Exhibit 10.1
STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT
(the "Agreement") is made and entered into as of June 30th, 2007
(the "Effective Date"), jointly and severally by and among
UNITED MINE SERVICES, INC., an Idaho Corporation of 1044
NORTHWEST BOULEVARD,STE. D, COEURD D'ALENE, IDAHO 83814, and
(hereinafter the "Buyer"), and GREG S. STEWART and JENNY
L. STEWART, husband and wife of P.O. Box 1275 Pinehurst, Idaho,
83850 (hereinafter collectively the "Seller").
RECITALS
WHEREAS, Seller owns all of the issued
and outstanding shares of capital stock in Stewart Contracting
Inc., an Idaho corporation ("Company"); and
WHEREAS, Buyers desire to purchase from
the Sellers, and the Sellers desire to sell to Buyers, all of the
outstanding capital stock of the Company (the “Company
Stock”), in consideration of the Purchase Price (hereinafter
defined), upon the terms and subject to the contingencies and
conditions set forth herein; and
WHEREAS, upon closing of this Stock
Purchase and Sale Agreement, Seller shall provide Buyers with a one
(1) year Lease to the real property presently used by the Company.
Real property is located at 202 S. Division Street in Pinehurst
Idaho. Lease will begin on November 1, 2007
NOW, THEREFORE , in
consideration of the respective representations, warranties,
agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1.
Purchase and Sale of Shares.
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1.1
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Purchase and Sale . On or before
June 30th, 2007 (the "Closing Date") and upon the terms and subject
to the conditions of this Agreement, the Sellers shall sell to
Buyers, and Buyers shall purchase from the Sellers, all of the
issued and outstanding shares of Company Stock (the "Shares"), free
and clear of all liens and encumbrances.
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1.2
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Purchase Price for Stock . The
aggregate purchase price payable by Buyers to the Sellers in
consideration for the sale of the Shares shall be Two and one half
Million Dollars ($2,500,000.00) (the "Stock Purchase Price").
Purchase will be in the form of a stock for stock transaction.
Seller will receive from Buyer Five Million (5,000,000 Shares)
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valued at $0.25 per share of United Mine
Services, Inc. and an additional $1,250,000 payable in stock or
cash at the discretion of the Buyer in exchange for 100% of the
shares of Stewart Contracting Inc. (1,000 Shares). Remaining
balance will accrue interest at a rate of 6% APR until paid off.
Buyer shall make minimum monthly payments to Seller in the amount
of 10,000 US until balance is paid. If additional payments are made
in stock, the share price will be based on the average traded
closed share price for the 90 days prior to the issuance of stock.
The time period to pay off the balance owed is 36 months from the
date of this agreement. The parties acknowledge that Buyer has
deposited with Sellers stock in the amount of Two Hundred and Fifty
Thousand Shares (250,000 Shares), as a non-refundable earnest money
("Earnest Money") to be applied as a down payment to the Purchase
Price at Closing. If all contingencies are satisfied and this
transaction proceeds to the Closing Date, the remaining balance of
Four Million Seven Hundred and Fifty Thousand Shares (4,750,000)
shall be paid at the Closing Date. In the event that this
transaction shall not close for any reason, Seller's shall retain
the full Earnest Money and without obligation to refund any portion
thereof to Buyers.
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2.
Purchase and Sale of Real Property .
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2.1
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Lease . Upon the Closing Date
hereof Sellers lease the Real Property to Buyers on the terms and
conditions of that Lease, attached hereto as Exhibit
“A” which Lease shall contain among its provisions, a
provision providing Buyer with an option for the sole and exclusive
right to purchase at the end of the Lease term Sellers' Real
Property, should the Sellers choose to sell, free and clear of all
liens and encumbrances.
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3.
Representations and Warranties of Buyers . Buyers
hereby represent and warrant to the Sellers as follows:
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3.1
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Organization, Standing and Corporate
Power . The Buyers, severally, are corporations duly
organized, validly existing and in good standing in the State of
Idaho, and have sufficient assets and sources of funds from which
will be paid the Purchase Price for the Shares.
