<PAGE>
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE
SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
/X/ Preliminary Information Statement
/ / Confidential, for use of the Commission Only (as permitted by Rule
14c-5(d)(2))
/ / Definitive Information Statement
New Directions Manufacturing, Inc.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
/ / No fee required
/X/ Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
(1) Title of each class of securities to which transaction
applies:
Common Stock, par value $.001 per share
................................................................................
(2) Aggregate number of securities to which transaction
applies:
5,052,270
................................................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
$0.21 per share*
................................................................................
(4) Proposed maximum aggregate value of transaction:
$1,060,977
................................................................................
(5) Total fee paid:
$5,305
................................................................................
* For purposes of calculating the fee only. This amount assumes the
exchange of all shares of common stock, par value $.001 per share
(collectively, the "Shares") of New Directions Manufacturing, Inc.
from all stockholders at the trading price of $0.21. The amount
of the filing fee, calculated in accordance with Section 14(g)(3)
and Rule 0-11(d) under the Securities Exchange Act of 1934, as
amended, equals 1/50th of one percent of the aggregate transaction
value.
<PAGE>
/ / Fee paid previously with preliminary materials:
................................................................................
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously paid. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
................................................................................
(2) Form, Schedule or Registration Statement No.:
................................................................................
(3) Filing party:
................................................................................
(4) Date filed:
................................................................................
copies to: Lynne Bolduc, Esq.
Horwitz & Beam
Two Venture Plaza, Suite 350
Irvine, CA 92618
Telephone: (949) 453-0300
Facsimile: (949) 453-9416
<PAGE>
NEW DIRECTIONS MANUFACTURING, INC.
2940 W. WILLETTA
PHOENIX, AZ 85009
On October 8, 1999, your Board of Directors approved an agreement for an
acquisition by and stock exchange of New Directions Manufacturing, Inc. ("New
Directions"). In the acquisition, New Directions will acquire all of the
outstanding shares of American Soil Technologies, Inc. ("ASTI"), spin off its
operating subsidiary, New Directions Manufacturing, Inc., an Arizona corporation
("New Directions-Arizona"), and change its name to American Soil Technologies,
Inc. After a 15 for 1 reverse stock split, New Directions shareholders may
exchange their New Directions stock for ASTI stock. This entire transaction
will be called the "Exchange."
Seven shareholders own a majority of New Directions' voting stock, and on
October 8, 1999, they executed a written consent as majority stockholders
approving the Exchange. This written consent assures that the Exchange will
occur without your vote. Therefore, your vote is not required to complete the
Exchange.
Please note that this is not a request for your vote or a proxy
statement, but rather an information statement designed to inform you of the
Exchange that will occur if the Exchange is completed and to provide you with
information about the Exchange and the background of these transactions.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Please note that this is not an offer to purchase your shares.
The date of this information statement is December 20, 1999. We mailed
this information statement to you on or about December 13, 1999.
Sincerely,
/s/ Sean Lee
------------------------
Sean Lee, President
<PAGE>
TABLE OF CONTENTS TO
SCHEDULE 14C
INFORMATION STATEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
QUESTIONS AND ANSWERS ABOUT THE EXCHANGE . . . . . . . . . . . . . . . . . . . . . .3
SPECIAL FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Background of the Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . .4
Purposes of the Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Certain Effects of the Exchange . . . . . . . . . . . . . . . . . . . . . . . .5
Interests of Certain Persons. . . . . . . . . . . . . . . . . . . . . . . . . .5
Conduct of New Directions' Business After the Exchange. . . . . . . . . . . . .6
Description of Ownership of New Directions Before and After the Exchange. . . .6
THE EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
The Stock Exchange Agreement. . . . . . . . . . . . . . . . . . . . . . . . . .7
Stockholder Consent to the Exchange . . . . . . . . . . . . . . . . . . . . . .7
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Description of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . .7
Directors and Executive Officers of the Company . . . . . . . . . . . . . . . .8
Principal Shareholders and Security Ownership of Management . . . . . . . . . .9
Market for the Company's Stock and Related Stockholder Matters. . . . . . . . 10
ANNEX A Stock Exchange Agreement dated as of November 24, 1999 . . . . . . .A-1
ANNEX B Written Consent of the Holders of a Majority of the Common
Stock of New Directions Manufacturing, Inc., dated as of
October 8, 1999. . . . . . . . . . . . . . . . . . . . . . . . . . .B-1
</TABLE>
<PAGE>
INTRODUCTION
On October 8, 1999, your Board of Directors approved an agreement for an
acquisition by and stock exchange of New Directions Manufacturing, Inc. ("New
Directions"). This entire transaction will be called the "Exchange."
The Exchange will occur in accordance with a Stock Exchange Agreement
(the "Agreement"), dated as of November 24, 1999, between New Directions and
American Soil Technologies, Inc. ("ASTI").
In the Exchange, New Directions will sell its operating subsidiary, New
Directions Manufacturing, Inc., an Arizona corporation ("New Directions -
Arizona") to current management of New Directions. This will essentially take
the operations of New Directions "private." The public shell will then conduct
a 15 for 1 reverse stock split in order to reduce the total number of shares
outstanding. The public shell which remains after the sale of the operating
subsidiary will acquire all of the outstanding shares of ASTI and change its
name to "American Soil Technologies, Inc." New Directions - Arizona will
continue the operations of furniture manufacturing and New Directions under its
new name of American Soil Technologies, Inc. will conduct the business of ASTI
which is development and sale of commercial soils. (See "Conduct of New
Directions' Business After the Exchange.") Current shareholders of New
Directions will automatically own shares of ASTI, after the reverse stock split.
For example, if a shareholder currently owns 15,000 shares of New Directions,
after the Exchange and reverse stock split, the shareholder will own 1,000
shares of ASTI.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Seven Shareholders of New Directions (the "Majority Shareholder")
currently own 3,180,444 shares of common stock of New Directions, representing
64% of the outstanding voting stock of New Directions. On October 8, 1999, the
Majority Shareholders acted by written consent (the "Stockholder Consent") to
approve and adopt the Agreement and the Exchange. If the Exchange is completed,
the Stockholder Consent assures that the Exchange will occur without your vote
and without a meeting. Therefore, your vote is not required to complete the
Exchange.
THE EXCHANGE HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE FAIRNESS OR MERIT OF THE EXCHANGE NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS INFORMATION STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
PLEASE NOTE THAT THIS IS NOT A REQUEST FOR YOUR VOTE OR A PROXY
STATEMENT, BUT RATHER AN INFORMATION STATEMENT (THE "INFORMATION STATEMENT")
DESIGNED TO INFORM YOU OF THE EXCHANGE THAT WILL OCCUR IF THE EXCHANGE IS
COMPLETED AND TO PROVIDE YOU WITH INFORMATION ABOUT THE EXCHANGE AND THE
BACKGROUND OF THESE TRANSACTIONS.
Please note also that this is not an offer to purchase your Shares. Upon
consummation of the Exchange, the Public Stockholders will receive instructions
on where and how to exchange their New Directions Shares for ASTI Shares.
The purpose of the Exchange is to take the current operations of New
Directions "private." New Directions' management and Board of Directors have
determined that the "public" status of New Directions is detrimental to the
Company's operations due to the time and expense burdens, as well as the fact
that New Directions requires an infusion of cash to survive and is not able to
raise capital as a public company due to its low stock price. New Directions
believes that the terms of the Exchange are fair to and in the best interests of
the Public Stockholders.
1
<PAGE>
This Information Statement is first being mailed to stockholders on or
about December 13, 1999. As of the date of this Information Statement, there
were 5,052,270 Shares outstanding.
THIS INFORMATION STATEMENT IS DATED DECEMBER 20, 1999
2
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE EXCHANGE
Q. Why did I receive this Information Statement?
A. Applicable laws require us to provide you information regarding the
Exchange even though your vote is neither required nor requested to
complete the Exchange.
Q. What will I receive if the Exchange is completed?
A. You will be entitled to receive shares in ASTI after the reverse stock
split.
Q. When do you expect the Exchange to be completed?
A. We are working to complete the Exchange by December 31, 1999. However,
we may extend the completion date for the Exchange.
Q. Why am I not being asked to vote?
A. The Majority Stockholders own Shares to approve the Exchange without your
vote, and have already given their approval of the Exchange.
Q. What do I need to do now?
A. Nothing. This Information Statement is purely for your information, and
does not require or request you to do anything. If you need information
about the Exchange, please contact the Information Agent.
Q. Should I send in my stock certificates now?
A. No. After the Exchange is completed we will send you written
instructions for exchanging your certificates representing your Shares of
New Directions for Shares of ASTI.
Q. Whom can I call with questions?
A. If you have any questions about the Exchange, please contact Ken Lew at
(480) 421-2882 (the "Information Agent").
For more detailed information on the Company, including financial
statements, you may refer to the Company's Form 10-KSB and Schedule 14A,
filed with the SEC on September 27, 1999. Copies of these documents were
mailed to all shareholders of the Company. Additional copies are
available on the SEC's EDGAR database at www.sec.gov or by calling the
Information Agent.
3
<PAGE>
SPECIAL FACTORS
BACKGROUND OF THE EXCHANGE
During the last year, New Directions experienced a significant
deterioration in its stock market valuation. This began in the fourth quarter of
1998 and continues to the present. New Directions' Shares, which ranged from $4
to $5 during the second half of 1997 and the first half of 1998, began a
downward trend during the third quarter of 1998 when they were trading between
$0.43 and $2.125. However, the downward spiral continued and became long-term
as New Directions' Shares have traded at only between $0.15 and $0.66 over the
last 52 weeks and between $0.20 and $0.16 during the third quarter ended
September 30, 1999. The closing bid price of the Company's stock was $0.21 on
November 24, 1999.
Also, during fiscal 1999, New Directions lost two customers which
represented over 20% of sales. While new customers and the introduction and
placement of new products offset this loss by the fiscal year end, this loss
resulted in a disruption of momentum and created a drag on sales for the last
year.
Following these events, the officers and directors ("Management") of New
Directions began to consider preliminarily strategic alternatives for New
Directions in light of New Directions' unsatisfactory stock market performance.
