AGREEMENT
BY AND AMONG
METEOR INDUSTRIES, INC.,
PYRAMID STORES, INC.,
▇▇▇▇▇▇▇▇▇ OIL COMPANY, INC.,
▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇
AGREEMENT
AGREEMENT, made as of the 31st day of July 1997, by and among
Pyramid Stores, Inc., a Colorado corporation, and Meteor Industries,
Inc., a Colorado corporation (these two corporations are referred to as
"Purchaser"), ▇▇▇▇▇▇▇▇▇ Oil Company, Inc. (the "Company"), a Wyoming
corporation, and ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇
(collectively referred to as "Shareholders").
WHEREAS, Purchaser desires to acquire all of the issued and
outstanding common stock, except treasury stock of ▇▇▇▇▇▇▇▇▇ Oil Company,
Inc., held by the Company, (the "Common Stock") in exchange for the
consideration and upon the terms described herein (the "Purchase"); and
WHEREAS, the Shareholders desire to sell all of their Shares of
Common Stock of the Company; and
WHEREAS, Purchaser, the Company and Shareholders desire to make
certain representations, warranties, covenants and agreements in
connection with the Purchase and also desire to prescribe various
conditions precedent to the Purchase;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
provisions, and representations contained herein, THE PARTIES HERETO
AGREE AS FOLLOWS:
ARTICLE 1
THE PURCHASE
1.1 Sale and Delivery of Common Stock. Subject to all the terms
and conditions of this Agreement, the Company and Shareholders shall
transfer, convey and deliver to Purchaser at the Closing (as defined in
paragraph 1.2 hereof) good, valuable and marketable title to the Common
Stock, free and clear of all liens, claims and encumbrances in exchange
for the consideration described in this Article 1. The consideration
described in this Article 1 hereof shall be delivered to a closing agent
mutually agreeable to the parties hereto (the "Closing Agent"). Closing
Agent shall then disburse such funds in accordance with this Agreement
and pursuant to joint written instructions to be prepared by the parties
hereto in a form substantially similar to that which is attached hereto
as Exhibit 1.1 and delivered to Closing Agent at Closing.
1.2 Effective Date and Closing. The effective date of this
transaction shall be July 31, 1997. The closing of the transaction
contemplated herein (the "Closing") shall occur at a mutually agreeable
time and place, on the earliest practicable date following the day on
which all of the obligations and conditions precedent contained herein
are complied with. The Closing date shall be August 11, 1997, or a soon
thereafter as reasonably practicable (the "Closing Date").
1.3 Purchase Price. Subject to adjustment pursuant to Section
1.4, subject to the terms of Section 1.5 and subject to all of the other
terms and conditions set forth in the Agreement and in reliance on the
representations, warranties and covenants hereinafter set forth,
Purchaser shall deliver to Closing Agent cash in the amount of $200 per
share of Common Stock (hereinafter referred to as the "Purchase Price").
1.4 Adjustments. The Total Purchase Price of the Common Stock
shall be defined as the number of shares of Common Stock outstanding
times $200 per share, the maximum shall be $4,752,000 (23,760 shares x
$200 per share). Such amount shall be adjusted as follows:
a. During the three month period following the
Closing, Purchaser shall have Coopers & ▇▇▇▇▇▇▇ L.L.P audit the balance
sheet and income statement of the Company as of July 31, 1997, and for
the five-month period ending July 31, 1997. In the event the audit
raises unexpected issues which reasonably require additional time to
complete the audit, the three month period may be extended up to 30 days.
b. If Purchaser's audit of the Company by Coopers &
▇▇▇▇▇▇▇ L.L.P. shows that the Company's working capital on July 31, 1997,
(after distributions have been made pursuant to Section 1.6) is less than
$1,550,000 then the Total Purchase Price shall be reduced by the amount
of such working capital deficiency, net of any reduction pursuant to
Section 1.4(c).
c. If the Purchaser's audit of the Company shows
that the Company's shareholders' equity is less than $3,800,000 (after
distributions have been made pursuant to Section 1.6) then the Total
Purchase Price shall be reduced by the amount of such shareholders'
equity deficiency, net of any reduction pursuant to Section 1.4(b).
d. If the Purchaser's audit of the Company shows
that the Company's deferred tax liability, capital leases and long term
notes payable are greater than $2,000,000 (after any distributions have
been made pursuant to Section 1.6) then the Total Purchase Price shall be
reduced by the amount of such excess.
e. If the Purchaser's audit shows that the Company
owes any related party any notes payable, then the total Purchase Price
shall be reduced by such note payable.
f. If the Common Stock outstanding is more than
23,760 shares the Purchase Price per share will be reduced on a pro rata
basis.
1.5 Payment of Purchase Price. The total Purchase Price shall be
paid as follows:
1. 100% of the Purchase Price per share shall be paid at
Closing.
Exhibit 1.5 attached hereto provides the estimated Purchase Price at
Closing. Any further adjustments will be made according to the
Adjustment Procedure attached hereto as Exhibit 1.5(a).
1.6 Bonuses to Employees. On or prior to the "Effective Date",
the Company may distribute to employees as bonuses such estimated amount
as would result in the after tax net income of the Company for the period
commencing March 1, 1997 through July 31, 1997, being equal to zero.
After tax net income shall be defined as follows:
After Tax Net Income - means taxable income on line 30 of the
Company's July 31, 1997 Form 1120 U.S. Corporation Income Tax Return,
less capital gain net income on line 8 of Form 1120, less net gain from
Form 4797, less the total tax on line 31 of Form 1120 (adjusted for the
tax effect of the adjustments from capital gain and Form 4797 gain).
Such distribution shall be made only to the extent that it does not
have a negative impact on the Company's operations or materially increase
accounts payable from the amounts disclosed in the Company's February
28, 1997 financial statements; and so long as net current assets less
current liabilities are not less than $1,550,000. No dividends or other
distributions may be made to Shareholders or employees after the
Effective Date, except as provided in Section 4.15.
The distribution will be paid to the Closing Agent pursuant to the
provisions of Section 4.15 below.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND SHAREHOLDERS
As an inducement to the Purchaser to enter into this Agreement, the
Company and the Shareholders hereby represent and warrant to Purchaser
that:
2.1 Organization. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of Wyoming, has
all necessary corporate powers to own its properties and to carry on
its business as now owned and operated by it, and to the Company's and
Shareholders' knowledge, the Company is duly qualified to do business and
is in good standing in each of the states where its business requires
qualification.
2.2 Capital. The authorized capital stock of the Company
consists of 200,000 shares common stock, no par value, of which 27,860
shares of common stock are issued and outstanding including a minimum of
4,100 shares that are currently held in the treasury of the Company. All
of the issued and outstanding shares of the Company are duly and validly
issued, fully paid, and non-assessable. There are no outstanding
subscriptions, options, rights, warrants, debentures, instruments,
convertible securities, or other agreements or commitments obligating the
Company, or any subsidiary to issue or to transfer from treasury
additional shares of its capital stock. Except for the common stock
outstanding, there are no other equity securities of the Company. To the
Company's and Shareholders' knowledge, no taxes or other payments to
governmental authorities will be due from the Purchaser upon transfer of
the Common Stock as contemplated by this Agreement.
2.3 Corporate Books and Records. The minute books of the Company
contain accurate records of all meetings and accurately reflect all other
actions taken by the Board of Directors, all committees of the Board of
Directors and the shareholders of the Company. Complete and accurate
copies of all such minute books and of the stock register of the Company
have been made available by the Company for inspection by the Purchaser.
