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EXHIBIT 2
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UNICORP INC.
AND
THE LAISSEZ-FAIRE GROUP, INC.
AGREEMENT AND PLAN
OF REORGANIZATION
DATED DECEMBER 15, 1997
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INDEX
Page
Exchange of Shares 3
Delivery of Shares 3
Representations and Warranties of Acquired and Stockholders 4
Representations and Warranties of Acquirer 7
Affirmative Covenants of Acquired and Stockholders 9
Closing 10
Conditions Precedent to Obligations of Acquired and Stockholders 10
Conditions Precedent to Obligations of Acquirer 12
Indemnification 13
Nature of Representations and Warranties 13
Documents at Closing 14
Miscellaneous 14
EXHIBITS
A. Shares Owned by Stockholders and Shares to be Received in Exchange
B. Acquired financial statement at December 31, 1997
C. Articles and By-Laws of Acquirer
D. Acquirer's Bank Accounts
E. Nominees for Election to Acquirer's Board of Directors
F. Form of Investment Letter
SCHEDULES
I. AS TO ACQUIRED
1. Material Agreements
2. Licenses, Trademarks, Trade Names, Etc.
3. Acquired Capitalization
II. AS TO ACQUIRER
4. Litigation Liabilities of Acquirer not Disclosed in Statements
5. Material Agreements
6. Exceptions to Compliance with Laws and Regulations
7. Issuance of Securities not reflected in the Statement
8. Acquirer's Expenses
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made and entered
into this 15th day of December, 1997, by and among Unicorp, Inc., a Nevada
corporation (hereinafter referred to as "Acquirer"), The Laissez-Faire Group,
Inc., a Texas corporation hereafter referred to as "Acquired") and L. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ (hereinafter collectively referred to as the "Stockholders").
RECITALS:
The Stockholders own all of the issued and outstanding shares of Acquired
common stock. Acquirer desires to acquire all of the issued and outstanding
common stock of Acquired, making Acquired a wholly-owned subsidiary of
Acquirer, and Stockholders desire to exchange all of their shares of Acquired
common stock for shares of Acquirer's issued and outstanding common stock. It
is the intention of the parties hereto that: (i) Acquirer shall acquire all of
the issued and outstanding common stock of Acquired in exchange solely for the
number of shares of Acquirer's authorized but unissued common stock set forth
below (the "Exchange"); (ii) the Exchange shall qualify as a tax-free
reorganization under Section 368(a)(1)(b) of the Internal Revenue Code of 1986,
as amended, and related sections thereunder; and (iii) the Exchange qualify as
a transaction in securities exempt from registration of qualification under the
Securities act of 1933, as amended, and under the applicable securities laws of
each state or jurisdiction where the Stockholders reside.
NOW THEREFORE, for the mutual consideration set out herein, the parties hereto
agree as follows:
1. EXCHANGE OF SHARES
Acquirer and Stockholders agree that on the Closing Date (as hereinafter
defined) Stockholders will exchange all of the issued and outstanding shares of
the common stock of Acquired 530,000 Class C shares presently outstanding) for
530,000 shares of Class C common (the "Shares") of Acquirer's stock $.01 par
value per shares (Class C Common Stock"). The number of Shares of Acquired
common stock owned by each Stockholder and the number of shares of Acquirer's
common stock which each will receive in the Exchange is set forth in Exhibit
"A", which is attached hereto and made a part hereof.
2. DELIVERY OF SHARES
On the Closing Date, Stockholders will deliver to Acquirer the certificates
presenting all of the outstanding shares of Acquired common stock, duly
endorsed (or with duly executed stock powers) so as to make Acquirer the sole
owner thereof, free and clear of all claims and encumbrances. Simultaneously,
on the Closing Date, Acquirer will deliver the certificates representing the
Shares to the Stockholders. The Exchange shall not be effected unless all of
Acquired Stockholders execute this Agreement and all shares of Acquired
outstanding common stock are delivered to Acquirer on the Closing Date.
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3. REPRESENTATIONS AND WARRANTIES OF ACQUIRED AND STOCKHOLDERS
The Acquired and the Stockholders, jointly and severally, as a material
inducement to Acquirer to enter into this Agreement and consummate the
transactions contemplated hereby, make the following representations and
warranties to Acquirer, which representations and warranties are true and
correct at this date, and will be true and correct in all material respect on
the Closing Date:
3(a) SECURITIES HOLDERS. The Stockholders listed on Exhibit "A" are the
owners, of record and beneficially, of all of the issued and outstanding shares
of Acquired common stock.
3(b) FINANCIAL STATEMENTS. Exhibit "B" which will be inserted into this
Agreement at the Closing, will contain copies of unaudited Financial Statements
of Acquired at December 31, 1997 including balance sheets, income statements
(the Financial Statements").
The Financial Statements will fairly present the consolidated financial
condition of Acquired as of the date thereof and the consolidated results of
its operations for the periods covered. The Financial Statements will have
been prepared in accordance with generally accepted accounting principles,
consistently applied, except as otherwise state therein.
3(c) UNDISCLOSED LIABILITIES. At the Closing Date Acquired: (i) will have no
liabilities or obligations of any nature, fixed or contingent, matured or
unmatured, which are not shown or otherwise provided for in the Financial
Statements except for liabilities and obligations arising in the ordinary
course of business, none of which is materially adverse, and (ii) all reserves
established by Acquired and set forth in the Financial Statements will be
adequate and there will be no material loss contingencies (as such term is used
in Statement of Financial Account Standard No. 5 of the Financial Accounting
Standards Board) which are not adequately provided for.
3(d) ABSENCE OF CHANGES. Since the date of the Financial Statements, Acquired
business has been operated in the ordinary course and there has not been (i)
Any material adverse change in the condition (financial or otherwise), assets,
liabilities, earnings, net worth, business or prospects of Acquired for such
period, in the aggregate, or at any time during such period: (ii) Any damage,
destruction of loss (whether or not covered by insurance) materially adversely
affecting the Acquired or its businesses; (iii) Any declaration setting aside,
or payment of any dividend or other distribution in respect of any shares of
Acquired, or any direct or indirect redemption, purchase or other acquisition
of such stock: (iv) Any issuance or sale by Acquired or agreement to sell any
of its securities; or (v) Any statute, rule, regulation or order adopted
(including orders of regulatory authorities with jurisdiction over Acquired or
its Business) which materially adversely affects Acquired or its business.
3(e) LITIGATION, ETC. There are no actions, suits, claims, investigations or
legal or administrative or arbitration proceedings pending or threatened
against Acquired, its assets or business, whether at law or in equity, or
before or by any federal, state municipal, local, foreign or other government
department, commission, board, bureau, agency or instrumentality; nor does the
Acquired know of a threat of such litigation or any basis for any such action,
suit, claim, investigation or proceeding.
3(f) COMPLIANCE, GOVERNMENTAL AUTHORIZATIONS. Acquired has complied with all
Federal, state, local, or foreign laws, ordinances, regulations and orders
applicable to its business, including without
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limitation, federal and state securities laws which if not complied with would
materially and adversely affect the business of Acquired. Acquired has all
federal, state, local and foreign governmental licenses and permits necessary
in the conduct of its business, and such licenses and permits are in full force
and effect, and Acquired knows of no violations of any suit licenses or
permits, and no proceedings are pending or threatened to revoke or limit the
use of such license and permits.
3(g) DUE ORGANIZATION, ETC. Acquired is a corporation's duly organized,
validly existing and in good standing under the laws of the State of Texas and
is qualified to do business and in good standing in each state where it is
required to be so qualified and such qualification is material to its business.
