting agreement, voting trust, or outstanding proxy with respect to
any of the LST Shares. There are no outstanding rights, options,
warrants, calls, commitments, or any other agreements of any character,
whether oral or written, with respect to the LST Shares.
(b) AUTHORITY; CONSENTS. Seller has full power and lawful
authority, including, if Seller is a corporation, full corporate power
and authority, to execute and deliver the Basic Agreements and the
Seller Disclosure Letter and to consummate and perform the Transaction
contemplated thereby. The Basic Agreements constitute (or shall, upon
execution, constitute) valid and legally binding obligations of Seller,
enforceable in accordance with their terms. To Seller's knowledge,
neither the execution and delivery of the Basic Agreements and the
Seller Disclosure Letter by Seller, nor the consummation and
performance of the Transaction, conflicts with, requires the consent,
waiver or approval of, results in a breach of or default under, or
gives to others any interest or right of termination, cancellation or
acceleration in or with respect to, any agreement by which Seller is a
party or by which Seller or any of its properties or assets are bound
or affected. Seller need not give any notice to, make any filings with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the Transaction.
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(c) NONCONTRAVENTION. Neither the execution and the
delivery of the Basic Agreements and Seller Disclosure Letter, nor the
consummation of the Transaction, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which Seller is subject or (ii) if Seller is a corporation,
any provision of such Seller's charter or bylaws.
(d) CAPITAL STOCK RIGHTS. Seller has no stock options,
warrants, rights, calls or any other agreements of any character,
whether oral or written, obligating LST to issue any shares of its
capital stock.
(e) ORGANIZATION OF INCORPORATED SELLER. If Seller is a
corporation, such Seller is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation.
(f) DISCLOSURE. All statements of Seller contained in the
Basic Agreements and in the Seller Disclosure Letter by and on behalf
of Seller and LST are true and correct in all material respects and do
not omit any material fact necessary to make the statements contained
therein not misleading in light of the circumstances under which they
were made. There are no facts known to Seller, which could have a
materially adverse effect upon the business, financial condition,
results of operations, assets, liabilities, or prospects of LST, which
have not been disclosed to Purchaser in the Basic Agreements or Seller
Disclosure Letter.
2.2 REPRESENTATIONS AND WARRANTIES CONCERNING LST. With such
exceptions, if any, as may be set forth in the Seller Disclosure Letter, Seller
represents and warrants to Purchaser, to the best of Seller's knowledge, as
follows:
(a) ORGANIZATION. LST is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of
Delaware. LST has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business. LST is
duly qualified and in good standing as a foreign corporation in each
jurisdiction where its ownership of property or operation of its
business requires qualification.
(b) AUTHORIZED CAPITALIZATION. The authorized
capitalization of LST consists of 20,000,000 shares of common stock,
par value $.001 per share, of which 8,349,750 shares have been issued
and are outstanding. LST has no other capital stock authorized, issued
or outstanding and there are no shares of stock held in treasury. The
outstanding shares of LST Common Stock have been duly authorized,
validly issued, fully paid and nonassessable with no personal liability
attaching to the ownership thereof and were offered, issued, sold and
delivered by LST in compliance with all applicable state and federal
laws. Except as set forth on Schedule 2.2(b) of the Seller Disclosure
Letter, LST does not have any outstanding rights, options, warrants,
calls, commitments, conversion or any other agreements of any
character, whether oral or written, obligating it to issue any shares
of its capital stock, whether authorized or not. LST is not a party to
and is not bound by any agreement, contract, arrangement or
understanding, whether
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oral or written, giving any person or entity any interest in, or any
right to share, participate in or receive any portion of LST's income,
profits or assets, or obligating LST to distribute any portion of its
income, profits or assets.
(c) CONSENTS. Except as set forth on Schedule 2.2(c) of
the Seller Disclosure Letter, the consummation and performance of the
Transaction (i) does not conflict with, require the consent, waiver or
approval of, result in a breach of or default under or give to others
any interest or rights of termination, cancellation or acceleration in
or with respect to, any agreement by which LST is a party or LST or any
of its properties or assets are bound or affected, and (ii) will not
result in the imposition of any claim, lien, encumbrance or restriction
of any kind upon the assets of LST.
