8949\1\801146.7
8949\1\801146.7
STOCK PURCHASE AGREEMENT
BY AND AMONG
PLATEAU RESOURCES LIMITED
CANYON HOMESTEADS, INC.,
CACTUS GROUP LLC,
AND
JOSEPH DEFFERT
D. PAIGE DEFFERT
ERNST DEFFERT
AILEEN DEFFERT
MARTIN VIALPANDO
MARY EILEEN VIALPANDO
DATED AUGUST 1, 2003
8949\1\801146.7
<PAGE>
STOCK PURCHASE AGREEMENT
This
STOCK PURCHASE AGREEMENT (the "AGREEMENT") is entered into as of
August 1, 2003, by and among Cactus Group LLC, a Colorado
limited liability
company ("CGL"), Joseph Deffert, D. Paige Deffert, Ernst Deffert, Aileen
Deffert, Martin Vialpando and Mary Eileen Vialpando (each, a "BUYER" and
collectively, the "BUYERS"), Canyon Homesteads, Inc., a Utah
corporation (the
"COMPANY"), and Plateau Resources Limited, a Utah corporation (the
"SHAREHOLDER").
RECITALS
A. The
Shareholder owns 4,478 shares of the outstanding common stock of
the
Company (the "SHARES"), which Shares constitute all of the issued and
outstanding shares of capital stock of the Company.
B. The Buyers, through their wholly owned entity,
CGL, desire to acquire
from the Shareholder and the Shareholder desires to
sell to the Buyers all of
the Shares, on the terms and subject to the conditions set forth in
this
Agreement (the "ACQUISITION").
C. The Board of Directors of the Company and the Shareholder and
the
members of CGL shall have approved and adopted this Agreement and the
transactions contemplated hereby.
AGREEMENT
NOW,
THEREFORE,
in consideration of the premises and
the mutual promises
herein made, and in consideration of the representations, warranties and
covenants in this Agreement, CGL, the
Company and the Shareholder (individually,
a "PARTY" and collectively, the "PARTIES") agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATIONS
1.1 DEFINITIONS. Capitalized terms used in this Agreement, but not
otherwise defined herein, shall have the meaning set out below:
"ACTION"
means any judicial or administrative action, claim, suit,
investigation, hearing, demand or proceeding by or before any Governmental
Authority
"AFFILIATE"
has the meaning set forth in Rule 12b-2 of the
regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"AGREEMENT"
means this Stock Purchase Agreement.
"ASSETS"
has the meaning set forth in Section 4.10.
-------------
"CLOSING"
has the meaning set forth in Section 2.4.
------------
"CLOSING DATE" has the meaning set forth in Section 2.7.
------------
"CODE"
means the Internal Revenue Code of 1986,
as amended, and the rules
and regulations promulgated thereunder.
"CONTRACTS"
has the meaning set forth in Section 4.14.
-------------
"DEED
OF TRUST" means that certain deed of
trust executed by CGL relating
to the properties and improvements in such form
reasonably acceptable to the
Shareholder.
"EFFECTIVE
DATE" means August 1, 2003.
"ENVIRONMENT"
means soil, land
surface or subsurface strata, real property
(excluding buildings, other structures or fixtures thereon), surface
waters
(including navigable waters, ocean waters, streams,
ponds, drainage basins and
wetlands), groundwater, water body sediments, drinking water supply, stream
sediments, plant and animal life and any other
environmental medium or natural
resource.
"ENVIRONMENTAL
LAW" means any federal, state or local law, including
regulations promulgated thereunder, or common law relating to emissions,
discharges, releases or threatened releases of
pollutants, petroleum, petroleum
products, contaminants, chemicals or toxic or hazardous substances or
wastes
into the environment, including ambient
air, soil, surface water, ground water,
wetlands, land or subsurface strata, or otherwise
relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, petroleum, petroleum
products, contaminants, chemicals
or toxic or hazardous substances or wastes.