Acquired has the power to own its properties and assets and to carry on its
business as now presently conducted.
3(h) TAX MATTERS. Acquire has filed all federal, state and local tax or
related return and reports due or required to be filed, which reports
accurately reflect in all material respect the amount of taxes due. Acquired
has paid all amounts of taxes or assessments which would be delinquent if not
paid as of the date of this agreement, other than taxes or charges being
contested in good faith or not yet finally determined.
3(i) AGREEMENTS, ETC. Schedule 1 contains a true and complete list and brief
description of all written or oral contracts, agreements, mortgages,
obligations, understandings, arrangements, restrictions and other instruments
to which Acquired is party or by which Acquired or its assets may be bound.
True and Correct copies of all items set forth on Schedule 1 have been or will
be made available to Acquirer prior to Closing. No event has occurred which
(whether with or without notice lapse of time or the happening or occurrence of
any other event) would constitute a default under any of the agreements set
forth in Schedule 1.
3(j) TITLE TO PROPERTY AND RELATED MATTERS. Acquired has good and marketable
title fee and clear of any liens of encumbrances to all the properties,
interest in properties and assets real personal and mixed, reflected as being
owned by it on the Financial Statements or acquired by it after the date of the
Financial Statements, of any kind or character, there are no liens for current
taxes not yet delinquent. Except for matters, which may arise in the ordinary
course of business, the Acquired assets are in good operating condition and
repair. To the best of knowledge of the Acquired, there does not exist any
condition, which materially interferes with the use thereof in the ordinary
course of Acquired business.
3(k) CORPORATE RECORDS. The corporate records, minute books, and other
documents and records of Acquired are complete and correct. Acquirer shall
have the right to review all corporate records of Acquired prior to the Closing
Date.
3(l) LICENSES, TRADEMARKS, TRADE NAMES, ETC. There is no pending or threatened
claim or litigation against Acquired contesting the right to use any of the
trademarks, trade names and know how or validity of any of the licenses,
copyrights and patents or asserting the misuse of any thereof, nor has there
ever been any such claim or litigation.
3(m) AUTHORIZATION BY THE ACQUIRED. This Agreement constitutes a valid and
binding agreement of the Acquired, enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, and
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other similar laws relating to limiting or affecting the enforcement of
creditors, rights generally; and neither the execution and delivery of this
Agreement nor the consummation by the Aquiree of the transaction contemplated
hereby, nor compliance with any of the provisions hereof, will violate any
statue, law rule or regulation or any order writ, injunction or decree of any
court or governmental authority or violate or conflict with other constitute a
default under (or give rise to any right of termination, cancellation or
acceleration under) the terms or conditions or provisions of any note, bond,
lease mortgage, obligation agreement, understanding, arrangement or restriction
of any kind to which Acquired is a party or by which Acquired or its properties
may be bound. No consent or approval of any governmental authority is required
in connection with the execution and delivery by the Acquired of this Agreement
or the consummation of the transactions contemplated hereby.
3(n) CORPORATE AUTHORIZATIONS. Acquired is authorized to enter into this
Agreement and have taken all corporate action necessary to authorize the
execution of this Agreement and consummation of the transactions contemplated
herein. The execution, delivery and performance of this Agreement by Acquired
will not be in conflict with or constitute a default under any provisions of
applicable law, Acquired Article of Incorporation or By-Laws, or any agreement
or instrument to which the Acquired is a party or by which it its assets are
bound.
3(o) CAPITALIZATION. The authorized capitalization of Acquired is as set forth
in Schedule 2. Except as set forth in said Schedule 2, there are no
outstanding or presently authorized securities, warrants, preemptive rights,
subscription rights, options or related commitments of any nature to issue any
of Acquired securities which are not reflected in the Financial Statement or in
Schedule 2.
3(p) FULL DISCLOSURE. Acquired has, and at the Closing Date will have,
disclosed to Acquirer all events, conditions and facts materially affecting the
business and prospects of Acquired; and the Acquired has not and will not have,
at the Closing Date, withheld disclosure of any events, conditions and facts
which it may have knowledge of, or have reasonable grounds to know, may
materially, adversely affect the business and prospects of Acquired.
3(q) BROKERAGE FEES. The Acquired has not incurred, nor will it incur any
liability for brokerage or finder's fee or similar charges in connection with
this Agreement or any of the transactions contemplated hereby.
3(r) EMPLOYMENT AGREEMENTS. Acquired has entered into employment agreements
("Employment Agreements") with Messrs. L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, and contains
such terms as are consistent with the terms of his employment prior to the date
hereof. True and correct copies of the Employment Agreement have been or will
be made available to Acquirer prior to Closing.
3(s) SHARE OWNERSHIP. The shares of Acquired common stock to be exchanged for
the Shares in the Exchange are owned of record and beneficially, by the
respective stockholders of Acquired as specified on Exhibit "A", free and clear
of all liens and encumbrances of any kind and nature and have not been sold,
pledged, assigned or otherwise transferred except pursuant to this Agreement.
3(t) AUTHORITY TO ENTER INTO AGREEMENT. Each Stockholder has the full right,
power and authority to execute and deliver this Agreement. And perform its
obligations hereunder.
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3(u) OBLIGATION. This Agreement constitutes a valid and legally binding
obligation of each Stockholder, and neither the execution of this Agreement,
nor the consummation of the transactions contemplated hereby, will constitute a
violation of or default under, or conflict with, any judgment, decree, statue
or regulation of any governmental authority applicable to such Stockholder or
any contract, commitment, agreement or restriction of any kind to which such
Stockholder is a party or by which it or its assets are bound. The execution
and delivery of this Agreement does not, and the consummation of the
transactions described herein will not, violate applicable law, or any
mortgage, lien, agreement, indenture, lease or understanding (whether oral or
written) of any kind outstanding relative to such Stockholder.
3(v) APPROVALS REQUIRED. No approval, authorization, consent, order or other
action of, or filing with any person, firm or corporation of any court,
administrative agency or other governmental authority is required in connection
with the execution and delivery by the Stockholders of this Agreement or the
consummation of the transaction described herein, except as disclosed herein
an, except to the extend that the parties are required to file reports in
accordance with relevant regulations under Federal and state securities laws.
4. REPRESENTATIONS AND WARRANTIES OF ACQUIRER
Acquirer, as a material inducement to Acquired and Stockholders to
enter into this Agreement and Consummate the transactions contemplated hereby,
makes the following representations and warranties go Acquired and
Stockholders, which representations are true and correct at this date, and will
be true and correct on the Closing Date as though made on as of such date:
4(a) SHARES OF COMMON STOCK. The Shares to be delivered to the
Stockholders at Closing will be valid and legally issued shares of Common
Stock, free and clear of all liens, encumbrances, and preemptive rights, and
will be fully paid on non assessable shares.
4(b) DUE AUTHORIZATION, ETC. This Agreement has been duly authorized,
executed and delivered by Acquirer, and constitutes a legal, valid, and binding
obligation no consent or other governmental authority is required by Acquirer
for the execution, delivery or performance of this Agreement by Acquirer; no
consent of any party to any contrary or agreement to which Acquirer is a party
of by which any of its property or assets are subject is required for the
execution, delivery prior performance of this Agreement by "Acquirer.
4(c) FINANCIAL STATEMENTS. Acquirer has delivered to Acquired its
unaudited financial statements at December 31, 1997 (the "Statements"), The
Statements and accurately reflect the financial condition of the Acquirer as of
the dates thereof and the results of operations for the periods reflected
therein. The Statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, except as otherwise state
therein; and the books and records, financial and others, of Acquirer are in
all material respects complete and correct and have been maintained in
accordance with good business and accounting practices.
