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Exhibit 2.01 -- AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") is made and entered into as of the
30th day of June, 2000, by and among INDUSTRIAL ECOSYSTEMS, INC. ("IEI"), a
Utah corporation which is publicly listed on the OTC-BB, ROP MERGER CORP.
("ROP"), a Missouri corporation, JFJ ECOSYSTEMS, LLC ("JFJ"), a Missouri
limited liability company and JOHN P. CROWE ("Crowe"), an individual residing
in Missouri.
WHEREAS, ROP is the successor in interest to ROP North America, L.L.C.;
WHEREAS, on the date hereof, ROP is owned fifty percent (50%) by JFJ and fifty
percent (50%) by IEI;
WHEREAS, the parties previously entered into a Rights Agreement dated as of
the 31st day of December, 1998 (the "Rights Agreement"), wherein JFJ was
granted certain rights to cause the merger of ROP and IEI Canada, Inc. ("IEI
Canada"), an Ontario corporation wholly owned by IEI;
WHEREAS, JFJ desires to exercise its rights to cause such merger in accordance
with the terms and conditions contained in the Rights Agreement;
WHEREAS, since there are certain restrictions regarding the merger of a U.S.
domestic corporation with a Canadian corporation, the parties agree that ROP
will be merged into IEI instead of IEI Canada;
WHEREAS, the authorized capitalization for ROP is 30,000 Shares of common
stock, $1.00 par value, of which 2,000 shares are issued and outstanding;
WHEREAS, the authorized capitalization for IEI is 100,000,000 shares of common
stock $0.001 par value of which 45,600,683 shares were issued and outstanding
at March 31, 2000;
WHEREAS, the respective shareholders and boards of IEI and ROP, at special
meetings held April 19, 1999 and June 16, 2000, respectively, approved the
essential terms of the transaction contemplated by this Agreement by which (a)
IEI and ROP will be merged with and into each other in accordance with Section
351.410 et. seq. of the Revised Statutes of Missouri, as amended, and Section
16-10a-1101 et. seq. of the Utah Code Annotated, as amended, with IEI being
the surviving corporation, (b) pursuant to the merger, JFJ will receive shares
of common stock of IEI in exchange for all of its stock ownership in ROP, and
(c) the merger is intended to qualify as a tax-free reorganization, pursuant
to Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, as part of the merger and pursuant to the Rights Agreement, JFJ will
also receive an option to purchase up to 2,261,334 shares of IEI restricted
common stock at an exercise price equal to the fair market value of IEI stock
on June 30, 2000 in accordance with the terms and conditions herein;
WHEREAS, JFJ has loaned to IEI Seven Hundred Fifty Thousand Dollars ($750,000)
(the "JFJ Loan") pursuant to a revolving line of credit (the "Line of
Credit"), which is evidenced by a Credit Agreement and a Master Promissory
Note and secured by a Pledge and Security Agreement, and the parties agree
that in connection with the merger of ROP and IEI, the JFJ Loan and all
accrued interest thereon through the effective date of this Agreement will be
converted to common stock of IEI in accordance with the terms and conditions
herein;
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WHEREAS, JFJ has also loaned to ROP Fifty Thousand Dollars ($50,000) (the "JFJ
ROP Loan"), and the parties agree that in connection with the merger of ROP
and IEI, the JFJ ROP Loan and all accrued interest thereon through the
effective date of this Agreement will also be converted to common stock of
IEI; and
WHEREAS, Crowe has loaned to ROP One Hundred Seventy-five Thousand Dollars
($175,000) (the "Crowe Loan"), and the parties agree that in connection with
the merger of ROP and IEI, the Crowe Loan and all accrued interest thereon
will also be converted to common stock of IEI;
NOW, THEREFORE, BE IT RESOLVED, in consideration of the premises and of the
mutual agreements herein contained, it is agreed by and among the parties
hereto as follows:
1. Plan of Merger. IEI and ROP shall be merged in accordance with Section
351.410 et. seq. of the Revised Statutes of Missouri, as amended, Section 16-
10a-1101 et. seq. of the Utah Code Annotated, as amended, and Section
368(a)(1)(A) of the Code and in accordance with the following Plan of Merger,
with IEI being the surviving corporation:
A. Effective Date. The date on which the Merger shall become effective
shall be on June 30, 2000, and such date is herein called the "Effective
Date."
