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EXHIBIT 10.1
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is made as this 17th
day of November, 1999, (the "Closing Date") by and among Elite
Logistics, Inc. (formerly "Summit Silver, Inc."), an Idaho
corporation(hereinafter referred to as "SSI"); Elite Logistics
Services, Inc., a Texas corporation (hereinafter referred to as
"▇▇▇▇"); and individuals, corporations, or other entities listed herein
In paragraph (1) below (hereinafter collectively referred to as the
"Stockholders"), who are the sole shareholders of ▇▇▇▇;
BACKGROUND:
A. The Stockholder own or will own as of the Closing Date (as defined
below), all of the issued and outstanding stock of ▇▇▇▇ (the "▇▇▇▇
Stock"), which they desires to exchange pursuant to the terms,
conditions mid covenants of this Agreement, for shares of voting
Common Stock of SSI, $0.01 par value, and for shares of Preferred
Stock of SSI, $100,00 par value (collectively, the "SSI Stock") as
hereinafter provided; and,
B. SSI desires to acquire all of the ▇▇▇▇ Stock from the
Stockholders, solely in exchange for shares of SSI Stock, as
hereinafter provided; and,
C. The shareholders of SSI have recently approved a I for 6 reverse
split of the issued and outstanding common shares of SSI. The
reverse split is designated to be effective on or about November
24, 1999: (the"Reverse Split Effective Date").
NOW, THEREFORE, in consideration of the promises and of the mutual
agreements, representations, warranties, provisions and covenants
herein contained, the parties hereto hereby agree as follows:
1. THE EXCHANGE OF SHARES.
1.1 Common Shares: On or about the Reverse Split Effective Date,
the Stockholders agree to deliver or cause to be delivered to SSI all
of the issued and outstanding shares of ▇▇▇▇ Stock (the "▇▇▇▇ Exchange
Shares"). In exchange for the ▇▇▇▇ Exchange Shares, SSI shall have
issued and caused to be delivered to the Stockholders 10,400,000 shares
of common stock of 351 Stock (the "SSI Exchange Shares") as follows,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1,104,400
▇▇▇▇▇ ▇. ▇▇▇▇▇ 4,016,000
▇▇▇▇ ▇▇▇▇▇▇ 3,112,400
▇▇▇▇▇ ▇▇▇▇▇▇ 1,104,400
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 200,800
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 502,000
Kokopelli Developments, L.L.C. 80,000
▇▇▇▇▇▇ Investments, L.P. 80,000
▇▇▇▇▇▇ ▇▇▇▇ 40,000
▇▇▇▇ ▇▇▇▇ 40,000
▇▇▇▇▇▇▇ A, ▇▇▇▇▇▇ 40,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 40,000
Arrow Manufacturing, Inc. 40,000
TOTAL 10,400,000
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1.2 Preferred Shares: ▇▇▇▇ also has a class of redeemable
Preferred Shares of which there are 2,445 shares issued and
outstanding. These shares are to be exchanged for the same
class of Preferred Shares of SSI at a same time as common
stock are issued, at the same exchange rate and some terms as
the existing ▇▇▇▇ preferred stock.
1.3 Warrants: ▇▇▇▇ has issued warrants ("▇▇▇▇ Warrants") to
purchase 1,215,555 shares of ▇▇▇▇ common stock. Upon the
Reverse Split Effective Date, such warrants shall be
exchanged for warrants to purchase 1,215,555 shares of SSI
common stock at the same exercise price, and exercisable
within the same time period, and bearing the same rights and
covenants as the ▇▇▇▇ Warrants.
DELIVERY OF COMMON SHARES.
2.1 Delivery of Temporary Certificates, On the Closing Date of
November 17, 1999, SSI shall deliver Temporary SSI Exchange
shares to the Stockholders, by delivering on such date to
Federal Express (or other overnight courier) for delivery to
the ▇▇▇▇ office in Freeport, Texas. Such temporary
certificates shall be distributed to the Stockholders and
shall be non-voting and non-transferable, and represent only
a right to receive a security at a future date, and way be
exchanged only by the Stockholder designated on the face
thereon, for Permanent SSI Exchange Shares sometime on or
after the Reverse Split Effective Date.
2.2 Delivery of ▇▇▇▇ Exchange Shares. On or about the Closing
Date. the Stockholders shall deliver to the President of ▇▇▇▇
at the offices in Freeport, Texas certificates representing
their shares of ▇▇▇▇. Such shares shall be held by the
President until Permanent Certificates of SSI have been
delivered on or about the Reverse Split Effective Date.
2.3 Final Delivery and Exchange. On or about the Reverse Split
Effective Date and after Permanent Certificates of SSI
Exchange Shares have been delivered to the President of ELSI,
the President shall cause such Permanent Certificates to be
exchanged and delivered to the Stockholders. The President
shall collect all Temporary Certificates and forward these
along with the ▇▇▇▇ Exchange Shares to the designated
Transfer Agent of SSI for safekeeping.
2.4 Restricted Nature of Shares. As provided in section 14 of
this Agreement, the parties agree that the SSI Exchange
Shares will be issued in reliance on Section 4(2) of the
Securities Act of 1933 (the "Act") and will be "restricted
securities," as that term is defined in Reg. 144 of the Act.
3. ENDORSEMENT OF ▇▇▇▇ SHARES.
The Stockholders shall deliver the certificates representing the
▇▇▇▇ Exchange Sham, duly endorsed in blank by the Stockholders or
accompanied by blank stock powers, with signatures Medallion Guaranteed
by a national bank, and with all necessary transfer tax and other
revenue stamps, acquired at the Stockholder's expense, affixed and
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canceled. The Stockholders agrees to cure any deficiencies with respect
to the endorsement of the certificates or other documents of conveyance
with respect to such ▇▇▇▇ Exchange Shares or with respect to the stock
powers accompanying any ▇▇▇▇ Exchange Shares.
4. CLOSING.
The exchange and delivery of Temporary Certificates referred to in
Section 2 hereof (hereinbefore and hereinafter referred to as the
"Closing") shall take place on the 17th day of November, 1999, which
date has boon and shall be referred to as the "Closing Date." Time is
of the essence. The effective date for accounting/tax purposes shall be
November 17, 1999.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS AND ▇▇▇▇
The Stockholders and ▇▇▇▇ represent and warrant that all of the
following representations and warranties shall, except as otherwise
disclosed herein, be true at the time of Closing and that such
representations and warranties as made at the time of Closing shall
survive the Closing for a period of two (2) years from the Closing Date
(which date is hereinafter called the "Expiration Date").
5.1 Due Organization. ▇▇▇▇ is a corporation duly organized,
validly existing and in good standing under the laws of the state of
Texas, and is duly authorized, qualified and licensed under all
applicable laws, regulations, ordinances and orders of public
authorities to carry on its businesses in the places and in the manner
as now conducted except where the failure to be so authorized,
qualified or licensed would not have a material adverse effect oil the
business of ▇▇▇▇ taken as a whole. Copies of the Articles of
Incorporation, Bylaws, each as amended, stock records and minute books
of ▇▇▇▇ as heretofore made available to SSI, are correct and complete.
5.2 Authorization. The Stockholders and ▇▇▇▇ have full legal
right, power and authority to enter into this Agreement, and the
exchange of ▇▇▇▇ Exchange Shares for SSI Exchange Shares, pursuant to
the provisions of this Agreement will transfer valid title in the ▇▇▇▇
Exchange Shares to SSI, free and clear of all liens, encumbrances and
claims of every kind.