At the Closing, all of those books and records will be in the possession
of the Company.
2.4 Subsidiaries. The Company does not have any subsidiaries or
own any interest in any other enterprise, except as described in Exhibit
2.4 attached hereto.
2.5 Directors and Officers. Exhibit 2.5 to this Agreement,
contains the names and titles of all directors and officers of the
Company.
2.6 Financial Statements. Exhibit 2.6 to this Agreement,
includes true and complete copies of the audited financial statements of
the Company for the fiscal periods ended February 28, 1997 and 1996,
together with all related notes and schedules thereto. Prior to Closing
an unaudited balance sheet as of July 31, 1997 and an unaudited income
statement for the five month period ending July 31, 1997 shall be
delivered to Purchaser and be included as part of Exhibit 2.6 (both
sets of financial statements are hereinafter referred to as the "The
Company Financial Statements"). The Company Financial Statements shall
have been prepared in accordance with generally accepted accounting
principals and practices of the United States (hereinafter referred to as
"GAAP"). The Company Financial Statements are true, accurate and
complete, and fairly present the financial position of the Company as of
the dates and for the periods mentioned therein.
2.7 Absence of Changes. To the Company's and the Shareholders'
knowledge, since the respective dates of the Financial Statements, there
has not been any change in the business (financial or otherwise), sales
levels, inventory levels in relation to sales, general financial
condition, assets, operations or prospects of the Company, except for
changes in the ordinary course of business, which changes have not
individually or in the aggregate been materially adverse. Since the
dates of the Financial Statements dated February 28, 1997, no dividends
or distributions of any kind shall have been or will be accrued to
Shareholders other than as permitted under Section 1.6 of this Agreement.
2.8 Absence of Undisclosed Liabilities. To the Company's and the
Shareholders' knowledge, as of the respective dates of the Financial
Statements included in Exhibit 2.6, the Company did not have any material
debt, liability, or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that is not
reflected in the Financial Statements. To the Company's and the
Shareholders' knowledge, as of the Closing Date, the Company does not
have any material liabilities not disclosed in the Company Financial
Statements.
2.9 Taxes. To the Company's and the Shareholders' knowledge,
within the times and in the manner prescribed by law, the Company has
filed all tax returns required by law and has paid all Taxes, assessments
and penalties due and payable. The provisions for Taxes, if any,
reflected in the Company Financial Statements, are adequate for any and
all Taxes for the periods ending on the date of such financial statements
and for all prior periods, whether or not disputed. To the Company's and
the Shareholders' knowledge, and except as set forth in Exhibit 2.11,
there are no present disputes as to Taxes of any nature payable by the
Company.
2.10 Compliance with Laws. To the Company's and the Shareholders'
knowledge, the Company has complied in all material respects with, and is
not in violation of , applicable federal, state, or local statutes, laws
or regulations (including without limitation, any applicable building,
zoning, environmental, or other law, ordinance or regulation) affecting
its properties or the operation of its business, except as set forth in
Exhibit 2.10.
2.11 Litigation. To the Company's and the Shareholders' knowledge,
except as set forth in Exhibit 2.11, (1) the Company is not a party to
any suit, action, arbitration or legal, administrative or other
proceeding, or governmental investigation pending or threatened against
or affecting the Company or its business, assets or financial condition
(hereinafter referred to as "Actions"); (2) the Company is not in default
with respect to any order, writ, injunction or decree of any federal,
state, local or foreign court, department, agency or instrumentality
applicable to them; (3) the Company is not engaged in any lawsuits to
recover monies due to it. Exhibit 2.11 sets forth an accurate list of
all Actions in the past three years including Actions commenced prior
thereto which have not yet been resolved, by or against the Company (or
by or against any affiliate thereof and relating to the business of the
Company) or affecting any of the assets or properties of the Company or
its business. All government notices of non-compliance or citations
received in the last three years are listed in Exhibit 2.11. To the
Company's and the Shareholders' knowledge, none of the disclosed Actions
will have an adverse effect upon the Company or its business.
2.12 Authority. The Board of Directors of the Company has
authorized the execution of this Agreement and the consummation of the
transactions contemplated herein, and the Company and Shareholders have
full power and authority to execute, deliver and perform this Agreement
and this Agreement is a legal, valid and binding obligation of the
Company and Shareholders, and is enforceable in accordance with its
terms.
2.13 Ability to Carry Out Obligations. Other than current banking
obligations and supplier contracts, as set forth in Exhibit 2.13, to the
Company's and the Shareholders' knowledge, the execution and delivery of
this Agreement by the Company and Shareholders and the performance by the
Company and Shareholders of their obligations hereunder will not cause,
constitute or conflict with or result in (a) any breach or violation of
any of the provisions of or constitute a default under any license,
indenture, mortgage, charter, instrument, articles of incorporation,
by-laws, or other agreement or instrument to which the Company is a
party, or by which it may be bound, nor will any consents or
authorizations of any party other than those hereto be required, (b) an
event that would permit any party to any agreement or instrument to
terminate such agreement or instrument or to accelerate the maturity of
any indebtedness or other obligation of the Company, or (c) an event that
would result in the creation or imposition of any lien, charge, or
encumbrance on any asset of the Company. Purchaser understands, as
hereinafter set forth, upon Closing, Shareholders intend and are entitled
to withdraw and cancel any personal guaranties executed by them to
suppliers and banks. The withdrawal and cancellation of such personal
guaranties by Shareholders, as hereinabove and hereinafter referred to
shall not constitute any breach or violation of this Agreement by the
Company or Shareholders unless such withdrawal or cancellation would
cause the Company to incur additional liabilities which are not disclosed
in the Company Financial Statements.
2.14 Validity of The Company Shares. The shares of the Company
Common Stock to be delivered to Purchaser pursuant to this Agreement,
when transferred in accordance with the provisions of this Agreement,
will be duly authorized validly issued, fully paid and non-assessable;
and free and clear of all liens, claims and encumbrances.
2.15 Assets. The Company has good and marketable and insurable
title to all its property and such property is not subject to any liens,
claims and/or encumbrances other than disclosed in Exhibit 2.6. Exhibit
2.15 hereto lists all plant property and equipment of the Company and the
location of such property with a value of $1,000 or more including all
tanks even if the value of such tank is less than $1,000.
2.16 Material Contracts. Exhibit 2.16 lists each of the following
material contracts and agreements (including, without limitation, oral
and informal arrangements) of the Company (such contracts and agreements
listed, being collectively referred to as "MATERIAL CONTRACTS"). The
Company has delivered, or will deliver on or before the execution of this
Agreement, to the Purchaser correct and complete copies of all Material
Contracts:
(i) each contract, agreement, invoice, purchase
order and other arrangement, for the purchase of Inventory, spare parts,
other materials or personal property with any supplier or for the
furnishing of services to the Company or otherwise related to the
business under the terms of which the Company: (A) is likely to pay or
otherwise give consideration of more than $75,000 in the aggregate during
the twelve month period ending December 31, 1997, (B) is likely to pay or
otherwise give consideration of more than $25,000 in the aggregate over
the remaining term of such contract, or (C) cannot be canceled by the
Company without penalty of $5,000 or more in the aggregate on 30 days' or
less notice;
(ii) each contract, agreement, invoice, sales
order and other arrangement, for the sale of Inventory or other personal
property or for the furnishing of services by the Company which: (A) is
likely to involve consideration of more than $25,000 in the aggregate
during the twelve month period ending December 31, 1997, (B) is likely to
involve consideration of more than $25,000 in the aggregate over the
remaining term of the contract, or (C) cannot be canceled by the Company
without penalty of $5,000 or more in the aggregate on 30 days' or less
notice;
(iii) all broker, distributor, dealer,
manufacturer's representative, franchise, agency, sales promotion, market
research, marketing consulting and advertising contracts and agreements
to which the Company is a party;
(iv) all management contracts, employment
agreements and contracts with independent contractors or consultants (or
similar arrangements) to which the Company is a party and which are not
cancelable without penalty or further payment on 30 days' or less notice;
(v) all contracts and agreements relating to
indebtedness of the Company;
(vi) all contracts and agreements that limit the
ability of the Company to compete in any line of business or with any
person or in any geographic area or during any period of time;
(vii) all contracts and agreements between or
among the Company and any affiliate, officer, director, employee or
shareholder of the Company, whether now in effect or in effect at any
time during the three years preceding the date of this Agreement; and
(viii) all other contracts and agreements,
whether or not made in the ordinary course of business, which are
material to the Company or the conduct of the business.
