|
EXHIBIT 2.1
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
---------------------------------------------------------
This Agreement dated as of this 30th day of October, 2007 by and
among
BlueStar Health Inc., a Colorado corporation ("Buyer"); Zeon
Global Energy,
Inc., a Texas corporation ("Sub"); and Zeon Fuel Inc. a Texas
corporation (the
"Company").
RECITALS
A. The respective Boards of Directors of each of the Company,
Sub and
Buyer, and a majority of the issued and outstanding stock of the
Company and
Sub, have approved and declared advisable: (i) the merger of the
Sub with and
into Company; (ii) Company becoming a wholly-owned subsidiary of
Buyer; and the
shareholders of Company will become stockholders of Buyer (the
"Merger") and
approved the Merger upon the terms and subject to the conditions
set forth in
this Agreement, whereby each issued and outstanding share of the
common stock of
the Company (a "Company Share" or, collectively, the "Company
Shares"), will be
converted into 0.001 shares of Series A Convertible Preferred
shares of Buyer
and 0.001 shares of Series B Preferred Convertible Shares of
Buyer (together,
"Buyer Preferred Stock") which, after giving effect to the
Merger, shall equal,
in the aggregate, 20,000 shares of Buyer Preferred Stock and
have the right to
convert into Common Stock of Buyer equivalent to 80% and as set
forth on
Schedule 1 hereto of the total issued and outstanding common
stock of Buyer at
the Effective Time (hereinafter defined) after giving full
effect to conversion
of Buyer Preferred Stock as described in SECTION 1.8(c) below,
subject to
adjustment as specifically provided herein .
B. The respective Boards of Directors of the Company, Sub and
Buyer have
determined that the Merger is in furtherance of and consistent
with their
respective long-term business strategies and is fair to and in
the best
interests of their respective stockholders.
C. It is intended that, for federal income tax purposes, the
Merger shall
qualify as a reorganization under the provisions of Section
368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and
regulations
promulgated thereunder (the "Code");
D. For financial accounting purposes, it is intended that the
Merger will
be accounted for as a "purchase".
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained
herein, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto
agree as follows:
ARTICLE I
The Merger; Closing; Effect of Merger
SECTION 1.1 The Merger. Upon the terms and subject to the
conditions set
forth in this Agreement and in accordance with Colorado
corporate law ("CCL")
and Texas corporate law ("TCL") as amended at the Effective
Time, the Sub shall
be merged with and into Company and the separate corporate
existence of the Sub
<PAGE>
shall thereupon cease. The Company shall be the surviving
corporation in the
Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and
the separate corporate existence of Buyer and Company with all
their rights,
privileges, immunities, powers and franchises shall continue
unaffected by the
merger, except that Company shall be a wholly-owned subsidiary
of Buyer, and as
otherwise set forth herein.
SECTION 1.2 Closing. Subject to the terms and conditions of this
Agreement,
the closing of the Merger and the consummation of the other
transactions
contemplated hereby (the "Closing") shall take place at the
offices of Zeon
Fuel, Inc. at 9801 Westheimer, Suite 302, Houston, Texas on
October 31, 2007 at
2:00 p.m. local time (or at such other date, time and place as
the parties
hereto may agree).
SECTION 1.3 Effective Time. On the date of Closing, the Company,
Sub and
Buyer will cause a Certificate of Merger (the "Certificate of
Merger") to be
filed with the Texas Secretary of State. The Merger shall become
effective at
the time when the Certificate of Merger has been filed with the
Texas Secretary
of State, or, as otherwise agreed by the Company and Buyer (the
"Effective
Time").
SECTION 1.4 Articles of Incorporation. The Amended and Restated
Articles of
Incorporation of Buyer attached hereto as Exhibit A shall be the
articles of
incorporation of the Buyer (the "Charter"), at the time of
Closing and until
duly amended as otherwise provided herein or by applicable
law.
