EXHIBIT 99.1
STOCK OPTION AGREEMENT
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This Stock Option Agreement, dated as of April 27, 2002 (the
"Agreement"), is made and entered into by and between N-VIRO INTERNATIONAL,
INC., a Delaware corporation having its principal office at 0000 Xxxx Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxx ("GRANTEE"); and WORLDTECH WASTE MANAGEMENT,
INC., a Nevada corporation having its principal office at 000 XXXXXX XXXX XX.,
XXXXX 0, XXXXXXXXXXXX, XX 00000 ("GRANTOR").
W I T N E S S E T H:
WHEREAS, the Grantor desires to grant to the Grantee the
Option (as hereinafter defined) upon the terms and subject to the conditions set
forth in this Agreement; and,
WHEREAS, the Board of Directors and stockholders of Grantor
have approved the grant of the Option upon the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and promises set forth herein and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, hereby agree as follows:
1. THE OPTION; CONSIDERATION.
(a) Grantor hereby grants to Grantee an
unconditional, irrevocable and exclusive right and option (the "Option") to
purchase, upon the terms and subject to the conditions hereof, up to an
aggregate of 350,000, but in no event less than 300,000, fully paid and
nonassessable shares of the voting, common stock, $.01 par value per share, of
Grantee ("Common Stock") at a price per share equal to $2.50 (such price, as
adjusted if applicable, the "Option Price"). The number of shares of Common
Stock that are subject to and may be received upon the exercise of the Option
(the "Option Shares") and the Option Price are subject to adjustment as herein
set forth.
(b) In exchange for the Option granted to
Grantee under and pursuant to the terms of this Agreement, Grantee shall pay
Grantor the sum of One Hundred Thousand and 00/100 Dollars ($100,000). The
payment referred to in the preceding sentence shall be due and payable on the
date of execution of this Agreement. Grantor and Grantee have agreed that
payment shall be made via set-off of certain fees due to Grantee under and
pursuant to the terms of that certain Technology Transfer Agreement (the
"Transfer Agreement") dated as of the date hereof by and between Grantor and
Grantee.
2. VOLUNTARY EXERCISE; MANDATORY EXERCISE.
(a) Grantee and/or any other person or
entity that shall become a holder of all or part of the Option in accordance
with the terms of this Agreement (each such person being referred to herein as
the "Holder") may exercise the Option, in whole or part, at any time (the
"Option Period") on or after the date hereof and before October 31, 2002 (the
"Expiration Date") in the manner set forth in this Section. In the event Holder
is entitled to and wishes to exercise the Option (or any portion thereof), it
shall send to Grantor on or before the Expiration Date a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of Option Shares it will purchase pursuant to such exercise and
(ii) a place and date (the "Closing Date") not earlier than three business
days nor later than 15 business days from the Notice Date for the closing of
such purchase (the "Closing"); PROVIDED, HOWEVER, that if the Closing of such
purchase cannot be consummated by reason of any applicable judgment, injunction,
decree, order, law or regulation, the period of time that would otherwise run
pursuant to this sentence shall run instead from the date on which such
restriction on consummation has expired or been terminated; PROVIDED FURTHER,
HOWEVER, that if prior notification to or approval of any regulatory agency is
required in connection with such purchase, the Holder shall promptly file the
required notice or application for approval, shall promptly notify Grantor of
such filing and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur effective as of
the Notice Date relating thereto, provided that Grantee, as of the date of
notice, delivers to SLK sufficient funds so as to satisfy all of Grantee's
obligations at closing. All such funds shall be held by SLK in conformity with
the provisions of the Escrow Agreement. Notwithstanding any provision herein to
the contrary, Grantee may not exercise this Option with respect to less than
300,000 shares.
(b) If, prior to the Expiration Date,
Grantee sells or otherwise transfers its interest in Florida N-Viro, L.P. to
anyone other than an affiliate of Grantee and receives in exchange for such
interest cash consideration in an amount equal to Two Million Dollars ($2.0
million) or more, then, within three (3) business days of the date of receipt of
such consideration, Grantee shall be obligated to exercise this Option in the
manner described in the preceding subsection (a) with respect to all 350,000
shares of Common Stock subject to the terms of the Option. For purposes of this
Section 2(b), cash consideration received by the Grantee in connection with the
disposition of Grantee's interest in Florida N-Viro, L.P. shall mean the net
proceeds to Grantee as a result of such transaction, after deduction from the
gross proceeds to Grantee of such transaction of all costs associated with such
transaction, which costs shall not exceed $25,000 in the aggregate.
