SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A-1
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 10, 1999
Hawks Industries, Inc.
(Exact name of registrant as specified in its charter)
Wyoming 0-5781 83- 0211955
(State or other jurisdiction (Commission (IRS Employer
of incorporation ) File Number) Identification No.)
913 Foster Road, Casper, Wyoming 82601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (307) 234-1593
N/A
(Former name or former address, if changed since last report.)
FORM 8-K CURRENT REPORT
Item 1. Change in Control of Registrant
On June 10, 1999, Registrant entered into an Agreement with Universal
Equities, Ltd., David H. Peipers, The Cornerhouse Limited Partnership and the
Winsome Limited Partnership (collectively referred to as "Buyers") which will
allow Buyers to secure a controlling interest in Registrant common stock through
a private placement. The value placed on Registrants's shares in the offer was
$1.60 per share for at least 6,250,000 shares of common stock yielding the
Registrant a consideration of $10,000,000.00. The offer also included the right
to buy up to an additional 14,375,000 shares at the same price. The maximum
consideration to be received by Registrant is $33,000,000.00 if all the
additional shares are purchased.
The terms of the offer require a payment of at least $5,000,000.00 in cash,
with the remainder of the consideration being paid in cash and/or transfer of
Buyer's rights to a debt obligation from North Star Exploration, Inc. ("North
Star"), and/or North Star common stock, and/or Zeus Exploration, Inc. ("Zeus")
common stock. North Star and Zeus are private Nevada Corporations with options
on mineral rights covering approximately 7,000,000 acres in Alaska.
The Agreement also requires the redemption of shares in Registrant owned by
Bruce A. Hinchey, James E. Meador, Jr. and the Anne D. Zimmerman Revocable Trust
in exchange for certain assets of Registrant.
The private placement and redemption of shares described above will be
subject to Registrant's Shareholder approval at its Annual Meeting in September.
A copy of the June 10, 1999 Agreement is attached hereto and made a part hereof
as Exhibit "1". A copy of the September 23, 1999 Amendment is attached hereto
and made a part hereof as Exhibit 3.
As a result of this transaction, the controlling interest in Registrant
will be owned by the Buyer Group in the following amounts:
A.
Required Minimum Amount
of Shares Purchased
Under the Agreement
Number
of Percentage
Purchaser Shares Ownership*
Universal Equities, Ltd. 3,125,000 43.20531%
David H. Peipers 1,562,500 21.60265%
The Cornerhouse Limited
Partnership 937,500 12.96159%
The Winsome Limited
Partnership 625,000 8.64106%
B.
Maximum Amount of Shares
Allowed to be Purchased
Under the Agreement
Number
of Percentage
Purchaser Shares Ownership*
Universal Equities, Ltd. 7,187,500 46.79999%
David H. Peipers 3,593,750 23.40000%
The Cornerhouse Limited
Partnership 2,156,250 14.04000%
The Winsome Limited
Partnership 1,437,500 9.36000%
*Assumes the total number of outstanding shares of Registrant at the time of
purchase will be Nine Hundred Eighty-two Thousand Nine Hundred Eight (982,908)
as per the June 10, 1999 Agreement.
Item 2. Disposition of Assets
On June 9, 1999, Registrant entered into an Agreement with officers and
directors, Bruce A. Hinchey and James E. Meador, Jr. and principal shareholder
Anne D. Zimmerman Revocable Trust dated, November 14, 1991 (collectively
referred to as "Shareholders"), to acquire all of Shareholders common stock in
Registrant, excluding their ESOP shares, in exchange for assets of Registrant.
A copy of the Agreement is attached hereto as Exhibit "1B" and made a part
hereof. Said Agreement sets forth the terms and conditions of the redemption of
shares. The redemption of shares is required pursuant to the North Star Group
Agreement dated June 10,1999, which is attached hereto as Exhibit "1".
The June 9, 199 Exhibit,"1B" Redemption of Shares Agreement was determined
as a result of arms-length negotiations using book values as reported by the
Registrant's auditors in the most recent 10-K Report. The Agreement was
unanimously approved by the Registrant's Board of Directors with Bruce A.
Hinchey and James E. Meador, Jr. abstaining from said approval. The redemption
of shares described above will be subject to Registrant's Shareholder approval
at its Annual Meeting in September.
Item 5. Other Events
On June 10, 1999 Registrant made a press release describing the Exhibit "1"
transaction. A copy of the Press Release is attached hereto as Exhibit "2" and
made a part hereof.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
Incorporated herein by reference is Registrant's most recent SEC 10-K Report
which was filed by EDGAR on March 4, 1999.
(c) Exhibits
"1" Agreement between Universal Equities Ltd, David H. Peipers, The
Cornerhouse Limited Partnership, and the Windsome Limited Partnership
and Hawks Industries, Inc.
"1 A-1 & 1A-2" Nasdaq correspondence
"1 B" Letter Agreement/ Hawks Industries, Inc. Share Acquisition
"1 C" Schedule of Shares to be Purchased
"1 D" Notices
"2" Press Release
"3" Amendment to Agreement between Universal Equities Ltd, David H
Peipers, The Cornershouse Lmited Partnership, and the Windsome Limited
Partnership and Hawks Industries, Inc.
"23.1" Consent of Lovelett, Hargens & Skogen, P.C.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on behalf its behalf by the
undersigned hereunto duly authorized.
HAWKS INDUSTRIES, INC.
By: /s/ Bruce A. Hinchey
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BRUCE A. HINCHEY, President
Dated: June 17, 1999
Exhibit "1"
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AGREEMENT dated as of the 10th day of June, 1999, by and between
UNIVERSAL EQUITIES LTD., a Delaware corporation ("Universal"), DAVID H. PEIPERS
("Peipers"), THE CORNERHOUSE LIMITED PARTNERSHIP, a New York limited partnership
("Cornerhouse"), and THE WINSOME LIMITED PARTNERSHIP, a New York limited
partnership ("Winsome", and collectively with Universal, Peipers and Cornerhouse
sometimes called "Purchasers"), and HAWKS INDUSTRIES, INC., a Wyoming
corporation ("Seller").
W I T N E S S E T H :
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WHEREAS, Purchasers, for themselves and other members of the
Purchasing Group referred to in Section 15 below, desire to buy shares and to
acquire the right to buy additional shares of Seller, and Seller is willing to
sell such shares and grant such right on the terms and conditions hereinafter
set forth,
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties do hereby mutually agree:
1. Sale of Shares.
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Subject to the terms and conditions of this Agreement, Seller hereby
agrees to sell to Purchasers, and Purchasers hereby agree to buy from Seller,
six million two hundred fifty thousand (6,250,000) authorized but unissued
shares of Seller, free and clear of all liens and encumbrances of any kind, for
a price of One and 60/100 Dollars ($1.60) per share, i.e. an aggregate price of
Ten Million Dollars ($10,000,000) (the "Share Purchase Price"), payable as
hereinafter provided.
2. Payment of Share Purchase Price.
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The Share Purchase Price shall be payable at the Initial Closing as
defined in Section 12(a) below (the "Initial Closing"), and shall be composed of
(a) Five Million Dollars ($5,000,000) paid in cash in New York Clearing House
funds by certified or official bank check and (b) Five Million Dollars
($5,000,000) paid (i) in cash in New York Clearing House funds by certified or
official bank check and/or (ii) by the assignment to Seller of indebtedness owed
to Purchasers by North Star Exploration, Inc., a Nevada corporation ("North
Star"). The indebtedness so assigned shall be credited against the Share
Purchase Price at 100% of the principal amount of such indebtedness plus accrued
interest thereon.