4(d) FINANCIAL STATEMENTS. Undisclosed Liabilities. Except as set
forth in Schedule 3, Acquirer: (i) has no material liabilities or obligations
of any nature, fixed or contingent, matured or unmatured, which are not shown
or otherwise provided for in the Statements; and (ii) all reserves
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established by Acquirer and set forth in the Statements are adequate and there
are no material loss contingencies (as such term is used in Statement of
Financial Accounting Standard No. 5 of the Financial Accounting Standards
Board) which are not adequately provided for.
4(e) MATERIAL ADVERSE CHANGE. Since the date of the Statements, there
has not been, and as of the Closing Date there shall not have been, any
material changes in the Acquirer's condition (financial or otherwise) or
liabilities (absolute, contingent or otherwise), whether or not arising from
transitions in the ordinary course of business; provided however, that the
parties have agreed that the financial position of Acquirer will change to the
extent that Acquirer incurs costs in connections with the transactions
contemplated by this Agreement.
4(f) LITIGATION, ETC. There are no actions, suits, claims,
investigations or legal or administrative or arbitration proceedings pending or
threatened against Acquirer, its assets or business, whether at law or in
equity, or before or by any Federal, state municipal, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality;
nor does the Acquirer know or have any reason to know of a threat of such
litigation or any basis for any such action suit, claim, investigation or
proceedings.
4(g) DUE ORGANIZATION, ETC. Acquirer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada, is
qualified to do business and in good standing in each state where it is
required to be qualified and such qualification is material and has the
corporate power to own its property and to carry on its business as now being
conducted. The Articles of Incorporation and By-Laws of Acquirer, as will be
in effect on the Closing Date, are attached hereto as Exhibit "C" and are made
a part hereof.
4(h) TAX MATTERS. Acquirer has filed all Federal, state and local,
tax or related returns and report due or required to be filed, which reports
accurately reflect in all material respects the amount of taxes due Acquirer
has paid all taxes or assessments which have become due other than taxes or
charges being contested in good faith or not finally determined
4(i) AGREEMENTS, ETC. Acquirer has not breached, nor is there any
pending or threatened claims or any legal basis for a claim that Acquirer has
breached, nor has an event occurred which with the passing of time would
constitute a breach of any of the terms or conditions of any agreements,
contracts or commitments to which Acquirer is a party or by which Acquirer or
its assets are bound. A list of all Acquirer/s material contracts, agreements
or commitments (whether oral or written) is set forth on Schedule 2 and true
and correct copies of all such contracts and agreements have been delivered by
Acquirer to Acquired on or prior to the Closing Date. The execution, delivery
and performance of this Agreement by Acquirer will not be in conflict with or
constitute a default under any provisions of applicable law, Acquirer's
Articles of Incorporation or By-Laws, or any agreement or instrument to which
Acquirer is a party or by which it or its assets are bound.
4(j) CAPITALIZATION. The capitalization of Acquirer consists of
50,000,000 authorized common stock, $.001 par value per share, 16,377,951
outstanding. Unicorp will perform a 273 to 1 reverse spit and amend it Articles
of Incorporation to authorized common stock of 100,000,000 Class A shares $.01
par value per share, 50,000,000 Class B shares $.01 par value per share,
10,000,000 Class C shares $.01 par value per share and 25,000,000 Prefer shares
$100.00 par value per share of which
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530,000 Class C and approximately 60,000 Class A will be outstanding on the
Closing Date. All outstanding shares of the Common Stock have been duly
authorized, validity issued, and are full-paid and non-assessable, and all such
shares were issued in complacence with all applicable federal and state
securities laws. There are not outstanding or presently authorized securities,
warrants, preemptive rights, subscription rights, options or related
commitments of any nature to issue any of Acquirer's securities, other than
those stated in the Articles of Incorporation.
4(k) DISCLOSURE OF MATERIAL FACTS. Acquirer has, and at the Closing
Date will have, disclosed to Acquired all events, conditions and facts
materially affecting the business and prospects of Acquirer; and Acquirer has
not and will not have, at the Closing Date, withheld disclosure of any events,
conditions and facts which it may have knowledge of, or have reasonable grounds
to know may materially, adversely affect the business and prospects of
Acquirer.
4(l) CORPORATE RECORDS. The corporate financial records, minute books
and other documents and records of Acquirer are to be available to Acquired
prior to the Closing Date and turned over to new management in their entirety
at Closing. Such records are complete and correct and have been maintained in
accordance with good business and accounting practices.
4(m) STOCKHOLDERS LIST. Attached is Exhibit "D" is a true correct and
complete statement dated not more than 10 days prior to the date of this
Agreement, setting forth the names and addresses of Acquirer's stockholders.
4(n) TITLE TO ASSETS. Acquirer has good and marketable title to all
of its assets, free of any liens and encumbrances.
4(o) BANK ACCOUNTS. Exhibit "E" contains a complete list of all bank
accounts and safe deposit boxes of Acquirer together with the name of
authorized signatories over such accounts and boxes.
4(p) COMPLIANCE, GOVERNMENTAL AUTHORIZATIONS Acquirer has coupled in
all respects with all Federal state, local, or foreign laws ordinances
regulations, and orders applicable to its business including without limitation
federal and state securities laws applicable to all offerings prior to the
Closing Date. Acquirer has all Federal, state, local and federal governmental
licenses and permits material to and necessary in the conduct of its business,
and such licenses and permits are in full force and effect and no violations
are or have been recorded in respect of any such licenses of permits, and no
proceedings are pending or threatened to revoke or limit the use of such
permits.
4(q) BROKERAGE FEES. The Acquirer has not incurred, nor will it incur
any liability for brokerage or finder's fees or similar charges in connection
with this Agreement or any of the transactions contemplated hereby.
5. AFFIRMATIVE COVENANTS OF ACQUIRED AND STOCKHOLDERS
Acquired and Stockholders, jointly and severally covenant to Acquirer
(and its stockholders) that:
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5(a) They will comply with all of the undertakings of Acquirer set
forth in the Acquirer's Registration Statement as amended, including without
limitation, (I) causing Acquirer to use its best Efforts to register or
qualify, or maintain in effect the registration or qualification of, the shares
of Acquirer's common stock, delivered upon expense of the Acquirer's
outstanding warrants: (ii) causing the Acquirer to make all filings required
under Section 13 and 15(d) of the Securities Exchange Act of 1934, as amended;
(iii) preparing and filing of a Form 10-K for fiscal year ended December, 31,
1997;(iv) filing of a Current Report on Form 8-K reporting the completion of
the transactions contemplated by this Agreement (which includes the financial
statements of Acquired required to be included therein); and 5(v) they will
cause the Acquirer to file a Report of Sales of Securities and Use of Proceeds
thereunder pursuant to Rule 463 (Form SR) reporting the use of the proceeds
from the Acquirer's public offering;
5(b) They will use their best efforts within 90 days of Acquirer's
eligibility for listing with the NASD Automated Quotation System to cause the
Acquirer to file such forms with the National Association of Securities
Dealers, Inc. ("NASD") as are necessary to effect the quotation of Acquirer's
securities on the NASD Automated Quotation System;
5(c) They will deliver to Acquirer's former management the Form 8-K to
be filed to report the completion of this transaction so that Acquirer's former
management can review the descriptions contained therein of Acquirer and the
terms of the transactions contemplated by this Agreement;
5(d) They will deliver to Acquirer's former management, with a copy to
its counsel (at the addresses set forth herein), all reports, registration
statements and other documents, other than e exhibits, as filed with the SEC
and the NASD during the three year period commencing on the Closing Date; and
6. CLOSING
The Closing (the "Closing") shall take place upon such date (the
Closing Date") as the parties hereto may mutual agree upon, but shall be no
later than December 31, 1997. The closing shall take place at such place as
may be mutually agreed upon by the parties.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED AND STOCKHOLDERS
All obligations of Acquired and stockholders under this Agreement are
subject to the fulfillment, prior to or on the Closing Date of each of the
following conditions:
7(a) The representation and warranties by or on behalf of Acquirer
contained in this Agreement or in any certificate or document delivered to
Acquired pursuant to this provisions hereof shall be true in all material
respects at and as of the time of losing as though such representations and
warranties were made at and as of such time.