(d) LST FINANCIAL STATEMENTS. The financial statements of
LST (the "LST FINANCIAL STATEMENTS") set forth in Schedule 2.2(d) of
the Seller Disclosure Letter are complete, were prepared in accordance
with generally accepted accounting principles applied on a basis
consistent with prior periods and fairly present the financial position
of LST as of December 31, 2000 and there have been no material changes
thereafter.
(e) COMPLIANCE WITH LAWS. LST is not in violation of any
federal, state, local or other law, ordinance, rule or regulation
applicable to its business, and has not received any actual or
threatened complaint, citation or notice of violation or investigation
from any governmental authority.
(f) NO LITIGATION. There are no actions, suits, claims,
complaints or proceedings pending or threatened against LST, at law or
in equity, or before or by any governmental department, commission,
court, board, bureau, agency or instrumentality; and there are no facts
which would provide a valid basis for any such action, suit or
proceeding. There are no orders, judgments or decrees of any
governmental authority outstanding which specifically apply to LST or
any of its assets.
(g) MATERIAL CONTRACTS. Schedule 2.2(g) of the Seller
Disclosure Letter sets forth a list of all material contracts of LST.
LST has in all material respect performed all of its obligations
required to be performed by it through the date hereof, and is not in
default or alleged to be in default in any material respect, under any
contract, including any leases for office space, and there exists no
event, condition or occurrence which, after notice or lapse of time or
both, constitutes such a default.
(h) EMPLOYMENT MATTERS. LST is not a party to any
employment agreements, letters or other agreements with any individual
with respect to his or her employment with LST. Schedule 2.2(h) of the
Seller Disclosure Letter sets forth a complete and accurate list of
employees and each employee's rate of compensation (including wages and
guaranteed or anticipated bonuses). LST is not subject to any labor
disputes.
(i) NO UNDISCLOSED LIABILITIES. Except as set forth in
LST Financial Statements, Seller is not aware of any material
liabilities for which LST is currently liable
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or will become liable in the future.
(j) TAXES. LST has timely filed all federal, state, local
and foreign tax returns and tax reports required to be filed with the
appropriate governmental agency in all jurisdictions in which such
returns and reports are required to be filed, excepting only those
taxes which will not be due until after the Closing. All such returns
and reports are true, correct and complete, and all amounts shown as
owing on them have been paid, including all interest, penalties,
deficiencies and assessments heretofore levied or assessed against LST.
There is no agreement for extension of time of payment of any taxes of
LST. There is no examination or audit pending or threatened by the
Internal Revenue Service or by any state or local taxing authority with
respect to tax matters of LST.
(k) REAL PROPERTY. LST does not own any real property.
(l) INSURANCE. A complete and accurate list of all
insurance policies held by LST and now in force (including insurance
policies covering the assets, business, equipment, properties,
employees, officers and directors of LST) are set forth in Schedule
2.2(l) of the Seller Disclosure Letter and are of the type and in
amounts customarily carried by persons conducting businesses similar to
those of LST. There is no material claim by LST pending under any of
the insurance policies as to which coverage has been questioned, denied
or disputed by the underwriters of such policies.
(m) INTELLECTUAL PROPERTY. Schedule 2.2(m) of the Seller
Disclosure Letter sets forth a complete and accurate list of and
describes all franchises, licenses, patents, patent applications,
trademarks, service marks, trade names, copyrights and rights with
respect to any of the foregoing (collectively, "INTELLECTUAL PROPERTY
RIGHTS") presently owned or held by LST. LST owns the right to use all
of the Intellectual Property Rights. The Intellectual Property Rights
are all that are necessary for LST to conduct its business. No event
has occurred which permits, or after notice or lapse of time would
permit, the revocation or termination of any of the Intellectual
Property Rights. LST has no reason to believe that it is infringing,
nor has it received notice with respect to the infringement or possible
or claimed infringement, upon, or, that it is otherwise acting
adversely to, any known right or claimed right of any person with
respect to any Intellectual Property Rights.
(n) BENEFIT PLANS. Schedule 2.2(n) of the Seller
Disclosure Letter sets forth a complete and accurate list of all of the
employee benefit plans that LST maintains or contributes to, or has
maintained or to which it has made contributions (including any
terminated employee benefit plans). LST does not have any obligation
under any employee benefit plans other than those identified on
Schedule 2.2(n), and LST is in compliance with all applicable
provisions of ERISA and the regulations and published interpretations
thereunder with respect to all employee benefit plans. The execution
and deliver of this Agreement and the consummation of the Transaction
will not result in any violations of ERISA or any other laws related
thereto.