SECTION 1.5 By-Laws. The by-laws of Buyer in effect immediately
prior to
the Effective Time shall be the by-laws of the Surviving
Corporation (the
"By-Laws"), until thereafter amended as provided therein or by
applicable law.
SECTION 1.6 Directors. The directors of the Buyer shall, from
and after the
Effective Time, be: (i) Naved Jafry (Chairman of the Board);
(ii) Richard M.
Greenwood; (iii) C. Kevin Moore; (iv) Ronald M. Hall; and (v)
Wallace J.
Rutland.
Officers. The officers of the Buyer shall, from and after the
Effective Time,
be: Richard Greenwood (CEO and President), C. Kevin Moore (EVP,
CFO, Secretary
and Treasurer), and Amir Pirzada (Director of Operations).
SECTION 1.7 Effect on Capital Stock. At the Effective Time, as a
result of
the Merger and without any action on the part of the holder of
any capital stock
of Buyer:
(i) Merger Consideration. Each Company Share issued and
outstanding immediately prior to the Effective Time shall be
converted into, and
become exchangeable for 0.001 shares of validly issued, fully
paid and
non-assessable shares of Buyer Series A Convertible Preferred
Stock and 0.001
shares of Series B Convertible Preferred Stock (together the "
Buyer Preferred
Stock " and the "Merger Purchase Price");
2
<PAGE>
(ii) Buyer Preferred Stock shall be convertible into Common
Stock as described in SECTION 1.8 below. Each share of Buyer
Preferred Stock
shall have voting rights equivalent to the number of shares of
Common Stock into
which it is convertible. Should any event described in SECTION
1.8(d) occur
prior to conversion of Buyer Preferred Stock, an equitable
adjustment to the
conversion ratio of Buyer Preferred Stock into Buyer Common
Stock shall be made.
The full rights and preferences of Buyer Preferred Stock are set
forth in
Buyer's Amended and Restated Articles of Incorporation, Exhibit
A.
(iii) At the Effective Time, all Company Shares in existence
prior to the merger shall be canceled as exchanged for Buyer
shares and the
Company shall then exist as a wholly owned subsidiary of Buyer,
and each share
certificate (a "Certificate") formerly representing any Company
Shares shall
thereafter represent only the right to receive the shares of
Buyer Preferred
Stock into which such Company Shares have been converted.
SECTION 1.8 Exchange of Certificates for Shares .
(a) Exchange. At Closing, Buyer shall deliver or cause to be
delivered
to each respective owner of Company Shares and in each of their
respective
names, certificates representing Series A Preferred Shares and
Series B
Preferred Shares into which the Company Shares that such
shareholders owns are
to be converted as set forth on Schedule 1, with the exception
of certain shares
to be pledged according to the terms of the Pledge Agreement
attached hereto as
Exhibit B, which shall be delivered to the pledgee
thereunder.
(b) Fractional Shares. No certificates or scrip representing
fractional shares of Buyer Preferred Stock shall be issued upon
the surrender
for exchange of Certificates pursuant to this Article I; no
dividend or other
distribution by Buyer and no stock split, combination or
reclassification shall
relate to any such fractional share; and no such fractional
share shall entitle
the record or beneficial owner thereof to vote or to any other
rights of a
stockholder of Buyer. In lieu of any such factional share, each
holder of
Company Shares who would otherwise have been entitled thereto
upon the surrender
of Certificate(s) for exchange pursuant to this Article I will
be paid one
additional share of Buyer Preferred Stock.
(c) Conversion of Preferred Stock. Upon shareholder approval of
the
Amended and Restated Articles of Incorporation changing the
Buyer's name and
increasing the number of authorized shares of Buyer Common
Stock, each share of
Series A Preferred Stock shall be immediately exchangeable for
4,400 shares of
Buyer Common Stock. In the event the increased number of common
shares is not
approved by shareholders at the time the merger is approved,
Series A Preferred
Stock shall be exchangeable into Common Stock at the earliest
opportunity
following approval of an increase in the number of authorized
common shares
permitting such exchange. Series B Preferred Stock shall be
convertible into
4,641.38 shares of Buyer Common Stock on the first anniversary
of the Effective
Time of the Merger.