B. Surviving Corporation. IEI shall be the surviving corporation, and such
corporation shall be referred to herein as the "Surviving Corporation." The
separate corporate existence of ROP shall cease forthwith upon the Effective
Date.
C. Articles of Incorporation. The Articles of Incorporation of IEI as in
effect immediately prior to the Effective Date shall be the Articles of
Incorporation of the Surviving Corporation following the Effective Date.
D. By-Laws. The By-Laws of IEI as in effect immediately prior to the
Effective Date, shall be the By-Laws of the Surviving Corporation following
the Effective Date.
E. Board of Directors and Officers. The directors and officers of the
Surviving Corporation shall continue as the directors and officers of the
Surviving Corporation and shall serve for the terms provided by law or in the
By-Laws, or until their successors shall have been elected and qualified.
F. Manner of Conversion. At the Effective Date, all shares of ROP common
capital stock owned by JFJ immediately prior to the Effective Date shall, by
virtue of the merger and with no further action, be converted into 10,392,337
shares of common stock of IEI (16,627,739 X ($1,250,000/$2,000,000)), and
thereafter each share of ROP common capital stock shall cease to exist and be
canceled and no cash or securities or other property shall be issued or paid
in respect thereof. Each share of IEI common capital stock issued and
outstanding immediately prior to the Effective Date shall remain outstanding
with no changes.
G. Rights and Liabilities of Surviving Corporation. On the Effective Date
of the merger, the Surviving Corporation shall possess all the rights,
privileges, powers, licenses and franchises, both public and private, of ROP
and IEI, and all property, real, personal and mixed, and all debts due ROP and
IEI on whatever account, as well as all other things in action of or belonging
to ROP or IEI shall be vested in the Surviving Corporation, and all property,
<PAGE> 3
assets, rights, privileges, powers, licenses, franchises and immunities, and
all and every other interest shall thereafter be the property of the Surviving
Corporation as they were of ROP and IEI and the title to any real estate
vested by deed or otherwise, in either ROP or IEI shall not revert or be in
any way impaired by reason of the merger, but all rights of creditors and all
liens upon any property of ROP and IEI shall be preserved unimpaired, and all
debts, liabilities, obligations and duties of ROP and IEI (except for the
notes expressly canceled below) shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said
debts, obligations, liabilities and duties had been incurred or contracted by
it.
H. Transfer of Book Entries. At the Effective Date of the merger, the
assets and liabilities of ROP and IEI shall be entered on the books of the
Surviving Corporation at the amounts at which they are carried at such date on
the books of such parties, subject to such intercorporate adjustments or
eliminations, if any, as may be required to give effect to the transfer; and
subject to such action as may be taken by the Board of Directors of the
Surviving Corporation in accordance with generally accepted accounting
principles.
I. JFJ Option to Purchase Shares of IEI. JFJ is hereby granted an option
to purchase up to 2,261,334 shares of IEI restricted common stock at an
exercise price equal to the fair market value of IEI stock on June 30, 2000.
Such fair market value shall be equal to the 5 day trailing average ending
June 30, 2000. The stock options shall be in accordance with the terms and
conditions of the Stock Option Agreement attached hereto as EXHIBIT A and
incorporated herein by this reference.
J. JFJ Loan. The parties agree that in connection with the merger of ROP
and IEI, the outstanding principal balance and all accrued and unpaid interest
on the JFJ Loan shall be converted into 6,235,402 shares of common stock of
IEI (16,627,739 X ($750,000/$2,000,000)). Upon the Effective Date, the JFJ
Loan and the Master Promissory Note shall be deemed to be satisfied by IEI,
and the Line of Credit, the Credit Agreement and the Pledge and Security
Agreement shall be terminated and of no further force and effect.
K. JFJ ROP Loan. The parties agree that in connection with the merger of
ROP and IEI, the outstanding principal balance ($50,000) and all accrued and
unpaid interest ($7,695) on the JFJ ROP Loan shall be converted into 479,669
shares of common stock of IEI ($57,695 X (16,627,739/$2,000,000)). Upon
Closing, the JFJ ROP Loan shall be deemed to be satisfied by ROP.