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(o) ACCOUNTS RECEIVABLE; CUSTOMERS. All accounts
receivable of LST represent in all material respects sales made in the
ordinary course of business. Schedule 2.2(o) of the Seller Disclosure
Letter sets forth LST's top 20 customers by ▇▇▇▇▇▇▇▇ and/or revenues
received. Seller has no knowledge of any oral or written notice or
other indication from any customer stating that it intends to terminate
its business relationship with LST or reduce the amount of business it
does with LST.
2.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER. With such
exceptions, if any, as may be set forth in a letter (the "PURCHASER DISCLOSURE
LETTER") to be delivered by Purchaser to Seller on the date hereof, Purchaser
represents and warrants to Seller as follows:
(a) ORGANIZATION. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of
the state of Delaware. Purchaser has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business. Purchaser is duly qualified and in good standing as a foreign
corporation in each jurisdiction where its ownership of property or
operation of its business requires qualification.
(b) AUTHORIZED CAPITALIZATION. The authorized
capitalization of Purchaser consists of Two Hundred Million
(200,000,000) shares of common stock, of which 61,687,654 shares have
been issued and are outstanding as of March 7, 2001, and 10,000,000
shares of preferred stock, none of which are issued or outstanding. In
addition, Purchaser, as of March 7, 2001, has outstanding warrants and
options to purchase 27,380,120 shares of the eRCG Common Stock. At
Closing, all issued and outstanding stock of Purchaser, including the
eRCG Shares, will have been duly authorized, validly issued, fully paid
and nonassessable with no personal liability attaching to the ownership
thereof. Seller will receive all right, title and interest to eRCG
Shares free and clear of all liens, pledges, mortgages, security
interests and claims whatsoever, except those imposed by state and
federal securities laws.
(c) AUTHORITY; CONSENTS. Purchaser has full power and
lawful authority to execute and deliver the Basic Agreements and the
Purchaser Disclosure Letter and to consummate and perform the
Transaction. The Basic Agreements constitute (or shall, upon execution,
constitute) valid and legally binding obligations of Purchaser,
enforceable in accordance with their terms. To Purchaser's knowledge,
neither the execution and delivery of the Basic Agreements and the
Purchaser Disclosure Letter by Purchaser, nor the consummation and
performance of the Transaction, conflicts with, requires the consent,
waiver or approval of, results in a breach of or default under, or
gives to others any interest or right of termination, cancellation or
acceleration in or with respect to, any agreement by which Purchaser is
a party or by which Purchaser or any of its properties or assets are
bound or affected.
(d) INVESTMENT INTENT. Purchaser is acquiring the LST
Shares for its own account, for investment purposes only, and not with
a view to the sale or distribution of any part thereof and Purchaser
has no present intention of selling, granting participation
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in, or otherwise distributing the same. Purchaser understands the
specific risks related to an investment in the LST Shares, especially
as it relates to the financial performance of LST.
(e) FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
Purchaser has filed all material reports, schedules, forms, statements
and other documents with the Securities and Exchange Commission (the
"SEC") pursuant to applicable state and federal securities laws through
the date hereof (the "SEC DOCUMENTS") and the SEC Documents constitute
all material documents required to have been filed by Purchaser
pursuant to such laws.
(f) DISCLOSURE. All statements of Purchaser contained in
the Basic Agreements and in the Purchaser Disclosure Letter by or on
behalf of Purchaser are true and correct in all material respects and,
when considered in conjunction with the SEC Documents, do not omit any
material fact necessary to make the statements contained therein not
misleading in light of the circumstances under which they were made.
There are no facts known to Purchaser which could have a material
adverse affect upon the business, financial condition, results of
operations, assets or liabilities of Purchaser, which have not been
disclosed to Seller in the Basic Agreements, the Purchaser Disclosure
Letter or the SEC Documents.
III.
COVENANTS
3.1 MUTUAL COVENANTS. Purchaser and Seller, on behalf of LST and
to the best of Seller's ability, each covenant and agree that from the date
hereof until Closing each shall:
(a) ORDINARY COURSE OF BUSINESS. Operate its business
only in the ordinary course and use its best efforts to preserve its
business, properties, assets, contracts, organization, goodwill and
relationships with persons with whom it has business dealings.
