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Exhibit 10.1
REORGANIZATION AND STOCK PURCHASE AGREEMENT
This
REORGANIZATION AND STOCK PURCHASE AGREEMENT dated as of October
24,
2007 (this "Agreement") is by and between Palomine Mining Inc., a
Nevada
corporation ("Palomine"), Universal Bioenergy North America, Inc.,
a Nevada
corporation ("UBNA"); Mortensen Financial Limited, a Belizean
corporation
("Mortensen"); and the stockholders and owners of all of the issued
and
outstanding equity of UBNA as set forth on Schedule 1(a) to this
Agreement
(collectively, jointly and severally, the "Shareholders")
RECITALS
A.
WHEREAS, Palomine desires to acquire directly or indirectly
100%
of the
equity of UBNA;
B.
WHEREAS, the Shareholders desire to exchange with Palomine all
of
the issued and outstanding common stock of UBNA for 2,000,000
shares of common stock of Palomine and thus transfer UBNA to
Palomine;
C.
WHEREAS, Mortensen is a shareholder of Palomine and owns
2,000,000
shares of Palomine or approximately 46% of the issued and
outstanding common stock of Palomine;
D.
WHEREAS, Mortensen desires to effect the transactions
contemplated
by this Agreement and in order to induce the transactions;
Mortensen will contribute 1,800,000 shares of common stock that
he
currently owns to the amount of shares being delivered to the
Shareholders hereunder;
E:
WHEREAS, the parties hereto intend that the transaction
contemplated hereby shall be completed as a tax-free exchange
of
stock.
NOW, THEREFORE, the Shareholders and the respective Boards of
Directors of
Palomine and UBNA deem it advisable and in the best interests of
their
corporations and the respective shareholders of their corporations
that Palomine
acquire 100% of the securities of UBNA, in accordance with the
terms and
conditions of this Reorganization and Stock Purchase Agreement.
1.
PRE-CLOSING ACTIONS OF PALOMINE AND MORTENSEN. Immediately upon
execution of this Agreement and prior to any Closing as set
forth
herein, Palomine (and Mortensen with respect to item b) shall
undertake the following actions:
(a) The
Board of Directors of Palomine shall unanimously
approve and shall deliver or cause to be delivered to Cohen
& Czarnik LLP ("Escrow Agent") to be placed in escrow
("Escrow") resolutions with respect to (a) approving all of
the transactions set forth herein; (b) increasing or
directing the size of the Board of Directors to be two
members; (c) electing two persons to the board of directors
of Palomine designated by UBNA, and (d) approving a name
change of the corporation to "Universal Bioenergy, Inc."
(the "Palomine Board Resolutions").
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(b)
Palomine and Mortensen, jointly and severally, shall
deliver or cause to be delivered to Escrow Agent to be
placed in Escrow a total of 2,000,000 shares of Palomine
(200,000 shares directly from Palomine and 1,800,000 shares
directly from Mortensen) for delivery to Shareholders (as
set forth on Schedule 1(a) attached hereto) (the "Escrowed
Palomine Shares").
(c)
Palomine shall use its reasonable best efforts to prepare
and complete the documents necessary to be filed with
local, state and federal authorities to consummate the
transactions contemplated hereby including the filing of
any necessary reports pursuant to the Securities Exchange
Act of 1934, as amended.
2.
PRE-CLOSING ACTION OF UBNA. Immediately upon execution of this
Agreement and prior to the Closing as set forth herein, UBNA
shall
undertake the following actions:
(a) The Board of Directors
of UBNA shall execute and deliver
resolutions unanimously approving all of the transactions
set forth herein.
(b) The
shareholders of UBNA shall deliver to Escrow Agent to
be placed in Escrow certificates representing 5,000 shares
of common stock of UBNA (the "Escrowed UBNA Shares"),
representing 100% of the issued and outstanding equity of
UBNA, for delivery to Palomine at Closing.
(c) During
the Due Diligence Period, UBNA shall make available
to Palomine and Palomine's employees, attorneys,
accountants, financial advisors, agents and representatives
during normal business hours all information concerning the
operation, business and prospects of UBNA as may be
reasonably requested by Palomine. UBNA will cooperate with
Palomine for the purpose of permitting Palomine to discuss
UBNA's business and prospects with customers, creditors,
suppliers and other persons having business dealings with
such
party, including without limitation providing access
to all employees, consultants, assets, properties, books,
accounts, records, tax returns, contracts and other
documents of UBNA, provided that such access will not
materially interfere with the normal business operations of
UBNA.
