AGREEMENT FOR SALE OF ALL SHARES IN EVANS COAL CORP.
Exhibit 10.5
AGREEMENT FOR SALE OF ALL
SHARES IN XXXXX COAL CORP.
THIS
AGREEMENT made and entered into at Flat Lick, Xxxx County, Kentucky as of the
6th
day of February, 2010 by and between XXXXXXX XXXXX, widow and not
remarried, being the owner of all the outstanding shares
of Xxxxx Coal Corp., hereinafter called the "Seller," and XXXXX COAL CORP.
(Xxxxx), a Kentucky corporation, of 00000 Xxxxx Xxxxxxx X.X. 00X, Xxxx Xxxx,
Xxxx Xxxxxx, Xxxxxxxx 00000, hereinafter called "Xxxxx" and AMERICAS ENERGY
COMPANY, INC., a Nevada corporation, of 000 Xxxxx Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxx 00000 hereinafter called the
"Buyer."
Recitals
The
Seller is the sole 'shareholder of Xxxxx Coal Corp., a Kentucky corporation,
which Corporation holds certain coal mining leases upon coal bearing
property in Xxxx County, Xxxx County, Xxxxxx County and Breathitt County,
Kentucky under various leases, has various surface disturbance
permits from the Commonwealth of Kentucky Natural Resources Cabinet upon
the Xxxx, Xxxx and Xxxxxx County, Kentucky leaseholds and is the owner of
certain surface mining equipment and assets, and Xxxxx
joins in this Agreement to certify certain items on behalf of the Seller, and
The
Seller desires to sell all of her stock in Xxxxx, and the Buyer desires to
purchase the same and to assume the Seller's position as sole owner on
the terms and conditions hereinafter provided.
NOW,
THEREFORE, WITNESSETH: That for and in consideration of the premises and the
mutual promises and the sums to be paid and the sum of Ten ($10.00) Dollars,
cash in hand paid, it is agreed to hereby by and between the Buyer and Seller as
follows, to wit:
ARTICLE
I
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1.
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Shares
to be Purchased. The Seller shall sell and the Buyer shall buy all of the
Seller's outstanding shares which consist of 100 fully paid and
nonassessed shares in Xxxxx and shall transfer and assign all the
outstanding interest in Xxxxx to the Buyer. A copy of Seller's shares to
be transferred to Buyer is attached hereto as
Exhibit"AA".
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2.
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Purchase
Price. The Buyer shall pay to the Seller as the purchase price of the
shares as follows, to wit:
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•
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The
sum of $4.00,000.00 already paid, the receipt of which is acknowledged by
the Seller; $2,600,000,00 upon execution of this Agreement; $4,000,000.00
at closing on the 5th
day of March,2010;
$25,000,000,00" to be paid at the rate of $5.00 per short ton of coal
mined, sold and shipped from the leaseholds of Xxxxx subject to the
payment
schedule in Exhibit "B" attached hereto. Buyer will execute a
Promissory Note in substantial compliance with the Promissory Note
attached hereto and
marked as Exhibit "c"
which shall include interest and penalties for a default and/or.
late payments.
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3.
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Guaranty
Reassignment. The Buyer shall substitute and/or relieve at the closing the
Seller from the various guaranty agreements set out in Exhibit "F," same
to be accomplished within thirty (30) days of the above date. Evidence of
the Buyer’s assumption of the assignments as approved by the creditors
shall be given to the Seller.
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4.
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Net
Worth. The Buyer has had full opportunity to review the balance sheet and
books and records of Xxxxx. The unaudited balance sheet as of December 31,
2009 of Xxxxx is attached hereto and marked as Exhibit "G". If
the Buyer wishes to audit the net worth of Xxxxx, it may do so at
its own expense.
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5.
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Restrictions
against Withdrawals and Sale or Removal of Assets. Until such time as all
the fixed and contingent payments from the Buyer to the Seller as required
by this Agreement have been met and satisfied, the Buyer or Xxxxx shall
not remove any of the equipment identified in Exhibit "H"
attached hereto from the permitted operating premises at the
Breathitt Project, Artemus
Project, 92 Project, Cardinal or Flat Lick, Xxxx County, Kentucky
without the express written consent of the
Seller.
