Exhibit 2.01
AGREEMENT OF STOCKHOLDERS TO SELL STOCK
OF MAXCO OIL CO., INC.
This Agreement, entered into this 22 day of August 2001 is by and between James
G. Maxey, James R. Leavy, and H. Thomas Cotter, individually and collectively
referred to as ("Shareholders") and Mid-Power Resource Corporation, a Nevada
corporation ("MPRC").
RECITALS
WHEREAS, on April 6, 2001, MaxCo Oil Co. ("MaxCo") presented an interest in
consummating a transaction with MPRC regarding a sale of a portion of the stock
of MaxCo Oil Co., Inc.
WHEREAS, MaxCo Oil Co., Inc. and MPRC entered into a Letter of Intent to outline
the terms of a transaction for the sale of a percentage of MaxCo to MPRC;
WHEREAS, MPRC desires to buy and the Shareholders are all the shareholders of
MaxCo and they desire to sell seventy percent of their shares of MaxCo to MPRC
in exchange for monies and stock of MPRC;
WHEREAS, as an inducement to MPRC to enter into this Agreement, James G. Maxey
and H. Thomas Cotter have entered into employment agreements, attached hereto as
Exhibits A and B, respectively, to this Agreement.
In consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. MPRC shall pay to Shareholders the sum of Four Hundred Fifty Thousand
Dollars ($453,000.00) for their purchased shares of MaxCo as provided
hereinbelow.
2. MPRC shall be prepared to loan to MaxCo, when it would be reasonably
commercially feasible, the sum of One Million Dollars ($1,000,000.00).
3. The Shareholders, except for James R. Leavy, represent and warrant to
MPRC:
a. that MaxCo is a corporation duly formed, validly existing and
in good standing under the laws of the State of Nevada, and
has all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its
business as now being conducted; and
b. that no action at law or in equity and no other proceedings
whatsoever, has ever been instituted against MaxCo, nor has
any action or proceeding now pending, to dissolve MaxCo, or to
declare its corporate rights, powers, franchises or
privileges, or any of them, to be null and void, or to declare
that it, or its Board of directors, or any of its Directors,
Offices, agents, have exceeded or violated any of its
corporate rights, powers, franchises, or privileges, or to
obtain any decree, order, judgment or other judicial
declaration or ruling that will or may impair, impeded or
detract from any of the corporate rights, powers, franchises,
or privileges, or any of them, now vested in MaxCo; and
c. that MaxCo has an authorized capital stock of Two Thousand
Five Hundred (2,500) no par shares which includes One Thousand
(1,000) shares of common stock, without par value, all fully
paid and non-assessable; that the One Thousand (1,000) shares
of common stock have been duly issued for full, adequate and
valuable consideration and are now outstanding; and that the
Shareholders are the complete and lawful owners of all
existing shares of common stock; and that no other stock of
MaxCo exists and/or has been issued; and
d. that MaxCo has duly paid any and all franchise or annual
corporation taxes, fees, duties or charges, levied, assessed
or imposed upon it, or any of its property, of whatsoever kind
and description; and
e. that all income taxes, unemployment, social security and all
other taxes, fees and charges levied, assessed or imposed upon
MaxCo by the United States, or any State, or governmental
sub-division have been duly paid; and
f. that the financial statements attached to as Exhibit C
constitute, but are not limited to, a current balance sheet
and Income and Expense Statement and Profit and Loss
Statements, show all its assets and liabilities as of June 30,
2001 and that there has been no substantial material change in
the financial condition of MaxCo since June 30, 2001; it being
expressly understood that any difference not in excess of
$50,000.00 in the amount of its assets and a difference on an
excess of $25,000.00 of its liabilities shall not be deemed to
be a material change in the financial change of MaxCo; and
g. the financial records of MaxCo are true and correct, and that
all monies due, or to become due, from or to MaxCo, by reason
of any matter, cause, thing, or transaction whatsoever, have
been duly entered therein; and that the Shareholders agree to
hold harmless MaxCo from any and all monies due, or to become
due, by reason of any matter whatsoever, initiated or accrued
prior to the date hereof, and respective which no entry has
been made in any books of account of MaxCo; and
h. that the minute book of MaxCo contains a complete and accurate
record of any and all meetings and/or proceedings and/or
actions of the Shareholders and/or of the Board of Directors
of MaxCo; and the Shareholders agree to save and hold harmless
MaxCo and MPRC from any and all claims, and suits, arising out
of any matter whatsoever, initiated or accrued prior to the
date hereof, and respective of which an entry has not been
made in the minute book of MaxCo.
4. MPRC represents and warrant to Shareholders:
a. that MPRC is a corporation duly formed, validly existing and
in good standing under the laws of the State of Nevada, and
has all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its
business as now being conducted; and
b. that no action at law or in equity and no other proceedings
whatsoever, has ever been instituted against MPRC, nor has any
action or proceedings now pending, to dissolve MPRC, or to
declare its corporate rights, powers, franchises or
privileges, or any of them, to be null and void, or to declare
that it, or its Board of Directors, or any of its Directors,
Offices, agents, have exceeded or violated any of its
corporate rights, powers, franchises, or privileges, or to
obtain any decree, order, judgment or other judicial
declaration or ruling that will or may impair, impede or
detract from any of the corporate rights, powers, franchises,
or privileges, or any of them, now vested in MPRC; and
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c. that MPRC has sufficient authorized capital and capital stock
to funds this merger as provided herein; and
d. MPRC has duly paid any and all franchise or annual corporation
taxes, fees, duties or charges, levied, assessed or imposed
upon it, or any of its property, of whatsoever kind and
description.
