SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT ("Agreement") is entered into effective this
31st day of December, 2008 by and between AvStar Aviation Services, Inc., a
Texas corporation ("AvStar"), and (a) Pangea Petroleum Corporation, a Colorado
corporation ("Pangea").
RECITALS:
WHEREAS, AvStar is the record and beneficial owner of 1,500 shares of
common stock, no par value, of San Diego Airmotive (the "SDA Common Stock"),
which shares constitute all of the outstanding shares of SDA Common Stock, and
all or substantially all of the assets of AvStar; and
WHEREAS, Pangea desires to acquire from AvStar, and AvStar desires to
convey to Pangea, all of the issued and outstanding SDA Common Stock, in
exchange for shares of the series A preferred stock of Pangea to be created
pursuant to the articles of amendment to articles of incorporation attached
hereto as Exhibit A ("Pangea Series A Preferred Stock"), all on the terms,
provisions and conditions set forth hereinafter;
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties set forth herein and other valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE 1
EXCHANGE OF SHARES
1.1 SDA COMMON STOCK. At the Closing, AvStar shall transfer, convey
and deliver to Pangea 1,500 shares of the SDA Common Stock, and shall deliver to
Pangea stock certificates representing the SDA Common Stock, duly endorsed to
Pangea or accompanied by duly executed stock powers.
1.2 PANGEA SERIES A PREFERRED STOCK. At the Closing, in exchange for
the shares of SDA Common Stock transferred to Pangea pursuant to Section 1.1
above, Pangea shall issue and deliver to AvStar 1,000,000 shares of the Pangea
Series A Preferred Stock, which shares will constitute in the aggregate
approximately 90% of outstanding economic interest and voting power in Pangea.
The transaction by which the transfer shall take place is referred to
hereinafter as the "Exchange."
1.3 CLOSING. The Closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of AvStar at 10:00
a.m. local time, on December 31, 2008, or at such other place and on such other
date as Pangea and AvStar may mutually agree in writing (the "Closing Date").
1.4 SHAREHOLDER AND DIRECTOR APPROVALS.
(a) AvStar shall submit, for consideration, approval and adoption at
Special Meetings of Shareholders convened as soon after the date hereof as is
possible (or if feasible, by means of written consent in lieu of a Special
Meeting), the Exchange and all other actions contemplated by this Agreement that
require approval and adoption by its shareholders.
(b) To the extent not already completed, each party to this Agreement
shall submit, for consideration, approval and adoption at a Special Meeting of
its Directors convened as soon prior to the Closing as is possible after the
date hereof, the Exchange and all other actions contemplated by this Agreement
that require approval and adoption by its Board of Directors.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PANGEA
Pangea hereby represents, warrants and agrees to and with AvStar that
(except as expressly set forth on a disclosure schedule attached hereto and
signed by AvStar):
2.1 ORGANIZATION AND STANDING OF PANGEA. Pangea is a corporation duly
organized, validly existing, and in good standing under the laws of the state of
Colorado. Pangea has full requisite corporate power and authority to carry on
its business as it is now being conducted, and to own, operate, and lease the
properties now owned, operated, or leased by it. Pangea is duly authorized and
qualified to carry on its business in the manner as now conducted in state in
which authorization and qualification is required. Pangea has made available to
AvStar true, correct and complete copies of the contents of its minute book,
which are accurate in all respects and set forth fully and fairly all of Pangea'
transactions.
2.2 CAPITALIZATION OF PANGEA. The authorized capital stock of Pangea
(the "Capital Stock") consists of 500,000,000 shares of common stock ("Pangea
Common Stock"), 490,499,544 of which were issued and outstanding prior to the
consummation of the Exchange, and 10,000,000 shares of Preferred Stock, none of
which are issued and outstanding. The shares of Pangea Common Stock issued and
outstanding prior to the consummation of the Exchange are duly and validly
authorized and issued and are fully paid and non-assessable, and were not issued
in violation of the pre-emptive rights of any current or former shareholder.
The shares of Pangea Common Stock issued and outstanding prior to the
consummation of the Exchange were issued, and all secondary transfers of such
shares permitted by Pangea were made, in compliance with all applicable law
(including, without limitation, available exemptions from the securities
offering registration requirements of federal and state law). The Pangea Series
A Stock to be issued to the shareholders of AvStar pursuant to this Agreement
will (when issued in accordance with this Agreement) be duly and validly
authorized and issued and fully paid and non-assessable, and will not be issued
in violation of the pre-emptive rights of any current shareholder. No option,
warrant, call, subscription, convertible security, or commitment of any kind
obligating Pangea to issue any Capital Stock exists. There is not any
compensation plan applicable to any of the officers, directors, or employees of
Pangea under which compensation accrued or payable is determined, in whole or in
part, by reference to Capital Stock. There are no agreements or commitments
obligating Pangea to repurchase or otherwise acquire any Capital Stock.
2.3 SUBSIDIARIES AND OTHER VENTURES. Pangea has no subsidiaries or
affiliated corporations, and owns no capital stock, bond, or other security of,
or has any equity or proprietary interest in, any corporation, partnership,
joint venture, trust, or unincorporated association.