(b) To the Company's and the Shareholders' knowledge,
each Material Contract is valid and binding on the respective parties
thereto and is in full force and effect. Neither Company nor any
Shareholder has received any actual notice that the Company is in breach
of or default under any Material Contract or that any event occurred or
failed to occur which, with the giving of notice or passage of time or
both, would constitute a breach of or default under any Material
Contract.
(c) To the Company's and the Shareholders' knowledge,
no other party to any Material Contract is in breach thereof or default
thereunder in any material respect nor has any event occurred or failed
to occur which, with the giving of the notice or passage of time or both,
would constitute a material breach of or default under any Material
Contract by any other party to any Material Contract.
(d) Except as set forth in Exhibit 2.16, there is no
contract, agreement or other arrangement granting any Person any
preferential right to purchase any of the properties or assets of the
Company.
(e) To the Company's and the Shareholders' knowledge,
there is no contract, agreement or other arrangement the performance of
which by the Company would have a material adverse effect.
2.17 Trade Names and Rights. To the Company's and the
Shareholders' knowledge, the Company owns all trademarks, service marks,
trade names, and copyrights required in its business, a list of which
is attached hereto as Exhibit 2.17. To the Company's and the
Shareholders' knowledge, no other person or entity owns any trademark,
trademark registration or application, service ▇▇▇▇, trade name,
copyright, or copyright registration or application the use of which is
necessary or material in connection with the present or contemplated
operations of the Company' business.
2.18 Proprietary and Intellectual Property Rights. To the
Company's and the Shareholders' knowledge, the Company possesses full
ownership of all proprietary rights and intellectual property rights
owned by or registered in the name of the Company or any of its
subsidiaries or used in the business of the Company or any of its
subsidiaries and is not in default in any material respect, under any
agreement relating to any proprietary right or intellectual property
right.
2.19 Employees. To the Company's and the Shareholders' knowledge,
there are, except as disclosed in Exhibit 2.19, no collective bargaining,
bonus, profit sharing, severance, indemnification, compensation or other
agreements, trusts, funds, plans or arrangements maintained by the
Company or any subsidiary of the Company for the benefit of its
directors, officers or employees, and there are no employment,
consulting, severance or indemnification arrangements, agreements or
understandings between the Company or any of its affiliates. Exhibit
2.19 identifies each person whose income from the Company in the fiscal
year ended February 28, 1997, or whose income from the Company in the
fiscal year begun immediately thereafter, is at a rate exceeding $15,000
per annum. Exhibit 2.19 describes any contractual arrangement for the
employment or compensation of each such person whether written or oral.
The Company is not, and following the Closing will not be, bound by any
express or implied contract or agreement to employ directly or as a
consultant or otherwise, any individual or entity for any specific period
of time or until any specific age except as specified in agreements in
writing identified in Exhibit 2.19. The Company's employee handbook or
manual and a complete description of all employee benefits, is included
as part of Exhibit 2.19. All of the Company's employees are at-will
employees.
2.20 Labor Matters. To the Company's and the Shareholders'
knowledge, there are no activities or controversies, including, without
limitation, any disputes with individuals, labor organizing activities,
proceedings preparatory thereto, unfair labor practice complaints, labor
strikes, disputes, slowdowns or work stoppages, pending or threatened,
between the Company or any of its employees.
2.21 Insurance. To the Company's and the Shareholders'
knowledge, the Company has insurance policies in full force and effect
which provide for coverages which are usual and customary in its business
as to amount and scope, and are adequate to protect the Company against
any reasonably foreseeable risk of loss. Such policies will remain in
full force and effect through Closing. Exhibit 2.21 attached hereto
identifies each of the Company's insurance policies, indicating the
carrier, amount of coverage, annual premium, risks covered, placing
broker or agent, and period through which the policy is paid up and
other relevant information as to each. Exhibit 2.21 also lists all of
the insurance policies covering the Company's properties and activities
with a short description of the coverages. Except as disclosed in
Exhibit 2.21, the Company has not within the past three (3) years
received any notice of cancellation of any insurance agreement or any
notice of nonrenewal or of uninsurability or any notice or other
communication regarding any unusual or extraordinary risk posed by any
aspect of the business of the Company. The Company shall provide
Purchaser with all applications for insurance policies, all copies of
claims made under existing policies, and a loss history for the past
three years.
2.22 Title to and Utilization of Properties. Exhibit 2.22
attached hereto lists all of the Company owned and leased properties. To
the Company's and the Shareholders' knowledge, the Company owns fee
simple, insured title to all real property owned by it and has
the unbridled right to use the same, and is not aware of any claim,
notice or threat to the effect that its right to own and use such
property is subject in any way to any challenge, claim, assertion of
rights, proceedings toward condemnation or confiscation in whole or in
part, or is otherwise subject to challenge. To the Company's and the
Shareholders' knowledge, no rights of first refusal encumber such Company
owned Properties. The Company has valid leases on its leased properties
and the expiration date of such leases are disclosed on Exhibit 2.22.
2.23 Facilities. To the Company's and the Shareholders'
knowledge, the Company facilities are (as to physical plant and
structure) structurally sound and none of its facilities, nor any of the
vehicles or other equipment used by the Company in connection with its
business, has any material defects and all of them are in all material
respects in good operating condition and repair and are adequate for the
uses to which they are being put. To the Company's and the Shareholders'
knowledge, none of such plants, structures, or equipment is in need of
maintenance and repairs except ordinary routine maintenance and repairs.
Subject to the knowledge requirement in the preceding two sentences, all
buildings, vehicles and equipment are being transferred on an "as is,
where is" basis.
2.24 Environmental and Other Permits and Licenses; Related
Matters.
(a) To the Company's and the Shareholders' knowledge,
the Company currently holds all the health and safety and other permits,
licenses, authorizations, certificates, exemptions and approvals of
governmental authorities (collectively, "PERMITS"), including, without
limitation, environmental permits, necessary for the current use,
occupancy and operation of each asset and property of the Company and the
conduct of its business, and all such permits and environmental permits
are in full force and effect. Neither the Company nor any of the
Shareholders has received any notice from any governmental authority
revoking, canceling, rescinding, materially modifying or refusing to
renew any permit or environmental permit or providing written notice of
violations under any environmental law which have not been resolved. To
the Company's and the Shareholders' knowledge, the Company is in all
material respects in compliance with the permits and all applicable
Environmental Laws. Exhibit 2.24(a) identifies all permits that will
require the consent of any governmental authority to consummate the
transactions contemplated by this Agreement.