7(b) Acquirer shall have performed and complied with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by its prior to or at the Closing:
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7(c) The present Directors of Acquirer shall have caused the
appointment of all of Acquired nominees to the Board of Directors of Acquirer
as directed by Acquired and will make arranged for the resignation of the
existing officers and directors of Acquirer. The directors designated by
Acquired for appointment are set forth on Exhibit "F".
7(d) On the Closing Date, Acquirer shall have no liabilities or
obligations, fixed or contingent.
7(e) All instruments and documents delivered to Acquired and
Stockholders pursuant to the provisions hereof shall be reasonably satisfactory
to legal counsel for Acquired and Stockholders.
7(f) Acquirer shall have delivered to Acquired and Stockholders an
opinion of Aquiror's counsel, dated the Closing Date to the effect that:
(1) Acquirer is a corporation duly organized valid existing
and in good standing under the laws of the State of Nevada.
(2) Acquirer has the corporate power to carry on its business
as now being conducted.
(3) This agreement has been duly authorized, executed and
delivered by Acquirer and is a valid and binding obligation of
Acquirer, enforceable in accordance with its terms, except to the
extent that enforcement is limited by applicable bankruptcy,
reorganization, insolvency, moratorium, or similar laws affecting
creditor' rights and remedies generally or by general equity
principles (and excepting specific performance as a remedy);
Acquirer has taken all corporate action necessary for its due
performance under this Agreement.
The execution and delivery by Acquirer of this Agreement an
the consummation of the transactions contemplated here by will not
conflict with or result in a breach of any provisions of Acquirer's
Articles of Incorporation or By-Laws or to the best of such counsel's
knowledge after inquiry and based upon information provided by
Acquirer, constitute a default under or give rise to a right of
termination, acceleration, or cancellation under any agreement under
which Acquirer or any of its properties are bound or violate any court
order, writ or decree of injunction applicable to Acquirer;
Such counsel does not know, after inquiry, of (a) actions
suits or other legal proceedings or investigations pending or
threatened against or relating to or materially adversely affecting
Acquirer; and (b) any unsatisfied judgment against Acquirer.
(7) The Authorized and, to such counsel's best knowledge after
inquiry, outstanding capitalization of Acquirer is as set forth in
Section 4(i) all of the outstanding shares of Acquirer's common stock
are validly issued, full-paid and non-assessable, without preemptive
rights, and to the best counsel's knowledge after inquiry, there are
no outstanding subscriptions, options, rights, warrants or other
transfer agreements (whether oral or written), other than as set forth
in Section 4(j) of this Agreement.
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7(g) There shall be delivered to the Stockholders an officer's certificate,
signed by ▇▇▇▇▇ Schullee, President and, Secretary, to the effect that all of
the representations and warranties of the Acquirer set forth herein are true
and complete in all material respects as of the closing date, and that the
Acquirer has complied in all material respects with its covenants and
agreements set forth here required to be complied with by the closing.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRER
All obligations of Acquirer under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions:
8(a) The representations and warranties by Acquired and Stockholders contained
in this Agreement or in any certificate or document delivered to Acquirer
pursuant to the provision hereof shall be true and all material respects at and
as of the time of Closing as though such representations and warranties were
made at and as of such time.
8(b) Acquired and Stockholders shall have performed and copied with all
covenants agreements, and conduits required by this Agreement to be performed
or complied with by it prior to or at the Closing;
8(c) Each of the Stockholders shall have delivered to Acquirer an "investment
letter" in the for attached as Exhibit "G" agreeing that the Shares are being
acquired for investment purposes only, and not with a view to public resale or
distribution.
8(d) Acquired shall have delivered all of the exhibits and schedules required
herein; including the Financial Statements, to Acquirer and such exhibits
schedules and Financial Statements shall have been acceptable to Acquirer, in
its sole and absolute discretion.
8(e) Acquired shall have delivered to Acquirer an opinion of counsel, dated the
Closing Date, to the effect that:
(1) Acquired is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas and is duly
qualified to do business in any jurisdiction where so required;
(2) Acquired has the corporate power to carry on its business
as now being conducted.
(3) This Agreement has been duly authorized, executed and
delivered by Acquired and Stockholders, and is a valid and binding
obligation of Acquired and Stockholders enforceable in accordance with
its terms, except to the extent that enforcement is limited by
applicable bankruptcy, reorganization, moratorium, insolvency or
similar laws after creditors' rights and remedies generally or by
general equity principal (and excluding specific performance as a
remedy), including limitations on enforcement by reason of fraudulent,
conveyance and corporate and other laws restricting indemnification by
corporations shareholders of a corporation, or its affiliates;
10
13
(4) Except as referred to herein, such counsel knows, after
inquiry of (a) no actions suit or other legal; proceedings or
investigations pending or threatened against or relating to or
materially adversely affecting Acquired; and (b) no unsatisfied
judgment against Acquired;
(5) The execution and delivery by Acquired of this Agreement
and the consummation if the transaction contemplated hereby will not
conflict with or result in a breach of any provision of Acquired
Articles of Incorporation or By-Laws or, to the best of such counsel's
knowledge, after inquiry, and based upon information provided by
Acquired and their officers and directors, constitute a default under
or give rise to a right of termination acceleration or cancellation
under any agreement under which Acquired or any of its properties are
bound or violate any court order, writ or decree of injunction
applicable to Acquired, and
(6) The authorized capitalization of Acquired is as set forth
in Section 3(0) all of the outstanding shares of common stock of
Acquired are validly issued, fully-paid and non assessable, without
preemptive rights, and in the best of counsel's knowledge, after
inquiry, there are no outstanding subscriptions, options, warrants or
other transfer agreements (whether oral or written) obligating
Acquired to issue or transfer from treasury any of its securities
except as set forth in Section 3(o) of this agreement. When duly
transferred to Acquirer as provided herein, to the best of such
counsel's knowledge after inquiry, Acquirer will own all of the issued
and outstanding Common stock of Acquired.
8(f) There shall be delivered to Acquirer a certificate executed by
the President and Secretary of Acquired to the effect that all of the
representations and warranties of the Acquirer set forth herein are true and
complete in all material respected as of the Closing Date, and that Acquired
has complied in all material respects with its covenants and agreement set
forth therein required to be complied with it by the closing.
