Exhibit 10.3
AGREEMENT
BY AND AMONG
CAPCO ENERGY, INC.,
METEOR STORES, INC.,
METEOR INDUSTRIES, INC.
THE SOLE SHAREHOLDER OF
METEOR STORES, INC.
AGREEMENT
AGREEMENT, made this 31st day of December, 1999, by and among Capco Energy,
Inc., a Colorado corporation ("Purchaser"), Meteor Stores, Inc. ("MSI" or the
"Company"), a New Mexico corporation, and Meteor Industries, Inc., the sole
shareholder of MSI ("Shareholder").
WHEREAS, Purchaser desires to acquire all of the issued and outstanding
stock of MSI, held by the Shareholder (the "Common Stock"), in exchange for the
consideration and upon the terms described herein (the "Purchase"); and
WHEREAS, the Shareholder desires to sell all of the outstanding Common
Stock of the Company; and
WHEREAS, Purchaser, the Company and Shareholder 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:
1
ARTICLE 1
THE PURCHASE
1.1 Sale and Delivery of Common Stock. Subject to all the terms and
conditions of this Agreement, the Shareholder 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 except those created by this Agreement in
exchange for the consideration described in this Article 1.
1.2 Effective Date and Closing. The effective date of this transaction
shall be December 31, 1999 (the "Effective Date"). 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 on or about December 29, 1999, or a
soon thereafter as reasonably practicable (the "Closing").
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 Shareholder the
amount of $1,596,400 (hereinafter referred to as the "Purchase Price").
1.4 Adjustments. The Total Purchase Price of the Common Stock shall be
defined as $1,596,400. Such amount shall be adjusted as follows:
(a) During the three month period following the Closing, Purchaser shall
have an independent auditor of its choice audit (using generally accepted
accounting principles and practices; fixed assets and inventories and the
balance sheet and income statement of the Company as of December 31, 1999 (the
"Audit"). Such auditor shall present its audit report to Shareholder and to
Purchaser. If the audit report would result in a reduction of the purchase price
under subsection (b) of this Section 1.4, below, and if Shareholder disagrees
with any portion of the audit report which is material to any such adjustment,
the Shareholder shall so notify the Purchaser in writing within five (5) days
and, the parties shall attempt to resolve such disagreement through good faith
bargaining. If the parties are not successful in resolving such disagreement
through bargaining within seven (7) days following Shareholder's notice to
Purchaser, the parties shall submit the disagreement for arbitration under
Section 13.4 below.
(b) If the Purchaser's Audit of the Company shows that the Company's
shareholder's equity is less than $1,596,400 then the Total Purchase Price shall
be reduced by the amount of such shareholder's equity deficiency.
2
1.5 Payment of Purchase Price. The total Purchase Price shall be paid as
follows:
(a) $250,000 of the total Purchase Price shall be paid to the Shareholder,
by certified or bank check or by electronic wire transfer of immediately
available funds, at Closing.
(b) $1,100,000 shall be paid at Closing in the form of 366,667shares of
Meteor common stock (the Meteor "Common Shares"). The Meteor Common Shares shall
be transferred, free and clear of all liens, claims and encumbrances. Any
adjustments under Section 1.4 above in excess of $246,400 will result in a
refund of Common Shares using a price of $3.00 per share.
(c) $246,400 shall be paid on or before March 31, 2000, subject to any
adjustments in the purchase price under Section 1.4 above.
1.6 Option to Repurchase Meteor Common Shares. Purchaser shall have the
right to repurchase all or part of the Meteor Common Shares transferred pursuant
to paragraph 1.5(b) at $3.00 per share plus .77% per month for each unexercised
month for eighteen months. These repurchased shares shall have antidilutive
provisions.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND SHAREHOLDER
As an inducement to the Purchaser to enter into this Agreement, the Company
and the Shareholder 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 New Mexico, has all necessary
corporate powers to own its 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 where its business requires qualification.
2.2 Capital. The authorized capital stock of the Company consists of 2,500
shares common stock, no par value, of which 2,500 shares of common stock are
issued and outstanding including -0- 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. 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.
3
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 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 unaudited financial statements of the Company for the
fiscal periods ended December 31,1998 and 1997, together with all related notes
and schedules thereto. Prior to Closing an unaudited balance sheet as of October
31, 1999, and an unaudited income statement for the fiscal year ending October
31, 1999, 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"). Except as set forth in Exhibit 2.6, 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").
Exhibit 2.6 sets forth certain year-end adjustments and tailoring transactions,
which will be made and entered into to facilitate this Agreement. As revised by
such adjustments and tailoring transactions, 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 Undisclosed Liabilities. 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. As of the Closing Date, the Company does
not have any material liabilities not disclosed in the Company Financial
Statements, other than as listed on Exhibit 2.7. For purposes of this Section
2.7, a material liability shall mean a liability of $25,000 or more.
Notwithstanding the definition of material liability in the preceding sentence,
total undisclosed liabilities shall not exceed $50,000.