5. James G. Maxey agrees to sell to MPRC and MPRC agrees to purchase from
James G. Maxey Three Hundred (300) shares of common stock of MaxCo,
together with all dividends, incomes, and issues and rights therefrom,
and all rights of preemption pursuant to the terms provided
hereinbelow.
6. James R. Leavy agrees to sell to MPRC and MPRC agrees to purchase from
James R. Leavy One Hundred (100) shares of common stock of MaxCo,
together with all dividends, incomes, and issues and rights therefrom,
and all rights of preemption pursuant to the terms provided
hereinbelow.
7. H. Thomas Cotter agrees to sell to MPRC and MPRC agrees to purchase
from H. Thomas Cotter Three Hundred (300) shares of common stock of
MaxCo, together with all dividends, incomes, and issues and rights
therefrom, and all rights of preemption pursuant to the terms provided
hereinbelow.
8. At the time of transfer of the common stock the Shareholders shall,
respectively, endorse in blank the certificates representing seventy
percent (70%) of their shares of common stock of MaxCo and shall
deliver them to MPRC.
9. The Shareholders and MPRC mutually covenant and agree that, at the time
of transfer of the common stock:
a. there will be no change in the financial condition of MaxCo,
as set forth in its balance sheet of June 30, 2001, and MPRC
except such as may occur in the ordinary and regular conduct
of its business; and
b. that no action or actions, suits or proceedings affecting or
involving MaxCo or MPRC shall be in existence or threatened
except the actions set forth in Exhibit D attached hereto; and
c. there exist no undisclosed liabilities of MaxCo or MPRC,
which, individually or in the aggregate may have a material
affect upon MaxCo's or MPRC's financial condition.
10. The certificates of stock of MaxCo and all other books and documents
referred to herein above shall be delivered to MPRC upon payment to the
Shareholders of the following:
a. 225,000 shares of Mid-Power Service Corporation shall be
retained by MPRC for the benefit of James G. Maxey. Voting
rights in these shares shall be held by James G. Maxey, except
to the extent James G. Maxey assigns those rights. Said
shares, until transferred to James G. Maxey, are not alienable
or subject to encumbrance and the legal owner of said shares
shall remain as MPRC, subject to the rights of James G. Maxey.
Said shares shall be distributed in the following manner. The
transfer of these shares is conditioned upon a minimum of
fourteen (14) of the Arvin area wells, commonly described
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"George Lease" wells, "Durr Lease" wells and others to be
acquired in the Arvin area, becoming commercially productive.
Commercially productive shall be defined, for purposes of this
Agreement, as the production of oil in commercial quantities
sufficient to yield a profit after the expense of production
and maintenance of reserves sufficient to maintain production.
The transfer of the stock to the shareholders shall not
unreasonably be withheld by MPRC.
Upon satisfaction of the condition of production as set forth
hereinabove one half (1/2) of the Mid-Power Service
Corporation shares to be transferred to James G. Maxey shall
be released upon expiration of the legend on the stock
certificates restricting transferability of said shares. An
additional one half (1/2) shall be distributed one year after
the initial distribution.
b. 225,000 shares of Mid-Power Service Corporation shall be
retained by MPRC for the benefit of H. Thomas Cotter. Voting
rights in these shares shall be held by H. Thomas Cotter,
except to the extent H. Thomas Cotter assigns those rights.
Said shares, until transferred to H. Thomas Cotter are not
alienable or subject to encumbrance and the legal owner of
said shares shall remain as MPRC, subject to the rights of H.
Thomas Cotter. Said shares shall be distributed in the
following manner. The transfer of these shares is conditioned
upon a minimum of fourteen (14) of the Arvin area wells,
commonly described "George Lease" wells, "Durr Lease" wells
and others to be acquired in the Arvin area, becoming
commercially productive. Commercially productive shall be
defined, for purposes of this Agreement, as the production of
oil in commercial quantities sufficient to yield a profit
after the expense of production of maintenance reserves of
sufficient to maintain production. The transfer of the stock
to the shareholders shall not unreasonably be withheld by
MPRC.
c. Upon satisfaction of the condition of production as set forth
hereinabove on half (1/2) of the Mid-Power Service Corporation
shares to be transferred to H. Thomas Cotter shall be released
upon expiration of the legend of the stock certificates
restricting transferability of said shares. An additional
one-half (1/2) shall be distributed one year after the initial
distribution.
d.
e. The payment of One Hundred Thousand Dollars to James R. Leavy
for One Hundred (100) shares of MaxCo stock, representing the
totality of Leavy's MaxCo's shares. Payment shall be Fifty
Thousand Dollars ($50,000.00) upon execution of this Agreement
and Fifty Three Thousand Dollars ($53,000.00) one year
thereafter.
