EX-10.1






Exhibit 10.1




SECURITIES EXCHANGE AGREEMENT




          This Securities Exchange Agreement (this “Agreement”) is dated as of July 21, 2005,
among CHANGING WORLD TECHNOLOGIES, INC., a Delaware corporation (the “Company”), and
CONAGRA FOODS, INC., a Delaware corporation (“CFI”).




          WHEREAS, the Company and CFI directly or indirectly each own a 50% limited liability company
interest in Renewable Environmental Solutions, LLC, a Delaware limited liability company
(“RES”); and




          WHEREAS, subject to the terms and conditions set forth in this Agreement, CFI desires to
exchange its (i) 50% limited liability company interest in RES (the “CFI Interest”), and
(ii) $2,000,000 cash for (y) 419,438 shares (the “Shares”) of common stock, par value $.01
(the “Common Stock”) of the Company and (z) a warrant (the “Warrant”) to purchase
an additional 140,351 shares of Common Stock at a per share exercise price of $71.25; and




          WHEREAS, as a condition to such transaction, CFI will agree to terminate that certain License
Agreement, dated December 4, 2004, between Resource Recovery Corporation, a Delaware corporation
(“RRC”), CFI and the other parties thereto (the “CFI License”).




          NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the Company and CFI agree as follows:



1. Exchange of Securities. Subject to the terms and conditions set forth in this Agreement
and in reliance upon the representations, warranties, covenants and conditions herein contained, on
the Closing Date (as defined in Section 2 hereof), the Company shall sell and issue to the CFI, the
Shares and the Warrant and in exchange therefore, CFI shall sell and deliver to the Company the CFI
Interest and $2,000,000.



2. Closing.




     2.1 The Closing. The closing (the “Closing”) of the transactions contemplated
by this Agreement shall take place on the date hereof (the “Closing Date”), at the offices
of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York, 10153, unless another time,
date or place is agreed to in writing by the parties hereto.



     2.2 Company Closing Deliveries. At the Closing, the Company shall deliver the
following to CFI:



          (a) A copy of certificate of incorporation of the Company, as in effect immediately prior to
the Closing, certified by its chief executive officer as being in effect as of the Closing Date;




          (b) A copy of the by-laws of the Company, certified by its chief executive officer as being in
effect as of the Closing Date;




 









 





          (c) A copy of the resolutions of the Board, authorizing and approving all matters in
connection with this Agreement and the transactions contemplated hereby, certified by the chief
executive officer of the Company as of the Closing Date;




          (d) A stock certificate issued to CFI representing the Shares to be delivered to CFI; provided
that the Company may deliver such certificate to CFI within (5) days following the Closing in the
event such certificate is not available for issuance on or prior to the Closing; and




          (e) A duly executed warrant in the form attached hereto as Exhibit A.




          (f) A duly executed Guaranty (the “Guaranty”) in the form attached hereto as
Exhibit B pursuant to which the Company guarantees RES’ payment and performance of its
obligations under: (i) that certain Ground Lease dated April 3, 2002, by and between RES and
ConAgra Foods Packaged Foods Company, Inc. (“Lease Agreement”), and (ii) that certain
By-Products Supply Agreement, dated May 10, 2005, by and between RES and ConAgra Foods Packaged
Foods Company, Inc. (the “By-Products Supply Agreement”).




          (g) The Assignment and Release Agreement, in the form attached hereto as Exhibit C
(the “Release”), duly executed by CFI.




     2.3 CFI Closing Deliveries. At the Closing, CFI shall deliver the following to the
Company:



          (a) $2,000,000 by wire transfer of immediately available funds to an account designated by the
Company;




          (b) A duly executed termination agreement terminating all rights of CFI and its affiliates
under the CFI License;




          (c) A duly executed counterpart signature page to the Company’s stockholders agreement in the
form attached hereto as Exhibit D (the “Stockholders Agreement”) agreeing to be
bound by the terms thereof; and




          (d) A copy of the resolutions of the board of directors of CFI, authorizing and approving all
matters in connection with this Agreement and the transactions contemplated hereby, certified by
the secretary or assistant secretary of CFI as of the Closing Date.




          (f) The duly executed Release.



3. Representations and Warranties of the Company. The Company represents and warrants to
CFI as follows in this Section 3. Notwithstanding anything to the contrary in the Section 3, except
as set forth in Section 3.9, the Company is making no representation or warranty with respect to
RES (as defined in Section 3.9).




     3.1 Organization, Standing and Power. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware, with




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full corporate power and corporate authority to (a) own, lease and operate its properties, (b)
carry on its business as currently conducted by it and (c) execute and deliver, and perform under
this Agreement and each other agreement and instrument to be executed and delivered by it pursuant
hereto. True and complete copies of the Certificate of Incorporation of Company and all amendments
thereof, and of the By-Laws of the Company, as amended to date, have heretofore been furnished to
CFI.