3. Right to Buy Additional Shares.
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Seller hereby agrees that Purchasers shall have the right to buy, in
addition to the shares purchased pursuant to Sections 1 and 2 above, up to a
maximum of fourteen million three hundred seventy-five thousand (14,375,000)
(the "Maximum Number") of authorized but unissued shares of Seller (the
"Additional Shares") for a price of One and 60/100 Dollars ($1.60) per share,
i.e. an aggregate price, if the Maximum Number of Additional Shares is
purchased, of Twenty-Three Million Dollars ($23,000,000), and, if less than the
Maximum Number of Additional Shares is purchased, an aggregate price that bears
the same ratio to Twenty-Three Million Dollars ($23,000,000) that the number of
Additional Shares that are purchased bears to the Maximum Number.
Such aggregate price (the "Additional Share Price") of the Additional Shares
that are purchased shall be paid as set forth in Section 4 below.
4. Payment of Additional Share Price.
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The Additional Share Price shall be payable at the Initial Closing
(subject to Sections 12 and 15 below) by Purchasers causing to be transferred to
Seller (a) cash in New York Clearing House funds by certified or official bank
check, (b) additional indebtedness of the kind referred to in Section 2(b) (ii)
above, and/or (c) shares of North Star Exploration, Inc., a Nevada Corporation
("North Star") and\or (d) shares of Zeus Exploration, Inc., a Nevada corporation
("Zeus"). Based upon valuations of North Star and Zeus by an independent
evaluator prior to the execution of this Agreement, which valuations have been
approved by Seller's board of directors, it is agreed that the aggregate amount
credited against the Additional Share Price for shares of North Star tendered in
payment thereofshall be the amount that bears the same ratio to Twenty Million
Dollars ($20,000,000) that the number of shares of North Star that are tendered
bears to the total number of shares of North Star that are outstanding, and the
aggregate amount credited against the Additional Share Price for shares of Zeus
that are tendered in payment thereof shall be the amount that bears the same
ratio to One Million Dollars ($1,000,000) that the number of shares of Zeus that
are tendered bears to the total number of shares of Zeus that are outstanding.
5. Preliminary Retirement of Shares.
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On the Initial Closing Date, immediately before the Initial Closing,
Seller agrees to cause at least twenty-six and 7/10 percent (26.7%) of its
outstanding shares as established in Seller's latest 10-K Report to be
surrendered and retired as more particularly provided for in Section 8 below, so
as to reduce the total number of outstanding shares of Seller to not more than
nine hundred eighty-two thousand nine hundred eight (982,908) shares.
6. Warranties and Representations of Seller.
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To induce Purchasers to enter into this Agreement, Seller makes the
following warranties and representations, which shall survive the execution and
delivery of this Agreement and the sale and transfer, of and payment for, the
shares:
a) Seller is a corporation duly organized, validly existing and in good
standing under the laws of Wyoming, is duly authorized to do business in every
jurisdiction where Seller's ownership or leasing of properties or its activities
require it to be so authorized under the laws of such jurisdiction, and has full
corporate and legal power and authority to own, lease and operate its properties
and to conduct its business as now conducted and to enter into and perform the
terms of this Agreement. Seller has no subsidiaries other than the following
wholly owned subsidiaries, to wit: (i) Burton Hawks Exploration Co., Ltd., (ii)
Western Environmental Services and Testing, Inc., which has a wholly owned
subsidiary named Western Environmental Services, Inc., and (iii) Central Wyoming
Properties, Inc.
b) Seller has an authorized capital stock consisting of 997,000
preferred shares, $.01 par value, and 5,000,000 common shares, $.01 par value.
Of these, no preferred shares and 1,351,515 common shares are validly issued and
outstanding, fully paid and non-assessable.
c) Seller is a reporting company under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), files reports in accordance with Section
12(g) of the Exchange Act, and is presently current with respect to all reports
required to be filed thereunder. As of the respective dates of their filing,
the reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and complied as to form with the requirements
of the Exchange Act or the Securities Act of 1933, as amended (the "Securities
Act"), as the case may be.
d) The shares of Seller are listed and admitted to trading on the
NASDAQ system in New York; to the best of Seller's knowledge, it is in full
compliance with all of the requirements for being listed and admitted to trading
on the NASDAQ system and no proceedings have been instituted or, to Seller's
knowledge, are contemplated to remove or suspend any of Seller's shares from
trading on the NASDAQ system, except as provided in the notice which is attached
hereto as Exhibit "A".
e) The copy of Seller's Annual Report on Form 10-K (the "10-K Report")
for the year ended December 31, 1998 that Seller has furnished to Purchaser is a
true and complete copy of said report as filed with the Securities and Exchange
Commission (the "Commission"); there are no subsequent reports that have been
filed with the Commission, except for Seller's Quarterly Form 10-Q Reports, or
the National Association of Securities Dealers, Inc. ("NASD") that have not been
delivered to Purchasers; the information contained in the Form l0-K Report
concerning Seller's business and other matters are true and complete in all
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements set forth therein not misleading; the financial statements contained
therein were prepared in conformity with general accepted accounting principles
consistently applied with prior periods, are correct and complete in all
material respects and fairly present Seller's financial condition and the
results of its operations at and for the periods ended on the dates referred to;
and there have been no material changes in Seller's financial condition or its
business since December 31, 1998, except internal adjustment of company overhead
and asset allocations between Seller and its subsidiaries, provided that said
adjustments shall not result in any obligation between Seller and Western
Environmental Services and Testing, Inc. upon completion of the transaction set
forth in Exhibit B.
f) There are not outstanding any warrants, options or other rights to
acquire shares of Seller except for those disclosed in the 10-K Report, to wit,
key employee stock options to purchase a total of 2,500 shares. Seller has not
contributed or caused any shares to be made available for its employee stock
purchase plan since the $11,000 made available for that purpose in 1998
disclosed in the 10-K Report. Seller does contemplate making an employee stock
purchase plan contribution for 1999 of not more than $43,000 in Seller's common
stock. There are no voting trusts or other agreements or understanding to which
Seller is a party with respect to the voting or transfer of the capital stock of
Seller except as contemplated by this agreement. There are no "puts" or other
agreements entitling anyone to sell common shares of Seller to Seller.
g) Seller has good title to all of its properties including, but not
limited to, property reflected in the balance sheet as of December 31, 1998 (the
"December 31, 1998 Balance Sheet") included in the 10-K Report. Seller holds
such property free of any liens, charges or encumbrances whatsoever other than
as disclosed
h) All necessary corporate and other action has been taken to authorize
the execution and delivery of this Agreement and, upon execution and delivery
hereof by a corporate officer of Seller, this Agreement will become a valid and
binding obligation of Seller, enforceable in accordance with its terms, subject
only to the provisions of Section 8 below for ratification and approval by
Seller's shareholders.
i) The shares to be sold pursuant to Sections 1 and 2 above and the
Additional Shares that may be sold pursuant to Sections 3 and 4 above will, upon
issuance in accordance with the provisions of this Agreement, be legally and
validly issued, fully paid and non-assessable and not subject to any preemptive
rights.
j) Seller is not in violation of, or in default under, nor has any
condition, event or act occurred which, with the giving of notice or lapse of
time, or both, would constitute a default under (i) any term, condition or
provision of its certificate of incorporation or by-laws, or (ii) any agreement,
indenture, mortgage, lease or other instrument of which it is a party or by
which it or any of its assets or properties is bound or affected, or (iii) any
license, judgment, decree, order, or arbitration award, or (iv) any law,
statute, ordinance or governmental rule or regulation applicable to it and known
to Seller the violation of which would have a material adverse effect on Seller
of which Seller has reason to know. The execution, delivery and performance of
this Agreement and carrying out of the transactions contemplated by this
Agreement and compliance with the provisions hereof by Seller will not result in
any such violation or be in conflict with or constitute a default, under any
such term, condition or provision, or cause or allow any holder of debt of the
Seller to cause any acceleration of debt or result in creation of any security
interest, lien, claim, charge or encumbrance of any kind whatsoever, except that
Joseph J. McQuade holds a security interest in Seller's oil and gas interests
and this transacton may cause an acceleration of the payment of not more than
$135,000 on his Covenant Not to Compete.
