<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20509
FORM 8-K-A1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
October 16, 1998
Date of Report
(Date of Earliest Event Reported)
CHEROKEE MINERALS AND OIL, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 02-23729 87-0575839
(State or other juris- (Commission File No.) (IRS Employer
diction of incorporation) I.D. No.)
8989 South Scofield Circle
Sandy, Utah 84093
(Address of Principal Executive Offices)
(801)942-2912
Registrant's Telephone Number
Item 1. Changes in Control of Registrant.
On November 12, 1998, the Registrant and Environmental Systems &
Solutions, Inc., a Nevada corporation ("ESSI"), executed a Agreement and Plan
of Reorganization (the "Plan") as outlined in the Letter of Intent between the
Registrant and ESSI dated October 16, 1998 (see the 8-K Current Report dated
October 16, 1998, Item 7, which has been previously filed with the Securities
and Exchange Commission and which is incorporated herein by reference),
whereby the Registrant, subject to the approval of persons owning not less
than 80 percent of outstanding voting securities of ESSI, will acquire a
controlling interest in ESSI, and ESSI will become a majority owned subsidiary
of the Registrant; it is the intention of the Registrant to acquire all of the
issued and outstanding voting securities of ESSI; however, the initial offer
in a stock for stock exchange will be made only to "accredited investors" and
the first 35 non-accredited investors who are stockholders of ESSI and who
execute and deliver a copy of the Plan.
No assurance can be given that the Plan will be completed as
contemplated; and the recent filing by the Registrant of a DBA under the name
of "Hydro-Maid International, Inc." and the change of its symbol from "CKMR"
to "HYMA," "HYII," or "HYMI" (in order of preference), should in no way be
considered to be any assurance that this Plan will be completed as
contemplated. See Item 5.
Item 2. Acquisition or Disposition of Assets.
See Items 1 and 5.
Item 3. Bankruptcy or Receivership.
None; not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
None; not applicable.
Item 5. Other Events.
Even though the Plan between the Registrant and ESSI has not yet
been completed, ESSI has consented to the Registrant's use of the name "Hydro-
Maid International, Inc.," and the Registrant has filed a DBA under that name
in the State of Nevada. The Registrant has also obtained a new CUSIP number,
44880F109, for this name; the Registrant has also requested the National
Association of Securities Dealers, Inc. to effect a change in its symbol on
the OTC Bulletin Board from "CKMR" to "HYMA," "HYII," or "HYMI" (in order of
preference).
If the Plan is completed, a Proxy Statement will be filed with the
Securities and Exchange Commission and forwarded to stockholders, seeking
formal stockholder approval of the name change.
Item 6. Resignations of Registrant's Directors.
None; not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
10 Agreement and Plan of Reorganization
Exhibit A-List of ESSI Shareholders
Exhibit B-Letter of Intent*
Exhibit C-Schedule of Options and Contingent
Issuance of Shares
Exhibit D-Exceptions
Exhibit E-ESSI Patents
Exhibit F-ESSI Bank Accounts
Exhibit G-Cherokee Exceptions
Exhibit H-Cherokee Financial Statements*
Exhibit I-Cherokee Bank Accounts
Exhibit J-Form of Power of Attorney
99 Stockholders letter to ESSI's letter to Stockholders
regarding the Plan
8-K Current Report filed October 21, 1998*
Letter of Intent dated October 16, 1998, regarding
proposed reorganization
Press Release regarding same dated October 19, 1998
10-QSB dated September 30, 1998*
10-SB filed February 5, 1998 with the Securities and Exchange
Commission*
Audited Financial Statements for the years ended December
31, 1997 and 1996
Initial Articles of Incorporation
Articles of Merger dated January 15, 1973
Certificate of Amendment to
Articles of Incorporation dated May 10, 1973
respecting name change
Certificate of Amendment to
Articles of Incorporation dated July 16, 1973
Setting Board of Director numbers
Certificate of Amendment to
Articles of Incorporation dated May 14, 1974
respecting name change and authorized capital
Certificate of Amendment to
Articles of Incorporation dated October 8, 1976
respecting name change
Certificate of Amendment to
Articles of Incorporation dated February 25,
1980 respecting name change
Certificate of Amendment to
Articles of Incorporation dated April 5, 1996
respecting reverse split
Certificate of Amendment to
Article of Incorporation dated January 29, 1998
respecting par value change
Financial Data Schedule
* Incorporated herein by reference.
Item 8. Change in Fiscal Year.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
CHEROKEE MINERALS AND OIL, INC.