(b) To the Company's and the Shareholders' knowledge,
all equipment owned or used by the Company, including, but not limited to
above ground storage tanks, underground storage tanks, and piping
associated with such tanks, is in substantial compliance with all
applicable Permits and Environmental Laws including the Federal and State
1998 underground storage tank requirements, and can be operated in the
ordinary course of business in substantial compliance with all applicable
Permits and Environmental Laws, except as set forth in Exhibit 2.24(b).
(c) To the Company's and the Shareholders' knowledge,
except as disclosed in Exhibit 2.24(a): (i) Hazardous Materials have not
been generated, used, treated, handled or stored on, or transported to or
from (other than petroleum products handled, stored or transported in the
normal course of business), or released on any owned real property or
leased real property by the Company, and the Company and its Shareholders
are unaware of any such generation, use, treatment, handling, storage,
transportation, or release by any other person or entity, including but
not limited to any predecessor in interest; (ii) the Company has reported
all Releases of Hazardous Material in accordance with Environmental Laws;
(iii) the Company has not Released any Hazardous Materials, and is not
responsible or liable for any Release of Hazardous Materials, which must
be Remediated under applicable Environmental Law (including, but not
limited to, any Release which results in the presence of Hazardous
Materials in the environment in quantities or amounts that exceed
Remediation action levels specified by regulation or by governmental
policy or guideline) or that any person or entity or governmental
authority has requested or required to be remediated; (iv) the Company
has disposed of all wastes, including those containing Hazardous
Materials, in material compliance with all applicable Environmental Laws
and environmental permits; (v) there are no past, pending or threatened
Environmental claims against the Company or any of its assets or
properties; (vi) the Company has not transported or arranged for the
transportation of any Hazardous Materials to any location that is listed
or proposed for listing on the National Priorities List under CERCLA or
on the CERCLIS or any analogous state list or which is the subject of any
environmental claim; and (vii) neither the Company nor any governmental
authority is conducting any remediation on or related to the owned real
property, the leased real property or the business of the Company.
(d) Exhibit 2.24(d) sets forth the age, contents or
former contents of any storage tanks located on the premises owned or
operated by the Company. To the Company's and the Shareholders'
knowledge, except as set forth in Exhibit 2.24(d) the Company has not
owned or operated any underground storage tanks as defined in the
Resource Conservation and Recovery Act ("RCRA"). To the Company's and
the Shareholders' knowledge, except as set forth in Exhibit 2.24(d), all
tanks and pipes pertinent thereto are presently and have been in the past
in good condition and tight.
(e) To the Company's and the Shareholders' knowledge,
there are no wastes, drums or containers disposed of or buried on, in or
under the ground or any surface waters located on the premises currently
or previously owned or operated by the Company. To the Company's and the
Shareholders' knowledge, neither the Company no any third parties have
disposed of or buried any wastes, drums or containers on, in or under the
ground or any surface waters located on the premises owned or operated by
the Company. To the Company's and the Shareholders' knowledge, neither
the Company nor any party acting on behalf of the Company disposed of or
buried, or arranged to dispose of or bury, any waste, drums or containers
in or on the premises of a third party other than those pursuant to and
in compliance with RCRA.
(f) Certain capitalized terms used in this Section
2.24 are defined as follows:
Hazardous Materials - means (a) oil, petroleum and
petroleum products, radioactive materials, asbestos in any form that is
or could become friable, urea formaldehyde foam insulation, transformers
or other equipment that contain polychlorinated biphenyls, and radon gas,
(b) any other chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "contaminants"
or "pollutants," or words of similar import, under any applicable
Environmental Law, and (c) any other chemical, material or substance
exposure to which is regulated by any governmental authority.
Environmental Laws - means any law including but not
limited to any federal, state, local, law, ordinance, regulation or rule
now in effect and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or Hazardous
Materials, including, without limitation, CERCLA; the Resource
Conservation and Recovery Act, 42 U.S.C. S.S. 6901 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. S.S. 6901 et seq.; the Clean
Water Act, 33 U.S.C. S.S. 1251 et seq.; the Toxic Substances Control Act,
15 U.S.C. S.S. 2601 et seq.; the Clean Air Act, 42 U.S.C. S.S. 7401 et
seq.; the Safe Drinking Water Act, 42 U.S.C. S.S. 300f et seq.; the
Atomic Energy Act, 42 U.S.C. S.S. 2011 et seq.; the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. S.S. 136 et seq.; and the Federal
Food, Drug and Cosmetic Act, 21 U.S.C. S.S. 301 et seq. and the state or
local equivalents of these laws.
Release - means disposing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping, emptying,
seeping, placing and the like into or upon any land, water or air or
otherwise entering into the environment.
2.25 Customers and Suppliers. Exhibit 2.25 lists all major
customers and suppliers which are material to the financial condition or
operations of the Company. To the Company's and the Shareholders'
knowledge, since February 28, 1997 and except as disclosed in Exhibit
2.25 there has been no adverse change in the business relationship of the
Company with any such customer or supplier. It is understood and agreed
that "material" customers and suppliers provided for in this section are
defined as customers purchasing product from the Company in excess of
$25,000 per year, and suppliers providing supplies and merchandise to the
Company in the amount of $50,000 per year.
2.26 Bank Accounts. Exhibit 2.26 sets forth the names and
locations of all banks, trust companies, savings and loan
associations and other financial institutions at which the Company
maintains current accounts of any nature and the names of all persons
authorized to draw thereon or make withdrawals therefrom.
2.27 Share Ownership. The shareholders hold all of the
outstanding common shares of the Company Common Stock as set forth in
Exhibit 2.27 hereto. Such shares are owned and the Shareholders'
ownership is of record and beneficially owned by each holder thereof, and
such shares are not subject to any claim, lien, encumbrance or pledge.
Each shareholder has authority to sell and exchange such shares pursuant
to this Agreement.
2.28 Other Information. To the Company's and the Shareholders'
knowledge, none of the information and documents which have been
furnished or made available by the Company or any of its representatives
to Purchaser or any of its representatives in connection with the
transactions contemplated by this Agreement is materially false or
misleading or contains any material misstatement of fact or omits any
material fact necessary to be stated in order to make the statements and
information therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to the Company and the Shareholders to enter into
this Agreement, the Purchaser represents and warrants to the Company and
Shareholders that:
3.1 Organization. Purchaser is a corporation duly organized,
validly existing, and in good standing under the law of Colorado, has
all necessary corporate powers to own properties and to carry on its
business as now owned and operated by it, and is duly qualified to do
business and is in good standing in each of the states were its business
requires qualification.
3.2 Capital. As of the date of this Agreement, the authorized
capital stock of Purchaser consists of 10,000,000 shares of $.001 par
value Common Stock of which 1,000 shares of Common Stock are currently
issued and outstanding, and 5,000,000 shares of preferred stock $.001 par
value, are authorized and none are currently outstanding. All of the
issued and outstanding shares of Purchaser are duly and validly issued,
fully paid and non-assessable.
3.3 Authority. The Board of Directors of Purchaser has
authorized the execution of this agreement and the transactions
contemplated herein, and Purchaser has full power and authority to
execute, deliver and perform this Agreement and this Agreement is the
legal, valid and binding obligation of Purchaser, and is enforceable in
accordance with its terms and conditions.
3.4 Ability to Carry Out Obligations. The execution and delivery
of this Agreement by Purchaser and the performance by Purchaser of its
obligations hereunder will not cause, constitute, or conflict with or
result in (a) any breach or violation of any of the provisions of or
constitute a default under any license, indenture, mortgage, charter,
instrument, certificate of incorporation, bylaw, or other agreement or
instrument to which Purchaser is a party, or by which it may be
bound, nor will any consents or authorizations of any party other than
those hereto be required, (b) an event that would permit any party to any
agreement or instrument to terminate it or to accelerate the maturity of
any indebtedness or other obligation or Purchaser, or (c) an event that
would result in the creation or imposition of any lien, charge, or
encumbrance on any asset of Purchaser.