2.4 OWNERSHIP OF STOCK. To the knowledge of Pangea, none of the
outstanding shares of Pangea Common Stock is subject to any voting trust, voting
agreement, or other agreement or understanding with respect to the voting
thereof, nor is any proxy in existence with respect to any such shares.
2.5 CAPACITY TO ENTER INTO AGREEMENT. Pangea has full right, power and
authority to execute and deliver this Agreement and all other agreements,
documents and instruments to be executed in connection herewith and perform such
its or his obligations hereunder and thereunder. The execution and delivery by
Pangea of this Agreement and all other agreements, documents and instruments to
be executed by Pangea in connection herewith have been authorized by all
necessary corporate action by Pangea. When this Agreement and all other
agreements, documents and instruments to be executed by Pangea in connection
herewith are executed by Pangea and delivered to AvStar, this Agreement and such
other agreements, documents and instruments will constitute the valid and
binding agreements of Pangea enforceable against Pangea in accordance with their
respective terms.
2.6 CONFLICTS. The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
Pangea is a party or by which Pangea is bound or by which any of the assets of
Pangea is bound or affected, (b) violate any judgment against, or binding upon,
Pangea or upon the assets of Pangea, (c) result in the creation of any lien,
charge or encumbrance upon any assets of Pangea pursuant to the terms of any
such contract, or (d) violate any provision in the charter documents, bylaws or
any other agreement affecting the governance and control of Pangea.
2.7 CONSENTS. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by
Pangea.
2.8 SEC FILINGS AND RELATED MATTERS. Pangea has filed all forms,
reports, statements and other documents required to be filed with the U.S.
Securities and Exchange Commission (the "SEC"), including, without limitation,
all Annual Reports on Form 10-KSB, all Quarterly Reports on Form 10-QSB or Form
10-Q, all proxy statements relating to meetings of shareholders (whether annual
or special), all Reports on Form 8-K and all required Registration Statements
(all such filings being referred to hereinafter as the "SEC Reports"). All of
the SEC Reports are true and correct in all material respects and such filings
have not included any material misstatement or omitted to state any fact which a
reasonable investor would deem to be material. The financial statements
contained in the Annual Report on Form 10-KSB for the fiscal year ended December
31, 2007 (the "Financial Statements") fully and fairly set forth the financial
position of Pangea as of the dates thereof and the results of operations for the
periods indicated and have been prepared in accord-ance with account-ing
principles applied on a consistent basis. There is no basis for the assertion
of any liabilities or obligations, either accrued, absolute, contingent, or
otherwise, which might adversely affect Pangea, or the value, use, operation or
enjoyment of the assets of Pangea and which is not expressly set forth on the
balance sheet of Pangea as of September 30, 2008 contained in the Quarterly
Reports on Form 10-Q for the three months ended as of such date (the "Balance
Sheet").
Pangea maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles, consistently applied
("GAAP"), to maintain asset accountability and to provide reasonable assurance
regarding the reliability of financial reporting, (iii) access to assets is
permitted only in accordance with management's general or specific
authorization, (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate actions are taken with
respect to any differences and (v) accounts, notes and other receivables and
inventory are recorded accurately, and proper and adequate procedures are
implement to collect such accounts, notes and receivables on a timely basis.
There are no significant deficiencies or material weaknesses in the design or
operation of internal controls over financial reporting that are reasonably
likely to adversely affect Pangea's ability to record, process, summarize and
report financial information.
Neither Pangea, nor any officer or employee (including any employee director) of
Pangea, and, to the knowledge of Pangea, no non-employee director, auditor,
accountant, attorney or representative of Pangea has received or otherwise had
or obtained knowledge of (i) any written complaint, allegation, assertion or
claim regarding the accounting or auditing practices, procedures, methodologies,
or methods of Pangea or its internal accounting controls, including any
complaint, allegation, assertion or claim that Pangea has engaged in
questionable accounting or auditing practices, or (ii) any fraud, whether or not
material, that involves management or other employees of Pangea who have a
significant role in Pangea's internal controls.
No attorney representing Pangea, whether or not employed by Pangea, has
reported evidence of a violation of securities laws, breach of fiduciary duty or
similar violation by Pangea or any of its officers, directors, employees or
agents.