2.8 Taxes. To the best knowledge and belief of Shareholder, 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 in the normal course of its business. To the best knowledge and belief
of Shareholder, the provisions for taxes, if any, reflected in the Company
Financial Statements, are reasonably adequate for taxes for the periods ending
on the date of such financial statements and for all prior periods, whether or
not disputed.
4
2.9 Compliance with Laws. To the best of Shareholder's knowledge and
belief, the Company is in compliance in all material respects with, and is not
in violation of, applicable federal, state, or local statutes, laws or
regulations affecting its properties or the operation of its business.
2.10 Litigation. Except as shown on Exhibit 2.10 attached hereto, (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.
2.11 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 Shareholder 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 Shareholder, and is
enforceable in accordance with its terms.
2.12 Ability to Carry Out Obligations. To the best of the Shareholder's
knowledge and belief and except as shown on Exhibit 2.12 attached hereto, the
execution and delivery of this Agreement by the Company and Shareholder and the
performance by the Company and Shareholder 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 Shareholder intends and is entitled to
withdraw and cancel any guaranties executed by it to suppliers and banks. The
withdrawal and cancellation of such guaranties by Shareholder, as here in above
and here in after referred to shall not constitute any breach or violation of
this Agreement by the Company or Shareholder.
2.13 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.
2.14 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 2.14 hereto lists all
plant property and equipment of the Company with a value of $ 10,000.
5
2.15 Material Contracts. Exhibit 2.15 lists each material contract and
agreement of the Company (such contracts and agreements listed, being
collectively referred to as "Material Contracts"). The Company has delivered, or
will deliver on or about the time of execution of this Agreement, to the
Purchaser correct and complete copies of all Material Contracts.
2.16 Trade Names and Rights. Except as set forth in Exhibit 2.16 attached
hereto, the Company owns all trademarks, service marks, trade names, and
copyrights required in its business. A list of trademarks, service marks, trade
names and copyrights owned by the Company is included in Exhibit 2.16. No other
person or entity owns any trademark, trademark registration or application,
service xxxx, 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's business.
2.17 Employees. There are, except as disclosed in Exhibit 2.17 attached
hereto, 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 any of the foregoing and the Company. The Company's
employee handbook or manual and a complete description of all employee benefits,
is included as part of Exhibit 2.17 as of the effective date. All of the
Company's employees are at-will employees who have no rights to severance pay.
2.18 Accounts Receivable. Except as covered by any allowance for doubtful
accounts booked in the normal course of business in the Company Financial
Statements, all accounts receivable of the Company, including those created
between the date of the Financial Statements and the Closing, represent
transactions in the ordinary course of business, and are current and collectible
in the ordinary course of business in the amounts recorded on the Books of the
Company.
2.19 Inventories. All inventories of the Company as of October 31, 1999 (to
be updated at Closing as of the Effective Date), a complete list of which is
attached hereto as Exhibit 2.19, whether or not reflected in the Company
Financial Statements, are of a quality and quantity usable and salable in the
ordinary course of business and comply in all material respects with applicable
standards and regulations of governmental authorities.
2.20 Accounts Payable. The accounts payable reflected on the Company
Financial Statements, and those reflected on the books of the Company at the
time of the Effective Date will, reflect all amounts owed by the Company in
respect of trade accounts due and other payables.
6
2.21 Insurance. 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 not remain in full force and effect
subsequent to 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.
2.22 Title to and Utilization of Properties. Exhibit 2.22 attached hereto
lists all of the Company owned and leased properties. Except as disclosed on
Exhibit 2.22, the Company owns fee simple, insured title to all real property
owned by it and has the unbridled fight to use the same, and is not aware of any
claim, notice or threat to the effect that its fight 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. The Company has valid leases on its leased
properties and the expiration dates of such leases are disclosed on Exhibit
2.22.
2.23 Facilities. To Shareholder's best knowledge and belief, 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. None of such plants,
structures, or equipment is in need of maintenance and repairs except ordinary
routine maintenance and repairs. Purchaser acknowledges that its representatives
have inspected such facilities and have found them to be sound and free of
obvious defects.
2.24 Environmental and Other Permits and Licenses, Related Matters.
(a) To Shareholder's best knowledge and belief, 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 Shareholder 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. 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.
7
(b) To Shareholder's best knowledge and belief, 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.
(c) 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 Shareholder 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) To Shareholder's best knowledge and belief, 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. 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"). 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 best knowledge and belief of Shareholder, 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. Neither the Company nor 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. 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.
8
(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. SS 6901 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. SS 6901 et seq.; the Clean
Water Act, 33 U.S.C. SS 1251 et seq.; the Toxic Substances Control Act, 15
U.S.C. SS 2601 et seq.; the Clean Air Act, 42 U.S.C. SS 7401 et seq.; the Safe
Drinking Water Act, 42 U.S.C. SS 300f et seq.; the Atomic Energy Act, 42 U.S.C.