3. PAYMENT OF PURCHASE PRICE. At the Closing, the Holder shall
(i) pay to Grantor the aggregate purchase price for the Option Shares purchased
pursuant to the exercise of the Option in immediately available funds by wire
transfer to a bank account designated by Grantor; PROVIDED, HOWEVER, that
failure or refusal of Grantor to designate such a bank account shall not
preclude the Holder from exercising the Option by delivery of a certified check
or bank draft, and (ii) present and surrender this Agreement to Grantor for
cancellation in whole or (in the case of a partial exercise) in part.
4. THE CLOSING. At the Closing and simultaneously with the
delivery of immediately available funds as provided in Section 3, Grantor shall
deliver to the Holder the certificate or certificates representing the number of
Option Shares purchased by the Holder, duly endorsed for transfer thereof by the
registered owner and, if the Option should be exercised in part only, a new
Option evidencing the rights of the Holder thereof to purchase the balance of
the Option Shares purchasable hereunder.
5. COVENANTS OF GRANTOR. In addition to its other agreements
and covenants herein, Grantor agrees:
(a) that it shall not sell or transfer the
Option Shares and at all times shall maintain the Option Shares free from any
and all claims, liens, pledges, encumbrances or security interests of any kind
or nature whatsoever (collectively, "Liens");
(b) that it will not, by charter amendment or
through reorganization, consolidation, merger, dissolution or sale of assets, or
by any other voluntary act, avoid or seek to avoid the observance or performance
of any of the covenants, stipulations or conditions to be observed or performed
hereunder by Grantor;
(c) promptly to take all action as may from
time to time be required in order to permit the Holder to exercise the Option
and Grantor to duly and effectively transfer the Option Shares;
(d) Upon execution of this Option or within
ten (10) business days thereof, deliver to Xxxxxxxx, Loop & Xxxxxxxx, LLP
("SLK"), Grantee's counsel, all certificates for the Option Shares to be held in
escrow by such law firm throughout the Option Period. Each of Grantee and
Grantor shall execute and deliver to SLK an escrow agreement (the "Escrow
Agreement") in form and substance acceptable to SLK in its sole discretion. SLK
shall not charge any fees for its escrow services but shall be entitled to
appropriate indemnification. The Escrow Agreement further shall provide for the
return of all stock certificates to Granter upon expiration of the Option Period
if the Option has not been exercised with respect to shares represented by such
certificates. Despite the escrow of certificates representing Grantor's
interests in the Option Shares, Grantor shall retain all rights to both vote and
receive dividends, if any, with respect to the Option Shares until such time, if
ever, as the Option is exercised with respect to such shares.
(e) During the Option Period and for a
period of twenty-four (24) months thereafter, neither Grantor nor any of its
affiliates shall, either directly or indirectly, acquire any Common Stock, any
interests in any Common Stock, or any options, warrants or other rights to
acquire any interests in any Common Stock; provided, however, affiliates of
Grantor may acquire any shares of Common Stock or rights to acquire Common Stock
to which such affiliates may from time to time become entitled to receive
directly from the Company as compensation for services. Notwithstanding the
foregoing, following the Option Period, Grantor and/or its affiliates may,
directly or indirectly, acquire additional Common Stock, interests in Common
Stock and options, warrants or other rights to acquire interests in Common Stock
so long as Grantor, together with its affiliates, owns or has the ability to
control, on a fully diluted basis, not more than 5% of the aggregate number of
shares of Common Stock issued and outstanding, absent any dilution, as of the
date of the most recent acquisition of any Common Stock by Grantor.
(f) During the Option Period, neither Grantor
nor any of its affiliates shall, either directly or indirectly, take any
action or cause any action to be taken to institute any legal or administrative
proceedings against or involving Grantee that arises out of, relates to, or is
based xxxx xxxx, xxxxxx, xxxxxx of fact or circumstances occurring or arising
prior to the date hereof. Furthermore, neither Grantee nor any of its affiliates
shall, either directly or indirectly, make or publish, whether orally,
electronically or in written form, any public statements threatening to commence
any legal or administrative proceedings against or involving Grantee or
suggesting that a basis exists for the institution of such legal or
administrative proceedings.
6. EXCHANGE; REPLACEMENT. INTENTIONALLY OMITTED.
7. ADJUSTMENTS. The number of Option Shares purchasable upon
the exercise of the Option and the Option Price shall be subject to adjustment
from time to time as provided in this Section 7.
(a) In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted.