5.3 Capital Stock of ▇▇▇▇. The authorized capital stock of ▇▇▇▇
consists of 20,000,000 shares of voting common stock, $0.01 par value,
of which 10,400,000 shares are issued and outstanding, and 2,000,000
shares of preferred stock of par value $100.00, of which 2,445 shares
are issued and outstanding. All of the issued and outstanding shares of
the capital stock of ▇▇▇▇ are owned by the Stockholders, and are free
Find clear of all liens, encumbrances and claims of every kind. All of
the issued and outstanding shares of ELS) Stock have been duly
authorized and validly issued, are fully paid and nonassessable, are
owned of record and beneficially by the Stockholders and further such
shares were offered, issued, sold and delivered by ▇▇▇▇ in compliance
with all applicable state and federal laws concerning the issuance of
securities.
5.4 Transactions in Capital Stock. No option, warrant, call,
conversion right or commitment of any kind exists which obligates ▇▇▇▇
to issue any of its authorized but unissued capital stock, except the
Forte Group, LLC Warrant and ▇▇▇▇▇▇ Investment Warrant as disclosed in
Schedule 5.4 hereto, In addition, ▇▇▇▇ has no obligation (contingent or
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otherwise) to purchase, redeem or otherwise acquire any of its equity
securities or any interests therein or to pay any dividend or make any
distribution in respect thereof, except as disclo5cd in Schedule 5.4
hereto,
5.5 Financial Statements. The Stockholders have delivered to SSI
copies of unaudited financial and must prepare within sixty (90) days
from the Closing Date audited financial statements. The ▇▇▇▇ financial
statements will be prepared in accordance with generally accepted
accounting principles and applied on a consistent basis throughout the
period indicated. The ▇▇▇▇ financial statements will present fairly the
financial condition of ▇▇▇▇ as of the date indicated thereon, and such
Statements of Earnings, and Cash Flows and Retained Earnings will
present fairly the results of its respective operations for the periods
indicated thereon. All such financial statements are accurate and
present fairly the financial position of Summit at their respective
dates and the results of operations for tho months periods then ended,
all in accordance with generally accepted United States accounting
principles, subject in the ease of the quarterly financial statements,
to normal recurring year end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse) and the
absence of notes (which, if presented, would not differ materially from
those included in the May 31, 1999 financial statements. The financial
statements referred to in this section reflect the consistent
application of accounting principles throughout the periods involved.
5.6 Property The Stockholders have delivered to SSI an accurate
list and summary description (Schedule 5.6) of each item of real and
personal property owned by ▇▇▇▇ (hereinafter "▇▇▇▇ Property") and
warrants it owns such free and clear of all encumbrances, or if
encumbered, warrants that the such encumbrances are limited to those
designated thereon. As used herein, "Permitted Encumbrance means any of
the following;
1. Liens related to transactions in the ordinary course of the
business of Elite and with respect to which Elite received
the full benefits of the considerations given in exchange for
such lien.
2. Liens for taxes, assessments, and other governmental charges
or levies if payment thereof shall not at the time be
required to be made, or if same are being contested in good
faith and by appropriate proceedings.
3. Liens of vendors, carriers, warehousemen, mechanics,
laborers, and material-men incurred in the ordinary course of
business for sums not then due or being contested in good
faith.
4. Liens incurred or deposits made in the ordinary course of
business in connection with wo0unen's compensation,
unemployment insurance and other social security, or to
secure the performance of tenders, statutory obligations,
surety and appeal bonds, performance and return of money
bonds and other similar obligations ("elusive of obligations
for the payment of money borrowed or the obtaining of
advances of credit.)
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5.7 Material Contracts and Commitments. ▇▇▇▇ is not a party to,
nor bound by, any material contracts, or commitments (including, but
not limited to, joint venture or partnership agreements, contracts with
any labor organizations, loan agreements, indemnity or guaranty
agreements, bonds, mortgages, options to purchase land, liens, pledges
or other security agreements) other than as disclosed on Schedule 5.7
hereto.
5.8 Conformity with Law. ▇▇▇▇ is not in material default under any
law or regulation or under any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over them which would
have a material adverse effect on their businesses, taken as a whole;
and there are no claims, actions, suits or proceedings, pending or
threatened, against or affecting ▇▇▇▇, at law or in equity, or before
or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having
jurisdiction over either of them and no notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received.
▇▇▇▇ has conducted and is conducting its business in substantial
compliance with the requirements, standards, criteria and conditions
set forth inapplicable federal, state and local statutes ordinances,
permits, licenses, orders, approvals, variances, rules and regulations
and is not in violation of any of the foregoing which might materially
and adversely affect the business. operations. affairs, prospects,
properties, assets, profits or condition (financial or otherwise) of
them, taken as a whole. ▇▇▇▇ has received no notice from any
shareholder or former shareholder asserting that ▇▇▇▇ or any Affiliate
("Affiliate" as used herein is used with the same meaning as under Rule
405 promulgated under the ▇▇▇▇ ▇▇▇) has violated or in any manner
failed to comply with any law or regulation, including without
limitation, federal or state securities laws and regulations.
5.9 Taxes. ▇▇▇▇ has filed with the appropriate governmental
authorities all tax and related returns required to be filed by it, and
such returns accurately reflect the taxes payable. All federal, state
local, county, franchise, sales, use, excise, property, and other taxes
which are due and payable have been duly paid; and no reserves for
unpaid taxes have been set up or am required on the basis of the facts
and in accordance with generally accepted accounting principles, except
as may be specified and set forth in the ▇▇▇▇ disclosure Schedule.
There are no unpaid assessments or proposed assessments of federal
income taxes pending against ▇▇▇▇ and there are no federal, state, or
local tax audits pending or threatened. ▇▇▇▇ has never filed a consent
under Section 341(f) of the Internal Revenue Code ▇▇▇▇ has timely filed
all requisite federal and other tax returns for all fiscal periods
ended; and there are no open years, examinations in progrc33 or claims
against them for federal and other taxes (including penalties and
Wtere3t) for any period.
5.10 Absence of Changes. Since the date of the ▇▇▇▇ financial
statements, there has not been:
(a) any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business
of ▇▇▇▇;
(b) any damage, destruction or loss (whether or not covered
by insurance) materially adversely affecting the properties
or business of ▇▇▇▇;
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(c) any change in the authorized capital of ▇▇▇▇ or in their
respective securities outstanding or any change in their
respective ownership interests or any grant of any options,
warrants, calls, conversion rights or commitments;
(d) any declaration of payment of any dividend of
distribution in respect of the capital stock or
any director indirect redemption, purchase or other acquisition of
any of the capital stock of ▇▇▇▇,- (e) any transaction by ▇▇▇▇
outside the ordinary course of their respective businesses.
5.11 Deposit Accounts: Power of Attorney. The Stockholders have
delivered to SSI an accurate schedule as of the date of the Agreement,
of:
(a) the names of all banks and other financial institution in
which are depositories of the funds of ▇▇▇▇, the accounts
established at such depositories, the names of all persons
authorized to draw or sign checks or drafts upon the accounts
established in such depositories, the name of any depositories or
other organization in which ▇▇▇▇ has a safe deposit box and the
names of the persons having access thereto.
(b) All insurance coverage's, with policy description, and
coverage period the names in which the accounts are covered
(c) A list of each officer and employee of ▇▇▇▇ presently
receiving remuneration (including salary, commission, bonuses, and
any other form of compensations if any) and the rate of
remuneration and position for each person named. ▇▇▇▇ has no
obligation to pay to any person listed any remuneration in excess
of that shown.
▇▇▇▇ has also set forth the name of each person, corporation, firm or
other entity holding a general or special power of attorney from ▇▇▇▇
and a description of the terms of such power.
