EXHIBIT 10.1
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT (this "Agreement") is made as of the 22nd day
of June, 2001, between Spacial Corporation, a Delaware corporation ("Spacial"),
Waste Recovery Technology Corporation, a Delaware corporation ("WRT"), James J.
Solano, Sr. ("Solano"), the Trust Under Agreement Dated 6/30/89 (the "Trust";
the Trust and Solano, each being sometimes referred to as a "Diluted
Shareholder" and collectively as the "Diluted Shareholders"), and each of the
other stockholders of WRT listed on the signature page hereto (each
individually, a "WRT Shareholder" and collectively the "WRT Shareholders"). The
term "WRT Shareholder" or "WRT Shareholders" when used in this Agreement
includes the Diluted Shareholders, unless the context requires otherwise or
otherwise specifically excluded.
W I T N E S S E T H:
1. The respective Boards of Directors of Spacial and WRT each has
determined that it is in the best interests of their respective stockholders for
Spacial to acquire WRT through an exchange of shares of voting common stock par
value $.001 per share ("Spacial Common Stock") issued by Spacial for all of the
issued and outstanding common stock without par value of WRT (as more fully
defined in Section 3.1 below, the "WRT Stock"), in an acquisition that
constitutes a tax-free transaction meeting the requirements of Section 368
(a)(1)(B) of the U.S. Internal Revenue Code of 1986, as amended (the "Code"),
and will result in WRT becoming a direct wholly owned subsidiary of Spacial upon
the terms and conditions set forth herein.
2. The WRT Shareholders own all of the issued and outstanding WRT Stock and
desire to exchange such WRT Stock for Spacial Common Stock.
3. In order to facilitate the Exchange, as hereinafter defined, and in
recognition that the value of the Spacial Common Stock will benefit
substantially from a contemplated financing, the Diluted Shareholders have
agreed to place an aggregate of 1,000,000 shares of the Spacial Common Stock to
be issued to them (the "Escrow Shares") under this Agreement in escrow (the
"Escrow").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and certain other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto covenant
and agree as follows:
ARTICLE 1.
PURCHASE OF SHARES
1.1. Exchange. Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing provided for in Section 1.2 hereof, each WRT
Shareholder shall sell, assign, transfer, convey and deliver to Spacial, and
Spacial shall purchase, all right, title and interest in and to all of such WRT
Shareholder's shares of WRT Stock, free and clear of all liens, security
interests, charges,
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encumbrances and rights of others. In consideration for the shares of WRT Stock
so acquired by Spacial, Spacial shall issue and deliver 13,160,000 shares of
Spacial Common Stock in exchange for 100% of the issued and outstanding capital
stock of WRT. The 13,160,000 shares of Spacial Common Stock shall be issued to
the WRT shareholders at a ratio of 10,000 shares of Spacial Common Stock, in
exchange for each share of WRT Stock transferred to Spacial pursuant to this
Agreement, as soon as practicable following the satisfaction or permissible
waiver of the conditions set forth in Articles 6, 7 and 8 (the exchange of
shares of Spacial Common Stock for shares of WRT Stock being referred to herein
as the "Exchange"). An aggregate of 848,536 and 151,464 of the shares of Spacial
Common Stock, respectively, that are issued to the Trust and Solano in partial
consideration for their WRT Stock, respectively, shall be issued and held in
Escrow, in accordance with the Share Escrow Agreement, substantially in the form
as attached hereto as Exhibit 6.12 (the "Escrow Agreement"), along with
appropriate irrevocable stock powers relating to such Escrow Shares, duly
executed by the respective Diluted Shareholder.
1.2. Closing. Consummation of the transactions contemplated by this Agreement
(the "Closing"), shall take place at the offices of Snow Becker Krauss P.C., 605
Third Avenue, New York, New York 10158, commencing at 10:00 a.m., local time, as
soon as practicable after the last to be fulfilled or waived of the conditions
set forth in Articles 6 and 7, or at such other place, time and date as shall be
fixed by mutual agreement among Spacial, WRT, and the WRT Shareholders on the
day on which the Closing shall occur shall be referred to herein as the "Closing
Date." Each party will use its reasonable best efforts to cause to be prepared,
executed and delivered the documents to be delivered pursuant to Articles 6 and
7 and all other appropriate and customary documents as any party or its counsel
may reasonably request for the purpose of consummating the transactions
contemplated by this Agreement. All actions taken at the Closing shall be deemed
to have been taken simultaneously at the time the last of any such actions is
taken or completed.
1.3. Tax Consequences. It is the intention of the parties hereto that no taxable
income or gain shall be recognized by any of the holders of WRT Stock, and that
the Exchange be deemed as a tax free exchange pursuant to the Code.
ARTICLE 2.
EXCHANGE OF SHARES
2.1. Exchange of Shares. Immediately after the satisfaction or permissible
waiver of the conditions set forth in Articles 6 and 7 at the Closing, each of
the shares of WRT Stock that are sold and tranferred to Spacial pursuant to this
Agreement (the "Converted Shares") shall be exchanged for 10,000 (such number
being referred to herein as the "Exchange Ratio") shares of Spacial Common
Stock, for an aggregate of 13,160,000 shares of Spacial Common Stock in exchange
for 1,316 Converted Shares. The WRT Shareholders shall deliver their
certificates representing the WRT Stock along with a duly executed irrevocable
stock powers to facilitate the Exchange.
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2.2. Fractional Shares. No scrip or fractional shares of Spacial Common Stock
shall be issued in the Exchange. All fractional shares of Spacial Common Stock
to which a WRT Shareholder would otherwise be entitled at the Closing pursuant
to this Agreement shall be rounded up to the nearest whole share of Spacial
Common Stock.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF WRT
AND THE WRT SHAREHOLDERS
3.1. Representations and Warranties of WRT. WRT hereby represents and warrants
to Spacial that, except as otherwise set forth on the WRT Disclosure Schedule
(herein so called) attached hereto:
3.1.1. Organization and Good Standing of WRT. WRT is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. WRT has no subsidiaries and no equity, profit sharing, participation
or other ownership interest (including any general partnership interest) in any
corporation, partnership, limited partnership or other entity.
3.1.2. Foreign Qualification. WRT is in the process of applying for authority to
transact business as a foreign corporation in the State of New York. WRT is
otherwise duly qualified or licensed to do business and is in good standing in
every other jurisdiction where the failure so to qualify would have a material
adverse effect on (a) the current business, operations, assets, financial
condition or prospects of WRT or (b) the validity or enforceability of, or the
ability of WRT to perform its obligations under, this Agreement (a "WRT Material
Adverse Effect").
3.1.3. Corporate Power and Authority. WRT has the corporate power and authority
to own, lease and operate its properties and assets and to carry on its business
as currently being conducted. WRT has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations under this
Agreement. The execution, delivery and performance by WRT of this Agreement has
been duly authorized by all necessary corporate action.
3.1.4. Binding Effect. This Agreement has been duly executed and delivered by
WRT and is the legal, valid and binding obligation of WRT enforceable in
accordance with its terms, except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of
public policy.
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3.1.5. Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement and the consummation of the Exchange and the
fulfillment of and compliance with the terms and conditions of this Agreement do
not and will not, with the passing of time or the giving of notice or both,
violate or conflict with, constitute a breach of or default under, result in the
loss of any material benefit under, or permit the acceleration of any obligation
under, (i) any term or provision of the Certificate of Incorporation or Bylaws
of WRT, (ii) any WRT Material Contract (as defined in Section 3.1.10), (iii) any
judgment, decree or order of any court or governmental authority or agency to
which WRT or by which WRT or any of its respective properties is bound, or (iv)
any statute, law, regulation or rule applicable to WRT, including the Delaware
General Corporation Law ("Delaware Law"), other than such violations, conflicts,
breaches or defaults which would not have a WRT Material Adverse Effect. Except
for compliance with the applicable requirements of the Securities Act of 1933,
as amended (the "Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and applicable state securities laws, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any governmental agency or public or regulatory unit, agency, body or
authority with respect to WRT is required in connection with the execution,
delivery or performance of this Agreement by WRT or the consummation of the
transactions contemplated hereby.