k) Insofar as Seller knows, or has reason to know, no other party to
any agreement, indenture, mortgage, lease or other instrument to which the
Seller is a party is in default under, nor has any condition, event or act
occurred which, with the giving of notice or lapse of time, or both, would
constitute a default under the terms, conditions or provisions thereof.
l) Except as disclosed in Seller's 10-K Report, Seller is not a party
to any employment contract with any officer or other person. Seller has no
pension, profit sharing, bonus deferred compensation, retirement or similar
employment benefit arrangement for any individual, other than as set forth or
referred to in the 10-K Report; nor is Seller a party to any collective
bargaining agreement.
m) As at December 31, 1998, Seller did not have any material
liabilities or obligation of any nature, contingent or otherwise, oral or
written, which are not reflected in the December 31, 1998 Balance Sheet.
n) There is no litigation, administrative proceeding, governmental
investigation or other proceeding pending, nor does Seller know or have reason
to know of any such threatened proceedings or of any change in NASD or
governmental regulation (including without limitation any ecological or
environmental regulation) (i) against or affecting Seller, its properties or
business, which, either alone or in the aggregate, if adversely determined or
adopted would have a material adverse effect on the Seller or which involves a
claim for damages of $25,000 or more or which seeks to enjoin any significant
activity of Seller, or (ii) which questions the validity of the transactions
contemplated by this Agreement.
o) No approval, consent, order or authorization of, or filing or
registration with, any governmental or regulatory authority is required to be
obtained, effected or given to permit the sale of the Units by Seller except for
the filing of an amendment of the certificate of incorporation to increase its
authorized common shares to at least fifty million (50,000,000) and notices and
notices and approval to the SEC and NASDAQ Exchange regarding the transactions.
p) All Federal, state, provincial, state, and local tax returns of
Seller required by law to be filed have been duly filed, or extensions of the
time within which such returns must be filed have been duly granted or obtained
and are in effect and all taxes as shown on said returns have been paid. The
charges, accruals, and reserves on the books of Seller in respect of taxes for
all fiscal periods are adequate and there are no unpaid assessments against
Seller for additional taxes for any fiscal period or any basis therefor.
q) All the insurable properties of the Seller are insured for the
benefit of the Seller in reasonably sufficient amounts against all risks,
including, without limitation, public liability insurance, usually insured
against by persons operating similar properties in the locality where such
properties are located, under valid and enforceable policies issued by insurers
of recognized responsibility.
r) The records and books of account of Seller are correct and complete
in all material respects, have been maintained in accordance with good business
practices and are reflected accurately in the financial statements included in
the 10-K Report.
s) The copies of the contents of the minute books of Seller as made
available to Purchasers and counsel for Purchasers prior to the Initial Closing,
contain accurate records of all meetings and accurately reflect all corporate
action of the shareholders and the board of directors (including committees) of
Seller taken since the incorporation of Seller.
t) The operation of Seller's business in which Seller (itself or through
a subsidiary) has direct control of operations, including the use and operation
of all real property or leaseholds owned, leased or used by Seller, has not
violated and does not violate any applicable federal, provincial, local, or
foreign environmental law (collectively, "Environmental Laws"), and no condition
------------------
or event has occurred which, with notice or passage of time or both, would
constitute a violation of any such Environmental Law. Without limiting the
generality of the foregoing:
(i) No pollutants, contaminants or hazardous or toxic wastes, substances
or materials (collectively, "Hazardous Materials"), as defined by the
-------------------
Environmental Laws have been manufactured, generated, stored, handled, disposed,
buried, dumped or used on, at or in connection with any real property or
leaseholds owned, leased or used by Seller with which Seller (itself or through
a subsidiary) has direct control of operations.
(ii) No asbestos, asbestos-containing materials, polychlorinated
biphenals ("PCB"), PCB compounds, or other pollutants, contaminants, hazardous
---
or toxic wastes, substances or materials are contained in, on, about or
otherwise located at any real property or leaseholds owned, leased or used by
Seller, nor have they been used in the construction, repair, or alteration of
any portion of such real property or leaseholds with which Seller (itself or
through a subsidiary) has direct control of operations.
iii) With operations in which Seller (itself or through a subsidiary) has
direct control, Seller does not have any liability under any Environmental Law
for the presence, disposal, release, storage or contamination of or by any
Hazardous Material at any site or facility owned, leased or operated presently
or at any previous time by Seller or at any site or facility at which any
Hazardous Material generated by Seller has been disposed or stored.
(u) Seller is in compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
and the related regulations and published interpretation (herein called
"ERISA"). Neither a Reportable Event (as stated in Section 4043 of ERISA) nor a
Prohibited Transaction as stated in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), has occurred or is
continuing with respect to any Plan of the Company. No notice of intent to
terminate a Plan has been filed nor has any Plan been terminated. No
circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the Pension Benefit Guaranty Corporation ("PBGC") to institute
proceedings to terminate, or appoint a trustee to administrate, a Plan, nor has
the PBGC instituted any such proceedings. Neither Seller nor any other members
of a Controlled Group has completely or partially withdrawn under Section 4201
or 4204 of ERISA from a Multi-employer Plan. Each of Seller and the other
members of a Controlled Group has met its minimum funding requirements under
ERISA with respect to all of their Plans and none of them has an Unfunded Vested
Liability. Neither Seller nor any other member of a Controlled Group has
incurred any liability to the PBGC under ERISA. As used herein the terms
(i) "Controlled Group" means all members of a controlled group of
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corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Seller, are treated as a single employer
under Sections 414(b) or 414(c) of the Code;
(ii) "Unfunded Vested Liability" of Seller means, with respect to any Plan
--------------------------
at any time, the excess of (1) the present value of all vested nonforfeitable
benefits under the Plan over (2) the fair market value of all Plan assets
allocable to those benefits, all determined as of the then most recent valuation
date for the Plan, but only to the extent that the excess represents a potential
liability of Seller or any member of its Controlled Group to the PBGS or the
Plan under Title IV of ERISA; and
(iii) "Plan" of a Seller means an employee pension benefit plan covered by
----
Title IV of ERISA or subject to the minimum funding standards under Section 12
of the Code and is either (1) maintained by Seller or any member of its
Controlled Group or (2) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which Seller or any member of its Controlled Group is then
making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
v) Seller does not have any liability or obligation, whether accrued,
absolute, contingent or otherwise, except (a) to the extent fully and
specifically reflected or reserved for on the December 31, 1998 Balance Sheet
(b) liabilities or obligations incurred During December 31, 1998 in the normal
and ordinary course of business of Seller consistent with past practice, and not
in violation of this Agreement, none of which has been materially adverse or (c)
internal adjustments for charges between Seller and its subsidiaries referred to
in Section 6(e) above.
w) Neither the Seller nor any of the Principal Shareholders (as defined
in Section 8(a)(i)) has retained any broker or finder in connection with the
transactions contemplated herein, and neither is obligated or has agreed to pay
any brokerage or finder's commission, fee or similar compensation.
x) All of the above warranties and representations will be true and
correct in all respects as of the date of the Initial Closing with the same
force and effect as if made at that time.
