LRM Merger and Plan of Reorganization:
Envirokare and its wholly owned subsidiary, Envirokare Composite Corp. (“ECC”), NOVA Chemicals Inc. (“NOVA”) and Zesiger Capital Group, LLC (“Zesiger”), reached agreement in conjunction with the developers of the state-of-the-art patented TPF ThermoPlastic Flowforming™ and patent-pending STF Sheetless Thermoforming™ technologies (the “Polks”), wherein a Merger and Plan of Reorganization (the “Agreement”) was completed on July 2, 2009. Highlights of the Agreement are as follows:
LRM Industries, LLC merged into a newly formed Delaware corporation, LRM Industries International, Inc (“LRM Int.”).
- LRM Int. was recapitalized with $4.5 million, as provided by clients and members of Zesiger in exchange for preferred stock in LRM Int.
- ECC received 1,323,530 shares of common stock in LRM Int., representing 100% of all issued and outstanding common stock.
- The Polks received a partial payment from LRM Int. to secure the proprietary technologies, together with a warrant to purchase preferred stock, with future payments to be made by LRM Int. as specified in the Agreement.
- NOVA has no further equity interest in LRM Int., but will receive an earn-out based on future positive net earnings at LRM Int.
- NOVA converted all outstanding debt and obligations due from ECC or the Company to NOVA into 1,746,677 shares of the Company’s common stock, which equaled 2.8 percent of the issued and outstanding common stock of the Company when issued.
- Both NOVA and ECC forgave all outstanding debts, including accrued interest, owed by the LRM joint venture to the respective parties.
- Post-merger capitalization of LRM Int. is: clients and members of Zesiger received preferred stock representing approximately 80 percent of LRM Int. (among other rights and preferences, holders of the preferred stock are entitled to certain preferential dividend payments and payments on a liquidation of LRM Int.); ECC received common stock representing approximately 20 percent of LRM Int.; Dale Polk Jr. received a warrant to acquire 15 percent of the authorized preferred stock; and an equity pool was created to incentivize key LRM Int. employees, based on performance standards as established from time-to-time.