3.1.6. Capitalization of WRT
(a) The authorized capital stock of WRT consists of 1,500 shares of
WRT Stock. As of the date hereof, there are 1,316 shares of WRT Stock
issued and outstanding and the WRT Shareholders own the shares of WRT
Stock as set forth on Section 3.1.6 of the WRT Disclosure Schedule.
(b) All of the issued and outstanding shares of WRT Stock have been
duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive rights.
(c) To WRT's knowledge, there are no voting trusts, shareholder
agreements or other voting arrangements, capacities, charges, liens or
encumbrances on any shares of WRT Stock that have been entered into by
the WRT Shareholders.
(d) There is no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call or other right obligating
WRT to issue, sell, exchange, or otherwise dispose of, or to purchase,
redeem or otherwise acquire, shares of, or securities convertible into
or exchangeable for, WRT Stock.
3.1.7. Absence of Certain Changes. Since September 30, 2000, WRT has not, except
as otherwise set forth herein:
(a) suffered any adverse change in its business, operations, assets,
or financial condition, except as reflected on the WRT Financial
Statements (as hereinafter defined in Sub-section
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3.1.8(a) below) and except for such changes that would not result in a
WRT Material Adverse Effect;
(b) suffered any material damage or destruction to or loss of the
assets of WRT, whether or not covered by insurance, which property or
assets are material to the operations or business of WRT taken as a
whole;
(c) settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the
ordinary course of business;
(d) entered into or terminated any material agreement, commitment or
transaction, or agreed to or made any changes in material leases or
agreements, other than renewals or extensions thereof and leases,
agreements, transactions and commitments entered into or terminated in
the ordinary course of business;
(e) written up, written down or written off the book value of any
material amount of assets other than in the ordinary course of
business;
(f) declared, paid or set aside for payment any dividend or
distribution with respect to the WRT Stock;
(g) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any shares of WRT Stock
or securities or any rights to acquire such capital stock or
securities, or agreed to changes in the terms and conditions of any
such rights outstanding as of the date of this Agreement;
(h) increased the compensation of or paid any bonuses to any employees
or contributed to any employee benefit plan or pension scheme, other
than in the ordinary course of business and consistent with
established policies, practices or requirements;
(i) entered into any employment, consulting or compensation agreement
with any person or group, except for agreements which in the aggregate
would not have a WRT Material Adverse Effect;
(j) entered into any collective bargaining agreement or trade union
recognition agreement with any person or group;
(k) entered into, adopted or amended any employee benefit plan or
share option scheme or agreement; or
(l) entered into any agreement to do any of the foregoing.
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3.1.8. No Material Undisclosed Liabilities. There are no liabilities or
obligations of WRT of any nature, whether absolute, accrued, contingent, or
otherwise, other than liabilities and obligations:
(a) in the aggregate adequately provided for in the Audited WRT
Financial Statements (including any related notes thereto) as of
September 30, 2000 (the "WRT Financial Statements"),
(b) incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected on the WRT
Financial Statements,
(c) incurred since September 30, 2000, in the ordinary course of
business,
(e) incurred in connection with this Agreement, or
(f) that do not have a WRT Material Adverse Effect.
3.1.9. Tax Returns: Taxes. WRT (a) has duly filed all U.S. federal and material
state, county, local and foreign tax returns and reports required to be filed by
it, including those with respect to income, payroll, property, withholding,
social security, unemployment, franchise, excise and sales taxes and all such
returns and reports are correct in all material respects for 1999, and has filed
for an extension with respect to year 2000 taxes; (b) has either paid in full
all taxes that have become due as reflected on any return or report and any
interest and penalties with respect thereto or have fully accrued on its books
or have established adequate reserves for all taxes payable but not yet due; and
(c) has made cash deposits with appropriate governmental authorities
representing estimated payments of taxes, including income taxes and employee
withholding tax obligations. No extension or waiver of any statute of
limitations or time within which to file any return has been granted to or
requested by WRT with respect to any tax, other than the year 2000 taxes. No
unsatisfied deficiency, delinquency or default for any tax, assessment or
governmental charge has been claimed, proposed or assessed against WRT, nor has
WRT received notice of any such deficiency, delinquency or default. WRT has no
material tax liabilities other than those arising in the ordinary course of
business since the date hereof.
3.1.10. Material Contracts. WRT has furnished or made available to Spacial
accurate and complete copies or detailed descriptions of the WRT Material
Contracts applicable to WRT including, but not limited to, the contract for
purchase of realty in Nassau County, New York, the promissory note in the amount
of $167,000 to the Trust, and certain other credit agreements as set forth in
the WRT Financial Statements. With respect to any WRT Material contract, WRT is
not aware of any existing breach, default or event of default by WRT, or event
that with notice or lapse of time or both would constitute a breach, default or
event of default by WRT, other than breaches, defaults or events of default that
would not have a WRT Material Adverse Effect, nor does WRT know of, and WRT has
not received notice of, or made a claim with respect to, any breach or default
by any other party thereto that would, severally or in the aggregate, have a WRT
Material Adverse
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Effect. As used herein, the term "WRT Material Contracts" shall mean all (i)
employee benefit plans, share option schemes or agreements and employment,
consulting or similar contracts, (ii) contracts that involve remaining aggregate
payments by WRT in excess of $50,000 or which have a remaining term in excess of
two years, (iii) insurance policies, and (iv) all contracts that would, if
terminated, have a WRT Material Adverse Effect.
3.1.11. Litigation and Government Claims. There is no pending suit, claim,
action or litigation, or administrative, arbitration or other proceeding or
governmental investigation or inquiry against WRT to which its businesses or
assets is subject that would, severally or in the aggregate, reasonably be
expected to result in a WRT Material Adverse Effect. To the knowledge of WRT,
there are no such proceedings threatened or contemplated that would, severally
or in the aggregate, have a WRT Material Adverse Effect. WRT is not subject to
any judgment, decree, injunction, rule or order of any court, or, to the
knowledge of WRT, any governmental restriction applicable to WRT that is
reasonably likely (i) to have a WRT Material Adverse Effect or (ii) to cause a
material limitation on Spacial's ability to own and operate the business of WRT
(as it is currently operated) after the Closing.
3.1.12. Compliance With Laws. WRT has all material authorizations, approvals,
licenses and orders to carry on its business as it is now being conducted, to
own or hold under lease the properties and assets it owns or holds under lease
and to perform all of its obligations under the agreements to which it is a
party, except for instances that would not have a WRT Material Adverse Effect.
WRT has been and is, to the knowledge of WRT, in compliance with all applicable
laws, regulations and administrative orders of any country, state or
municipality or of any subdivision of any thereof to which its business,
ownership of assets, employment of labor or use or occupancy of properties or
any part thereof are subject, the violation of which would have a WRT Material
Adverse Effect.
3.1.13. Employee Benefits Plans. WRT does not currently have in effect any
employee pension or profit sharing plans.
3.1.14. Employment Agreements. There are no material employee benefit plans,
agreements and arrangements to which WRT is a party, including without
limitation (i) severance, employment, consulting or similar contracts, (ii)
material agreements and contracts with "change of control" provisions or similar
provisions and (iii) indemnification agreements or arrangements with directors
or officers.
3.1.15. Intellectual Property. WRT owns or has valid, binding and enforceable
rights to use all material patents, trademarks, trade names, service marks,
service names, copyrights, applications therefor and licenses or other rights in
respect thereof ("WRT Intellectual Property") used or held for use in connection
with the business of WRT, without any known conflict with the rights of others,
except for such conflicts as do not have a WRT Material Adverse Effect. WRT has
not received any notice from any other person pertaining to or challenging the
right of WRT to use any WRT Intellectual Property or any trade secrets,
proprietary information, inventions, know-how, processes and procedures owned or
used or licensed to WRT, except with respect to rights the loss
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of which, individually or in the aggregate, would not have a WRT Material
Adverse Effect. The WRT Intellectual Property represents all of the proprietary
rights necessary to operate the respective businesses of WRT.