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1
ARTICLE
II
Representations
and Warranties of Buyer. Buyer represents and warrants to Seller that the
statements contained herein are correct and complete as of the date of this
Agreement except in the case of representations and warranties
stated to be made as of the date of this Agreement or as of another date and
except for changes contemplated or permitted by this Agreement.
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1.
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Organization
and Qualification. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization. Buyer has all requisite power and authority to own, lease
and use its assets as they are currently owned, leased and used and to
conduct its business as it
is currently conducted.
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2.
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Authority
and Validity. Buyer has all requisite corporate power to execute and
deliver, to perform its obligations under, and to consummate the
transactions contemplated by this Agreement. The execution and delivery by
Buyer of the performance by Buyer of its obligations under, and the
consummation by Buyer of the transactions contemplated by this Agreement
have been duly authorized by all requisite action of Buyer, and certified
copies of the Board of Directors of Buyer authorizing the purchase shall
be delivered at closing.
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3.
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No
Breach or Violation. The execution, delivery and performance by Buyer of
this Agreement and the Supporting Documents to which it is a party, and
the consummation of the transactions contemplated hereby and thereby
in accordance with the terms and conditions hereof and thereof,
do not and will not conflict with, constitute a violation or breach of,
constitute a default or give rise to any right of termination or
acceleration of any right or obligation of Buyer under, or result in the
creation or imposition of any Encumbrance upon Buyer, Buyer's Assets,
Buyer's Business or Buyer's Common
Stock.
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4.
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Consents
and Approvals. No consent, approval, authorization or order of,
registration or filing with, or notice to, any Regulatory Authority or any
other Person is necessary to be obtained, made or given by Buyer in
connection with the execution, delivery and performance by Buyer of this
Agreement or any Supporting Document or for the consummation by Buyer of
the transactions contemplated hereby or thereby, except to the extent the
failure to obtain any such consent, approval, authorization or order or to
make any such registration or filing would not have a Material Adverse
Effect on Buyer or a material adverse effect on the validity, binding
effect or enforceability of this Agreement or the Supporting Documents or
the ability of Buyer to perform its obligations under this Agreement or
any of the Supporting Documents.
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5.
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Compliance
with Legal Requirements. Buyer has operated Buyer's Business in compliance
with all Legal Requirements applicable to Buyer except to the extent the
failure to operate in compliance with all material Legal Requirements
would not have a Material Adverse Effect on Buyer or Material Adverse
Effect on the validity, binding effect or enforceability of this Agreement
or the Supporting Documents.
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6.
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Financial
Statements. Prior to the deposit of funds, Buyer shall provide Seller,
if
desired, with current financial statements of
Buyer.
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2
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7.
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Litigation.
There are no outstanding judgments or orders against or otherwise
affecting or related to Buyer, Buyer's Business or Buyer's Assets, and
there is no action, suit complaint, proceeding or investigation, judicial
administrative or otherwise, that is pending or, to Buyer's knowledge,
threatened that if adversely determined, would have a Material Adverse
Effect on Buyer or a material adverse effect on the validity, binding
effect or enforceability of this Agreement or the Supporting Documents,
except as noted in the audited Company Financial Statements or documented
by Buyer to Seller in Exhibit "I" hereto.
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8.
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Brokers
or Finders. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Buyer in
connection with the transactions contemplated by this Agreement. Buyer has
not incurred any obligation to pay any brokerage or finder's fee or other
commission in connection with the transaction contemplated by this
Agreement, except a two (2%) percent override to X.X. Xxxxx, Xx. set out
in a separate override finder's fee agreement.
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9.
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Disclosure.
No representation or warranty of Buyer in this Agreement or in the
Supporting Documents and no statement in any certificate furnished or to
be furnished by Buyer pursuant to this Agreement contained, contains or
will contain on the date such agreement or certificate was or is
delivered, or on the Closing Date, any untrue statement of a material
fact, or omitted, omits or will omit on such date to state any material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not
misleading.