(b) NO INDEBTEDNESS. Not create, incur, assume, guarantee
or otherwise become liable with respect to any obligation for borrowed
money, indebtedness, capitalized lease or similar obligation, except in
the ordinary course of business consistent with past practices where
the entire net proceeds thereof are deposited with and used by and in
connection with the business.
(c) MAINTAIN BOOKS. Maintain its books, accounts and
records in the usual, regular and ordinary business manner and in
accordance with generally accepted accounting principles applied on a
basis consistent with past practices.
(d) NO AMENDMENTS. (i) Not amend its corporate charter or
bylaws (or similar documents) or material contracts, and (ii) maintain
its corporate existence, licenses, permits, powers and rights in full
force and effect.
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(e) TAXES AND ACCOUNTING MATTERS. (i) File when due all
federal, state and local tax returns and reports which shall be
accurate and complete, including, but not limited to, income,
franchise, excise, ad valorem, and other taxes with respect to its
business and properties, and to pay as they become due all taxes or
assessments, except for taxes for which adequate reserves are
established and which are being contested in good faith by appropriate
proceedings, and (ii) not change its accounting methods or practices or
any depreciation, amortization or inventory valuation policies or
practices.
(f) DUE COMPLIANCE. Comply in all material respects with
all laws, regulations, rules and ordinances applicable to it and to the
conduct of its business.
(g) CONSENTS. Use its best efforts to obtain the consent
or approval of each person or entity whose consent or approval is
required for the consummation of the Transactions.
(h) EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, use its reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper and advisable under applicable laws to
consummate and make effective, as soon as practicable after the date of
this Agreement, the Transaction.
3.2 SELLER'S COVENANTS. Seller, on behalf of LST and to the best
of Seller's ability, covenants and agrees from the date hereof until Closing,
LST shall:
(a) COMPENSATION. Not (i) enter into or alter any
employment agreements, (ii) grant any severance or increase in
compensation other than normal merit increases consistent with its
general prevailing practices to any officer or employee, (iii) enter
into or alter any labor or collective bargaining agreement or any bonus
or other employee fringe benefit, or (iv) adopt or amend any employee
stock option plan.
(b) NO SECURITIES ISSUANCES OR CHANGES/NO DISTRIBUTIONS.
Not to (i) issue any shares of any class of capital stock, or enter
into any contract, option, warrant or right calling for the issuance of
any such shares of capital stock, or create or issue any securities
convertible into any securities, (ii) accelerate or amend the period of
exercisability of warrants or restricted stock or reprice any warrants
or authorize cash payments in exchange for any warrants, or (iii)
declare or pay any dividends on or make any other distributions in any
form in respect of capital stock, or split, combine or reclassify any
capital stock.
3.3 NO SHOP. Seller agrees to, and to the best of Seller's ability
shall cause LST to, negotiate exclusively with Purchaser and not to solicit,
negotiate, enter into any agreement or entertain other offers or alternative
proposals for the LST Shares or the acquisition of Seller, its assets or stock
from the date hereof until the earlier of (i) termination of this Agreement or
(ii) August 31, 2001.
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3.4 PUBLIC ANNOUNCEMENTS. Seller shall not, and to the best of
Seller's ability shall cause LST not to, without the prior written consent of
Purchaser, make any announcement, issue any press release or make any statement
to any third party with respect to the Transaction except as may be necessary to
comply with any law, regulation or order and then only after prior notice to
Purchaser as to the content of such announcement.
3.5 CONFIDENTIALITY. Seller agrees to, and to the best of Seller's
ability shall cause LST to, maintain the confidentiality of all confidential
information furnished to it related to Purchaser and shall not use or disclose
such information for any purpose, except in furtherance of the Transaction.
IV.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF PURCHASER TO CLOSE
The obligation of Purchaser to close the Transaction is subject to the
fulfillment prior to the Closing of each of the following conditions, which may
be waived in whole or in part by Purchaser:
4.1 COMPLIANCE WITH SELLER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS. The representations and warranties of Seller contained in Sections
2.1 and 2.2 hereof shall have been true and correct in all material respects
when made and shall be true and correct in all material respects as of the
Closing with the same force and effort as if made at the Closing. Seller shall
have performed in all material respects all agreements, covenants and conditions
required to be performed by Seller prior to the Closing.