3.1.16. Title to Properties and Related Matters. WRT has good and marketable
title to or valid license or leasehold interests in its properties (other than
personal properties sold or otherwise disposed of in the ordinary course of
business), and all of such properties and all assets purchased by WRT are free
and clear of any lien, claim or encumbrance, except for:
(a) liens for taxes, assessments or other governmental charges not yet
due and payable or the validity of which are being contested in good
faith by appropriate proceedings;
(b) statutory liens incurred in the ordinary course of business that
are not yet due and payable or the validity of which is being
contested in good faith by appropriate proceedings;
(c) landlord liens contained in leases entered into in the ordinary
course of business; and
(d) other liens, claims or encumbrances that, in the aggregate, do not
materially subtract from the value of, or materially interfere with,
the present use of any real property owned or used by WRT.
All properties and assets material to the present operations of WRT are owned or
leased by WRT in the manner and to the extent required by New York law and the
generally accepted accounting principles in the United States ("GAAP").
3.1.17. Environmental Matters. Except as set forth in this Agreement or as do
not have a WRT Material Adverse Effect, WRT: (i) has obtained all consents or
approvals which are required to be obtained under applicable federal, state,
foreign or local laws or any regulation, code, plan, order, decree, judgment,
notice of demand letter issued, entered, promulgated or approved thereunder
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes (the "Environmental
Laws") into ambient air, surface water, ground water, or land or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants or hazardous or
toxic materials or wastes by WRT or any of its subsidiaries (or their respective
agents); (ii) are in compliance with terms and conditions of such required
Approvals; and (iii) have not received notice of any past or present violation
of Environmental Laws or any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with Environmental Laws or which would give rise to any
common law or statutory liability, or otherwise from the basis of any claim,
action, suit or proceeding, against WRT based on or resulting from the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant or hazardous or toxic material or
waste.
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3.1.18. Full Disclosure. All documents delivered by or on behalf of WRT in
connection with this Agreement and the transactions contemplated hereby, taken
as a whole, are true, complete and authentic in all material respects. The
representations and warranties made by or on behalf of WRT to Spacial in
connection with this Agreement and the Exchange contemplated hereby do not
contain any untrue statement of a material fact and do not omit to state a
material fact required to be stated therein or necessary to make the statements
made, in the context in which made, not false or misleading.
3.2. Representations and Warranties of WRT Shareholders. Each WRT Shareholder
hereby severally represents and warrants that, except as otherwise set forth
herein:
3.2.1. Ownership. Such WRT Shareholder has good and valid title to the shares of
WRT Stock described on Schedule 3.1.6 of the WRT Disclosure Schedule to be sold
by such WRT Shareholder hereunder on the Closing Date, free and clear of all
liens, encumbrances, equities or claims, and upon delivery of such shares and
payment therefor pursuant hereto, good and valid title to such shares will pass
to Spacial free and clear of all liens, encumbrances, equities or claims of any
nature whatsoever.
3.2.2. Authority. Such WRT Shareholder has full right, power and authority to
enter into this Agreement.
3.2.3. Conflicts. The execution, delivery and performance of this Agreement by
such WRT Shareholder and the consummation by such WRT Shareholder of the
transactions contemplated hereby will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which such WRT Shareholder is a party or by which such WRT
Shareholder is bound or to which any of the property or assets of such WRT
Shareholder is subject, nor will such actions result in any violation of any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over such WRT Shareholder or the property or assets of
such WRT Shareholder.
3.2.4. Consents. No consent, approval, authorization or order of, or filing or
registration with, any court or governmental agency or body having jurisdiction
over such WRT Shareholder or the property or assets of such WRT Shareholder is
required for the execution, delivery and performance of this Agreement by such
WRT Shareholder and the consummation by such WRT Shareholder of the transactions
contemplated hereby.
3.2.5. Investment Intent. Such WRT Shareholder entering into this Agreement and
acquiring the Spacial Common Stock hereunder for its own account and with no
present intention of distributing or selling such securities and no one other
than such WRT Shareholder has any beneficial interest in its WRT Stock or in
such Spacial Common Stock. Such WRT Shareholder understands that the issuance by
Spacial of the Spacial Common Stock hereunder has not been registered under the
Securities Act by reason of its contemplated issuance in a transaction exempt
from the registration
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and prospectus delivery requirements of the Act and that the reliance of Spacial
on such exemption from registration is predicated in part on the representations
and warranties of the WRT Shareholders set forth herein. Such WRT Shareholder
acknowledges that a restrictive legend consistent with the foregoing has been or
will be placed on the certificates representing the Spacial Common Stock.
3.2.6. Adequate Information. Each WRT Shareholder represents that it/he/she has
received from Spacial and WRT, and has reviewed, such information as such WRT
Shareholder considers necessary or appropriate to evaluate the risks and merits
of acquiring the Spacial Common Stock pursuant to this Exchange, including this
Agreement, the WRT Audited Financial Statements and all registration statements
and reports filed by Spacial with the Securities and Exchange Commission (the
"SEC") under the Securities Act and the Exchange Act.
3.2.7. Opportunity to Question. Such WRT Shareholder has had the opportunity to
question and has questioned, to the extent deemed necessary or appropriate,
representatives of Spacial so as to receive answers and verify information
obtained in such WRT Shareholder's examination of Spacial, including the
information that such WRT Shareholder has received and reviewed as referenced in
Section 3.2.6 hereof in relation to this Agreement.
3.2.8. No Other Representations. No oral or written representations have been
made to such WRT Shareholder or by Spacial or any of its representatives, in
connection with such WRT Shareholder's acquisition of the Spacial Common Stock
herein that were in any way inconsistent with the information reviewed by such
WRT Shareholder. Each WRT Shareholder acknowledges that no representations or
warranties of any type or description have been made to it by any person with
regard to Spacial, WRT, or their respective businesses, properties or prospects
or the investment contemplated herein, other than the representations and
warranties set forth by Spacial or WRT herein.
3.2.9. Knowledge and Experience. Such WRT Shareholder, individually and/or
together with its professional advisors, has evaluated the merits and risks of
acquiring the Spacial Common Stock in this Exchange, and has such knowledge and
experience in financial, tax and business matters, including substantial
experience in evaluating and investing in common stock and other securities
(including the common stock and other securities of new and speculative
companies), so as to enable such WRT Shareholder to use the information referred
to in Section 4.7 hereof and any other information made available by Spacial to
such WRT Shareholder in order to evaluate the merits and risks of and investment
in the Spacial Common Stock and to make an informed investment decision with
respect thereto.
3.2.10. Independent Decision. Such WRT Shareholder is not relying on Spacial,
WRT or any legal or other opinion in the materials reviewed by such WRT
Shareholder with respect to the financial or tax considerations of such WRT
Shareholder relating to its investment in Spacial Common Stock. Such WRT
Shareholder has relied solely on the representations, warranties, covenants and
agreements of Spacial in this Agreement (including the Exhibits and Schedules
hereto) and on its examination and independent investigation in making its
decision to acquire Spacial Common Stock.
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3.2.11. Risks Relating to Exchange. Such WRT Shareholder recognizes that the
acquisition of Spacial Common Stock pursuant to this Agreement involves
substantial risks, including loss of the entire amount of such investment.
Further, such WRT Shareholder has carefully read and considered the matters set
forth herein and has taken full cognizance of and understands all of the risks
related to the Exchange.
3.2.12. No General Solicitation/Advertising, etc. Such WRT Shareholder is not
executing this Agreement or acquiring the Spacial Common Stock as a result of,
or pursuant to, any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television, radio, or the Internet, or presented at any seminar or meeting.