3.
CONDITIONS TO CLOSING
The
parties' obligation to close the proposed Acquisition will be
subject
to
specified conditions precedent including, but not limited to,
the
following:
(a)
the
representations and warranties of Palomine as set forth in
Section 6 herein shall remain accurate as of the Closing Date
and
no material adverse change to the financial condition of
Palomine
shall have occurred;
(b)
the
representations and warranties of UBNA as set forth in Section
7 herein shall remain accurate as of the Closing Date and no
material adverse change in the business or financial condition
of
UBNA shall have occurred;
(c)
all the
documents necessary to be filed with local, state and
federal authorities are prepared;
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(d)
Palomine
shall have provided the board resolutions and any other
approval required to complete the board election; and board
resolutions approving the name change;.
(e)
Palomine
shall retain its good standing as a publicly traded
company, trading on the over-the-counter bulletin board under
the
symbol "POMM.OB";
(f)
Palomine
shall have prepared and delivered to UBNA within thirty
(30) days of Closing audited and unaudited financial statements
which if filed at the time received would be complete and
compliant with Regulation S-X, Section 310, sufficient for the
combined entities to file any and all filings required by the
US
Securities and Exchange Commission and U.S. securities laws and
rules (the "Palomine Financial Statements"); and
(g)
UBNA shall
have prepared and delivered to Palomine within five (5)
days of closing audited and unaudited financial statements
which
if filed at the time received would be complete and compliant
with
Regulation S-X, Section 310, sufficient for the combined
entities
to file any and all filings required by the US Securities and
Exchange Commission and U.S. securities laws and rules (the
"UBNA
Financial Statements").
4.
AT
THE CLOSING.
(a)
At the
Closing, Escrow Agent shall release from Escrow the
Palomine Board Resolutions effectuating the election of members
designated by UBNA to the Palomine Board of Directors. The
members
of the Board of Directors of Palomine prior to Closing shall
submit resignations at Closing.
(b)
At the
Closing, Escrow Agent shall release from Escrow the
Escrowed Palomine Shares to the Shareholders.
(c)
At the
Closing, Escrow Agent shall release from Escrow the
Escrowed UBNA Shares to Palomine.
(d)
At the
Closing, the existing officers of Palomine shall resign and
be replaced by those officers appointed by the new Board of
Directors.
5.
TIMING OF CLOSING. The Closing shall occur upon the
satisfaction
of the conditions set forth in this Agreement and upon
instructions from the parties hereto to the Escrow Agent. The
Closing Date shall occur on or before November 30th, 2007 in
the
event such conditions are met, unless the Escrow Agent receives
instructions otherwise from the parties or notice from a party
that the conditions set forth herein have not occurred. Unless
otherwise advised in writing by the parties, in the event the
Closing does not occur on or before December 31, 2007, (i) the
Escrow Agent shall return the Escrowed Palomine Shares and the
Palomine Board Resolutions to Palomine; and (ii) the Escrow
Agent
shall return the Escrowed UBNA Shares to the shareholders of
UBNA.
6.
REPRESENTATIONS OF PALOMINE/MORTENSEN. Palomine (and Mortensen
solely with respect to his shares of common stock of Palomine
contributed to the Escrowed Palomine Shares) represents and
warrants as follows:
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(a)
OWNERSHIP
OF SHARES. As of the Closing Date, the shareholders of
UBNA will become the owners of the Escrowed Palomine Shares.
The
Escrowed Palomine Shares will be free from claims, liens or
other
encumbrances, except as provided under applicable federal and
state securities laws;
(b)
FULLY PAID
AND NONASSESSABLE. The Escrowed Palomine Shares
constitute duly and validly issued shares of Palomine, and are
fully paid and nonassessable, and Palomine further represents
that
it has the power and the authority to execute this Agreement
and
to perform the obligations contemplated hereby;
(c)
ORGANIZATION OF PALOMINE; AUTHORIZATION. Palomine is a
corporation
duly organized, validly existing and in good standing under the
laws of Nevada with full corporate power and authority to
execute
and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate
action of Palomine and this Agreement constitutes a valid and
binding obligation of Palomine; enforceable against it in
accordance with its terms.
