Exhibit 99.1A
Cal Alta Auto Glass, Inc.
#8, 3927 Edmonton Trail, N.E.
Calgary, Alberta T2E T1
May 28, 2007
Mr. Kirk Reed, President & The Board of
Directors of Energy One Resource
Services Inc. Suite 1000, Bankers Hall
West 888 - 3rd Street, S.W. Calgary,
Alberta T2P 5L5
RE: Letter of Intent - Proposed Take-over
Bid for the shares of Energy One Resource Services Inc.
Gentlemen:
Let this Letter of Intent serve to: (a) express the intentions of Cal
Alta Auto Glass, Inc., a Nevada corporation (the "Buyer") to purchase (the
"Acquisition") all of the issued and outstanding capital stock (the "Shares") of
Energy One Resource Services Inc., an Alberta corporation (the "Company") from
the Company's stockholders (the "Sellers"); and (b) supersede and replace all
prior understandings and discussions that we have had regarding the transactions
and matters set forth below.
We understand that all of the Company's issued and outstanding capital
stock consists of the following common stock and all said stock is held by
stockholders who have given you their assurance that they seek to enter into the
transaction contemplated by the Acquisition. As presently contemplated, we
anticipate that a closing (the "Closing") of the Acquisition transaction
contemplated in the definitive agreements for the purchase of the Shares (the
"Definitive Agreements") shall occur on or before 2:00 P.M. (Calgary, Alberta
time), September 7, 2007, at which time the Definitive Agreements will be
executed.
In executing this Letter of Intent, the Buyer acknowledges and confirms
its intentions expressed herein with respect to the proposed transaction, but
(except for the provisions of Paragraphs numbered 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14, and 16 hereof which are intended to be legally binding and enforceable)
this Letter of Intent is not intended to constitute a binding contract or to
create any legal obligations or rights of any party or non-party within any
jurisdiction.
The parties hereto further acknowledge and confirm that they seek to
complete the contemplated Acquisition under Section 368 of the Internal Revenue
Code of 1986, as amended and part 14 of and pursuant to the Securities Act
(Alberta) and all other applicable securities laws in Alberta. Further, and
prior to the close of the Acquisition, the parties acknowledge and agree that
the Buyer shall have the right, at its sole discretion, to divest or make
arrangements for the divestiture, in whole or in part, of the Company's assets
and business operations on such terms as the Buyer may determine with the
consent of the Company (the "Divestiture"). Buyer shall, however, reasonably
consult with and advise the Company of any determinations that it makes with
respect to the terms, timing, and arrangements in connection with any
Divestiture.
In the event the parties fail to execute the Definitive Agreements by
2:00 P.M., (Calgary, Alberta time), September 7, 2007 (the "Closing"),
regardless of the cause or reason, then this Letter of Intent (except for
Paragraphs 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, and 16) shall terminate
automatically and become null and void and of no force or effect as to its
intent without liability on the part of any party (or parties), and without
further action by the parties or any one of them.
At present, on the basis of the information made available to us, we
believe that an agreement can be reached upon the following general terms and
conditions.
1. Delivery of Shares at Closing by Sellers
At Closing (as set forth in Paragraph 6 below), the Company shall cause
each of the Sellers to deliver to Buyer all of the Shares of the
Company owned and held by the Sellers. All said Shares shall be
delivered free of any rights, claims, interests, charges (both legal
and equitable) and encumbrances of any third party (including any that
may be asserted under any marital or community property laws)
("Encumbrances"). The Company shall, upon request of the Buyer, provide
the Buyer with an opinion of its legal counsel that the Shares are and
will be at Closing, free of all said Encumbrances.
(a) No later than ten (10) days prior to Closing, the Company and
each Seller shall confirm the total number of Shares of the
Company that are and will be outstanding at Closing and
provide the Buyer with instructions for the number of shares
of the Buyer's common stock that are to be issued to each of
the Sellers in payment of the pro rata Purchase Price to each
Seller.
2. Consideration for Shares
At Closing and subject to Paragraph 2 of this Letter of Intent, Buyer
shall pay such number of shares of Buyer's common stock (the "Purchase
Price") as the parties may determine for all of the issued and
outstanding Shares of the Company with the amount of the Purchase Price
to be paid to each Seller to be determined by the proportion of the
number of Shares sold by each Seller divided by the total number of
Shares of the Company then outstanding. The parties acknowledge that
the number of shares shall be further negotiated.