2.9 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since the date of the
Balance Sheet, there has not been:
(a) Financial Change. Any adverse change in the financial condition,
operations, business prospects, employee relations, customer relations, assets,
liabilities (accrued, absolute, contingent, or otherwise) or income of Pangea,
or the business of Pangea as continued by Pangea, from that shown on the
Financial Statements;
(b) Dividends, Etc. Any declaration, setting aside, or payment of any
dividend or other distribution in respect of the Capital Stock, or any direct or
indirect redemption, purchase, or any other acquisition of any such stock;
(d) Incurrence of Debt. Any borrowing of, or agreement to borrow any
funds or any debt, obligation, or liability (absolute or contingent) incurred by
Pangea (whether or not presently outstanding) except current liabilities
incurred, and obligations under agreements entered into in the ordinary course
of business;
(e) Creation of Liens. Any mortgage, pledge, lien, security interest,
charge, claim or other encumbrance created on or in any of Pangea' properties or
assets, except liens for current taxes not yet due and payable;
(f) Assets. Any sale, assignment, or transfer of Pangea' assets,
except in the ordinary course of business, any cancellation of any debts or
claims owed to Pangea, any capital expenditures or commitments therefor
exceeding in the aggregate $1,000, any damage, destruction or casualty loss
exceeding in the aggregate $1,000 (whether or not covered by insurance), or any
charitable contributions or pledges;
(g) Material Contracts. Any amendment or termination of any contract,
agreement, license, or arrangement to which Pangea is or was a party or to which
any properties or assets of Pangea are or were subject, which amendment or
termination has had, or may be reasonably expected to have, an adverse effect on
the financial condition, properties, assets, liabilities (accrued, absolute,
contingent, or otherwise), or income of Pangea, or the business of Pangea as
continued by Pangea;
(h) Compensation Changes. Any increase in the compensation, rate of
compensation, or commission payable or to become payable by Pangea to any of its
officers, directors, employees, or agents, or any change in any then existing
bonus, profit-sharing, pension, stock option, retirement, or other similar plan,
agreement, or arrangement, or any adoption of or entering into of any new bonus,
profit sharing, pension, stock option, retirement, group life or health
insurance, or other similar plan, agreement, or arrangement, or any accrual,
arrangement for, or payment of any severance or termination pay to any present
or former officer, director, or key employee of Pangea;
(i) Other Material Changes. Any other material transaction by Pangea
outside the ordinary course of business or any other event or condition
pertaining to, and adversely affecting the operations, assets, liabilities
(accrued, absolute, contingent, or otherwise) or income of Pangea, or the
business of Pangea as continued by Pangea; or
(j) Payments to Affiliates. Any payment of any nature to any affiliate
of Pangea, including, without limitation, any director, officer or stockholder
of Pangea.
2.10 ASSETS. Pangea has good and indefeasible title to all of its
properties, interests in properties, and assets, real and personal, reflected in
the Balance Sheet, free and clear of all mortgages, liens, pledges, charges, or
encumbrances of any nature whatsoever, except (a) liens and encumbrances
expressly disclosed in the Balance Sheet, and (b) liens for current taxes not
yet due and payable.
2.11 CONTRACTS. Pangea is not a party to any written or oral lease,
contract, agreement, arrangement or commitment, whether or not made in the
ordinary course of business, that either (a) involves or may involve aggregate
payments by of Pangea exceeding $1,000 per year except as have been provided to
Avstar; (b) is not by its terms terminable at will by Pangea without premium or
penalty, or (c) otherwise materially adversely affect or, to the knowledge of
Pangea, might materially adversely affect the financial condition, property,
assets, liabilities (accrued, absolute, contingent, or otherwise), or revenues,
of business heretofore conducted by Pangea. All leases, contracts, agreements,
arrangement or commitments to which Pangea is a party are in good standing,
valid, and effective. There is not, under any such lease, contract, agreement,
arrangement or commitment, any existing or prospective default or event of
default by Pangea or event which with notice or lapse of time, or both would
constitute a default and in respect to which Pangea has not taken adequate steps
to prevent a default from occurring; and, to the knowledge of Pangea, no other
party to any such lease, contract, agreement, arrangement or commitment, is in
default or breach thereof nor has any event occurred which with notice or lapse
of time would constitute a breach or default of any of such lease, contract,
agreement, arrangement or commitment.
2.12 PERMITS. Pangea holds all licenses, permits and authorizations
required to carry on its business and licenses, permits and authorizations are
in good standing. Pangea is in full compliance with and not in default or
violation with respect to any term or provision of any of its licenses, permits
and authorizations. No notice of pending, threatened, or possible violation or
investigation in connection with, or loss of, any license, permit, or
authorization of Pangea, has been received by Pangea. Pangea has no knowledge
that the issuance of such a notice is being considered or of any facts or
circumstances which form the basis for the issuance of such a notice. No
license, permit, or authorization of Pangea is affected by the transactions
provided for herein or contemplated hereby.
2.13 EMPLOYEES.
(a) Pangea is not a party as an employer to any employment contract,
agreement or understanding which is not terminable at will without any penalty,
liquidated damages or other required payment;
(b) Pangea has satisfied all salaries, wages, unemployment insurance
premiums, worker compensation payments, income tax, FICA and other deductions
and any like payments required by law; and
(c) Pangea employees are not unionized, and to the knowledge of Pangea,
there have not been attempts to unionize them.
(d) Pangea has never maintained or contributed to any "employee benefit
plan," as such term is defined in the Employee Retirement Income Security Act of
1974, as amended, and Pangea has never maintained or contributed to any
"multiemployer plan," as defined in such act.