(d)
CAPITALIZATION. The authorized capital stock of Palomine
consists
of 75,000,000 shares of common stock, par value $0.001 per
share,
and no shares of preferred stock. As of the Closing Date,
Palomine
will have a total of no more than 4,600,000 shares of common
stock
issued and outstanding and no shares of preferred stock issued
and
outstanding. As of the Closing Date, all of the issued and
outstanding shares of common stock of Palomine are validly
issued,
fully paid and non-assessable. There is not and as of the
Closing
Date, there will not be outstanding any warrants, options or
other
agreements on the part of Palomine obligating Palomine to issue
any additional shares of common or preferred stock or any of
its
securities of any kind. Palomine will not issue any shares of
capital stock from the date of this Agreement through the
Closing
Date. The Common Stock of Palomine is presently trading on the
over-the-counter electronic bulletin board under the symbol
"POMM.OB".
(e)
OWNERSHIP
OF PALOMINE SHARES. The delivery of certificates
provided herein for the Escrowed Palomine Shares will result in
the shareholders of UBNA immediate acquisition of record and
beneficial ownership of the Escrowed Palomine Shares, free and
clear of all encumbrances.
(e)
NO
CONFLICT AS TO PALOMINE. Neither the execution and delivery of
this Agreement nor the consummation of the exchange of the
Palomine Shares will (a) violate any provision of the
certificate
of incorporation or by-laws (or other governing instrument) of
Palomine or (b) violate, or be in conflict with, or constitute
a
default (or an event which, with notice or lapse of time or
both,
would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or excuse
performance by any Person of any of its obligations under, or
cause the acceleration of the maturity of any debt or
obligation
pursuant to, or result in the creation or imposition of any
encumbrance upon any property or assets of Palomine under, any
material agreement or commitment to which Palomine is a party
or
by which its property or assets is bound, or to which any of
the
property or assets of Palomine is subject, or (c) violate any
statute or law or any judgment, decree, order, regulation or
rule
of any court or other governmental body applicable to Palomine
except, in the case of violations, conflicts, defaults,
terminations, accelerations or encumbrances described in clause
(b) of this Section for such matters which are not likely to
have
a material adverse effect on the business or financial
condition
of Palomine.
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(f)
CONSENTS
AND APPROVALS OF GOVERNMENTAL AUTHORITIES. No consent,
approval or authorization of, or declaration, filing or
registration with, any Governmental Body is required to be made
or
obtained by Palomine in connection with the execution, delivery
and performance of this Agreement by Palomine or the
consummation
of the sale of the Escrowed Palomine Shares.
(g)
OTHER
CONSENTS. Except for consents from the holders of the
Escrowed Palomine Shares, no consent of any Person is required
to
be obtained by Palomine to the execution, delivery and
performance
of this Agreement or the consummation of the sale of the
Palomine
Shares, including, but not limited to, consents from parties to
leases or other agreements or commitments, except for any
consent
which the failure to obtain would not be likely to have a
material
adverse effect on the business and financial condition of
Palomine.
(h)
LITIGATION. There is no action, suit, inquiry, proceeding or
investigation by or before any Court or Governmental body
pending
or threatened in writing against or involving Palomine which is
likely to have a material adverse effect on the business or
financial condition of Palomine, or which questions or
challenges
the validity of this Agreement. Palomine is not subject to any
judgment, order or decree that is likely to have a material
adverse effect on the business or financial condition of
Palomine.
(i)
SEC
REPORTS. Palomine has filed with the SEC all forms, reports,
schedules, and statements that were required to be filed by it
with the SEC within the three (3) year period ending on the
Closing, and previously has furnished or made available to the
Company accurate and complete copies of all the SEC Documents.
As
of their respective dates, the SEC Documents were prepared in
accordance with the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the Securities Act of 1933, as amended
(the "Securities Act") and did not contain any untrue statement
of
a material fact or
omit to state a material fact required to be
stated in those documents or necessary to make the statements
in
those documents not misleading, in light of the circumstances
under which they were made. As of their respective dates, these
reports and statements will not contain any untrue statement of
a
material fact or omit to state a material fact required to be
stated in them or necessary to make the statements in them not
misleading, in light of the circumstances under which they are
made and these reports and statements will comply in all
material
respects with all applicable requirements of the Exchange Act
and
the Securities Act. "SEC Documents" means all forms, notices,
reports, schedules, statements, and other documents filed by
Parent with the SEC within the three years from the Closing,
whether or not constituting a "filed" document, and includes
all
proxy statements, registration statements, amendments to
registration statements, periodic reports on Forms 10-KSB,
10-QSB,
and 8-K, and annual and quarterly reports to shareholders.