5.12 Environmental Matters. ▇▇▇▇ has no knowledge of any assertion
by any governmental agency or other regulatory authority of any
environmental lien or action.
5.13 Validity of Obligations. The execution and delivery of this
Agreement by ▇▇▇▇ and the performance of the transactions contemplated
herein have been duty and validly authorized by the Board of Directors
of ▇▇▇▇, and this Agreement has been duly and validly authorized by all
necessary corporate action and is a legal, valid and binding obligation
of the Stockholders and ▇▇▇▇.
5.14 Relations with Government. ▇▇▇▇ has not made, offered or
agreed to offer anything of value to any governmental official,
political party or candidate for government office nor has it otherwise
taken any action which would cause) ▇▇▇▇ to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended or any law of similar
effect.
5.15 Disclosure. This Agreement and all other documents and
information furnished to SSI and its representatives pursuant hereto
and listed on Schedule 5.15, to the knowledge of ▇▇▇▇ or the
Stockholders, do not and will not include any untrue statement of a
material fact or omit to state a material fact necessary to make the
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statements therein not misleading. If ▇▇▇▇ or the Stockholders become
aware of any fact or circumstances which would change a representation
or warranty of ▇▇▇▇ or the Stockholders in this Agreement or any
representation made on behalf of ELSI, ELSI and the Stockholders shall
immediately give notice of such fact or circumstance to SSI. However,
such notification shall not relieve either ▇▇▇▇ or the Stockholders of
their respective obligations under this Agreement, and at the sole
option of SSI, the truth gad accuracy of any and all warranties and
representations of ▇▇▇▇, or on behalf of ▇▇▇▇ and of the Stockholders
tit the date of this Agreement and at the closing, shall be a
precondition to the consummation of this transaction.
5.16 Employee Benefit Plans. ▇▇▇▇ does not maintain or otherwise
have any liability (whether direct or indirect, actual or contingent)
in respect of any employee pension benefit plan (as such term is
defined in Section 3(2) of the Employee Retirement income Security Act
of 1974, as amended "ERISA") or under any "employee welfare benefit
plan" (as such term is defined in Section 3(l) of ERISA)
5.17 No Subsidiaries. ▇▇▇▇ has no subsidiaries, and has made no
advances to or investments in, directly or indirectly, any other
business, entity, enterprise, or organization, nor has it ever had any
subsidiaries or made such investments, except as specifically disclosed
on Schedule 5.15, there are no related entities controlled by ▇▇▇▇.
6. REPRESENTATIONS AND WARRANTIES OF SSI AND SSI STOCKHOLDERS.
SSI represents and warrants that all of the following
representations and warranties be true at the time of Closing and that
such representations and warranties as made at the time of Closing
shall survive the Closing for a period of four (4) years from the
Closing Date (which date is hereinafter called the "Expiration Date"),
unless otherwise modified by documents furnished to ▇▇▇▇ in accordance
with paragraph 14.10 of this document.
6.1 Due Organization. SSI is duly organized, validly existing and
in good standing under the laws of the State of Idaho, and is duly
authorized, qualified and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to carry on
its business in the places and in the manner as now conducted except
where the failure to be so authorized, qualified or licensed would not
have a material adverse effect on the business of SSI taken as a whole.
Copies of the Articles of Incorporation, bylaws, stock records and
minute books of SSI as heretofore made available to ▇▇▇▇, are complete
and correct.
6.2 Authorization. SSI has full legal right, power and authority
to enter into this Agreement and the exchange of the SSI Exchange
Shares for the ▇▇▇▇ Exchange Shares, pursuant to the provisions of Us
Agreement will transfer valid title in the SSI Exchange Shares to the
Stockholders, free and clear of all liens, encumbrances and claim of
every kind.
6.3 Capital Stock of SSI. The authorized capital stock of SSI
consists of 20,000,000 shares of voting common stock, $0.01 par value,
of which 6X8,784 shares are issued and outstanding as of the Closing
Date. Upon the Reverse Split Effective Date approximately 1,044,000
common shares will be issued and outstanding. SSI also has authorized
class of Preferred Stock consisting of 10,000,000 shares of $0.01 par
value of which none is issued and outstanding. The SSI Exchange Shares
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to be delivered to the Stockholders on or after the Reverse Split
Effective Date will constitute valid and legally issued shares of SSI
fully paid and non-assessable, and with the exception of restrictions
upon resale. will be legally equivalent in all respects to the SSI
Stock issued and outstanding as of the date hereof.
6.4 Transactions in Capital Stock. No option, warrant, call,
conversion right or commitment of any kind exists which obligates SSI
to issue any of their authorized but unissued capital stock.
6.5 Financial Statements. SSI has or will have delivered prior to
the Reverse Split Effective Date to ▇▇▇▇ and Stockholder copies of the
following financial statements (the SSI Financial Statements"):
SSI's unaudited financial statement as of August 31, 1999
(hereinafter referred to as the "SSI Financial Statements") and
Statements of Earnings, Cash Flows and Retained Earnings for the
period ended May 31, 1999.
The SSI Financial Statements have been prepared in accordance with
generally accepted accounting principles and applied on a consistent
basis throughout the periods indicated (except as noted). The SSI
Financial Statements present fairly the financial condition of SSI as
of the date indicated thereon, unless disclosed in Schedule 6.5
attached hereto, and such Statements of Earnings, and Cash Flows and
Retained Earnings present fairly the results of its respective
operations for the periods indicated thereon.
6.6 Property. SSI owns no property.
As used herein, "Permitted Encumbrances" means any of the
following:
1. Liens related to transactions in the ordinary course of the
business of Elite and with respect to which Elite received
the full benefits of the considerations given in exchange for
such lien.
2. Liens for taxes, assessments, and other governmental charges
or levies if payment thereof shall not at the time be.
required to be made, or if same are being contested in good
faith and by appropriate proceedings.
3. Liens of vendors, carriers, warehousemen, mechanics,
laborers, and material-men incurred in the ordinary course of
business for sums not then due or being contested in good
faith.
4. Liens incurred or deposits made in the ordinary course of
business in connection with workmen's compensation,
unemployment insurance and other social security, or to
secure the performance Of tenders, statutory obligations,
surety and appeal bonds, performance and return of money
bonds and other similar obligations (exclusive of obligations
for the payment of money borrowed or the obtaining of
advances of credit.)
6.7 Liabilities. SSI has no liabilities or obligations (direct
or indirect, absolute or contingent, matured or unmatured, asserted or
unasserted) of whatever nature, whether arising out of contract, tort,
statute, or otherwise other than those reflected on or reserved against
on the August 31, 1999 Balance Sheet and those incurred since August
31, 1999, incurred only in the ordinary course of business (excluding
from the meaning of "Ordinary course of business" for purposes of this
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agreement any tort liability or any liability arising out of a
violation of law or breach of a contractual or other obligation) and
recorded on the books of Summit other then those listed its financial
statements referenced in Section 6.5 above. Books & Records, The books
and records of Summit Silver, Inc. set forth in all respects the
transactions of Summit Silver, Inc. to which Summit Silver, Inc. is a
party or by which it or if properties are bound and such books and
records have been properly kept and maintained in accordance with
generally accepted accounting principles applied on a consistent basis,
where applicable, and otherwise in accordance with prudent business
practices.