9. INDEMNIFICATION
Acquirer shall indemnify and hold harmless Acquired to this Agreement
at all times after the date of this Agreement against and in respect of any
liability damage or deficiency all actions suits, proceedings, demands,
assessments, judgments, costs and expenses including attorney's fee (through
all appeals) incident to any of the foregoing, resulting for any
misrepresentation, breach of covenant or warranty or non fulfillment of any
agreement on the part of such party under this Agreement or for any
misrepresentation or omission for any certificate furnished or to be furnished
to a party hereunder. Subject to the terms of this Agreement, the defaulting
party shall reimburse the other party or parties, on demand, for any reasonable
payment made by said parties at any time after Closing in respect of any
liability or claim to which the foregoing indemnity relates, if such payment is
made after reasonable notice to the other party defend or satisfy the same and
such party failed to defend or satisfy same.
10. NATURE OF REPRESENTATIONS AND WARRANTIES
All of the parties hereto are executing and carrying out the
provisions of this Agreement in reliance o the representation, warranties,
covenants and agreements contained I this Agreement or
11
14
at the Closing of the transaction herein provided for and an investigation
which they might have made or any other representations warranties agreements,
promises or information, written or oral, made by the other party or any other
person shall not be deemed a waiver of any breach of any such representation
warranty covenant or agreement. Acquirer represents and agrees that its chief
executive officer is a sophisticated investor and that the business in which
the Acquired is engaged is subject to a high degree of competition from other
companies, many of which have greater financial and other resources than
Acquired. For these and other reasons an investment in Acquired's capital
stock is subject to substantial risks and speculative.
11. DOCUMENTS AT CLOSING
At the Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
11(a) Stockholders will deliver, or cause to be delivered, to Acquirer
the following:
(1) Stock certificates for the shares of common stock of
Acquired being exchanged hereunder, duly endorsed or with stock powers
attached in blank.
(2) All corporate records of Acquired, including without
limitation corporate minute books (which shall contain copies of the
Articles of Incorporation and By-Laws, as amended to the Closing,
stock books, stock transfer books, corporate seals, and such other
corporate books and records as may reasonably be requested by Acquirer
and its counsel:
the opinion of Counsel for Acquired as set forth herein:
(4) A certificate executed by Acquired to the effect that all
representations and warranties made by Acquired and Stockholders
respectively, under this Agreement are true and correct as of the
Closing Date, as though originally give to Acquirer on said date:
(5) Such other instruments and documents, if any, as are
required to be delivered pursuant to the provisions of this Agreement,
or which may be reasonably requested in furtherance of the provisions
of this Agreement.
12. MISCELLANEOUS
12(a) Further Assurances. At any time, and from time to time, after the Closing
each party will execute such additional instruments and take such action as may
be reasonably requested by the other party to confirm or perfect title to any
property transferred hereunder or otherwise to carry out the intent and
purposes of this Agreement.
12(b) Waiver. Any failure on the part of any party hereto in complying with
any of its obligations; the party to whom such compliance is owed hereunder may
waive agreements or conditions in writing.
12
15
12(c) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent
by prepaid first class registered or certified mail, return receipt requested
to the following addresses or such other addresses as are given to other
parties in the manner set forth herein:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
Unicorp, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
President
The Laissez-Faire Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
12(d) HEADINGS. The section and subsection headings in the Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
12(e) COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12(f) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware.
12(g) BINDING EFFECT. This Agreement shall be binding upon the parties hereto
and inure to the benefit of the parties, their respective heirs,
administrators, executors, successor and assigns.
12(h) ENTIRE AGREEMENT. This Agreement is the entire agreement of the parties
covering everything agreed upon or understood in the transaction. There are no
oral promises, conditions, representation, understandings, interpretations or
terms of any kind as conditions or inducements to the execution hereof.
12(i) TIME. Time is of the essence.
12(j) SEVERABILITY. If any part of this Agreement is determined by a court of
competent jurisdiction to be unenforceable, the balance of the Agreement shall
remain in full force and effect.
12(k) DEFAULT COSTS. In the event any party hereto has to resort to legal
action to enforce any of the terms hereof such party shall be entitled to
collect attorneys' fees and other costs for the party in default.
13
16
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
ATTEST: UNICORP, INC.
By: By:
-------------------------- ----------------------------
ATTEST: THE LAISSEZ-FAIRE GROUP, INC.
By: By:
-------------------------- ----------------------------
14
17
STOCKHOLDERS OF
THE LAISSEZ-FAIRE GROUP, INC.
--------------------------------- -----------------------------------
---------------------------------
---------------------------------
15
18
EXHIBIT A
PRE TRANSACTION STOCK OUTSTANDING
CAPITAL STOCK ISSUED & OUTSTANDING AUTHORIZED
Class A Voting Common 0 100,000,000
Class B Non-Voting Common 0 50,000,000
Class C Voting Common 530,000 10,000,000
Preferred 0 25,000,000
SHARES TO BE ISSUED TO THE LAISSEZ-FAIRE GROUP, INC. SHAREHOLDERS POST MERGER
Class A Voting Common 0 100,000,000
Class B Non-Voting Common 0 50,000,000
Class C Voting Common 530,000 10,000,000
Preferred 0 25,000,000
The Laissez-faire Group, Inc. only shareholder of record is L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇
19
EXHIBIT B
THE LAISSEZ-FAIRE GROUP, INC.
BALANCE SHEET
(UNAUDITED)
DECEMBER 31,
1997
--------------
ASSETS (in thousands)
Current assets:
Cash and cash equivalents (note 1) $ --
Short-term investments (note 2) --
Prepaid inventories (note 3) --
--------------
Total current assets --
--------------
Total assets $ --
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable, note payable and accrued expenses $ --
Accrued income taxes --
--------------
Total liabilities --
--------------
Stockholders' equity:
Class A common stock $0.01 par value,
100,000,000 shares authorized, --
Preferred stock $100.00 par value,
25,000,000 shares authorized, --
Additional paid-in capital --
Retained earnings --
--------------
Total shareholders' equity --
--------------
Total liabilities and shareholders' equity $ --
==============
SEE NOTES TO THE FINANCIAL STATEMENTS
20
THE LAISSEZ-FAIRE GROUP INC.
STATEMENT OF INCOME
(UNAUDITED)
December 31,
1997
----
(in thousands)
Revenue: 0
------
Total revenue --
Cost of sales: --
------
Gross profit: --
------
Operating expenses:
Professional fees and expenses --
------
Total operating expenses --
------
Operating income --
Provision for income taxes: --
------
Net income $ --
======
21
THE LAISSEZ-FAIRE, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- CASH AND CASH EQUIVALENTS
Cash equivalent is any instrument whose maturity is less than ninety (90)
days, such as, cash, money markets, CDs, commercial paper, short-term notes,
treasuries, etc.
NOTE 2 -- SHORT-TERM INVESTMENTS
Short-term investment is any instrument whose maturity is less than twelve
(12) months, such as, CDs, commercial paper, short-term notes, bonds, etc.
NOTE 3 -- PREPAID INVENTORIES
22
EXHIBIT E
Nominees for Election to Acquirer's Board of Directors
L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, began
his career with Monmouth Investments, a prominent regional investment banking
firm. Thereafter, he managed portfolios of major institutions and high net
worth individuals at ▇▇▇▇▇▇▇▇▇▇▇ & Co. ▇▇. ▇▇▇▇▇▇▇▇▇ is widely engaged in
professional and civic activities, including Chairman of the President's
Advisory Board of the Houston Development Council.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, DIRECTOR, the 36th Treasurer of the United States has
enjoyed a distinguished career within the public and private sectors. Aside
from her role in the ▇▇▇▇▇▇ Administration, ▇▇. ▇▇▇▇▇▇ has served on the Boards
of Wendy's International, The National Democratic Institute, and Citizen Trust
Mutual Fund (Chairman), Saint ▇▇▇▇▇▇▇ University (Austin, TX), Africare, Inc.
and Schlotzsky's Inc. In addition to these appointments she also serves on the
advisory board of Horizon Bank of Virginia, President of the ▇▇▇▇ ▇▇▇▇▇▇▇▇
Foundation, and the Austin Children Museum. ▇▇. ▇▇▇▇▇▇ is a member of the
▇▇▇▇▇▇▇ ▇▇▇▇▇ Society of Distinguished Americans, and is currently President of
Exeter Capital Asset Management in Austin, Texas.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, DIRECTOR, Chairman of the Board of the Unity National Bank of
Houston. President of Jefferson Associates, an information management company.