7. Warranties and Representations of Purchasers.
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To induce Seller to enter into this Agreement, Purchasers make the
following warranties and representations, which shall survive the execution and
delivery of this Agreement and the sale and transfer of, and payment for, the
Shares:
a) Universal is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, is duly authorized to do business in
every jurisdiction where Universal's ownership or leasing of property or its
activities require it to be so authorized under the laws of such jurisdiction,
and has full legal power and authority to enter into and perform the terms of
this Agreement.
b) Cornerhouse and Winsome each is a limited partnership duly
organized, validly existing and in good standing under the laws of New York, is
duly authorized to do business in every jurisdiction where its ownership or
leasing of property or activities require it to be so authorized under the laws
of such jurisdiction, and has full legal power and authority to enter into and
perform the terms of this Agreement;
c) All necessary corporate and other action has been taken to authorize
the execution and delivery of this Agreement by Universal, Cornerhouse and
Winsome and, upon execution and delivery hereof by corporate officers of
Universal, the general partners of Cornerhouse and Winsome and Peipers, this
Agreement will become the valid and binding obligation of each of them,
enforceable in accordance with its terms.
d) The indebtedness of North Star to be transferred to Seller hereunder
was or will be incurred for moneys actually advanced to North Star, has or will
have been duly and validly acquired by Purchasers from the lender thereof, and
to the best of Purchasers' knowledge is, and at the time of the Initial Closing
will be, a legally enforceable indebtedness of North Star.
e) The shares of North Star and Zeus to be transferred to Seller
hereunder have been (or at the time of delivery to Seller will be) legally and
validly issued and fully paid and non-assessable.
f) Seller's shares are being acquired by each of the Purchasers hereunder
for his or its own account for investment and not with a view to distribution in
violation of the Securities Act.
g) North Star and Zeus are corporations duly organized, validly existing
and in good standing under the laws of Nevada, are duly authorized to do
business in every jurisdiction where their ownership or leasing of properties or
their activities require them to be so authorized, and have full corporate and
legal power to operate their properties and conduct their business as now
conducted.
h) North Star has an authorized capital stock of 25,000 common shares
without par value all of which are validly issued and outstanding, fully paid
and non-assessable. An additional 25,000 shares may be authorized and
outstanding at the time of the Initial Closing.
i) Zeus has an authorized capital stock of 25,000 common shares without
par value. Of these, 22,500 common shares are validly issued and outstanding,
fully paid and non-assessable.
j) The valuations of North Star and Zeus that have been delivered to
Seller are believed by Purchasers to constitute fair valuations that have been
prepared in accordance with criteria generally accepted in the mining industry
for the valuation of mining properties. The said valuations do not, to the best
of Purchasers' knowledge, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements set forth therein not misleading.
k) There are not outstanding any warrants, options or other rights to
acquire shares of North Star or Zeus that are presently outstanding except that
Doyon, Limited may have a right to acquire the 2,500 authorized but unissued
shares of Zeus for a nominal price. In addition, it is North Star's intention
(i) to grant to one of its employees, before consummation of the transaction
provided for in this Agreement, an option to acquire, for a nominal price, five
percent of the outstanding shares of North Star and (ii) to cause to be granted
to another of its employees, after consummation of the transaction provided for
in this Agreement, an option to acquire, for a nominal price, 50,000 of the
authorized but unissued shares of Seller.
l) Zeus has, and North Star upon the exercise of the options held by it
under its agreement with Doyon, Limited dated May 27, 1997 will have, good title
to all of their respective properties, free and clear of any liens, charges or
encumbrances whatsoever, subject, in the case of North Star, to the rights of
Doyon, Limited under the provisions of the aforesaid agreement.
m) Neither North Star or Zeus is in violation of, or in default under, nor
has any condition, event or act occurred which, with the giving of notice or
lapse of time, or both, would constitute a default under (i) any term, condition
or provision of its certificate of incorporation or by-laws, or (ii) any
agreement, indenture, mortgage, lease or other instrument of which it is a party
or by which it or any of its assets or properties is bound or affected, or (iii)
any license, judgment, decree, order, or arbitration award, or (iv) any law,
statute, ordinance or governmental rule or regulation applicable to it and known
to Purchasers the violation of which would have a material adverse effect on
North Star or Zeus of which Purchasers have reason to know. The execution,
delivery and performance of this Agreement and carrying out of the transactions
contemplated by this Agreement and compliance with the provisions hereof by
North Star and Zeus will not result in any such violation or be in conflict with
or constitute a default, under any such term, condition or provision, or cause
or allow any holder of debt of North Star or Zeus to cause any acceleration of
debt or result in the creation of any security interest, lien, claim, charge or
encumbrance of any kind whatsoever.
n) Insofar as Purchasers know, or have reason to know, no other party
to any agreement, indenture, mortgage, lease or other instrument to which the
North Star or Zeus is a party is in default under, nor has any condition, event
or act occurred which, with the giving of notice or lapse of time, or both,
would constitute a default under the terms, conditions or provisions thereof.
o) There is no litigation, administrative proceeding, governmental
investigation or other proceeding pending, nor do Purchasers know or have reason
to know of any such threatened proceedings or of any change in governmental
regulation (including without limitation any ecological or environmental
regulation) (i) against or affecting North Star or Zeus, or their respective
properties and business, which, either alone or in the aggregate, if adversely
determined or adopted would have a material adverse effect on North Star or
Zeus, or which involves a claim for damages of $25,000 or more or which seeks to
enjoin any significant activity of North Star or Zeus, or (ii) which questions
the validity of the transactions contemplated by this Agreement.
p) No approval, consent, order or authorization of, or filing or
registration with, any governmental or regulatory authority is required to be
obtained, effected or given to permit the exchange of the shares of North Star
or Zeus contemplated by this Agreement except notices and approval to the SEC
and NASDAQ Exchange regarding the transaction.
q) All Federal, state, provincial, state, and local tax returns of
North Star and Zeus required by law to be filed have been duly filed, or
extensions of the time within which such returns must be filed have been duly
granted or obtained and are in effect and all taxes as shown on said returns
have been paid. The charges, accruals, and reserves on the books of North Star
and Zeus in respect of taxes for all fiscal periods are adequate and there are
no unpaid assessments against North Star or Zeus for additional taxes for any
fiscal period or any basis therefor.
r) All the insurable properties of North Star and Zeus are insured for
the benefit of the owner thereof in reasonably sufficient amounts against all
risks, including, without limitation, public liability insurance, usually
insured against by persons operating similar properties in the locality where
such properties are located, under valid and enforceable policies issued by
insurers of recognized responsibility.
s) The records and books of account of North Star and Zeus are correct
and complete in all material respects and have been maintained in accordance
with good business practices.
t) The copies of the contents of the minute books of North Star and
Zeus as made available to Seller and counsel for Sellers prior to the Initial
Closing, contain accurate records of all meetings and accurately reflect all
corporate action of the shareholders and the board of directors (including
committees, if any) of North Star and Zeus taken since their respective
incorporations.
u) The operation of the business of North Star and Zeus, in which
either of them (itself or through a subsidiary) has direct control of
operations, including the use and operation of all real property or leaseholds
owned, leased or used by either of them, has not violated and does not violate
any applicable federal, provincial, local, or foreign environmental law
(collectively, "Environmental Laws"), and no condition or event has occurred
------------------
which, with notice or passage of time or both, would constitute a violation of
any such Environmental Law. Without limiting the generality of the foregoing:
(i) No pollutants, contaminants or hazardous or toxic wastes, substances
or materials (collectively, "Hazardous Materials"), as defined by the
-------------------
Environmental Laws have been manufactured, generated, stored, handled, disposed,
buried, dumped or used on, at or in connection with any real property or
leaseholds owned, leased or used by North Star or Zeus in which either of them
(either itself or through a subsidiary) has direct control of operations.