3.2.13. Pre-Existing Relationship. Such WRT Shareholder (i) has a pre-existing
business relationship with Spacial or WRT, or one of their officers, directors
or controlling persons and/or (ii) by reason of such WRT Shareholder's business
or financial experience or the business or financial experience of such WRT
Shareholder's professional advisors who are unaffiliated with, and who are not
compensated by, Spacial, WRT or any affiliate of Spacial or WRT, directly or
indirectly, can be reasonably assumed to have the capacity to protect such WRT
Shareholder's interests in connection with the Exchange.
3.2.14. Accredited Investor; Financial Means. Such WRT Shareholder, with the
exception of the Trust, is an Accredited Investor, as defined under Rule 501 of
Regulation D of the Securities Act. In addition, such WRT Shareholder has
reached the age of majority in the state in which he or she resides, has
adequate means of providing for his or her current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
relating to receipt of the Spacial Common Stock pursuant to the Exchange for an
indefinite period of time, has no need for liquidity in such investment, and at
the present time could afford a complete loss of such investment.
3.2.15. Finder's or Broker's Commissions. Such WRT Shareholder has not incurred
any obligation for any finder's, broker's or agent's fees or commissions in
connection with the transactions contemplated hereby.
3.2.16. Resale of the Securities. Each WRT Shareholder agrees not to transfer
Spacial Common Stock received herein in violation of the Act or any applicable
state securities laws and that it will not sell or otherwise dispose of any
Spacial Common Stock unless such sale or other disposition has been registered
under the Act or, in the opinion of counsel reasonably satisfactory to Spacial,
is exempt from registration under the Act and has been registered or qualified
or, in the opinion of such counsel, is exempt from registration or qualification
under applicable state securities laws. Additionally, Spacial Common Stock
received herein may not be sold, hypothecated or assigned without the written
consent of Spacial. Such WRT Shareholder understands that the terms hereof may
apply to the WRT Shareholders' heirs and assigns whether permitted or otherwise.
3.2.17. WRT Representations. Based upon such WRT Shareholder's actual knowledge
without having conducted an independent inquiry, such WRT Shareholder has no
reason to believe that the
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representations and warranties of WRT contained in Section 3.1 hereof are not
materially true and correct and has no knowledge of any material fact, condition
or information not disclosed herein that has adversely affected or may adversely
affect the business of WRT or would otherwise result in a WRT Material Adverse
Effect.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SPACIAL
Spacial hereby represents and warrants that, except as otherwise set forth in
the Spacial Disclosure Schedule (herein so called) attached hereto:
4.1. Organization and Good Standing. Spacial is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Spacial has no subsidiaries and no equity, profit sharing, participation or
other ownership interest (including any general partnership interest) in any
corporation, partnership, limited partnership or other entity.
4.2. Foreign Qualification. Spacial is duly qualified or licensed to do business
and is in good standing as a foreign corporation in every jurisdiction where the
failure so to qualify would have a material adverse effect on (a) the current
business, operations, assets, financial condition or prospects of Spacial or (b)
the validity or enforceability of, or the ability of Spacial to perform its
obligations under, this Agreement (a "Spacial Material Adverse Effect").
4.3. Corporate Power and Authority. Spacial has the corporate power and
authority and all material licenses and permits to own, lease and operate its
properties and assets and to carry on its business as currently being conducted.
Spacial has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement and to consummate
the Exchange. The execution, delivery and performance by Spacial of this
Agreement has been duly authorized by all necessary corporate action.
4.4. Binding Effect. This Agreement has been duly executed and delivered by
Spacial and is the legal, valid and binding obligation of Spacial, enforceable
in accordance with its terms, except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of
public policy.
4.5. Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement and the consummation of the Exchange and the
fulfillment of and compliance with the
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terms and conditions of this Agreement do not and will not, with the passing of
time or the giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material benefit under, or
permit the acceleration of any obligation under, (i) any term or provision of
the Certificate of Incorporation or Bylaws of Spacial, (ii) any Spacial Material
Contract (as defined in Section 4.11 below), (iii) any judgment, decree or order
of any court or governmental authority or agency to which Spacial is a party or
by which Spacial or any of its properties is bound, or (iv) any statute, law,
regulation or rule applicable to Spacial other than such violations, conflicts,
breaches or defaults as would not have a Spacial Material Adverse Effect. Except
for compliance with the applicable requirements of the Securities Act, the
Exchange Act and applicable state securities laws, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
governmental agency or public or regulatory unit, agency, body or authority with
respect to Spacial is required in connection with the execution, delivery or
performance of this Agreement by Spacial or the consummation of the transactions
contemplated hereby.
4.6. Capitalization of Spacial.
(a) The authorized capital stock of Spacial consists of 40,000,000
shares of Spacial Common Stock, and 5,000,000 shares of serial "blank
check" preferred stock, $.001 par value (the "Preferred Stock"). As of
the date hereof, there are (i) 2,490,000 shares of Spacial Common
Stock outstanding, (ii) no shares of the Preferred Stock outstanding
(iii) no designated series or class of Preferred Stock; and (iv) an
outstanding warrant (the "Warrant") to purchase 51,000 shares (the
"Warrant Shares") of Spacial Common Stock at an exercise price of
$.255 per share.
(b) All of the issued and outstanding shares of Spacial Common Stock
have been and upon exercise of the Warrant in accordance with its
terms, the Warrant Shares will be, duly authorized and validly issued
and are (or with respect to the Warrant Shares will be), fully paid,
nonassessable and free of preemptive rights.
(c) To Spacial's knowledge, there are no voting trusts, stockholder
agreements or other voting arrangements that have been entered into
among the stockholders of Spacial.
(d) Except as set forth in subsection (a) above, there is no
outstanding subscription, contract, convertible or exchangeable
security, option, warrant, call or other right obligating Spacial to
issue, sell, exchange, or otherwise dispose of, or to purchase, redeem
or otherwise acquire, shares of, or securities convertible into or
exchangeable for, capital stock of Spacial.
4.7. SEC Documents; Parent Financial Statements.
Spacial has filed with the SEC all forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto) required
to be filed by it under each of the Act and the Exchange Act, and the respective
rules and regulations thereunder, all of which complied in all
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material respects with all applicable requirements of the appropriate act and
rules and regulations thereunder. Spacial has furnished or made available to WRT
and the WRT Shareholders true and correct copies of all forms, statements,
reports and documents filed by Spacial with the SEC since December 1, 1999 ( the
"Spacial SEC Documents"). As of their respective filing dates, the Spacial SEC
Documents complied in all material respects with the requirements of the Act and
the Exchange Act, and the applicable rules and regulations of the Commission
thereunder, as the case may be, and none of the Spacial SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. The
financial statements of Spacial, including the notes thereto, included in the
Spacial SEC Documents (the "Spacial Financial Statements") comply as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto, were
prepared in accordance with GAAP applied on a basis consistent throughout the
periods indicated and consistent with each other (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by SEC
rules for such form) and present fairly the consolidated financial position of
Spacial at the dates thereof and of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring audit adjustments which will not be material in amount or
significance) and do not include or omit to state any fact which renders Spacial
Financial Statements hereunder misleading. There has been no change in Spacial
accounting policies except as described in the notes to Spacial Financial
Statements.
4.8. Absence of Certain Changes. Spacial has not, since September 30, 2000,
except as otherwise set forth on the Spacial Disclosure Schedule:
(a) suffered any adverse change in its business, operations, assets,
or financial condition except for such changes that would not have a
Spacial Material Adverse Effect;
(b) suffered any material damage or destruction to or loss of the
assets of Spacial, whether or not covered by insurance, which property
or assets are material to the operations or business of Spacial taken
as a whole;
(c) settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the
ordinary course of business;
(d) entered into or terminated any material agreement, commitment or
transaction, or agreed to or made any changes in material leases or
agreements, other than renewals or extensions thereof and leases,
agreements, transactions and commitments entered into or terminated in
the ordinary course of business;
(e) written up, written down or written off the book value of any
material amount of assets other than in the ordinary course of
business;
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(f) declared, paid or set aside for payment any dividend or
distribution with respect to Spacial's capital stock;
(g) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of Spacial's
capital stock or securities or any rights to acquire such capital
stock or securities, or agreed to changes in the terms and conditions
of any such rights outstanding as of the date of this Agreement;
(h) increased the compensation of or paid any bonuses to any employees
or contributed to any employee benefit plan, other than in the
ordinary course of business and consistent with established policies,
practices or requirements;
(i) entered into any employment, consulting or compensation agreement
with any person or group or agreements which in the aggregate would
not have a Spacial Material Adverse Effect;
(j) entered into any collective bargaining agreement with any person
or group;
(k) entered into, adopted or amended any employee benefit plan; or
(1) entered into any agreement to do any of the foregoing.
