AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") dated as
of February 6, 1998, is made by and among Colorado Wyoming Reserve Company, a
Wyoming corporation ("CW"), CWSub, Inc., a Colorado corporation ("CWSub"),
Shoreline Resource Company, Inc., a Colorado corporation ("Shorco") and F.
Xxxxxx Xxxxxxx ("Xxxxxxx"), Xxxx X. Xxxxxx ("Xxxxxx") and Xxxxx X. Xxxxxxx
("Xxxxxxx"), the shareholders of Shorco (Tiddens, Xxxxxx and Xxxxxxx,
collectively, to be referred to herein as "Shorco Shareholders"). CW, CWSub and
Shorco are sometimes individually referred to herein as a "Party" or
collectively as the "Parties."
RECITALS
A. The Shorco Shareholders collectively own all of the issued
and outstanding shares of Shorco common stock, par value $.001 per share
("Shorco Common Stock").
B. CW desires to acquire the business and properties of
Shorco, and Shorco desires to become affiliated with CW, by means of a merger
(the "Merger") of CWSub, a wholly-owned subsidiary of CW, with and into Shorco
on the terms and conditions of this Agreement and as provided in the Articles of
Merger in the form attached hereto as EXHIBIT A, which by this reference are
incorporated herein.
C. To effectuate the Merger, CW desires to issue 797,618
restricted shares of its common stock, par value $.01 per share ("CW Common
Stock") and a commitment to provide funds in the minimum amount of $300,000 to
develop the Paradox Basin (San Xxxx County, Utah) project, in exchange for all
of the Shorco Common Stock, and the Shorco Shareholders desire to exchange their
Shorco Common Stock for 797,618 shares of CW Common Stock, and a commitment by
CW to provide funds in the minimum amount of $300,000 for development of the
Paradox Basin project. Upon effectiveness of the Merger, Shorco will be a
wholly-owned subsidiary of CW.
D. The Boards of Directors of CW, CWSub and Shorco deem the
merger of CWSub with and into Shorco in accordance with the applicable law of
the State of Colorado, to be advisable and in the best interests of their
respective stockholders, and have, by resolutions duly adopted, approved this
Agreement and the plan of merger set forth herein, and the Shorco Shareholders,
as holders of all of the outstanding stock of Shorco, and CW, as sole
stockholder of CWSub, have approved this Agreement.
E. If the terms and conditions of this Agreement are
satisfied, the 10,000 issued and outstanding shares of Shorco Common Stock will
be deemed to have been converted into a total of 797,618 shares of CW Common
Stock upon effectiveness of the Merger.
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AGREEMENT
In consideration of the recitals and mutual promises contained
herein, the Parties agree as follows:
ARTICLE I
THE MERGER
At the Closing (as defined in Section 5.1 hereof), which shall
occur contemporaneously with the execution of this Agreement, CWSub shall be
merged with and into Shorco in accordance with the terms hereof:
1.1 EFFECT OF MERGER. In accordance with the provisions of
this Agreement and the Colorado Business Corporation Act (the "Colorado Act"),
at the Merger Effective Time (as defined in Section 1.2 hereof), (i) CWSub shall
be merged with and into Shorco, (ii) the separate existence of CWSub shall
cease; and (iii) Shorco shall continue its corporate existence under the laws of
the State of Colorado (the "Surviving Corporation").
1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective when (i) the properly executed Articles of Merger are duly filed with
the Office of the Secretary of State of Colorado as provided for in Section
0-000-000 of the Colorado Act, which filing shall be made upon completion of the
Closing of the Merger in accordance with Section 5.4 hereof. The date and time
when the Merger shall become effective is referred to as the "Merger Effective
Time."
1.3 CERTIFICATE OF INCORPORATION; BYLAWS; NAME OF SURVIVING
CORPORATION. At the Merger Effective Time, (i) the Certificate of Incorporation
of CWSub as in effect immediately prior to the Merger Effective Time shall be
the Certificate of Incorporation of the Surviving Corporation until amended as
provided by law, (ii) the Bylaws of CWSub in effect immediately prior to the
Merger Effective Time shall be the Bylaws of the Surviving Corporation until
amended as provided by law, and (iii) the name of the Surviving Corporation
shall be Shoreline Resource Company, Inc..
1.4 OFFICERS AND DIRECTORS. The officers and directors of
CWSub at the Merger Effective Time shall become the officers and directors of
the Surviving Corporation immediately after the Merger Effective Time.