Through the Jefferson family 60% interest in the only African-American owned
Bank in Texas, ▇▇. ▇▇▇▇▇▇▇▇▇ is established as a major force in the private and
commercial banking industry.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, PRINCIPAL/NEW BUSINESS GROUP, started his investment career
with the Retirement Services Group of ▇▇▇▇▇▇▇▇▇▇▇ and Co., managing small to
medium corporate pension funds. He subsequently managed the portfolio's of high
net worth individuals with the Private Client Group of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Co.
23
EXHIBIT F
24
SCHEDULE 1
[THE LAISSEZ-FAIRE GROUP, INC. LETTERHEAD]
December 15, 1997
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Executive Officer
Sellers Petroleum Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇▇:
We are pleased to advise you of our intention, subject of course to your
acceptance, to purchase all of the issued and outstanding shares of Sellers
Petroleum Products, Inc., Sellers Transportation Services, Inc. and Sellers
Tank Services, Inc., ("Sellers" or "The Company"), on the following terms and
subject to the following conditions:
1. PRICE
$7,000,000 payable at closing in cash, and the assumption of the closing
balance of The Company's line of credit currently totalling $3,345,000, with
interest and terms, to be stated in the closing purchase agreement, with an
overall cap of $4,500,000. This includes approximately $150,000 in long-term
debt.
(a) ADDITIONAL PURCHASE ITEMS. Included within the purchase, whether or
not as this time owned by the subject corporation, are all intangible assets,
specifically including exclusive use, subject only to any license agreements,
to any party, of the name Sellers and its affiliates, all licenses, permits,
trademarks, service marks, trade names, patents, copyrights, trade secrets,
and/or similar intellectual property, all books and records and customer lists
utilized by the current owners, officers and agents of Sellers, and its
affiliates in the conduct of such business.
(b) OTHER ASSETS BEING SOLD. At the closing date, the Seller shall have
negotiated and agreed upon, separate from the assets on the July 31, 1997
balance sheet of Sellers, all real estate attached in exhibit A, whether owned
in fee or under lease, by Sellers or any affiliate except that real estate
unacceptable to the Purchaser, such as any property that does not pass the
Buyers' environmental due diligence. The purchased real estate will be at the
prevailing market price. This price will be based upon an independent
appraisal, mutually agreed upon by both parties, and a
25
review of all liabilities owed on said real estate. It is the opinion of the
owners that the value is approximately five (5) million dollars.
Notwithstanding this paragraph, Purchaser agrees to assume, as necessary, all
leased real estate used by Sellers, Inc. in the operation of its business.
(c) Other Assets. The retail operation opportunity presented by Tosco,
which is approximately 20 stores, is not considered to be a part of the
existing entity and therefore may either be purchased separately by the
Purchaser or will remain with the shareholders for their own development. In
addition, net earnings from August 1, 1997 to the closing belong to the current
shareholders.
2. CONCLUSION OF CONTRACT
This proposal is subject to the conclusion by us of an agreement
satisfactory to our respective counsel in the customary form for such
transactions. Such agreement will contain, among other provisions, the usual
warranties and representations of the Seller.
(a) The negotiation, execution and delivery of the definitive Purchase
Agreement in form and substance mutually acceptable to both Seller and
Purchaser, which Agreement is hereby intended by the parties to be consistent
with the terms of this letter. The definitive Purchase Agreement shall contain
such representations, warranties and covenants of the Seller, as well as
conditions to the obligations of the parties to close, as are customarily
included in the Definitive Purchase Agreement, including but not limited to:
(i) The various stockholders have full authority to sell the stock;
(ii) The stock is free and clear of all liens, liabilities, security
interests, pledges and/or other encumbrances, whether written or oral.
(b) There shall be no material adverse changes to the operations of the
company prior to the closing date.
(c) The officers and directors of Sellers shall have entered into such
reasonable employment and noncompetitive agreements as shall be required to
maintain the business of the company free from direct competition by those with
inside or proprietary information for a period of three (3) years after the
termination of employment and/or purchase. The form of such agreements shall be
approved by Purchaser's counsel which shall opine that such agreements are
enforceable, under current law, in accordance with their terms. The employment
terms are for three years at $125,000 per year.
3. AUDITS
The proposed transaction will be subject to a pre-acquisition audit to be
conducted by our independent Big 6 auditors. In addition, we would anticipate
that the financial conditions of the company on the closing date would be at
least as good as at July 31, 1997, per the financial statements, which the
company is expected to sustain in the ordinary course of business, and
26
which will not be substantially different from what has been represented.
In connection with the negotiation and preparation of the definitive
Purchase Agreement, the Seller will provide Purchaser and its representatives
with access to Seller's facilities, its officers, directors and employees, and
will make available all information, books and records relating and to Sellers
as may be requested. It is agreed that any information disclosed to Purchaser
by the Seller shall be treated as confidential and may not be disclosed to
third parties other than attorneys, accountants and other advisors or the
Purchaser receiving such information and may not be used by the Purchaser
except in connection with the negotiation and consummation of the Definitive
Purchase Agreement.
4. CONFIDENTIALITY
If for any reason the contemplated purchase and sale are not consummated,
we agree to keep confidential all information furnished to or obtained by us in
connection with the transaction and to return to you, without retaining copies
of all financial statements and other data furnished by you to us or our
auditors.
5. BOARD OF DIRECTOR AND SHAREHOLDER APPROVALS
The purchase and sale contemplated by this letter of intent, if further
subject to and conditioned upon the consent and approval of the Board of
Directors and all shareholders of our respective companies, then the parties
shall use their best efforts to obtain consent and approval on or before March
15, 1998. During the period leading up to the signing of the Definitive
Purchase Agreement, the Seller shall consider the Purchaser's rights having
exclusivity, and shall voluntarily refrain from negotiating with any new
Purchasers. This will be considered a "standstill" period of at least forty-five
(45) days, beginning on the date of the signing of this letter of intent. After
this period, The Laissez-Faire Group, Inc. shall transfer from its assets
$350,000 to be held in escrow as a good faith deposit. Should the transaction
fail to close, the deposit will be forfeited. The owners will warrant that all
information provided to date to The Laissez-Faire Group is accurate and true
and that no false statements or accounts of Sellers' financial condition were
made in order to induce The Laissez-Faire Group to make this agreement. Closing
shall occur as soon as diligently possible after execution of the Definitive
Purchase Agreement.
If you are prepared to accept this offer, please so signify on the enclosed
copy of this letter and return one executed original to us.
Very truly yours,
The Laissez-Faire Group, Inc.
By: /s/ L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
---------------------------
L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
Chief Executive Officer
Accepted:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇, PRESIDENT
---------------------------
(Signature of seller)
Accepted subject to incorporation of Addends "A" and "B",
attached. X DS (Seller)
---
X LMJ (Purchaser)
---
27
ADDENDUM "A" TO DECEMBER 15, 1997 LETTER FROM
L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ TO ▇▇▇▇▇ ▇▇▇▇▇▇▇
To the extent of the value of the services of the officers and directors of
Sellers that would be obtained by Purchaser in conjunction with the
contemplated purchase by Purchaser of Sellers' stock, the parties will consider
the suitability of utilizing split-dollar life insurance to compensate such
officers and directors for their obligations under such services arrangements
(which would include any covenants not to compete).