L. Crowe Loan. The parties agree that in connection with the merger of ROP
and IEI, the outstanding principal balance ($175,000) and all accrued and
unpaid interest ($16,550) on the Crowe Loan shall be converted into 1,592,522
shares of common stock of IEI ($191,550 X (16,627,739/$2,000,000)). Upon
Closing, the Crowe Loan shall be deemed to be satisfied by ROP.
2. Number of Shares Outstanding and Number of Shares Entitled to Vote. As to
each corporation, the number of shares outstanding and entitled to vote were
or are:
No. of Shares No. of Shares Present
Name Outstanding and Entitled to Vote
---- ------------- ---------------------
IEI 33,596,906 25,223,599
ROP 2,000 2,000
<PAGE> 4
3. Number of Shares Voted for and Against Plan of Merger. As a precaution,
John Crowe abstained from the IEI vote as to all shares beneficially owned by
him. As to each corporation whose stockholders are entitled to vote, the
number of shares voted for and against the plan respectively are:
Total Shares Total Shares
Voted For Voted Against
------------ -------------
IEI 16,317,730 14,801
ROP 2,000 0
4. Representations. IEI and ROP represent and warrant to each other as
follows:
A. Organization and Existence. IEI and ROP are corporations duly
incorporated and in good standing under the laws of the State of their
incorporation and are in good standing in all other jurisdictions in which
they are required to be qualified to do business as a foreign corporation.
The stock ownership of IEI and ROP is in accordance with sections 2 and 3
above, and neither corporation has any stock outstanding, including, but not
limited to, any preferred stock, other than that disclosed in this Agreement.
B. Authorization, Etc. The execution, delivery and performance by IEI and
ROP of this Agreement and all related instruments, agreements and documents
have been duly authorized by them. The execution, delivery and performance by
IEI and ROP of these instruments, agreements, and documents is within their
corporate power, has been duly authorized by all necessary corporate action,
and is not prohibited, restricted, or inhibited by (i) their Articles of
Incorporation or By-laws; or (ii) any material law, indenture, contract,
instrument or agreement, (other than contracts for which appropriate consents
to this transaction have been or prior to Closing will be obtained).
C. Approval of Governmental Bodies. Except for compliance with federal and
state securities and corporation laws, as provided herein, to the best of the
parties knowledge no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by IEI or ROP of this
Agreement and all related agreements, instruments and documents.
As soon as practicable following consummation of the transactions contemplated
hereby on the Closing Date, Certificates and/or Articles of Merger and such
other documents as are required by the provisions of the corporate statutes of
the states of Utah and Missouri to complete the Merger share be filed with the
respective states. The effective date of the Merger shall be June 30, 2000.
Within 15 calendar days of the effective date of the Merger, IEI shall file a
report with the Securities and Exchange Commission (the "SEC") on Form 8-K
disclosing the material terms of the transaction.
5. Enforceability of Obligations. This Agreement and all related agreements,
instruments and documents are, or upon execution at the Closing will be,
legal, valid and binding obligations and enforceable against IEI and ROP, as
applicable in accordance with their respective terms, except to the extent of
applicable bankruptcy, moratorium, insolvency, reorganization and other laws
and legal principles affecting or limiting creditors' rights generally.