"ENVIRONMENTAL
LIABILITY(IES) AND COST(S)" means all Liabilities and losses
incurred (i) to comply with any
Environmental Law, (ii) as a result of a Release
of any Hazardous Substance or (iii)
as a result of any environmental conditions
present at, created by or arising out of the
past or present operations of the
Company and its business through the Effective Date.
"ENVIRONMENTAL
PERMITS" mean any
permit, registration, filing, approval or
authorization from any Governmental Authority required
under, issued pursuant
to, or authorized by any Environmental Law.
"ENVIRONMENTAL
REPORT" means the Environmental Assessment Report for
Ticaboo, Utah prepared on behalf of Shareholder
by Jay W. Davis dated July 23,
2003, provided by Shareholder to CGL and Buyers
prior to the execution of this
Agreement.
"EXCLUDED
ASSETS" means those assets set forth on Exhibit A attached
---------
hereto.
"EXCLUDED
LIABILITIES"
means the following Liabilities of the Company,
relating to any period on or prior to the
Effective Date: (i) any liabilities or
obligations of the Company with respect to
any debt or trade payable (other than
accounts payable or debt of the Company
which have been incurred in the Ordinary
Course of Business and are outstanding as of the Effective Date), (ii)
any
liabilities or obligations of any officer or
employee of the Company, or of the
Shareholder or its Affiliates that provided services to or on behalf
of the
Company, (iii) any costs of any such
employees, including without limitation any
accrued vacation, sick leave, COBRA obligations, personal
time, and any other
prerequisites (including accrued bonuses), (iv) any
liabilities or obligations
with respect to worker's compensation
claims (v) any Taxes, including any Taxes
resulting from the transactions contemplated hereby, and (vi) the Company's
relationship, contractual or otherwise,
with the subtenant at Pier 84, (vii) the
pending litigation between the Company and
Phil Snyder, as further described on
Schedule 4.15 ("SNYDER LITIGATION"), and (viii) Company's relationship,
--------------
contractual or otherwise, with Ticaboo Townsite Joint Venture.
"ERISA"
means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP"
means United States generally accepted
accounting principles as in
effect on the date hereof.
"GOVERNMENTAL
AUTHORITY"
means the United States of America, any
Indian
tribe, any state or other political
subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or
administrative functions of or
pertaining to government, or any court,
tribunal, arbitrator or arbitral body.
"GUARANTY
AGREEMENT"
means the Guaranty Agreement, by and between each
Buyer and the Shareholder, in a form reasonably
acceptable to CGL, Buyers and
the Shareholder.
"HAZARDOUS
SUBSTANCE"
means, collectively,
(i) any petroleum or petroleum
products, explosives, radioactive materials, asbestos, urea
formaldehyde foam
insulation, and transformers or other substances that contain
polychlorinated
biphenyls, (ii) any chemicals or other
materials or substances that are defined
as or included in the definition of
"hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic
pollutants," "contaminants," "pollutants" or
words of similar import under any
Environmental Law and (iii) any other chemical
or other material or substance, exposure to which is prohibited,
limited or
regulated under any Environmental Law.
"INDEBTEDNESS"
means, with respect to any Person, any
and all obligations
of such Person (i) for borrowed money, (ii) evidenced by notes, bonds,
debentures or similar instruments, (iii)
under or relating to letters of credit
(including any obligation to reimburse the
letter of credit issuer with respect
to amounts drawn on such instruments), (iv)
for the deferred purchase price of
goods or services (other than trade payables or
accruals incurred and paid in
the Ordinary Course of Business), (v) under
capital leases, (vi) with respect to
bank overdrafts or otherwise reflected
as negative cash in financial statements
of such Person, (vii) for deferred compensation, (viii) to pay any
accrued
dividends or dividends that have otherwise been
declared and not yet paid, and
(ix) in the nature of guarantees of the obligations
described in clauses (i)
through (viii) above of any other Person.
"INVESTMENTS"
means (i) any share of capital stock,
partnership or other
equity interest, evidence of Indebtedness
or other security issued by any other
Person, (ii) any loan, advance, prepayment or extension of credit to, or
contribution to the capital of, any other Person,
(iii) any acquisition of all
or any part of the business of any other
entity or the assets comprising such
business or part thereof, (iv) any commitment
or option to make any investment
or (v) any other similar investment.