3.5 Directors and Officers. Exhibit 3.5 of this Agreement
contains the names and titles of all directors and officers of Purchaser.
3.6 Investment Intent. Purchaser is purchasing the Common Stock
for its own account for investment purposes and not with a view to public
distribution. Purchaser has the capacity to evaluate the merits
and risks of the acquisition of the Common Stock and understands that the
Common Stock is subject to resale restrictions under various state and
federal securities laws.
ARTICLE 4
COVENANTS
4.1 Investigative Rights. From the date of this Agreement until
the Closing Date, the Company shall provide to Purchaser, and its
counsel, accountants, auditors, and other authorized representatives,
reasonable access to all of The Company's properties, books, contracts,
commitments, and records for the purpose of examining the same. The
Company shall furnish Purchaser with all information concerning its
affairs as Purchaser may reasonably request. Without in any manner
reducing or otherwise mitigating the representations contained herein,
Purchaser and/or its representatives shall have the opportunity to meet
with accountants and attorneys to discuss the financial condition of the
Company. If the transaction contemplated hereby is not completed, all
documents received by Purchaser and/or its attorneys and accountants
shall be returned to the Company upon request.
4.2 Conduct of Business. From the date of this Agreement, the
Company and the Shareholders covenant that they: (1) shall conduct the
Company's business in the normal course, and shall not sell, pledge, or
assign any assets, without the prior written approval of Purchaser,
except in the regular course of business; (2) shall not amend the
Company's Articles of Incorporation or Bylaws, declare dividends, redeem
or sell stock or other securities, incur additional or newly-funded
liabilities, acquire or dispose of fixed assets, change employment
terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet
receivable for less amount, or enter into any other transactions other
than in the regular course of business; (3) shall not directly or
indirectly solicit, initiate, or encourage any inquiries or proposals
from, discuss or negotiate with, provide non-public information to, or
consider the merits of any unsolicited inquiry or proposal from any
person (other than the Purchaser) relating to the merger, consolidation
or acquisition of the Company or any of the assets or properties of the
Company (other than acquisitions of inventories in the ordinary course of
business); or (4) shall not agree or commit to do or authorize any of the
foregoing, unless such action complies with the terms of this Agreement.
4.3 Indemnification of the Company and Shareholders. Purchaser
shall be liable for and shall indemnify, defend and hold the Company and
the Shareholders and its officers, directors, affiliates, agents and the
Shareholders harmless against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies, including interest, penalties, and
reasonable attorney fees, that they shall incur or suffer, which result
from or relate to any activities of the Company or Purchaser subsequent
to the Closing Date or which result from or relate to any breach of, or
failure by Purchaser to perform any of its representations, warranties,
covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by
Purchaser under this Agreement.
4.4 Indemnification of Purchaser. The Company and Shareholders
shall be liable for and shall agree to indemnify, defend and hold
Purchaser and its officers, directors, affiliates and agents harmless
against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties, and reasonable attorney fees, that it
shall incur or suffer, which result from or relate to any breach of, or
failure by the Company to perform any of its respective representations,
warranties, covenants and agreements in this Agreement or in any exhibit,
schedule, certificate or other instrument furnished or to be furnished by
the Company or Shareholders under this Agreement.
4.5 Consulting Services. ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ shall make themselves available to Purchaser, at reasonable times,
to respond to questions for one year without charge. ▇▇. ▇▇▇▇▇▇▇▇▇
agrees to provide additional consulting services to the Company or
Purchaser on as needed basis for a two-year period after the Closing
Date on an hourly basis at a rate of $100 per hour. ▇▇. ▇▇▇▇▇▇ will
provide additional consulting services to the Company on an as needed
basis for a two-year period on an hourly basis at a rate of $100 per
hour.
4.6 Accounts Payable and Personal Guarantees. With regard to
all accounts payable and accrued taxes as of the Effective Date,
Purchaser will cause such amounts to be paid according to the payment
plan and/or requirements of the creditor or taxing authority, without
extension, delinquency or other material deviation from the payment term
and plan. Purchaser understands and agrees that it is the intention of
Shareholders to withdraw all personal guarantees relating to the Company.
4.7 Environmental Site Assessments. New "Phase One"
environmental site assessments shall be obtained by Purchaser on all real
properties subject to this transaction prior to the Closing Date, at the
Company's cost up to a maximum of $15,000. Such "Phase One" costs shall
be accrued as of July 31, 1997 and payable by the Company at Closing.
Any additional "Phase One" expenses shall be borne by Purchaser. The
persons performing such site assessments shall be chosen and engaged by
Purchaser. It is further agreed that Purchaser will complete the Phase
One Reports as soon as reasonably practicable, and Purchaser may elect to
pursue, at its expense, "Phase Two" assessments (e.g. core sampling,
ground water sampling, etc.).
To the Company's and the Shareholders' knowledge, it is the
Purchaser's understanding that all regulatory and environmental upgrades
completed in the past have brought the Company's properties and equipment
into compliance with current requirements and the 1998 underground
storage tank regulations, except as set forth in Exhibit 2.24(b) and
Exhibit 2.10. Any properties and/or equipment found not to be in
compliance shall either be brought into compliance prior to Closing or an
adjustment to the Purchase Price shall be made at Closing.
4.8 Shareholders' Cooperation After the Closing; Further Action.
At any time and from time to time after the Closing, the Shareholders
shall execute and deliver to the Purchaser such other instruments and
take such other actions as the Purchaser may reasonably request more
effectively to vest title to the Shares in the Purchaser and, to the full
extent permitted by law, to put the Purchaser in actual possession and
operating control of the Company and its assets, properties and the
business. Each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all appropriate action, do or cause to be
done all things necessary, proper or advisable under applicable laws, and
execute and deliver such documents and other papers, as may be required
to carry out the provisions of this Agreement and to consummate and make
effective the transactions contemplated hereby. The Company and the
Shareholders will provide such information (including financial
information) as is reasonably required by Purchaser for any Report on
Form 8-K to be filed by Purchaser with the Securities and Exchange
Commission in connection with this transaction.
4.9 Confidentiality.
(a) The Shareholders covenant and agree to, and
will cause their respective affiliates, trustees, beneficiaries,
employees and agents to: (i) treat and hold as confidential (and not
disclose or provide access to any person to) all information relating to
trade secrets, processes, price lists, customer lists, raw materials,
supplier lists, pricing and marketing plans, policies and strategies,
operations methods, and any other intellectual property rights or other
confidential information with respect to the business or the company;
(ii) in the event that the Shareholders or any of their affiliates,
trustees, beneficiaries, employees or agents become legally compelled to
disclose any information, provide the Purchaser with prompt written
notice of such requirement so that the Purchaser may seek a protective
order or other remedy or waive compliance with this Section 4.9; and
(iii) promptly furnish (prior to or at the Closing) to the Purchaser any
and all copies (in whatever form or medium) of all such confidential
information then in the possession of the Shareholders or any of their
respective affiliates, trustees, beneficiaries, employees and agents and
destroy any and all additional copies then in their possession of such
information and of analyses, compilations, studies or other documents
prepared, in whole or in part, on the basis thereof; PROVIDED, HOWEVER,
that this sentence shall not apply to any information that, at the time
of disclosure, is available publicly and was not disclosed in breach of
this Agreement by the Shareholders or their affiliates, trustees,
beneficiaries, employees or agents.