SS 2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. SS 136 et seq.; and the Federal Food, Drug and Cosmetic Act, 21 U.S.C. SS
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. Since October 31,1998, 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 $10,000 per year, and suppliers providing
supplies and merchandise to the Company in the amount of $10,000 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.
9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to the Company and the Shareholder to enter into this
Agreement, the Purchaser represents and warrants to the Company and Shareholder
that:
3.1 Organization. Purchaser is a corporation duly organized, validly
existing, and in good standing under the law of California, 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 150,000,000 shares of $.001 par value Common Stock of
which 1,000,000 shares of Common Stock are currently issued and outstanding, and
10,000,000 shares of preferred stock $1.00 par value are authorized of which
292,947 shares 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. Except as described in Exhibit 3.4,
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 of 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 Other information. None of the information and documents which have
been furnished or made available by the Purchaser or any of its representatives
to Seller 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.
10
ARTICLE 4
COVENANTS
4.1 Investigative Rights. 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 to discuss the financial condition
of the Company.
4.2 Indemnification of the Company and Shareholder. Purchaser shall be
liable for and shall indemnify, defend and hold the Company and the Shareholder
and its officers, directors, affiliates, agents and the Shareholder 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.
4.3 Indemnification of Purchaser. The Company and Shareholder 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 Shareholder under this Agreement.
4.4 Accounts Payable. 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 shall, within fifteen (15) days after Closing, arrange for
the release of Shareholder and other key employees of the Company from personal
guarantees relating to the business of the Company.
11
4.5 Shareholder's Cooperation After the Closing, Further Action. At any,
time and from time to time after the Closing, the Shareholder 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.
ARTICLE 5
CONDITIONS PRECEDENT TO PURCHASER'S PERFORMANCE
5.1 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 5. 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 Shareholder shall be in default of any
of their representations, warranties, or covenants under this Agreement.
5.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by the Company and Shareholder 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.
5.3 Performance. Purchaser shall be reasonably satisfied that the Company
and Shareholder 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.
5.4 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.
5.5 Directors of the Company. Effective on the Closing Date the Board of
Directors of the Company shall be reorganized and be made up of four individuals
named by Purchaser.
12
5.6 Closing Documents. The Company and the Shareholder shall be prepared to
deliver the closing documents set forth in Article 6 of this Agreement.
5.7 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 special conditions specified in Sections 6.2 hereof
have been fulfilled.
ARTICLE 6
CONDITIONS PRECEDENT TO THE COMPANY'S
AND SHAREHOLDER'S PERFORMANCE
6.1 Conditions. The Company's and Shareholder's obligations hereunder shall
be subject to the satisfaction, at or before the Closing, of all the conditions
set forth in this Article 6. The Company and Shareholder 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 Shareholder of any other condition
of or any of the Company's or Shareholder's 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.
6.2 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
Shareholder by Purchaser under this Agreement shall be true and accurate on and
as of the Closing Date as though made at that time.
(a) 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.
(b) Each party shall deliver such other documents or information required
to be furnished by Closing pursuant to this Agreement.
ARTICLE 7
MISCELLANEOUS
7.1 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.
7.2 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.
13
7.3 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
(ii) 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.
7.4 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings.
7.5 Choice of Law. This Agreement and its application shall be governed by
the laws of the State of Colorado.
7.6 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.
7.7 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: CAPCO ENERGY, INC.
0000 XXXXXXX XXXXXX, XXXXX 000
XXXXXX, XX 00000
ATTENTION: IMRAN, JATTALA, VICE PRESIDENT
Shareholder: METEOR INDUSTRIES, INC.
0000 XXXXX XXXXXX, XXXXX 000
XXXXXX, XXXXXXXX 00000
The Company: METEOR STORES, INC.
0000 XXXXX XXXXXX, XXXXX 000
XXXXXX, XX 00000
14
7.8 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.
7.9 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.
7.10 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.
7.11 Announcements. Purchaser, Shareholder 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. Nevertheless,
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
NASDAQ, including a press release following the execution of this Agreement.
7.12 Expenses. Except as specifically provided in this Agreement, all
direct costs and expenses including legal, and any other out-of-pocket expenses
incurred by Shareholder, in connection with this transaction, shall be paid by
the Shareholder. 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.
7.13 Survival of Representations and Warranties. Except as otherwise
provided in this Section 9.13, 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 one year irrespective of any investigation made by or on
behalf of any party.
7.14 Assignment. This Agreement may not be assigned by operation of Law or
otherwise by the Shareholder, the Company or the Purchaser.
AGREED TO AND ACCEPTED as of the date first above written.
PURCHASER: CAPCO ENERGY, INC. SHAREHOLDER: METEOR INDUSTRIES, INC.
/s/ Xxxxx Xxxxxxxxx /s/ Xxxxxx X. Xxxxx, Director
By ----------------------- By ----------------------------------
SELLER: METEOR STORES, INC.
/s/ Xxxx X. Xxxxxxx, President
By -------------------------------
15