Management considered that New Directions would have greater flexibility as a
private company. Further, Management calculated that it costs New Directions
approximately $120,000 per year to file the required reports and financial
statements required of a public company. The time spent in preparing and
revising these documents is also a distraction to Management, taking time away
from creating additional products and generating sales for the Company. While
New Directions has 85 employees, it has only two officers, one accountant, and
one secretarial staff. The other 81 employees are floor supervisors and
laborers. Therefore, there can be no delegation of any portion of these duties
away from Management and critical office personnel. In addition, New Directions
requires an infusion of cash which cannot be raised as a public company due to
the depressed price of its stock.
Beginning in July 1999, Management began to have preliminary
communications with several investment banking firms concerning possible
alternatives to increase shareholder value. Certain of these firms addressed
the advantages and disadvantages of various capital-markets transactions,
including a going private transaction. Based on the discussions with these
investment banks and the factors discussed above, Management determined that a
going private transaction was superior to the other alternatives in terms of
enhancing shareholder value. Management interviewed several investment banking
firms to obtain their views concerning the advisability of, and their
qualifications to advise on the structuring and financing of, such a
transaction. Representatives of Corporate Architects, Inc. ("Corporate
Architects") were first interviewed on August 15, 1999. At that time and in
subsequent meetings and conversations, representatives of Corporate Architects
provided preliminary views concerning the feasibility and financing of a going
private transaction, as well as other possible transaction structures. On
September 1, 1999, Management formally engaged Corporate Architects to advise
Management and to arrange for the financing for a possible transaction. Such
engagement did not include a request to render, and Corporate Architects has not
at any time rendered, an opinion with respect to the fairness of any price
proposed in connection with the going private transaction.
On September 1, 1999, Corporate Architects provided New Directions with a
copy of ASTI's business plan and references on Corporate Architects. Mr. Lee
called all references and made other inquiries that were very favorable. On
September 29, 1999, Mr. Lee and Mr. Horner met with Ron Felestrom and Neil
Kitchen of ASTI where the product was demonstrated to their satisfaction. On
October 17 and October 18, 1999, Mr. Lee visited the Soil Wash operation in San
Diego and toured the process and on October 22, 1999 the Wilcox Polymer
activity.
On October 8, 1999, after discussion and review of due diligence
documents, the Board of Directors held a special meeting wherein the Directors
unanimously approved New Directions to move forward with the Exchange. Also on
October 8, 1999, the Majority Shareholders executed the Majority Written Consent
authorizing New Directions to move forward with the Exchange.
4
<PAGE>
PURPOSES OF THE EXCHANGE
The purpose of engaging in the transactions contemplated by the Exchange
is to provide the Public Stockholders a better opportunity to receive a fair
price for their Shares, acquire 100% ownership of ASTI, and to terminate the
status of New Directions as a company with publicly traded equity. Management
believes that the Company has not been rewarded by the public equity markets in
recent periods, and that the conditions that may have contributed to that
situation are not likely to change in the near future. If the Exchange is
completed, New Directions-Arizona will become wholly owned by Jack Horner, Jr.,
current Vice President, Secretary, and Director of New Directions. See
"Interests of Certain Persons."
CERTAIN EFFECTS OF THE EXCHANGE
Upon consummation of the Exchange, New Directions-Arizona will become a
privately held corporation. Accordingly, the Public Stockholders will not have
the opportunity to participate in the earnings and growth of New
Directions-Arizona after the Exchange and will not have the right to vote on
corporate matters. Instead, the Public Stockholders of New Directions will have
the opportunity to participate in the earnings and growth of ASTI and will have
the right to vote on corporate matters of ASTI.
It is expected that if the Exchange is not consummated, Management of New
Directions, under the general direction of the Board of Directors, will continue
to manage New Directions as currently constituted.
INTERESTS OF CERTAIN PERSONS
Sean F. Lee is the current President, Chief Executive Officer, Chief
Operating Officer, and Chief Financial Officer and a Director of New Directions.
Mr. Lee owns 1,410,000 Shares of New Directions. If the Exchange is
consummated, Mr. Lee will agree to terminate his current employment agreement
with New Directions and resign as an officer and director of New Directions.
After the reverse stock split, Mr. Lee will own 94,000 shares of ASTI. Mr. Lee
agrees that he will sell no more than a maximum of 5,000 of his shares each
month on a noncumulative basis.
Jack Horner, Jr. is the current Vice President and Secretary and a
Director of New Directions. Mr. Horner owns 510,000 Shares and 900,000 options
to purchase Shares of New Directions ("Options"). If the Exchange is
consummated, Mr. Horner will agree to terminate his current employment agreement
with New Directions and resign as an officer and director of New Directions.
Mr. Horner will also agree to the cancellation of all of his Options. Mr. Horner
will be the sole shareholder officer, and director of New Directions - Arizona.
After the Exchange and reverse stock split, Mr. Horner will own 34,000 shares of
ASTI. Mr. Horner agrees that he will sell no more than a maximum of 5,000 of
his shares each month on a noncumulative basis.
Donald A. Metke is currently a Director of New Directions. If the
Exchange is consummated, Mr. Metke will resign from the Board of Directors of
New Directions. New Directions is currently indebted to Mr. Metke under a
Separation Agreement, Short Term Consulting Agreement, and Long Term Consulting
Agreement (collectively, the "Separation Agreements"). Mr. Metke and New
Directions will agree to terminate the Separation Agreements and return Mr.
Metke's 461,000 Shares to him. After the Exchange and reverse stock split, Mr.
Metke will own 30,733 shares of ASTI. Mr. Metke agrees that he will sell no
more than a maximum of 5,000 of his shares each month on a noncumulative basis.
Michael Dunn is currently a Director of New Directions. Mr. Dunn owns
50,000 Shares of New Directions. If the Exchange is consummated, Mr. Dunn will
resign from the Board of Directors of New Directions. After the reverse stock
split and share exchange, Mr. Dunn will own 3,333 Shares of ASTI.
5
<PAGE>
CONDUCT OF NEW DIRECTIONS' BUSINESS AFTER THE EXCHANGE
If the Exchange is consummated, New Directions - Arizona (the private
company) will continue the operations of furniture manufacturing. Jack Horner,
Jr. will be the sole shareholder, officer, and director of New Directions -
Arizona. (See "The Company -Description of the Company" for a discussion of the
business of New Directions - Arizona.)
If the Exchange is consummated, New Directions (the public company) will
acquire all of the outstanding shares of ASTI and change its name to "American
Soil Technologies, Inc." New Directions under its new name of American Soil
Technologies, Inc. will conduct the business of ASTI which is development and
sale of commercial soils. Current management and directors of ASTI will assume
those roles in New Directions under its new name of ASTI.
American Soil Technologies, Inc. is a Nevada corporation which was formed
by merging the respective assets and liabilities of Soil Wash Technologies, Inc.
("Soil Wash Technologies") and Polymers Plus, LLC ("Polymers Plus"). Soil Wash
Technologies owns and operates a commercial non-hazardous soil and water
remediation facility which is located in San Diego, California and Polymers Plus
has developed, patented and trademarked product lines that can be used in
agriculture, turf, garden and landscaping. When tilled into the soil, AGRIBLEND
PLUS-Registered Trademark- creates Semi-Permeable Barrier beneath the soil
surface that cost effectively retains moisture, nutrients, and herbicides in the
germination and root zone. AGRIBLEND PLUS-Registered Trademark- dramatically
increases germination, sprout emergence, and yield while at the same time
functions to decrease water, fertilizer, and chemical use. A single application
of AGRIBLEND PLUS-Registered Trademark- will provide optimum benefits for three
to five years. The technological link between the merger of Soil Wash
Technologies and Polymers Plus is the expert knowledge each company has with
respect to polymers and soil and the Company believes that this combined
knowledge could make it a leader in the science of agronomy.
DESCRIPTION OF OWNERSHIP OF NEW DIRECTIONS BEFORE AND AFTER THE EXCHANGE
The following tables illustrate the current ownership of new Directions
and the contemplated ownership of ASTI upon completion of the Exchange.
CURRENT STATUS:
<TABLE>
<S> <C>
----------------------------------------------------------------
Shares Authorized (par value $0.001) 25,000,000
----------------------------------------------------------------
Shares Issued (fully diluted) 5,952,270
----------------------------------------------------------------
Sean Lee Shares Owned 1,410,000
----------------------------------------------------------------
Jack Horner Shares and Options Owned 1,410,000
----------------------------------------------------------------
Donald Metke Shares Owned 461,000
----------------------------------------------------------------
Current Share Value ($/share) (approximately) $0.14
----------------------------------------------------------------
State of Incorporation Nevada
----------------------------------------------------------------
OTC BB Status Fully reporting
----------------------------------------------------------------
No. of Shareholders 601
----------------------------------------------------------------
</TABLE>
OWNERSHIP AFTER COMPLETION OF THE EXCHANGE:
<TABLE>
<CAPTION>
----------------------------------------------------------------
DESCRIPTION SHARES
<S> <C>
----------------------------------------------------------------
Total shares authorized 25,000,000
----------------------------------------------------------------
Total shares outstanding (fully diluted) 5,952,000
----------------------------------------------------------------
Jack Horner Options are cancelled 900,000
----------------------------------------------------------------
Subtotal 5,052,270
----------------------------------------------------------------
After the reverse split of 15 old for 1 new 336,818
----------------------------------------------------------------
6
<PAGE>
----------------------------------------------------------------
Current Management (Sean Lee, Jack Horner, 158,733
and Donald Metke) will own 2,381,000/15 =
158,733 shares after reverse stock split
(monthly leak out provision of not more than
5,000 shares each, noncumulative)
----------------------------------------------------------------
Public Float (exclusive of Management) 178,085
----------------------------------------------------------------
Public Float (free trading) 336,818
----------------------------------------------------------------
Issued to ASTI for all of their issued and 7,867,741
outstanding shares (Restricted under Rule 144
+ one voluntary year)
----------------------------------------------------------------
Issued to Consultants, etc. (Restricted under 400,000
Rule 144 + one voluntary year)
----------------------------------------------------------------
Issued to other professionals (legal, 100,000
accounting, etc.) free trading 90 days from
closing (S-8 filing)
----------------------------------------------------------------
TOTAL SHARES ISSUED AND OUTSTANDING 8,704,559
----------------------------------------------------------------
</TABLE>
THE EXCHANGE
THE STOCK EXCHANGE AGREEMENT
The Exchange will occur in accordance with a Stock Exchange Agreement
(the "Agreement"), dated as of November 24, 1999, between New Directions and
American Soil Technologies, Inc. ("ASTI").