(b) All information furnished by any Shareholder or
the Company to the Purchaser pursuant to this Agreement shall be treated
as the property of such Shareholder or the Company until the Closing Date
and shall be kept confidential by the Purchaser until the Closing Date.
If the Closing does not occur, the Purchaser shall return to the
Shareholders or the Company all documents and other materials containing,
reflecting or referring to such information, shall keep confidential all
such information, and shall not directly or indirectly use such
information for any competitive purpose. The Purchaser's obligation to
keep such information confidential and to not use such information shall
continue for a period of two years from the date the transactions
contemplated by this Agreement are abandoned and shall extend to the
directors, officers, employees and agents of the Purchaser. The
Purchaser shall take all necessary action to inform such persons of the
obligation of confidentiality set forth in this Section 4.9(b). The
obligation to keep such information confidential shall not apply to any
information which the Purchaser can demonstrate (i) was already in its
possession prior to the disclosure thereof by any Shareholder or the
Company to the Purchaser, (ii) was then available to the public, (iii)
became known to the public through no fault of the Purchaser or any of
its directors, officers, employees or agents, or (iv) was disclosed to
the Purchaser by a third party unaffiliated with the Purchaser who, to
the knowledge of the Purchaser, was not bound by an obligation of
confidentiality to the Shareholders or the Company, nor shall the
obligation to keep such information confidential apply to disclosures
required to be made in accordance with any law.
(c) The Shareholders agree and acknowledge that
remedies at law for any breach of their obligations under Section 4.9(a)
hereof are inadequate and that in addition thereto the Purchaser and/or
the Company shall be entitled to seek equitable relief, including
injunctive relief and specific performance, in the event of any such
breach, without the necessity of demonstrating the inadequacy of monetary
damages. The Purchaser agrees and acknowledges that remedies at law for
any breach of its obligations under Section 4.9(b) hereof is inadequate
and that in addition thereto the Company and/or the Shareholders shall be
entitled to seek equitable relief, including injunctive relief and
specific performance, in the event of any such breach, without the
necessity of demonstrating the inadequacy of monetary damages.
4.10 Preservation of Assets and Relationships. After the date
hereof and through the Closing, the Company shall use its best efforts to
preserve intact the assets and properties of the Company and to keep
available the services of its officers and employees and maintain good
relationships with suppliers, customers and others having business
relationships with the Company.
4.11 Transfer of Shares. The Shareholders agree that after the
date hereof and through the Closing, without the Purchaser's consent, the
Shareholders will not sell, transfer, mortgage, pledge or otherwise
dispose of or encumber all or any part of the Common Stock.
4.12 Agreement to Vote. The Shareholders agree to vote or cause to
be voted all Common Stock in favor of the transactions contemplated by
this Agreement and against any action or agreement that would result in a
breach of any covenant, representation or warranty or any other
obligation or agreement of the Company or the Shareholders under this
Agreement.
4.13 Representations and Warranties. Through the Closing Date,
each of the parties shall refrain from taking any action which would
render any of its representations or warranties in this Agreement
inaccurate as of the Closing Date.
4.14 Employment Agreements Prior to the Closing Date, the Company
will enter into an employment agreement (the "Employment Agreement") with
▇▇▇▇▇▇ ▇▇▇▇▇▇ which will be substantially in the form of the employment
agreement attached hereto as Exhibit 4.14.
4.15 Bonuses. The Company agrees to estimate the bonuses relating
to the period beginning on March 1, 1997 and ending on July 31, 1997
contemplated by Section 1.6 before the Closing and will cause the Company
to pay such bonuses to the Closing Agent immediately before or at the
Closing, and the funds will be held in escrow by the Closing Agent
pending the completion of the audit by Coopers & ▇▇▇▇▇▇▇. The parties
agree that the actual bonuses for such period shall be calculated by the
Company on the basis of an audit report to be prepared for the five month
period ending July 31, 1997, prepared by Coopers & ▇▇▇▇▇▇▇ during the
three month period following the Closing. Upon completion of the audit
the appropriate amount as determined in accordance with Section 1.6 will
be distributed to the employees. Any difference between the estimated
amount and the actual amount paid will be considered an adjustment to the
Purchase Price as contemplated by Article 1 and Exhibit 1.5(a).
4.16 Covenant not to Compete. Shareholder(s) acknowledge and
agree that Shareholders possess information unique and proprietary to the
Company and Purchaser, and that Purchaser would not be willing to enter
into this Agreement if Shareholders, after the Closing Date, could
compete with the Company or Purchaser because such competition by
Shareholders would severely injure the Company or Purchaser no matter
where in the geographic areas listed below such competition occurred.
Accordingly and in exchange for the Purchase Price, ▇▇▇ ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇ agree that for a period of two (2) years from the Closing
Date, such persons shall not directly or indirectly, whether as an owner,
stockholder, partner, employee, independent contractor, or otherwise,
compete with the Company or Purchaser or any affiliate of the Company or
Purchaser anywhere within Mexico and the states of Texas, New Mexico,
Arizona, Colorado, Utah, Nevada, and Wyoming in any field of business in
which the Company is engaged on the Closing Date. The period, the
geographical area and the scope of the restrictions on Shareholders'
activities are divisible so that if any provision of the restriction is
invalid, that provision shall automatically be modified to the extent
necessary to make it valid. The provisions of this Section 4.16 shall be
in addition to any other similar agreements entered into by the Company
and certain individual Shareholders and shall not serve to supplant or
reduce the effect of such other agreements. The parties hereto agree and
acknowledge that many of the rights conveyed by this Section 4.16 are of
a unique and special nature and that the Company and Purchaser will not
have an adequate remedy at law in the event of failure of Shareholders to
abide by its terms and conditions, nor will money damages adequately
compensate for such injury. It, therefore, is agreed between the parties
that in the event of breach by Shareholders of Shareholders' agreements
contained in this Section 4.16 the Company and Purchaser shall have the
rights, among other rights, to damages sustained thereby and to an
injunction to restrain Shareholder from the prohibited acts. Nothing
herein contained shall in any way limit or exclude any and all other
rights granted by law or equity to the Company or Purchaser.
4.17 Notice to Wyoming Department of Environmental Quality
("DEQ"). The Company agrees to provide the DEQ with notice of this
Agreement immediately upon the execution of this Agreement, unless such
notice was previously provided.
4.18 Letters of all Shareholders. Within three (3) business days
after the execution of this Agreement, the Company will use its best
efforts to have each of the Company's shareholders sign a letter in which
they agree to sell their shares to the Purchaser for $200 per share; that
they own their shares free and clear of any liens or encumbrances; and if
their shares are held in an ▇▇▇ or similar account, that they will
instruct the custodian of their shares to deliver their certificate at
the closing.
4.19 Use of ▇▇▇▇▇▇▇▇▇ Name. If at any time during the five year
period commencing on the Closing, the Purchaser or any of its executive
officers is convicted of any felony or of any acts of dishonesty, fraud
or acts of moral turpitude, the Purchaser agrees to cease using the
▇▇▇▇▇▇▇▇▇ name.
ARTICLE 5
TAX MATTERS
5.1 Cooperation and Exchange of Information. The Company, the
Shareholders and the Purchaser will provide each other with such
cooperation and information as any of them reasonably may request of the
other in filing any Tax (as defined in Section 9.2) return determining a
liability for Taxes or a right to a refund of Taxes, or participating in
or conducting any audit or other proceeding in respect of Taxes.