The Laissez-Faire Group, Inc.
By:/s/ L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------- ---------------------
L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ (Signature of Seller)
Chief Executive Officer
28
ADDENDUM "B" TO DECEMBER 15, 1997 LETTER FROM
L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ TO ▇▇▇▇▇ ▇▇▇▇▇▇▇
Seller accepts this letter of intent subject to the following two items: (1)
Purchaser agrees to coordinate the final documentation of the transaction to
accommodate Seller's charitable gifting program, provided that such
coordination shall involve no additional cost to Purchaser, and (2) the
transaction contemplated herein shall close, if at all, not later than April
15, 1998.
The Laissez-Faire Group, Inc.
By:/s/ L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------- ---------------------
L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ (Signature of Seller)
Chief Executive Officer
29
EXHIBIT "A"
SELLERS PETROLEUM: PROPERTIES OWNED BY
COMPANY OR RELATED ENTITY -
TO BE INCLUDED IN SALE
1. Yuma Bulk Plant - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇
2. Imperial Bulk Plant - ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
3. Holtville Cardlock #72 - ▇▇▇ ▇. ▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇
4. Imperial Cardlock #851 - ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
5. Gila St. Cardlock #▇▇▇ - ▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇
6. Cardlock #633 - ▇▇▇▇ ▇. ▇▇▇▇ ▇▇., ▇▇▇▇, ▇▇
30
MODULAR PROCESSING TECHNOLOGIES, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ PHONE/FAX PAGER (▇▇▇) ▇▇▇-▇▇▇▇
December 9, 1997
Mr. L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, CEO
U.S. Refining, Inc.
River Oaks Tower
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Letter of Intent for Acquisition of ▇▇▇▇▇ Refining Complex and Lacostex
Unit
Dear ▇▇. ▇▇▇▇▇▇▇▇▇,
This letter will serve to outline the general provisions of the proposed
acquisition of the refining complex located at Nixon, Texas and the purchase
and relocation to that facility of the 6,000 bbl/day Val Verde modular unit
known as the Lacostex unit. Modular Processing Technologies, Inc. (hereafter
MPT) will provide a turnkey contract for the refurbishment and start up of
operations of the Lacostex unit at the ▇▇▇▇▇ site including transportation and
installation, as well as engineering and start up services for the ▇▇▇▇▇
complex.
The purchase price for the ▇▇▇▇▇ refinery complex is $3,000,000 with an
additional estimated start up cost of $500,000, not including start up of the
main tower. The purchase price of the Lacostex unit, recertified by Val Verde
Corporation, is $6,500,000 including an estimated relocation, installation and
start up cost of $500,000 for that unit. The total purchase cost of the
facility and Lacostex unit is $9,500,000 with an additional $500,000 for start
up cost of the ▇▇▇▇▇ facility. The equipment list of the ▇▇▇▇▇ facility is
included herein as Exhibit A and the equipment list of the Lacostex unit is
included herein as Exhibit B.
It is the intention of both MPT and U.S. Refining that a formal agreement
will be executed between the parties for the turnkey contract, as detailed
herein, on or about January 15, 1998. It is assumed that a provision of this
contract will be the posting of Option money by U.S. Refining, in the an
anticipated amount of $100,000, to secure both the Lacostex unit and the ▇▇▇▇▇
facility for a sixty to ninety (60-90) days feasibility period and to allow
U.S. Refining sufficient time to finalize the funding of the total purchase
price, which will be in cash and stock.
Additionally, it is assumed that MPT will provide on-going operational
management services to the ▇▇▇▇▇ facility under terms of a consulting services
agreement to be negotiated between the parties prior to the closing of the
transaction. This agreement will provide for management and engineering
services based upon structured monthly fees and operational performance bonuses
which may include some type of warrants and/or stock options.
31
▇▇▇▇▇/Lacostex Letter of Intent Page 2
In addition to the total $10,000,000 shown above the initial estimates for
operational capital at the start up of the facility are as follows:
Feedstock for testing/start up:
10,000 bbls/$20.00 per barrel $200,000
Catalyst and operating chemicals: $100,000
Personnel:
Operational staff 8 people at @ $200/day (15 days) $ 24,000
contract labor: 2 consultants $500/day (15 days) $ 15,000
Other expenses:
Electrical deposit (estimated) $ 5,000
Insurance - property (estimated) $20,000
Insurance - liability (estimated) $20,000
other - lab equipment/materials $16,000
Subtotal Other $ 61,000
Estimated Additional Startup Cost $400,000
This estimated start up budget is only for operational testing purposes
and is not intended to be the complete budget for purposes of ongoing
operations of the facility. That budget and the related schedule for ongoing
operations will be developed prior to the completion of the formal purchase
agreement.
Both parties agree that this Letter of Intent details the initial
intentions and commitments of the parties related to the turnkey acquisition of
these two petroleum processing units to be operated at the ▇▇▇▇▇ site. Specific
due diligence benchmarks and schedules will be incorporated in the formal
"turnkey acquisition" contract to be executed in January.
Agreed and accepted this 17th day of December 1997.
On behalf of U.S. Refining, Inc. On behalf of Modular Processing
Technologies, Inc.
/s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------- -------------------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, CEO J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Chairman
32
SCHEDULE 2
LICENSES, TRADEMARKS, TRADE NAMES, ETC.
There are no applicable documents.
33
SCHEDULE 3
CAPITAL STOCK
This Corporation is authorized to issue (i) One Hundred Million
(100,000,000) shares of Class A voting common stock, having a par value of one
cent ($0.01) per share, which shall be designated "Class A Common Stock", (ii)
Fifty Million (50,000,000) shares of Class B non-voting common stock, having a
par value of one cent ($0.01) per share, which shall be designated "Class B
Common Stock", (iii) Ten Million (10,000,000) shares of Class C voting common
stock having a par value of one cent ($0.01) per share, which shall be
designated "Class C Common Stock", and Twenty-five Million (25,000,000) shares
of Preferred Stock, having a par value of one hundred dollars ($100.00) per
share, which shall be designated at the discretion of the Board of Directors.
At anytime after October 1, 1999, the outstanding Class C Common Stock may be
converted into Class A Common Stock and Class B Common Stock at the option of
the owner at the rate of three (3) shares of Class A Common Stock and three (3)
shares of Class B Common Stock for each share of Class C Common Stock.
1. Voting Rights.
The Common Stock shall possess exclusive voting rights at all meetings of
the shareholders. Each record holder of such stock shall be entitled to one
vote for each share held, provided, however, shareholders holding Class C
Common Stock shall be entitled to have a 2/3 voting majority in the election of
the Board of Directors and all shareholders matters and the shareholders
holding Class A Common Stock shall be entitled to the remaining members and
votes of the Board of Directors and shareholder matters. There shall be no
cumulative voting in the election of Directors.
2. Dividend and Liquidation Rights.
All dividends, whether payable in the form of a liquidating distribution or
otherwise payable upon any of the common stock, is at the discretion of the
Board of Directors. Except that Class C Common Stock dividend rights, which is
1/4 of any distribution, are subordinate to both Class A Common Stock, which is
1/2 of any distribution, and Class B Common Stock, which is 1/4 of any
distribution.
