Joint ventures

On March 3, 2005, the Company through it wholly owned subsidiary Envirokare Composite Corp. ("ECC") executed a Limited Liability Company Agreement with NOVA Chemicals, Inc.("NCI") creating a Joint Venture Company, LRM Industries, LLC ("LRM") a Delaware limited liability company for the purpose of commercializing the Company's Thermoplastic Flowforming technology including but not limited to the manufacture, marketing, sales and/or licensing of the technology (see the Company's Form 8-K filing on the SEC's EDGAR site, dated March 10, 2005, for the complete filing of information pertaining to this transaction).

LRM Industries, LLC

Technology agreements

Envirokare acquired the rights to the TPF Thermoplastic Flowforming™ technology by virtue of its merger with TCD into the Company's wholly owned subsidiary, ECC, in March 2005. A description follows that outlines the merger agreement with TCD and the creation of the joint venture entity, LRM Industries, LLC, in conjunction with the Company's joint venture partner, Nova Chemicals.

On March 3, 2005, the Company, together with ECC, Thermoplastic Composite Designs, Inc. ("TCD") and the TCD shareholders, Dale Polk Jr. & Dale Polk Sr., terminated their prior merger and related agreements and simultaneously therewith entered into a new merger agreement (the "Merger") as a result of which, among other things: 

                (a)  ECC acquired from TCD all of its assets and agreed to pay the TCD shareholders merger consideration equal to $15 million, of which $2.5 million was paid at the time of the acquisition and $2 million is payable not later than January 31, 2009, $3 million is payable not later than January 31, 2012 and $7.5 million is payable not later than January 31, 2013 plus, commencing in 2013, contingent consideration equal to 1 percent of: (1) any annual net income of LRM; or, in the event of a sale of the majority of the equity in or assets of LRM to an unaffiliated third party of LRM (2) 1 percent of any net proceeds derived by: (x) the members from any sale of their interests in LRM; (y) LRM from any sale of less than a majority of its equity or assets; and (z) the sale by ECC of any part of its interest in LRM; 

                (b)  TCD merged into ECC, with ECC becoming the surviving company; and 

                (c)   ECC entered into a joint venture agreement with NCI, an indirect wholly owned subsidiary of Nova Chemicals Corp. ("Nova"), pursuant to which their equally owned joint venture company, LRM, acquired from ECC all of ECC's assets acquired in the merger with TCD, with the exception of the former TCD operating plant and land, and agreed to pay and assume payment of the merger consideration described in (a) above.