6. Conditions Precedent to IEI's Obligation to Close. IEI shall not be
obligated to close unless all of the following conditions are satisfied on or
before the Closing Date or IEI elects to waive in writing any condition which
has not been satisfied:
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A. Compliance. All of the representations of ROP contained in this
Agreement shall be true as of the date of this Agreement and shall be deemed
to have been made again at and as of the time of the Closing, and shall then
be true in all material respects, and ROP shall have caused all agreements,
covenants and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing to be so performed or complied
with;
B. No Action, Etc. No action or proceeding shall have been brought or
threatened before any court or administrative agency to prevent the
consummation of, or to seek damages in a material amount by reason of the
transactions contemplated hereby, and no governmental authority shall have
asserted in writing that the within transaction (or any other pending
transaction involving IEI and ROP, when considered in light of the effect of
the within transaction) shall constitute a material violation of law or give
rise to material liability on the part of IEI;
C. Legal Matters. All actions, proceedings, instruments and documents
required to carry out this Agreement incidental hereto and all other related
legal matters, instruments and documents required to carry out this Agreement
or incidental hereto and all other related legal matters shall have been
approved by legal counsel to IEI, which approval shall not be unreasonably
withheld, and such legal counsel shall have been furnished with all actions,
documents and instruments as they shall have reasonably requested in
connection with the transactions contemplated herein;
D. Certified Resolutions. ROP shall have furnished resolutions, certified
by the appropriate officers of ROP, authorizing the transactions contemplated
hereby;
E. Financial Information. Within 30 days of the Closing Date, ROP shall
provide the information necessary to present the pro forma consolidated and
consolidating financial statements and pro forma consolidated and
consolidating summary information, including a pro forma consolidated and
consolidating balance sheet, pro forma consolidated and consolidating income
statements, pro forma summaries of earnings (with aggregate and per-share
earnings), and pro forma (combined basis) earnings data for all periods
required to be presented and in the form and manner required for use in the
Form 8-K and/or Form 10QSB or any other document required to be filed with the
SEC or state securities agency, requiring the presentation of IEI financial
statements under generally accepted accounting principles. Such information
includes:
The audited balance sheet of ROP (or its predecessor) as of December 31, 1999
and 1998 and the related statements of income (loss), changes in shareholders'
equity and, cash flows, and stockholders' equity for the years since inception
to December 31, 1999, and 1998, including the notes thereto, prepared by
independent certified public accountants, as well as unaudited financial
information through the periods from December 31, 1999 to the closing date,
which, to the best knowledge of ROP contain all adjustments (all of which are
normal recurring adjustments) necessary to present fairly the results of
operations and financial position for the periods and as of the dates
indicated.
The audited financial statements delivered pursuant hereto must have been
prepared in accordance with United States generally accepted accounting
principles consistently applied throughout the periods involved and, when
required to be audited, have been audited by a certified public accountants
licensed to practice in the United States and before the Securities and
<PAGE> 6
Exchange Commission. The audited financial statements must be presented in
accordance with the requirements of Regulation S-X promulgated by the SEC
regarding the form and content of and requirements for financial statements to
be filed with the SEC.
F. Loan Documentation. Prior to the Closing Date, ROP shall provide
documentation satisfactory to IEI concerning the specifics of the Crowe Loan,
including the date and terms.
7. Conditions Precedent to the Obligations of ROP to Close. ROP shall not be
obligated to close unless all of the following conditions are satisfied on or
before the Closing Date or ROP elects to waive in writing any condition which
has not been satisfied:
A. Compliance. All of the representations of IEI contained in this
Agreement shall be true as of the date of this Agreement and shall be deemed
to have been made again at and as of the time of the Closing, and shall then
be true in all material respects, and IEI shall have caused all agreements,
covenants and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing to be so performed or complied
with;
B. No Action, Etc. No action or proceeding shall have been brought or
threatened before any court or administrative agency to prevent the
consummation of, or to seek damages in a material amount by reason of the
transaction contemplated hereby, and no governmental authority shall have
asserted in writing that the within transaction (or any other pending
transaction involving IEI and ROP, when considered in light of the effect of
the within transaction) shall constitute a material violation of law or give
rise to material liability on the part of ROP;
C. Legal Matters. All actions, proceedings, instruments and documents
required to carry out this Agreement incidental hereto and all other related
legal matters, instruments and documents required to carry out this Agreement
or incidental hereto and all other related legal matters shall have been
approved by legal counsel to ROP, which approval shall not be unreasonably
withheld, and such counsel shall have been furnished with all such actions,
documents and instruments as they shall have reasonably requested in
connection with the transactions contemplated herein;
D. Certified Resolutions. IEI shall have furnished resolutions, certified
by the appropriate officers of IEI authorizing the transactions contemplated
hereby;
8. Closing.
A. Time and Place. Unless otherwise agreed to by the parties, the Closing
under this Agreement for the merger of ROP and IEI shall take place at the
offices of Seigfreid, Bingham, Levy, Selzer & Gee, P.C., 2800 Commerce Tower,
911 Main Street, Kansas City, Missouri 64105, on or before June 30, 2000. All
references in this Agreement, its exhibits and schedules, and in the
agreements, instruments and documents delivered pursuant hereto, to the
Closing or the Closing Date shall mean June 30, 2000, or such other date as
the parties mutually agree upon.