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3.2
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Compliance with Applicable Laws
. Buyers, jointly and severally, are in compliance with all
laws, regulations, rules and governmental orders applicable to
it.
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3.3
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Litigation . Buyers, severally,
are not subject to any judgment, injunction, order or arbitration
decision, and there is no litigation or administrative proceeding
pending or threatened against the Buyers.
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3.4
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Investment . The Buyers are
acquiring the Shares for investment for its own account, and not as
a nominee or agent, and not with a view to, or for resale in
connection with any distribution thereof. The Buyers understand the
Shares have not been, and will not be, registered under the Federal
and State Securities Acts by reason of a specific exemption or
exemptions from the registration provisions of the Securities Acts
which depend upon, among other things, the bona fide nature of the
purchaser's investment intent and the accuracy of the purchaser's
representations as expressed herein. The Buyers further understand
that no public market now exists for any of the Shares issued by
the Company.
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3.5
Taxes . Upon the
Closing Date, the parties shall elect to end the then current tax
year of the Company pursuant to §1377(a)(2) of the Internal
Revenue Code of 1986, as amended ("IRC"), to the extent the Company
will have two (2) tax years for 2007. Buyers shall be solely
responsible for the timely filing of any and all Federal and/or
State tax returns pertaining to fiscal year ending December 31,
2007, and due following the Closing Date, which shall be filed in a
timely manner. Except as provided for herein, Buyers shall
indemnify and hold harmless Sellers from all claims by all taxing
authorities with respect to the operations of the Business after
the date of Closing.
3.6
S Corporate Status
. Buyers represent and acknowledge that it, as Corporations,
are not qualified shares and can no longer continue to the S
Corporation status of the Company for Federal income purposes, and
that the fiscal tax year for the Company pursuant to IRC
§1377(a)(2) will close the tax year for the Company as of the
date of Closing, with the Sellers being solely responsible for the
payment of any Federal or State Income taxes accruing on operations
prior to the date of Closing.
3.7
Stock Purchase . The Buyers do hereby represent and
acknowledge and agree that following the Closing, it will not make,
nor attempt to make, any election under IRC §338 to have the
acquisition of the Shares herein treated as an asset acquisition.
Buyers acknowledge that the Sellers are relying on this
representation with respect to their tax planning, and would not
enter into this transaction but for this representation of the
Buyers. An election of the Buyers under §338 to treat this
stock acquisition as an asset acquisition would have the likely
effect of liquidating the Corporation for Federal and State income
tax purposes causing there to be additional Federal and State
income taxes payable by the Seller. Buyers further acknowledge and
agree that the Sellers would have increased the purchase price by
an amount in excess of the additional Federal and State taxes they
would have to pay if the Buyers were to purchase the assets of the
Company, or to make an election under IRC §338.
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3.8
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Employee Retention . Upon
Closing, the Buyers will extend an offer of employment to each of
the existing employees of the Company and use its best efforts to
continue to employ all such employees for a period of at least one
(1) year following the Closing, provided that such employees
perform within the reasonable expectations, guidelines and policies
of management. Sellers are relying on this representation of Buyers
and that no notices have been given of pending layoff or employment
terminations, nor need to be given.
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a.
Key Employees . In addition to the
foregoing, on or before ten (10) days from the execution of this
Agreement, Buyer shall notify Sellers of the key personnel of the
Company, Greg Stewart, with which the Buyers interest is in
negotiating a one (1) year employment contract. In the event that
the Buyers are unable to negotiate an employment contract with such
individual, it shall be regarded as a matter of due diligence under
Paragraph 5.2 herein. In the event that this transaction shall fail
to close, for whatever reason, the Buyers do hereby jointly and
severally agree not to employ, or to offer employment directly or
indirectly, for a period of five (5) years commencing on the date
hereof.
4.
Representations and Warranties of the Sellers.