2.14 LITIGATION. There is no pending suit, action, or legal,
administrative, arbitration, or other proceeding or governmental investigation
to which Pangea is a party or which adversely affects or might adversely affect
Pangea. Pangea is not in default with respect to any judgment, order, writ,
injunction, decree, or award applicable to it of any court or other governmental
instrumentality or arbitrator. There is no action, suit, proceeding, or claim
pending or, to the knowledge of Pangea, threatened against Pangea by persons not
a party to this Agreement wherein an unfavorable decision, ruling, or finding
would render unlawful or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement.
2.15 COMPLIANCE WITH LAW. Pangea is not in violation of, or in default
with respect to, or in alleged violation of or alleged default with respect to,
any applicable law, rule, regulation, permit, or any writ or decree of any court
or any governmental commission, board, bureau, agency, or instrumentality,
including without limitation, any laws, ordinances, rules, regulations, permits,
or orders relating to the business of Pangea, or the business operations and
practices, health and safety, and employment practices of Pangea. Pangea is not
delinquent with respect to any report required to be filed with any governmental
commission, board, bureau, agency, or instrumentality, or with any trade
association or certification organization that has in the past certified or
endorsed the business of Pangea. Pangea is not delinquent with respect to any
reports required by private covenants or agreements to which it is a party.
2.16 TAXES. Complete, proper and accurate federal, state and other
appropriate jurisdictional tax returns have been timely filed with appropriate
governmental agencies by Pangea for each period for which any returns were due.
All taxes shown by such returns to be due and payable have been timely paid. No
extension of time or waiver of any statute of limitations with respect to
federal, state, or other political subdivision income or other tax for any
period, is currently in effect. Pangea has not received any notice of
deficiency or assessment issued or proposed deficiency or assessment by the
Internal Revenue Service or any other taxing authority. There is no pending
audit or inquiry of Pangea.
2.17 ENVIRONMENTAL MATTERS.
(a) Pangea is in compliance with all applicable federal, state and
local laws and regulations relating to pollution control and environmental
contamination including, but not limited to, all laws and regulations governing
the generation, use, collection, treatment, storage, transportation, recovery,
removal, discharge or disposal of Hazardous Materials (as defined below) and all
laws and regulations with regard to record keeping, notification and reporting
requirements respecting Hazardous Materials;
(b) Pangea has not received any notice from any governmental agency
with respect to any alleged violation by it of any applicable federal, state or
local environmental or health and safety statutes and regulations in connection
with Pangea's operations, nor does Pangea know of any basis for any
investigation or proceeding against it by any federal, state or local
environmental or health and safety enforcement agency in connection with the
operation of the business;
(c) Pangea has not been alleged to be in violation of, or has been
subject to any administrative or judicial proceeding pursuant to, such laws and
regulations, either now or at any time during the past five years, and so far as
Pangea is aware, there are no such threatened or proposed violations with
respect to such locations;
(d) There are no permits, licenses, consents, filings or other
approvals necessary or required to be obtained or made by laws and regulations
relating to Hazardous Material, pollution controls and environmental
contamination in connection with Pangea's business;
(e) Pangea is not a party to any contract or other agreement relating
to the storage, transportation, treatment or disposal of Hazardous Materials;
(f) There are no claims or facts or circumstances that Pangea
reasonably believes could form the basis for the assertion of any claim relating
to environmental matters involving Pangea, including, but not limited to, any
claim arising from past or present practices of the business of Pangea, or with
respect to properties now or previously owned or leased, as asserted under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
42 U.S.9601-9657 and any amendments thereto ("CERLA"), or the Resource
Conservation and Recovery Act, 42 U.S. 6901-6987 and any amendments thereto
("RCRA"), any other federal, state or local environmental statute, or the
generation, use, treatment, disposal, discharge, ownership, operation,
transportation, storage of Hazardous Materials, or any other related act or
omission of Pangea;
(g) Pangea is not subject to any remedial obligation under applicable
law or administrative order or decree pertaining to environmental, health or
safety statutes or regulations, including, without limitation, CERLA, RCRA or
any similar state statute;
(h) Pangea has determined that no Hazardous Material or other
substances known or suspected to pose a threat to health or the environmental
have been disposed of or otherwise released on or near any real property or
improvements of Pangea, and there are no off-site locations where Hazardous
Materials associated in any way with Pangea have been generated, used,
collected, treated, stored, transported, recycled, discharged or disposed of;
and
(i) To the best of any of the Pangea's knowledge and belief, after
diligent investigation and inquiry, no real property is owned or leased by
Pangea that is on any federal or state "Superfund" list or subject to any
environmentally related liens, and no claim has been made or threatened alleging
damages arising from any Hazardous Materials or other substances known or
suspected to pose a threat to health or the environment.
The term "Hazardous Materials" shall mean materials, substances, waste or
by-products defined as "hazardous substances", "hazardous wastes" or "solid
wastes" in CERLA, RCRA or any other federal, state or local environmental
statute or regulation or any unwholesome toxic or radioactive material. For the
purposes of this representation and warranty, the term "claim" shall mean any
and all claims, demands, causes of action, suits, proceedings, administrative
proceedings, losses, judgments, decrees, debts, damages, liabilities, costs, and
attorneys' fees and other expenses regarding or against the assets of Pangea.