f. Three Hundred Fifty Thousand Dollars ($350,000.00) cash, which
shall first be applied to payment of MaxCo's obligations. The
balance if any, shall then be paid to: Shareholders Cotter and
Maxey in the following proportions:
James G. Maxey 50%
H. Thomas Cotter 50%
e. MPRC shall have first right of refusal to purchase the
Mid-Power Service Corporation stock from Shareholder upon the
following terms:
(i) Should Shareholder desire to transfer shares of
Mid-Power Service Corporation, after expiration of
the restrictions of transferability set forth on the
stock certificates, said shares shall first be
offered to MPRC. The price shall be fair market price
of the Mid-Power Service Corporation stock as
determined by the average trading value of the stock
over the prior sixty (60) day period. Such rights as
are set forth in this Section 10e)(i) are intended to
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create additional transferability of the Mid-Power
Service Corporation stock for the benefit of
Shareholder.
(ii) Prior to the elapsing of the period of time as
described in Section 10(a) and (b), MPRC shall have
the right to maintain ownership of the Mid-Power
Service Corporation stock, should a Shareholder
desire to receive cash in lieu of stock for the
purpose of the Shareholder's interest in MaxCo. The
cash value the Shareholder shall receive, upon
election of the Shareholder prior to distribution of
the Mid-Power Service Corporation stock, shall be the
average trading value of the stock over the prior
sixty (60) day period.
(iii) After the period of time has elapsed, as described in
Section 10(a) and (b), and for a period of three
years thereafter, Shareholder may, in lieu of
receiving Mid-Power Service Corporation stock or
cash, elect to allow MPRC to maintain ownership of
the stock, for the beneficial interest of
Shareholders, until such time as Shareholder either
elects to receive the Mid-Power Service Corporation
stock to which Shareholder is entitled, or to receive
cash for said stock. Should Shareholder elect to
receive cash under this Section 10(e)(iii), the cash
value for the mid-Power Service stock shall be the
equivalent of One Hundred and Ten percent (110%) of
the average trading value of the stock over the prior
sixty (60) day period.
11. The representations, warranties, covenants, agreements and guarantees
contained herein, on part of the all parties, shall be deemed and
construed to be continued representations, warranties, covenants,
agreements and guarantees that shall survive the delivery of the shares
of stock. All parties including the stockholders of MaxCo and the
officers and directors of MPRC shall be jointly and severally liable
for any misrepresentation or breach of the representations, warranties,
covenants, agreements and quantities contained herein.
12. Shareholder shall not engage in a business similar to that business
presently conducted by MaxCo, in any capacity, directly or indirectly,
within the State of California for a period of three years from the
date of execution of this Agreement. The covenants contained in this
Section are material inducement to MPRC to enter into this Agreement to
purchase the shares of stock of Shareholder.
13. Miscellaneous Provisions
A. Titles and Headings. Titles and Headings as used in this
Agreement are for convenience and reference only, and the words
contained therein shall in no way be held to explain, modify, amplify
or aid in the interpretation, construction or meaning of any provision.
B. Assignment. This Agreement may not be assigned without the
prior written consent of the parties hereto.
C. Severability of Provisions. If any term or provision of this
Agreement shall be adjudicated to be invalid or unenforceable, the
remainder of the Agreement shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
D. Binding Effect. The terms and provision of this Agreement
shall be binding upon and shall inure to the benefit of the Parties and
their successors and permitted assigns.
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E. Forbearance. Any past or present forbearance on the part of
any party to demand compliance with the terms and conditions of this
Agreement shall in no way be construed as a waiver or defense to
enforcement.
F. Entire Agreement. This Agreement shall constitute the entire
agreement between the parties hereto relating to the subject matter
hereof. No modification of this Agreement or waiver of any provision
hereof shall be binding unless the modification or waiver shall be in
writing and signed by the parties hereto.
G. Governing Law. This Agreement shall be governed by, construed
and enforced in accordance with, the laws of the State of Nevada,
without giving effect to the conflict or choice of law principles
thereof.
H. Attorneys Fees. If any arbitration, litigation, or other legal
proceeding occurs between the parties hereto relating to the
enforcement or interpretation of this Agreement, the prevailing party
shall be entitled to recover (in addition to any other relief awarded
or granted) its reasonable costs and expenses (including attorneys'
fees) incurred in the proceeding.
I. Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed an original, but all of which together
will constitute one and the same instrument. Delivery of the executed
signature pages by facsimile transaction will constitute effective and
binding execution and delivery of this Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by
its officers or employees thereunto duly authorized and directed by appropriate
corporate authority.
Mid-Power Resources Corporation
By: /s/ James W. Scott
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Its: President
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MaxCo Oil Co., Inc.
By: /s/ James G. Maxey
----------------------------
Its: President
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/s/ James G. Maxey
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James G. Maxey
/s/ James R. Leavy 08-15-01
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James R. Leavy
/s/ H. Thomas Cotter
- --------------------------------
H. Thomas Cotter
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