The Sellers, jointly and severally, hereby represent and warrant to
Buyers as follows:
4.1
Organization,
Standing and Corporate Power . Stewart Contracting Inc., is
a corporation duly organized, validly existing and in good standing
in the State of Idaho.
4.2
Capital
Structure . The authorized capital stock of the Company
consists of one thousand (1,000) shares of One Dollars ($1.00) par
value voting common stock. There are no shares of common stock
issued and outstanding and no shares of common stock are held by
the Business in its treasury. No shares of capital stock are
reserved for issuance for any other purpose. All the issued and
outstanding shares of capital stock are duly authorized, validly
issued, fully paid and nonassessable and have not been issued in
violation of any preemptive or similar rights. There are no
outstanding contractual obligations of the Business to repurchase,
redeem, or otherwise acquire any shares of common stock. The
Business has two subsidiary businesses. They are listed and
described below.
1. Stewart Contracting Inc. doing business as
Castlegrade Fine Masonry. This is an active masonry company
established in December 2005.
2. Stewart Contracting Inc. doing business as
Jet-Black Sealcoating and Repair. This business is currently
inactive.
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4.3
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Ownership of Shares . As of the
date hereof, Greg S. Stewart is the sole Shareholder of record
equally owning all shares of stock currently issued and
outstanding, free and clear of all liens and encumbrances.
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4.4
Capacity;
Authority . The Seller has full legal capacity to execute
the Sellers' Agreements and consummate the transactions
contemplated hereby and thereby. No person other than the Seller
has any interest in any of the assets of the Company.
4.5
Compliance with
Applicable Laws . The Company is in compliance with all
laws, regulations, rules and governmental orders applicable to
it.
4.6
Litigation
. The Company is not subject to any judgment, injunction, order
or arbitration decision and there is no litigation or
administrative proceeding pending or threatened against the
Company.
4.7
Assets .
The Company has, and, except as otherwise provided herein,
following the Closing will have, good and marketable title to the
Real Property described in the Lease attached as Exhibit
“A”. Except as may be agreed upon between
the parties hereto prior to Closing and specified in the financial
statements, all assets of the Corporation shall be free and clear
of all encumbrances.
4.8
Financial
Statements . Sellers have provided to Buyers a complete
listing of its assets and liabilities as of December 31, 2006,
which Buyers have reviewed to its satisfaction. Prior to Closing
and except for open purchase orders to its vendors, Sellers will
either cause all of its liabilities to be paid in full, or that the
Company, at Closing, will have accounts receivable in excess of its
accounts payable.
4.9
Taxes .
Sellers have timely filed or will timely file all federal, state,
and county tax returns of every nature which have due dates or will
have due dates preceding Closing. All taxes and interestlpenalties,
if any, which were due prior to closing, shall be paid by
Shareholders. Except as provided for herein, Sellers shall
indemnify and hold harmless Buyers from all claims by all taxing
authorities with respect to the Business operations prior to the
date hereof.
5.
Contingencies of Closing . This sale is subject to
the Buyers' investigation in accordance with the following
contingencies:
5.1
Independent
Investigation and Inspection . Buyers do hereby reconfirm
its Confidentiality Agreement dated March 19, 2007. At
all times after the
Effective Date, and upon five (5) days written notice to Sellers,
Buyers shall have supervised access to the Real Property and the
Stewart Contracting Inc. business operations for purposes of
viewing and inspecting the equipment, structures and status of
current activities of Stewart Contracting Inc. (the "Business") to
learn and understand the operations of the Business.
5.2
Due Diligence
. Seller shall, within ten (10) business days from written
request of the Buyers, provide to the Buyers all reasonably
requested Corporate documents (i.e., articles, bylaws, minutes),
including, but not limited to copies of leases, financial
statements and 2006 tax returns, copies of property statements,
copies of assessments, copies of any employee policy/benefit
manuals and employment files, and copies of 2006 utilities, repairs
and maintenance invoices. Buyers shall have until June 20th, 2007
to review and ask questions regarding such documents and the
operations of the Business. Unless extended in writing by the
parties on or before June 20th, 2007, Buyers shall be deemed to
have either accepted or waived all remaining contingencies to its
Closing that pertain to its investigation of the Business.