3. Conditions to Buyer's Obligations to Closing
The obligations of the Buyer to consummate the Acquisition is subject
to the following conditions:
(a) completion of Buyer's Due Diligence, satisfactory to Buyer (in
its sole and absolute discretion) including, but not limited
to, any pending or threatened litigation or government inquiry
or proceeding which could lead to or result in actions to
enjoin, challenge, require the payment of damages in
connection with the Acquisition, or otherwise result in
additional burdens upon the Buyer as a result of the
Acquisition;
(b) completion of negotiations and execution of the Definitive
Agreements and any and all collateral agreements and third
party consents prior to September 7, 2007, with
representations and warranties, affirmative and negative
covenants customary in transactions of this type;
(c) a formal take-over bid circular filed and prepared in
accordance with applicable securities legislation in Alberta;
(d) receipt by Buyer of approval by all state and federal (and
also provincial) securities regulatory bodies), as may be
needed;
(e) the receipt by Buyer of any consents deemed by Buyer as needed
or necessary to consummate the Acquisition, unless Buyer
waives its right to require any said consents;
(f) completion of negotiations and execution of any other
agreements with one or more Company officers and employees on
terms deemed satisfactory to Buyer;
(g) approval of the Acquisition and all transactions contemplated
or required to effect the Acquisition, by the Board of
Directors of both Buyer and Company (and by the Shareholders
of the Company after the Company's Annual General and Special
Meeting of its Shareholders to occur on or before August 30,
2007);
(h) at Closing, the Company's net working capital (defined as
total current assets minus total current liabilities) shall be
not less than such amount as the Buyer determines, in the
exercise of its reasonable discretion is necessary to ensure
that the Company can meet its financial obligations without
difficulties;
(i) at Closing, the Company's equity (as reflected on its balance
sheet of June 30, 2007 and at closing), shall be not less than
such amount as the Buyer determines, in the exercise of its
reasonable discretion, is necessary to ensure hat the company
can meet its financial obligations without difficulties.
4. Expiration
Unless terminated in a writing signed by both the Buyer and the Seller,
this Letter of Intent and the terms and conditions recited herein,
shall expire at 2:00 P.M., (Calgary, Alberta time) on June 1, 2007.
5. No Solicitation
The Company agrees not to take any of the following action and to cause
each of the Sellers not to solicit interest in, encourage, supply
information in connection with, negotiate, or entertain, directly or
indirectly, any transaction involving: (1) the purchase or acquisition
of the Company or any assets of the Company (except in the ordinary
course of the Company's business); (2) a business combination involving
the Company or affiliate or subsidiary of the Company; (3) the issuance
or sale of any shares of the Company's capital stock, any security
convertible or exchangeable for the purchase of any shares of the
Company's capital stock, or the issuance or sale of any warrant, right,
or option which, upon exercise could result in the issuance or sale of
any shares of the Company's capital stock; (4) the sale of all or any
portion of the business or assets of the Company (except in the
ordinary course of the Company's business); or (5) any combination of
any of them.
6. Closing
The Closing shall occur at the offices of Miller Thomson LLP, counsel
to the Company, at the address on the first page of this Agreement on
or before 2:00 P.M., (Calgary, Alberta time) on September 7, 2007 or
soon thereafter as the parties may mutually agree in writing.
7. Survival of Certain Provisions
Paragraphs 4,5, 6, 7, 8, 9, 10, 11, 12, 13, 14, and 16 herein are
binding upon the parties and shall survive the termination or
expiration of this Letter of Intent for a period of three (3) years
hereafter. This Letter of Intent shall be deemed to obligate, extend to
and inure to the benefit of the successors, assigns, transferees,
grantees, and indemnitees of each of the parties hereto.
8. Warranty of the Company
The Company warrants and represents to the Buyer that each Seller will
have at Closing, the power and authority to enter into the Definitive
Agreements and that the Company has duly authorized the execution and
delivery of this Letter of Intent to the Buyer.