(d) Adjustments of Conversion Number. In the event that Buyer
changes
the number of shares of Buyer Common Stock, issued and
outstanding prior to the
Effective Time, except as otherwise expressly permitted in this
Agreement, as a
3
<PAGE>
result of a reclassification, stock split (including a reverse
split), dividend
or distribution, recapitalization, merger (other than the
Merger, Stock Purchase
or the cancellation of options previously granted by the
Company), subdivision,
or other similar transaction with the effect of increasing or
decreasing the
number of shares of Buyer Common Stock, or if a record date with
respect to any
of the foregoing shall occur prior to the Effective Time, the
conversion number
shall be equitably adjusted.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to Buyer as
follows and
acknowledges that Buyer is relying upon such representations and
warranties in
connection with the Contemplated Transactions (as hereinafter
defined):
SECTION 2.1 Capitalization. The outstanding and issued capital
stock of the
Company consists of 100,000,000 authorized common shares with a
par value of:
$0.001. There are 39,000,000 common shares outstanding as
detailed on Schedule 1
which sets forth the name of each record and beneficial
shareholder of the
Company (each a "Shareholder" and collectively the
"Shareholders") and the
number of Company Shares held by each such person. The Company
does not and, at
the Closing, the Company will not, except as disclosed on
Schedule 2.1, have
outstanding any capital stock or other securities or any rights,
warrants or
options to acquire securities of the Company or any convertible
or exchangeable
securities and, other than Buyer pursuant to this Agreement, no
person has or,
at Closing will have, any right to purchase or otherwise acquire
any securities
of the Company. There are, and at Closing there will be, no
outstanding
obligations of the Company to repurchase, redeem or otherwise
acquire any
securities of the Company. All of the Company Shares are, and at
Closing will
be, duly authorized, duly and validly issued, fully paid and
non-assessable, and
none were issued in violation of any preemptive rights, rights
of first refusal
or any other contractual or legal restrictions of any kind
except as set forth
on Schedule 2.1.
SECTION 2.2 Title to the Shares. To the best of Company's
knowledge and
information each Shareholder is the beneficial owner and holds
good and valid
title to its Company Shares free and clear of any Lien. To the
best of Company's
knowledge and information, upon consummation of the Contemplated
Transactions
and the satisfaction of the conditions to Closing set forth
herein, Buyer will
own all of the issued and outstanding shares of capital stock of
the Company,
free and clear of any Lien. At the Closing, each Shareholder
will deliver the
Company Shares to Buyer free and clear of any Lien, other than
restrictions
imposed by the Securities Act of 1933, as amended, and
applicable securities
Laws including the laws of the State of Texas.
SECTION 2.3 Authority Relative to this Agreement. Following
approval of the
Shareholders of the Company, the Company will have full power,
capacity and
authority to execute and deliver each document to which it is
or, at Closing,
will be, a party (the "Transaction Documents") and to consummate
the
transactions contemplated hereby and thereby (the "Contemplated
Transactions").
4
<PAGE>
The execution, delivery and performance by the Company of each
Transaction
Document and the consummation of the Contemplated Transactions
to which the
Company is, or at Closing, will be, a party will have been duly
and validly
authorized by the Company and no other acts by or on behalf of
the Company will
be necessary or required to authorize the execution, delivery
and performance by
the Company of each Transaction Document and the consummation of
the
Contemplated Transactions to which it is or, at Closing, will
be, a party. This
Agreement and the other Transaction Documents to which the
Company is a party
have been duly and validly executed and delivered by the Company
and (assuming
the valid execution and delivery thereof by the other parties
thereto) will
constitute the legal, valid and binding agreements of the
Company enforceable
against the Company in accordance with their respective terms,
except as such
obligations and their enforceability may be limited by
applicable bankruptcy and
other similar Laws affecting the enforcement of creditors'
rights generally and
except that the availability of equitable remedies is subject to
the discretion
of the court before which any proceeding therefor may be brought
(whether at law
or in equity).