B. Deliveries by ROP or JFJ. At the Closing ROP or JFJ shall deliver to
IEI:
(i) The certified resolutions required by Section 6(d) hereof;
<PAGE> 7
(ii) A certificate of Good Standing or corporate existence of ROP not
more than thirty (30) days prior to the Closing Date;
(iii) The stock certificates representing all of the ROP stock ownership
interests owned by JFJ;
(iv) The original Master Promissory Note evidencing the JFJ Loan;
(v) The Stock Option Agreement in the form attached hereto as EXHIBIT A,
duly executed by JFJ; and
(vi) Any such other documentation as counsel to IEI may reasonably
request.
C. Deliveries by IEI. IEI shall deliver to JFJ:
(i) Certified resolutions required by Section 7(d) hereof;
(ii) A Certificates of Good Standing or corporate existence of IEI dated
not more than thirty (30) days prior to the Closing Date;
(iii) The IEI stock certificate(s) issued to JFJ for 10,392,337
restricted shares of the common stock of IEI pursuant to Section 1(f) hereof;
(iv) The IEI stock certificate(s) issued to JFJ for 6,235,402 restricted
shares of the common stock of IEI pursuant to Section 1(j) hereof;
(v) The IEI stock certificate(s) issued to JFJ for 479,669 restricted
shares of the common stock of IEI pursuant to Section 1(k) hereof;
(vi) The IEI stock certificate(s) issued to Crowe for 1,592,522
restricted shares of the common stock of IEI pursuant to Section 1(l) hereof;
(vii) The Stock Option Agreement in the form attached hereto as EXHIBIT
A, duly executed by IEI; and
(viii) Any such other documentation as counsel to ROP reasonably
request.
9. Restricted Shares to be Issued. JFJ and Crowe understand and are aware
that the issuance of IEI's shares and the shares underlying the options
hereunder is being made without registration under the Securities Act of 1933,
as amended (the "Act"), or any state securities laws and that the shares so
issued may not be sold or transferred without registration under the Act and
under applicable state, securities laws, or unless an exemption from such
registration is available. IEI agrees that, upon notification of a winding up
of JFJ and the distribution of the IEI shares and options issued to JFJ under
this agreement to the members of JFJ, IEI will file, on a best efforts basis,
a registration statement with the Securities and Exchange Commission on behalf
of those members of JFJ who would not be deemed to be "affiliates" of IEI, as
that term is defined under the Act.
10. Expenses. Each party shall pay its own expenses (including attorney
fees) of carrying this Plan of Merger into effect and accomplishing the
merger.
11. Service of Process on Surviving Corporation. The Surviving Corporation
agrees that it may be served with process in the State of Missouri and that
the Secretary of State of Missouri shall be and hereby is irrevocably
<PAGE> 8
appointed as the agent of the Surviving Corporation to accept service of
process, in any proceeding based upon any cause of action against any
corporation organized in the State of Missouri which is a party to this merger
arising in the State of Missouri prior to the issuance of the certificate of
merger by the Secretary of State of Missouri and in any proceeding for the
enforcement of the rights of a dissenting shareholder of any corporation
organized in the State of Missouri which is a party to this merger against the
Surviving Corporation.
12. Compliance with Applicable Laws. Upon compliance with filing and
recording requirements, the provisions of the corporation laws of Missouri and
Utah will have been complied with.
13. Counterparts. This Agreement of Merger may be executed in counterparts,
and each counterpart shall be considered an original of this Agreement of
Merger.
IN WITNESS WHEREOF, the parties have hereby duly executed this Agreement as of
the day and year first above written.
ROP Merger Corp.
"ROP"
By /S/ John P. Crowe, President
JFJ Ecosystems, LLC
"JFJ"
By /S/ John P. Crowe, Manager
Industrial Ecosystems, Inc.
"IEI"
By /S/ Tom Jarnagin, President
/S/ John P. Crowe
STATE OF MISSOURI)
) ss.