9. Notices
All notices and other communication shall be furnished by hand delivery
or registered or certified mail to the parties at the addresses set
forth below. Any such notice shall be deemed duly given upon the date
it is delivered to the address shown below, addressed to each party
using the addresses given on the first page of this Agreement. The
addresses set forth above may be changed by either party upon delivery
to every other party a notice of change of address in accordance with
the terms of this Paragraph 9 of this Letter of Intent.
10. Expenses
Each party shall be responsible for its own fees (including but not
limited to legal fees, audit fees), costs, and ancillary expenses that
it incurs in connection with this Letter of Intent, the Acquisition and
all transactions contemplated thereby including the preparation and
closing of the Definitive Agreement.
11. Finders
Each of the parties acknowledge and agree that they have not and will
not engage the services or give or make any commitment to pay or assume
an obligation to pay any finders' or other consulting fees to any
person in connection with the Acquisition or the transactions
contemplated by this Letter of Intent. Each party agrees to indemnify
each other party from any said obligations that may be asserted at any
time hereafter.
12. Independent Counsel
Each of the parties to this Letter of Intent acknowledges and agrees
that it has been represented by independent counsel of its own choice
throughout all negotiations which preceded the execution of this Letter
of Intent and each has executed this Letter of Intent with the consent
and upon the advice of said independent counsel.
13. Operations of the Company Prior to Closing
The Company agrees that prior to Closing, the Company shall operate and
maintain and cause the officers and directors to operate and maintain
the Company and the Company's assets and operations in accordance with
the Company's customary operating procedures and past practice so as
not to diminish or reduce or cause the diminution or reduction of: (1)
the Company's current operations and sales; (2) the morale of the
Company's employees; (3) the relationships that the Company has with
its current and prospective vendors and suppliers of goods and
services; and (4) the relationships that the Company has with each
landlord or lessor of real property and each lessor of personal
property leased by the Company. Further:
(a) Within fifteen (15) days after the execution of this Letter of Intent, the
Company shall deliver to the Buyer copies of
- ----------------------------------------------------------------- documents and
such other information as Buyer may reasonably request so as to allow Buyer to
undertake a due diligence review of the Company (the "Company's Due Diligence
Documents"). The parties agree that Buyer shall have the right, upon reasonable
notice, to inspect and further review the Company's books and records during
regular business hours and to conduct such other reviews to confirm and evaluate
the Company's Due Diligence Documents. The parties further agree that the scope
and extent of said due diligence review shall include such matters as Buyer, in
the exercise of its reasonable discretion, may reasonably require and the
Company shall cooperate, deliver photocopies, and assist Buyer by providing
reasonable access and assistance to further the completion of said due diligence
by Buyer and any legal or accounting advisors retained to assist Buyer in
conducting the due diligence.
(b) Within fifteen (15) days after the execution of the Letter of Intent the
Buyer shall deliver to the Company and its solicitors, Miller Thomson LLP,
copies of documents and such other information as the Company and its
solicitors, acting reasonably, may request so as to allow the Company to
undertake a due diligence review of the Buyer (the "Buyer's Due Diligence
Documents"). The parties agree that the Company shall have the right, upon
reasonable notice, to inspect and review the Buyer's books and records during
regular business hours and to conduct such other reviews to confirm and evaluate
the Buyer's Due Diligence Documents. The parties further agree that the scope
and extent of Company's Due Diligence review shall include such matters as
Company, in the exercise of its reasonable discretion, may reasonably require
and the Buyer shall fully cooperate and assist Company by providing reasonable
access and assistance to further the completion of Company's Due Diligence by
Company and any legal advisors and/or accounting advisors retained to assist the
Company in conducting the due diligence.
(c) The Company agrees that it shall not, at any time, enter into
any employment, consulting, joint venture, partnership, or
similar agreements with any person or make or give any current
employee, consultant, or other person any increase or bonus
unless the Buyer has provided the Company with written
approval of the same.
(d) The Company further agrees that it shall not, subject to
Buyer's written consent, issue or cause to be issued any
shares of its capital stock or grant or issue any options,
warrants, rights, or other securities which could result in
the issuance of any additional shares of its common stock or
issue or grant any securities which are convertible or
exchangeable into the Company's capital stock or any class or
series thereof, save for the conversion of certain currently
outstanding convertible debentures into common shares (as
outstanding as of May 25, 2007) listed and described in
Exhibit A attached hereto and incorporated by reference
herein. The obligations set forth in this sub-paragraph shall
be broadly construed and shall continue until the earlier of
the Closing or the termination of this Letter of Intent.