The Stock Exchange Agreement provides for New Directions to: (a) change
its name to ASTI; (b) approve and elect a board of directors as selected by
ASTI; (c) acquire all of the issued and outstanding stock of ASTI in exchange
for the same number of shares of newly issued and restricted common stock; and
(d) obtain and accept the resignation of all existing New Directions officers
and directors. This Agreement requires each party to deliver due diligence
materials to the other. Customary representations and warranties as to
corporate good standing, authorization, and financial and business condition of
both parties are also contained in the Agreement. The Parties to the Agreement
agree to provide mutual indemnification.
The Stock Exchange Agreement is attached hereto as Annex A.
STOCKHOLDER CONSENT TO THE EXCHANGE
The Majority Stockholders, as the holders of 64% of the voting power of
the Common Stock, have taken action by written consent to approve the Exchange
and the Agreement pursuant to the NRS Sections 78.320 and 92A.120. On October
8, 1999, the Majority Stockholders executed and delivered to the Company the
Stockholder Consent adopting the Agreement and authorizing the transactions
contemplated thereby. The Stockholder Consent is sufficient under the NRS to
adopt the Exchange without the concurrence of any other stockholders.
Therefore, no further action of the Public Stockholders is necessary. The
Stockholder Consent is attached as Annex B to this Information Statement. NRS
Section 78.320(2) provides that, unless the articles of incorporation or bylaws
of the corporation provide otherwise, action by the stockholders may be taken
without a meeting if a written consent to that action is signed by the
stockholders holding at least a majority of the voting power (unless a different
proportion of the voting power is required for such an action at a meeting and
then that proportion is required to sign the written consent). NRS Section
92A.120(7) correspondingly provides that, unless otherwise provided in the
articles of incorporation or the bylaws, a plan of merger (such as the
Agreement) may be approved by written consent as provided in NRS Section 78.320.
NRS Section 78.320(3) further provides that in no instance where action is
authorized by written consent need a meeting of stockholders be called or notice
given.
THE COMPANY
DESCRIPTION OF THE COMPANY
New Directions Manufacturing, Inc. ("the Company") was incorporated under
the laws of Nevada on January 9, 1997. The wholly owned operating subsidiary of
the Company, New Directions-Manufacturers of
7
<PAGE>
Contemporary Furniture, Inc., an Arizona corporation ("New Directions-Arizona")
was established in 1989 by the Horner family. The Company purchased New
Directions - Arizona from the Horner family in January 1997.
The Company manufactures quality oak furniture using no particleboard.
Its product line consists mainly of entertainment centers, wall units, and home
office products; however, it also offers bookshelves, bedroom suites, and other
oak furniture units. The Company's customers are located throughout the United
States, as well as Canada, Puerto Rico, and Bermuda.
On January 15, 1997, the Company exercised the Option to purchase New
Directions-Arizona with a cash payment of $1,280,000. The Company paid the cash
payment of $1,280,000 with funds raised in its private offering commenced on
January 9, 1997 as well as a short-term loan from a private individual in the
amount of $500,000. The loan was completely paid off, including principal and
interest, upon the completion of the private offering on May 14, 1997. The
remaining balance of the purchase price of $800,000 was financed by the sellers
according to a promissory note. There remains due and owing $329,936 under the
note as of June 30, 1999.
The address of the Company's principal executive offices is 2940 West
Willetta Street, Phoenix, AZ 85009. The Company's telephone number is (602)
352-1165.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
NAME AND AGE DIRECTOR SINCE POSITION WITH THE COMPANY
- ------------------------------------------------------------------------------
<S> <C> <C>
Sean F. Lee (59) 1997 President, Chief Executive
Officer, Chief Operating
Officer, Chief Financial
Officer, Chairman
- ------------------------------------------------------------------------------
Jack Horner, Jr. (45) 1997 Executive Vice President,
Secretary, Director
- ------------------------------------------------------------------------------
Donald A. Metke (64) 1997 Director
- ------------------------------------------------------------------------------
Michael D. Dunn (54) 1998 Director
- ------------------------------------------------------------------------------
</TABLE>
Mr. Sean F. Lee has served as a Director of the Company since 1997. Mr.
Lee has served in management positions in the retail industry since 1963.
Recently Mr. Lee was co-founder and chairman of INFOPAK, a company that
manufactured a hand held computer and created custom software for the real
estate industry. He held the position of Chairman from inception in January
1991 until its sale in October 1996. In October 1996, Mr. Lee accepted the
position of co-founder Chairman of Soy Environmental Products, Inc., Overland,
Kansas, a manufacturer of cleaners and solvents for the retail market. He
resigned from Soy Environmental effective September 1998. Mr. Lee's retail
experience includes 18 years with Montgomery Ward, starting as a trainee and
ending in 1981 as merchandise manager for the Western region. In 1982, he
joined W.R. Grace as a divisional Vice President ending in 1986 as C.E.O. of
Grace Homecenters West. Mr. Lee was C.E.O. of YellowFront Stores, Inc. from
1986 through 1988. Mr. Lee was C.E.O. of Homebase, a $1.7 billion home
improvement chain, in 1988 and 1989. He holds a B.S. in economics from Hood
College, Frederick, Maryland.
Mr. Jack Horner, Jr. has served as a Director of the Company since 1997.
Mr. Horner was a co-founder of New Directions and was instrumental in its
development from inception to over $5 million in sales annually. From 1987 to
1990, he was a manufacturer's representative covering the Southwestern United
States for three separate furniture companies. From 1985 to 1987, he owned and
operated retail furniture stores in Phoenix, Arizona and has been a central
figure in the management of New Directions since its establishment in 1989.
8
<PAGE>
Mr. Donald A. Metke has served as a Director of the Company since 1997.
Mr. Metke's business background includes extensive consulting for Yucaipa
Companies of Los Angeles, California, and Smitty's Supermarkets, Phoenix,
Arizona. Mr. Metke was President of the Company from January 1997 through
August 1999, when he semi-retired. From 1990 to 1993, Mr. Metke served as
Executive Vice President for Almac's Supermarkets, Providence, Rhode Island, and
from 1988 to 1990 he served as Executive Vice President of Marketing for Chas.
P. Young, the leader in the financial and securities printing fields. Mr. Metke
was a partner with MultiServices of Orlando, Florida from 1983 to 1988 with
involvement in sales, and mergers and acquisitions of small and medium sized
companies. He was President of the Consumer Products Division of Petrolane from
1977 to 1983 with responsibility for Supermarkets (Stater Brothers, 92 stores in
California), Health Services (44 hospitals in the West and Midwest), and 92
automotive stores.
Mr. Michael D. Dunn has served as a Director of the Company since May
1998. Mr. Dunn is currently and has been President of Wadco Services Inns, Inc.
since he founded it in February 1987. Previously, he was Founder, Chairman, and
C.E.O. of Westworld Community Healthcare, Inc. (WCHI-NASD) from 1982-1986. From
1968 to 1982, he served as Co-Founder and President of Advanced Health Systems,
Inc. which became a subsidiary of Petrolane, Inc. (PTO-NYSE). Mr. Dunn served
as a Director of ICH Corporation (IH-ASE) from 1996-1998; a Director of TriCare,
Inc. (TRCR-NASD) from 1985-1993 and PharmaKinetics Laboratories, Inc.
(PKLB-NASD) from 1985-1996. Mr. Dunn currently serves as a Director of Horizon
Medical, Inc. of Santa Ana, CA; LifePort, Inc. of Vancouver, WA; and is Chairman
of the Board of ARS Enterprises, Inc. of Santa Fe Springs, CA. Mr. Dunn has
also served as Director and/or consultant to a variety of other enterprises
since 1968.
There is no family relationship between any of the directors or officers
of the Company.
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the amount of shares of Common Stock owned
as of September 15, 1999 by each person standing for election as a Director of
the Company, by those persons known to the Company to own Beneficially 5% or
more of the outstanding shares of Common Stock of the Company, and by all
Directors and Officers of the Company as a group. With respect to any person
who beneficially owns 5% or more of the outstanding shares of Common Stock, the
address of such person is also set forth.
9
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
NAME OF BENEFICIAL OWNER OWNED (1) CLASS
- --------------------------------------------------------------------------------
<S> <C> <C>
Sean F. Lee 1,410,000 27.9%
- --------------------------------------------------------------------------------
Donald A. Metke (2) 461,000 9.1%
- --------------------------------------------------------------------------------
Jack Horner, Jr. (1) 1,410,000 (3) 23.7%
- --------------------------------------------------------------------------------
Michael D. Dunn (1) 50,000 1.0%
- --------------------------------------------------------------------------------
Winthrop Trust, Ronald W. Tupper, TTEE 459,444 9.1%
P.O. Box 11587
Bainbridge Island, WA 98110
- --------------------------------------------------------------------------------
All Officers and Directors 3,331,000 56.0%
as a group (4 persons)
- --------------------------------------------------------------------------------
</TABLE>
MARKET FOR THE COMPANY'S STOCK AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION. The Company's Common Stock is traded on the
Over-the-Counter ("OTC") Bulletin Board Quotation System. The following table
sets forth the high and low sales prices of the Company's Common Stock, as
reported on the OTC Bulletin Board for the periods indicated. The prices
presented are bid prices, which represent prices between broker-dealers and
don't include retail mark-ups and mark-downs or any commission to the dealer.
Therefore, the prices may not reflect actual transactions.
<TABLE>
<CAPTION>
Quarter Ended High Low
------------- ---- ---
<S> <C> <C>
1997
Third $ 4.50 $ 1.00
Fourth $ 5.00 $ 1.13
1998
First $ 4.38 $ 1.00
Second $ 4.06 $ 1.75
Third $ 2.13 $ 0.44
Fourth $ 0.53 $ 0.19
1999
First $ 0.66 $ 0.17
Second $ 0.20 $ 0.16
Third $ 0.20 $ 0.16
</TABLE>
HOLDERS. As of September 30, 1999, the number of holders of record of
the Company's Common Stock was approximately 103. The Company believes that
there are approximately an additional 398 holders who own shares of the
Company's Common Stock in street name.
DIVIDENDS. The Company has paid no cash dividends.