4.2 NO ADVERSE CHANGE. There shall have been no event, which has
had or may have a material adverse effect upon the business, financial
condition, results of operation, assets, liabilities or prospects of LST.
4.3 NO LEGAL PROCEEDINGS. No suit, action or other legal or
administrative proceeding before any court or other governmental agency shall be
pending or threatened seeking to enjoin the consummation of the Transaction.
4.4 DOCUMENTS TO BE DELIVERED BY SELLER. Seller shall have
delivered the following documents:
(a) Stock certificate(s) representing all of the LST
Shares held by Seller, duly endorsed to Purchaser in blank or
accompanied by duly executed stock powers;
(b) All agreements referred to in Section 1.5 hereof,
executed by all parties thereto other than Purchaser; and
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(c) Such other documents or certificates as shall be
reasonably required by Purchaser or its counsel in order to close and
consummate the Transaction.
4.5 CONSENTS.
(a) BY PURCHASER. Purchaser's Board of Directors shall
have approved and taken all necessary corporate action to execute,
deliver and perform the Basic Agreements, the Purchaser Disclosure
Letter and consummate the Transaction.
(b) BY LST. LST shall have delivered to Purchaser any and
all consents, waivers or approvals of any government, government agency
or other third party necessary to the consummation and performance of
the Transaction.
4.6 LISTING OF ERCG SHARES. The eRCG Shares to be issued in
connection with the Transaction shall be listed for trading on the American
Stock Exchange.
4.7 AMENDMENT OF STOCK OPTION PLAN. LST shall have caused Article
X of that certain LST, Inc. Omnibus Stock Option and Award Plan dated September
29, 2000 (the "STOCK OPTION PLAN") to be amended to provide that upon a "Change
of Control" (as defined in the Stock Option Plan) all outstanding options shall
be cancelled and any vested, but unexercised options shall no longer be
exercisable.
4.8 CANCELLATION OF OUTSTANDING OPTIONS. LST shall have cancelled
any and all outstanding options, whether granted pursuant to the Stock Option
Plan or otherwise, and any vested but unexercised options shall no longer be
exercisable.
4.9 SALE BY OTHER LST STOCKHOLDERS. Stockholders of LST holding
one hundred percent (100%) of the issued and outstanding LST Common Stock shall
have entered into stock purchase agreements with Purchaser similar to this
Agreement and the other agreements set forth in Section 1.5 hereof.
4.10 CONSUMMATION OF PRIVATE PLACEMENT BY LST. LST shall have sold
2,500,000 shares of LST Common Stock for a purchase price of One Dollar ($1.00)
per share pursuant to the terms of that certain Private Placement Memorandum
dated July 15, 2000.
4.11 INVESTIGATION. Purchaser shall have satisfactory completed its
due diligence investigation of LST. No investigation by Purchaser shall affect
the representations and warranties of Seller.
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V.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER TO CLOSE
The obligation of Seller to close the Transaction is subject to the
fulfillment prior to Closing of each of the following conditions, which may be
waived in whole or in part by Seller:
5.1 COMPLIANCE WITH PURCHASER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS. The representations and warranties made by Purchaser in Section 2.3
of this Agreement shall have been true and correct in all material respects when
made and shall be true and correct in all material respects at the Closing with
the same force and effect as if made at the Closing. Purchaser shall have
performed in all material respects all agreements, covenants and conditions
required to be performed by Purchaser prior to the Closing.
5.2 NO LEGAL PROCEEDINGS. No suit, action or other legal or
administrative proceedings before any court or other governmental agency shall
be pending or threatened seeking to enjoin the consummation of the Transaction.
5.3 OTHER AGREEMENTS. Purchaser shall have executed and delivered
all agreements referred to in Section 1.5 hereof, to be executed by the
Purchaser.
5.4 PAYMENTS. Seller shall have received from Purchaser all of
eRCG Shares and cash in lieu of any fractional eRCG Share that Seller is
entitled to receive pursuant to the Basic Agreements.
VI.