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10.
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Permits
and Licenses. Buyer has all certificates of occupancy, rights, permits,
certificates, licenses, franchises, approvals and other authorizations as
are reasonably necessary to conduct its business and to own, lease, use,
operate and occupy its assets, at the places and in the manner now
conducted and operated, except those the absence of which would not
materially adversely affect its business. Buyer has not received any
written or oral notice or claim pertaining to the failure to obtain any
material permit, certificate, license, approval or other authorization
required by any federal, state or local agency or other regulatory body,
the failure of .which to obtain would materially and adversely affect its
business. Buyer is not “permit blocked" from receiving and/or obtaining
surface disturbance permits from the Kentucky Natural Resources Cabinet
and any other required permits to fully operate the leasehold premises of
Xxxxx for deep and surface coal mining
purposes.
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11.
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Assets Necessary to Business. Buyer owns or leases all
properties and assets, real, personal, and mixed, tangible and intangible,
and is a party to all licenses, permits and other agreements necessary to
permit it
to carryon its business as presently conducted and the business of
Xxxxx as a surface and/or deep coal miner and
producer.
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3
ARTICLE
III Representations
by Seller. The Seller, to induce the Buyer to purchase her interest in Xxxxx,
makes the following representations, to wit:
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1.
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Entire
Interest. On the closing date, the Seller is the holder of all the
outstanding shares in Xxxxx; said interest is valid, fully paid and
nonassessable without any liens or encumbrances upon or against such
interest, and there exists no limitation or restriction of any kind on her
right to sell her interest and assign same to the Buyer upon the terms
hereof. Further, there are no other options, warrants, agreements or
similar rights created by the Seller for the issue or sale of any interest
of any kind in Xxxxx or for the purchase thereof by any other person other
than the Buyer.
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ARTICLE
IV Representations
of Xxxxx
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1.
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Balance
Sheet. The pro forma income tax basis balance sheet of Xxxxx as of
December 31, 2009, Exhibit "G" hereto, which has
been furnished to the Buyer, reflects with substantial accuracy the
financial condition (income tax basis) of Xxxxx on that date, and it then
had the designated liabilities, commitments, obligations or agreements
contingent or otherwise shown on the balance sheet and no
other.
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2.
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Leases
of Xxxxx Coal Corp. Xxxxx represents and warrants that the leases set out
in Exhibit "J" are valid, in Full force
and in good standing. As of Closing, there shall be no threatened
terminations; notices of default, or delinquencies occurring under the
leases as set out in Exhibit "J".
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3.
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Conduct
of Business. From the date hereof to the closing date, Xxxxx shall not
operate the premises nor enter into any operating transactions or
agreements other than in the ordinary course of business nor shall it
borrow any funds from any banks or lending institutions other than
as shown on the current
obligations.
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4.
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Titled
Assets. On the closing date, Xxxxx shall have good title, free of any
liens, to all property owned or purported to be owned by it
or included on its books as part of its fixed assets except as
designated herein and by the attachments hereto in Exhibit
"K".
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5.
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Litigation.
On the closing date, there shall be no suits, claims or proceedings, not
covered by adequate insurance, either pending or threatened, against Xxxxx
nor any fines or violations in anyone case involving an amount in excess
of $10,000.00 or in an aggregate amount of in excess of $50,000.00 except
as disclosed to the Buyer in the attached Exhibit "L".
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6.
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Employees.
On the closing date, Xxxxx shall have approximately one employee, more or
less. There is no litigation or labor charges pending or to Seller's
knowledge threatened against Xxxxx regarding employee matters.
Additionally, on the closing date, Xxxxx
shall have no commitments to any employees, past or present, for
expenses, profit-sharing or consumption in addition to regular salary and
bonus arrangements.
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4
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7.
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Increased
Employee Compensation. From the date hereof to the closing date, there
shall have been and shall be no general increases in salaries and no
payments of bonus, shares and profits or extra compensation except as
stated in Exhibit "M".
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8.
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Distributions.