     3.2 Capitalization. The authorized capital stock of the Company consists of (i)
3,000,000 shares of Common Stock, of which 1,724,269.178 shares are issued and outstanding, 39,145
shares are reserved for issuance under options and warrants which are issued and outstanding,
128,805 shares are reserved for issuance under options to be granted under the Company’s stock
option plan, and 195,081 shares are reserved for issuance upon the conversion of the Series A
Preferred Stock, and (ii) 445,081 shares of preferred stock, of which 195,081 shares are designated
as Series A Preferred Stock, of which 195,081 shares are issued and outstanding, and of which
250,000 shares are undesignated. Except as described on Schedule 3.2 and as set forth
above, (a) no shares of Common Stock are held in treasury; (b) there are no other issued or
outstanding equity securities of the Company or other securities of the Company convertible or
exchangeable at any time into equity securities of the Company; (c) there are no outstanding stock
appreciation rights, phantom stock rights, profit participation rights, or other similar rights
with respect to any capital stock of the Company, and (d) the Company is not subject to any
commitment or obligation that would require the issuance or sale of additional shares of capital
stock of the Company at any time under options, subscriptions, warrants, preemptive rights,
anti-dilution rights or other rights or obligations. Each stockholder of the Company has executed a
counterpart signature page to the Stockholders Agreement in the form attached hereto as Exhibit
D, or to a more restrictive form of such stockholders agreement.



     3.3 Issuance of the Shares. The issuance, sale and delivery of the Shares and Warrant
has been duly authorized by all necessary corporate action on the part of the Company. The Shares,
and the shares of Common Stock issuable upon exercise of the Warrant (the “Warrant
Shares”), when so issued, sold and delivered against payment therefor in accordance with the
provisions of this Agreement or the Warrant, as applicable, shall be duly and validly authorized
and issued, fully paid and nonassessable.



     3.4 Authority. The execution and delivery by the Company of this Agreement and of all
of the agreements and other documents to be executed and delivered by the Company pursuant hereto
(collectively, the “Company Documents”), the performance by the Company of its obligations
hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby,
have been duly and validly authorized by all necessary corporate action on the part of the Company
and the Company has all necessary corporate power and corporate authority with respect thereto.
This Agreement is, and when executed and delivered by the Company, each of the Company Documents
will be, in each case assuming such documents are duly executed by the other parties thereto, the
valid and binding obligations of the Company enforceable in accordance with their respective terms,
except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the rights of creditors generally and subject to the rules of law governing (and all
limitations on) specific performance, injunctive relief, and other equitable remedies.



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     3.5 Noncontravention. Neither the execution and delivery by the Company of this
Agreement or the Company Documents, nor the consummation of any of the transactions contemplated
hereby or thereby, nor the performance by the Company of any of its obligations hereunder or
thereunder, will (nor with the giving of notice or the lapse of time or both would) (a) conflict
with or result in a breach of any provision of the Certificate of Incorporation or By- Laws of the
Company, each as amended to date, or (b) give rise to a default, or any right of termination,
cancellation or acceleration, or otherwise be in conflict with or result in a loss of contractual
benefits to the Company under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to which the Company is a
party or by which it or any of the Company’s assets may be bound, or require any consent, approval
or notice under the terms of any such document or instrument (other than such consents, approval or
notices that are obtained or delivered prior to the Closing), or (c) violate any order, writ,
injunction, decree, law, statute, rule or regulation of any court or governmental authority which
is applicable to the Company or (d) result in the creation or imposition of any liens upon any of
the Company’s assets, the Common Stock or Warrant Shares, or (e) interfere with or otherwise
adversely affect the ability of the Company to carry on its business after the Closing Date on
substantially the same basis as it is now conducted or as proposed to be conducted.



     3.6 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any federal, state or local
governmental authority on the part of the Company is required in connection with the valid
execution and delivery of the Warrant, this Agreement, or the offer, sale or issuance of the Shares
hereunder, except such as has already been obtained.



     3.7 Litigation. Except as set forth on Schedule 3.7, there are no claims,
suits or actions, or administrative, arbitration or other proceedings or governmental
investigations, pending or, to the Company’s knowledge, threatened, adverse to the Company, the
transactions contemplated hereby or the business of the Company or any of the Company’s assets.
There are no judgments, orders, stipulations, injunctions, decrees or awards in effect which relate
to the Company, this Agreement, the transactions contemplated hereby, the business of the Company
or any of its assets, the effect of which is (a) to limit, restrict, regulate, enjoin or prohibit
in any respect any business practice of the Company in any area or (b) otherwise adverse to the
business, condition, affairs, assets, capital stock or prospects of the Company or any of its
subsidiaries, financially or otherwise, nor, to the Company’s knowledge, is the Company aware that
there is any basis for the foregoing.



     3.8 No Violation of Law. Except as set forth on Schedule 3.8, to its
knowledge, the Company is not engaging in any activity or omitting to take any action as a result
of which it is in violation of any material law, rule, regulation, zoning or other ordinance,
statute, order, injunction or decree, or any other requirement of any court or governmental or
administrative body or agency, applicable to the Company, the business of the Company or any assets
of the Company, including, but not limited to, those relating to: occupational safety and health
matters; issues of environmental and ecological protection (e.g., the use, storage,
handling, transport or disposal of pollutants, contaminants or hazardous or toxic materials or
wastes, and the exposure of persons thereto); business practices and operations; labor practices;
employee benefits; and zoning and other land use laws and regulations.



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     3.9 Subsidiaries. There are no direct or indirect subsidiaries of the Company, other
than (i) RRC, (ii) Thermal Depolymerization Process LLC, (“TDP”) a Delaware limited
liability company, and (iii) Renewable Environmental Solutions, LLC, (“RES”) a Delaware
limited liability company. 100% of the capital stock of RRC and 100% of the total membership
interests of TPD is owned by the Company, free and clear of all liens. 50% of the total membership
interests of RES is owned indirectly by the Company, free and clear of all liens.