1.5 SUCCESSION. At the Merger Effective Time, the separate
corporate existence of CWSub shall cease, and Shorco as the Surviving
Corporation shall possess all the rights, privileges, powers and franchises of a
public and private nature and be subject to all the restrictions, disabilities
and duties of CWSub and all rights, privileges, powers and franchises of CWSub,
and all property, real, personal and mixed, and all debts due to CWSub on
whatever account, and all other things in action belonging to CWSub, shall be
vested in the Surviving Corporation; and all
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property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectively the property of the Surviving
Corporation as they were of CWSub, and the title to any real estate vested by
deed or otherwise in CWSub, shall not revert or be in any way impaired by reason
of the Merger; but all rights of creditors and all liens upon any property of
CWSub shall be preserved unimpaired, and all debts, liabilities and duties of
CWSub shall thenceforth attach to the Surviving Corporation and may be enforced
against it to the same extent as if such debts, liabilities and duties had been
incurred or contracted by the Surviving Corporation. All corporate acts, plans,
policies, agreements, arrangements, approvals and authorizations of CWSub, its
stockholder, Board of Directors and committees thereof, officers and agents
which were valid and effective immediately prior to the Merger Effective Time,
shall be taken for all purposes as the acts, plans, policies, agreements,
arrangements, approvals and authorizations of Shorco and shall be as effective
and binding thereon as the same were with respect to CWSub.
1.6 CONVERSION AND EXCHANGE OF STOCK AT CLOSING. At the Merger
Effective Time, by virtue of the Merger and without any action on the part of
any holder:
(a) Each share of CWSub common stock (the "CWSub
Common Stock"), which is issued and outstanding shall be converted into one
share of common stock of the Surviving Corporation;
(b) All outstanding shares of Shorco Common
Stock shall be converted into a total of 797,618 shares of CW Common Stock.
1.7 EXCHANGE OF STOCK CERTIFICATES. After the Merger Effective
Time, the Shorco Shareholders shall surrender their outstanding certificate or
certificates representing shares of Shorco Common Stock for cancellation to CW's
corporate secretary, who shall act as the exchange agent to effect the exchange
of Shorco share certificates for certificates representing shares of CW Common
Stock. The Shorco Shareholders shall be entitled upon such surrender to receive
in exchange therefor, certificates representing such portion of the 797,618
shares of CW Common Stock to which each is entitled as set forth on EXHIBIT B
attached hereto and incorporated herein by this reference. Until such surrender
and cancellation, each such outstanding Shorco Common Stock certificate shall,
after the Merger Effective Time, be deemed for all corporate purposes to
evidence solely the number of shares of CW Common Stock to which each Shorco
Shareholder is entitled as set forth on EXHIBIT B, and the right to receive a CW
stock certificate representing such shares, but no other right with respect to
Shorco Common Stock. After the Merger Effective Time, there shall be no further
registration of transfers of Shorco Common Stock on the records of Shorco and,
if a certificate representing such shares is presented to Shorco, it shall be
canceled and exchanged as herein provided.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF SHORCO SHAREHOLDERS. The
Shorco Shareholders represent and warrant to CW that:
(a) ORGANIZATION, GOOD STANDING, QUALIFICATION.
Shorco is a corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado. Shorco is duly qualified to carry on
its business in the states in which its business and properties are located.
(b) AUTHORITY.
(i) (A) The Shorco Shareholders are the
lawful owners and holders of record of all outstanding shares of Shorco Common
Stock, free and clear of all liens, and each has full authority to execute and
deliver this Agreement and to perform his or her obligations hereunder; (B)
delivery to CW of a certificate or certificates representing the Shorco Common
Stock pursuant to this Agreement will transfer to CW valid title thereto, free
and clear of all liens; and (C) none of the Shorco Shareholders has any legal
obligation, absolute or contingent, to any other person or firm to sell any of
his or her Shorco Common Stock, to effect any merger, consolidation or other
reorganization of Shorco or to enter into any agreement which would affect his
or her title or right to deliver the Shorco Common Stock free and clear of all
liens.
(ii) (B) Shorco has all requisite power and
authority to carry on its business as presently conducted, to enter into this
Agreement, and to perform its obligations under this Agreement. The consummation
of the transactions contemplated by this Agreement will not (B) violate, or be
in conflict with, any provision of Shorco's charter, bylaws, or governing
documents, or any agreement or instrument to which it is a party or is bound or
affected, or (C) violate any (yy) Order, writ, injunction, decree or judgment of
any court or governmental authority (collectively "Orders"), or (zz) federal,
state, local or foreign laws, statutes, rules, ordinances or regulations
(collectively "Laws") applicable to Shorco or any of its assets.
(c) ENFORCEABILITY. This Agreement and all
documents and instruments required hereunder have been duly executed and
delivered by each of the Shorco Shareholders and on behalf of Shorco, and
constitute the legal, valid and binding obligations of Shorco and each of the
Shorco Shareholders, enforceable in accordance with their terms, subject only to
the effects of bankruptcy, insolvency, reorganization, moratorium, and similar
laws from time to time in effect, as well as to general principles of equity.