6.8 Conformity with Law. SSI is not in material default under any
law or regulation or under any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over them which would
have a material adverse effect on their businesses, taken as a whole;
and except to the extent set forth in Schedule 6.8, there are no
claims, actions, suits or proceedings, pending or threatened, against
or affecting SSI or the SSI Subsidiaries at law or in equity, or before
or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having
jurisdiction over either of them and no notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received,
nor is SSI aware of any grounds for such claims, actions, suits or
proceedings, to materialize. SSI is not aware of any disgruntled
shareholders or any circumstances that would give rise to a shareholder
or shareholder class action lawsuit. SSI and the SSI Subsidiaries have
conducted and are conducting their businesses in substantial compliance
with the requirements, standards, criteria and conditions set forth in
applicable federal, state and local statutes, ordinances, permits,
licenses, orders, approvals, variances, rules and regulations and is
not in violation of any of the foregoing which might materially and
adversely affect the business, operations, affairs, prospects,
properties, assets, profits or condition (financial or otherwise) of
them, taken as a whole. ▇▇▇▇ has received no notice from any
shareholder or former shareholder asserting that ▇▇▇▇ or any Affiliate
("Affiliate" as used herein is used with the same meaning as under Rule
405 promulgated under the ▇▇▇▇ ▇▇▇) has violated or in any manner
failed to comply with any law or regulation, including without
limitation, federal or state securities laws and regulations
6.9 Taxes. SSI has filed with the appropriate governmental
authorities all tax and related returns required to be filed by it, and
such returns accurately reflect the taxes payable. All federal, state
local, county, franchise, sales, use, excise, property, and other taxes
which are due and payable have been duly paid; and no reserves for
unpaid taxes have been set up or are required on the basis of the facts
and in acceptance with generally accepted accounting principles, except
as may be specified and set forth in the SSI disclosure Schedule. There
are no unpaid assessments or proposed assessments of federal income
taxes pending against SSI and there are no federal, state, or local tax
audits pending or threatened. SSI has never filed consent under Section
341 (f) of the Internal Revenue Code. SSI has timely filed all
requisite federal and other tax returns for all fiscal periods, there
are no open years, examinations in progress or claims against them for
federal and other taxes (including penalties and interest) for any
period or periods and no notice of any claim, whether pending or
threatened, for taxes has been received.
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6.10 Absence of Charges Since the date of the SSI financial
statements, there has not been:
(a) any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business
of SSI;
(b) any damage, destruction or loss (whether or not covered
by insurance) materially adversely affecting the properties or
business of SSI;
(c) any declaration or payment of any dividend or
distribution in respect of the capital stock or any direct or
indirect redemption, purchase or other acquisition of any of the
capital stock of SSI;
6.11 Deposit Accounts: Powers of Attorney. SSI has delivered to
the Stockholders an accurate schedule as of the date of the Agreement,
of:
(a) The names of all banks and other financial institution
in which are depositories of the funds of ▇▇▇▇, the accounts
established at such depositories, the names of all persons
authorized to draw or sign checks or drafts upon the accounts
established in such depositories, the name of any depositories or
other organization in which ▇▇▇▇ has a safe deposit box and the
names of the persons having access thereto.
(b) All insurance coverage's, with policy description, and
coverage period the names in which the accounts are covered
(c) A list of each officer and employee of ▇▇▇▇ presently
receiving remuneration (including salary, commission, bonuses, and
any other form of compensations if any) and the rate of
remuneration and position for each person named. ▇▇▇▇ has no
obligation to pay to any person listed any remuneration In excess
of that shown.
SSI has delivered the name of each person, corporation, firm or other
entity holding a general or special power of attorney from SSI and a
description of the terms of such power.
6.12 Environmental Matters & Laws. All real property
presently or formerly owned or leased by Summit Silver. Inc. ("Company
Property") and the operations conducted thereon do not violate any
order or requirement of any court of the United States, the state,
county, city, and political subdivision in which Summit Property is
located or which exercises jurisdiction over any such Company Property
or any agency. department. commission, board, bureau or instrumentality
which exercises jurisdiction over any such Company Property
Governmental Authority") or any Environmental Laws (as hereinafter
defined) and there are no conditions existing on or resulting from
operations conducted on Summit Property that may give rise to any on-
site or off-site remedial obligations under any Environmental Laws.
Summit Property and the operations conducted by any prior owner or
operator of Summit Property, are not subject to any existing, pending,
or threatened action, suit, investigation, inquiry, or proceeding by
or before any court or Governmental Authority. All hazardous substances
or solid waste generated at Summit Property and shipped for disposal
has been transported, treated, stored, and
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disposed of only by persons and entities authorized to do so under
applicable Environmental Laws and only at treatment storage, and
disposal facilities maintaining authorizations under applicable
Environmental Laws, which persons, entities, and facilities have been
and are operating in compliance with such authorizations and are not
the subject of any existing, pending, or, to the knowledge of Sellers,
threatened action, investigations, or inquiry by any Governmental
Authority in connection with any Environmental Laws with respect to the
transportation, treatment storage and disposal of hazardous substances
or solid waste. No hazardous substances or solid wa5tv has been
dispo3ed of or otherwise released on Summit property except in
compliance with Environmental Laws, and there are no leaking above
ground or below ground storage tanks or containers on Summit Property
For purposes hereof, "Environmental Laws" means any and all laws,
statutes, ordinances, rules, regulations, orders, or determinations of
any Governmental Authority pertaining to healthy or the environment in
effect in any and all jurisdictions in which Summit Property is
located, including without limitation, the Clean Air Act, as amended,
the Comprehensive Environmental, Response, compensation, and Liability
Act of 1980 ("CERCLA") as amended, the, Federal Water Pollution Control
Act, as amended, the occupational Safety and Health Act of 1970, as
amended, The Resource Conservation and Recovery Act of 1976 ("RCRA")
as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and other environmental, conservation
or protection laws, The terms "hazardous substance" and "releaser (or
threatened release") have the meanings specified in CERCLA, and the
terms solid waste and disposal" (or "disposed") have the meanings
specified in RCRA; provided, however that (1) to the extent that laws
of the state in which Summit property is located established a meaning
for "hazardous substance", "release", "solid waste', or "disposal"
shall include all oil and gas exploration and production wastes that
may present an endangerment to public health or welfare or the
environment, even if such wastes are specifically exempt from
classification as hazardous substances or solid Wastes Pursuant to a
CERCLA or RCRA or the state analogues to those statutes. SSI has no
knowledge of any assertion by any governmental agency or other
regulatory authority of any environmental lien or action. SSI now owns
or controls no mining properties. SSI has provided ▇▇▇▇ an
environmental assessment produced by GeoEngineers, Inc, evaluating the
▇▇▇▇▇▇▇▇ Mine property which was formerly controlled by SSL Such report
is made a part herein as Schedule 6.12. Other than the evaluation
contained therein, SSI is unaware of any other environmental conditions
on any other mining properties it owned or controlled which would
require further environmental assessments being conducted.
6.13 Validity of Obligations. The execution and delivery of this
Agreement by the SSI and the performance of the transactions
contemplated herein have been duly and validly authorized by the )Board
of Directors of SSI, and this Agreement has been duly and validly
authorized by all necessary corporate action and is a legal, valid and
binding obligation of the SSI.
6.14 Relations with Government. SSI has not made, offered or
agreed to offer anything of value to any governmental official,
political party or candidate for government office nor has it otherwise
taken any action which would cause SSI to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended or any law of similar
effect,
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6.15 Disclosure. This Agreement and all other documents and
information furnished to the Stockholders and its representatives
pursuant hereto do not and will not include any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein not misleading. If SSI becomes aware of any fact or
circumstance which would change a representation or warranty of SSI in
this Agreement or any representation made on behalf of SSI, SSI shall
immediately give notice of such fact or circumstance to die
Stockholders. However, such notification shall not relieve SSI of its
obligations under this Agreement, and at the sole option of the
Stockholders, the truth and accuracy of any and all warranties and
representations of SSI at the date of this Agreement and at the
Closing, shall be a precondition to the consummation of this
transaction.