4.9. No Material Undisclosed Liabilities. There are no liabilities or
obligations of Spacial of any nature, whether absolute, accrued, contingent, or
otherwise, other than:
(a) in the aggregate as provided for in the balance sheet of Spacial
(including any related notes thereto) as of March 31, 2001, as set
forth in Spacial's Quarterly Report on Form 10-QSB for the Quarter
Ended March 31, 2001 (the "March 31, 2001 Spacial Balance Sheet"),
(b) incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected on the March
31 2001 Spacial Balance Sheet,
(c) incurred since March 31, 2001, in the ordinary course of business,
(e) incurred in connection with this Agreement, or
(f) that do not have an Spacial Material Adverse Effect.
4.10. Tax Returns; Taxes. Spacial (a) has duly filed all U.S. federal and
material state, county, local and foreign tax returns and reports required to be
filed by it, including those with respect to income, payroll, property,
withholding, social security, unemployment, franchise, excise and sales
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taxes and all such returns and reports are correct in all material respects; (b)
has either paid in full all taxes that have become due as reflected on any
return or report and any interest and penalties with respect thereto or have
fully accrued on its books or have established adequate reserves for all taxes
payable but not yet due; and (c) has made cash deposits with appropriate
governmental authorities representing estimated payments of taxes, including
income taxes and employee withholding tax obligations. No extension or waiver of
any statute of limitations or time within which to file any return has been
granted to or requested by Spacial with respect to any tax. No unsatisfied
deficiency, delinquency or default for any tax, assessment or governmental
charge has been claimed, proposed or assessed against Spacial, nor has Spacial
received notice of any such deficiency, delinquency or default. Spacial has no
material tax liabilities other than those arising in the ordinary course of
business since the date hereof.
4.11. Material Contracts. Spacial has furnished or made available to WRT
accurate and complete copies of the Spacial Material Contracts applicable to
Spacial There is not under any of the Spacial Material Contracts any existing
breach, default or event of default by Spacial nor event that with notice or
lapse of time or both would constitute a breach, default or event of default by
Spacial other than breaches, defaults or events of default that would not have a
Spacial Material Adverse Effect nor does Spacial know of, and Spacial has not
received notice of, or made a claim with respect to, any breach or default by
any other party thereto that would, severally or in the aggregate, have a
Spacial Material Adverse Effect. As used herein, the term "Spacial Material
Contracts" shall mean all (i) employee benefit plans, stock option agreements
and employment, consulting or similar contracts, (ii) contracts that involve
remaining aggregate payments by Spacial in excess of $1,000 or which have a
remaining term in excess of one year, (iii) insurance policies and (iv)
contracts that, if terminated, would have an Spacial Material Adverse Effect.
4.12. Litigation and Government Claims. There is no pending suit, claim, action
or litigation, or administrative, arbitration or other proceeding or
governmental investigation or inquiry against Spacial to which its businesses or
assets are subject that would, severally or in the aggregate, reasonably be
expected to result in a Spacial Material Adverse Effect. To the knowledge of
Spacial, there are no such proceedings threatened or contemplated that would,
severally or in the aggregate, have a Spacial Material Adverse Effect. Spacial
is not subject to any judgment, decree, injunction, rule or order of any court,
or, to the knowledge of Spacial, any governmental restriction applicable to
Spacial that is reasonably likely to have a Spacial Material Adverse Effect.
4.13. Compliance with Laws. Spacial has all material authorizations approvals,
licenses and orders to carry on its businesses as it is now being conducted, to
own or hold under lease the properties or assets it owns or holds under lease
and to perform all of its obligations under the agreements to which it is a
party, except for instances that would not have a Spacial Material Adverse
Effect. Spacial has been and is, to the knowledge of Spacial, in compliance with
all applicable laws, regulations and administrative orders of any country, state
or municipality or any subdivision of any thereof to which its businesses,
ownership of assets and its employment of labor or its use or occupancy of
properties or any part thereof are subject, the violation of which would have a
Spacial Material Adverse Effect.
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4.14. Employment Agreements. The Spacial Disclosure Schedule sets forth a
complete and accurate list of all material employee benefit or compensation
plans, agreements and arrangements to which Spacial is a party, including
without limitation (i) all severance, employment, consulting or similar
contracts, (ii) all material agreements and contracts with "change of control"
provisions or similar provisions and (iii) all indemnification agreements or
arrangements with directors or officers.
4.15. Intellectual Property. Spacial owns or has valid, binding and enforceable
rights to use all material patents, trademarks, trade names, service marks,
service names, copyrights, applications therefor and licenses or other rights in
respect thereof ("Spacial Intellectual Property") used or held for use in
connection with the business of Spacial, without any known conflict with the
rights of others, except for such conflicts as do not have a Spacial Material
Adverse Effect. Spacial has not received any notice from any other person
pertaining to or challenging the right of Spacial to use any Spacial
Intellectual Property or any trade secrets, proprietary information, inventions,
know-how, processes and procedures owned or used or licensed to Spacial, except
with respect to rights the loss of which, individually or in the aggregate,
would not have a Spacial Material Adverse Effect. The Spacial Intellectual
Property represents all of the proprietary rights necessary to operate Spacial's
business.
4.16. Title to Properties and Related Matters. Spacial has good and marketable
title to or valid leasehold interests in its properties (other than personal
properties sold or otherwise disposed of in the ordinary course of business),
and all of such properties and all assets purchased by Spacial are free and
clear of any lien, claim or encumbrance and except for:
(a) liens for taxes, assessments or other governmental charges not yet
due and payable or the validity of which are being contested in good
faith by appropriate proceedings;
(b) statutory liens incurred in the ordinary course of business that
are not yet due and payable or the validity of which are being
contested in good faith by appropriate proceedings;
(c) landlord liens contained in leases entered in the ordinary course
of business; and
(d) other liens, claims or encumbrances that, in the aggregate, do not
materially subtract from the value of, or materially interfere with,
the present use of, any real property owned or used by Spacial
All properties and assets material to the present operations of Spacial are
owned or leased by Spacial in the manner and to the extent required by generally
accepted accounting principles.
ARTICLE 5.