5.2 Conveyance Taxes. The Shareholders shall be liable for, and
the Shareholders covenant and agree that they shall hold the Purchaser
harmless against, any transfer or conveyance Taxes which become payable
in connection with the transactions contemplated by this Agreement.
ARTICLE 6
CONDITIONS PRECEDENT TO PURCHASER'S PERFORMANCE
6.1 Conditions. Purchaser's obligations hereunder shall be
subject to the satisfaction, at or before the Closing, of all the
conditions set forth in this Article 6. Purchaser may waive any or all
of these conditions in whole or in part without prior notice; so long as
such waiver is in writing; and provided, however, that no such waiver of
a condition shall constitute a waiver by Purchaser of any other condition
or any of Purchaser's other rights or remedies, at law or in equity, if
the Company and Shareholders shall be in default of any of their
representations, warranties, or covenants under this Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted
by this Agreement, all representations and warranties by the Company and
Shareholders in this Agreement or in any written statement that
shall be delivered to Purchaser by the Company under this Agreement shall
be true and accurate when made and on and as of the Closing Date with the
same force and affect as if made at the Closing.
6.3 Performance. Purchaser shall be reasonably satisfied that
the Company and Shareholders shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the
Closing Date.
6.4 Absence of Litigation. No action, suit, or proceeding before
any court or any governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its consummation, shall
have been instituted or threatened against any party hereto on or before
the Closing Date.
6.5 Acceptance by Shareholders. The holders of not less than
100% of the issued and outstanding shares of Common Stock of the
Company have agreed to sell and deliver their shares to Purchaser in
accordance with this Agreement.
6.6 Directors of the Company. Effective on the Closing Date the
Board of Directors shall be reduced to three, and shall include those
individuals named by Purchaser and all of the previous directors shall
have submitted their resignations to take effect on the Closing Date and
the three individuals nominated by Purchaser shall have been elected to
fill the vacancies.
6.7 Financial Conditions. Prior to Closing, the Company shall
provide to Purchaser unaudited financial statements dated July 31, 1997.
There shall be no material reduction in consolidated net book value or
shareholders equity from February 28, 1997 through Closing. At July
31, 1997 the assets of the Company shall include all assets listed in the
attached Exhibit 6.7, except the cash items. On the Closing Date: (1)
the Company's plant, property and equipment before depreciation shall not
be less than $7,700,000; (2) the accounts payable, accrued expenses,
taxes payable, capital leases and notes payable of the Company shall not
exceed the value of its cash, accounts receivable and inventory by more
than $100,000; and (3) no assets of the Company will be encumbered other
than by notes payable shown on the Company's Financial Statements.
6.8 Tax Return. The Company shall complete, file and deliver a
copy to Purchaser, its federal and state income tax return for the period
ended July 31, 1997. The cost of preparing such return and any taxes due
shall be booked as a payable or paid as of July 31, 1997.
6.9 Legal Opinions. The Company shall deliver the opinion of
its counsel, ▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., dated the Closing Date, in
form and substance satisfactory to counsel for Purchaser, to the effect
that:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Wyoming, and is duly qualified to do business and is in good standing in
each of the states where its business requires qualification, except
where the failure to be so qualified would not have a material adverse
effect on the Company.
(b) The Company's authorized and issued capital stock
is as set forth in paragraph 2.2 hereof.
(c) The execution and consummation of this Agreement
have been duly authorized and approved by the Company's Board of
Directors and consummation of this Agreement will not constitute or
result in any breach or default of the character described in paragraph
2.12 hereof of which counsel has knowledge.
(d) The shares of Common Stock to be purchased by
Purchaser pursuant to this Agreement are duly and validly authorized and
issued, and are fully paid and nonassessable.
(e) Counsel has no knowledge of any undisclosed
liabilities.
(f) Counsel has no knowledge of any undisclosed
litigation.
(g) Other such items as counsel to the Purchaser and
the Shareholders shall mutually agree.
6.10 Accountants' Comfort Letter. The Company shall deliver a
letter addressed to Purchaser from McGladrey & ▇▇▇▇▇▇ LLP stating that
all tax returns that they have prepared and filed for the Company since
the Company's last federal income tax audit comply in all material
respects with the applicable rules and regulations.
6.11 Closing Documents. The Company and the Shareholders shall be
prepared to deliver the closing documents set forth in Article 7 of this
Agreement;
6.12 Purchaser's Board Approval. Within five (5) days following
execution of this Agreement, the Board of Directors of the Purchaser
shall have authorized the execution and delivery of this Agreement and
the other agreements, documents and instruments referenced herein, and
the consummation of the transactions contemplated hereby and thereby;
6.13 Employment Agreement and Non-Competition Agreement. The
Company shall have entered into the employment agreement described in
Section 4.14 with ▇▇▇▇▇▇ ▇▇▇▇▇▇ in form and substance satisfactory to
the Purchaser in its reasonable discretion, and shall have entered into
Non-Competition agreements described in Section 4.16.
6.14 Due Diligence. The Purchaser shall be satisfied in its
reasonable discretion with the results of its due diligence investigation
of the Company.
6.15 Rights of First Refusal. All rights of first refusal held by
any person or entity relating to the Company or the business or any of
the assets or properties of the Company or the business shall have been
waived (with each such waiver to be in form and substance satisfactory
to the Purchaser in its reasonable discretion), except as has been
disclosed in Exhibit 2.22, or shall have expired without exercise.
6.16 Officer's Certificate. The Company shall have delivered to
Purchaser a certificate, dated the Closing Date, and signed by the
President of the Company, certifying that each of the conditions
specified in Section 6.2 through 6.9 and 6.15 hereof have been fulfilled.
ARTICLE 7
CONDITIONS PRECEDENT TO THE COMPANY'S
AND SHAREHOLDERS' PERFORMANCE
7.1 Conditions. The Company's and Shareholders' obligations
hereunder shall be subject to the satisfaction, at or before the Closing,
of all the conditions set forth in this Article 7. The Company and
Shareholders may waive any or all of these conditions in whole or in part
without prior notice; so long as such waiver is in writing; and provided,
however, that no such waiver of a condition shall constitute a waiver by
the Company and Shareholders of any other condition of or any of the
Company's or Shareholders' rights or remedies, at law or in equity, if
Purchaser shall be in default of any of its representations, warranties,
or covenants under this Agreement.
7.2 Accuracy of Representations. Except as otherwise permitted
by this Agreement, all representations and warranties by Purchaser in
this Agreement or in any written statement that shall be delivered to
the Company and/or Shareholders by Purchaser under this Agreement shall
be true and accurate on and as of the Closing Date as through made at
that time.
7.3 Performance. Purchaser shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the
Closing Date.
7.4 Absence of Litigation. No action, suit or preceding before
any court or any governmental body or authority, pertaining to the
transactions contemplated by this Agreement or to its consummation, shall
have been instituted or threatened against Purchaser on or before the
Closing Date.
7.5 Releases by American National Bank of Personal Guarantees.
▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ will be released by American National Bank
as guarantors on all of the Company's loans with American National Bank.
7.6 30-Day Notice Requirement of the Wyoming Department of
Environmental Quality ("DEQ"). The 30-day notice period required by the
DEQ in its agreement with the Company will have expired.
7.7 Purchaser's Written Agreement to comply with Wyoming DEQ
Administrative Order on Consent in Docket No. 2760-96. The Purchaser
will have produced the letter required by the Wyoming DEQ Administrative
Order on Consent in Docket No. 2760-96.