(d) CAPITAL STOCK OF SHORCO. The authorized
capital of Shorco consists of 10,000 shares of common stock, all of which shares
are issued and outstanding, and all of which are duly authorized, validly
issued, fully paid and nonassessable. There are no outstanding or authorized
options, warrants or other contracts or commitments that require Shorco to
issue, sell or
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otherwise cause to become outstanding any of its capital stock or other
securities and there are no outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to Shorco.
There are no stockholders' agreements, voting trusts, proxies or other
agreements or understandings with respect to the voting of the capital stock of
Shorco.
(e) SUBSIDIARIES, PARTNERSHIPS, ETC. OF SHORCO.
Shorco does not own, directly or indirectly, any stock or other security of any
other corporation, partnership, joint venture or other entity.
(f) FINANCIAL STATEMENTS AND BALANCE SHEET.
True and correct copies of the balance sheet of Shorco as of December 31, 1997
and statement of operations and cash flow for the year then ended, have been
previously delivered to CW. Except as otherwise noted therein, the balance sheet
and statement of operations and cash flow were prepared in accordance with
generally accepted accounting principles applied consistently, and fairly
present the financial condition, assets and liabilities of Shorco as of December
31, 1997. There are no liabilities of Shorco, contingent or otherwise, not
reflected in the balance sheet. Since December 31, 1997, there has not been any
reduction in working capital below that shown on the December 31, 1997 balance
sheet except as necessary to conduct the business of Shorco in the ordinary
course.
(g) TAX MATTERS. Shorco has not taken or
agreed to take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of section 368(a) of the Internal
Revenue Code of 1946, as amended. Shorco has duly filed all federal, state,
local and foreign tax returns (consolidated or otherwise) required to be filed
and such returns are true, correct and complete, and Shorco has duly paid in
full or made provision in accordance with generally accepted accounting
principles for the payment of all taxes for all periods ending through the date
hereof. There is no agreement for the extension of the time of any assessment of
any tax with respect to Shorco. None of Shorco's assets are subject to liens for
unpaid taxes, except for taxes not yet due and payable. No audit has been
conducted or threatened with respect to the taxes paid by Shorco or with respect
to its assets, and no issue is pending currently with any taxing agency relating
to any such taxes.
(h) NECESSARY ACTION. Each of the Shorco
Shareholders represents and warrants on behalf of Shorco, that as of the date of
execution of this Agreement, he or she has heretofore agreed and consented to
execute this Agreement and any documents or agreements necessary to carry out
the terms hereof and for the consummation of the transactions contemplated by
this Agreement, including, but not limited to, the Merger. No other action by or
on behalf of Shorco is or will be necessary to authorize the execution, delivery
and performance of this Agreement and any documents and agreements executed by
Shorco in connection herewith or the transactions contemplated herein.
(i) TITLE TO PROPERTIES. Shorco owns all of
the oil and gas leasehold interests and other property interests reflected on
the balance sheet dated December 31, 1997 and as specifically set forth on
EXHIBIT C attached hereto and incorporated herein by this reference (the "Shorco
Assets"), free and clear from all defects, claims, liens, encumbrances and
burdens except
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as disclosed in the balance sheet dated December 31, 1997 and specifically set
forth on EXHIBIT C. Specifically:
(1) There is no claim, dispute, suit, action,
investigation or other proceeding pending before any court or
governmental agency, nor, to the best knowledge of Shorco
based upon reasonable inquiry and investigation, threatened,
against Shorco or any of the Shorco Shareholders or any of the
Shorco Assets which has or might result in the impairment or
loss of Shorco's title to any of the Shorco Assets or the
value thereof or impede operations thereon.
(2) To the best knowledge of Shorco based upon
reasonable inquiry and investigation, there exists no
unrecorded document or agreement which may result in
impairment or loss of Shorco's ability to convey the Shorco
Assets or impairment or loss of any portion of the rights,
titles or interests therein.
(3) Shorco warrants title to the Shorco Assets
against the claims and demands of all persons asserting any
interest by, through or under Xxxxx X. Xxxxx and/or Shorco,
and the Surviving Corporation shall be subrogated to any
warranty claim which Shorco may have against any third party,
prior owner, vendor or assignor.
(4) Except as set forth on EXHIBIT C, Shorco has good
and marketable record title to the Shorco Assets which
entitles Shorco to one hundred percent (100%) of the working
interest under the oil and gas leases identified on EXHIBIT C,
and such working interest is not burdened by any royalty
interest, overriding royalty interest, carried interest,
production payment, net profits interest or any other similar
burden (collectively, "Leasehold Burdens") other than the
landowner's royalty attributable to each respective oil and
gas lease. There are no limitations as to the depths covered
or substances to which such working interests apply.
(5) Shorco shall not directly or indirectly create,
reserve or retain any recorded or unrecorded executory rights
or Leasehold Burdens in the Shorco Assets.