2.18 FINDER'S FEES; CERTAIN EXPENSES. All negotiations relative to
this Agreement and the transactions contemplated hereby have been carried on by
Pangea, and their counsel directly with AvStar and its counsel, without the
intervention of any other person as the result of any act of any of them, and as
far as is known to Pangea, without the intervention of any other person in such
manner as to give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder's fee, or any similar payment.
2.19 TRANSACTIONS WITH AFFILIATED PARTIES. There are no transactions
currently engaged in between Pangea and any party affiliated with Pangea (other
than transactions inherent in the normal capacities of shareholders, officers,
directors, or employees). Except for the ownership of non-controlling interests
in securities of corporations the shares of which are publicly traded, no party
affiliated with Pangea has any investment or ownership interest, directly,
indirectly, or beneficially, in any competitor or potential competitor, major
supplier, or customer of Pangea.
2.20 UNTRUE STATEMENTS. This Agreement, the schedules and exhibits
hereto, and all other documents and information furnished by Pangea or its
representatives pursuant hereto or in connection herewith do not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made herein and therein not misleading or otherwise.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF AVSTAR
AvStar hereby represents, warrants, and agrees to and with Pangea, that:
3.1 ORGANIZATION AND STANDING OF AVSTAR. AvStar is a corporation duly
organized, validly existing, and in good standing under the laws of the state of
Texas. AvStar has full requisite corporate power and authority to carry on its
business as it is now being conducted, and to own, operate, and lease the
properties now owned, operated, or leased by it. AvStar is duly authorized and
qualified to carry on its business in the manner as now conducted in state in
which authorization and qualification is required. AvStar has made available to
Pangea true, correct and complete copies of the contents of its minute book,
which are accurate in all respects and set forth fully and fairly all of
AvStar's transactions.
3.2 CAPACITY TO ENTER INTO AGREEMENT. AvStar has full right, power and
authority to execute and deliver this Agreement and all other agreements,
documents and instruments to be executed in connection herewith and perform such
its obligations hereunder and thereunder. The execution and delivery by AvStar
of this Agreement and all other agreements, documents and instruments to be
executed by AvStar in connection herewith have been authorized by all necessary
action by AvStar. When this Agreement and all other agreements, documents and
instruments to be executed by AvStar in connection herewith are executed by
AvStar and delivered to AvStar, this Agreement and such other agreements,
documents and instruments will constitute the valid and binding agreements of
AvStar or enforceable against AvStar in accordance with their respective terms.
3.3 CONFLICTS. The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
AvStar is a party or by which AvStar is bound or by which any of the assets of
AvStar is bound or affected, (b) violate any judgment against, or binding upon,
AvStar or upon the assets of AvStar, (c) result in the creation of any lien,
charge or encumbrance upon any assets of AvStar pursuant to the terms of any
such contract, or (d) violate any provision in the charter documents, bylaws or
any other agreement affecting the governance and control of AvStar.
3.4 CONSENTS. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by
AvStar.
3.5 LITIGATION. There is no action, suit, proceeding, or claim pending
or, to the knowledge of AvStar, threatened against AvStar by persons not a party
to this Agreement wherein an unfavorable decision, ruling, or finding would
render unlawful or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement.
3.6 FINDER'S FEES. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by AvStar and its counsel
directly with Pangea, and its counsel, without the intervention of any other
person as the result of any act by AvStar, and so far as is known to AvStar,
without the intervention of any other person in such manner as to give rise to
any valid claim against any of the parties hereto for a brokerage commission,
finders' fee, or any similar payment.
3.7. SECURITIES REPRESENTATIONS. AvStar believes that it is familiar
with the business and financial condition, properties, operations and prospects
of Pangea, has been given full access to all material information concerning the
condition, properties, operations and prospects of Pangea, and it has had an
opportunity to ask such questions of, and to receive such information from,
Pangea as it has desired and to obtain any additional information necessary to
verify the accuracy of the information and data received; it has such knowledge,
skill and experience in business, financial and investment matters so that it is
capable of evaluating the merits and risks of an acquisition of the shares of
the Pangea Series A Preferred Stock being acquired pursuant hereto; it has
reviewed its financial condition and commitments and that, based on such review,
it is satisfied that it (a) has adequate means of providing for contingencies,
(b) has no present or contemplated future need to dispose of all or any of
shares of the Pangea Series A Preferred Stock being acquired pursuant hereto to
satisfy existing or contemplated undertakings, needs or indebtedness, (c) is
capable of bearing the economic risk of the ownership of shares of the Pangea
Series A Preferred Stock being acquired pursuant hereto for the indefinite
future, and (d) has assets or sources of income which, taken together, are more
than sufficient so that it could bear the loss of the entire value of shares of
the Pangea Series A Preferred Stock being acquired pursuant hereto; it is
acquiring shares of the Pangea Series A Preferred Stock being acquired pursuant
hereto solely for its own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution of shares of
the Pangea Series A Preferred Stock being acquired pursuant hereto; it
understands that shares of the Pangea Series A Preferred Stock being acquired
pursuant hereto has not been registered under the Securities Act of 1933 or any
state securities laws and therefore shares of the Pangea Series A Preferred
Stock being acquired pursuant hereto is "restricted" under such laws; and it has
not offered or sold any portion of shares of the Pangea Series A Preferred Stock
being acquired pursuant hereto and has no present intention of reselling or
otherwise disposing of any portion of shares of the Pangea Series A Preferred
Stock being acquired pursuant hereto either currently or after the passage of a
fixed or determinable period of time or upon the occurrence or non-occurrence of
any predetermined event or circumstance.