7.8 Officers' Certificate. Purchaser shall have delivered to the
Company and Shareholders a certificate, dated the Closing Date and signed
by the President of Purchaser certifying that each of the conditions
specified in Sections 7.2 through 7.7 have been fulfilled.
ARTICLE 8
CLOSING
8.1 Closing. The Closing of this transaction shall be held at
the offices of the Closing Agent to be mutually agreed upon by the
parties on August 11, 1997, or as soon thereafter as reasonably
practicable, or such other place as shall be mutually agreed upon, and on
such date as shall be mutually agreed upon by the parties. In the event
that Purchaser cannot close because it is waiting on a UCC filing to be
recorded with the Wyoming Secretary of State's office, the closing may be
delayed until August 15, 1997, provided that the total Purchase Price has
been deposited with the Closing Agent by August 11, 1997. At the
Closing:
(a) Purchaser shall deliver a certified or cashiers
checks for the Purchase Price to the Closing Agent.
(b) Each Shareholder shall present the certificates
representing his shares of the Company being sold to Purchaser, and such
certificates will be duly endorsed; and
(c) Each Shareholder shall receive from the Closing
Agent his or her share of the Purchase Price in the form of a cashiers
check based upon the shareholders pro rata share.
(d) Purchaser shall deliver an officer's certificate,
dated the Closing Date, stating that all representations, warranties,
covenants and conditions set forth in this Agreement on behalf of
Purchaser are true and correct as of, or have been fully performed and
complied with by, the Closing Date.
(e) Purchaser shall deliver a signed consent and/or
Minutes of the Directors of Purchaser approving this Agreement and each
matter to be approved by the Directors of Purchaser under this Agreement.
Such Minutes shall be certified by an Officer of Purchaser.
(f) The Company shall deliver a certificate, dated
the Closing Date, stating that all representations, warranties
covenants and conditions set forth in this Agreement on behalf of the
Company are true and correct as of, or have been fully performed and
complied with by, the Closing Date.
(g) The Company shall deliver a signed Consent or
Minutes of the Directors of the Company approving this Agreement. Such
Minutes shall be certified by an officer of the Company.
(h) Each party shall deliver such other documents or
information required to be furnished by Closing pursuant to this
Agreement.
ARTICLE 9
DEFINITIONS
9.1 Definition of Knowledge. Statements in this Agreement made
to the "knowledge" of a person shall mean the knowledge that such person
(where the person is an entity, the executive officers of such entity)
has or should have after having made a good faith effort to ascertain the
fact in question pursuant to an inquiry directed to such officers,
supervisors, advisors and employees of the Company as would be reasonably
likely to have information relating to the fact in question.
9.2 Definition of Tax. The capitalized term Tax as used in this
Agreement is defined as follows:
TAX or TAXES means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any government or taxing authority,
including, without limitation: taxes or other charges on or with respect
to income, franchises, windfall or other profits, gross receipts,
property, minimum, alternative minimum, estimated, sales, use, capital
stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value added,
or gains taxes; license, registration and documentation fees; and
customs' duties, tariffs, and similar charges.
ARTICLE 10
MISCELLANEOUS
10.1 Captions and Headings. The Article and paragraph/section
headings through this Agreement are for convenience and reference only,
and shall in no way be deemed to define, limit, or add to the meaning of
any provision of this Agreement.
10.2 No Oral Change. This Agreement and any provision hereof, may
not be waived, changed modified, or discharged orally, but it can be
changed by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, or discharge is sought.
10.3 Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall
be deemed to have been made unless expressly in writing and signed by the
party against whom such waiver is charged; and (i) the failure of any
party to insist in any one or more cases upon the performance of any of
the provisions, covenants, or conditions of this Agreement or to exercise
any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such provisions, covenants, or
conditions, (i) the acceptance of performance of anything required by
this Agreement to be performed with knowledge of the breach or failure
of a covenant, condition, or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of one
breach by another party shall be construed as a waiver with respect to
any other or subsequent breach.
10.4 Entire Agreement. This Agreement contains the entire
Agreement and understanding between the parties hereto, and supersedes
all prior agreements and understandings.
10.5 Choice of Law. This Agreement and its application shall be
governed by the laws of the State of Wyoming.
10.6 Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
10.7 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be
deemed to have been duly given on the date of receipt if served
personally on the party to whom notice is to be given, by telecopy or
telegram, or mailing if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
Purchaser:
▇▇▇▇▇▇ ▇. Names, Director
Pyramid Stores, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The Company:
▇▇▇▇▇▇▇▇▇ Oil Company, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Shareholders:
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
10.8 Binding Effect. This Agreement shall inure to and be binding
upon the heirs, executors, personal representatives, successors and
assigns of each of the parties to this Agreement.
10.9 Mutual Cooperation. The parties hereto shall cooperate with
each other to achieve the purpose of this Agreement, and shall execute
such other and further documents and take such other and further actions
as may be necessary or convenient to effect the transaction described
herein.
10.10 Brokers. Each of the parties hereto shall indemnify and hold
the other harmless against any and all claims, losses, liabilities or
expenses which may be asserted against it as a result of its dealings,
arrangements or agreements with any broker, finder or person.
10.11 Announcements. Purchaser Shareholders and the Company will
consult and cooperate with each other as to the timing and content of any
announcements of the transactions contemplated hereby to the general
public or to employees, customers or suppliers. Except to the extent
that the parties consent in writing otherwise, no party to this Agreement
shall make, or cause to be made, any press release or public announcement
in respect of this Agreement or the transactions contemplated hereby or
otherwise communicate with any news media. Notwithstanding the preceding
sentencing, the parties agree that the Purchaser or an affiliate of the
Purchaser may make such disclosure (on Form 8-K, by press release or
otherwise) regarding the terms of this Agreement and the transactions
contemplated hereby as it deems necessary to comply with applicable
securities laws or the rules and regulations of the American Stock
Exchange, including a press release following the execution of this
Agreement.
10.12 Expenses. Except as specifically provided in this Agreement,
all costs and expenses including legal, accounting and any other
out-of-pocket expenses incurred by the Company or its Shareholders, in
connection with this transaction, shall be paid by the Company. All
costs and expenses including legal, accounting and any other
out-of-pocket expenses incurred by the Purchaser, in connection with this
transaction, shall be paid by the Purchaser.
10.13 Survival of Representations and Warranties. Except as
otherwise provided in this Section 10.13, the representations,
warranties, covenants and agreements of the parties set forth in this
Agreement or in any instrument, certificate, opinion, or other writing
providing for in it, shall survive the Closing for a period of
five years irrespective of any investigation made by or on behalf of any
party. Notwithstanding the above, the representations and warranties set
forth in Article 5 relating to tax issues shall survive for a period
equal to the applicable statute of limitations with respect to any
circumstances described therein or related thereto.
10.14 Assignment. This Agreement may not be assigned by operation
of Law or otherwise by the Shareholders, the Company or the Purchaser.
10.15 No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other Person, including, without
limitation, any employee or former employee of the Company, any legal or
equitable right, benefit or remedy of any nature whatsoever, including,
without limitation, any rights of employment for any specified period,
under or by reason of this Agreement.
10.16 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity without the
necessity of demonstrating the inadequacy of monetary damages.
AGREED TO AND ACCEPTED as of the date first above written.
METEOR INDUSTRIES, INC. PYRAMID STORES, INC.
By /s/ ▇▇▇▇▇▇ ▇. Names By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. Names, President ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary/Treasurer
▇▇▇▇▇▇▇▇▇ OIL COMPANY, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, CEO
SHAREHOLDERS:
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