(6) There are no preferential rights to purchase nor
any required third-party consents which must be obtained,
other than consents from governmental authorities which are
commonly obtained after an assignment, with respect to the
Shorco Assets.
(7) All ad valorem, property and similar taxes and
assessments based on the ownership of property and due and
payable as of the date hereof, have been paid timely in all
respects, and there are no liens for taxes or assessments
affecting the Shorco Assets.
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(8) All rental payments, lease bonus payments and
minimum royalty payments due and payable with respect to the
Shorco Assets as of the date hereof have been paid timely in
all respects. The oil and gas leases identified on EXHIBIT C
are in full force and effect, validly existing and are legally
binding, without any payment or performance obligation
necessary to maintain any such lease, except as otherwise
disclosed on EXHIBIT C or in the terms of such lease.
(9) Any easements, rights-of-way, servitudes,
permits, surface leases, conditions, covenants or other
restrictions that burden the Shorco Assets have been disclosed
on EXHIBIT C and do not have a material adverse effect on the
ownership, use, operation or value of the Shorco Assets.
(10) Shorco is not in breach or default with respect
to any of its obligations under any oil and gas lease or other
document establishing any interest or right in the Shorco
Assets, and to the best knowledge of Shorco based upon
reasonable inquiry and investigation, no person or party has
given or threatened to give notice of any action to terminate,
cancel, rescind or procure reformation of any such lease or
document.
(j) EXHIBITS. The Exhibits attached hereto
provide complete and accurate listings of all information stated in this
Agreement to be provided therein. There are no exceptions to Shorco's
representations and warranties contained in this Agreement except as expressly
contained in this Agreement or in the Exhibits attached hereto.
(k) MATERIAL AGREEMENTS. Shorco has
delivered to CW a true and complete list, attached hereto as EXHIBIT D, of all
Material Agreements. "Material Agreements" means all contracts, agreements,
plans, leases, policies, licenses (including intellectual property) or
instruments, which are material to the operation of the business of Shorco as
presently conducted. (i) The Material Agreements are in all respects in full
force and effect and are the valid and legally binding obligations of the
parties thereto and are enforceable in accordance with their respective terms;
(ii) neither Shorco nor to its knowledge, any other party to a Material
Agreement, is in breach or default with respect to any of its obligations
thereunder or any regulations incorporated therein or governing same, nor does
there exist any condition or circumstances which with the passage of time would
constitute such a breach or default; and (iii) the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not result in a breach of, constitute a default under, or result in a violation
of the provisions of any of the Material Agreements.
(l) BROKERS. Neither Shorco nor the Shorco
Shareholders have incurred liability, contingent or otherwise, for brokers' or
finders' fees relating to the transactions contemplated by this Agreement.
(m) SUITS OR CLAIMS; COMPLIANCE WITH LAW. No
suit, action, claim, investigation, or other proceeding is pending or, to the
knowledge of the Shorco Shareholders after
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due inquiry, threatened before any court or governmental agency and to the
knowledge of each of the Shorco Shareholders after due inquiry, no cause of
action exists that relates to the Shorco Assets or that might result in
impairment or loss of Shorco's title to any portion of the Shorco Assets or the
value thereof or that might hinder or impede Shorco's ability to consummate the
transactions contemplated by this Agreement. There is no material noncompliance
by Shorco with any Laws and Orders, and Shorco has not received notice from any
enforcement authority of any violation of any Laws or of any investigation of
any alleged violation and the Shorco Assets conform with applicable Laws.
(n) PERMITS. Shorco holds all of the
certificates, permits, licenses, registrations, consents, authorizations,
approvals, privileges, waivers, exemptions and orders (collectively, "Permits")
required to own the Shorco Assets and operate its business as presently owned
and operated and pursuant to all Laws, and such Permits are in full force and
effect. There is no material violation of any Permit and no action or claim is
pending or threatened to challenge, revoke or limit any such Permit. Shorco has
complied in all material respects with all laws, including but not limited to,
environmental laws, regulations, ordinances and orders relating to its business
or any of the Shorco Assets.
(o) CONSENTS. No action or consent of any
governmental authority is required for the execution, delivery or performance of
this Agreement by Shorco other than filings with the Colorado Secretary of State
and any other states in which Shorco is authorized to conduct business as a
foreign corporation. No Material Agreement requires any action or consent by any
person or entity for the execution, delivery or performance of this Agreement.
(p) EMPLOYEES; CONSULTANTS; LABOR. Shorco (i)
does not now nor has it ever had any employees or consultants; (ii) is not now
nor has it ever been a party to any employment agreement, collective bargaining
agreement or similar labor agreement; and (iii) does not now nor has it ever had
an "Employee Benefit Plan," (as defined by ERISA Section 3(3)) which term
includes but is not limited to pension, retirement, profit sharing, bonus,
nonqualified deferred compensation, welfare, disability, medical,
hospitalization, dental, workers' compensation, health insurance, life
insurance, severance and incentive plans, vacation benefits and fringe benefits.