34
THE COMPANY
On May 8, 1981 the Company was incorporated in the State of Nevada under the
name of Texoil, Inc. for the purpose of entering the minerals exploration,
discovery, production, refining or transportation businesses, the company
engaged in various minerals related ventures. In August 1988 the Company
participated in the minerals business through ▇▇▇▇▇▇▇▇ Oil Company, Inc. a Texas
Corporation. The Company changed its name to Unicorp, Inc. in 1989. Concurrently
the Company acquired 90% of the stock of Med-X, Inc. As a result of adverse
business circumstances, no substantial business operations have been conducted
by the company since 1992.
The company examined methods to restructure to seek new capitalization. The
Board of Directors held a Directors meeting December 31, 1997 to examine a
proposal to Reverse split the stock on a 270 for 1 basis. The board also elected
to amend the ownership structure of Unicorp to include three classes of common
stock and one class of preferred stock. (see Description of Securities) A vote
was also taken to consider a proposal to merge Unicorp with the Laissez-Faire
group of Houston, Texas. All measures were approved.
On December 31, 1997 the Company voted to restructure, re-capitalize, and seek
acquisitions of companies and management in the hydrocarbon refining and
distribution market. L. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, CEO of Laissez-Faire was appointed
President/CEO of Unicorp. Jefferson outlined existing agreements (formerly
Laissez-Faire agreements) which would afford the Company the right to purchase
certain operating businesses and refining assets to expand into the Petroleum
Refining and Distribution businesses.
The Company expects that through an affiliated business the Company can achieve
certain purchasing and marketing advantages in purchases of raw crude and the
sale of refined petroleum products to government agencies.
Subsequently the Company entered into an agreement to purchase the oil
distribution business of Sellers Petroleum ("Sellers") of Yuma, Arizona.
Sellers engages in the marketing and distribution of refined petroleum products
in Arizona and California. Expected consideration for purchase is $7,000,000.
The company also elected to pursue an agreement to purchase the a Refinery
located at the ▇▇▇▇▇▇▇▇ refurbishment facility in Houston, Texas and a refinery
and site, located in Nixon, Texas. The Company continues its search for
undervalued private and public entities in related businesses. Meetings with
several investment banking relationships have been held pursuant to financing
for these anticipated purchases.
The Company has purchased approximately 58,000 tons of Fluid Catalytic
Catalyst in exchange for 420,000 shares of Class A common stock and $5,800,000
of $100 Par Series A Callable Preferred stock. This equates to approximately
$175.00 per ton of material. Fluid Catalytic Catalyst (Zeolite) is used in the
refining, agriculture, water purification, turf management, and air
purification markets. The current market price for similar materials ranges
from $300.00 to $1,100 per ton. A sale of 20,571 tons of the Zeolite was
effected in exchange for collateralized notes and commercial paper equaling
$5,000,000, or $243.00 per ton.
PENDING ACQUISITIONS
The Company's proposed acquisitions will expand the Company through the
acquisition of an established, growing distribution business in the Southwestern
United States (Sellers). The Company feels that the purchase of refining, and
distribution facilities in Texas will limit the Company's reliance upon outside
refiners for refined petroleum products. The Company is also currently
negotiating for the purchase of a
35
third existing company which operates a distribution and convenience store
operation in the Southwestern United States.
o Sellers Petroleum
Sellers Petroleum Products, Inc. (Sellers) is one of the largest distributors
of wholesale petroleum products in the Yuma, Arizona and El Centro, California
regions. Products offered include fuels (gasoline, oil, diesel), lubricants,
maintenance services, and tires/batteries/accessories. Sellers maintains two
modern bulk plant facilities located in Yuma, Arizona and El Centro,
California, as well as seven state-of-the-art cardlock facilities throughout
its regions. The facilities are the only ones of all regional competitors that
are in compliance with all applicable EPA standards through 1998, including
above ground tank storage, storm water compliance, and product transportation
regulations.
Sellers is a branded Unocal 76 jobber, although fuel is also rack purchased
from various other major refiners and independents refiners based upon
pricing. Unocal, Chevron, and Texaco lubricant products are also offered.
Seller has maintained a strong relationship with Unocal since the company's
inception in 1954, and continues to be its premier distributor in the region.
Seller is currently Unocal's third largest lubricant jobber nationwide, and has
been approached by Unocal to expand its service region further into both
Southern California and Arizona.
Its customers include both commercial and retail (cardlock and service station)
accounts. Management strongly emphasizes service, with customer satisfaction
evident in its 95%+ rate of repeat business. Customer service is further
augmented by through excellent staffing, characterized by low employee turnover
and average employee tenure of 10 years. Sales for fiscal year 1997 are
projected to reach $70 million. U.S. refining expects that current Sellers
management will be retained post acquisition. Management will have incentives
in place to continue its qualify of service and growth record. Sellers has
over 1,300 active accounts which order at least once per month.
Seller's long-term track record has made it the largest commercial petroleum
products distributor in Yuma. It also boasts the largest fleet capacity in both
its El Centro and Yuma locations. Revenues totaled $34,764,000 in 1995,
$60,293,000 in 1996 and are expected to total $70,000,000 in 1997. This
represents a growth rate of approximately 33% annually. Pretax Income margins
have been maintained at a level of 3% plus or minus. Existing management will
stay with Sellers.
o USRP/▇▇▇▇▇ Refinery
The ▇▇▇▇▇ refinery is located on a 50 acre site approximately 40 miles south of
San Antonio, Texas. The plant is certified by the U.S. Department of Energy at
a rate of 17,033 barrels per day of 42 API Crude. The plant was designed to
refine military jet fuel in addition to Propane, C3/C4, Naptha, Kerosene,
Diesel, Gas Oil, & Resid. The refinery ran for several years delivering
Military Jet fuel to all three U.S. Air Force bases in San Antonio prior to its
closure after Desert Storm. The refinery can be tuned to produce the standard
range of refined petroleum products to meet demand in its market area. The
Company feels that through an association with a Minority owned petroleum
distributor, profit margins exceeding $3.00 per barrel refined may be
realized. The USRP Refinery is currently being refurbished in Houston, Texas.
Management believes that by combining its additional 6,000 to 7,000 barrels of
refining capacity to the ▇▇▇▇▇ Refinery, the company can process approximately
20,000 barrels of petroleum daily.
GROWTH STRATEGY
The Petroleum Refining and Distribution businesses are characterized by high
volumes of sales at low margins. Additionally the petroleum distribution
business is heavily weighted with small independent "Mom and Pop" companies.
U.S. Refining intends to acquire existing Distribution and Refining companies
in which it can extract additional profit margins. The company expects to
achieve these higher margins through price advantages which it may be afforded
through government contracts and certain private sector discounts for purchases
of crude oil and refined products. These companies have traditionally operated
36
high volume, low margin, operations which net a small percentage of sales as
earnings. Management feels that an increasing margins only 2 to 3 percent
would substantially impact profitability.
Additional companies are currently being examined with the intention of
vertically integrating U.S. Refining into a business which takes crude oil
from the well head and processes it through to the end user. (i.e. from the
producer of oil & gas to the retail gasoline market). Through this strategy,
the company feels that increased efficiency and profitability will be realized.
The Company's objective is to become a "consolidator" in the highly fragmented
independent wholesale distribution segment of the petroleum industry.
Purchase and sales price advantages are afforded certain companies in regard to
sales of diesel, gasoline, and jet fuel to government agencies. Through an
affiliated company, U.S. Refining expects to extract additional operating
profit over and above that which its acquisition targets currently achieve in
their sales on government fuel purchases.