TERMINATION
6.1 TERMINATION AND ABANDONMENT. This Agreement may be terminated
and the purchase of the LST Shares may be abandoned before the Closing by:
(a) The mutual consent of Seller and Purchaser;
(b) Purchaser, if the conditions precedent set forth in
Article IV hereof shall have not have been satisfied on or before the
Closing Date (as the same may be extended from time to time); and
(c) Seller, if the conditions precedent set forth in
Article V hereof shall not have been satisfied on or before the Closing
Date (as the same may be extended from time to time).
Termination shall be effective on the date of receipt of written notice
specifying the reasons therefor. Termination shall not relieve any party from
liability for any willful breach of
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this Agreement.
VII.
MISCELLANEOUS
7.1 SURVIVAL. Except for the provisions of Sections 2.1, 2.2, 3.4
and 3.5 and Article VII hereof, which shall survive the Closing or termination
hereof for a period of two (2) years, none of the representations and warranties
contained in this Agreement or in any certificate, exhibit or other document
delivered pursuant to this Agreement shall survive the Closing.
7.2 BINDING EFFECT OF THE BASIC AGREEMENTS; NO THIRD PARTY
BENEFICIARIES. The Basic Agreements and the other instruments delivered by or on
behalf of the parties pursuant thereto, constitute the entire agreement between
the parties. The terms and conditions of the Basic Agreements shall inure to the
benefit of and be binding upon the respective heirs, legal representatives,
successors and assigns of the parties hereto. Nothing in the Basic Agreements,
expressed or implied, confers any rights or remedies upon any party other than
the parties hereto and their respective heirs, legal representatives, successors
and assigns.
7.3 GOVERNING LAW. The Basic Agreements and the other instruments
delivered by or on behalf of the parties pursuant hereto are made pursuant to,
and will be construed under, the laws of the State of Delaware, without regard
to its conflicts of law principles.
7.4 NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and will be deemed to have been
duly given when personally delivered, delivered by a nationally recognized
overnight delivery service, sent via facsimile transmission (receipt confirmed),
or three (3) business days after it is deposited in the United States mail,
certified or registered, return receipt requested, postage prepaid, to:
(a) If to Seller to:
▇▇▇▇▇▇▇ Holdings, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) If to Purchaser, to:
eResource Capital Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Executive Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
These addresses may be changed from time to time by like written notice
to the other party.
7.5 HEADINGS. The headings contained in this Agreement are for
reference only and will not affect in any way the meaning or interpretation of
this Agreement.
7.6 SEVERABILITY. If any one or more of the provisions of this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
under applicable law, then this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. The
remaining provisions of this Agreement shall be given effect to the maximum
extent then permitted by law.
7.7 EXPENSES. Each party shall pay all fees and expenses incurred
by it incident to this Agreement and in connection with the consummation of the
Transaction.
7.8 INTEGRATION; INTERPRETATION. The Basic Agreements and all
documents and instruments executed pursuant hereto merge and integrate all prior
agreements and representations respecting the Transaction, whether written or
oral, and constitute the sole agreement of the parties in connection therewith.
This Agreement has been negotiated by and submitted to the scrutiny of both
Seller and Purchaser and their counsel and shall be given a fair and reasonable
interpretation in accordance with the words hereof, without consideration or
weight being given to its having been drafted by either party hereto or its
counsel.
7.9 AMENDMENTS. No amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and duly
executed by both of the parties hereto.
7.10 VARIATION OF PRONOUNS. All pronouns and any variations thereof
shall be deemed to reflect masculine, feminine, or neuter, singular or plural,
as the identity of the person or entity may require.
7.11 WAIVERS. Purchaser and Seller may, in writing, amend the time
for or waive compliance by the other with any of the covenants or conditions of
the other contained herein. Failure to pursue any legal or equitable remedy or
right available to a party shall not constitute a waiver of such right, nor
shall any such forbearance, failure or actual waiver imply or constitute waiver
of subsequent default or breach.
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7.12 COUNTERPART; FACSIMILE SIGNATURES. This Agreement may be
executed in counterparts (whether by facsimile or otherwise), each of which will
be deemed an original and all of which together will constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned parties hereto have duly executed
this Agreement, or caused this Agreement to be duly executed, on the date first
written above.
PURCHASER:
ERESOURCE CAPITAL GROUP, INC.
BY:
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
ITS: EXECUTIVE VICE PRESIDENT
SELLER:
▇▇▇▇▇▇▇ HOLDINGS, INC.
By:
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Print Name:
---------------------------------
Its:
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