     3.10 Financial Statements. The Company has furnished to CFI the audited balance sheet
of the Company as of December 31, 2004 and the related audited statements of income (loss),
shareholders’ equity and changes in financial position for the fiscal year then ended and its
unaudited balance sheet and related statements of income (loss), shareholders’ equity and changes
in financial position for the period ending May 31, 2005 (collectively, the “Financial
Statements”). The Financial Statements: (a) are true, correct and complete; (b) have been
prepared in accordance with the books and records of the Company; (c) present fairly the
consolidated financial condition and consolidated operating results of the Company as of the dates
and for the periods indicated; and (d) have been prepared in accordance with generally accepted
accounting principles (“GAAP”) applied on a consistent basis except for year-end audit
adjustments and the absence of footnotes required under GAAP in the case of the unaudited financial
statements. The Company maintains and will continue to maintain a system of accounting established
and administered in accordance with GAAP.



     3.11 Absence of Changes. Except as otherwise set forth on Schedule 3.11, since
December 31, 2004, there has not been (i) any material adverse change in the Financial condition,
results of operations, assets, liabilities, business or prospects of the Company; (ii) any material
liability or obligation of any nature whatsoever (contingent or otherwise) incurred by the Company,
other than (a) liabilities incurred in the ordinary course of business and (b) obligations under
contracts and commitments incurred in the ordinary course of business and not required under GAAP
to be reflected in the Financial Statements, which, individually or in the aggregate, are not
material to the financial condition or operating results of the Company; (iii) any material asset
or property of the Company made subject to a lien of any kind; (iv) any waiver of any material
valuable right of the Company, or any cancellation of any material debt or claim held by the
Company; (v) any sale, assignment or transfer of any tangible or intangible material asset of the
Company, except for sales, assignments or transfers in the ordinary course of business; (vi) any
loan by the Company to any officer, director, employee, consultant or shareholder of the Company,
or any agreement or commitment therefor other than routine travel or relocation advances, or loans
made in the ordinary course of business; (vii) any material damage, destruction or loss (whether or
not covered by insurance) affecting the assets, property, business or prospects of the Company;
(viii) any change in the accounting methods, practices or policies followed by the Company,
including any change in depreciation or amortization policies or rates; or (ix) any off-balance
sheet transactions.



     3.12 Property and Assets. The Company does not own any real property. The Company owns
or has a valid leasehold interest in, all of the material properties and assets, used by it or
located on its premises, including all properties and assets reflected in the Financial Statements,
and except those disposed of since the date thereof in the ordinary course of business; none of
such properties or assets is subject to any mortgage, pledge, lien, security interest, lease,
charge or encumbrance other than those material terms which are described in the




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Financial Statements. The Company is in compliance with all material terms of each lease to which
it is a party or is otherwise bound. The Company owns, or has a valid leasehold interest in, all
assets necessary for the conduct of its businesses as presently conducted.




     3.13 Intellectual Property. The Company or its subsidiaries own or have a valid
license to use, or has a pending application for, all trademarks, service marks, trade names,
service names, copyrights, patents, patent applications, know-how, methods, processes or other
intellectual property, including, without limitation, rights to a technology known as
Thermo-Depolymerization and Chemical Reformer (collectively, the “Intellectual Property”)
that are required to conduct the Company’s business and operations as now conducted and as proposed
to be conducted, all of which are, to Company’s knowledge, valid and in good standing and
uncontested. Except as set forth on Schedule 3.13, the Company has not received any notice
or demand alleging that the Company is infringing upon or otherwise acting adversely to any
trademarks, service marks, trade names, service names, copyrights, patents, patent applications,
know-how, methods, processes or other intellectual property of any other person or entity, and
there is no claim, proceeding or action pending or, to the knowledge of the Company, threatened,
with respect thereto. Except as set forth on Schedule 3.13, to the Company’s knowledge, no
person or entity is infringing upon the Company’s rights or ownership interest in the Intellectual
Property.



     3.14 Taxes. The Company has filed or has obtained presently effective extensions with
respect to all Federal, state, county, local and foreign tax returns which are required to be filed
by it, such returns are true and correct and all taxes shown thereon to be due have been timely
paid.



     3.15 Insurance. The Company maintains such types and amounts of insurance with respect
to its business and properties, on both a per occurrence and an aggregate basis, as are customarily
carried by persons or entities engaged in the same or similar business as the Company.



     3.16 Securities Laws. Based in part upon the representations of CFI, the issuance,
sale and delivery of the Shares pursuant to this Agreement and the Certificate of Incorporation of
the Company shall be exempt from the registration requirements of Section 5 of the Securities Act
of 1933, as amended (the “Securities Act”).



     3.17 Information as to the Company. None of the representations or warranties made by
the Company in this Agreement or in any of the documents executed and delivered pursuant hereto, is
false or misleading with respect to any material fact, or omits to state any material fact
necessary in order to make the statements therein contained not misleading.