CERTAIN COVENANTS AND AGREEMENTS
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5.1. Conduct of Business by WRT From the date hereof to the Closing Date, WRT
will, except as required in connection with the Exchange and the other
transactions contemplated by this Agreement and except as otherwise disclosed on
the WRT Disclosure Schedule or consented to in writing by Spacial:
(a) carry on its business in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage
in any new line of business or enter into any material agreement,
transaction or activity or make any material commitment except those
in the ordinary and regular course of business and not otherwise
prohibited under this Section 5.1;
(b) neither change nor amend its Certificate of Incorporation or
Bylaws;
(c) not issue or sell or register the transfer of shares of securities
or capital stock of WRT or issue, sell or grant options, warrants or
rights to purchase or subscribe to, or enter into any arrangement or
contract with respect to the issuance or sale of any of the securities
of WRT or rights or obligations convertible into or exchangeable for
any securities of WRT and not alter the terms of any presently
outstanding warrants or options or make any changes (by split-up,
combination, reorganization or otherwise) in the capital structure of
WRT;
(d) not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other securities of
WRT and not redeem, purchase or otherwise acquire any shares of the
capital stock or other securities of WRT or rights or obligations
convertible into or exchangeable for any shares of the capital stock
or other securities of WRT or obligations convertible into such, or
any options, warrants or other rights to purchase or subscribe to any
of the foregoing;
(e) not acquire or enter into any agreement to acquire, by merger,
consolidation or purchase of securities or assets, any business or
entity or any material part of the same;
(f) use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of WRT, to keep the
officers and employees of WRT available to WRT and to preserve the
relationships of WRT with suppliers, customers and others having
business relations with any of them, except for such instances that
would not have a WRT Material Adverse Effect;
(g) not (i) create, incur or assume any debt or create, incur or
assume any short-term debt for borrowed money, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person,
(iii) make any loans or advances to any other person, or (iv) make any
capital contributions to, or investments in, any person;
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(h) not (i) enter into, modify or extend in any manner the terms of
any employment, severance or similar agreements with officers and
directors, (ii) grant any increase in the compensation of officers or
directors, whether now or hereafter payable or (iii) grant any
increase in the compensation of any other employees except for
compensation increases in the ordinary course of business and
consistent with past practice (it being understood by the parties
hereto that for the purposes of (ii) and (iii) above increases in
compensation shall include any increase pursuant to any option, bonus,
stock purchase, pension, profit-sharing, deferred compensation,
retirement or other plan, arrangement, contract or commitment);
(i) not make or incur (other than in the ordinary course of business)
any individual capital expenditure in excess of $100,000 or capital
expenditures in the aggregate in excess of $200,000 without the prior
approval of Spacial (as used herein, "capital expenditure" shall mean
all payments in respect of the cost of any fixed asset or improvement
or replacement, substitution or addition thereto that has a useful
life of more than one year, including those costs arising in
connection with the acquisition of such assets by way of increased
product or service charges or offset items or in connection with
capital leases);
(j) except in instances that would not have a WRT Material Adverse
Effect, perform all of its obligations under all WRT Material
Contracts (except those being contested in good faith) and not enter
into, assume or amend any contract or commitment that would be a WRT
Material Contract other than contracts to provide services entered
into in the ordinary course of business; and
(k) except in instances that would not have a WRT Material Adverse
Effect, prepare and file all returns for taxes and other tax reports,
filings and amendments thereto required to be filed by it, and allow
Spacial, at its request, to review all such returns, reports, filings
and amendments at WRT's offices prior to the filing thereof, which
review shall not interfere with the timely filing of such returns.
5.2. Conduct of Business by Spacial From the date hereof to the Closing Date,
Spacial will, except as required in connection with the Exchange and the other
transactions contemplated by this Agreement and except as otherwise disclosed in
the Spacial Disclosure Schedule or as consented to in writing by WRT:
(a) carry on its businesses in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage
in any new line of business or enter into any agreement, transaction
or activity or make any commitment except in the ordinary and regular
course of business and not otherwise prohibited under this Section
5.2;
(b) neither change nor amend its Certificate of Incorporation or
Bylaws;
(c) not issue or sell any securities of Spacial or issue, sell or
grant options, warrants or rights to purchase or subscribe to, or
enter into any arrangement or contract with respect to
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the issuance or sale of any of the securities of Spacial or rights or
obligations convertible into or exchangeable for any securities of
Spacial and not alter the terms of any warrants or options, or make
any changes (by split-up, combination, reorganization or otherwise) in
the capital structure of Spacial;
(d) not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity
securities of Spacial and not redeem, purchase or otherwise acquire
any shares of the capital stock or other securities, or rights or
obligations convertible into or exchangeable for any shares of the
capital stock or other securities of Spacial or obligations
convertible into such, or any options, warrants or other rights to
purchase or subscribe to any of the foregoing;
(e) not acquire or enter into any agreement other than the Merger
Agreement to acquire, by merger, consolidation or purchase of
securities or assets, any business or entity or any material part
thereof;
(f) use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of Spacial, to keep the
officers and employees of Spacial available to Spacial and to preserve
the relationships of Spacial with suppliers, customers and others
having business relations with any of them, except for such instances
that would not have a Spacial Material Adverse Effect;
(g) not (i) create, incur or assume any debt or create, incur or
assume any short-term debt for borrowed money, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, or
(iii) make any loans or advances to any other person;
(h) not (i) enter into, modify or extend in any manner the terms of
any employment, severance or similar agreements with officers and
directors, (ii) grant any increase in the compensation of officers or
directors, whether now or hereafter payable or (iii) grant any
increase in the compensation of any other employees except for
compensation increases in the ordinary course of business and
consistent with past practice (it being understood by the parties
hereto that for the purposes of (ii) and (iii) above increases in
compensation shall include any increase pursuant to any option, bonus,
stock purchase, pension, profit-sharing, deferred compensation,
retirement or other plan, arrangement, contract or commitment);
(i) not make or incur (other than in the ordinary course of business)
any individual capital expenditure in excess of $1,500 or capital
expenditures in the aggregate in excess of $2,000 without the prior
approval of WRT (as used herein, "capital expenditure" shall mean all
payments in respect of the cost of any fixed asset or improvement or
replacement, substitution or addition thereto which has a useful life
of more than one year, including those costs arising in connection
with the acquisition of such assets by way of increased product or
service charges or offset items or in connection with capital leases);
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(j) except in instances that would not have a Spacial Material Adverse
Effect, perform all of its obligations under all Spacial Material
Contracts (except those being contested in good faith) and not enter
into, assume or amend any contract or commitment that would be a
Spacial Material Contract other than contracts to provide services
entered into in the ordinary course of business; and
(k) except in instances that would not have a Spacial Material Adverse
Effect, prepare and file all federal, state, local and foreign returns
for taxes and other tax reports, filings and amendments thereto
required to be filed by it, and allow WRT, at its request, to review
all such returns, reports, filings and amendments at Spacial's offices
prior to the filing thereof, which review shall not interfere with the
timely filing of such returns.
5.3. Shareholder Covenants. From the date hereof to the Closing Date, each WRT
Shareholder covenants and agrees that, except as required in connection with the
Exchange and the other transactions contemplated by this Agreement and except as
otherwise disclosed in the WRT Shareholder Disclosure Schedule or consented to
in writing by Spacial, such WRT Shareholder will not sell, assign, pledge,
encumber, or otherwise transfer, or grant any other rights in or option to
acquire, any of such WRT Shareholder's WRT Stock or agree to do any of the
foregoing.
5.4. Notice of any Material Change. Each party shall, promptly after the first
notice or occurrence thereof but not later than the Closing Date, advise the
other parties in writing of any event or the existence of any state of facts
that (i) would make any of his, her or its representations and warranties in
this Agreement untrue in any material respect, (ii) would constitute a breach of
any provisions of this Article 5 or (iii) would otherwise constitute either a
WRT Material Adverse Effect or a Spacial Material Adverse Effect.
5.5. Filing of Information Statement and Satisfaction of Rule 14f-1. Spacial
shall file with the SEC a statement pursuant to Rule 14f-1 of the Exchange Act,
which shall have been prepared by Spacial and WRT, and shall send the Statement
(the "Statement") to all Spacial shareholders immediately after the Closing, and
Spacial and WRT shall use their respective best efforts to obtain effectiveness
of such Information Statement should any comments arise from the SEC.
5.6. Reasonable Efforts; Further Assurances; Cooperation. Subject to the other
provisions of this Agreement, the parties hereto shall use all reasonable
efforts to perform their obligations herein and to take, or cause to be taken,
or do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable law to obtain all regulatory approvals and satisfy all
conditions to the obligations of the parties under this Agreement and to cause
the Exchange and the other transactions contemplated herein to be carried out
promptly in accordance with the terms hereof and shall cooperate fully with each
other and their respective officers, directors, employees, agents, counsel,
accountants and other designees in connection with any steps required to be
taken as a part of their respective obligations under this Agreement, including
without limitation:
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(a) WRT and Spacial shall promptly make their respective filings and
submissions and shall take, or cause to be taken, all actions and do,
or cause to be done, all things reasonably necessary, proper or
advisable under applicable laws and regulations to (i) comply with the
provisions of the Securities Act, the Exchange Act and Delaware Law,
and (ii) obtain any other required approval of any other federal,
state or local governmental agency or regulatory body with
jurisdiction over the transactions contemplated by this Agreement.