ARTICLE 4
COVENANTS
4.1 CONDUCT OF BUSINESS OF PANGEA. Except as contemplated by this
Agreement, during the period from the date hereof to the Closing, unless
otherwise agreed to in writing by AvStar, Pangea shall conduct its business in
the ordinary course consistent with past practice and shall use reasonable
efforts to preserve intact its business. Without limiting the generality of the
foregoing, except as otherwise contemplated by this Agreement or as otherwise
agreed to in writing by AvStar, prior to the Closing, Pangea shall not (a)
issue, sell or pledge, or authorize or propose the issuance, sale or pledge of
(i) any shares of Capital Stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
Capital Stock, or any options, warrants, calls, rights, commitments or any other
agreements of any character to purchase or acquire any shares of Capital Stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any such shares of Capital Stock, or grant or
accelerate any right to convert or exchange any securities of Pangea for Capital
Stock, or (ii) any other securities in respect of, in lieu of, or in
substitution for, shares of Capital Stock outstanding on the date hereof; (b)
redeem or otherwise acquire, or propose to redeem or otherwise acquire, any of
the outstanding equity securities of Pangea; (c) declare, set aside or pay any
dividend or other distribution in respect of any shares of Capital Stock; (d)
make any acquisition, by means of a merger or otherwise, of a material amount of
assets or securities, other than acquisitions in the ordinary course consistent
with past practice; (e) agree to any sale, lease, encumbrance or other
disposition of a material amount of assets or securities or any material change
in its capitalization, other than sales or other dispositions in the ordinary
course consistent with past practice; (f) enter into any material contract other
than in the ordinary course of business or agree to any release or
relinquishment of any material contract rights; (g) incur any long-term debt or
short-term debt for borrowed money except for debt incurred in the ordinary
course consistent with past practice; (h) propose or adopt any amendments to its
Certificate of Incorporation or Bylaws; (i) enter into any new employment,
consulting, severance or indemnification agreement with any officer, director or
key management employee; or (j) agree in writing or otherwise to take (i) any of
the foregoing actions or (ii) any action which would make any representation or
warranty of Pangea herein untrue or incorrect in any material respect.
4.2 ACQUISITION PROPOSALS. From and after the date hereof, Pangea shall
not, directly or indirectly, and shall instruct its officers, directors,
employees, agents or advisors or other representatives or consultants not to,
directly or indirectly, solicit or initiate any proposals or offers from any
person relating to any acquisition or purchase of all or a material amount of
the assets of, or any securities of, or any merger, consolidation or business
combination with, Pangea.
4.3 ACCESS TO INFORMATION AND CONFIDENTIALITY. Between the date hereof
and the Closing, each of Pangea and AvStar agrees that it shall (a) give to the
other party and its authorized representatives such access during regular
business hours to the covenantor's books, records, properties, personnel and to
such other information as the other party reasonably request and shall instruct
the other party's independent public accountants to provide access to their work
papers and such other information as the other party may reasonably request, and
(b) cause the covenantor's officers to furnish the other party with such
financial and operating data and other information with respect to the business
and properties of the covenantor's as the other party may reasonably request.
Neither party shall disclose to any third person (other than its
accountants, attorneys, consultants, employees, agents and other representatives
for purposes of evaluating the Exchange), except as may be required by
applicable law, any information obtained pursuant to this Agreement or otherwise
in contemplation of the Exchange at any time, unless such information is
otherwise already known by the party or is generally available to the public, or
hereafter is disclosed to the party by a person who did not have an obligation
not to disclose such information or hereafter becomes generally available to the
public. In the event that the Exchange is not consummated by the Closing Date
as it may be hereafter extended, each party shall promptly return all nonpublic
information, documents and other written information containing information
obtained pursuant to this Agreement, including any item obtained in any
investigation permitted pursuant to this Agreement, and any copies thereof.
Each party shall require its accountants, attorneys, consultants, employees,
agents and other representatives not to disclose such information, unless
required by applicable law.