6.16 Employee Benefit Plans. SSI does not maintain or otherwise
have any liability (whether direct or indirect, actual or contingent)
in respect of any "employee pension benefit plan" (as such term is
defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or under any "employee welfare benefit
plan" [as such term is defined in Section 3(l) of ERISA).
6.17 Affiliations and Subsidiaries. SSI does not presently own,
of record or beneficially, or control, directly or indirectly, the
capital stock securities convertible into capital stock of any other
equity interest in any corporation, association or business entity. SSI
is not, directly or indirectly, a participant in any joint venture,
partnership or other non-corporate entity. Further, SSI does not own
any subsidiary corporations.
6.18 Predecessor Status, Etc. SSI has not owned any predecessor
companies SS) has never been a subsidiary or division of another
corporation nor been a part of an acquisition which was later
rescinded, other than as disclosed in Schedule 6.18 hereto.
6.19 Guaranties. There are no contracts or commitments by Summit
guaranteeing the payment or performance by others or whereby Summit is,
or will be, in any way liable with respect to the obligations of any
other person, firm, corporations, limited liability company,
partnership or other entity. Summit is not obligated as surety or
indemnitor under any surety or similar bond or other contract or
agreement.
6.20 Related Party Transactions: Summit is not a party to any
transactions with an officer, director, employee or shareholder or
their respective Affiliates.
6.21 No Claims. No shareholder, officer, director, or employee of
Summit or any of their respective Affiliates has any claims of any
nature against Summit, including without limitation any claim for
compensation for services or use of property. Summit is not aware of
any state of facts that would operate to prevent Summit from carrying
on its business in the manner in which it is being carried on or which
would render Summit subject to any liabilities or adversely affect any
of its assets.
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6.22 Improper Payments. Neither Summit or any Affiliate, officer,
or employee thereof has paid or caused to be paid, directly or
indirectly. in connection with the business of Summit any bribe,
kickback, or other similar payment to any domestic or foreign
government or agency thereof or any contribution to any political party
or candidate (other than from personal funds of officers or employees
not reimbursed by Summit.
6.23 Confidentiality. Each party agrees with respect to all
technical, commercial, and other information that is furnished or
disclosed by the other party, including, but not limited to,
information regarding each party's organization, personnel, business
activities, customers, subscribers, policies, assets, finances, costs,
sales, revenues, technology, riots, obligations, liabilities and
strategies ("the Corporate Information"), that, unless and until the
transactions contemplated hereby shall have been consummated:
a) such Corporate Information is confidential and or proprietary
to the. furnishing/disclosing party and entitled to and shall
receive treatment as such by the receiving party;
b) the receiving party will hold in confidence and not disclose
or use (except in respect of the transactions contemplated
hereby) any such Corporate Information, treating such
Corporate Information with the same degree of care and
confidentiality as it accords its own confidential and
proprietary information; provided, however, that the
receiving parry shall not have any restrictive obligations
with respect to any Corporate information within the
following categories:
(1) is contained in a printed publication available to the
general public without breach hereof by the receiving
party.
(2) Is or becomes publicly known through no wrongful act or
omission of the receiving party;
(3) Is known by the receiving party without any proprietary
restrictions by the furnishing disclosing party at the
time of receipt of such Corporate Information; or
(4) Disclosure is compelled by or court or other
governmental body
(5) All such Corporate information furnished to a party by
another, unless otherwise this Agreement is terminated,
shall be returned to it, together with any and all
copies made thereof, upon written request for such
return by it (except for documents submitted to a
governmental agency with the consent of the
furnishing/disclosing party or upon subpoena and that
cannot be retrieved with reasonable effort), and each
party shall confirm in writing to the other compliance
with any such request.
COVENANTS PRIOR TO CLOSING
7.1 Access and Cooperation: ▇▇▇▇. ▇▇▇▇ will afford to the officers
and authorized representatives of SSI access to all of ELSI's
properties, books and records and will furnish SSI with such additional
financial and operating data and other information as to the business
and properties of ▇▇▇▇ as SSI may from time to time reasonably request.
▇▇▇▇ will cooperate with SSI, its representatives, engineers, auditors
and counsel in the preparation of any documents or other material which
may be required in connection with any documents or materials required
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by any governmental agency. SSI will cause all information obtained in
connection with the negotiation and performance of this Agreement to
be treated as confidential in accordance with the provisions of Section
12 hereof.
7.2 Access and Cooperation: SSI. SSI will afford to the officers
and authorized representatives of ▇▇▇▇ access to all of SSIs
properties, books and records and will ▇▇▇▇▇▇▇ ▇▇▇▇ with such
additional financial and operating data and other information as to the
business and properties of SSI as ▇▇▇▇ may from time to time reasonably
request. SSI and stockholders will cooperate with ▇▇▇▇, its
representatives, engineers, auditors and counsel in the preparation of
any documents or other material which may be required in connection
with any documents or materials required by any governmental agency,
▇▇▇▇ will cause all information obtained in connection with the
negotiation and performance of this Agreement to be treated as
confidential in accordance with the provisions of Section 12 hereof.
7.3 Conduct of Business 5. UPON CLOSING OF ACQUISITION
Stockholders shall cause ▇▇▇▇ to:
(a) carry on its business in substantially the same manner
as they have heretofore and not introduce any material new method
of management, operation or accounting;
(b) maintain their respective properties and facilities,
including those held under leases, in as good working order and
condition as at present, ordinary wear and tear excepted;
(c) perform all of their respective material obligations
under agreements relating to or affecting their respective assets,
properties or rights;
(d) keep in full force and effect present insurance policies
or other comparable insurance coverage;
(e) use their beat efforts to maintain and preserve their
business organization intact retain their present employees and
maintain their respective relationships with suppliers, customers
and others having business relations with ▇▇▇▇ or SSI, as the case
may be;
(f) maintain compliance with all permits, laws, rules and
regulations, consent orders, etc.;
(g) maintain present debt and lease instruments and not
enter into new or amended debt or lease instruments, without the
knowledge and consent of all parties hereto; and
(h) maintain present salaries and commission levels for all
officers, directors, employees and agents
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS.
The obligations of the Stockholders hereunder are subject to the
following conditions.
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8.1 Representations and Warranties; Performance of Obligations.
The representations and warranties of SSI contained in Section 7 shall
be accurate as of the Closing Date as though such representations and
warranties had been made as of that time; and all of the terms,
covenants and conditions of this Agreement to be complied with and
performed by SSI an or before the Closing Date shall have been duty
complied with and performed.
8.2 No Litigation No claim, suit, action, or other proceeding will
be pending or, to the knowledge of any party hereto, threatened before
any court or governmental agency seeking to restrain, prohibit, or
obtain damages or other relief in connection with this agreement or the
consummation of the transactions contemplated hereby and, to the
knowledge of any party hereto, no investigation or inquiry will have
been made or commenced by any governmental agency in connection with
this agreement or transaction.
8.1 No Material Adverse Change No material adverse change in the
results of operations, financial condition or business of SSI and shall
have occurred, and SSI shall not have suffered any material loss or
damages to any of its properties or asset whether or not covered by
insurance, since the SSI Financial statements, which change, loss or
damage materially affects or impairs the ability of SSI to conduct its
business.
8.4 Counsel Approval All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and
all other related legal matters shall have been approved by, Christian,
Samson & ▇▇▇▇▇, P.C., counsel to the Stockholders. The consents of any
third parties whose consent may be required for the consummation of the
transactions contemplated hereby shall have been obtained.