"KNOWLEDGE"
means a Person's actual knowledge after reasonable
investigation, including the knowledge of a particular fact or matter by
any
executive officer employed by or serving a Person; provided, however, the
Company's knowledge shall mean the actual knowledge of only Mark
Larsen, Hal
Herron and Daryl Winters.
"LAWS"
means all laws, statutes, rules,
regulations, codes, injunctions,
judgments, orders, decrees, ruling,
interpretations, constitutions, ordinances,
common law or treaties of any federal, state, local,
municipal and foreign,
international or multinational Government Authority.
"LIABILITY"
means any liability or obligation (whether
known or unknown,
whether asserted or unasserted, whether
absolute or contingent, whether accrued
or unaccrued, whether liquidated or
unliquidated, whether incurred directly or
consequentially and whether due or to become due),
including any liability for
Taxes.
"MATERIAL
ADVERSE EFFECT" means a material adverse effect on
the Party's
business, financial condition, operations, results of operations.
"ORDINARY
COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice
(including with respect to quantity and
frequency).
"PERSON" means
an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock
company, a trust, a joint venture, an
unincorporated organization, or a
governmental entity (or any department, agency
or political subdivision thereof).
"PROMISSORY
NOTE" means that certain secured promissory note in the
principal amount of $3,003,200.00 payable to the Shareholder in a form
reasonably acceptable to the Shareholder.
"PURCHASE
PRICE" has the meaning set forth in Section 2.2.
------------
"PROPERTY(IES)"means
collectively the
Real Property and Assets of the
Company.
"REAL
PROPERTY" has the meaning set forth in Section 4.10.
-------------
"RELEASE"
means any actual, threatened or alleged spilling, leaking,
pumping, pouring, emitting, dispersing, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of any Hazardous
Substance into the
Environment that may cause an Environmental Liability
and Cost (including the
disposal or abandonment of barrels, containers, tanks or other receptacles
containing or previously containing any Hazardous Substance).
"SCHEDULES"
has the meaning set forth in Article 3.
"SECURITY
AGREEMENT"
means that certain Security Agreement,
by and among
the CGL, the Company and the Shareholder in the
form reasonably acceptable to
the Shareholder.
"SECURITY
INTEREST" means any
mortgage, pledge, lien, encumbrance, charge,
claim, equitable interest, restriction on transfer
or other security interest,
other than (a) mechanic's, materialmen's,
and similar liens, securing payment of
sums not yet due and payable, (b) liens for
Taxes not yet due and payable or for
Taxes that the taxpayer is contesting in good faith through appropriate
proceedings and (c) other liens arising in the
Ordinary Course of Business and
not incurred in connection with the
borrowing of money as set forth on Schedule
4.14.
"TAX"
means any federal, state, local, or
foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation,
premium,
windfall profits, capital gain, intangible,
environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer,
registration, value added,
alternative or add-on minimum, estimated, or
other tax of any kind whatsoever,
including any interest, penalty, or addition
thereto, whether disputed or not,
and any obligation to indemnify, assume or
succeed to the liability of any other
Person in respect to the foregoing.
"TAX
RETURN" means any federal, state, local, or foreign return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or
attachment thereto, and including
any amendment thereof.
"TITLE COMPANY"
means South Eastern Utah Title Company located 175 East 100
South, P.O. Box 855, Price, Utah 84501.
"TREASURY
REGULATION"
or "TREAS. REG." means
the proposed, temporary, and
final regulations promulgated under the Code.
1.2 Terms denoting the singular only shall include the
plural, and vice
versa.
1.3 Unless otherwise stated, a reference to a Recital,
Article, Section,
Schedule or Exhibit is a reference to a
Recital, Article, Section, Schedule or
Exhibit of this Agreement.
1.4 Section
numbers and headings are for convenience of reference only, and
shall not affect the interpretation of this Agreement.