4.4 BEST EFFORTS. Upon the terms and subject to the conditions hereof,
all of the parties hereto agree to use their best efforts to take, or cause to
be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement and to cooperate in connection with the
foregoing, including using best efforts (a) to obtain any necessary waivers,
consents and approvals from other parties to material notes, licenses,
agreements, and other instruments and obligations; (b) to obtain any material
consents, approvals, authorizations and permits required to be obtained under
any federal, state or local statute, rule or regulation; (c) to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby; and (d) promptly to effect
all necessary filings and notifications. In case at any time after the Closing
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of Pangea or AvStar or both shall
take all such.
4.5 BOARD OF DIRECTORS. At the Closing, the Board of Directors of
Pangea shall be expanded to a total of four seats, and Thomas Mathewshall be
elected to the expanded Board of Directors. Moreover, at the Closing, all of
Pangea's then current officers shall resign from all offices that they
respectively hold with Pangea. Subject to full compliance with all applicable
laws, rules and regulations (including, without limitation, Section 14(f) of and
Rule 14f-1 under the Securities Exchange Act of 1934), Edward Skaggs shall
resign from his seat on such Board of Directors. Pangea shall take, at its
expense, all action necessary to effect any such election, including mailing to
its stockholders the information required by Section 14(f) of and Rule 14f-1
under the Securities Exchange Act of 1934 (the "Exchange Act"). In addition and
in connection with the Exchange, AvStar agrees to enter into a Voting Agreement
(in form satisfactory to AvStar) providing that, for one year after the
Effective Date, AvStar shall cast all votes it has with respect to their Pangea
Series A Preferred Stock in favor of Alan Premel or his designee for a single
seat on the Board of Directors of Pangea in any election of board members.
4.6 AMENDMENT TO PANGEA'S ARTICLES OF INCORPORATION. As soon after the
Closing as is believed advisable, Pangea shall take, at its expense, all action
necessary to effect amendments to its Articles of Incorporation to effect (a) a
change in Pangea's corporate name to "AvStar Aviation Services, Inc." and (b) a
one-for-100 reverse split of the Pangea's common stock, so that the number of
issued and outstanding shares of common stock (considered on a fully diluted
basis) shall be decreased from approximately 500,000,000 on a pre-split basis to
approximately 5,000,000 on a post-split basis, prior to the conversion of the
Pangea Series A Preferred Stock. The action required of Pangea shall include
mailing to Pangea's stockholders the proxy statement or written consent
solicitation statement required by Section 14 under the Exchange Act.
4.7 CURRENT PANGEA ASSETS. Prior to Closing or as soon thereafter as
is possible, Pangea will form a new, wholly-owned Texas subsidiary corporation
into which all of Pangea's pre-Exchange businesses, operations and assets shall
be contributed.
4.8 PRESS RELEASES. Pangea and AvStar will seek to consult with each
other before issuing any press release or otherwise making any public statement
with respect to the transactions contemplated hereby.
ARTICLE 5
SURVIVAL
The representations and warranties made in Articles 2 and 3 hereof shall
not survive the Closing of the Exchange. Except for those covenants and
agreements that by their terms contemplate performance after the Closing of the
Exchange, all covenants and agreements set forth herein shall not survive the
Closing of the Exchange. This Article 5 shall not limit the term of any
covenant or agreement which by its terms contemplates performance after the
Closing of the Exchange.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 CONDITIONS TO THE PARTIES' OBLIGATIONS TO CLOSE. The respective
obligations of AvStar and Pangea to enter into the Exchange are subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the Exchange shall have
been authorized and approved by the shareholders of AvStar in accordance with
the provisions of Section 5.03 of the Texas Business Corporation Act.
(b) LITIGATION. As of the Closing, no action, suit or proceeding shall
have been instituted or, to the knowledge of the parties, be pending or
threatened before any court or other governmental body by any public agency or
governmental authority seeking to restrain, enjoin or prohibit the consummation
of the transactions contemplated hereby or to seek damages or other relief in
connection therewith against any officer or director of AvStar or Pangea.
(c) THIRD PARTY CONSENTS. All third party and other consents required
for the Exchange shall have been obtained; and
(d) DUE DILIGENCE. The business, legal, technical and financial due
diligence of each party of the other shall have been completed and shall be
satisfactory to each party in its sole discretion; and
(e) NO MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change in the financial condition, operations, business prospects,
employee relations, customer relations, assets, liabilities (ac-crued, absolute,
contingent, or otherwise) or income of either AvStar or Pangea, or the busi-ness
of either AvStar or Pangea; and
(f) SECURITIES EXEMPTION. The legal research and analysis as to the
availability and anticipated perfection of exemptions from all applicable
Federal and state securities offering registration requirements relating to the
issuance of the Pangea Series A Preferred Stock in connection with the Exchange
shall have been completed and shall be satisfactory to Pangea and AvStar in
their sole discretion.
6.2 FURTHER CONDITIONS TO AVSTAR'S OBLIGATIONS TO CLOSE. The
obligations of AvStar to enter into the Exchange are further subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) each of the representations and warranties of Pangea contained in
this Agreement shall be true and correct in all respects at and as of the
Closing as if each such representation and warranty were made at and as of the
Closing, Pangea shall have performed in all respects all agreements and
covenants required by this Agreement to be performed by it prior to or at the
Closing, and at the Closing there shall be delivered to AvStar customary
bring-down certificates (each dated as of the Closing, signed by Pangea and
Pangea) to the foregoing effects; and
(b) each and every officer and director of Pangea shall have signed a
release document in form satisfactory to AvStar.