- --------------------------------
(1) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed above, based on information furnished by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities. All Shares of Common Stock subject to options or warrants are
deemed outstanding for purposes of computing the percentage of any other person
(2) c/o Company's address: 2940 West Willetta Street, Phoenix, AZ 85009-3518
(3) Includes 900,000 options to purchase shares of common stock at $0.10 per
share expiring on August 1, 2009
10
<PAGE>
ANNEX A
STOCK EXCHANGE AGREEMENT
DATED AS OF NOVEMBER 24, 1999
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STOCK EXCHANGE AGREEMENT
entered into by and between
NEW DIRECTIONS MANUFACTURING, INC.
a Nevada corporation,
and
AMERICAN SOIL TECHNOLOGIES, INC.,
a Nevada corporation,
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Effective as of November 24th, 1999
Scottsdale, Arizona
A-1
<PAGE>
STOCK EXCHANGE AGREEMENT
This STOCK EXCHANGE AGREEMENT (this "Agreement") is made and entered into
on the dates set forth below, to be effective as of November 24th, 1999, by and
between NEW DIRECTIONS MANUFACTURING, INC., a Nevada corporation ("NDMI") and,
AMERICAN SOIL TECHNOLOGIES, INC., a Nevada corporation ("ASTI").
The persons listed in the shareholder list provided by ASTI to NDMI
(the "ASTI Shareholder List") are all of the shareholders of ASTI. Such
persons are referred to herein as the "Acquired Company's Shareholders."
ASTI is sometimes referred to herein as the "Acquired Company" because the
transactions described below will result in the acquisition of all of the
issued and outstanding stock of ASTI by NDMI. NDMI, the Acquired Company and
the Acquired Company's Shareholders are referred to collectively herein as
the "Parties" and sometimes individually as a "Party."
The Acquired Company's Shareholders may agree to be bound by the terms
of this Agreement that are applicable to them by (i) signing a signature page
or (ii) signing any other document or agreement that indicates an intention
on the part of the signer to be bound by the terms of this Agreement and to
approve the transactions provided for in this Agreement. Any Acquired
Company's Shareholder may also indicate his, her or its intention to be bound
by this Agreement by taking the actions of an Acquired Company's Shareholder
as provided for herein, even if the Acquired Company Shareholder does not
sign a signature page or undertaking to be bound by this Agreement.
RECITALS
A. On September 29, 1999, NDMI and ASTI signed a letter of intent
(the "Letter of Intent").
B. The Letter of Intent provides for NDMI (and its shareholders, as
required) prior to the Closing (defined below) (a) to change the corporate name
of NDMI to AMERICAN SOIL TECHNOLOGIES, INC., a Nevada corporation, (b) to elect
a new board of directors selected by ASTI, (c) to acquire all of the issued and
outstanding stock of ASTI in exchange for 8,267,741 shares of newly issued and
restricted common stock (the "Acquisition Stock") of NDMI that will be issued to
the Acquired Company's Shareholders, (d) to obtain and to accept the resignation
of all existing NDMI officers and directors effective as of the Closing Date
(defined below) (e) to complete any and all delinquent regulatory filings for
NDMI (if any), (f) to provide all requested due diligence materials to ASTI,
including a legal opinion stating that there is no outstanding or pending
litigation against NDMI, that all regulatory filings have been made as required
by applicable law, that NDMI is in good standing in various states and other
matters reasonably required by the Acquired Company, (f) to approve and
consummate a reverse stock split (15 old for 1 new) of all of the issued and
outstanding shares of NDMI, resulting in 336,818 shares constituting the total
issued and outstanding shares of NDMI after such stock split, (g) to approve
issuance of up to, and to issue up to, at Closing, 100,000 shares
A-2
<PAGE>
of free trading common stock to professionals and other persons through an S-8
Filing and (h) to sell, by resolution of NDMI's board of directors or by a stock
purchase agreement signed by NDMI and Jack Horner, all of the issued and
outstanding stock of NDMI's sole subsidiary, New Directions Manufacturing, Inc.
(Arizona), an Arizona corporation ("NDMI-Arizona") to Jack Horner, currently a
member of the board of directors of NDMI, in consideration of his agreement to
cancel options to purchase 900,000 shares of NDMI stock. The Acquisition Stock
will be issued in exchange for all of the issued and outstanding stock of the
Acquired Company (the "Acquired Company's Stock"). After such exchange, the
Acquired Company will be a wholly owned subsidiary of NDMI.
C. The Letter of Intent provides for the Acquired Company's
Shareholders to transfer to NDMI, in exchange for the Acquisition Stock, all of
the Acquired Company's Stock.
D. The Parties wish to enter into this Agreement to definitively
provide for several of the transactions that are contemplated in the Letter of
Intent. When executed and delivered by the Parties as provided below, this
Agreement will supersede and replace the Letter of Intent so far as the
transactions provided for in this Agreement are concerned. Other provisions of
the Letter of Intent, if any, that are not otherwise provided for in this
Agreement, will survive execution of this Agreement by the Parties unless
superseded by any other agreements of the Parties.
AGREEMENT
THEREFORE, in consideration of the mutual covenants and conditions herein
contained, and for other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the Parties, intending to be legally
bound, hereby agree as follows.
ARTICLE
1
SHARE EXCHANGES
1.1 STOCK EXCHANGES. NDMI hereby agrees to sell, convey, assign
and transfer the Acquisition Stock to the Acquired Company's Shareholders in
exchange for their sale, conveyance, assignment and transfer to NDMI of the
Acquired Company's Stock. The Acquired Company's Shareholders and the
Acquired Company hereby agree, jointly and severally, to sell, convey, assign
and transfer, and/or to cause transfer to be made of, the Acquired Company's
Stock to NDMI in exchange for sale, conveyance, assignment and transfer to
the Acquired Company's Shareholders of the Acquisition Stock. Unless the
Acquired Company's Shareholders otherwise direct, the Acquisition Stock will
be transferred to them in the same proportions as the Acquired Company's
Shareholders currently own the Acquired Company's Stock, as shown in the ASTI
Shareholder List. All share transactions involving the Acquired Company's
Shareholders are to be made after the reverse stock split described in the
Recitals above.
A-3
<PAGE>
1.2 CLOSING. Consummation of the transactions described in this
Agreement (the "Closing") will occur at 9:00 a.m. on or before November 31st,
1999 (the "Closing Date") at the offices of Corporate Architects, Inc. in
Scottsdale, Arizona or at such other location as is mutually agreeable to the
Parties.
1.3 RESTRICTIONS ON TRANSFERABILITY OF THE ACQUISITION STOCK. At the
Closing, NDMI will convey to the Acquired Company's Shareholders good, valid and
marketable title to the Acquisition Stock, free and clear of any and all
encumbrances, claims, liens, security interests, pledges or mortgages of any
kind. The Acquisition Stock will be newly issued stock. The Parties hereby
agree that the Acquisition Stock, once acquired by the Acquired Company's
Shareholders, will be subject to the restrictions of SEC Rule 144. Unless and
until the Acquisition Stock is registered under the Securities Act of 1933 or
the Securities Exchange Act of 1934, or until restrictions under Rule 144 lapse
or would have lapsed, if Rule 144 in fact applied to the Acquisition Stock, no
Acquired Company's Shareholder will be entitled to transfer all or any share of
the Acquisition Stock to any other person or party, unless the Acquired
Company's Shareholder first provides NDMI with an acceptable opinion of counsel
that the proposed transfer will not violate any applicable law, rule or
regulation or any provision of this Agreement. NDMI will be entitled to place a
restrictive legend on all certificates evidencing ownership of the Acquisition
Stock that provides notice of the provisions of this paragraph and other
applicable provisions of this Agreement.
1.4 STOCK CONVEYED BY THE ACQUIRED COMPANY'S SHAREHOLDERS. At the
Closing the Acquired Company's Shareholders will convey to NDMI good, valid and
marketable title to the Acquired Company's Stock, free and clear of any and all
encumbrances, claims, liens, security interests, pledges or mortgages of any
kind. The Acquired Company's Stock conveyed to NDMI will constitute all of the
issued and outstanding stock of the Acquired Company. Following delivery to
NDMI of the Acquired Company's Stock, the Acquired Company will deliver a new
stock certificate to NDMI that will replace the Acquired Company's Stock
certificate delivered to NDMI as delivered above. The new certificate will be
issued in the name of NDMI.
ARTICLE
2
DELIVERIES BY NDMI AT THE CLOSING
2.1 DELIVERIES BY NDMI. In addition to the other items required to be
delivered by NDMI at the Closing under this Agreement, NDMI will deliver all of
the following items to one or more of the Acquired Company's Shareholders:
A-4
<PAGE>
(a) the Acquisition Stock to the Acquired Company's
Shareholders, by delivery of certificates evidencing ownership of
the Acquisition Stock by the Acquired Company's Shareholders;
(b) a certified copy of NDMI's articles of
incorporation, amended as necessary to authorize issuance of the
Acquisition Stock, together with a certificate of NDMI's
Secretary, confirming that the Acquisition Stock has been duly
issued as required in this Agreement;
(c) a current Certificate of Good Standing of NDMI,
issued by the Secretary of State of the State of Nevada;
(d) corporate records of NDMI consisting of at least the
following: certified copies of NDMI's bylaws, complete minute
books and a copy of NDMI's stock transfer ledger;
(e) an unaudited balance sheet of NDMI dated as of
September 30, 1999, prepared by NDMI's accountants in accordance
with generally accepted accounting principles consistently
applied, certified as accurate and as having been prepared in
accordance with generally accepted accounting principles
consistently applied by the person or firm who prepared the
balance sheet;
(f) a stock transfer ledger of NDMI, stating the names
of all NDMI shareholders, their addresses, their social security
or federal tax ID numbers, the number of shares of NDMI owned by
each shareholder, the date of acquisition of the shares and
information about all transfers of shares of NDMI that have been
made since its original incorporation, certified as true, correct,
complete and accurate by the Secretary of NDMI or the person
responsible for preparing and maintaining such stock transfer
ledger;
(g) certificates of the Secretary and the Vice President
or the President of NDMI verifying the accuracy and authenticity
of all corporate records, other materials, disclosures, exhibits
to this Agreement and/or all other documents and information of
NDMI delivered or provided by NDMI at the Closing, and confirming
the accuracy on the Closing Date of all representations and
warranties of NDMI contained herein;
(h) resignations of all officers and members of the
board of directors of NDMI, effective as of or prior to the
Closing Date;
(i) certified copies of resolutions of the board of
directors of NDMI authorizing execution and delivery of this
Agreement by NDMI and consummation by NDMI of all of the
transactions that are contemplated herein;
A-5
<PAGE>
(j) evidence that all employees of NDMI who have entered
into employment agreements with NDMI prior to the Closing Date
have agreed that NDMI may, at its option, as to all or any number
of such agreements, (i) continue the effectiveness the agreements
in accordance with their terms, or (ii) terminate any agreement,
while continuing to benefit from all non-competition agreements,
in any, contained in such agreements;
(k) information concerning purchase of the stock of
NDMI-Arizona by Jack Horner, and evidence that such transaction
has been completed to the reasonable satisfaction of the Acquired
Company, and that NDMI has no indemnity obligation or ongoing
liability relating to NDMI-Arizona or Jack Horner, other than
indemnity obligations or liabilities, if any, that were agreed to
by the Acquired Company prior to the Closing Date;
(l) a legal opinion of NDMI's counsel, addressed to the
Acquired Company and NDMI, in form that is mutually agreeable to
the Parties and which includes confirmation that NDMI is current
in making all SEC and similar filings required by applicable law,
and that NDMI is not in violation of any state or federal
securities laws, and that, to the best of such counsel's knowledge
after inquiry of the officers of NDMI, there is no outstanding or
pending litigation against NDMI;
(m) copies of all contracts, loan agreements, memoranda
and other documents or instruments (in an amount of $5,000 or
more) to which NDMI is a party or by which it is bound or to which
it or any of its assets is subject; and
(n) copies of all SEC Forms 10QSB and 10KSB (and 8K, if
any) filed by NDMI with the SEC, indicating that NDMI is current
in making all required SEC filings, and a copy of the SEC Form 14C
filed by NDMI in connection with the transactions contemplated in
this Agreement, together with all correspondence from the SEC
relating to such Form 14C and evidence that the Form 14C has been
approved by the SEC.