1.5 Reference to any gender includes the other.
1.6 Reference to
"including" means including, but not by way of limitation.
1.7 Unless otherwise expressly
provided in this Agreement, reference to an
Agreement (including this Agreement), document, or instrument is the
same as
amended, modified, novated or replaced from time to time.
1.8 Reference to a statute or other legislative act, by-law, rule,
regulation, or order is to the same as amended,
modified or replaced from time
to time and to any rule, regulation or
order promulgated pursuant to such law.
ARTICLE 2
PURCHASE AND SALE; INITIAL DELIVERIES; CLOSING
2.1 PURCHASE AND SALE. Upon the basis of the representations and
warranties, for the consideration, and subject to the terms and conditions
hereof, the Shareholder agrees to sell,
convey, transfer and deliver to CGL at
the Closing (as defined in Section 2.4 below), and
CGL agrees to purchase and
accept from the Shareholder at the Closing,
effective as of the Closing Date,
the Shares free and clear of any and all Security Interests.
2.2 PURCHASE PRICE. Subject to the adjustments set
forth in Section 2.3,
the aggregate purchase price for the Shares shall be $3,470,000.00 (the
"PURCHASE PRICE"), and shall be payable to the Shareholder as follows:
a. Within five (5) business days following the
Effective Date, CGL
shall wire at least one-half of an amount
equal to $466,800 (the "Deposit") to
the Title Company. The remainder of the Deposit will be wired to the
Title
Company within ten (10) business days following the Effective Date. Title
Company shall place the Deposit in an insured, interest-bearing
account. If
prior to Closing, this Agreement is terminated pursuant to Section
11.1(c),
$100,000 of the Deposit shall be transmitted by the Title Company to
Shareholder, with the balance transmitted to
CGL. At Closing, the Deposit shall
be released from escrow to the Shareholder pursuant
to certain escrow closing
instructions to be delivered by CGL to the Title Company; and
b. At Closing, CGL shall deliver the Promissory Note, dated
as of
the Closing Date, to the Shareholder,
as well as the Security Agreement and the
Deed of Trust, and each Buyer shall deliver a Guaranty Agreement.
2.3 INTENTIONALLY
DELETED.
2.4 TITLE
COMMITMENT
AND SURVEY.
a.
Title Insurance
Commitment.
The Shareholder has
delivered to
----------------------------
the Buyers and CGL, a commitment (the "TITLE COMMITMENT") from the Title
Company. CGL shall deliver a Lender's title insurance policy
to Shareholder.
Buyers and CGL and Shareholder shall
share the cost of the Title Commitment and
Lender's title insurance policy equally.
b.
Surveys. The
Shareholder
shall deliver to the
Buyers and CGL
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any boundary and improvement surveys of the
Property in the Shareholder's or the
Company's possession.
2.5 WATER RIGHTS. The Shareholder has provided the Buyers and CGL
all
information it and the Company have in their possession related
to sanitary
sewer and other information with respect to
the water rights, well permits and
other documentation related to adequacy of water supply for the Property.
2.6 UTILITIES AND POWER. The Shareholder has
provided the Buyers and CGL
with all information and documentation it and the Company have in their
possession related to the adequacy of power and utilities to service the
operation of the Property, including without limitation, all information
pertaining to power generators and the like.
2.7 TENANT RELATIONSHIPS. Within ten (10)
days following the date hereof,
the Shareholder shall provide the
Buyers and CGL with any financial information
of subtenants of the Property within its or
the Company's possession. Within ten
(10) days prior to the Closing Date, the Shareholder
shall use commercially
reasonable efforts to have the following subtenants execute estoppel
certificates confirming that such subtenant's
lease is in full force and effect
and that neither the tenant nor the Company
is in default under their applicable
lease: (i) Slick Rock Services, Inc.,
sublease dated June 1, 2003; (ii) Stephen
Lama, sublease for Motel Room No. 112 dated March 27, 2001; and
(iii) Wendy
Schmitz, sublease for restaurant and bar dated March 15, 2003. Each of
the
foregoing subleases shall also be assigned to the Company as of the
date of
Closing.