(q) BOOKS AND RECORDS. All books of account,
minute books, stock certificate books, stock transfer ledgers and other
corporate records of, and records maintained pursuant to the requirements of
governmental authorities by Shorco are complete, and correctly and accurately
present and reflect in all material respects all transactions entered into by
Shorco or to which Shorco is a party or any other matter which should be set
forth in such books and records.
(r) INVESTMENT REPRESENTATIONS. Each of the
Shorco Shareholders (i) is acquiring the shares of CW Common Stock pursuant to
the terms hereof for his own account for the purpose of investment and not with
a view to any distribution or sale of such shares except insofar as such shares
are included in a public offering registered pursuant to the Securities Act of
1933, as amended (the "Act") or the disposition thereof is exempt from such
registration; and (ii) understands that such shares of CW Common Stock have not
been registered under the Act or any state securities
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law and that such shares are being offered and sold to him or her pursuant to
exemptions from the registration requirements of the Act.
2.2 REPRESENTATIONS AND WARRANTIES OF CW AND
CWSUB. CW and CWSub represent and warrant to Shorco and the Shorco Shareholders
that:
(a) INCORPORATION, GOOD STANDING, QUALIFICATION.
CW is a corporation duly organized, validly existing and in good standing under
the laws of the State of Wyoming, duly qualified to carry on its business in
each of the states in which it is required to be qualified. CWSub is a
corporation duly organized, validly existing and in good standing under the
Colorado Act, duly qualified to carry on its business in each of the states in
which it is required to be qualified.
(b) AUTHORITY. CW and CWSub have all requisite
power and authority to carry on their respective businesses as presently
conducted, to enter into this Agreement, to accomplish the Merger on the terms
described in this Agreement and to perform their respective obligations under
this Agreement. The consummation of the transactions contemplated by this
Agreement will not violate, nor be in conflict with, any provision of CW's or
CWSub's charter, bylaws or governing documents, or any agreement or instrument
to which CW or CWSub is party or is bound, or any judgment, decree, order,
statute, rule or regulation applicable to them. The execution, delivery and
performance of this Agreement and the transactions contemplated have been duly
and validly authorized by all requisite action, corporate or otherwise, on the
part of CW and CWSub.
(c) ENFORCEABILITY. This Agreement and all
documents and instruments required hereunder have been duly executed and
delivered on behalf of CW and CWSub, and constitute legal, valid and binding
obligations of CW and CWSub enforceable in accordance with their respective
terms, subject only to the effects of bankruptcy, insolvency, reorganization,
moratorium, and similar laws from time to time in effect, as well as to general
principles of equity.
(d) EXHIBITS. The Exhibits attached hereto
provide complete and accurate listings of all information stated in this
Agreement to be provided therein. There are no exceptions to CW's or CWSub's
representations and warranties contained in this Agreement except as expressly
contained in this Agreement or in the Exhibits attached hereto.
(e) BROKERS. Neither CW nor CWSub has incurred
liability, contingent or otherwise, for brokers' or finders' fees relating to
the transactions contemplated by this
Agreement.
(f) CAPITAL STOCK OF CW AND CWSUB. EXHIBIT E sets
forth, by class, the entire authorized amount of capital stock and other
securities of each of CW and CWSub, along with the amount of securities of each
such class which is issued and outstanding. All such issued and outstanding
shares are duly authorized, validly issued, fully paid and nonassessable. Except
as set forth in EXHIBIT E, there are no outstanding or authorized options,
warrants, conversion rights, exchange rights or other contracts or commitments
that require CW or CWSub to issue, sell or
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otherwise cause to become outstanding any of its capital stock or other
securities and there are no outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to CW or
CWSub. To the knowledge of CW or CWSub, there are no stockholders' agreements,
voting trusts, proxies or other agreements or understandings with respect to the
voting of the capital stock of CW or CWSub.
(g) SUITS OR CLAIMS. No suit, action, claim,
investigation, or other proceeding is pending or, to the best of CW's or CWSub's
knowledge, threatened before any court or governmental agency and to the best of
their knowledge no cause of action exists that might hinder or impede CW's or
CWSub's ability to consummate the transactions contemplated by this Agreement.
(h) CONSENTS. No action or consent of any
governmental authority is required for the execution, delivery or performance of
this Agreement by CW or CWSub other than filing with the Colorado Secretary of
State and any other states in which CW or CWSub are authorized to conduct
business as foreign corporations.