2.2 OTHER DOCUMENTS AND INSTRUMENTS. NDMI will also deliver any and
all such other documents and instruments of conveyance, assignment and transfer,
and such other items, as may be reasonably requested or necessary in order to
vest good and marketable title to the Acquisition Stock in the Acquired
Company's Shareholders, on or prior to the date of the Closing. All instruments
and other documents or instruments exchanged by the Parties will be in form as
needed to effectuate the transactions contemplated by this Agreement or to
evidence the same, and will include any third party consents to the transactions
contemplated herein that may be required by the provisions of any contracts,
agreements or obligations to which NDMI is a party or pursuant to which a change
in the stock ownership of NDMI is deemed to constitute an assignment or transfer
requiring such consent or approval. These additional
A-6
<PAGE>
conveyances and transfers will be made by NDMI with a view toward placing the
Acquired Company's Shareholders, on or prior to the date of the Closing in
actual possession and full and complete ownership of the Acquisition Stock as
provided herein.
ARTICLE
3
DELIVERIES BY THE ACQUIRED COMPANY AND
THE ACQUIRED COMPANY'S SHAREHOLDERS
AT THE CLOSING
3.1 DELIVERIES BY THE ACQUIRED COMPANY'S SHAREHOLDERS. In addition to
all other items required to be delivered by the Acquired Company and the
Acquired Company's Shareholders at the Closing under this Agreement, at the
Closing (or after, if indicated below) the Acquired Company and the Acquired
Company's Shareholders will deliver all of the following items to NDMI:
(a) all of the Acquired Company's Stock, by delivery to
NDMI of one or more share certificates evidencing ownership of all
of the Acquired Company's Stock, with each certificated endorsed
in blank by the Acquired Company's Shareholder who owns such
certificate;
(b) certified copies of the Acquired Company's articles
of incorporation, together with certificates of the Acquired
Company's confirming that the Acquired Company's Stock has been
duly transferred on the books and records, and in the stock
transfer ledgers of the Acquired Company, as required in this
Agreement;
(c) a current Certificate of Good Standing of the
Acquired Company, issued by the Secretary of State of the State of
Nevada;
(d) corporate records of the Acquired Company's
Shareholders consisting of at least the following: certified
copies of the Acquired Company's Shareholders' bylaws, complete
minute books and a copy of the Acquired Company's Shareholders'
stock transfer ledger;
(e) an unaudited balance sheet of ASTI dated as of
September 30, 1999, prepared by ASTI's accountants in accordance
with generally accepted accounting principles consistently
applied, certified as accurate and as having been prepared in
accordance with generally accepted accounting principles
consistently applied by the person or firm who prepared the
balance sheet;
(f) a stock transfer ledger of ASTI, stating the names
of all ASTI shareholders, their addresses, their social security
or federal tax ID numbers, the number of shares of ASTI owned by
each shareholder, the date of acquisition of
A-7
<PAGE>
the shares and information about all transfers of shares of ASTI that
have been made since its original incorporation, certified as true,
correct, complete and accurate by the Secretary of ASTI or the person
responsible for preparing and maintaining such stock transfer ledger;
(g) a correct statement of the number of issued and
outstanding shares of stock of ASTI as of the Closing date;
(h) copies of resumes of all of the persons who will
serve as directors and officers of NDMI after the Closing;
(i) certificates of the Secretary and the Vice President
or the President of the Acquired Company verifying the accuracy
and authenticity of all corporate records, other materials,
disclosures or documents pertaining to the Acquired Company
delivered or provided by the Acquired Company's Shareholders at
the Closing, and confirming the accuracy on the Closing Date of
all representations and warranties of the Acquired Company's
Shareholders and the Acquired Company as contained herein;
(j) certified copies of resolutions of the board of
directors of the Acquired Company authorizing execution and
delivery of this Agreement by the Acquired Company and
consummation by the Acquired Company of all of the transactions
that are contemplated herein;
(k) evidence reasonably satisfactory to NDMI that, as of
or prior to the Closing Date, ASTI owns all of the issued and
outstanding stock of Soil Washing Technologies, Inc., a California
corporation, and all of the outstanding membership interests of
Polymers, Plus, LLC, an Arizona limited liability company;
(l) a legal opinion of ASTI's counsel, addressed to
NDMI, in form that is mutually agreeable to the Parties and which
includes confirmation that ASTI is not in violation of any state
or federal securities laws, and that, to the best of such
counsel's knowledge after inquiry of the officers of ASTI, there
is no outstanding or pending litigation against ASTI; and
(m) copies of all contracts of $5,000 (U.S.) or more,
loan agreements, memoranda and other documents or instruments to
which the Acquired Company is a party or by which it is bound or
to which it or any of its assets is subject.
3.2 OTHER DOCUMENTS AND INSTRUMENTS. The Acquired Company and the
Acquired Company's Shareholders will also deliver to NDMI any and all such other
documents and instruments of conveyance, assignment and transfer, and such other
items, as may be
A-8
<PAGE>
reasonably requested or necessary in order to vest good and marketable title to
the Acquired Company's Stock in NDMI on or prior to the date of the Closing.
All instruments and other documents or instruments exchanged by the Parties will
be in form as needed to effectuate the transactions contemplated by this
Agreement or to evidence the same, and will include any third party consents to
the transactions contemplated herein that may be required by the provisions of
any contracts, agreements or obligations to which the Acquired Company is a
party or pursuant to which a change in the stock ownership of the Acquired
Company is deemed to constitute an assignment or transfer requiring such consent
or approval. These additional conveyances and transfers will be made by the
Acquired Company with a view toward placing NDMI on, or prior to, the date of
the Closing in actual possession and ownership of all of the Acquired Company's
Stock as provided herein.
ARTICLE
4
REPRESENTATIONS AND WARRANTIES OF NDMI
4.1 REPRESENTATIONS AND WARRANTIES OF NDMI. NDMI hereby represents
and warrants to, and covenants with, ASTI and the Acquired Company's
Shareholders that the representations and warranties provided below are true,
correct, accurate and complete in any and all respects as of the effective date
of this Agreement, and that the same will be true, correct, accurate and
complete on and as of the date of the Closing (as though made then and as though
the Closing were substituted for the date of this Agreement throughout the
following), except as may be set forth in the Disclosure Schedule attached
hereto (the "NDMI Disclosure Schedule"). The NDMI Disclosure Schedule will be
arranged in paragraphs and subparagraphs that correspond to the designation of
subparagraphs below.
4.2 ORGANIZATION OF NDMI. NDMI is a corporation that is duly
organized, validly existing, and in good standing in all material respects under
the laws of the State of Nevada.
4.3 AUTHORIZATION OF TRANSACTION. NDMI has full actual and legal
corporate power and corporate authority to execute and deliver this Agreement
and to perform its obligations hereunder.
4.4 ENFORCEABLE OBLIGATION. This Agreement constitutes the valid and
legally binding obligation of NDMI, enforceable against NDMI in accordance with
this Agreement's terms.
4.5 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby by NDMI
will (i) to NDMI's knowledge, violate any statute, law, regulation, rule,
judgment, order, decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or state or federal court to which NDMI
or the Acquisition Stock are subject or any provision of the articles of
incorporation or bylaws or similar governing rules or documents of NDMI, (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create
A-9
<PAGE>
in any party the right to accelerate, terminate, modify or cancel, or require
any notice under any governmental rule, law or regulation of any state or
federal court or under any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage or instrument of
indebtedness or under any other arrangement to which NDMI is a party or by which
it or the Acquisition Stock are bound or to which it or any of the Acquisition
Stock is subject, (iii) nor result in the imposition of any lien, encumbrance,
claim or security interest in, to or affecting any of the Acquisition Stock. To
its knowledge, NDMI does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any state or federal
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except those that will be obtained
or made prior to Closing or those which would fail to have a material adverse
effect on the ability of NDMI to consummate the transactions contemplated by
this Agreement.
4.6 THE ACQUISITION STOCK. As of the date of Closing, the Acquisition
Stock will constitute, in the aggregate, not less than 90% of all of the issued
and outstanding common stock of NDMI after the Closing, with the rights,
privileges and preferences that are described in NDMI's articles of
incorporation. As of the date of Closing the Acquisition Stock will have been
duly and validly issued and is and will be nonassessable. The Acquisition Stock
will be restricted stock, consistent with the provisions of this Agreement.
Title to the Acquisition Stock will be in the name of the Acquired Company's
Shareholders in the official records of NDMI and in the records of NDMI's stock
transfer agent, if any.