4. Representations and Warranties as to CFI. CFI represents and warrants to the Company as
follows:




     4.1 Investment. CFI is acquiring the Shares, the Warrant and the Warrant Shares, as
appropriate, for its own account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with a present intention of distributing or selling the same,




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except for distributions to its affiliates in which an exemption from registration exists for any
such distribution.




     4.2 Authority. The execution and delivery by CFI of this Agreement and of all of the
agreements and other documents to be executed and delivered by CFI pursuant hereto (collectively,
the “CFI Documents”), the performance by CFI of its obligations hereunder and thereunder,
and the consummation of the transactions contemplated hereby and thereby, have been duly and
validly authorized by all necessary action on the part of CFI, and CFI has all necessary power and
authority with respect thereto. This Agreement is, and when executed and delivered by CFI, each
other CFI Document will be, the valid and binding obligation of CFI enforceable in accordance with
the respective terms thereof, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the rights of creditors generally and subject to
the rules of law governing (and all limitations on) specific performance, injunctive relief, and
other equitable remedies.



     4.3 Experience. CFI acknowledges that (i) an investment in the Shares, the Warrant and
the Warrant Shares is highly speculative and involves a high degree of risk and that CFI can bear
the loss of its investment hereunder and (ii) it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the investment in the
Shares, the Warrant and the Warrant Shares.



     4.4 Access to Information. CFI has carefully reviewed the representations concerning
the Company contained in this Agreement, has made an inquiry concerning the Company, its business
and its personnel, and has had a reasonable opportunity to ask questions of and receive answers
from the Company with respect to the Company, its business, the Shares, the Warrant and the Warrant
Shares, and all such questions, if any, have been answered to the satisfaction of CFI.



     4.5 No Market for the Shares. CFI understands that there is no market for any of the
Shares, the Warrant and the Warrant Shares, nor is there any assurance that one will develop in the
near future, and that the Shares, the Warrant and the Warrant Shares have limited transferability.



     4.6 Accredited Investor. CFI is an “Accredited Investor” within the definition set
forth in Rule 501 (a) of the Securities Act.



     4.7 Legend. CFI understands that the certificate(s) representing the Shares and any
Warrant Shares will bear a restrictive legend thereon substantially as follows:




“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
APPLICABLE SECURITIES LAWS, AND ARE RESTRICTED SECURITIES AS THAT TERM IS DEFINED
UNDER RULE 144 PROMULGATED UNDER THE SECURITIES ACT. THESE SECURITIES MAY NOT BE
SOLD, PLEDGED, TRANSFERRED, DISTRIBUTED OR OTHERWISE DISPOSED OF IN ANY MANNER



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UNLESS THEY ARE REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS,
OR UNLESS THE REQUEST FOR TRANSFER IS ACCOMPANIED BY A FAVORABLE OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT THE TRANSFER WILL NOT RESULT IN A
VIOLATION OF THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.”


5. Covenants




     5.1 Information Rights. The Company shall, so long as CFI owns at least 10% of the
issued and outstanding shares of Common Stock, deliver to CFI:




     (i) Monthly Reports. Within twenty (20) calendar days after the end of each
calendar month, consolidated financial statements showing the consolidated financial condition
and results of operations of the Company and its subsidiaries as of the end of each such
month.




     (ii) Annual Reports. Within 120 days after the end of each fiscal year, a balance
sheet and statements of operations, stockholders’ equity and cash flows of the Company and its
subsidiaries on a consolidated basis, audited by a firm of independent certified public
accountants.




Termination. The rights in this Section 5.1 shall terminate upon the earlier of the
initial public offering of securities of the Company or any time at which the Company is
otherwise required to file public periodic reports with any governmental authority.



     5.2 Registration Rights.



          (a) Piggyback Registration.





     (i) If, at any time that CFI beneficially owns any of the Registrable Securities (as defined
below) the Company proposes to prepare and file with the Securities and Exchange Commission, or an
equivalent foreign governmental authority, if the Company proposes to register its securities on a
foreign securities market (the “Commission”) one or more registration statements or similar
statements (except in connection with an initial public offering of its securities, subject to
Section 5.2. (a) (iii) below) or post-effective amendments thereto covering equity or debt
securities of the Company, or any such securities of the Company held by its securityholders (in
any such case, other than in connection with a merger, acquisition or pursuant to Form S-8 or
successor form) (collectively, the “Registration Statement”), the Company will give written
notice of its intention to do so by registered mail (“Notice”), at least twenty (20) days
prior to the initial filing of each such Registration Statement, to all holders of the Registrable
Securities. Upon the written request of such, a holder (a “Requesting Holder”), may, within
ten (10) days after receipt of the Notice, request that the Company include any of the Requesting
Holder’s Registrable Securities in the proposed Registration Statement, and the Company shall, as
to each such Requesting Holder, effect the registration under the Securities Act or any similar
act, rule or regulation of any




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foreign governmental authority on which the Company’s securities are traded, of the Registrable
Securities which it has been so requested to register (“Piggyback Registration”);
provided, however, that if, in the written opinion of the Company’s managing underwriter,
if any, for such offering, or the Company, the inclusion of all or a portion of the Registrable
Securities requested to be registered, when added to the securities being registered by the Company
or the selling stockholder(s), will exceed the maximum amount of the Company’s securities which can
be marketed (i) at a price reasonably related to their then current market value, or (ii) without
otherwise materially adversely affecting the entire offering, then the Company may exclude from
such offering all or a portion of the Registrable Securities which it has been requested to
register. The term “Registrable Securities” means (i) the Shares, (ii) the Warrant Shares
and (iii) any Common Stock of the Company issued as a dividend or other distribution with respect
to, in exchange for or in replacement of the Shares or the Warrant Shares; provided that any
Shares, Warrant Shares or other shares of Common Stock shall not be considered Registrable
Securities at such time as all of the shares of Common Stock held by a holder may be freely traded
(without limitation or restriction as to quantity or timing and without registration under the
Securities Act or, if the Company’s securities are listed in a foreign jurisdiction, any act
similar to the Securities Act) under Rule 144(k) promulgated under the Securities Act or otherwise
under any foreign rule or regulation.