8.5 Opinion of Counsel. The Stockholders shall have received an
opinion from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, counsel to SSI, dated the Closing Date.
in form and substance satisfactory to the Stockholders, to the effect
that:
(a) SSI has been duly organized and is validly existing in
good standing under the laws of the State of Idaho;
(b) this Agreement has been duly authorized, executed and
delivered red by SSI and constitutes a valid and binding agreement
of SSI enforceable in accordance with its terms except as such
enforceability may be subject to bankruptcy, moratorium,
insolvency, reorganization, arrangement and other similar laws
relating to or affecting the rights of creditors except as the
same may be subject to the effect of general principles of equity
and that no opinion need be expressed as to the enforceability of
indemnification provisions Included herein; and
(c) the shams of SSI Stock to be received by the Stockholders
on or after the Reverse Split Effective Date shall be duly
authorized, fully paid and non-assessable.
8.6 Elite shall have completed Elite's due diligence review of
Company, its assets and its liabilities, and the result thereof shall
be satisfactory to Elite in its sole discretion.
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9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SSI.
The obligations of SSI hereunder are, at its option, subject to
the satisfaction, on or prior to the Closing Date, of the following
conditions,
9.1 Representations and Warranties; Performance of Obligations.
Ile representations and warranties of the Stockholders and ▇▇▇▇
contained in this Agreement shall be true on and as of the Closing Date
with the same effect as though such representations and warranties had
been made on and as of such date and 411 of the agreements of the
Stockholders and ▇▇▇▇ shall have been performed.
9.2 No Litigation No action or proceeding before a court or any
other governmental agency or body shall have been instituted or
threatened to restrain or prohibit the acquisition by SSI of the ▇▇▇▇
Stock, and no governmental agency or body shall have taken any other
action or made any request of SSI as a result of which the management
of SSI deems it inadvisable to proceed with the transactions hereunder.
9.3 No Material Adverse Change No material adverse change in the
results of operations, financial condition or business of ▇▇▇▇ shall
have occurred, and ▇▇▇▇ shall not have suffered any material loss or
damages to my of its properties or assets, whether or not covered by
insurance, since the ▇▇▇▇ Balance Sheet Date, which change, lose or
damage materially affects or impairs the ability of ▇▇▇▇ to conduct its
business; and SSI shall have received a certificate signed by the
Stockholders dated the Closing Date to such effect.
9.4 Counsel Approval. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and
all other related legal matters shall have been approved by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, counsel to SSI
9.5 Opinion of Counsel. SSI shall have received an opinion from
▇▇▇▇▇ ▇. ▇▇▇▇, Attorney At Law, counsel to ▇▇▇▇ and the Stockholders,
dated the Closing Date, in form and substance satisfactory to SSI, to
the effect that:
(a) ▇▇▇▇ has been duly organized and is validly existing in
good standing under the laws of the state of Texas;
(b) this Agreement has been duly authorized, executed and
delivered by the Stockholders and constitutes a valid and binding
agreement of the Stockholders enforceable in accordance with its
terms except as such enforceability may be subject to bankruptcy,
moratorium, insolvency, reorganization, arrangement and other
similar laws relating to or affecting the rights of creditors
except as the same may be subject to the effect of general
principles of equity and that no opinion need be expressed as to
tile enforceability of indemnification provisions included herein:
and
(c) the shares of ▇▇▇▇ Stock to be received by SSI on or
about the Closing Date shall be duly authorized, fully paid and
non-assessable.
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10. INDEMNIFICATION.
10.1 Indemnification by the Stockholders. The Stockholders
covenants and agrees that it will indemnify, defend, protect and hold
harmless SSI and ▇▇▇▇ at all times from and after the date of this
Agreement until the Expiration Date from and against all claims,
damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation)
incurred by SSI in excess of Ten Thousand Dollars ($10,000) In the
aggregate as a result of or incident to any material breach of the
representations and warranties set forth in Section 5 of this Agreement
or Certificates attached pursuant thereto and any misrepresentations
or nonfulfillment of any agreement on the part of the Stockholders
under this Agreement.
10.2 Indemnification by SSI. SSI covenants and agrees that it
will indemnify and hold harmless the Stockholders at all times from and
after the date of this Agreement until the Expiration Date from and
against all claim, damages actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by ▇▇▇▇ in excess of Too Thousand Dollars
($10,000) in the aggregate as a result of or incident to any material
breach of the representations and warranties set forth in Section 6 of
this Agreement or on the schedules or certificates attached pursuant
thereto and any misrepresentations or non-fulfillment of any agreement
on the part of SSI under this Agreement. in addition, other
indemnification agreements relating to the ▇▇▇▇▇▇▇▇ Mine property are
contained in Schedule 10.2, and made a part of this section.
10.3 Third Person Claims. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has
knowledge of any claim by a person not a party to this Agreement
("Third Person") or the Commencement of any action or proceeding by a
Third Person, the Indemnified Party shall, as a condition precedent to
a claim with respect thereto being made against any party obligated to
provide indemnification pursuant to Sections 10.1 1 or 10.2, hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party
written notice of such claim or the commencement of such action or
proceeding, Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof, The Indemnifying
Party shall have right to defend and settle, at its own expense and by
its own counsel, any such matter so long as the Indemnifying Party
pursues the same in good faith and diligently. if the Indemnifying
Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party
shall cooperate with the Indemnifying Party and its counsel in the
defense thereof and in any settlement thereof. Such cooperation shall
include, but shall not be limited to, furnishing the Indemnifying Party
with any books, records or Information reasonably requested by the
Indemnifying Party that are in the Indemnified Party's possession or
control, Notwithstanding the foregoing, the Indemnified Party shall
have the right to participate in any matter through counsel of its own
choosing at its own expense (unless there is a conflict of interest
that prevents counsel for the indemnifying Party from representing
Indemnified Party, in which case the Indemnifying Party will reimburse
the Indemnified Party for the expenses of its counsel); provided that
the Indemnifying Party's counsel shall always be lead counsel and shall
determine all litigation and settlement steps, strategy and the like.
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After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability,
and for so long as the Indemnifying Party diligently pursues such
defense, the Indemnifying Party shall not be liable for any additional
legal expenses incurred by the Indemnified Party in connection with any
defense or settlement of such asserted liability, except to the extent
such participation is requested by the Indemnifying Party, in which
event the Indemnified Party shall be reimbursed by the Indemnifying
Party for reasonable additional legal expenses, out-of-pocket expenses
and allocable share of employee compensation incurred in connection
with such participation for any employee whose participation is so
requested. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the Indemnified
Party refuses to consent to such settlement, then the Indemnifying
Party's liability under this Section with respect to such Third Person
claim shall be limited to the amount so offered in settlement by said
Third Person and the Indemnified Party shall reimburse the Indemnifying
Party for any additional costs of defense which it subsequently incurs
with respect to such claim. If the Indemnifying Party does not
undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, or fails diligently to pursue
such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying
Party, and the Indemnified Party may settle such matter, and the
Indemnifying Party shall reimburse the Indemnified Party for the amount
paid in such settlement and any other liabilities or expenses incurred
by the Indemnified Party in connection therewith, provided, however,
that under no circumstances shall the Indemnified Party settle any
Third Person claim without the written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld,
10.4 Method of Payment All claims paid to the Indemnified Party
pursuant to this indemnity shall be paid in cash.