5.3
Operation of
Business Prior to Closing . Seller shall have operated the
Business in the normal and ordinary course of business and shall
not have make any sale of assets other than in the ordinary course
of business without the prior written consent of the Buyers. The
parties acknowledge and agree that cash balance amount of
$317,878.78 shown on the year end reviewed financial statement
ending December 31, 2006 will be disbursed to the Sellers by
December 15 th ,
2007 and the personal items belonging to the Sellers, all as listed
on Exhibit "B" attached hereto. All accounts receivable existing on
the date of Closing shall remain with the Business. At Closing, the
Sellers shall make a list of all accounts receivables and list of
all vendors with outstanding invoices. To the extent that the
amounts owing to vendors exceeds the aggregate of the accounts
receivable at Closing, the Purchase Price payable herein shall be
reduced, dollar for dollar, for each dollar of excess liability. At
Closing, Seller shall provide Buyer with a list of any open
purchase orders.
7.
Actions to Occur At Closing .
7.1
Seller's Deliveries
. On the Closing Date, the Sellers shall execute for delivery,
as provided below, the following:
a.
Share Certificates . Endorsed stock certificates
(with executed stock powers) transferring ownership of certificates
to the Buyers representing all of the outstanding Shares.
b.
Lease Aqreement . A Lease Agreement with Buyers for
the lease of Sellers' Real Property in the form attached as Exhibit
"A.
c.
Corporate Records . The complete stock books, Bylaws,
minute books, corporate seals, and any and all other corporate
records or documents of the Company.
d.
Other Documentation . Any and all further
documentation necessary to complete this stock sale
transaction.
7.2
Buyer's Deliveries .
On the Closing Date, the Buyers will execute for delivery or
perform the following:
a.
Unanimous Consent . A unanimous Consent of
Shareholders and Directors for the election of new Officers and
Directors of the Company, effective immediately upon the
Resignations as provided in Paragraph 7.1 (b) above.
b.
Lease Agreement . A Lease Agreement with Seller for
the lease of Sellers' Real Property in the form attached as Exhibit
" A.
c.
Other Documentation . Any and all further
documentation necessary to complete this stock sale
transaction.
d.
Release . The release of Sellers from any and all
personal guaranties to suppliers or vendors to the Business,
effective upon Closing.
7.3
Proration of Expenses
. As part of the Closing, the Buyers shall pay at Closing and
as an addition to the Purchase Price, Buyer's prorata share of real
estate taxes, prepaid insurance premiums, other prepaid expenses
and any closing costs.
8.
Indemnification
8.1
Indemnification by the Sellers
. The Seller hereby agrees to indemnify, hold harmless,
protect, and defend Buyers from and against any and all claims,
causes of action, liabilities, losses, costs, taxes, damages,
whether foreseeable or unforeseeable, arising out of this sale of
stock and prior to the date of this Agreement. The Sellers shall
indemnify the Buyers in respect of, and hold the Buyers harmless
against damages incurred or suffered by the Buyers or any affiliate
thereof resulting from, relating to or constituting:
a. any
breach, as of the date of this Agreement or as of the Effective
Date, of any representation or warranty of the Sellers contained in
this Agreement, or any other agreement or instrument furnished by
the Sellers to the Buyers pursuant to this Agreement; or
b. any
failure to perform any covenant or agreement of the Sellers
contained in this Agreement, or any agreement or instrument
furnished by the Sellers to the Buyers pursuant to this
Agreement.