     (ii) If securities are proposed to be offered for sale pursuant to a Registration Statement by
security holders of the Company (other than CFI) and the total number of securities to be offered
by such other selling security holders and the Requesting Holders is required to be reduced
pursuant to a request from the managing underwriter or the Company (which request shall be made
only for the reasons and in the manner set forth above) the aggregate number of Registrable
Securities to be offered by Requesting Holders pursuant to such Registration Statement shall equal
the number which bears the same ratio to the maximum number of securities that the underwriter or
the Company believes may be included for all selling security holders as the number of Registrable
Securities beneficially owned by the Requesting Holders bears to the total original number of
securities proposed to be offered by the Requesting Holders and the other selling security holders.




     (iii) Anything contained in this Section 5.2 (a) to the contrary notwithstanding, the Company
shall not be obligated to include any of the Requesting Holders’ Registrable Securities in a
Registration Statement in connection with an initial public offering of its securities in the event
that the Company does not include any securities of the Company held by any other security holder
of the Company in such Registration Statement.




     (b) Company Covenants in Connection with Registration.




     (i) The Company shall pay all costs, fees and expenses (other than underwriting fees,
discounts and nonaccountable expense allowance applicable to the Registrable Securities) in
connection with all Registration Statements filed pursuant to Sections 5.2(a) hereof including,
without limitation, the Company’s legal and accounting




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fees, printing expenses, and blue sky fees and expenses and the fees and expenses of one counsel
retained by the holders of Registrable Securities up to a maximum of $10,000.




     (ii) The Company shall take all necessary action which may be required to (i) qualify or
register the Registrable Securities included in the Registration Statement, for offering and sale
under the securities or blue sky laws of such states as are reasonably requested by the holders of
such securities and (ii) list the Registrable Securities on the principal securities exchange (or
the NASDAQ Stock Market) on which the Common Stock is so listed.




     (iii) The Company shall indemnify and hold harmless the holders of the Registrable Securities,
and each officer, director, employee and agent of the holders of the Registrable Securities, from
and against any and all losses, claims, damages and liabilities, including attorney fees caused by
any untrue statement of a material fact contained in any Registration Statement, any post-effective
amendment to such Registration Statement, or any prospectus included therein required to be filed
or furnished by reason of this Section 5.2 or caused by any omission to state therein a material
fact required to be stated therein or necessary to make the statements therein not misleading;
except insofar as such losses, claims, damages or liabilities are caused by any such untrue
statement or omission based upon information furnished or required to be furnished in writing to
the Company by the holders of the Registrable Securities or underwriter within the meaning of the
Securities Act and each officer, director, employee and agent of the holders of the Registrable
Securities and underwriter.




     (iv) If for any reason the indemnification provided for in this Section 5.2 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect to any loss,
claim, damage, liability or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and the indemnifying
party, as well as any other relevant equitable considerations.




     (v) The Company shall promptly deliver copies of all correspondence between the Commission and
the Company, its counsel or auditors and all memoranda relating to discussions with the Commission
or its staff with respect to the Registration Statement to each holder of Registrable Securities
included for such registration in such Registration Statement pursuant to Sections 5.2 hereof
requesting such correspondence and memoranda and to the managing underwriter, if any, of the
offering in connection with which such holder’s Registrable Securities are being registered and
shall permit each holder of Registrable Securities and such underwriter to do such reasonable
investigation, upon reasonable advance notice, with respect to information contained in or omitted
from the Registration Statement as it deems reasonably necessary to comply with applicable
securities laws or rules of NASD Regulation, Inc. Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company with its officers
and independent auditors, all to such reasonable extent and at such




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reasonable times and as often as any such holder of Registrable Securities or underwriter shall
reasonably request.



     5.3 Restrictions on Transfer. CFI agrees that it will not, sell, assign or transfer
the Shares or the Warrant Shares in violation of the Securities Act, or any other applicable state
or foreign securities laws (“Other Securities Laws”) and understands that it cannot sell,
assign or transfer the Shares or the Warrant Shares unless the Shares or the Warrant Shares are
registered under the Securities Act and Other Securities Laws or an exemption from such
registration is applicable to such transfer.



     5.4 Holdback. In the event of any registration of shares of Common Stock in connection
with an underwritten public offering, CFI agrees not to effect any sale of any shares of Common
Stock or any common stock equivalents (in each case, other than as part of such public offering)
during the 14 days prior to the effective date of such registration statement (except as part of
such registration statement) or during the period after such effective date as reasonably required
by the managing underwriter of an underwritten offering, but in no event longer than the earlier of
(i) the shortest period applicable to the officers, directors and stockholders (other than the
holders of the Shares) holding 5% or more of the capital stock of the Company or (ii) 180 days.



