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.
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 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
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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 CERTIFATES. 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.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF SHORCO SHAREHOLDERS. The Shorco
Shareholders represent and warrant to CW that:
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(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 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.
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(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 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
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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.
(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
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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 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
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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 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.
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(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 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
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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.
(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
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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 AGREEMENT. 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 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.
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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 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
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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
(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 OFAs 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
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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 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
P.O. Box 10,000
Xxxxxxxxxxxx, Xxxxxxxx 00000
0000 Xxxxx Xxxxxxx Xxxxx, #000 (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.
6.11 ENTIRE AGREEMENT. This Agreement (including the exhibits hereto)
constitutes the entire understanding between the Parties with respect to the
subject matter hereof,
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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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