2.8 CLOSING. The
closing of the transactions contemplated by this Agreement
(the "CLOSING") shall take place at the
offices of Davis Graham & Stubbs LLP in
Denver, Colorado, commencing at 9:00 a.m., local time, or at
such other place
and time as is agreed upon by the Parties, on August 12,
2003 or as soon as
practicable thereafter following the
satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions
contem-plated
hereby (other than conditions with respect to actions the
respective Parties
will take at the Closing itself) or
such other date as the Parties may mutually
determine (the "CLOSING DATE").
Notwithstanding the actual date of the Closing,
the Closing shall be effective for accounting
purposes as of the 11:59 p.m. on
the date immediately preceding the Effective Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDER
The disclosure schedules (the
"SCHEDULES") contemplated by this Article 3,
Article 4 and Article 5 will be arranged to correspond to the
numbered and
lettered sections contained in Article 3, Article 4 and
Article 5 and will be
delivered concurrently with the execution of this Agreement.
As a material
inducement to the Buyers and CGL to enter into this Agreement
and consummate the transactions
contemplated hereby, the Shareholder represents
and warrants to the Buyers and CGL as follows:
3.1 ORGANIZATION,
QUALIFICATION, AND
CORPORATE POWER. The
Shareholder
is a corporation duly organized, validly
existing and in good standing under the
laws of the State of Utah and has the
corporate power to own its property and to
carry on its business as now being
conducted. The
Shareholder is duly qualified
and/or licensed, as may be required, and in good standing in each of the
jurisdictions in which the nature of the business conducted by it or the
character of the property owned, leased or used
by it makes such qualification
and/or licensing necessary, except in such
jurisdictions where the failure to be
so qualified and/or licensed would not
individually or in the aggregate have a
Material Adverse Effect on the Company or the Shareholder.
3.2 NO LIENS ON SHARES. The
Shareholder is the beneficial and record owner
of all of the Shares free and clear of any
Security Interests other than the
rights and obligations arising under this Agreement except as disclosed
on
Schedule 3.2. No Share is subject to any
outstanding option, warrant, call, or
similar right of any other Person to acquire the
same, and no Share is subject
to any restriction on transfer thereof, except for restrictions related
to
registration of the Shares under the Securities Act of 1933,
as amended (the
"SECURITIES ACT"). The Shareholder has full power and
authority to convey the
Shares, free and clear of any Security Interests.
Upon Closing, CGL will hold
the entire equity interest in the Company, free and clear of all Security
Interests, other than those Security
Interests to be created by the transactions
contemplated by this Agreement or Security
Interests otherwise created by CGL.
3.3 AUTHORIZATION OF TRANSACTION. The Shareholder has the full
limited
liability company power and authority to execute, deliver and perform
this
Agreement and to carry out the transactions
contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by all
requisite limited liability company action of the Shareholder.
This Agreement
has been duly and validly executed and delivered by the Shareholder and
constitutes the valid and legally binding obligation of the Shareholder,
enforceable against the Shareholder in
accordance with its terms and conditions,
subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer,
moratorium, reorganization and other laws of general
applicability relating to
or affecting creditors' rights and to general equity principles.
3.4 NONCONTRAVENTION.
Except for filings, permits, authorizations, consents
and approvals, all of which are set forth
on Schedule 3.4, neither the execution
------------
and delivery of this Agreement by the Shareholder
nor the consummation by the
Shareholder of the transactions contemplated herein nor compliance by the
Shareholder with any of the provisions hereof will
(i) conflict with or result
in any breach of the articles of incorporation or
bylaws of the Shareholder,
(ii) result in a violation or breach of any provisions of, 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, cancellation of, or
accelerate the performance required by, or result
in a right of termination or
acceleration under, or result in the creation
of any Security Interest upon any
of the properties or assets of the Shareholder, or
require the notice to any
Person under, any of the terms, conditions or provisions of
any note, bond,
mortgage, indenture, deed of trust,
license, contract, lease, agreement or other
instrument or obligation of any kind to which
the Shareholder is a party or by
which the Shareholder's properties or
assets, may be bound or (iii) subject to
compliance with applicable Utah corporate laws, the Securities Act and
applicable "blue sky" laws, violate Laws
applicable to the Shareholder or any of
the Shareholder's properties or assets.