COUNTY OF JACKSON)
Be it remembered, that before me the undersigned, a Notary Public in and for
County and State aforesaid came, John P. Crowe, President of ROP, a Missouri
corporation, personally known to me to be the person who executed the
foregoing instrument in writing as President, and duly acknowledged the
execution of the same this 30th day of June, 2000.
/S/ Cheryl L. Curtis, Notary Public -- Notary Seal
State of Missouri, County of Platte
My Commission Expires 09/06/2002
STATE OF MISSOURI)
) ss.
COUNTY OF JACKSON)
Be it remembered, that before me the undersigned, a Notary Public in and for
County and State aforesaid came, John P. Crowe, Manager of JFJ, a Missouri
limited liability company, personally known to me to be the person who
executed the foregoing instrument in writing as Manager, and duly acknowledged
the execution of the same this 30th day of June, 2000.
<PAGE> 9
/S/ Cheryl L. Curtis, Notary Public -- Notary Seal
State of Missouri, County of Platte
My Commission Expires 09/06/2002
STATE OF CALIFORNIA)
) ss.
COUNTY OF MARIN )
Be it remembered, that before me the undersigned, a Notary Public in and for
County and State aforesaid came, Tom Jarnagin, President of IEI, a Utah
corporation, personally known to me to be the person who executed the
foregoing instrument in writing as President, and duly acknowledged the
execution of the same this 28th day of June, 2000.
S/Martha Romero, Comm. #1123730
Notary Public -- Notary Seal
State of California, Marin County
My Commission Expires: Feb. 24, 2001
STATE OF MISSOURI)
) ss.
COUNTY OF JACKSON)
Be it remembered, that before me the undersigned, a Notary Public in and for
County and State aforesaid came, John P. Crowe, personally known to me to be
the person who executed the foregoing instrument in writing, and duly
acknowledged the execution of the same this 30th day of June, 2000.
/
S/ Cheryl L. Curtis, Notary Public -- Notary Seal
State of Missouri, County of Platte
My Commission Expires 09/06/2002
<PAGE>
<PAGE> 10
EXHIBIT A -- STOCK OPTION AGREEMENT
THIS STOCK OPTION (this "Option") is granted this 30th day of June, 2000, by
INDUSTRIAL ECOSYSTEMS, INC., a Utah corporation (the "Company"), pursuant to a
resolution of the board of directors of the Company to JFJ ECOSYSTEMS, LLC, a
Missouri limited liability company (hereinafter "Optionee").
GRANT
1. Grant of Option. The Company hereby irrevocably grants to Optionee the
right and option to purchase all or any part of an aggregate of two million
two hundred sixty one thousand three hundred thirty-four (2,261,334) shares of
the Company's restricted common stock, par value $0.001 (the "Common Stock")
on the terms and conditions hereinafter set forth.
2. Exercise Price. The exercise price of this Option shall be equal to the
fair market value of IEI stock on June 30, 2000. Such fair market value shall
be equal to the per share value of IEI stock for the last trade on June 30,
2000.
3. Term of Option. Subject to the other provisions contained herein, this
Option may be exercised, in whole or in part, at any time prior to 12:00
midnight five (5) years from the date of this Option.
4. Shareholder's Rights. The Optionee shall have the rights of a shareholder
only with respect to Common Stock fully paid for by Optionee under this
Option.
5. Persons Entitled to Exercise. During the Optionee's lifetime, this Option
can only be exercised by the Optionee or its successors and assigns or by its
members in the event of an in-kind liquidating distribution thereto.
6. Adjustment to Number of Shares of Common Stock. The number of shares of
Common Stock subject to this Option shall be adjusted to take into account:
any stock split, stock dividend, or recapitalization of the Common Stock of
the Company.
7. Method of Exercise. This Option may be exercised, in accordance with all
of the terms and conditions set forth in this Option, by delivery of a notice
of exercise, a form of which is attached hereto as Exhibit "A" and
incorporated herein by this reference, setting forth the number of Options to
be exercised along with a certified check or bank check payable to the order
of the Company in the amount of the full exercise price of the Common Stock
being purchased.