SECTION 2.4 No Conflicts; Consents. The execution, delivery and
performance
by the Company of each Transaction Document to which it is a
party and the
consummation of the Contemplated Transactions to which the
Company is a party,
upon approval of the Shareholders will not: (i) violate any
provision of the
certificate of formation or memorandum of association of the
Company; (ii)
require the Company to obtain any consent, approval or action of
or waiver from,
or make any filing with, or give any notice to, any Governmental
Body or any
other person, except as set forth on Schedule 2.4 (the "Company
Required
Consents"); (iii) violate, conflict with or result in a breach
or default under
(with or without the giving of notice or the passage of time or
both), or permit
the suspension or termination of, any material Contract
(including any Real
Property Lease) to which the Company is a party or by which it
or any of its
assets is bound or subject, or to the best of Company's
knowledge and
information result in the creation of any Lien upon any of the
Company Shares or
upon any of the Assets of the Company; (iv) violate any Order,
any Law, of any
Governmental Body against, or binding upon, the Company or upon
any of their
respective assets or the Business; or (v) violate or result in
the revocation or
suspension of any Permit.
SECTION 2.5 Corporate Existence and Power. The Company is a
corporation
duly organized, validly existing and in good standing under the
laws of the
State of Texas, and has all requisite powers, authority and all
Permits required
to own and/or operate its Assets and to carry on the Business as
conducted as of
the date hereof. The Company has no Subsidiaries and does not
directly or
indirectly own any equity or other interest or investment in any
other person.
SECTION 2.6 Charter Documents and Corporate Records. The Company
has
heretofore delivered to Buyer true and complete copies of the
certificate of
formation, bylaws and minute books, or comparable instruments,
of the Company as
in effect on the date hereof. The stock transfer books of the
Company have been
made available to Buyer for its inspection and are true and
complete in all
respects in accordance with their tenor.
5
<PAGE>
SECTION 2.7 Financial Statements.
(a) Schedule 2.7A sets forth true, complete and correct copies
of: (i)
the Company's reviewed financial statements as of and for the
year ended
December 31, 2006 (the "Annual Statement"); (ii) the Company's
interim financial
statements as of and for the year to date period ending June 30,
2007 (the
"Interim Statement"); and (iii) all management letters,
management
representation letters and attorney response letters issued in
connection with
the Annual Statement, (the Annual Statement and Interim
Statement together
referred as "Financial Statements"). The Financial Statements
present fairly and
accurately in all material respects the financial position of
the Company as of
their date, and the earnings, changes in stockholders' equity
and cash flows
thereof for the periods then ended in accordance with GAAP,
consistently
applied. Each balance sheet contained therein or delivered
pursuant hereto fully
sets forth all consolidated Assets and Liabilities of the
Company existing as of
its date which, under GAAP, should be set forth therein, and
each statement of
earnings contained therein or delivered pursuant hereto sets
forth the items of
income and expense of the Company which should be set forth
therein in
accordance with GAAP.
(b) All financial, business and accounting books, ledgers,
accounts
and official and other records relating to the Company have been
properly and
accurately kept and completed, and the Company has no knowledge,
notice belief
or information there are any material inaccuracies or
discrepancies contained or
reflected therein.
SECTION 2.8 Liabilities. The Company has not incurred any
Liabilities since
June 30, 2007 (the "Latest Balance Sheet Date") except (i)
current Liabilities
for trade or business obligations incurred in connection with
the purchase of
goods or services in the ordinary course of the Business and
consistent with
past practice, and (ii) Liabilities reflected on any balance
sheet referred to
in Section 2.7(a).