4.7 LITIGATION. NDMI is not subject to any unsatisfied judgment,
order, decree, stipulation, injunction, or charge nor is it a party or
threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing, or investigation of or in any court or quasi-judicial or
administrative agency of any federal, state or local jurisdiction or before any
arbitrator that relates in any way, directly or indirectly, to the transactions
contemplated in this Agreement. NDMI has no actual reason to believe that any
charge, complaint, action, suit, proceeding, hearing, or investigation will or
may be brought or threatened against NDMI in connection with the transactions
contemplated in this Agreement.
4.8 SEC AND BLUE SKY COMPLIANCE. NDMI is in compliance with all
requirements of all federal and state securities laws applicable to NDMI.
4.9 MATERIAL INFORMATION. As of the Closing, no representation or
warranty by NDMI, nor any statement or certificate furnished or to be furnished
to the Acquired Company's Shareholders pursuant hereto or in connection with the
transactions contemplated hereby, nor any filing made by NDMI with the SEC or
any state securities regulatory entity or authority contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact necessary to make the representation, warranty, statement or certificate
not misleading. At or prior to the Closing NDMI will deliver to the Acquired
Company's Shareholders a Disclosure Document (the "NDMI Disclosure Document")
that provides the Acquired Company's Shareholders with all material information
concerning NDMI and the
A-10
<PAGE>
Acquisition Stock, as required by the Securities and Exchange Commission,
and NDMI and the Acquired Company's Shareholders will take all actions and
steps that are necessary to cause the Acquired Company's Shareholders'
acquisition of the Acquisition Stock to be qualified under applicable rules
and regulations of the Securities and Exchange Commission as a private
placement of securities and to be similarly qualified under applicable
provisions of state laws. The Parties will cooperate with each other in
signing documents and forms to be filed with federal and state regulatory
agencies to accomplish the results contemplated in this paragraph.
4.10 DOCUMENTATION. Prior to the Closing NDMI will deliver to the
Acquired Company's Shareholders, materially correct, accurate and complete
copies of all of the contracts in an amount of $5,000 or more, and agreements
and documents that comprise or relate to NDMI or the Acquisition Stock in any
way. As to each such contract, agreement, or document (collectively, each
"Contract"):
(a) the Contract is the legal, valid, binding, and
enforceable obligation of the parties thereto as of the Closing
Date, and is in full force and effect as of the Closing Date;
(b) to the extent permitted by applicable law, after the
Closing, each Contract will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the Closing;
(c) no party to the Contract is in breach or default,
and no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination,
modification, or acceleration of the Contract;
(d) no party to the Contract has repudiated, breached or
anticipatorily breached any provision thereof, nor is there any
reason to think that any such is likely to occur or may occur in
the future;
(e) there are no disputes, oral agreements, or
forbearance programs in effect as to the Contract; and
(f) NDMI has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
Contract.
4.11 LEGAL COMPLIANCE.
(a) NDMI has complied in all material respects with all
laws (including rules and regulations thereunder) of federal,
state and local governments (and all agencies thereof), and no
charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has been filed or
commenced against any of NDMI alleging any failure to comply with
any such law or regulation.
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(b) NDMI has complied in all material respects with all
applicable laws (including rules and regulations thereunder)
relating to the employment of labor, employee civil rights, and
equal employment opportunities.
4.12 RECEIPT OF DISCLOSURE SCHEDULE. Prior to Closing, NDMI received
and reviewed a copy of the Acquired Company's Disclosure Schedule described in
Section 5.9 below, had discussions with representatives of the Acquired Company
and the Acquired Company's Shareholders, and received from such representatives
all such additional documents and information as NDMI requested.
4.13 RESTRICTED STOCK. NDMI understands that the Acquired Company's
Stock will not be registered with the Securities and Exchange Commission, and
that transferability of the Acquired Company's Stock will be subject to the
provisions and restrictions of state and federal securities laws.
4.14 REGISTRATION REPRESENTATIONS. NDMI is the sole party in interest
agreeing to purchase the Acquired Company's Stock by entering into this
Agreement. NDMI is acquiring the Acquired Company's Stock for investment
purposes only and not with a view to the resale or other distribution thereof,
in whole or in part. As stated in the previous paragraph, NDMI is aware that as
of the date of Closing the Acquired Company's Stock has not been and will not be
registered under the 1933 Act.
4.15 THIRD PARTY CONSENTS. All third parties whose consent to the
transactions contemplated in this Agreement are listed in the Disclosure
Schedule. The Disclosure Schedule also indicates the contract, agreement,
permit or other relationship to the third party that gives rise to the need for
the third party's consent.
4.16 DUE DILIGENCE PERIOD. During the time period from the effective
date of this Agreement until the Closing date (the "Due Diligence Period"), NDMI
will be entitled to investigate the Acquired Company, review its files, visit
the Acquired Company's business premises and to talk with officers and employees
of the Acquired Company and to meet with any and all other third parties, public
and private, and to perform such other due diligence reviews and investigations
pertaining to the transactions contemplated in this Agreement as NDMI determines
is necessary or proper.
4.17 BULLETIN BOARD COMPANY. NDMI is traded on the OTCBB in accordance
with all applicable rules applicable to such exchange. NDMI has approximately
601 shareholders and is in compliance with all federal and state securities
laws.
4.18 FINANCIAL STATEMENTS. NDMI has provided to ASTI balance sheets
and income statements of NDMI (the "NDMI Financial Statements"). The NDMI
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied, and are true and accurate. The
NDMI Financial Statements
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provided in connection with transactions contemplated in this Agreement are
true, correct and accurate in all respects. Since the date of the NDMI
Financial Statements, there has been no change in the financial condition of
NDMI. NDMI has no liabilities (including without limitation tax liabilities),
commitments or obligations, contingent or otherwise, that are not shown on the
NDMI Financial Statements.
4.19 CAPITALIZATION. All information relating to the authorized and
outstanding shares of stock of NDMI that has been provided by NDMI in connection
with transactions contemplated in this Agreement is true, correct and accurate
in all respects.
4.20 PENDING OR THREATENED LITIGATION. There is no pending or, to the
best of NDMI's knowledge, threatened litigation against NDMI by any party or
person.
ARTICLE
5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE ACQUIRED COMPANY
The Acquired Company represents and warrants to, and covenants with,
NDMI, that the representations and warranties provided below are true, correct,
accurate and complete in all respects as of the effective date of this
Agreement, and that the same will be true, correct, accurate and complete on and
as of the date of the Closing (as though made then and as though the Closing
were substituted for the date of this Agreement throughout the following),
except as may be set forth in the Disclosure Schedule attached hereto (the
"Acquired Company's Disclosure Schedule"). The Acquired Company's Disclosure
Schedule will be arranged in paragraphs and subparagraphs that correspond to the
designation of subparagraphs below.
5.1 ORGANIZATION OF THE ACQUIRED COMPANY. The Acquired Company is
a corporation that is duly organized, validly existing, and in good standing
in all material respects under the laws of the State of Nevada. The
description of the Acquired Company's Stock that is contained in the ASTI
Shareholder List is a true, correct, complete and accurate description. The
Acquired Company's Shareholders own 100% of all of the issued and outstanding
stock of the Acquired Company's Stock. There are no warrants, options,
convertible securities or other interests or rights to acquire the Acquired
Company's Stock.
5.2 AUTHORIZATION OF TRANSACTION. The Acquired Company has full actual
and legal corporate power and corporate authority to execute and deliver this
Agreement and to perform its obligations hereunder.
5.3 ENFORCEABLE OBLIGATION. This Agreement constitutes the valid and
legally binding obligation of the Acquired Company, enforceable against it in
accordance with this Agreement's terms.
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5.4 NONCONTRAVENTION. Neither the execution and delivery of this
Agreement by the Acquired Company, nor the consummation by any of them of the
transactions contemplated hereby, will (i) to ASTI's knowledge, violate any
statute, law, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental agency,
or court to which the Acquired Company or the Acquired Company's Shareholders or
the Acquired Company's Stock are subject, or any provision of the articles of
incorporation or bylaws or similar governing rules or documents of the Acquired
Company, (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any governmental rule,
law or regulation or under any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage or instrument of
indebtedness or under any other arrangement to which the Acquired Company or the
Acquired Company's Shareholders is a party or by which any of them is bound or
to which any of them is subject, (iii) nor result in the imposition of any lien,
encumbrance, claim or security interest in, to or affecting any assets of the
Acquired Company or the Acquired Company's Stock. No Acquired Company or
Acquired Company Shareholder needs to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
5.5 DOCUMENTATION. Prior to the Closing, the Acquired Company will
deliver to NDMI true, correct, accurate and complete copies of all of the
contracts, agreements and documents that comprise or relate to the Acquired
Company or the Acquired Company's Stock in any way. As to each such contract,
agreement, or document (collectively, each "Contract"):
(a) the Contract is the legal, valid, binding, and
enforceable obligation of the parties thereto as of the Closing
Date, and is in full force and effect as of the Closing Date;
(b) to the extent permitted by applicable law, after the
Closing, each Contract will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the Closing;
(c) no party to the Contract is in breach or default,
and no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination,
modification, or acceleration of the Contract;
(d) no party to the Contract has repudiated, breached or
anticipatorily breached any provision thereof, nor is there any
reason to think that any such is likely to occur or may occur in
the future;
(e) there are no disputes, oral agreements, or
forbearance programs in effect as to the Contract; and
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(f) the Acquired Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the Contract.
5.6 LITIGATION. The Acquired Company is not subject to any unsatisfied
judgment, order, decree, stipulation, injunction, or charge, nor is the Acquired
Company a party or threatened to be made a party to any charge, complaint,
action, suit, proceeding, hearing, or investigation of or in any court or
quasi-judicial or administrative agency of any federal, state or local
jurisdiction or before any arbitrator that relates in any way, directly or
indirectly, to the transactions contemplated in this Agreement. The Acquired
Company has no reason to believe that any charge, complaint, action, suit,
proceeding, hearing, or investigation will or may be brought or threatened
against the Acquired Company in connection with any of the transactions
contemplated in this Agreement.
5.7 LEGAL COMPLIANCE.
(a) The Acquired Company has complied with all laws
(including rules and regulations thereunder) of federal, state and
local governments (and all agencies thereof), and no charge,
complaint, action, suit, proceeding, hearing, investigation,
claim, demand, or notice has been filed or commenced against the
Acquired Company alleging any failure to comply with any such law
or regulation.