Except as set forth on Schedule 3.4, the
------------
Shareholder is not required by applicable Laws
or other obligations to give any
notice to, make any filing with, or obtain any authorization, consent or
approval of any Governmental Authority or other Person in order for the
consummation by the Parties of the transactions contemplated herein.
3.5 CLAIMS AND PROCEEDINGS. Except as
set forth on Schedule 3.5, there are
------------
no Actions pending or, to the Shareholder's
Knowledge, threatened against the
Shareholder that would reasonably be expected
to have a Material Adverse Effect
on the Company or the Shareholder, or that question the validity of this
Agreement or of any action taken or to be taken
pursuant to or in connection
with the provisions of this Agreement nor, to the
Shareholder's Knowledge, is
there any fact (past or present), situation,
circumstance, status, condition,
activity , practice, plan occurrence,
event, incident, action, failure to act or
transaction that could reasonably be expected to form the
basis of an Action.
The Shareholder is not subject to any order, judgment, writ,
injunction or
decree of any Governmental Authority which,
individually or in the aggregate,
has a Material Adverse Effect on Shareholder.
3.6 BROKER'S
FEES. Except as set forth on Schedule 3.6, the Shareholder has
------------
no Liability to pay any fees or commissions
to any broker, finder, or agent with
respect to the transactions contemplated by
this Agreement for which CGL could
become liable.
3.7 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of Shareholder in respect of the Shares.
3.8 DISCLOSURE. The representations and warranties contained in this
Article 3 (including the Schedules to this
Agreement and any other schedules and
exhibits required to be delivered by the Shareholder to the Buyers and
CGL
pursuant to this Agreement) and any
certificate furnished or to be furnished by
the Shareholder to the Buyers and CGL hereunder do not contain
and will not
contain any untrue statement of material fact or omit to state any fact
necessary in order to make the statements and information
contained in this
Section 3 not misleading. To the
Shareholder's Knowledge, there is no material
fact relating to the Shareholder (other than general economic or industry
conditions) which may have a Material Adverse Effect on the Company or
the
Shareholder or materially effect the ability of
the Shareholder to perform any
of its material obligations hereunder which
has not been disclosed in writing in
this Agreement to the Buyers or CGL by the Shareholder.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
As a material
inducement to the Buyers and CGL to enter into this Agreement
and consummate the transactions
contemplated hereby, the Company represents and
warrants to the Buyers and CGL as follows:
4.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The Company is a
corporation duly organized, validly
existing and in good standing under the laws
of the State of Utah and has the corporate power to own
its property and to
carry on its business as now being conducted. The Company
is duly qualified
and/or licensed, as may be required, and in good standing in each of the
jurisdictions in which the nature of the business conducted by it or the
character of the property owned, leased or used
by it makes such qualification
and/or licensing necessary, except in such
jurisdictions where the failure to be
so qualified and/or licensed would not
individually or in the aggregate have a
Material Adverse Effect on the Company.
4.2 CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of the Company consists of 20,000
shares of common stock, no par
value, of which 4,478 are issued and outstanding. This 4,478 issued and
outstanding shares of common stock consist of
all the Shares and constitute all
of the issued and outstanding shares of
capital stock of the Company. The Shares
are held beneficially and of record by the Shareholder. No
shares of common
stock are held in the treasury of the Company. The Shares have been
duly
authorized, validly issued, are fully paid and nonassessable and free of
preemptive rights. None of the Shares were
issued in violation of the Securities
Act or applicable "blue sky" laws. There
are no outstanding options, warrants or
other rights to subscribe for, purchase
or acquire from the Company any capital
stock of the Company or securities
convertible into or exchangeable for capital
stock of the Company. Immediately following
the Closing, CGL will own the entire
ownership interest of the Company.