11. TERMINATION OF AGREEMENT.
No party shall be permitted to terminate hereunder if such parry
is in violation of this Agreement. To all other circumstances, whether
or not shareholder approval has been received, this Agreement may he
terminated at any time prior to the Closing date as follows:
a) By mutual consent of the Board of Directors of SSI or
▇▇▇▇; or
b) By either party, if any of the following circumstances
occur:
1) Any representation or warranty of or by the other party
contained herein shall have been incorrect of breached
in any material respect, its to which notice shall have
been given to such party, and shall not have been cured
or otherwise resolved to the reasonable satisfaction of
the other party on or before the Closing Date.
2) Except as provided in (5) below any condition to the
consummation of the transactions contemplated hereby
that must be fulfilled to its satisfaction has, in the
good faith judgement of its Board of Directors, become
impractical to be fulfilled.
3) Any permanent injunction or other order of a court or
other competent authority preventing the consummations
of the transactions contemplated hereby shall have
become final and not subject to appeal as against the
other party.
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4) All of the transactions contemplated hereby have net
become effective by January 1, 1999.
5) If any of the conditions in Section 6 are not fulfilled
as determined in the sole discretion of Elite Board of
Directors, Elite may terminate this Agreement.
SSI or the Stockholders may, by notice in the manner hereinafter
provided on or before the Closing Date, terminate this Agreement if a
material default shall be made by the other party in the observance or
in the due and timely performance of any of the covenants, agreements
or conditions contained herein, and the curing of such default shall
not have been made on or before the Closing Date and shall not
reasonably be expected to occur,
12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
12.1 Confidentiality Each party agrees with respect to all
technical, commercial, and other information that is furnished or
disclosed by the other party, including, but not limited to,
information regarding such party's organization, personnel, business
activities, customers, subscribers, policies, assets, finances, costs,
sales, revenues, technology, riots, obligations, liabilities and
strategies ("the Corporate Information"), that, unless and until the
transactions contemplated hereby shall have been consummated:
a) such Corporate Information is confidential and or
proprietary to the furnishing/disclosing party and entitled to and
shall receive treatment as such by the receiving party;
b) the receiving party will hold in confidence and not
disclose or use (except in respect of the transactions
contemplated hereby) any such Corporate information, treating such
Corporate Information with the same degree of care and
confidentiality as it accords its own confidential and proprietary
information; provided, however, that the receiving party shall not
have any restrictive obligations with respect to any Corporate
information within the following categories:
1) is contained in a printed publication available to
the general public without breach hereof by the receiving
party;
2) is or becomes publicly known through no wrongful act
or omission of the receiving party;
3) is known by the receiving party without any
proprietary restrictions by the furnishing/disclosing party
at the time of receipt of such Corporate Information; or
4) disclosure is compelled by or court or other
governmental body;
5) all such Corporate information furnished to a party
by another, unless otherwise this Agreement is terminated,
shall be returned to it, together with any and all copies
made thereof, upon written request for such return by it
(except for documents submitted to a governmental agency with
the consent of the furnishing/disclosing party or upon
subpoena and that cannot be retrieved with reasonable
effort), and each party shall confirm in writing to the other
compliance with any such request.
129
SSI recognizes and acknowledges that it has in the past, currently has,
and prior to the Closing Date, will have access to certain confidential
information of ▇▇▇▇. such as lists of operations of ▇▇▇▇ and ELSI's
respective businesses. SSI agrees that it will not disclose such
confidential information to any person, firm, corporation, association,
or other entity for any purpose or reason whatsoever, prior to the
Closing Date without the Stockholder's prior written consent. In the
event of a breach or threatened breach by SSI of the provisions of this
Section, the Stockholders shall be entitled to an injunction
restraining SSI from disclosing, in whole or in part, such confidential
information, Nothing contained herein shall be construed as prohibiting
the Stockholders from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages.
13. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON SSI STOCK.
13.1 Status of Stockholders. Stockholders hereby represents and
warrants to, and covenants with SSI regarding as follows:
(a) The undersigned Subscriber understands that the Company's
Shares of Common Stock have not been approved or disapproved by
the United States Securities and Exchange Commission, any state
securities agency; or any foreign securities agency;
(b) The undersigned Subscriber is not an underwriter and
would be acquiring the Company's shares of Common Stock solely for
investment for his or her own account and not with a view to, or
for, resale in connection with any distribution within the meaning
of any federal securities act, state securities act or any other
applicable federal or state laws;
(c) The undersigned Subscriber understands the speculative
nature and risks of investments associated with the Company, and
confirms that the shares of Common Stock would be suitable and
consistent with his or her investment program; that his or her
financial position enable him or her to bear the risks of this
investment; and, that there is no public market for the shares of
Common Stock subscribed for herein;
(d) The shares of Common Stock subscribed for herein may not
be transferred, encumbered, sold, hypothecated, or otherwise
disposed of, if such disposition will violate any federal and/or
state securities acts. Disposition shall include, but is not
limited to acts of selling, assigning, transferring, pledging,
encumbering hypothecating, giving, and any form of conveying,
whether voluntary or not, and may not be resold for a period of
one (1) year from the date of issuance;
(e) To the extent that any federal, and/or state securities
laws shall require, the Subscriber hereby agrees that any shares
of Common Stock acquired pursuant to this Agreement shall be
without preference as to assets;
(f) The Company is under no obligation to register or seek
an exemption under any federal securities act, state securities
act, or any foreign securities act for any shares of Common Stock
of the Company or to cause or permit such shares of Common Stock
to be transferred in the absence of any such registration or
exemption;
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(g) The Subscriber has had the opportunity to ask questions
of the Company and has received additional information from the
Company to the extent that the Company possessed such Information,
necessary to evaluate the merits and risks of any investment in
the Company. Further, the Subscriber has been given:
(1) All material books, records and financial statements
of the Company; (2) all material contracts and documents
relating to the proposed transaction; and, (1) an opportunity
to question the appropriate executive officers of the
Company.
(h) The Subscriber has satisfied the suitability standards
imposed by his or her applicable state laws and has a preexisting
personal and business relationship with the Company;
(i) The Subscriber has adequate means of providing for his
current needs and personal contingencies and has no need to sell
the shares of Common Stock in the foreseeable future (that is at
the time of the investment, Subscriber can afford to hold the
investment for an indefinite period of time);
(j) The Subscriber has sufficient knowledge and experience
in financial matters to evaluate the merits and risks of this
investment and further, the Subscriber is capable of reading and
interpreting financial statements; and/or
(k) The Subscriber acknowledges that if he/she/it is a
resident of the State of Florida, he/she/it has the privilege of
declaring this transaction null and void provide the Subscriber
communicates such intention to the Company in writing within three
(3) days of the of the tender of his/her/its consideration,
13.2 Status of SSI SSI has never been required to make any filings
of any type with the Securities and Exchange Commission or any state
securities agency except for Form D and similar state forms claiming
exemptions from registrations, all of which were timely filed. SSI has
provided Elite with true, correct, and complete copies of each such
filings.
14. GENERAL.
14.1 Cooperation. The Stockholders and SSI shall each deliver or
cause to be delivered to the other on the Closing Date, and at such
other times and places as shall be reasonably agreed to, such
additional instruments as the other may reasonably request for the
purpose of carrying out this Agreement. The Stockholders will cooperate
and use its best efforts to have the present officers, directors and
employees of ▇▇▇▇ cooperate with SSI on and after the Closing Date in
furnishing information, evidence, testimony and other assistance in
connection with any actions, proceedings, arrangements or disputes of
any nature with respect to matters pertaining to all periods prior to
the Closing Date.
14.2 Board of Directors After Closing. Immediately after the
Closing, the existing Board of Directors of SSI shall nominate to the
Board of Directors of SSI the following individuals and ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ shall resign from the SSI board:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ L, ▇▇▇▇▇▇
14.3 Successors and Assigns. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and
shall be binding upon and shall inure to the benefit of the parties
hereto, the successor of SSI and the Stockholders.