SECTION 2.9 Company Receivables. Except to the extent of the
amount of the
allowance for doubtful accounts reflected in the Financial
Statements as of the
Latest Balance Sheet Date, all the Receivables of the Company
reflected therein,
and all Receivables that have arisen since the Latest Balance
Sheet Date (except
Receivables that have been collected since such date), are valid
and enforceable
Claims subject to no known defenses, offsets, returns,
allowances or credits of
any kind, and constitute bona fide Receivables collectible in
the ordinary
course of the Business except as enforceability may be limited
by applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance or
similar laws or principles of equity affecting the enforcement
of creditors
rights generally.
SECTION 2.10 Absence of Certain Changes. (a) Since June 30, 2007
the
Company has conducted the Business in the ordinary course
consistent with past
practice, except as disclosed on Schedule 2.10 hereof, and there
has not been:
(i) Any material adverse change in the Condition of the
Business;
6
<PAGE>
(ii) Any damage, destruction or other casualty loss (whether
or
not covered by insurance), condemnation or other taking
affecting the Business
or the Assets of the Company;
(iii) Any change in any method of accounting or accounting
practice by the Company;
(iv) Except for normal increases granted in the ordinary
course
of business, any increase in the compensation, commission, bonus
or other direct
or indirect remuneration paid, payable or to become payable to
any officer,
stockholder, director, consultant, agent or employee of the
Company, or any
alteration in the benefits payable or provided to any
thereof;
(v) Any material adverse change in the relationship of the
Company with its employees, customers, suppliers or vendors;
(vi) Except for any changes made in the ordinary course of
Business, any material change in any of the Company's business
policies,
including advertising, marketing, selling, pricing, purchasing,
personnel,
returns or budget policies;
(vii) Any agreement or arrangement whether written or oral
to
do any of the foregoing.
(viii) The Company has no Liability that is past due except
as
shown on the Annual Statements.
SECTION 2.11 Leased Real Property. (a) The Company has no fee
interest,
purchase options or rights of first refusal in any real property
and the Company
has no leasehold or other interest in any real property, except
as set forth on
Schedule 2.11 (the "Leased Real Property"), and all leases
including all
amendments, modifications, extensions, renewals and/or
supplements thereto
(collectively, "Real Property Leases") are described on Schedule
2.11.
SECTION 2.12 Personal Property; Assets. The Company has good and
valid
title to (or valid leasehold interest in) all of its personal
property and
Assets, free and clear of all Liens, except the Permitted Liens
and as indicated
on Schedule 2.12. The machinery, equipment, computer software
and other tangible
personal property constituting part of the Assets and all other
Assets (whether
owned or leased) are in good condition and repair (subject to
normal wear and
tear) and are reasonably sufficient and adequate in quantity and
quality for the
operation of the Business as previously and presently conducted.
Schedule 2.12
contains a list and description of all tangible personal
property owned or
leased by the Company with a book value (before depreciation) of
$10,000 or
more. The Assets constitute all of the assets, which are
necessary to operate
the Business of the Company as currently conducted.
7
<PAGE>
SECTION 2.13 Contracts. (a) Schedule 2.13 sets forth an accurate
and
complete list of all Contracts to which the Company is a party
or by which it or
its Assets are bound or subject that: (i) cannot be canceled
upon 30 days'
notice without the payment or penalty of less than Ten Thousand
Dollars
($10,000); or (ii) involve aggregate annual future payments by
or to any person
of more than Fifty Thousand Dollars ($50,000). True and complete
copies of all
written Contracts (including all amendments thereto and waivers
in respect
thereof) and summaries of the material provisions of all oral
Contracts so
listed have been made available to Buyer.
(b) All Contracts to which the Company is a party are valid,
subsisting, in full force and effect and binding upon the
Company and the other
parties thereto, in accordance with their terms, except that no
representation
or warranty is given as to the enforceability of any oral
Contracts. To the best
of the Company's knowledge and belief, except as set forth on
Schedule 2.13, the
Company is not in default (or alleged default) under any such
Contract.
(c) The contracts between Company and Safe Fuel and Star Fuel,
true
and accurate copies of which are appended to Schedule 2.13, are
in full force
and effect, with no defaults existing on the part of either
party to the
contract. Also appended to Schedule 2.13 are written consents of
Safe Fuel and
Star Fuel to the acquisition of the Company by Buyer.