ARTICLE III
COVENANTS
3.1 COVENANTS OF SHORCO AND THE SHORCO SHAREHOLDERS. Shorco
and the Shorco Shareholders covenant and agree to and with CW that:
(a) RESIGNATIONS. The current officers and
directors of Shorco shall resign from their respective positions effective as of
the Merger Effective Time, and shall provide a copy of such resignations to CW
at the Closing.
3.2 COVENANTS OF CW. CW covenants and agrees to and with
Shorco and the Shorco Shareholders that:
(a) FURTHER ASSURANCES. From time to time,
as and when required by the Surviving Corporation, or by its successors and
assigns, there shall be executed and delivered on behalf of CW or CWSub such
deeds and other instruments, and there shall be taken or caused to be taken by
it all such further and other action, as shall be appropriate or necessary in
order to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, the title to and possession of all property, interests, assets,
rights, privileges, immunities, powers, franchises and authority of CWSub, and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of the Surviving Corporation are fully authorized in the name and on
behalf of CWSub or otherwise, to take any and all such action and to execute and
deliver any and all such deeds and other instruments.
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(b) DIRECTORS AND OFFICERS OF CW. The Board of
Directors of CW shall approve a resolution, effective as of the Merger Effective
Time, to increase the membership on the Board of Directors of CW from three to
five members, and to appoint Tiddens and Xxxxxx as members of the Board.
(c) COMMITMENT OF FUNDS FOR PROJECT CW shall
commit funds in the minimum amount of $300,000 to develop the Paradox Basin (San
Xxxx County, Utah) project. Such funds shall be used for lease acquisition,
"3-D" seismic surveys and general and administrative expenses incurred in
connection with the project.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 INVESTMENT MATTERS. The CW Common Stock to be issued to
the Shorco Shareholders pursuant to the Merger has not and will not be
registered under the Act or any state securities law, and is being issued in
reliance upon representations made by the Shorco Shareholders herein and
exemptions from such registration requirements that are available only if the CW
Common Stock is not being offered to the public and is being acquired for
investment and not with a view to its distribution or sale. CW will cause an
appropriate legend stating these restrictions to be placed on all stock
certificates issued by it pursuant to this Agreement.
4.2 GOVERNMENT FILINGS. After the Closing, as appropriate, the
Parties shall in a timely manner (a) make required filings with each
governmental agency to which such filings are necessary or appropriate for the
consummation of the transactions contemplated hereby, and (b) provide such
information as each may reasonably request to make such filings. The Parties
shall cooperate with and assist each other in pursuing such filings. Each Party
shall be responsible for and shall make any governmental filings occasioned by
the ownership or organization of such Party.
4.3 CONSULTING AGREEMENTS. At or prior to the Closing,
the following agreements shall have been entered into:
(a) XXXXXXX. Xxxxxxx shall execute a preliminary
agreement which will provide that Xxxxxxx receive a consulting payment of
$20,000 at Closing and $40.00 per hour for consulting services provided to
Shorco or CW during the period of the Financing Contingency, and that she will
enter into a consulting agreement, effective upon completion of an additional
tranche of financing satisfactory to CW (the "Financing Contingency"), pursuant
to which she will receive (i) a grant of non-qualified stock options to purchase
30,000 shares of CW Common Stock at an exercise price of $1.50 per share, which
options shall be granted pursuant to the CW Equity Incentive Plan and shall vest
on January 15, 1999; (ii) a consulting fee of $80,000.00 per year for a period
of two years, in return for services to be specified and set forth in such
consulting agreement; and (iii) a guaranteed, assigned one percent of 8/8ths
overriding royalty (proportionately reduced to CW's interest) in the Paradox
Basin (San Xxxx County, Utah) project (the "Project"), as
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well as an opportunity to participate in an overriding royalty pool sponsored by
CW or Shorco, as the case may be.
(b) VTV, INCORPORATED ("VTV"). VTV, by and
through Xxxxx X. Xxxxxxxx, Xx., shall execute a preliminary agreement which will
provide that VTV will enter into a consulting agreement effective upon
completion of the Financing Contingency and ending on December 31, 1998 unless
otherwise extended by the parties thereto, pursuant to which VTV will receive
(i) a grant of non-qualified stock options to purchase 75,000 shares of CW
Common Stock at an exercise price of $1.50 per share, which options shall be
granted pursuant to the CW Equity Incentive Plan and shall vest on January 15,
1999; (ii) a compensation package for 1998 including, but not limited to,
out-of-pocket expenses and $85.00 per hour for all direct services provided by
VTV to the Project in return for its commitment of time and professional
services during 1998 to the Project, as further set forth and specified in such
consulting agreement; and (iii) a guaranteed, assigned one-half of one percent
of 8/8ths overriding royalty (proportionately reduced to CW's interest) limited
to the acquisition area and/or 3-D volume in the Project.