(c) Pangea shall have satisfied all of its periodic reporting requirements
with the SEC through the date of the Exchange; and
(d) Pangea shall have not have liabilities exceeding $$758,084.05 for Notes
Payable which continue to accrue interest plus the $100,000 that extinguishes
all short term debt as of the Closing Date; and
(e) Pangea shall have delivered its minute books and other corporate
records to H.L. Schulle; and
(f) Dissenters' rights shall have been exercised with respect to no
more than five percent (5%) of the outstanding shares of AvStar Common Stock.
6.3 FURTHER CONDITIONS TO PANGEA'S OBLIGATIONS TO CLOSE. The
obligations of Pangea to enter into the Exchange are further subject to the
satisfaction at or prior to the Closing of the following conditions
(a) that each of the representations and warranties of AvStar contained
in this Agreement shall be true and correct in all respects at and as of the
Closing as if each such representation and warranty were made at and as of the
Closing, AvStar shall have performed in all respects all agreements and
covenants required by this Agreement to be performed by it prior to or at the
Closing, and at the Closing there shall be delivered to Pangea customary
bring-down certificates (each dated as of the Closing, signed by AvStar) to the
foregoing effects; and
(b) AvStar shall have $100,000 in cash to satisfy expenses of Pangea.
ARTICLE 7
ABANDONMENT OF EXCHANGE
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement may be terminated and the Exchange abandoned at any time prior to the
Closing, whether before or after adoption and approval of this Agreement by the
shareholders of AvStar:
(a) By mutual consent of the Boards of Directors of AvStar and
Pangea; or
(b) By the Board of Directors of AvStar if any of the conditions
set forth in Section 6.1 or 6.2 are not satisfied in any respect or waived by
AvStar on or before the Closing, or if the Closing has not occurred before the
end of December 31, 2008, other than due to a breach of this Agreement by
AvStar; or
(c) By the Board of Directors of Pangea if any of the conditions
set forth in Section 6.1 or 6.3 are not satisfied in any respect or waived by
the Pangea on or before the Closing, or if the Closing has not occurred before
the end of business hours on December 31, 2008, other than due to a breach of
this Agreement by Pangea; or
(d) By the Board of Directors of AvStar, if such Board of
Directors determines that the consummation of the transaction provided for
herein would not, for any reason, be in the best interests of AvStar and its
shareholders.
ARTICLE 8
MISCELLANEOUS PROVISIONS
8.1 COMPLETE AGREEMENT. This Agreement contains a complete and
exclusive statement of the agreement of the parties with respect to the subject
matter hereof, and all prior negotiations and agreements between the parties are
superseded by this Agreement.
8.2 WAIVER AND AMENDMENT. Any representation, warranty, covenant, term
or condition of this Agreement which may legally be waived, may be waived, or
the time of performance thereof extended, at any time by the party entitled to
the benefit thereof, and any term, condition or covenant hereof (including,
without limitation, the period during which any condition is to be satisfied or
any obligation performed) may be amended by the parties at any time. Any
waiver, extension or amendment shall be evidenced by any instrument in writing
executed on behalf of the appropriate party or parties or on its behalf by its
Chairman, President or any Vice President or other person who has been
authorized by its Board of Directors to execute waivers, extensions or
amendments on its behalf.
8.3 ASSIGNMENT; BINDING EFFECT. This Agreement may not be assigned by
either party without the written consent of the other party. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
8.4 NOTICES. Any notice, demand, claim or other communication under
this Agreement shall be in writing and shall be deemed to have been given upon
the delivery or mailing thereof, as the case may be, if delivered personally or
sent by certified mail, return receipt requested, postage prepaid, to the
parties at such address as a party may specify by notice to the other.
8.5 GOVERNING LAW. AS TO ALL MATTERS OF LAW, THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH TEXAS LAW, REGARDLESS OF THE LAWS
THAT MIGHT OTHERWISE BE APPLICABLE UNDER PRINCIPLES OF CONFLICTS OF LAW.
8.6 HEADINGS. Any headings in this Agreement are solely for convenience
of reference and shall not affect its interpretation.
8.7 EXECUTION OF COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
8.8 SEVERABILITY. If any provision of this Agreement is held or deemed
to be, or in fact is, invalid, inoperative or unenforceable for any reason, this
Agreement shall be construed as though such invalid, inoperative or
unenforceable provision had never been contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
"PANGEA"
PANGEA PETROLEUM CORPORATION,
a Colorado corporation
By:/s/ Alan Premel
Name: Alan Premel
Title: President
"AVSTAR"
AVSTAR AVIATION SERVICES, INC.,
a Texas corporation
By: /s/ Thomas Mathew
Name: Thomas Mathew
Title: President and Chief Executive Officer