From the date hereof to the closing date, no distributions shall have been
or will be declared or paid or distributions made for or on account of any
of the shareholders of Xxxxx, being the
Seller.
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9.
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Certification.
On the closing date, there will be delivered to the Buyer a certificate
signed by Xxxxx to the effect that all the conditions have been met and
satisfied,
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10.
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Compliance
with Applicable Laws. Xxxxx has complied with all applicable
laws and regulations in relation to its business operations and has
obtained all necessary licenses, permits, certifications and
authorizations necessary for the conduct of its business and the use of
the property. Xxxxx is not subject to any fine as the result of any act or
omission and has not received any notice which has not been complied. with
from any governmental authority, insurance or inspection body to the
effect that any of the operations of its businesses failed to comply with
applicable laws and regulations. Exhibit"A" sets forth a true, complete
and correct list of all permits, licenses and other necessary approvals
issued for the operations of Xxxxx. All permits, licenses, and other
necessary approvals are validly issued and existing, in good standing,
with no outstanding violations and without
any modifications or alterations. Included
in Exhibit “A” is a true and complete list of all permit obligations,
including but not limited to any mine closing obligations such as all mine
treatment and "perpetual care" (water treatment, monitoring, etc.) costs
and liabilities. All reclamation required by the Permits is
current.
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11.
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Contracts.
Xxxxx has not entered into any written, oral or implied contracts,
agreements, leases or other commitments, except as set forth in Exhibit
“J” attached
hereto and incorporated herein by reference. Xxxxx has complied with all
obligations imposed by said contracts and commitments and is not in
default under the terms of any of said
obligations.
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12.
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No
Violation of other Agreements. Seller's execution and compliance with the
terms of this Agreement will not violate any provisions of law and will
not conflict with or result in the breach of any of the terms, conditions
or provisions of any other agreements to which Seller is a party or by
which the Seller is bound.
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13.
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Tax
Returns. Xxxxx has filed all tax returns which are due or required to be
filed by it
prior to the date of this Agreement. Said returns are true and
correct, and there are no outstanding tax claims or audits involving the
Seller.
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ARTICLE
V
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1.
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Lien
on Assets. In order to secure the Seller as to the future payments by the
Buyer to the Seller, the Buyer and Xxxxx shall execute a lien in favor of
Seller upon all the assets of Xxxxx, including a pledge of the stock, and
shall
execute a corporate guaranty all as set out in Exhibit “N”.
However, said lien shall be subordinated to any commercial
insurance bonding company for bonds identified in
Exhibit “A”, which subordination agreements shall be executed to
the insurance carrier from time to time as the bonds are replaced with
insurance.
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2.
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Closing Date and Place. The
purchase and sale of the Seller to the Buyer shall be consummated on the
5th
day of March, 2010 at the company office at 00000 Xxxxx Xxxxxxx
X.X. 00X, Xxxx Xxxx, Xxxx Xxxxxx, Xxxxxxxx 00000, or at such other time or
place as the parties may agree in
writing.
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3.
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Performance
on Closing Date. On the closing date, the Buyer shall make the first
payment of Four Million ($4,000,000.00) Dollars on account as set out in
Section 2 by certified or bank check or wire transfer payable to the order
of the Seller or her survivors in immediately available funds drawn upon a
United States bank payable at First State Financial, Pineville, Xxxx
County, Kentucky. The Seller shall immediately deliver to the Buyer
endorsed share certificates for all the outstanding shares owned by Seller
in Xxxxx and resignations of Seller and Xxxxxxxx Xxxxxxxx as officers and
directors in Xxxxx. Further, the Seller and Buyer shall execute all
closing documents and debt instruments necessary to effect the purposes
contemplated herein.
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4.
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Xxxxx
owes Seller $1,198,685.03 as reflected upon the books of Xxxxx. Xxxxx or
before closing on March 5, 2010 shall reimburse Seller for said sums in
full
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5.