8.2
Indemnification by the
Buyers . The Buyers hereby agree to indemnify, hold
harmless, protect, and defend the Sellers, their agents,
representatives, attorney's, officers and directors from and
against any and all claims, causes of action, liabilities, losses,
costs, taxes, damages, whether foreseeable or unforeseeable,
arising out of this sale of stock and after the date of this
Agreement. The Buyers shall further indemnify the Sellers in
respect of, and hold it harmless against, any and all damages
incurred or suffered by the Sellers resulting from, relating to or
constituting:
a. any
breach, as of the date of this Agreement or as of the Closing Date,
of any representation or warranty of the Buyers contained in this
Agreement or any other agreement or instrument furnished by the
Purchasers to the Sellers pursuant to this Agreement;
b. any
failure to perform any covenant or agreement of the Buyers
contained in this Agreement or any other agreement or instrument
furnished by the Buyers to the Sellers pursuant to this
Agreement.
9.
Cooperation. Buyers, the Seller and the
Company agree to cooperate fully with one another in taking any
actions necessary or helpful to accomplish the transactions
contemplated hereby.
10.
Costs
and Expenses . Buyers are responsible for their own
Attorney fees and other related costs. Seller is responsible for
its own Attorney fees and other related costs including, but not
limited to, any Federal or State income taxes which may be due as a
result of this transaction. No cost shall be paid by the other
party without proper notice and proper acceptance. Costs of any
Closing Agent employed to close this stock sale transaction shall
be paid equally by the parties.
11.
Parties in Interest; Assignment . This Agreement
shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, assigns and transferees. No
party may voluntarily or involuntarily assign its or their interest
under this Agreement without the prior written consent of the other
party hereto.
12.
Amendment . No amendment, waiver of compliance with
any provision or condition hereof or consent pursuant to this
Agreement shall be effective unless evidenced by an instrument in
writing signed by the party against whom enforcement of any waiver,
amendment or consent is sought.
13.
Governing Law . This Agreement shall be construed in
accordance with and governed by the internal law of the State of
Idaho (without reference to its rules as to conflicts of law).
14.
Notice . All notices, requests, consents, waivers and
other communications required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given if
transmitted by facsimile, upon acknowledgment of receipt thereof in
writing by facsimile or otherwise; if personally delivered, upon
delivery or refusal of delivery; if mailed by registered or
certified United States mail, return receipt requested, postage
prepaid, upon delivery or refusal of delivery; or if sent by a
nationally recognized overnight delivery service, upon delivery or
refusal of delivery. All notices, consents, waivers or other
communications required or permitted to be given hereunder shall be
addressed to the respective party to whom such notice, consent,
waiver or other communication relates at the following
addresses:
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United Mine Services, Inc.
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15.
Counterparts . This Agreement may be executed in one
or more counterparts, each of which will be deemed an original and
all of which together will constitute one and the same
instrument.
16.
Entire
Agreement . This Agreement and the exhibits hereto embody
the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein.
17.
Legal Representation.
18.
Further Actions . After the Effective Date, the
Sellers shall execute and deliver such other certificates,
agreements, conveyances, and other documents, and take such other
action, as may be reasonably requested by Buyers in order to
transfer and assign to, and vest in, Buyers the Shares pursuant to
the terms of this Agreement or to permit Buyers to control the
Company and its assets.
19.
Attorney's Fees . In the event of any breach of this
Agreement, the party responsible for the breach agrees to pay
reasonable attorney's fees and costs, including, but not limited to
the costs of service of notices incurred by the other party. The
prevailing party in any suit instituted arising out of this
Agreement shall be entitled to receive reasonable attorney's fees
and costs incurred in such suit or proceedings.
20.
Arbitration of Disputes . Any controversy or claim
arising out of or relating to this Agreement, or the actual or
alleged breach hereof, or arising out of or relating to the rights
or duties or obligations of the parties inter se in
any capacity respecting any matter that could be asserted in a
dispute by way of cross-complaint or counterclaim, shall be settled
by exclusive and binding arbitration, by a single arbitrator
conducted in a Seller designated location in accordance with, and
by an arbitrator appointed pursuant to, the Rules of the American
Arbitration Association applicable to the type of dispute in
question in effect at the time, and judgment upon the award
rendered pursuant thereto may be entered