14. Arbitration & Choice of Law
Any dispute or claim arising to or in any way related to this Letter of
Intent shall be settled by arbitration in Calgary, Alberta. All
arbitration shall be conducted in accordance with the rules and
regulations of the American Arbitration Association ("AAA"). AAA shall
designate an arbitrator from an approved list of arbitrators following
both parties' review and deletion of those arbitrators on the approved
list having a conflict of interest with either party. Each party shall
pay its own expenses associated with such arbitration except that in
the event of a dispute between the parties concerning the enforcement
or interpretation of this Letter of Intent, the prevailing party in
such dispute, whether by legal proceedings or otherwise, shall be
reimbursed immediately for the reasonably incurred attorneys' fees and
other costs and expenses by the other parties to the dispute. This
Letter of Intent and the Definitive Agreements shall be interpreted and
enforced under the laws of Nevada as if each were fully executed and
all acts contemplated in each were fully performed in Nevada.
15. Definitive Agreements
Promptly following the Buyer's receipt of an executed copy of this
Letter of Intent, the Buyer's counsel shall commence the preparation of
a draft of the Definitive Agreements to be entered into by the Sellers
and Buyer and the formal Take-Over Bid Circular that must be filed and
prepared in accordance with Securities legislation in Alberta. These
Definitive Agreements shall contain the detailed terms and conditions
governing the Acquisition and any related transactions, as well as
certain mutually agreed upon representations, warranties and
indemnifications by each Seller and the Company. The parties and their
respective counsel will promptly proceed to negotiate and finalize the
specific terms and related other documents to the mutual satisfaction
of all parties, all as intended by this Letter of Intent.
16. Confidentiality
Subject to Buyer's duties and obligations under the Securities Exchange
Act of 1934, and under the Securities Act (Alberta) it is agreed by the
parties that any information concerning the business or operations of
the Company, disclosed to Buyer or its counsel, accountants,
representatives or financial institutions prior to or after the date of
this Letter of Intent shall be treated as confidential, unless such
information is of public record or knowledge or becomes available to
Buyer on a non-confidential basis from a source other than the Company,
the Sellers or their representatives. Buyer shall not use such
information for any purpose other than for evaluating the transaction
contemplated by this Letter of Intent.
(a) In the event that the parties fail to execute the Definitive
Agreements by 2:00 P.M., (Calgary, Alberta time), September 7,
2007, Buyer shall promptly redeliver to the Company all
confidential information concerning the Company, and Buyer
shall not retain any copies, extracts or other reproductions,
in whole or in part, of such confidential information.
If this Letter of Intent properly sets forth our mutually agreeable
understanding with respect to the above matters, please so indicate by executing
this Letter of Intent in the space provided below, and return a copy of such
original to Frank Aiello at your earliest convenience (via fax at (403)216-3479)
with a second copy to the Buyer's counsel, Law Offices of William M. Aul via fax
at 619-542-0555.
Very truly yours,
CAL ALTA AUTO GLASS, INC.
Date: Per:
-------------------------- -----------------------------
Frank Aiello, President
ENERGY ONE RESOURCE SERVICES INC.
Date: Per:
------------------------- ------------------------------
Kirk Reed, President
[SIGNATURE PAGE TO LETTER OF INTENT OF MAY 28, 2007]
EXHIBIT A
OUTSTANDING CONVERTIBLE DEBENTURES ISSUED BY THE COMPANY
In accordance with Paragraph 13(d) of this Letter of Intent,
the Company hereby warrants and represents that the following
Convertible Debentures are outstanding as of May 25, 2007:
Dollar Amount Date Issued Name of Holder
1. ____________________ ___________ _______________
2. ____________________ ___________ _______________
3. ____________________ ___________ _______________
4. ____________________ ___________ _______________
5. ____________________ ___________ _______________
6. ____________________ ___________ _______________
7. ____________________ ___________ _______________
8. ____________________ ___________ _______________
9. ____________________ ___________ _______________
10. ____________________ ___________ _______________