     5.5 Reserved.



     5.6 Expenses. Each party shall pay all of its own costs in connection with the
preparation, negotiation and execution of this Agreement and the consummation of the transactions
contemplated hereby; provided, however, the Company will pay all expenses (other than CFI’s legal
expenses and other than underwriting commissions and discounts) with respect to registration of
securities under Section 5.2 hereof.



     5.7 Anti-Dilution.



          (a) In the event that the Company shall at any time or from time to time after the date
hereof, issue, grant or sell any Additional Stock (as defined in Section 5.8(b), but for the
purposes of this Section 5.7, such definition shall not include the items set forth in clause (i)
of Section 5.8(b)) for a consideration, exercise or conversion price per share (as the case may be,
the “Anti-Dilution Price”) less than the then current Effective Price (as defined below),
then, in connection with such issuance, the Company shall issue to CFI, without any additional
consideration paid by CFI, additional shares of Common Stock (such shares, the “Anti-Dilution
Shares”) such that after the issuance of the Anti-Dilution Shares, the Effective Price of the
shares of Common Stock owned by CFI shall equal such Anti-Dilution Price.




          “Effective Price” shall initially be $71.25 per share, as adjusted as provided in this
Section 5.7.




          (b) The Company (and any successor corporation) shall take all action necessary so that a
number of shares of the authorized but unissued Common Stock (or common stock in the case of any
successor corporation) sufficient to provide for issuance of additional shares of Common Stock to
CFI in accordance with the provisions of Section 5.7(a) above are at





11









 







all times reserved by the Company (or any successor corporation), free from preemptive rights, for
such issuance.




          (c) Whenever the Company shall take any of the actions specified in this Section 5.7 which
would result in any adjustment in the Effective Price, the Company shall give notice to CFI, which
notice shall be made within 10 days after the effective date of such adjustment and shall state the
adjustment and the Effective Price. Notwithstanding the foregoing notice provisions, failure by the
Company to give such notice or a defect in such notice shall not affect the binding nature of such
corporate action of the Company.




          (d) For the purpose of any computation to be made in accordance with Section 5.7(a), the
following provisions shall apply:





            (i) In case of the issuance or sale of shares of Common Stock for a consideration part or
all of which shall be cash, the amount of the cash consideration therefor shall be deemed to
be the amount of cash received by the Company for such shares (or, if shares of Common Stock
are offered by the Company for subscription, the subscription price, or, if such securities
shall be sold to underwriters or dealers for public offering without a subscription offering,
the initial public offering price) before deducting therefrom any compensation paid or
discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or
others performing similar services, or any expenses incurred in connection therewith.




            (ii) In the case of the issuance or sale (otherwise than as a dividend or other
distribution on any stock of the Company) of shares of Common Stock for a consideration part
or all of which shall be other than cash, the amount of the consideration therefor other than
cash shall be deemed to be the fair market value of the consideration as determined in good
faith by the Board of Directors of the Company plus the amount of cash, if any.




            (iii) In the case of the issuance of options, rights, or warrants to purchase or
subscribe for shares of Common Stock, securities convertible into or exchangeable for shares
of Common Stock, or options, rights or warrants to purchase or subscribe for any such
convertible or exchangeable securities, the following provisions shall apply:




  (A) The effective price for the issuance, grant or sale of any options, rights
or warrants shall be deemed to be the minimum purchase price per share provided for
in such options, rights or warrants at the time of issuance plus the consideration,
if any, received by the Company in connection with the sale or issuance of such
options, rights or warrants; provided, however, that upon the termination of such
options, rights or warrants, if any thereof shall not have been exercised, the
Effective Price then in effect shall forthwith be readjusted and thereafter be the
price which it would have been had such adjustment been made on the basis of the
issuance only of shares of Common Stock actually issued or issuable



12









 






upon the exercise of those options, rights or warrants as to which the
exercise of rights shall not have expired or terminated unexercised.




     (B) The effective price for the issuance, grant or sale of any
convertible or exchangeable securities shall be deemed to be the
consideration received by the Company in connection with the sale of such
securities plus the consideration, if any, receivable by the Company upon
the conversion or exchange thereof; provided, however, that upon the
termination of the right to convert or exchange such convertible or
exchangeable securities (whether by reason of redemption or otherwise), the
Effective Price then in effect shall forthwith be readjusted and thereafter
be the price which it would have been had such adjustment been made on the
basis of the issuance only of shares actually issued or issuable upon the
conversion or exchange of those convertible or exchangeable securities as to
which the conversion or exchange rights shall not have expired or terminated
unexercised.




     (C) If any change shall occur in the price per share provided for in
any of the options, rights or warrants referred to in Section
5.7(d)(iii)(A), or in the price per share at which the securities referred
to in Section 5.7(d)(iii)(B) are convertible or exchangeable, such options,
rights or warrants or conversion or exchange rights, as the case may be,
shall be deemed to have expired or terminated on the date when such price
change became effective in respect of shares not theretofore issued pursuant
to the exercise or conversion or exchange thereof, and the Company shall be
deemed to have issued upon such date new options, rights or warrants or
convertible or exchangeable securities at the new price in respect of the
number of shares issuable upon the exercise of such options, rights or
warrants or the conversion or exchange of such convertible or exchangeable
securities.