SECTION 2.14 Patents and Intellectual Property Rights. (a)
Schedule 2.14
sets forth a list of each patent, trademark, trade name, service
mark, brand
mark, brand name, and registered copyright as well as all
registrations thereof
and pending applications therefore, and each license or other
contract relating
thereto (collectively, the "Intellectual Property") owned or
used in connection
with the Business by the Company and indicates, with respect to
each item of
Company's Intellectual Property that is licensed by the Company,
the name of the
licensor thereof and, with respect to oral Contracts, the terms
of such license
relating thereto. To the Company's knowledge, the use of the
foregoing by the
Company does not conflict with, infringe upon, violate or
interfere with or
constitute an appropriation of any right, title, interest or
goodwill,
including, without limitation, any intellectual property right,
patent,
trademark, trade name, service mark, brand name, computer
program, database,
industrial design, trade secret, copyright or any pending
application thereto of
any other person and there have been no claims made and the
Company has not
received any notice or otherwise know that any of the foregoing
is invalid or
conflicts with the asserted rights of other Persons or have not
been used or
enforced or have been failed to be used or enforced in a manner
that would
result in the abandonment, cancellation or unenforceability of
the Intellectual
Property, except as set forth on Schedule 2.14A.
(b) The Company owns or has rights to use all Intellectual
Property,
know-how, formulae and other proprietary and trade rights
necessary to conduct
the Business as it is now conducted. The Company has not
forfeited or otherwise
relinquished any such Intellectual Property, know-how, formulae
or other
proprietary right used in the conduct of the Business as now
conducted.
8
<PAGE>
(c) To the extent used in the conduct of the Business by the
Company,
each of the licenses or other contracts relating to the
Company's Intellectual
Property (collectively, the "Intellectual Property Licenses") is
in full force
and effect and is valid and enforceable in accordance with its
terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws
affecting creditors' rights and remedies generally, and subject,
as to
enforceability, to general principles of equity (regardless of
whether
enforcement is sought in a proceeding at law or in equity), and
there is no
notice or claim of default under any Intellectual Property
License either by the
Company or, to the Company's knowledge, by any other party
thereto, and to the
Company's knowledge, no event has occurred that with the lapse
of time or the
giving of notice or both would constitute a default by the
Company there under.
SECTION 2.15 Claims and Proceedings. There are no outstanding
Orders of any
Governmental Body against or involving the Company, its Assets,
the Business, or
the Company Shares. There are no actions, suits, claims or
counterclaims,
examinations, Company Required Consents or legal,
administrative, governmental
or arbitral proceedings or investigations (collectively,
"Claims") (whether or
not the defense thereof or Liabilities in respect thereof are
covered by
insurance), pending or, to the best of the Company's knowledge,
threatened on
the date hereof, against or involving the Company, its Assets,
the Business or
the Company Shares.