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Xxxxx
currently owes Caterpillar Finance approximately $195,141.00 for a D-9
bulldozer. On or before
closing, Seller shall cause said indebtedness to be paid in full
and produce evidence of this satisfactory to Buyer. See, Exhibit "0" and
Exhibit "E".
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6.
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Xxxxx
currently has Kentucky Natural Resource & Environmental
Protection Cabinet Permits Nos.
807-0289,848-0223,807-5190,861-5340,807-0343 and 807-0329 secured by the
bonds set out in Exhibit "A". Xxxxx shall on or before closing on March 5,
2010 cause all of the bonds for said permits to be replaced.
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7.
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Xxxxx
shall on or before closing on March 5, 2010 reimburse Seller for all
accounts payable of Xxxxx in the approximate sum of $ ____ incurred since
November 5, 2009 through date of closing.
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8.
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Indemnity. As of the Closing
Date, Seller agrees to indemnify and hold Buyer harmless from and against
any and all claims, demands, suits, proceedings, judgments, losses,
liabilities, damages, costs and expenses of every kind and nature
(including, but not limited to, reasonable attorneys' fees) imposed upon
or incurred by Buyer or Xxxxx, as a result of or in connection with any
misrepresentation or breach of warranty made by Seller in this Agreement
and any breach of or default in the performance by Seller of any covenant,
agreement or obligation to be performed by Seller under this Agreement.
Said Indemnity will be as set out in Exhibit “O”.
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9.
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Miscellaneous.
This Agreement shall bind and inure to the benefit of the respective
executors, administrators and assigns of the Seller and the successors and
assigns of Xxxxx and the Buyer. No finders fee or brokers commission shall
be payable by the Seller;
Xxxxx or Buyer on account of the purchase and sale of the interest
herein, except Buyer's override to X.X. Xxxxx, Xx. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same contract.
Captions and headings are for convenience of reference only and shall not
be deemed relevant to any interpretation of this Agreement, Any portion of
this Agreement that is deemed to be ineffective shall not affect the
remaining portions of the Agreement. Time shall be considered of the
essence.
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10.
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Survival.
All the representations and warranties contained in this Agreement shall
survive the closing,
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11.
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Default.
If the
Buyer defaults in any of the payments called for herein, notice of default
shall be given to Buyer in writing by delivering Notice of Default to Xx.
Xxxxx Xxxxxxxx, 000 Xxxxx Xxxxxx ,Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx
00000 and to Xx.
Xxxxx Xxxxxxxx! 00000
Xxxxx X.X. Xxxxxxx 00X, Flat Lick! Xxxxxxxx 00000, registered agent in
the Commonwealth of Kentucky for the Buyer. If
any payment under said Promissory Note remains unpaid after Notice
of Default for ten (10)
days then the Seller shall be entitled to interest at the legal
rate in the Commonwealth of Kentucky from the date said payment is unpaid
until fully paid, together with their attorney fees and court costs for
the collection thereof.
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12.
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Disputes.
Any disputes as to the terms of this Agreement will be interpreted by the
laws of the Commonwealth of Kentucky, and jurisdiction and venue shall be
with the Xxxx County, Kentucky Circuit Court.
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ARTICLE VI
Corporate
Books and Records. It
is hereby agreed that upon closing of this Agreement the Seller and Xxxxx
shall deliver to the Buyer all corporate books and records including, but not
limited to, all outstanding shares held by the shareholder properly endorsed for
transfer, the stock transfer books, tax, royalty statements, bank records,
titles and deeds. The books and records of Seller or Xxxxx accurately and fairly
represent Xxxxx and its results of operations in all material
respects.
IN
WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first hereinabove written.
Buyer:
AMERICAS
ENERGY COMPANY, INC.
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Signature
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Title
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/s/
Xxxxxxxxxxx X. Xxxxxxxx
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Title:
President and CEO Xxxxx
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Xxxxxxxxxxx
X. Xxxxxxxx
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/s/
Xxxxxxx Xxxxx
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Title:
Seller
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XXXXXXX
XXXXX
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/s/
Xxxxxxx Xxxxx
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Title:
XXXXX COAL CORP., President
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Xxxxxxx
Xxxxx
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