14.4 Agreement This Agreement (including the schedules and
Exhibits attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding between the
Stockholders, ▇▇▇▇, and SSI and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This
Agreement, upon execution, constitutes a valid and binding agreement
on the parties thereto enforceable in accordance with its terms and may
be modified or amended only by a written instrument executed by the
Stockholders, ▇▇▇▇, and SSI acting through their respective officers,
duly authorized by their respective Boards of Directors.
14.5 Counterparts This Agreement may be executed simultaneously
in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the
same instrument.
14.6 Brokers and Agents Each party represents and warrants that
it employed no broker, finder or agent in connection with this
transaction and agrees to indemnify the other against all loss, cost
damages or expense arising out of claims for fees or commission of
brokers employed or alleged to have been employed by such indemnifying
party
14.7 Expenses Each parry will be responsible for their own
expenses in connection with this Agreement
14.8 Notices. All notices of communication required or permitted
hereunder shall be in writing and may be given by depositing the same
in United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested,
overnight courier addressed to the party to be notified, postage
prepaid, or by delivering the same in person to an officer or agent of
such party.
(a) If to SSI, addressed to it at:
▇▇▇▇ ▇▇▇▇
Elite Logistics, iNC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(b) If to the Stockholders, addressed to it at:
▇▇▇▇▇▇ ▇▇▇▇▇
Elite Logistics Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
132
(c) If to ▇▇▇▇, addressed to it at:
▇▇▇▇▇▇ ▇▇▇▇▇
Elite Logistics Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
14.9 Governing Law. This Agreement shall be construed in
accordance with the laws of the state of Idaho and any action brought
hereunder shall be exclusively in the state or federal courts of the
state of Idaho.
14. 10 Survival of Representations and Warranties, The
representations, warranties, indemnities, covenants and agreements of
the parties made hereto contain in this Agreement and any related
documents, shall survive for a period of four (4) years after the
closing date. At the end of the survival period of the representations
and warranties herein, each party shall, without further actions, be
deemed to have fully released the other party from any and all
responsibility with respect to a breach of such representations and
warranties (including any obligation under the indemnification
provisions contained in Section 4.02 unless during such survival period
a party shall have given the other party notice of the nature and
reasonable particulars under the then existing circumstances of any
claimed breach. The obligations, covenants, and Agreements of each
party hereto contained In this Agreement and any related documents
shall survive the Closing. The representation, warranties, obligations,
covenants, indemnities and agreements shall not be affected by, and
shall remain in full force and effect notwithstanding, any
Investigations at any time made by or on behalf of either party or any
information which either party may have with respect thereto.
14.11.1 Exercise of Rights and Remedies. Each party hereto
acknowledges that the remedy at law for any breach by a party of
its obligations under this Section is inadequate and that the
other parties shall be entitled to equitable remedies, including
injunctive relief, in the event of breach by any other party.
14.11.2 Each party hereto shall jointly and severally
indemnify and hold the other party harmless from and against and
promptly reimburse such other party for, any and all loss,
expense, damage, deficiency, liability or obligation. including
investigative and settlement cost, and attorney's fees, arising
out of or in connection with any breach of representation or
warranty contained herein or in any certificate delivered pursuant
hereto, regardless of whether any such other party relied upon the
truth of such representation or warranty or had any knowledge of
any breach thereof.
14.11.3 Upon receipt by a party ("Claimant") of notice of any
situation, event or occurrence that might give rise to a claim for
indemnification of or against the other party pursuant to this
Section 14.10.2, Claimant shall give prompt written notice thereof
to the other party, indicating the nature of such indemnification.
Failure to give any notice provided under this Section shall in
no way be deemed a forfeiture of any rights of Claimant to be
indemnified hereunder. A claim for indemnity may, at the option
of the Claimant, be asserted as soon as any situation, event or
occurrence has been noticed by Claimant, regardless of whether
actual harm has been suffered or out of pocket expenses incurred
133
14.12 Except as otherwise provided herein, no delay of or omission
in the exercise of any right, power or remedy accruing to any party as
a result of any breach or default by any other parry under this
Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall
any waiver of any single breach or default be deemed a waiver of any
other breach or default occurring before or after that waiver.
14.13 Time. Time is of the essence of this Agreement.
14.14 Reformation and Severability, In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid. legal and
enforceable but so as to most nearly retain the intent of the parties,
and if such modification is not possible, such provision shall be
severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the 17th day of November, 1999.
SSI:
ATTEST: ELITE LOGISTICS, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇
/s/ illegible BY: ▇▇▇▇ ▇. ▇▇▇▇
Title: President
▇▇▇▇:
ATTEST: ELITE LOGISTICS SERVICES, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ BY: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
134
Addendum to that certain agreement titled "Acquisition
Agreement" between Elite Logistics Services, Inc., and Elite
Logistics, Inc. signed on November 17, 1999.
The following changes to the subject agreement are hereby adopted
by the parties and incorporated into and made part of the subject
agreement:
First, the introductory paragraph is hereby amended to read as
follows:
"THIS ACQUISTION AGREEMENT (the "Agreement') is made as of this
17", day of November, 1999, (the "Closing Date") by and among
Elite Logistics, Inc. (formerly "Summit Silver, Inc. "), an Idaho
corporation (hereinafter referred to as "SSI") and Elite Logistics
Services, Inc., a Texas corporation (hereinafter referred to as
"▇▇▇▇"):
Second, in any sections of the agreement referring to liabilities
of or representations of ▇▇▇▇ stockholders, or in sections requiring
indemnification of one or more parties by the ▇▇▇▇ stockholders, the
parties hereby agree that the minor shareholders listed below are
hereby exempt from and are not to be bound by such representations,
warranties, indemnification provisions, or other obligations (other
than their obligation under Section 3 and Section 10.1 of the
agreement to make good deliver of unencumbered shares of ▇▇▇▇ if they
choose to exchange such shares) and such minor shareholders are not
subject to any future liability or already accrued liability which may
result or have already resulted by the execution of said agreement;
Minor Shareholder # Shares Held
Kokopelli Developments, L.L.C. 80,000
▇▇▇▇▇▇ Investments, L.P. 80,000
▇▇▇▇▇▇ ▇▇▇▇ 40,000
▇▇▇▇ ▇▇▇▇ 40,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 40,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 40,000
Arrow Manufacturing, Inc. 40,000
Third, the Section 8.4 is changed to read as follows:
Counsel Approval All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other
related legal matters shall have been approved by ▇▇▇▇▇ ▇. ▇▇▇▇,
counsel to ▇▇▇▇. The consents of any third parties whose consent may
be required for the consummation of the transactions contemplated
hereby shall have been obtained
Fourth, add to Section 13 the following definitions which are
hereby adopted and to be applied throughout Section 13, Company or
Company's: refers to and is the party Elite Logistics, Inc. an Idaho
Corporation,
Subscriber: refers to and is each and every stockholder listed
herein in Section L I ofthis agreement who exchanges subject ▇▇▇▇
shares for the shares of Elite Logistics, Inc. ( "SSI")
Fifth, and there are no other changes, additions, or deletions at
this time.
135
IN WITNESS WHEREOF, the parties hereto have adopted and executed
this Addendum to the Acquisition Agreement as of the 2nd day of
December, 1999,
SSI:
ATTEST: ELITE LOGISTICS, INC.
BY: /s/ ▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇,
Title: President
▇▇▇▇:
ATTEST: ELITE LOGISTICS SERVICES INC.
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ illegible ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