(b) The Acquired Company has complied in all material
respects with all applicable laws (including rules and regulations
thereunder) relating to the employment of labor, employee civil
rights, and equal employment opportunities.
5.8 MATERIAL INFORMATION. As of the Closing, no representation or
warranty made by the Acquired Company, nor any statement or certificate
furnished or to be furnished to any person or Party pursuant hereto or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact necessary to make the representation, warranty, statement or
certificate not misleading. At or prior to the Closing the Acquired Company
will deliver to NDMI a Disclosure Document (the "Acquired Company's Disclosure
Document") that provides NDMI with all material information concerning the
Acquired Company. The Parties will cooperate with each other in signing
documents and forms to be filed with federal and state regulatory agencies to
accomplish the results contemplated in this paragraph.
5.9 RECEIPT OF DISCLOSURE SCHEDULE. Prior to making the decision to
acquire the Acquisition Stock as provided herein, the Acquired Company and the
Acquired Company's Shareholders received and reviewed a copy of the Disclosure
Schedule described in Section 4.9, had discussions with representatives of NDMI
and received from such representatives such additional documents and information
as the Acquired Company's Shareholder requested.
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Each of the Acquired Company's Shareholders acknowledges that he or she is
sophisticated and experienced in matters relating to NDMI and its planned
business activities as described in the Disclosure Schedule.
5.10 RESTRICTED STOCK. Each of the Acquired Company's Shareholders
understands that the Acquisition Stock will be restricted stock, not registered
with the Securities and Exchange Commission. Unless and until the Acquisition
Stock is registered under the Securities Exchange Act of 1934, no Acquired
Company's Shareholder will be entitled to transfer all or any share of the
Acquisition Stock unless the Acquired Company's Shareholder first provides NDMI
with an acceptable opinion of counsel that the proposed transfer will not
violate any applicable law, rule or regulation or any provision of this
Agreement. NDMI will be entitled to place a restrictive legend on all
certificates evidencing ownership of the Acquisition Stock that provides notice
of the provisions of this paragraph and other applicable provisions of this
Agreement. Unless otherwise provided in this Agreement, each of the Acquired
Company's Shareholders will be prohibited from trading the Acquisition Stock for
a period of two years after the date of the Closing.
5.11 REGISTRATION REPRESENTATIONS. Each of the Acquired Company's
Shareholders is the sole party in interest agreeing to purchase the Acquisition
Stock by entering into this Agreement. The Acquired Company's Shareholders are
acquiring the Acquisition Stock for the Acquired Company's Shareholders' own
account, for investment purposes only and not with a view to the resale or other
distribution thereof, in whole or in part. As stated above, the Acquired
Company's Shareholders is aware that as of the date of Closing the Acquisition
Stock has not been and will not be registered under the 1933 Act and that NDMI
provides no assurance that the Acquisition Stock will ever be registered under
such act. Each of the Acquired Company's Shareholders is willing and able and
agrees to bear the economic risk of investment in the Acquisition Stock for an
indefinite period of time, and each is capable of bearing that risk. Each of
the Acquired Company's Shareholders is knowledgeable with respect to the
financial, tax and business aspects of ownership of the Acquisition Stock and of
the business operations conducted by NDMI, or the Acquired Company has been
represented by a person with such knowledge and expertise in connection with
acquisition of the Acquisition Stock.
5.12 THIRD PARTY CONSENTS. All third parties, if any, whose consent to
the transactions contemplated in this Agreement are listed in the Disclosure
Schedule. The Disclosure Schedule also indicates the contract, agreement,
permit or other relationship to the third party that gives rise to the need for
the third party's consent.
5.13 DUE DILIGENCE PERIOD. During the time period from the effective
date of this Agreement until the Closing date (the "Due Diligence Period"), the
Acquired Company's Shareholders will be entitled to investigate NDMI, review its
files, to visit NDMI's business premises and to talk with officers and employees
of NDMI and to meet with any and all other third parties, public and private,
and to perform such other due diligence reviews and
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investigations pertaining to the transactions contemplated in this Agreement as
any Acquired Company's Shareholder determines is necessary or proper. The
Acquired Company's Shareholders have received the financial statements of NDMI
dated September 30, 1999.
5.14 FINANCIAL STATEMENTS. ASTI has provided to NDMI balance sheets
and income statements of ASTI (the "ASTI Financial Statements"). The ASTI
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied, and are true and accurate. The
ASTI Financial Statements provided in connection with transactions
contemplated in this Agreement are true, correct and accurate in all
respects. Since the date of the ASTI Financial Statements, there has been no
change in the financial condition of ASTI. ASTI has no liabilities,
commitments or obligations, contingent or otherwise, that are not shown on
the ASTI Financial Statements.
ARTICLE
6
CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NDMI. The following
are conditions precedent to the obligation of NDMI to sell and convey the
Acquisition Stock to the Acquired Company's Shareholders and to receive an
assignment of the Acquired Company's Stock at the Closing. Any condition listed
below may be waived by NDMI at or prior to the Closing Date.
(a) Delivery to NDMI of all information and materials
required to be delivered under any provision of this Agreement;
(b) Receipt of all necessary third party consents;
(c) Performance by each Acquired Company Shareholder of
all of his or her or its obligations under this Agreement that are
required to be performed prior to Closing;
(d) True and correct representations and warranties by
the Acquired Company and the Acquired Company's Shareholders in
connection with this Agreement; and
(e) Discovery of no materially adverse information at or
prior to the Closing concerning the Acquired Company.
6.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRED COMPANY'S
SHAREHOLDERS. The following are conditions precedent to the obligations of
Acquired Company's Shareholders to sell and transfer the Acquired Company Stock
to NDMI, and to acquire the Acquisition Stock from NDMI, at the Closing. Any
condition listed below may be waived by the Acquired Company's Shareholders at
or prior to the Closing.
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(a) Delivery to the Acquired Company's Shareholders of
all information and materials required to be delivered by NDMI
under any provision of this Agreement;
(b) Receipt of all necessary third party consents;
(c) Performance by NDMI of all of its obligations under
this Agreement that are required to be performed prior to Closing;
(d) Receipt of evidence of satisfactory completion of
the transactions involving the Acquired Company Shareholders as
described herein; and
(e) Discovery of no materially adverse information at or
prior to the Closing concerning NDMI.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Parties contained in this Agreement will survive the
Closing and will continue to be the obligations of the Parties for a period of
two years after the date of the Closing.
ARTICLE
7
GENERAL PROVISIONS
7.1 COSTS AND FEES. If any Party breaches any term of this Agreement,
the breaching Party agrees to pay the non-breaching Party all reasonable
attorneys' fees, expert witness fees, investigation costs, costs of tests and
analysis, travel and accommodation expenses, deposition and trial transcript
costs, court costs and other costs and expenses incurred by the non-breaching
Party in enforcing this Agreement or preparing for legal or other proceedings,
at the trial or appellate level, whether or not such proceedings are instituted.
If any legal or other proceedings are instituted, the Party prevailing in any
such proceeding will be paid all of the aforementioned costs, expenses and fees
by the other Party, and if any judgment is secured by such prevailing Party, all
such costs, expenses, and fees will be included in such judgment, attorneys'
fees to be set by the court and not by the jury. References in this paragraph
to "legal proceedings" refer to litigation as well as arbitration proceedings
and any other similar or related proceedings.
7.2 WAIVER. No delay by a Party in exercising any right or remedy
will constitute a waiver of a Party's rights under this Agreement, and no waiver
by any Party of the breach of any covenant of this Agreement by the other will
be construed as a waiver of any preceding or succeeding breach of the same or
any other covenant or condition of this Agreement.
7.3 INDEMNIFICATION. Each Party (the "Indemnifying Party") will
protect, indemnify and hold harmless the other Party and its directors,
officers, employees, agents, affiliates and representatives (each an
"Indemnified Party") against any and all costs, expenses, damages
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(whether such damages are general, special, consequential, limited, direct or
indirect or incidental), liabilities or losses, including attorneys' fees,
caused by, for or on account of the Indemnifying Party's negligence, gross
negligence or willful misconduct or failure to perform its obligations under
this Agreement or the negligence, gross negligence or willful misconduct of the
Indemnifying Party's directors, officers, employees, agents affiliates or
representatives.
(a) If an Indemnified Party intends to seek
indemnification under this paragraph from any Indemnifying Party
with respect to any action or claim, the Indemnified Party will
give the Indemnifying Party notice of such claim or action upon
the receipt of actual knowledge or information by the Indemnified
Party of any possible claim or of the commencement of such claim
or action, which period will in no event be later than the earlier
of (i) fifteen business days prior to the last day of responding
to such claim or action or (ii) one half of the period allowed for
responding to such claim or action or, if no time period for
responding exists, as soon as reasonably possible. The
Indemnifying Party will have no liability under this paragraph for
any claim or action for which such notice is not provided, unless
the failure to give such notice does not prejudice the
Indemnifying Party.
(b) The Indemnifying Party will have the right to assume
the defense of any such claim or action, at its sole cost and
expense, with counsel designated by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party: provided,
however, that if the defendants in any such action include both
the Indemnified Party and the Indemnifying Party, and the
Indemnified Party will have reasonably concluded that there may be
legal defenses available to it which are different from or
additional to those available to the Indemnifying party, the
Indemnified Party will have the right to select separate counsel,
at the Indemnifying Party's expense, to assert such legal defenses
and to otherwise participate in the defense of such action on
behalf of such Indemnified Party.
(c) Should any Indemnified Party be entitled to
indemnification under this Section as a result of a claim by a
third party, and should the Indemnifying Party fail to assume the
defense of such claim or action, the Indemnified Party may, at the
expense of the Indemnifying Party, contest or, (with the prior
consent of the Indemnifying Party, which consent will not be
unreasonably withheld) settle such claim or action. Except to the
extent expressly provided herein, no Indemnified Party will settle
any claim or action with respect to which it has sought or intends
to seek indemnification pursuant to this Section without the prior
written consent of the Indemnifying Party, which consent will not
be unreasonably withheld or delayed.
(d) If an Indemnifying Party is obligated to indemnify
and hold any Indemnified Party harmless under this Agreement, the
amount owing to the
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Indemnified Party will be the amount of such Indemnified Party's actual
out-of-pocket loss, net of any insurance or other recovery.