4.3 AUTHORIZATION OF TRANSACTION. The
Company has the full corporate power
and authority to execute, deliver and perform this
Agreement and to carry out
the transactions contemplated hereby. The
execution, delivery and performance of
this Agreement and the consummation of the
transactions contemplated hereby have
been duly and validly authorized by all requisite corporate action of
the
Company. This Agreement has been duly and
validly executed and delivered by the
Company and constitutes the valid and
legally binding obligation of the Company,
enforceable against the Company in accordance with its terms and
conditions,
subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer,
moratorium, reorganization and other laws of general
applicability relating to
or affecting creditors' rights and to general equity principles.
4.4
NONCONTRAVENTION. Except for filings, permits, authorizations,
consents
and approvals, all of which are set forth
on Schedule 4.4, neither the execution
------------
and delivery of this Agreement by the Company nor the consummation by
the
Company of the transactions contemplated herein
nor compliance by the Company
with any of the provisions hereof will (i)
conflict with or result in any breach
of the articles of incorporation or bylaws of the Company, (ii)
result in a
violation or breach of any provisions of, 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, cancellation of, or
accelerate the performance
required by, or result in a right of termination or
acceleration under, or
result in the creation of any Security Interest
upon any of the Properties of
the Company or require the notice to any Person under, any of the
terms,
conditions or provisions of any note, bond,
mortgage, indenture, deed of trust,
license, Contracts, lease, agreement or other instrument or
obligation of any
kind to which the Company is a party or by
which the Company's Properties, may
be bound, or (iii) subject to compliance with
applicable Utah corporate laws,
the Securities Act and applicable "blue sky" laws,
violate Laws applicable to
the Company or any of the Company's properties or
assets, other than any such
event described in items (i), (ii) or (iii) which would not (x)
prevent the
consummation of the transactions contemplated hereby or (y) have a Material
Adverse Effect on the Company. Except as
set forth on Schedule 4.4, the Company
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is not required by applicable Laws or
other obligations to give any notice to,
make any filing with, or obtain any authorization,
consent or approval of any
Governmental Authority or other Person in order for the consummation by
the
Parties of the transactions contemplated herein.
4.5 REVENUE AND OPERATING COST SUMMARIES.
Attached hereto as Schedule 4.5
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are the Company's monthly revenue and operating cost summaries
covering the
period from January 1, 2000 to June 30, 2003 (collectively, the
"Revenue
Summaries"). The Revenue Summaries have been
prepared consistent with the books
and records of the Company and the Shareholder
and are correct and complete in
all material respects, present fairly
the financial condition of the Company as
of such dates and the results of operations of the
Company for such periods.
4.6 SUBSEQUENT EVENTS; CORPORATE TRANSACTIONS. Except as set forth on
Schedule 4.6, since June 30, 2003, the
Company has conducted its business in the
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Ordinary Course of Business and has not (a)
suffered a Material Adverse Effect;
(b) incurred any Liabilities that would reasonably be expected to have a
Material Adverse Effect on the Company; (c)
incurred any Indebtedness or become
the guarantor or otherwise liable for any Indebtedness of any Person,
(d)
suffered any change in its relationship with any of
the suppliers, customers,
distributors, lessors, licensors, licensees or other
third parties which would
reasonably be expected to have a Material Adverse Effect on
the Company; (e)
waived any claims or rights of material value; (f)
sold, leased, licensed or
otherwise disposed of any of its Property,
other than in the Ordinary Course of
Business; (g) amended, modified or
terminated any material contract to which it
is or was a party; (h) suffered any creation or
imposition of any Security
Interest upon any of the Company's Property or
suffered any occurrence, event,
incident, action, omission or transaction
which could reasonably be expected to
materially affect the ability of the
Company to hold its Property free and clear
of all Security Interests, (i) incurred any
capital expenditure (or series of
related capital expenditures) involving
more than $25,000 in the aggregate, (j)
incurred any Investment in, loan to or any acquisition of the
securities or
assets of any other Person which exceeds $25,000, (k)
permitted any delay or
postponement of accounts payable or any other
Liabilities outside the Ordinary
Course of Business, (l) declared any
dividend or distribution (whether in case
or in kind) or repurchase, redemption or
retirement of any securities of the
Company, (m) suffered any damage, destruction or loss (whether covered by
insurance) to the Property of the Company, which damage,
destruction or loss
singly or in the aggregate exceeds $25,000, (n)
entered into any agreement or
transaction with an Affiliate of the Company or (o) committed
pursuant to a
legally binding agreement to do any of the things set forth above.