SECTION 2.16 Taxes. (a) Except as set forth in Schedule
2.16:
(i) The Company has timely filed or, if not yet due but due
before Closing, will timely file all Tax Returns required to be
filed by it for
all taxable periods ending on or before the date of Closing and
all such Tax
Returns are or, if not yet filed, will be, upon filing, true,
correct and
complete in all material respects;
(ii) the Company has paid, or if payment is not yet due but
due
before Closing, will promptly pay when due to each appropriate
Tax Authority,
all Taxes of the Company shown as due on the Tax Returns
required to be filed by
it for all taxable periods ending on or before the date of
Closing;
(iii) the accruals for Taxes currently payable as well as
for
deferred Taxes shown on the financial statements of the Company
as of the date
of the Annual Statement or the date of any financial statements
delivered
hereunder: (A) adequately provide for all contingent Tax
Liabilities of the
Company as of the date thereof; and (B) accurately reflect, as
of the date
thereof, all unpaid Taxes of the Company whether or not
disputed, in each case
as required to be reflected thereon in order for such statements
to be in
accordance with GAAP;
(iv) no extension of time has been requested or granted for
the
Company to file any Tax Return that has not yet been filed or to
pay any Tax
that has not yet been paid and the Company has not granted a
power of attorney
that remains outstanding with regard to any Tax matter;
9
<PAGE>
(v) the Company has not received notice of a determination by
a
Tax Authority that Taxes are currently owed by the Company (such
determination
to be referred to as a "Tax Deficiency") and, to the Company's
knowledge, no Tax
Deficiency is proposed or threatened;
(vi) all Tax Deficiencies have been paid or finally settled
and
all amounts determined by settlement to be owed have been
paid;
(vii) there are no Tax Liens on or pending against the
Company
or any of the Assets, other than those which constitute
Permitted Liens;
(viii) there are no presently outstanding waivers or
extensions
or requests for a waiver or extension of the time within which a
Tax Deficiency
may be asserted or assessed;
(ix) no issue has been raised in any examination,
investigation, Company Required Consents, suit, action, claim or
proceeding
relating to Taxes (a "Tax Company Required Consents") which, by
application of
similar principles to any past, present or future period, would
result in a Tax
Deficiency for such period;
(x) there are no pending or threatened Tax Audits of the
Company;
(xi) the Company has no deferred intercompany gains or
losses
that have not been fully taken into income for income Tax
purposes;
(xii) there are no transfer or other taxes (other than
income
taxes) imposed by any state on the Company by virtue of the
Contemplated
Transactions; and
(xiii) no claim has been made by any Tax Authority that the
Company is subject to Tax in a jurisdiction in which the Company
is not then
paying Tax of the type asserted.
Each reference to a provision of the Code in this Section 2.16
shall be treated
for state and local Tax purposes as a reference to analogous or
similar
provisions of state and local law.
(b) To the Company's knowledge, the Company has collected and
remitted
to the appropriate Tax Authority all sales and use or similar
Taxes required to
be collected on or prior to the date of Closing and has been
furnished properly
completed exemption certificates for all exempt transactions and
has no
information otherwise or notice of any claim by any government
or jurisdiction
with regards thereto. The Company has maintained and has in its
possession all
records, supporting documents and exemption certificates
required by applicable
sales and use Tax statutes and regulations to be retained in
connection with the
collection and remittance of sales and use Taxes for all periods
up to and
10
<PAGE>
including the date of Closing. With respect to sales made by the
Company prior
to the date of Closing for which sales and use Taxes are not yet
due as of the
date of Closing, all applicable sales and use Taxes payable with
respect to such
sales will have been collected or billed by the Company and will
be included in
the Assets of the Company as of the date of Closing.
SECTION 2.17 Compliance with Laws. The Company is not in
violation of any
order, judgment, injunction, award, citation, decree, consent
decree or writ
(collectively, "Orders") and to the best of the Company's
knowledge, belief and
information, any Laws of any Governmental Bodies affecting the
Company, the
Company Shares or the Business.
SECTION 2.18 Permits. The Company has obtained all licenses,
permits,
certificates, certificates of occupancy, orders, authorizations
and approvals
(collectively, "Permits"), and has made all required
registrations and filings
with all Governmental Bodies, that are necessary to the
ownership of the Assets,
the use and occupancy of the Leased Real Property, as presently
used and
operated, and the conduct of the Business or otherwise required
to be obtained
by the Company. All Permits required to be obtained or
maintained by the Company
are listed on Schedule 2.18 and are in full force and effect; no
violations are
or have been recorded, nor have any notices or violations
thereof been received,
in respect of any Permit; and no proceeding is pending or
threatened to revoke
or limit any Permit; and the consummation of the Contemplated
Transactions will
not (or with the giving of notice or the passage of time or both
will not) cause
any Permit to be revoked or limited.
SECTION 2.19 Environmental Matters. To the best of the Company's
knowledge,
belief and information, the Company is, and at all times has
been, in full
compliance with, and has not been and is not in violation of or
liable under,
any Environmental Law.