(ii) No asbestos, asbestos-containing materials, polychlorinated
biphenals ("PCB"), PCB compounds, or other pollutants,contaminants, hazardous
---
or toxic wastes, substances or materials are contained in, on, about or
otherwise located at any real property or leaseholds owned, leased or used
by North Star of Zeus, nor have they been used in the construction, repair, or
alteration of any portion of such real property or leaseholds with which North
Star or Zeus (itself or through a subsidiary) has direct control of operations.
iii) In operations with which North Star of Zeus (itself or through a
subsidiary) has direct control, they do not have any liability under any
Environmental Law for the presence, disposal, release, storage or contamination
of or by any Hazardous Material at any site or facility owned, leased or
operated presently or at any previous time by North Star or Zeus or at any site
or facility at which any Hazardous Material generated by North Star or Zeus has
been disposed or stored.
v) North Star and Zeus are in compliance in all material respects with
all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended, and the related regulations and published interpretation
(herein called "ERISA"). Neither a Reportable Event (as stated in Section 4043
of ERISA) nor a Prohibited Transaction as stated in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), has
occurred or is continuing with respect to any Plan of the Company. No notice of
intent to terminate a Plan has been filed nor has and Plan been terminated. No
circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the Pension Benefit Guaranty Corporation ("PBGC") to institute
proceedings to terminate, or appoint a trustee to administrate, a Plan, nor has
the PBGC instituted any such proceedings. Neither North Stare, Zeus nor any
other member of a Controlled Group has completely or partially withdrawn under
Section 4201 or 4204 of ERISA from a Multi-employer Plan. Each of North Star,
Zeus and the other members of a Controlled Group has met its minimum funding
requirements, if any, under ERISA with respect to all of their Plans, if any,
and none of them has an Unfunded Vested Liability. Neither North Star, Zeus nor
any other member of a Controlled Group has incurred any liability to the PBGC
under ERISA. As used herein the terms
(i) "Controlled Group" means all members ofa controlled group of
----------------
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with North Star or Zeus, are treated as a single
employer under Sections 414(b) or 414(c) of the Code;
(ii) "Unfunded Vested Liability" of North Star or Zeus means, with respect
--------------------------
to any Plan at any time, the excess of (1) the present value of all vested
nonforfeitable benefits under the Plan over (2) the fair market value of all
Plan assets allocable to those benefits, all determined as of the then most
recent valuation date for the Plan, but only to the extent that the excess
represents a potential liability of Seller or any member of its Controlled Group
to the PBGS or the Plan under Title IV of ERISA; and
(iii) "Plan" of North Star or Zeus means an employee pension benefit plan
----
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 12 of the Code and is either (1) maintained by North Star, Zeus or any
member of its Controlled Group or (2) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which North Star, Zeus or any member of its
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions.
w) All of the above warranties and representations will be true and
correct in all respects as of the date of the Initial Closing with the same
force and effect as if made at that time.
8. Covenants of Seller
-------------------
Sller covenants that it will cause the following to occur prior to or
at the Initial Closing:
a) Seller will cause twenty six and 7/10 percent (26.7%) of its
outstanding shares as established in Sellers latest 10-K Report to be
surrendered for cancellation and retirement without being replaced by the
issuance of presently unissued or treasury shares, so that immediately prior to
the Initial Closing the total number of Seller's outstanding shares will have
been reduced to not more than 982,808 shares. The terms of the acquisition of
the above described shares shall be in accordance with the agreement betweem
Seller and the principals of seller which is attached hereto as Exhibit B and
made a part hereof. The said agreement shall be approved and ratified by a
majority of the shareholders of Seller in attendance at the annual meeting of
Seller. It is understood and agreed that Purchasers are intended to and shall
be a third party beneficiary of the agreement between Seller and the principals
of seller referred to in Section 8(a)(i) above and, if the cancellation of their
shares does not take place by the Closing, then, in addition to any other
remedies, Purchasers shall have the right to obtain a decree in equity directing
that such agreement be specifically performed and enforced.
b) Seller will continue to conduct its business in ordinary course in
the same manner in which it is now being conducted between the date of this
Agreement and the Initial Closing and shall incur no liability other than in
normal ordinary course of business without the written consent of Purchasers.
c) Seller will cause all outstanding options, warrants and other rights
to purchase authorized but unissued Shares of Seller to be cancelled and
surrendered at or prior to the Initial Closing, it being expressly understood
and agreed that it is of the essence of this Agreement that there shall be no
such warrants, options or other rights to purchase shares of Seller outstanding
other than the right to purchase Additional Shares being granted to Purchaser
pursuant to Sections 3 and 4 above. No warrants, stock options or other rights
to purchase shares will be granted or honored between the date of this Agrrement
and the Initial Closing. No shares or contributions will be made available for
Seller's Employee Stock Purchase Plan between the date of this Agreement and the
Initial Closing except for the above mentioned proposed 1999 contribution of not
more than $43,000 in Seller's common stock.
d) Until the completion of the Initial Closing, Seller will take all
steps necessary to maintain the listing and admission to trading of its shares
upon the NASDAQ system including, but not limited to, remaining current in the
filing of all reports required under the Exchange Act, any state or local
legislation or the rules and regulations of NASDAQ and the NASD, and the taking
of any action required by NASDAQ or any other self-regulatory organization or
governmental unit in order maintain such listing and admission to trading
privileges. It is understood by the parties hereto that Seller is subject to
the NASDAQ notice attached hereto as Exhibit A and Seller will not influence the
stock price in any way except as permitted by NASDAQ or SEC Rules and
Regulations. Notwithstanding anything contained herein, however, it is
understood and agreed that Purchasers shall have the right to cancel and
withdraw from this Agreement without liability if the listing and admission to
trading upon NASDAQ of Seller's shares is suspended or terminated at any time
prior to the Initial Closing by reason of any of the matters referred to in the
aforesaid notice or for any other reason.
e) As soon as practicable after the execution of this Agreement Seller
will propose to its shareholders that Seller's certificate of incorporation be
amended to increase the number of shares that Seller is authorized to issue to
fifty million (50,000,000) shares, that the exchange provided in Exhibit B be
approved, and that the terms and conditions of this Agreement be approved, and
will cause a notice to be sent out for a shareholders meeting to approve such
matters, and Seller will use its best efforts to obtain such approval. If
Purchasers shall so request, Seller shall also propose to its shareholders, for
approval at the same meeting, reincorporation of Seller as a corporation
organized under the laws of Nevada. by subjoining their signatures at the foot
of this Agreement, the Principals of Sellers have signified their agreement to
vote in favor of the matters set forth above.
f) Seller will cause its principals and employees to cooperate with
such public relations professionals as may be retained by Purchasers in
publicizing the execution of this Agreement and its terms.
9. Covenants of Purchasers.
-----------------------
Purchasers will cause the following to occur prior to the Initial
Closing:
a) Purchasers will maintain their financial ability to perform the
transaction provided for in Sections 1 and 2 above and will not, pending the
Initial Closing, permit their resources to be diverted into other matters so as
to render them unable to complete such transaction.
b) Purchasers will refrain from publicizing the existence of this
Agreement, the terms hereof or the proposed transactions contemplated hereby
except to the minimum extent required by law.
10. Conditions Precedent to Obligations of Purchasers.
-------------------------------------------------
Purchasers' obligation to proceed with the transactions herein
provided for shall be subject to the following conditions, any of which may be
waived in writing by Purchasers:
a) All of Seller's warranties and representations shall be true and
correct at the time of the Initial Closing as if made at that time.
b) Seller shall have fully performed all of the covenants on its part
to be performed as provided for in Section 8 above. Without limiting the
generality of the foregoing:
i) Seller shall have completed the retirement of twenty-six and 7/10
percent (26.7%) of its outstanding shares, and the total number of Seller's
outstanding shares shall have been reduced to no more than nine hundred eighty-
two thousand nine hundred eight (982,908) shares.
ii) The total number of common shares that Seller is authorized to issue
shall have been increased to at least fifty million (50,000,000).
iii) Seller's common shares shall still be listed and admitted to trading
upon the NASDAQ system.
iv) If Purchasers shall have so requested, Seller shall have been
reincorporated as a Nevada corporation.
v) There shall have been no material adverse change in Seller's assets,
liabilities or financial position (except for the transaction provided for in
Section 8(a) above).
c) There shall have been obtained all SEC and NASDAQ approvals required
(if any) to permit the listing of Seller's shares on the NASDAQ Exchange to be
maintained without interruption after the changes in Seller's business and
control resulting from the transactions provided for in this Agreement.
d) The principals of Seller referred to in Section 8(a) shall have
executed and delivered to Seller an undertaking in form satisfactory to
Purchasers to perform and discharge all obligations and liabilities of the
Seller arising out of or in any way connected with the ownership or operation of
Seller's Environmental Testing and Management Division, and to hold Seller
harmless against any loss, damage, liability or expense, including reasonable
attorneys' fees, resulting from any breach of such undertaking.
e) Seller and its Board of Directors shall have taken such action as
Purchasers shall request to elect persons designated by Purchasers as directors
of Seller.
f) Purchaser shall have received the resignation of all directors and
officers of Seller.