(c) XXXXX X. XXXXX ("WHITE"). White shall
execute an agreement which will provide that Shorco will be entitled to purchase
certain additional oil, gas and mineral interests in the Project area from
White, according to the terms and conditions contained therein. At and
conditioned upon the consummation of the Closing, White shall receive
non-qualified stock options to purchase 25,000 shares of CW Common Stock at an
exercise price of $1.50 per share, which options were granted on January 22,
1998 pursuant to the CW Equity Incentive Plan and which shall vest on January
15, 1999.
4.4 TIDDENS' CONSULTING SERVICES. At the Closing, Tiddens
shall receive a consulting payment of $30,000.00 and upon completion of the
Financing Contingency, will be paid a consulting fee of $6,000.00 per month
through December 31, 1998 for services to be specified and set forth in a
consulting agreement with CW.
ARTICLE V
CLOSING
5.1 TIME AND PLACE. The closing of the Merger and the other
transactions contemplated by this Agreement (the "Closing") shall occur
contemporaneously with the execution of this Agreement at the offices of Trinity
Petroleum Management LLC, 0000 Xxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 at
10:00 a.m. on February 6, 1998, or at such other time or on such other date or
at such other place as the Parties may mutually agree. The date Closing actually
occurs is herein called the "Closing Date."
5.2 DELIVERIES BY CW AND CWSUB AT CLOSING. At the
Closing, CW and CWSub, as appropriate, shall deliver the following, each being a
condition precedent to the obligations of
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Shorco and the Shorco Shareholders, and each being deemed to have occurred
simultaneously with the obligations of Shorco and the Shorco Shareholders:
(a) letters from CW representing stock
certificates evidencing shares of CW Common Stock, in the names of the Shorco
Shareholders and for the number of shares as set forth on EXHIBIT B;
(b) cash or its equivalent in the amount of
$30,000, to Tiddens;
(c) cash or its equivalent in the amount of
$20,000, to Xxxxxxx;
(d) an option agreement to White to purchase up
to 25,000 shares of CW Common Stock as specified in Section 4.3 herein;
(e) Certificates of Good Standing of CW and
CWSub, dated within five days prior to the Closing; and
(f) a certificate, dated as of the Closing Date
and signed by CW's Secretary or Assistant Secretary, certifying (i) that CW and
CWSub have received all requisite corporate approvals authorizing the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein; (ii) as to the attached resolution from the
board of directors of CW increasing the size of the board from three to five
members and appointing Tiddens and Xxxxxx to fill the board vacancies effective
as of the Merger Effective Time; and (iii) as to the incumbency of the officers
executing this Agreement on behalf of CW and CWSub, and any documents to be
executed and delivered by CW or CWSub at Closing.
5.3 DELIVERIES BY SHORCO AND THE SHORCO SHAREHOLDERS AT
CLOSING. Shorco and the Shorco Shareholders, as appropriate, shall deliver the
following, each being a condition precedent to the obligations of CW and CWSub,
and each being deemed to have occurred simultaneously with the obligations of CW
and CWSub:
(a) stock certificates evidencing the Shorco
Shares, duly endorsed for transfer to CW or accompanied by a stock power duly
executed in blank;
(b) the Xxxxxxx agreement, as described in
Section 4.3 herein;
(c) the VTV agreement, as described in Section
4.3 herein;
(d) the White agreement, as described in Section
4.3 herein;
(e) a Certificate of Good Standing of Shorco,
dated within five days prior to the Closing; and
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(f) a certificate, dated as of the Closing Date
and signed by Shorco's Secretary or Assistant Secretary, certifying: (i) that
Shorco has received all requisite corporate approvals authorizing the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein; (ii) as to the attached resignations of all
members of the board of directors and officers of Shorco effective as of the
Merger Effective Time; and (iii) as to the incumbency of the officers executing
this Agreement on behalf of Shorco, and any documents to be executed and
delivered by Shorco at Closing.
5.4 FILING OF CERTIFICATE OF MERGER. As soon as possible after
the Closing, the duly executed Articles of Merger shall be filed with the
Colorado Secretary of State.
ARTICLE VI
MISCELLANEOUS
6.1 SURVIVAL. The representations, warranties, covenants and
agreements included or provided in this Agreement, or in any schedule, document,
certificate or other instrument delivered pursuant hereto, shall survive the
Closing.
6.2 LIABILITIES UPON BREACH. If this Agreement is breached,
the Party not at fault shall have the right to recover damages for the breach or
failure of any representation, warranty, covenant or agreement contained herein.
6.3 EXPENSES. Except as otherwise specifically provided
otherwise in this Agreement, all fees, costs and expenses incurred by any Party
in consummating the transactions contemplated by this Agreement shall be shared
equally between the Parties, except that any fees, costs and expenses incurred
by Shorco or the Shorco Shareholders relating to either of such Party's own tax
planning, internal preparation of documents or organizational structure, shall
be paid by the Party incurring the same, including, without limitation, legal,
engineering and accounting fees, costs and expenses.