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(j)
FINANCIAL
STATEMENTS. The audited consolidated financial
statements and unaudited consolidated interim financial
statements
of Palomine that are included or incorporated in the SEC
Documents
were prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as otherwise
indicated
in the notes to them) and fairly present the consolidated
financial position, results of operations, and cash flows from
operating, investing, and financing activities of Palomine as
of
the dates and for the periods indicated, except that the
unaudited
consolidated interim financial statements in the SEC Documents
are
subject to normal year-end adjustments and were prepared in
accordance with the instructions to SEC Form 10-QSB and,
accordingly, omit or condense certain footnotes and other
information normally included in financial statements prepared
in
accordance with GAAP. The consolidated financial statements of
Palomine that are included or incorporated in any subsequent
report or statement that Palomine mails to its shareholders
generally or files with the SEC during the period after the
date
of this Agreement and before the Closing Date will be prepared
in
accordance with GAAP applied on a consistent basis during the
periods involved (except as otherwise indicated in them, the
notes
to them, or any related report of Palomine's independent
accountants) and will fairly present the financial information
that they purport to present, except that the unaudited,
consolidated interim financial statements will be subject to
normal year-end adjustments and will omit or condense certain
footnotes and other information normally included in financial
statements prepared in accordance with GAAP.
(k)
ABSENCE OF
CERTAIN CHANGES. From December 31, 2006, to the date
hereof, Palomine has not :
1.
suffered damage or destruction of any of its properties or
assets (whether or not covered by insurance) which is
materially adverse to the financial condition of Palomine,
or made any disposition of any of its material properties
or assets other than in the ordinary course of business;
2.
made any change or amendment in its certificate of
incorporation or by-laws, or other governing instruments,
except as contemplated hereby or required to effect the
transactions set forth herein;
3.
other than the Palomine Escrowed Shares or other than the
total issued and outstanding shares set forth in paragraph
6(d) hereto, issued or sold any Equity Securities or other
securities, acquired, directly or indirectly, by redemption
or otherwise, any such Equity Securities, reclassified,
split-up or otherwise changed any such Equity Security, or
granted or entered into any options, warrants, calls or
commitments of any kind with respect thereto;
4.
organized any new Subsidiary or acquired any Equity
Securities of any Person or any equity or ownership
interest in any business;
5.
borrowed any funds or incurred, or assumed or become
subject to, whether directly or by way of guarantee or
otherwise, any obligation or liability with respect to any
such indebtedness for borrowed money except to Mortensen;
6.
paid, discharged or satisfied any material claim, liability
or obligation (absolute, accrued, contingent or otherwise),
other than in the ordinary course of business;
7.
prepaid any material obligation having a maturity of more
than 90 days from the date such obligation was issued or
incurred;
8.
cancelled any material debts or waived any material claims
or rights, except in the ordinary course of business;
9.
disposed of or permitted to lapse any rights to the use of
any material patent or registered trademark or copyright or
other intellectual property owned or used by it;
9.
granted any general increase in the compensation of
officers or employees (including any such increase pursuant
to any employee benefit plan), except to Frank H. Ward;
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10.
purchased or entered into any contract or commitment to
purchase any material quantity of raw materials or
supplies, or sold or entered into any contract or
commitment to sell any material quantity of property or
assets;
11. made
any capital expenditures or additions to property,
plant or equipment or acquired any other property or
assets;
12.
written off or been required to write off any notes or
accounts receivable;
13.
written down or been required to write down any inventory;
or
14.
entered into any collective bargaining or union contract or
agreement.
15.
incurred any liability in excess of $20,000.
(l) CONTRACTS AND
COMMITMENTS. Palomine is not a party to any:
1.
Contract or agreement involving any liability on the part
of Palomine.
2.
Lease of personal property;
3.
Employee bonus, stock option or stock purchase, performance
unit, profit-sharing, pension, savings, retirement, health,
deferred or incentive compensation, insurance or other
material employee benefit plan (as defin