11. Conditions Precedent to obligations of Seller.
----------------------------------------------
Seller's obligation to proceed with the transactions hereinabove
provided for shall be subject to the following conditions, any of which may be
waived in writing by Seller:
a) All of Purchasers' warranties and representations shall be true and
correct at the time of the Initial Closing with the same effect as if made at
that time.
b) Purchasers shall have fully performed all of the covenants on their
part to be performed as provided in Section 9 above.
c) There shall have been no material adverse change in the financial
position of North Star.
12. The Closing.
-----------
a) The Initial Closing shall take place at the offices of North Star
in Denver, Colorado, on a date (the "Initial Closing Date") to be specified by
notice to Seller from Purchasers, which date shall be not less than ten (10) nor
more than forty (40) days after the date on which Seller's shareholders vote the
approvals referred to in Section 8(e) above. On the Initial Closing Date,
Seller shall deliver to Purchasers (a) certificates for the 6,250,000 unissued
common shares of Seller being purchased pursuant to Sections 1 and 2 above, and
(b) certificates for such number of additional unissued common shares of Seller,
up to a maximum of 14,375,000 such shares, as to which Purchasers elect to
exercise their right to buy Additional Shares pursuant to Sections 3 and 4
above. Exhibit C hereto shows the number of shares that will be issuable to
each of Purchasers if they purchase the Maximum Number of Additional Shares.
b) If Purchasers shall purchase less than the Maximum Number of
Additional Shares on the Initial Closing Date, they may at that time give
Seller notice (the "Designating Notice") pursuant to Section 15 below
designating other persons ("Purchasers' Designees") each of whom shall have the
right to purchase pursuant to Sections 3 and 4 up to the number of remaining
Additional Shares specified for him or it in the Designating Notice (provided
that the total number of shares specified to be bought by the Purchasers'
Designees shall not, together with the Additional Shares bought by Purchasers,
exceed the Maximum Number). If a Designating Notice is given, the transfer to
Purchasers of all of the shares purchased by them pursuant to Sections 1, 2, 3
and 4 shall be completed on the Initial Closing Date, as well as transfers of
shares to any of Purchasers' Designees who are ready to complete their purchases
at that time, and, after completion of those transfers, the Closing shall be
recessed for not more than six months to a date designated by Purchasers (the
"Recessed Closing Date"). On the Recessed Closing Date, or prior thereto on ten
days prior notice to Seller and Purchasers, each of Purchasers' Designees who or
which did not complete his or its purchase at the Initial Closing shall have the
right to purchase from Seller pursuant to this Agreement, on the terms and
conditions set forth in Sections 3 and 4 above, up to the number of Additional
Shares specified for him or it in the Designating Notice .
c) On the Initial Closing Date, Purchasers shall deliver to Seller
the consideration for the shares of Seller being purchased at that time, which
shall consist of:
i) Cash, in the form of New York Clearing House Funds by certified or
official bank check, in the amount of at least Five Million Dollars
($5,000,000), and, to the extent not paid in cash,
ii) Transfer, in the form of an instrument of assignment in a form approved
by Seller's counsel, which approval shall not be unreasonably withheld, of a
minimum of Five Million Dollars ($5,000,000) and a maximum of Seven Million
Dollars ($7,000,000) of indebtedness theretofore owed by North Star to
Purchasers;
iii) Transfer, in the form of share certificates of North Star duly
endorsed in form for transfer, of such number of shares of North Star that shall
constitute up to a maximum of all of North Star's outstanding shares; and
iv) Transfer, in the form of share certificates of Zeus duly endorsed in
form for transfer, of such number of shares of Zeus that shall constitute up to
a maximum of all of Zeus' outstanding shares.
d) On the Recessed Closing Date, the consideration for any shares
of Seller being delivered at that time shall be cash and/or share certificates
duly endorsed in form for transfer evidencing shares of North Star Which shall
not, however, exceed in number the difference between the number of shares of
North Star transferred at the Initial Closing and the total number of shares of
North Star that were outstanding at the time of the Initial Closing.
13. Notices.
-------
Notices in connection with this Agreement shall be deemed given when
sent in the manner and to the addresses specified in Exhibit D hereto.
14. Complete Agreement.
-------------------
This Agreement constitutes the complete agreement of the parties, has
not been made in reliance an any warranties or representations not expressly set
forth herein, and cannot be modified or terminated, nor may any of its
provisions be waived, except by a writing signed by the party to be charged.
15. Binding Effect.
--------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Without limiting
the generality of the foregoing, the Purchasers shall have the right at the
Initial Closing, as provided in Section 12(b) above, to name Purchasers'
Designees to exercise the right to buy portions of the Additional Shares that
are not bought by Purchasers. Purchasers' Designees exercising such right shall
furnish the Seller with a representation in writing that the shares being
purchased are being acquired for investment and not with a view to distribution.
Such Purchasers' Designees shall, together with Purchasers, comprise the
Purchasing Group referred to in the first recital paragraph of this Agreement.
16. Headings.
--------
The headings of the various sections in this Agreement are intended
for convenience only and shall not limit or otherwise affect the meaning of any
of the sections.
17. Counterparts.
------------
This Agreement may be executed in two or more counterparts all of
which, together, shall constitute one and the same agreement.
18. Applicable Law.
--------------
The parties acknowledge that this Agreement has been negotiated partly
in the State of New York and that a significant part of the performance hereof
will take place in the State of New York, and it is therefore agreed that this
Agreement shall be construed under and governed by the laws of the State of New
York, except that matters relating to the internal affairs of the parties shall
be governed by the corporate or partnership laws of their respective
jurisdictions of organization, as the case may be.
19. Jurisdiction.
------------
Each of Seller, Purchasers and Principal Shareholders acknowledges
that by the execution of this Agreement it has transacted business in the state
of New York, and each of Seller, Purchasers and Principal Shareholders agrees
that it shall be subject to the jurisdiction of the State and Federal courts in
New York in any civil action or law suit arising out of or related to this
Agreement or the performance or alleged breach thereof. Each of Seller,
Purchasers and Principal Shareholders hereby irrevocably waives any objection,
including without limitation, the laying of venue, or based upon the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
- --------------------
action or proceeding.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
HAWKS INDUSTRIES, INC.
By: /s/ Bruce A. Hinchey
____________________
Bruce A. Hinchey, President
UNIVERSAL EQUITIES LTD.
By: /s/ Vincent P. Iannazzo
________________________
Vincent P. Iannazzo, President
THE CORNERHOUSE
LIMITED PARTNERSHIP
By: /s/ David H. Peipers
_______________________
David H. Peipers, General Partner
THE WINSOME
LIMITED PARTNERSHIP
By: /s/ David H. Peipers
______________________________
David H. Peipers, General Partner
_/s/ David H. Peipers______________
DAVID H. PEIPERS
The undersigned hereby agree to be bound by the provisions of Sections
8 and 10(d) of the foregoing Agreement.
____/s/ Bruce A. Hinchey____________
BRUCE A. HINCHEY
____/s/ James E. Meador____________
JAMES E. MEADOR
NASDAQ AMEX
EXHIBIT A-1
VIA FACSIMILE & REGULAR MAIL
- --- --------- --------- ---
April 1, 1999
Mr. Bill Ukele
Controller
Hawks Industries, Inc.