4.7 LEGAL
COMPLIANCE. Except as set forth on Schedule 4.7, to the
Company's
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knowledge, the Company is in compliance with all
applicable Laws currently in
effect, except where non-compliance would not
reasonably be expected to have a
Material Adverse Effect on the Company. The Company
has received no notices of
any noncompliance with any applicable Laws.
4.8 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no Liabilities
except for (i) Liabilities reflected on the
Revenue Summaries, or any related
balance sheets provided by the Shareholder to the Buyers and CGL, (ii)
Liabilities under Contracts listed on Schedule 4.14, (iii) Liabilities in
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connection with Actions disclosed on Schedule
4.15. (none of which have had or
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could reasonably be expected to have a Material
Adverse Effect on the Company)
or (iv) Liabilities which have arisen since
the date of the Revenue Summaries in
the Ordinary Course of the Business.
4.9 TAX MATTERS.
a. The Company's Tax Returns are filed on a
consolidated basis with
its parent companies. To the extent of the
Company's information, all such Tax
Returns were correct and complete in all material
respects. All Taxes owed by
the Company shown on any Tax Return have been paid in a
timely fashion. The
Company currently is not the beneficiary of any
extension of time within which
to file any Tax Return. The Company has not received
written notice from an
authority in a jurisdiction where the
Company does not file Tax Returns that it
is or may be subject to taxation by that
jurisdiction. There are no Security
Interests on any of the assets of the
Company that arose in connection with any
failure (or alleged failure) to pay any Tax.
b. The Company has withheld and paid all material
Taxes required to
have been withheld and paid in connection with amounts paid or
owed to any
independent contractor, creditor, shareholder, or other third party.
c. There is no dispute or claim concerning any
Tax Liability of the
Company either (i) claimed or raised by any
authority in writing or (ii) as to
which the Company has Knowledge.
d. The Company has not waived any statute of limitations in respect
of
Taxes or agreed to any extension of time with respect
to a Tax assessment or
deficiency.
e. The Company has not been a United States real property
holding
corporation within the meaning of Code Section
897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii).
f. The Company does not have any Liability for the Taxes of any
Person
(other than the Company) under Treas. Reg. Section 1.1502-6 (or
any similar
provision of state, local, or foreign law), as a transferee
or successor, by
contract, or otherwise.
4.10
PROPERTIES/ASSETS.
a. Attached hereto as Schedule 4.10(a) is a legal
description of all of
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the Company's interests in real property (including, without limitation,
leasehold interests) used or occupied by it in the
conduct of the business, as
well as a list reflecting the Company's good
faith understanding of all other
related real property interests (the "REAL
PROPERTY"). Except as expressly set
forth on Schedule 4.10(a)the Title
Commitment, or applicable zoning, land use,
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or similar restrictions, such Real Property is free and clear of Security
Interests and is not subject to any rights of way,
building use restrictions,
exceptions, variances or limitations which interfere
with the use of such Real
Property in the conduct of the business. All Real
Property leases used in the
conduct of the business are described in
Schedule 4.10(a), are in full force and
----------------
effect, the Company holds a valid and
existing leasehold interest under each of
the leases for the terms set forth on such Schedule and any and all
rent
payments owing under the leases have been
paid to date, except as expressly set
forth on Schedule 4.10(a). The Company has not
received written notice of any
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default under the leases and the Company is not in default
under any of the
leases. No person has the right to
terminate or accelerate performance under or
otherwise modify (including up