As soon as practicable after receipt by the Company of such notice a
certificate or certificates representing such shares of Common Stock shall be
issued in the name of the Optionee, or, if the Optionee shall so request in
the notice exercising the Option, in the name of the Optionee and another
person jointly, with right of survivorship, and shall be delivered to the
Optionee. If this Option is not exercised with respect to all Common Stock
subject hereto, Optionee shall be entitled to receive a similar Option of like
tenor covering the number of shares of Common Stock with respect to which this
Option shall not have been exercised.
8. Availability of Shares. During the term of this Option, the Company shall
at all times keep available for issuance the number of shares of Common Stock
subject to this Option.
<PAGE> 11
9. Restrictions on Transfer. The Option and the Common Stock subject to the
Option (collectively referred to as the "Securities") are subject to
registration under the Securities Act of 1933, as amended (the "Securities
Act"), and any applicable state securities statutes. Optionee acknowledges
that unless a registration statement with respect to the Securities is filed
and declared effective by the Securities and Exchange Commission and the
appropriate state governing agency, the Securities have or will be issued in
reliance on specific exemptions under state statutes. Any disposition of the
Securities may, under certain circumstances, be inconsistent with such
exemptions. The Securities may be offered for sale, sold, or otherwise
transferred only if (i) registered under the Securities Act, and in some
cases, under the applicable state securities acts, or, if not registered, (ii)
only if pursuant to an exemption from such registration requirements and only
after the Optionee provides an opinion of counsel or other evidence
satisfactory to the Company to the effect that registration is not required.
In some states, specific conditions must be met or approval of the securities
regulatory authorities may be required before any such offer or sale. If Rule
144 is available (and no assurance is given that it will be), only routine
sales of the Common Stock in limited amounts can be made after one year
following the acquisition date of the Securities, as determined under Rule
144(d), in accordance with the terms and conditions of Rule 144. The Company
is under no obligation to make Rule 144 available. In the event Rule 144 is
not available, compliance with Regulation A or some other disclosure exemption
may be required before the Optionee can sell, transfer, or otherwise dispose
of the Securities without registration. The Company and its registrar and
transfer agent will maintain a stop transfer of the Securities, and any
certificate representing the Securities will bear a legend in substantially
the following form so restricting the sale or other transfer thereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED
UNDER THE
SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT
BE SOLD OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE
ABSENCE OF AN
EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.
If the Securities are not registered, the Company may refuse to transfer the
Securities to any transferee who does not furnish in writing to the Company
the same representations and warranties set forth in this paragraph and agree
to the same conditions with respect to such Securities as are set forth
herein. The Company may further refuse to transfer the Securities if certain
circumstances are present reasonably indicating that the proposed transferee's
representations are not accurate. In any event, in the absence of an
effective registration statement covering the Securities, the Company may
refuse to consent to any transfer in the absence of an opinion of legal
counsel, satisfactory to and independent of counsel of the Company, that such
proposed transfer is consistent with the above conditions and applicable
securities laws.
10. Record Owner. The Company may deem the Optionee as the absolute owner of
this Option for all purposes. This Option is exercisable only by the Optionee
or, by the Optionee's duly designated or appointed representative or by its
members in the event of an in-kind liquidating distribution thereto.
EXECUTED as of the date first above written.
INDUSTRIAL ECOSYSTEMS, INC.
By /S/ Tom Jarnagin, President
<PAGE> 12
EXHIBIT A -- TO STOCK OPTION AGREEMENT
Form of Exercise
(To be signed only upon exercise of Option)
TO: INDUSTRIAL ECOSYSTEMS, INC.
The undersigned, the owner of the attached Option, hereby irrevocably elects
to exercise the purchase rights represented by the Option for, and to purchase
thereunder, __________ shares of Common Stock of Industrial Ecosystems, Inc.
Enclosed is payment in the amount of $_________________, the exercise price of
the Common Stock to be acquired. Please have the certificate(s) registered in
the name of __________________________________________________________. If
this exercise does not include all of the Common Stock covered by the attached
Option, please deliver a new option of like tenor for the balance of the
Common Stock to the undersigned at the foregoing address.
DATED this _______ day of _____________________, ________.
___________________________________________
Signature of Optionee