6.4 NOTICES. All notices and communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been given three (3) business days
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following deposit in the United States mail as provided herein or upon actual
receipt if sent by overnight delivery, facsimile transmission or hand delivery,
in each such case addressed as follows:
IF TO SHORCO OR TIDDENS:
Shoreline Resource Company, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: F. Xxxxxx Xxxxxxx, President
IF TO XXXXXX:
Xxxx X. Xxxxxx
X.X. Xxx 00,000 #000
Xxxxxxxxxxxx, Xxxxxxxx 00000
0000 Xxxxx Xxxxxxx Xxxxx (FedEx/UPS)
Telecopy: (000) 000-0000
IF TO XXXXXXX:
Xxxxx X. Xxxxxxx
Petroleum Geologist
0000 X. Xxxxxxxxx Xxx., Xxxxx 00
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
IF TO CW OR CWSUB:
Colorado Wyoming Reserve Company
c/o Trinity Petroleum Management LLC
Xxxxx 000, 0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, President
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WITH COPY TO:
Xxxxxxxx X. Xxxxxxxx, Esq.
Xxxxx, Xxxxxx & Xxxxxx LLP
Xxxxx 0000, 000-00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Any Party may, by written notice so delivered to the other,
change the address or the person to which delivery shall thereafter be made.
6.5 AMENDMENT OR WAIVER. This Agreement may not be altered or
amended, nor any rights hereunder be waived, except by an instrument in writing
executed by the Party to be charged with such amendment or waiver. No waiver of
any term, provision or condition of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, provision or condition or as a waiver of any other
term, provision or condition of this Agreement.
6.6 ANNOUNCEMENTS. Shorco and CW shall consult with each other
with regard to all press releases and other public announcements concerning this
Agreement or the transactions contemplated hereby and, except as may be required
by applicable laws or the applicable rules and regulations of any governmental
agency or stock exchange, neither Party shall issue any such press release or
make any other public announcement without the prior written consent of the
other Party, which shall not be unreasonably withheld.
6.7 GENERALITY OF PROVISIONS. The specificity of any
representation, warranty, covenant, agreement or indemnity included or provided
in this Agreement, or in any exhibit, document, certificate or other instrument
delivered pursuant hereto, shall in no way limit the generality of any
representation, warranty, covenant, agreement or indemnity included or provided
in this Agreement, or in any exhibit, document, certificate or other instrument
delivered pursuant hereto.
6.8 HEADINGS. The headings of the articles and sections of
this Agreement are for guidance and convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions of this Agreement.
6.9 COUNTERPARTS AND FACSIMILES. This Agreement may be
executed by the Parties in any number of counterparts or by facsimile signature,
each of which shall be deemed an original instrument, but all of which together
shall constitute but one and the same instrument.
6.10 GOVERNING LAW. This Agreement and the transactions
contemplated hereby shall be construed in accordance with, and governed by, the
laws of the State of Colorado.
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6.11 ENTIRE AGREEMENT. This Agreement (including the exhibits
hereto) constitutes the entire understanding between the Parties with respect to
the subject matter hereof, superseding all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter.
6.12 PARTIES IN INTEREST. This Agreement shall be binding
upon, and shall inure to the benefit of, the Parties hereto and their respective
successors and assigns, and nothing contained in this Agreement, express or
implied, is intended to confer upon any other person or entity any benefits,
rights or remedies.
6.13 ATTORNEYS' FEES. In the event of a dispute between the
Parties hereto with respect to the interpretation or enforcement of the terms
hereof, the prevailing Party in any action resulting therefrom shall be entitled
to collect from the other its reasonable costs and attorneys' fees, including
its costs and fees upon appeal.
IN WITNESS WHEREOF, the Parties hereby execute this Agreement
as of the date first above mentioned.
SHORELINE RESOURCE COMPANY, INC
By /S/ F. XXXXXX XXXXXXX
------------------------------
F. Xxxxxx Xxxxxxx, President
SHORCO SHAREHOLDERS:
/S/ F. XXXXXX XXXXXXX
-------------------------------
F. Xxxxxx Xxxxxxx, Individually
/S/ XXXX X. XXXXXX
-------------------------------
Xxxx X. Xxxxxx, Individually
/S/ XXXXX X. XXXXXXX
--------------------------------
Xxxxx X. Xxxxxxx, Individually
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COLORADO WYOMING RESERVE
COMPANY
By /S/ XXX X. XXXXXX
--------------------------------
Xxx X. Xxxxxx,
President
CWSUB, INC.
By /S/ XXX X. XXXXXX
--------------------------------
Xxx X. Xxxxxx,
President
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