(b) Whenever the number of shares of Common
Stock purchasable upon exercise hereof is adjusted as provided in this Section
7, the Option Price shall be adjusted by multiplying the Option Price by a
fraction, the numerator of which shall be equal to the number of shares
of Common Stock purchasable prior to the adjustment and the denominator of which
will be equal to the number of shares of Common Stock purchasable after the
adjustment.
8. EXTENSION. The periods for exercise of the Option under
Section 2 hereof shall be extended: (i) to the extent necessary to obtain all
governmental and regulatory approvals for the exercise of such rights (for so
long as the Holder is using its reasonable best efforts to obtain such
regulatory approvals), and for the expiration of all statutory waiting periods;
(ii) during any period for which an injunction or similar legal prohibition on
exercise shall be in effect; and, (iii) to the extent necessary to avoid
liability under Section 16(b) of the Securities Exchange Act of 1934, as
amended, by reason of such exercise. In no event, however, shall any extension
extend the Option Period beyond the date of the first anniversary hereof.
9. REPRESENTATIONS AND WARRANTIES.
(a) Grantor hereby represents and warrants to
Grantee as follows:
(i) Grantor has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Issuer and no other
corporate proceedings on the part of Grantor are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Grantor
and constitutes a valid and legally binding obligation of Grantor
enforceable against Grantor in accordance with its terms (except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors'
rights or by general equity principles, whether such principles are
considered at law or in equity.)
(ii) Grantor has indefeasible title to the Option
Shares, free and clear of any and all Liens. All Option Shares, upon
transfer to the Holder upon exercise of the Option thereof, will be
delivered free and clear of any and all Liens (other than those created
by this Agreement).
(iii) The execution, delivery and performance of this
Agreement does not or will not, and the consummation by Grantor of any
of the transactions contemplated hereby will not, constitute or result
in (A) a breach or violation of or a default under, its articles or
certificate of incorporation or by-laws, or the comparable governing
instruments of any of its subsidiaries, or (B) a breach or violation of
or a default under, any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time
or both) or under any law, rule, ordinance or regulation or judgment,
decree, order, award or governmental or non-governmental permit or
license to which it or any of its subsidiaries is subject.
(b) Grantee hereby represents and warrants to
Grantor that Grantee has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement; the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee; and this Agreement has been duly
executed and delivered by Grantee and constitutes a valid and legally binding
obligation of Grantee enforceable against Grantee in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity principles
whether such principles are considered at law or in equity).
10. ASSIGNMENT. Neither of the parties hereto may assign any
of its rights or obligations under this Agreement or the Option created
hereunder to any other person, without the express written consent o the other
party.
11. FILINGS; OTHER ACTIONS. Each of Grantee and Grantor will
use its reasonable best efforts to make all filings with, and to obtain consents
of, all third parties and regulatory and governmental authorities necessary for
the consummation of the transactions contemplated by this Agreement.
12. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties hereto shall be enforceable
by either party hereto through injunctive or other equitable relief.
13. SEVERABILITY. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated. If for any reason such
court or regulatory agency determines that the Holder is not permitted to
acquire the full number of shares of Common Stock provided in Section 1 hereof
(as adjusted pursuant to Section 7 hereof), it is the express intention of
Grantor to allow the Holder to acquire or to require the Grantor to repurchase
such lesser number of shares as may be permissible, without any amendment or
modification hereof.
14. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by fax, telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the first paragraph hereof.
15. GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware, without
regard to the conflicts of laws principles thereof.
16. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to constitute an original.
17. EXPENSES. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
18. CONDITION PRECEDENT; EFFECTIVENESS OF AGREEMENT. This
Agreement shall not be effective, and neither Grantor nor Grantee shall have any
obligations hereunder, unless and until such time as Grantor and Grantee enter
into the Transfer Agreement.
19. CAPTIONS. The section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
20. TIME IS OF THE ESSENCE. Time is of the essence with
respect to each parties' performance of al of their obligations hereunder;
provided, however, that to the extent that Grantor is
precluded from fulfilling in a timely manner its obligations with respect to the
delivery of stock certificates to SLK pursuant to Section 5(d) hereof by delay
on the part of Grantee's transfer agent, Grantor shall not be deemed to be in
breach of its obligations under Section 5(d).
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
N-VIRO INTERNATIONAL, INC.
by /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
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Title: Senior Vice-President
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WORLDTECH WASTE MANAGEMENT, INC.
By /s/ R. Xxxxxxx XxXxxxx
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Name: R. Xxxxxxx XxXxxxx
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Title: President
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