          (e) In case the Company shall pay or make a dividend or other distribution to all holders of
its Common Stock in shares of Common Stock, the Effective Price in effect at the opening of
business on the day following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such Effective Price by
a fraction, the numerator of which shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination, and the denominator of which shall be
the sum of the numerator and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening of business on the
day next following the date fixed for such determination. For the purposes of this Section 5.7(e),
the number of shares of Common Stock at any time outstanding shall not include shares of Common
Stock held in the treasury of the Company.



          (f) In case the outstanding shares of Common Stock shall be subdivided into a greater number
of shares of Common Stock, the Effective Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall be proportionately reduced,
and, conversely, in case the outstanding shares of Common Stock shall




13












 






each be combined into a smaller number of shares of Common Stock, the Effective
Price in effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately after
the opening of business on the day following the day upon which such subdivision or
combination becomes effective.



          (g) Anything contained in this Section 5.7 to the contrary notwithstanding, the rights granted
under this Section 5.7 shall terminate and be of no further force or effect upon earlier of (i) the
closing of a firm commitment underwritten public offering pursuant to an effective registration
statement filed under the Securities Act covering the offer and sale of Common Stock for the
account of the Company in which the per share price is based on a pre-offering valuation of the
Company of not less than $60,000,000 or (ii) upon any merger, or consolidation of the Company with
or into another entity where the stockholders of the Company immediately prior to such event hold
less than a majority of the outstanding voting power of the surviving or consolidated entity, other
than a merger for the sole purpose of effecting a reorganization or change in domicile of the
Company.




     5.8 Right of First Offer.



          (a) Subject to the terms and conditions set forth below, from the date hereof until such time
as the Company effectuates an offering of its Common Stock to the public, CFI shall have the right
of first offer to purchase, on a pro rata basis, any Additional Stock which the Company may, from
time to time, propose to issue and sell. CFI’s pro rata share, for purposes of this right of first
offer, shall be determined by dividing (x) the total number of shares of Common Stock which are
owned, or obtainable by CFI upon exercise of the Warrant, by (y) the total number of shares of
outstanding Common Stock on a fully-diluted basis. The failure by CFI to exercise its right of
first offer with respect to any particular issuance shall not affect in any way such right with
respect to any subsequent issuance.




          (b) The term “Additional Stock” shall mean Common Stock or options, warrants or other
rights to acquire or securities convertible into or exchangeable for shares of Common Stock,
including shares held in the Company’s treasury, but shall not include (i) securities offered to
the public pursuant to a registration statement approved by the Board of Directors of the Company
and filed with the Commission for a public offering and sale of securities of the Company, (ii)
securities issued for the acquisition of another corporation or other entity by merger, purchase of
all or substantially all of the assets of such other corporation or other entity or other
reorganization resulting in the ownership by the Company of not less than 51% of the voting power
of such other corporation or entity; provided that such transaction is approved by a majority of
the disinterested directors of the Company, (iii) options to purchase up to 75,000 shares (as
equitably adjusted for stock split, stock dividend, conversion or reclassification) of Common Stock
pursuant to the Company’s 2002 Stock Option Plan and any options to purchase shares of Common Stock
issued pursuant to the Company’s future stock option plans or similar plans approved by the Board
of Directors and the stockholders of the Company, but only to the extent that not more than 15% of
the options to purchase Common Stock subject to any one such plan are issued to any one person or
entity (including his or its respective affiliates, as the case may be), (iv) securities issued as
a result of any stock split, stock dividend, conversion or reclassification of Common Stock,
distributable on a pro rata basis to all





14









 







holders of Common Stock, (v) securities issued as a result of any stock split, stock dividend or
reclassification of Series A Preferred Stock, (vi) securities issued to any unaffiliated and
independent third party lenders pursuant to any bank financing arrangement approved by the Board of
Directors (including any securities issued upon exercise of such securities), (vii) securities sold
to stockholders of the Company pursuant to a general rights offering to all stockholders, offered
on a pro rata basis, (viii) securities issuable upon exercise of options, warrants or other rights
to acquire or securities convertible into or exchangeable for shares of Common Stock that are
currently outstanding, (ix) securities issued to directors of the Company solely as compensation
for service to the Company as a director up to a maximum of 10,000 shares of Common Stock (as
equitably adjusted for stock split, stock dividend, conversion or reclassification) provided that
CFI or its designee on the Board of Directors, if any, shall receive an equivalent grant of
securities, (x) securities issued upon exercise or conversion of any Additional Stock, (xi)
securities issued in connection with any anti-dilution rights of any other stockholder of the
Company or (xii) up to $12,000,000 of equity securities, provided that the per share price (on an
as-converted to common stock basis, if applicable) is equal to or greater than $53.39 (as equitably
adjusted for stock splits, stock dividends and the like).