(b) In the event any claim, action, suit, investigation or other
proceeding by any governmental body or other person is commenced that
questions the validity or legality of the Exchange or any of the other
transactions contemplated hereby or seeks damages in connection
therewith, the parties agree to cooperate and use all reasonable
efforts to defend against such claim, action, suit, investigation or
other proceeding and, if an injunction or other order is issued in any
such action, suit or other proceeding, to use all reasonable efforts
to have such injunction or other order lifted, and to cooperate
reasonably regarding any other impediment to the consummation of the
transactions contemplated by this Agreement.
(c) Each party shall give prompt written notice to the other of (i)
the occurrence, or failure to occur, of any event that occurrence or
failure of which would be likely to cause any representation or
warranty of such party contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to
the Closing Date or that will or may result in the failure to satisfy
the Conditions specified in Article 6 or 7 and (ii) any failure of
such party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
5.7. Boards of Directors of WRT and Spacial.
5.7.1. WRT. The Board of Directors of WRT, immediately before the Closing Date,
shall consist of James J. Solano, Sr., Norman A. Ponder, and Joseph R.
MacDonald.
5.7.2. Spacial. James A. Prestiano ("Prestiano") shall be the sole member of the
Board of Directors of Spacial immediately prior to the Closing.
5.8. Corporate Governance of the Companies After the Exchange. Spacial, the
Board of Directors of Spacial, WRT, the WRT Shareholders and the Board of
Directors of WRT shall take all actions necessary after the Closing to do the
following, including obtaining any necessary approvals of their stockholders at
or prior to the Closing:
(a) The Certificate of Incorporation and Bylaws of Spacial, as in effect on the
Closing Date, shall continue in full force and effect.
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(b) James J. Solano, Sr. shall be appointed as a member of the Board of
Directors of Spacial such that James J. Solano, Sr. and James A. Prestiano are
the only directors of Spacial. The officers of Spacial immediately after the
Closing shall be as follows:
Name Title
---- -----
James J. Solano, Sr. President, Chief Executive Officer
Norman A. Ponder Executive Vice President
Joseph R. MacDonald Chief Operating Officer
Treasurer, Chief Financial Officer
(c) Promptly after expiration of the waiting period under Rule 14f-1 of the
Exchange Act, relating to the Rule l4f-1 Statement shall have been satisfied,
the Spacial Board shall elect Messrs. Norman A. Ponder and Joseph R. MacDonald
as members of the Spacial Board of Directors, and Mr. Prestiano's resignation as
a board member shall automatically become effective, in each case, without
further action by the board or any party.
ARTICLE 6.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE WRT SHAREHOLDERS
Except as may be waived by a WRT Shareholder as to such WRT Shareholder only,
the obligations of each WRT Shareholder to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or before
the Closing Date of each of the following conditions:
6.1. Compliance. Spacial shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms, covenants and
conditions of this Agreement to be complied with or performed by Spacial on or
before the Closing Date.
6.2. Representations and Warranties. All of the representations and warranties
made by Spacial in this Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same force and effect as if such
representations and warranties had been made at and as of the Closing Date,
except for changes permitted or contemplated by this Agreement; provided,
however, that notwithstanding anything herein to the contrary, this Section 6.2
shall be deemed to have been satisfied even if such representations or
warranties are not true and correct, unless the failure of any of the
representations or warranties to be so true and correct would have or would be
reasonably likely to have an Spacial Material Adverse Effect.
6.3. Material Adverse Changes. There shall have occurred no Spacial Material
Adverse Effect other than any such change that affects both Spacial and WRT in a
substantially similar manner.
6.4. Board Composition. The respective Boards of Directors of Spacial and WRT
shall have been set in accordance with Section 5.6.
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6.5. Officer's Certificate. Spacial shall have delivered to each WRT Shareholder
a Certificate of the President of Spacial, dated the Closing Date, certifying
that the conditions specified in Sections 6.1 and 6.2 have been satisfied.
6.6. Secretary's Certificate. Spacial shall have delivered to each WRT
stockholder, a certificate of the Secretary of Spacial certifying as to its
Certificate of Incorporation, Bylaws, incumbency of officers, and the
resolutions attached thereto and any other corporate proceedings relating to the
authorization, execution and delivery of this Agreement and the transactions
contemplated hereby.
6.7. Spacial Share Certificates. Spacial shall have delivered to each WRT
Shareholder one or more certificates representing the shares of Spacial Common
Stock to be exchanged for such WRT Shareholder's WRT Stock, along with an
opinion of counsel to WRT, that such shares are duly authorized, validly issued,
fully paid and non-assessable and are not subject to any pre-emptive rights.
6.8. Exchange by Other Shareholders. Each of the other WRT Shareholders shall
have exchanged their shares of WRT Stock for shares of Spacial Common Stock as
contemplated by this Agreement.
6.9. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory to
the WRT Shareholders and their counsel, and the WRT Shareholders and their
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
6.10. Prestiano Resignation. James Prestiano shall have (i) resigned as an
officer of Spacial, (ii) submitted his resignation as a director of Spacial to
become effective automatically upon expiration of the waiting period provided
for under Rule 14f-1 of the Exchange Act, (iii) returned for cancellation
1,200,000 shares of Spacial Common Stock, leaving Mr. Prestiano with ownership
of 800,000 shares of Spacial Common Stock (the "Prestiano Shares"), in exchange
for a warrant (the "Prestiano Warrant") to purchase 150,000 shares of Spacial of
Common Stock (the "Prestiano Warrant Shares"), (iv) a lock-up agreement relating
to all such shares (including the Warrant and Prestiano Warrant Shares) owned by
Prestiano as set forth in subsection 6.11, and (v) entered into a Registration
Rights Agreement with Spacial relating to such Prestiano Shares and the
Prestiano Warrant Shares, entitling Prestiano to one demand registration right
after the first underwritten, registered public offering of Spacial Common
Stock, and unlimited piggy-back registration rights, until an exemption for
resale of such Prestiano Shares is or becomes available under rule l44(k) under
the Securities Act.
6.11. Lock-Up Agreements of Prestiano, Ponder, Trust and Solano. Each of Messrs.
Prestiano, Ponder and Solano, and the Trust (the "Restricted Shareholders")
shall have entered into a lock-up agreement prohibiting the resale of any and
all Spacial Common Stock owned by them for a period of six months after the
Closing Date and prohibiting the resale of one-half of all such shares and by
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the Restricted Shareholders for six months thereafter. Furthermore, each
Restricted Shareholder shall agree to become further restricted, on a pari pasu
basis, should such lock-up be requested by an underwriter as condition to
closing of a firm commitment, public offering of Spacial securities, registered
under the Securities Act.
6.12. Escrow Agreement. The obligations of Spacial and the WRT Shareholders to
effect the Exchange and otherwise consummate the transactions contemplated by
this Agreement shall be subject to the execution and delivery of the Share
Escrow Agreement at the Closing Date, by Spacial and the Diluted Shareholders
with respect to 1,000,000 shares of Spacial Common Stock owned by the Diluted
Shareholders.
ARTICLE 7.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SPACIAL
Except as may be waived by Spacial, the obligations of Spacial to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Closing Date, of each of the following
conditions:
7.1. Compliance. WRT and each WRT Shareholder shall have, or shall have caused
to be, satisfied or complied with and performed in all material respects all
terms, covenants, and conditions of this Agreement to be complied with or
performed by him, her or it on or before the Closing Date.
7.2. Representations and Warranties. All of the representations and warranties
made by WRT and each WRT Shareholder in this Agreement shall be true and correct
in all material respects at and as of the Closing Date with the same force and
effect as if such representations and warranties had been made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement;
provided, however, that notwithstanding anything herein to the contrary, this
Section 7.2 shall be deemed to have been satisfied even if such representations
or warranties are not true and correct, unless the failure of any of the
representations or warranties to be so true and correct would have or would be
reasonably likely to have a WRT Material Adverse Effect.