(e) The duty to indemnify under this Agreement will
continue in full force and effect for a period of two years with
respect to any loss, liability, damage or other expense based on
facts or conditions which occurred prior to such termination.
7.4 NOTICES. No notice, consent, approval or other communication
provided for herein or given in connection herewith will be validly given, made,
delivered or served unless it is in writing and delivered personally, sent by
overnight courier, or sent by registered or certified United States mail,
postage prepaid, with return receipt requested, to the addresses for each Party
set forth below. Any Party hereto may from time to time change its address by
notice to the other Parties given in the manner provided herein. Notices,
consents, approvals, and communications by mail will be deemed delivered upon
the earlier of forty-eight (48) hours after deposit in the United States mail in
the manner provided above or upon delivery to the respective addresses set forth
above if delivered personally or sent by overnight courier. Addresses of the
Parties are the following:
To NDMI:
New Directions Manufacturing, Inc.
2940 W. Willetta
Phoenix, Arizona 85009
Telephone: (602) 352-1165
Fax: (602) 352-1505
To the Acquired Company and the Acquired Company's Shareholders:
American Soil Technologies, Inc.
215 North Marengo Avenue, Suite 110
Pasadena, California 91101
Telephone: 626-793-2435
Fax 626-568-1629
7.5 INTERPRETATION AND TIME. The captions of the paragraphs of this
Agreement are for convenience only and will not govern or influence the
interpretation hereof. This Agreement is the result of negotiations between the
Parties and, accordingly, will not be construed for or against any Party
regardless of which Party drafted this Agreement or any portion thereof. Time
is of the essence under this Agreement.
7.6 SUCCESSORS AND ASSIGNS. All of the provisions hereof will inure
to the benefit of and be binding upon the successors and assigns of the Parties.
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7.7 NO PARTNERSHIP. This Agreement is not intended to, and nothing
contained in this Agreement will, create any partnership, joint venture or other
similar arrangement between the Parties.
7.8 FURTHER DOCUMENTS. Each of the Parties will execute and deliver
all such other and additional documents and perform all such acts, in addition
to execution and delivery of this Agreement and performance of the Party's
obligations hereunder, as are reasonably required from time to time in order to
carry out the purposes, matters and transactions that are contemplated in this
Agreement.
7.9 INCORPORATION OF EXHIBITS. All exhibits attached to this
Agreement are by this reference incorporated herein.
7.10 GOVERNING LAW. This Agreement will be governed by the laws of the
State of Nevada, without giving effect to the conflict of law provisions or
principles of the State of Nevada.
7.11 DATE OF PERFORMANCE. If the date of performance of any obligation
or the last day of any time period provided for herein should fall on a
Saturday, Sunday or legal holiday, then said obligation will be due and owing,
and said time period will expire, on the first day thereafter which is not a
Saturday, Sunday or legal holiday. Except as may otherwise be set forth herein,
any performance provided for herein will be timely made if completed no later
than 5:00 p.m., Scottsdale, Arizona time, on the day of performance.
7.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts. This Agreement may be signed by original signatures or by fax
signatures. Any set of counterparts of this Agreement, whether faxed or
originals or both, showing signatures by all Parties, taken together, will
constitute a single copy of this Agreement.
7.13 RESOLUTION OF DISPUTES. In the event of any dispute between the
Parties as to their rights and obligations under this Agreement, including, but
not limited to, any question as to whether or not a Party has performed its
obligations fully or remedied an alleged breach, and any and all other disputes
arising under this Agreement, will be resolved as follows.
(a) The Parties will submit their dispute to at least
four (4) hours of mediation in accordance with the mediation
procedures of American Arbitration Association ("AAA").
(b) In the event the dispute does not then settle within
15 calendar days after the first mediation session, the Parties
agree to submit the dispute to binding arbitration in accordance
with the arbitration procedures of the AAA except as modified in
this Agreement. The arbitration hearing will be conducted no
later than 45 calendar days after the first mediation session.
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(c) The arbitrator or arbitrators conducting the
arbitration hearing will render the arbitration decision in
writing, which writing will explain the reasoning and bases for
the decision.
(d) The Parties agree to share equally the costs of
mediation. However, if the dispute is settled through
arbitration, the prevailing Party will be entitled to recover all
costs incurred, including reasonable attorneys' fees, to enforce
its rights hereunder, in addition to any damages recovered, as
provided in "Costs and Fees" above.
7.14 SEVERABILITY. If any term or provision of this Agreement will, to
any extent, be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Agreement will not be affected thereby, and
each term and provision of this Agreement will be valid and be enforceable to
the fullest extent permitted by law.
7.15 ASSIGNMENT. No Party will assign this Agreement, nor any interest
arising herein, without the written consent of the other Parties.
7.16 RECITALS. The recitals set forth above are a part of this
Agreement.
7.17 JURISDICTION AND VENUE. Venue for and jurisdiction over any legal
proceedings available to the Parties hereunder will lie in the appropriate
courts of the State of Arizona, located in Phoenix, Arizona.
IN WITNESS WHEREOF, the Parties hereto have hereunder affixed their
signatures on the dates set forth below to be effective as of the date first set
forth above.
NEW DIRECTIONS MANUFACTURING, INC., a
Nevada corporation,
Date: 11/24/1999 By: /s/ Sean F. Lee
----------------- ---------------------------------
Name: Sean F. Lee
---------------------------------
Its: President
----------------------------------
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AMERICAN SOIL TECHNOLOGIES, INC.,
a Nevada corporation,
Date: 11/24/1999 By: /s/ Neil C. Kitchen
----------------- ---------------------------------
Name: Neil C. Kitchen
---------------------------------
Its: President/CEO
----------------------------------
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ANNEX B
WRITTEN CONSENT OF THE HOLDERS OF A
MAJORITY OF THE COMMON STOCK OF
NEW DIRECTIONS MANUFACTURING, INC.
<PAGE>
ACTION BY MAJORITY WRITTEN CONSENT
OF THE SHAREHOLDERS OF
NEW DIRECTIONS MANUFACTURING, INC.
A NEVADA CORPORATION
The undersigned, holders of a majority of the issued and outstanding
shares of NEW DIRECTIONS MANUFACTURING, INC., a Nevada corporation (the
"Corporation"), in accordance with Section 78.115 Nevada Revised Statutes,
without the formality of convening a meeting, do hereby consent to and adopt the
following resolution:
AUTHORIZATION OF EXCHANGE WITH AMERICAN SOIL TECHNOLOGIES, INC.
WHEREAS, in light of the significant deterioration of the Corporation's
stock market valuation, the need for a substantial cash infusion, and the
expense of being a public company, the Board of Directors have presented to the
Shareholders an opportunity for the Corporation to provide its Public
Stockholders a better opportunity to receive a fair price for their Shares,
acquire 100% ownership of American Soil Technology, Inc. and to terminate the
status of the Corporation as a company with publicly traded equity (the
"Exchange").
WHEREAS, the Shareholders have reviewed and approved the draft Stock
Exchange Agreement and Stock Issuance Agreement which will govern the Exchange.
WHEREAS, the Shareholders have met with representatives of ASTI and
reviewed due diligence material on ASTI.
WHEREAS, the Shareholders have deemed it to be in the best interests of
the Corporation to enter into an acquisition by and stock exchange of the
Corporation. In this transaction, the Corporation will acquire all of the
outstanding shares of American Soil Technologies, Inc., spin off its operating
subsidiary, New Directions Manufacturing, Inc., an Arizona corporation ("New
Directions-Arizona"), and change its name to American Soil Technologies, Inc.
After a 15 for 1 reverse stock split, the Corporation's shareholders may
exchange their stock of the Corporation for shares of common stock of American
Soil Technologies, Inc.
NOW, THEREFORE, IT IS HEREBY RESOLVED, that either the Chief Executive
Officer, President, Chief Financial Officer, Vice President, and/or Secretary of
the Corporation, acting alone or together, each are hereby authorized to execute
and deliver, for and on behalf of the Company, the Stock Exchange Agreement and
Stock Issuance Agreement, with such changes as the officers authorized to
execute the documents may approve, together with and including, without
limitation, any and all agreements, instruments, and documents, and amendments
thereto (collectively, the "Documents") as they may deem necessary or
appropriate to consummate the transactions contemplated therein.
RESOLVED FURTHER, that the Corporation is authorized to perform the
actions required to be taken by the Documents executed and delivered in
accordance with these resolutions.
FURTHER ACTION
RESOLVED, that the officers of the Company specified above are authorized
to take such further action as they may deem necessary or appropriate to carry
out the purpose and intent of the foregoing resolution.
The undersigned, constituting a majority of the Shareholders of the
Corporation, by affixing their signature below do hereby approve each of the
resolutions set forth above.
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IN WITNESS WHEREOF, the undersigned Shareholders, constituting a majority
of the Shareholders of the Corporation, have executed this Majority Written
Consent in Lieu of Meeting as of the 8th day of October, 1999.
<TABLE>
<S> <C>
/s/ SEAN F. LEE 1,410,000
- --------------------------------------- -------------------------
SEAN F. LEE NUMBER OF SHARES OWNED
/s/ JACK HORNER, JR. 510,000
- --------------------------------------- -------------------------
JACK HORNER, JR. NUMBER OF SHARES OWNED
/s/ DONALD A. METKE. 461,000
- --------------------------------------- -------------------------
DONALD A. METKE. NUMBER OF SHARES OWNED
/s/ MICHAEL D. DUNN 50,000
- --------------------------------------- -------------------------
MICHAEL D. DUNN NUMBER OF SHARES OWNED
/s/ EARL T. SHANNON 459,444
- --------------------------------------- -------------------------
EARL T. SHANNON, ATTORNEY-IN-FACT FOR NUMBER OF SHARES OWNED
RONALD W. TUPPER, TTEE OF THE WINTHROP TRUST
/s/ SAM PERONE 250,000
- --------------------------------------- -------------------------
SAM PERONE NUMBER OF SHARES OWNED
/s/ EARL T. SHANNON 40,000
- --------------------------------------- -------------------------
EARL T. SHANNON, AN INDIVIDUAL NUMBER OF SHARES OWNED
TOTAL SHARES 3,180,444 (64%)
-------------------------
</TABLE>
B-2