SECTION 2.20 Finders Fees. Other than as set forth in Schedule
2.20, there
is no investment banker, broker, finder or other intermediary
which has been
retained by or is authorized to act on behalf of the Company who
might be
entitled to any fee or commission from the Company in connection
with the
consummation of the Contemplated Transactions. Any finder's fees
shall be paid
by Company's shareholders.
SECTION 2.21 Disclosure. Neither this Agreement, the Schedules
hereto, nor
any reviewed or unaudited financial statements, documents or
certificates
furnished or to be furnished to Buyer by or on behalf of the
Company pursuant to
this Agreement contains or will contain any untrue statement of
a material fact
or omits or will omit to state a material fact necessary in
order to make the
statements contained herein or therein not misleading. There are
no events,
transactions or other facts, which, either individually or in
the aggregate, may
give rise to circumstances or conditions which would have a
material adverse
effect on the general affairs or Condition of the Business.
SECTION 2.22 Business Contracts. The Company has (i) entered
into contracts
for supply of its basic goods and material sufficient to fulfill
contracts for
sale of its basic products such that (ii) its retail delivery
contract(s) will
result in the sale of 800,000 gallons of its basic product each
month for a
period of at least one year. The Company believes the underlying
contracts are
11
<PAGE>
binding upon the counter-parties and the counter-parties from
the Company's due
diligence are financially capable of completing the terms of the
respective
contracts.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer and Sub (in this section sometimes collectively referred
to as
"Buyer") represent, warrant and covenant to the Company as
follows and
acknowledge that the Company is relying upon such
representations and warranties
in connection with the Contemplated Transactions:
SECTION 3.1 Authority Relative to this Agreement. Buyer has full
power and
authority to execute and deliver each Transaction Documents to
which they are
or, at Closing, will be, a party and to consummate the
Contemplated
Transactions. Following the approval of the board of directors
of Buyer and Sub
and the shareholder of Sub with respect to the Contemplated
Transactions, the
execution, delivery and performance by Buyer of each Transaction
Document and
the consummation of the Contemplated Transactions to which they
are or, at
Closing, will be, a party have been duly and validly authorized
and approved by
Buyer and no other acts by or on behalf of Buyer is necessary or
required to
authorize the execution, delivery and performance by Buyer of
each Transaction
Document and the consummation of the Contemplated Transactions
to which they are
or, at Closing, will be a party. This Agreement and the other
Transaction
Documents to which Buyer is a party have been, duly and validly
executed and
delivered by Buyer and (assuming the valid execution and
delivery thereof by the
other parties thereto) constitutes, or will, at the Closing,
constitute, as the
case may be, the legal, valid and binding agreements of Buyer
enforceable
against each of them in accordance with their respective terms,
except as such
obligations and their enforceability may be limited by
applicable bankruptcy and
other similar Laws affecting the enforcement of creditors'
rights generally and
except that the availability of equitable remedies is subject to
the discretion
of the court before which any proceeding therefor may be brought
(whether at law
or in equity).
SECTION 3.2 No Conflicts; Consents. The execution, delivery and
performance
by Buyer of each Transaction Document to which it is a party and
the
consummation of the Contemplated Transactions to which Buyer is
a party does not
and will not: (i) violate any provision of the certificate of
incorporation or
by-laws of Buyer, as the case may be; (ii) require Buyer to
obtain any consent,
approval or action of or waiver from, or make any filing with,
or give any
notice to, any Governmental Body or any other person, except as
set forth on
Schedule 3.2 (the "Buyer Required Consents"); (iii) except as
set forth in
Schedule 3.2, violate, conflict with or result in the breach or
default under
(with or without the giving of notice or the passage of time),
or permit the
suspension or termination of, any material Contract to which
Buyer is a party or
any of them or any of their assets is bound or subject or result
in the creation
or any Lien upon any of Buyer Common Stock or upon any
assets
|