7.3. Material Adverse Changes. Except as set forth in this Agreement or on the
schedules hereto, there shall have occurred no WRT Material Adverse Effect other
than any such change that affects both Spacial and WRT in a substantially
similar manner
7.4. WRT Officer's Certificate. WRT shall have delivered to Spacial a
Certificate of the President of WRT, dated the Closing Date, certifying that the
conditions specified in Sections 7.1 and 7.2 have been satisfied.
7.5. WRT Secretary's Certificate. WRT shall have delivered to Spacial a
certificate of the Secretary of WRT certifying as to its Certificate of
Incorporation, Bylaws, incumbency, and certain
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resolutions attached thereto and any other corporate proceedings relating to the
authorization, execution and delivery of this Agreement and the transactions
contemplated hereby.
7.6. WRT Share Certificates. Each WRT Shareholder shall have delivered to
Spacial one or more certificates representing the shares of WRT Stock to be
exchanged for Spacial Common Stock.
7.7. Exchange by All WRT Shareholders. All of the WRT Shareholders shall have
exchanged their shares of WRT Stock for shares of Spacial Common Stock as
contemplated by this Agreement.
7.8. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory to
Spacial and its counsel, and Spacial and its counsel shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
ARTICLE 8.
MISCELLANEOUS
8.1. Termination. Subject to Section 8.3, this Agreement and the transactions
contemplated hereby and the provisions herein may be terminated at any time on
or before the Closing Date:
(a) by mutual consent of WRT, Spacial and all of the WRT Shareholders;
(b) by Spacial or WRT if the transactions contemplated by this
Agreement have not been or are incapable of being consummated by June
15, 2001, as extended (the "Termination Date"), unless such failure of
consummation is due to the failure of the terminating party to perform
or observe the covenants, agreements, and conditions hereof to be
performed or observed by him, her or it at or before the Closing Date;
provided, that the non-breaching party's cause of action resulting
from such failure to perform or to observe the covenants, agreements
and conditions hereof shall not be terminated; or
(c) by WRT, Spacial or any WRT Shareholder if the transactions
contemplated hereby violate any non-appealable final order, decree, or
judgment of any court or governmental body or agency having competent
jurisdiction.
8.2. Entire Agreement. This Agreement and the exhibits hereto contain the
complete agreement among the parties with respect to the transactions
contemplated hereby and supersede all prior agreements and understandings among
the parties with respect to such transactions. Section and other headings are
for reference purposes only and shall not affect the interpretation or
construction of this Agreement. The parties hereto have not made any
representation or warranty except as expressly set forth in this Agreement or in
any certificate or schedule delivered pursuant hereto. The
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obligations of any party under any agreement executed pursuant to this Agreement
shall not be affected by this section.
8.3. Survival of Provisions. The representations and warranties of each party
contained herein or in any exhibit, certificate, document or instrument
delivered pursuant to this Agreement shall not survive the Closing. The
covenants and agreements set forth in Sections 3.2, 3.1.6, 5.6, 5.7 and 8.3
shall survive the Closing. The covenants and agreements set forth in Sections
8.3, 8.6 and 8.8 shall survive the termination of this Agreement in accordance
with Section 8.1.
8.4. Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original, and
such counterparts together shall constitute only one original.
8.5. Notices. All notices, demands, requests, or other communications that may
be or are required to be given, served, or sent by any party to any other party
pursuant to this Agreement shall be in writing and shall be sent by facsimile
transmission, nationally recognized overnight courier, or mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
transmitted by hand delivery, addressed as follows:
(i) If to WRT or any WRT Shareholder:
Waste Recovery Technology Corporation
92 Brown Place
Bronx, New York 10454
Telephone: (718) 292-1920
Fax: (718) 292-4459
Attention: James J. Solano, Sr.
with a copy to:
Snow Becker Krauss P.C.
605 Third Avenue
New York, NY 10158
Telephone: (212)687-3860
Fax: (212)949-7052
Attention: Jack Becker, Esq.
(ii) If to Spacial:
Spacial Corporation
c/o Law Offices of James A. Prestiano
317 Madison Avenue, Suite 2310
New York, NY 10017
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Telephone: 212-949-9696
Fax: 212-949-6241
with a copy (which shall not constitute notice) to:
Jeffer Mangles Butler and Mamaro, LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, CA 90067-5010
Telephone: 310-203-8080
Fax: 310-203-0567
Attention: Steven J. Insel, Esq.
Each party may designate by notice in writing a new address to which any notice,
demand, request, or communication may thereafter be so given, served, or sent.
Each notice, demand, request, or communication that is mailed, delivered, or
transmitted in the manner described above shall be deemed sufficiently given,
served, sent, and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt or the affidavit of
messenger being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
8.6. Successors; Assignments. This Agreement and the rights, interests, and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned, by operation of law or otherwise, by any of the parties hereto without
the prior written consent of the other.
8.7. Governing Law; Venue. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York (except the choice of law
rules thereof). Venue of any action brought to enforce or interpret this
Agreement shall be commenced and maintained in a federal court sitting in New
York County, New York. The parties irrevocably consent to jurisdiction and venue
in such courts for such purposes.
8.8. Waiver and Other Action. This Agreement may be amended, modified, or
supplemented only by a written instrument executed by the parties against which
enforcement of the amendment, modification or supplement is sought.
8.9. Severability. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable, such provision shall be fully severable, and this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance; and in lieu of
such illegal, invalid, or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision
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as similar in its terms to such illegal, invalid, or unenforceable provision as
may be possible and be legal, valid, and enforceable.
8.10. Enforcement. Each WRT Shareholder acknowledges that, due to the unique
nature of his shares of WRT Stock, the breach of this Agreement by such WRT
Shareholder will cause Spacial irreparable damage, and therefore, Spacial may
enforce its rights under this Agreement by equitable relief, including
injunction and specific performance, in addition to other remedies it may have
at law or in equity.
8.11. Jurisdiction. The parties hereto hereby consent to the exclusive
jurisdiction of the Supreme Court of the State of New York and the United States
District Court for the Southern District of New York with respect to any
disputes, claims, controversies or other actions or proceedings arising under
this Agreement and agree that venue for any such action shall lie in New York
County. The parties hereto hereby waive any and all right to commence any action
or proceeding before any other court or judicial body or in any other venue with
respect to the subject matter hereof.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SPACIAL CORPORATION
By: /s/ James A. Prestiano
-------------------------------
James A. Prestiano
Chief Executive Officer
WASTE RECOVERY TECHNOLOGY
CORPORATION
By: /s/ James J. Solano, Sr.
-------------------------------
James J. Solano, Sr., President
STOCKHOLDERS OF
WASTE RECOVERY TECHNOLOGY
CORPORATION
/s/ James J. Solano, Sr.
-----------------------------------
James J. Solano, Sr.
/s/ Norman A. Ponder
-----------------------------------
Norman A. Ponder
James J. Solano, Sr.
-as Attorney-In-Fact- for:
Trust Under Agreement, Dated 6/30/89
Bruce Caputo
Maurice Collins
Michael Emma
Joseph R. MacDonald
Donna Peck
Weir Stewart
David Wiener
By: /s/ James J. Solano, Sr.
-------------------------------
James J. Solano, Sr.
as Attorney-In-Fact
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WRT DISCLOSURE SCHEDULE
PURSUANT TO SECTION 3.1.6 OF SHARE EXCHANGE AGREEMENT
Pre-Spacial Merger
Name No. of Shares
---- ------------------
Trust Under Agreement 1,000.0
dated 6/30/89
James J. Solano, Sr. 178.5
Norman A. Ponder 100.0
David Wiener 10.0
Joseph R. MacDonald 10.0
Weir Stewart 2.5
Bruce Caputo 5.0
Donna Peck 2.5
Maurice Collins 2.5
Michael Emma 5.0
============
Total No. Shares of WRT
Immediately Prior to
Spacial Share Exchange....................... 1,316.00