913 Foster Road
Casper, WY 82601
Dear Mr. Ukele:
The purpose of my letter is to bring to your attention a concern regarding the
continued listing of Hawks Industries, Inc.'s shares of common stock (HAWK) on
The Nasdaq SmallCap Market. Based upon the staff's review of the price data
covering the last thirty consecutive trade dates, your Company's shares of
common stock have failed to maintain a closing bid price greater than or equal
to $1.00. To be eligible for continued listing, all securities, the Company's
shares of common stock, must maintain a minimum bid price of $1.00.1
We recognize this deficiency may be a temporary situation, and no delisting
action with respect to the bid price deficiency will be initiated at this time.
Instead, the Company will be provided ninety (90) calendar days in which to
regain compliance with the minimum bid price requirement.2 If at anytime within
the next ninety calendar days from the date of this letter, the shares of common
stock reports a closing bid price of at least $1.00 or more for a minimum of ten
-------
consecutive trading days, it will have complied with the minimum bid price
requirement.
However, if the Company is unable to demonstrate compliance with the minimum
$1.00 bid price on or before the end of the ninety day period July 1, 1999, the
Company's securities will be subject to delisting, effective with the close of
business on July 1, 1999. To stay the delisting, the Company may request a
hearing by the close of business on July 1, 1999. For more information on the
on the hearing process, please contact the Listing Qualifications Hearing
department at (202)496-2635.
If you have any questions concerning the compliance issues discussed above,
please call Razina Boursiquot, Listing Analyst at (800)330-8920.
1. Marketplace Rule 4310(c)(04).
2. The ninety day period relates exclusively to the bid price deficiency.
The Company may be delisted during the ninety day period for falure to maintain
compliance with any other listing requirement for which it is currently n
notice or which occurs during the period.
Very truly yours,
/s/ Kit Milholland
Kit Milholland
Associate Director
Nasdaq Listing Qualifications
cc: Cam Funkhouser
Market Surveillance
NASDAQ AMEX
EXHIBIT A-2
VIA FACSIMILE & REGULAR MAIL
- --- --------- --------- ---
April 1, 1999
Mr. Bill Ukele
Controller
Hawks Industries, Inc.
913 Foster Road
Casper, WY 82601
Dear Mr. Ukele:
The purpose of my letter is to bring to your attention a concern regarding the
continued listing of Hawks Industries, Inc.'s shares of common stock (HAWK) on
The Nasdaq SmallCap Market. Based upon the staff's review of the price data
covering the last thirty consecutive trade dates, your Company's shares of
common stock have failed to maintain the required market value of the public
float. To be eligible for continued listing, your Company's shares of common
stock must maintain the minimum of $1,000,000 of the market value of the public
float.1
We recognize this may be a temporary situation, and no delisting action with
respect to the market value of the public float will be initiated at this time.
Instead, the Company will be provided ninety (90) calendar days in which to
regain compliance.2 If at anytime within the next ninety calendar days from the
date of this letter, the common stock achieves a market value of the public
float greater than $1,000,000 for ten consecutive trading days, it will have
complied with this standard.
However, if the Company is unable to demonstrate compliance with the minimum
market value of the public float requirement on or before the end of the ninety
day period (July 1, 1999), the Company's securities will be subject to delisting
effective with the close of business on July 1, 1999. To stay the delisting,
the Company may request a hearing by the close of business on July 1, 1999. For
more information on the hearing process, please contact the Listing
Qualifications Hearings Department at (202) 496-2635.
If you have any questions concerning the compliance issues discussed above,
please contact Razina Boursiquot, Listing Analyst at (800) 330-8920.
1. Marketplace Rule 4310(c)(07)
2. The ninety day period relates exclusively to the market value of the public
float deficiency. The Company may be delisted during the ninety day period for
failure to maintain compliance with any other listing requirement for which it
is currently on notice or which occurs during the period.
Very truly yours,
/s/ Kit Milholland
Kit Milholland
Associate Director
Nasdaq Listing Qualifications
cc: Cam Funkhouser
Exhibit B
June 9, 1999
Mr. Bruce A. Hinchey
Mr. James E. Meador, Jr.
Hawks Industries, Inc.
P. O. Box 359
Casper, WY 82601
Re: Letter Agreement/Hawks Industries, Inc. Share Acquisition
Dear Bruce and Jim:
Pursuant to the requirements of the North Star Group Agreement, Hawks
Industries, Inc. ("Company") proposes to acquire all Bruce A. Hinchey
("Hinchey"), James E. Meador, Jr. ("Meador") and Anne D. Zimmerman Revocable
Trust dated November 14, 1991 ("Zimmerman Trust") shares of common stock which
are not in the Company ESOP Plan and settle all claims you have against the
Company as a result of your Employment Agreement and receive a Covenant Not to
Compete under the following terms and conditions:
1. In consideration for redemption of all the shares described above,
settlement of the employment contract claims and securing a Covenant not to
Compete, the Company shall transfer its following assets:
(a) All shares of Western Environmental Services and Testing, Inc. ("West")
(b) All shares of Central Wyoming Properties, Inc.
(c) All its shares of W.E.R.C. preferred stock.
(d) All buildings owned by the Company subject to the existing debt secured by
said buildings.
(e) All oil and gas royalty and overriding royalty owned by the Company. (All
oil and gas working interest shall be retained by the Company).
2. Hinchey and Meador shall secure the transfer of the Zimmerman Trust shares
with consideration for said shares being paid out of the assets transferred
in Paragraph 1 above.
3. Hinchey and Meador shall secure an environmental indemnity and release from
W.E.S.T which contains the provisions provided in the April 15, 1999 North
Star Agreement at paragraph 6(t).
4. All parties hereto shall mutually release each other from any and all
obligations which are subject to Hinchey's and Meador's Employment
Agreements.
5. The parties hereto shall enter into a formal Agreement containing the above
provided terms and said Agreement shall be subject to the approval of a
majority of the Company's shareholders at the next Annual Meeting and shall
not be binding on the Company until approved by the Shareholders.
If these terms and conditions are acceptable, please execute a copy of this
Letter Agreement and return it to my office. This Letter Agreement may be
executed by Counterpart signature.
Sincerely,
/s/ Bob Despain
Bob Despain
BD/pt
AGREED TO AND ACCEPTED this 9th day of June, 1999.
HAWKS INDUSTRIES, INC.
BRUCE A. HINCHEY
__/s/ Bruce A. Hinchey_____________ __/s/ Dwight B. Despain____________
DWIGHT B. DESPAIN, Director
JAMES E. MEADOR, JR.
___/s/ James E. Meador, Jr.________ __/s/ Gerald E. Moyle_____________
GERALD E. MOYLE, Director
EXHIBIT C
Purchaser and Number of Common Shares Number of Additional
Registration Purchased Shares Issuable
(If Maximum Number
Purchased)
Universal Equities Ltd. 3,125,000 7,187,500
David H. Peipers 1,562,500 3,593,750
The Cornerhouse Limited 937,500 2,156,250
Partnership
The Winsome 625,000 1,437,500
Limited Partnership
EXHIBIT D
Notices
-------
Notices pursuant to or in connection with this Agreement shall be deemed
given when sent my certified, registered or express mail, return receipt
requested, addressed as follows or to such other address as may have been
designated by such notice.
If to Seller:
- -------------
Hawks Industries, Inc.
Attention: Bruce A. Hinchey
913 Foster Road
Casper, WY 82601
If to Universal Equities Ltd.:
- ------------------------------
Universal Equities Ltd.
