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AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION

Agreement and Plan of Merger

AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION | Document Parties: BlueStar Health Inc., | Zeon Fuel Inc. | Zeon Global Energy, You are currently viewing:
This Agreement and Plan of Merger involves

BlueStar Health Inc., | Zeon Fuel Inc. | Zeon Global Energy,

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Title: AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
Governing Law: Texas     Date: 11/7/2007
Industry: Recreational Activities     Sector: Services

AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION, Parties: bluestar health inc.  , zeon fuel inc. , zeon global energy
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EXHIBIT 2.1

AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION

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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

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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");

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(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

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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").

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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.

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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;

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(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.

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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.

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(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;

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(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

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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


 
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