          (c) In the event the Company intends to issue any Additional Stock, it shall give CFI written
notice (“First Offer Notice”) of such intention, describing the type of Additional Stock to
be issued, the price thereof and the general terms upon which the Company proposes to effect such
issuance. CFI shall have twenty (20) days (unless a shorter period of time is agreed upon by CFI)
from the date of any such First Offer Notice (the “Initial Exercise Period”) to agree to
purchase its pro rata share of such Additional Stock for the purchase price and upon the terms and
conditions specified in the Company’s First Offer Notice by giving written notice to the Company
stating the quantity of Additional Stock to be so purchased. In the event there is a material
change in the terms upon which Additional Stock is offered by the Company following delivery of the
First Offer Notice, the Company will issue a new First Offer Notice and CFI will have the longer of
(i) the remainder of the Initial Exercise Period or (ii) ten (10) days from the date of issuance of
the new First Offer Notice to deliver a new notice of irrevocable acceptance to purchase the
Additional Stock on the new terms specified in such new First Offer Notice.




          (d) If CFI does not elect to purchase all of the Additional Stock so offered, the Company
shall have the right to sell the unsold Additional Stock to any third party within ninety (90) days
after the date of the First Offer Notice at a purchase price not less than, and upon terms and
conditions not more favorable than, the purchase price and terms and conditions set forth in the
First Offer Notice. If the Company shall not sell all of the Additional Stock within such ninety
(90) day period, such Additional Stock shall again be subject to the terms, conditions and
restrictions set forth in this Section 5.8.




          (e) For convenience in administration, the Company may offer and sell Additional Stock covered
by the right provided in Section 5.8 without first offering such securities to CFI, so long as CFI
is given prior notice of such sale and the opportunity to purchase its pro rata amount (which shall
be calculated after giving effect to such issuance to CFI of its pro rata amount) within twenty
(20) days after the close of the sale of the Additional Stock.




15









 




6. Miscellaneous.




     6.1 All communications hereunder will be in writing and, except as otherwise provided, will be
delivered at, or mailed by certified mail, return receipt requested, or telegraphed to, the
following addresses:



	 	 	 
	If to the Company, to:

	 	Changing World Technologies, Inc.
	 

	 	460 Hempstead Avenue
	 

	 	West Hempstead, New York 11552
	 

	 	Attn: President
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	Michael A. King
	 

	 	Weil, Gotshal & Manges, LLP
	 

	 	767 Fifth Avenue
	 

	 	New York, NY 10153
	 
	 	 
	If to CFI, to:

	 	ConAgra Foods, Inc.
	 

	 	Five ConAgra Drive
	 

	 	Omaha, Nebraska 68102-5001
	 

	 	Attn: Capital & Contracts
	 

	 	Fax: (402)595-6149
	 
	 	 
	 

	 	with a copy to:
	 

	 	David Anderson
	 

	 	McGrath North Mullin & Kratz, PC LLO
	 

	 	Suite 3700 First National Tower
	 

	 	1601 Dodge Street
	 

	 	Omaha, Nebraska 68102
	 

	 	Fax: (402) 341-0216






     6.2 This Agreement shall be deemed to have been made and delivered in New York City and shall
be governed as to validity, interpretation, construction, effect and in all other respects by the
internal laws of the State of New York. Each of CFI and the Company (1) agree that any legal suit,
action or proceeding arising out of or relating to this Agreement, shall be instituted exclusively
in New York State Supreme Court, County of New York, or in the United States District Court for the
Southern District of New York, unless such court shall have refused such jurisdiction, (2) waives
any objection which CFI or the Company may have now or hereafter to the venue of any such suit,
action or proceeding, and (3) irrevocably consents to the jurisdiction of the New York State
Supreme Court, County of New York, and the United States District Court for the Southern District
of New York in any such suit, action or proceeding. Each of CFI and the Company further agrees to
accept and acknowledge service of any and all process which may be served in any such suit, action
or proceeding in the New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York and agrees that service of process upon CFI or
the Company, as the case may be, mailed by certified mail to CFI’s address or the Company’s
address, as the case may be,




16









 







set forth in Section 6.1 above shall be deemed in every respect effective service of process upon
CFI or the Company, as the case may be, in any such suit, action or proceeding.




     6.3 Each party hereto agrees to use its reasonable best efforts to take any action which may
be necessary or appropriate or reasonably requested by the other party hereto in order to
effectuate or implement the provisions of this Agreement.



     6.4 This Agreement is not assignable without the consent of the other parties hereto. In the
event of an assignment, the rights and obligations of the parties under this Agreement shall bind
and inure to the benefit of the parties and their respective successors and assigns.



     6.5 Each of the parties hereto hereby agrees that representations and warranties made by or on
behalf of it in this Agreement or in any document or instrument delivered pursuant hereto shall
survive the Closing Date and continue in effect until the second anniversary of the Closing Date.
The covenants and agreements contained in this Agreement or in any document or instrument delivered
pursuant hereto shall survive the Closing Date and shall continue in effect in accordance with
their respective terms.



     6.6 This Agreement may be executed in separate counterparts, all of which shall constitute one
agreement.



17









 





          IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.




	 	 	 	 	 
	 	COMPANY:



CHANGING WORLD TECHNOLOGIES, INC.

 	 
	 	By:  	/s/ Brian S. Appel
 	 
	 	 	Name:  	BRIAN S. APPEL 	 
	 	 	Title:  	CEO 	 
	 
	 	CFI:



CONAGRA FOODS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 









 





          IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.




	 	 	 	 	 
	 	COMPANY:



CHANGING WORLD TECHNOLOGIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CFI:

CONAGRA FOODS, INC.

 	 
	 	By:  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	SVP