Attention: Vincent P. Iannazzo
115 East 57th Street, Suite 1540
New York, NY 10022
If to The Cornerhouse Limited Partnership:
- ------------------------------------------
The Cornerhouse Limited Partnership
Attention: David H. Peipers
888 Seventh Avenue, Suite 1608
New York, NY 10106
If to the Winsome Limited Partnership:
- --------------------------------------
The Winsome Limited Partnership
Attention: David H. Peipers
888 Seventh Avenue, Suite 1608
New York, NY 10106
If to David H. Peipers:
- -----------------------
David H. Peipers
888 Seventh Avenue, Suite 1608
New York, NY 10106
Exhibit "2"
PRESS RELEASE
BY
HAWKS INDUSTRIES, INC.
The Chairman of the Board of Directors of Hawks Industries, Inc., Bruce A.
Hinchey, announced that on June 10, 1999 Hawks entered into an Agreement with
Universal Equities Ltd., David H. Peipers, Ther Cornerhouse Limited Partnership
and the Winsome Limited,Partnership (collectively referred to as "Buyers") to
secure a controlling interest in Hawks' common stock through a private
placement. The value placed on Hawks' shares in the offer was $1.60 per share
for at least 6,250,000 shares of common stock yielding the Company a
consideration of $10,000,000.00. The offer also included the right to buy up to
an additional 14,375,000 shares at the same price. The maximum consideration to
be received by Hawks is $33,000,000.00 if all the additional shares are
purchased.
The terms of the offer require a payment of at least $5,000,000.00 in cash,
with the remainder of the consideration being paid in cash and/or transfer of
buyer rights to a debt obligation from North Star Exploration, Inc. ("North
Star"), and/or North Star common stock, and/or Zeus Exploration, Inc. ("Zeus")
common stock. North Star is a private Nevada Corporation with options on mineral
rights covering approximately 7,000,000 acres in Alaska .
The Agreement also requires the redemption of shares in Hawks owned by
Bruce A. Hinchey, James E. Meador, Jr. and the Anne D. Zimmerman Revocable Trust
in exchange for certain assets of the Company.
The private placement and redemption of shares described above will be
subject to Hawks Shareholder approval at its Annual Meeting in September.
As a result of this transaction, the controlling interest in Hawks will be
owned by the Buyer Group which will focus on its mineral claims in Alaska.
Exhibit "3"
September 23, 1999
Hawks Industries, Inc.
931 Foster Road
Casper, Wyoming 82601
Gentlemen:
Reference is made to the Agreement (the "Agreement") dated as of June 10,
1999 between you and us. Terms used herein shall have their meanings as defined
in the Agreement. You and we agree that the Agreement is hereby modified as
follows:
1. Section 12(b) of the Agreement is amended to read as follows:
"b) If Purchasers shall purchase less than the Maximum Number of
Additional Shares on the Initial Closing Date, they may at that time give
seller notice (the "Designating Notice") pursuant to Section 15 below
specifying a recessed closing date (the "Recessed Closing Date") not more
than eight months thereafter, which notice may designate any of Purchasers
and/or other persons ("Purchasers' Designees") to have the right on the
Recessed Closing Date to purchase pursuant to Sections 3 and 4 up to the
number of remaining Additional Shares specified for him or it in the
Designating Notice (provided that the total number of shares specified to
be bought by the Purchasers' Designees shall not, together with the
Additional Shares bought by Purchasers, exceed the Maximum Number). If a
Designating Notice is given, the transfer to Purchasers of all of the
shares purchased by them on the Initial Closing Date shall be completed at
that time, as well as transfers of shares to any of Purchasers' Designees
who are ready to complete their purchases, and, after completion of those
transfers, the Closing shall be adjourned to the Recessed Closing Date. On
the Recessed Closing Date, or prior thereto on ten days prior notice by
Purchasers to Seller and Purchasers' Designees, each of Purchasers or
Purchasers' Designees who or which did not complete his or its purchase at
the Initial Closing shall have the right to purchase from Seller pursuant
to this Agreement, on the terms and conditions set forth in Sections 3 and
4 above, up to the number of Additional Shares specified for him or it in
the Designating Notice."
2. Section 12(c) of the Agreement is hereby amended to read as
follows:
"c) On the Initial Closing Date, Purchasers shall deliver to Seller
the consideration for the shares of Seller being purchased at that time,
which shall consist of:
i) Cash, in the form of New York Clearing House Funds be certified
or official bank check, in the amount of at least Five Million Dollars
($5,000,000), and to the extent not paid in cash;
ii) Transfer, in the form of an instrument of assignment in a form
approved by Seller's counsel, which approval shall not be unreasonably
withheld, of a minimum of Five Million Dollars ($5,000,000) and a
maximum of Ten Million Five Hundred Thousand Dollars ($10,500,000) of
indebtedness owed by North Star to Purchasers;
iii) Transfer, in the form of share certificates of North Star duly
endorsed in form for transfer, of shares of North Star the maximum
number of which shall be that number which, when valued in accordance
with Section 4 above, will result in a credit against the Additional
Share Price equal to the difference between the aggregate amount of
all other considerations being tendered pursuant to this Section 12
and Thirty-Three Million Dollars ($33,000,000); and
iv) Transfer, in the form of share certificates of Zeus duly endorsed
in form for transfer, of shares of Zeus the maximum number of which
shall be that number which, when valued in accordance with Section 4
above, will result in a credit against the Additional Share Price
equal to the difference between the aggregate amount of all other
considerations being tendered pursuant to this section 12 and Thirty-
Three Million Dollars ($33,000,000)."
3. Section 12(d) of the Agreement is hereby amended to read as
follows:
"d) On the Recessed Closing Date, the consideration for any shares of
Seller being delivered at that time shall be cash and/or indebtedness of
the kind described in Section 2(b) (ii) and/or share certificates duly
endorsed in form for transfer evidencing shares of North Star and/or Zeus,
provided, however, that (i) the indebtedness assigned on the Recessed
Closing Date together with the indebtedness assigned on the Initial Closing
Date shall not exceed a total of Ten Million Five Hundred Thousand Dollars
($10,500,000) in the aggregate and (ii) the number of shares of Seller
purchased on the Recessed Closing Date together with the shares purchased
on the Initial Closing Date shall not exceed a total of Twenty Million Six
Hundred Twenty-Five Thousand (20,625,000) shares in the aggregate."
4. There shall be added a new Section 12(e) which shall read as
follows:
"e) On the Recessed Closing Date the Purchasers may purchase, for
consideration conforming to Section 12(d), any of the Additional Shares not
purchased by Purchasers on the Initial Closing Date that are not purchased
by any of Purchasers' Designees."
5. As modified above the Agreement shall continue in full force and
effect.
Please confirm your consent to the above modifications of the agreement by
affixing your signature at the foot hereof underneath the word "Agreed".
Your very truly,
UNIVERSAL EQUITIES LTD.
By: /s/ Vincent P Iannazzo
--------------------------
Vincent P. Iannazzo, President
THE CORNERHOUSE
LIMITED PARTNERSHIP
By: /s/ David H. Peipers
--------------------------
David H. Peipers, General Partner
THE WINSOME
LIMITED PARTNERSHIP
By: /s/ David H. Peipers
--------------------------
David H. Peipers, General Partner
/s/ David H. Peipers
------------------------------
DAVID H. PEIPERS
Agreed:
HAWKS INDUSTRIES, INC.
By: /s/ Bruce A. Hinchey
--------------------------
Bruce A. Hinchey, President
Exhibit "23.1"
Lovelett, Hargens & Skogen, P.C.
Certified Public Accountants
INDEPENDENT AUDITOR'S CONSENT
Lovelett, Hargens & Skogen, P.C. formerly named Hocker, Lovelett, Hargens &
Skogen, P.C., consents to the incorporation by reference into this Current
Report of Hawks, Inc. (the "Company") on Form 8-K of our report dated February
12, 1999 relating to the Company's financial statements included in its Annual
Report on Form 10-K for the year ended December 31, 1998.
LOVELETT, HARGENS & SKOGEN, P.C.
/s/ Lovelett, Hargens & Skogen, P.C.
Casper, Wyoming
October 11, 1999