Date: 12/9/98 By:/s/Joe Johnson
--------------------------------------
Joe Johnson
President and Director
Date: 12/9/98 By:/s/Melinda Johnson
--------------------------------------
Melinda Johnson
Treasurer and Director
AGREEMENT AND PLAN OF REORGANIZATION
FOR THE ACQUISITION OF ALL OF THE OUTSTANDING
SHARES OF COMMON STOCK OF
ENVIRONMENTAL SYSTEMS & SOLUTIONS, INC.
BY CHEROKEE MINERALS AND OIL, INC.
THIS AGREEMENT AND PLAN OF REORGANIZATION, is executed this 12th day of
November, 1998, by and among shareholders of ENVIRONMENTAL SYSTEMS &
SOLUTIONS, INC., whose names are listed in Exhibit "A," a copy of which is
attached hereto and incorporated herein by this reference (the
"Shareholders"), ENVIRONMENTAL SYSTEMS & SOLUTIONS, INC. ("ESSI"), a Nevada
corporation, and CHEROKEE MINERALS AND OIL, INC. ("CHEROKEE"), a Nevada
corporation.
RECITALS:
A. Whereas, the Shareholders together own, beneficially and of
record, all of the issued and outstanding shares of the common stock of ESSI
(hereinafter the shares of common stock are referred to as the "Exchanged
Shares") as set forth in Exhibit "A," a copy of which is attached hereto and
incorporated herein by this reference; and
B. Whereas, CHEROKEE desires to purchase from each of the
Shareholders all of the outstanding Exchanged Shares owned by them in exchange
for an aggregate of twenty-two million eighty thousand (22,080,000) restricted
shares (the "Cherokee Shares") of the common stock of CHEROKEE, and each of
the Shareholders desires to exchange their Exchanged Shares for the Cherokee
Shares, the number of the Exchanged Shares being surrendered and the number of
Cherokee Shares being received by each of the Shareholders is as set forth in
Exhibit "A" hereto; and
C. Whereas, CHEROKEE, acting through JOE K. JOHNSON ("IOHNSON"), its
President and Chief Executive Officer, and CULLEY W. DAVIS ("DAVIS"),
President and Chief Executive Officer of ESSI, have heretofore entered into a
letter of intent as set forth in a letter dated October 16, 1998, a copy of
which is attached hereto as Exhibit "B" (the "Letter Agreement"), providing
for the acquisition by CHEROKEE from each of the Shareholders of all of the
Exchanged Shares in exchange for the Cherokee Shares and on certain additional
terms and conditions specified therein; and
D. Whereas, the parties hereto desire to set forth the definitive
terms and conditions upon which each of the Shareholders shall sell to
CHEROKEE, and CHEROKEE shall purchase from each of the Shareholders, all of
the Stock of ESSI owned by each of them, as contemplated by and in furtherance
of the Letter Agreement; and
E. Whereas, it is intended that ESSI, CHEROKEE, and their respective
shareholders will recognize no gain or loss for U.S. Federal income tax
purposes under Section 368 (a)(1)(B) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated thereunder as a result
of the Reorganization;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements contained herein,
and in accordance with the applicable provisions of Nevada corporate law, the
parties hereto covenant and agree as follows:
ARTICLE I
THE REORGANIZATION
1.1 The Reorganization. As of the Closing (as defined in Section 1.2
below) of this Agreement, the Shareholders shall surrender all of their
Exchanged Shares in exchange for the Cherokee Shares in the amounts set forth
opposite the respective names of the Shareholders in Exhibit "A." The
transactions contemplated hereby are intended to qualify as a tax-free
reorganization under the Code and the parties hereto agree to report them as
such.
1.2 Closing. The closing of the Reorganization (the "Closing") shall
take place (i) at the offices of ESSI, 12226 East 1000 East, Suite 10, Draper,
Utah 84020 at 10:00 a.m., local time, on December 4, 1998; or (ii) at such
other time and place and on such other date as ESSI and CHEROKEE agree (the
"Closing Date"). The Closing Date shall be the effective date of the
Reorganization. If the Closing fails to occur by December 31, 1998, or by
such later date to which the Closing may be extended as provided hereinabove,
this Agreement shall automatically terminate, all parties shall pay their own
expenses incurred in connection herewith, and neither CHEROKEE, ESSI, nor any
of the Shareholders shall have any further obligations hereunder. The Closing
shall be contingent upon the agreement of Shareholders holding a minimum of
80% of the outstanding Exchange Shares. At such time as Shareholders holding
a minimum of 80% of the Exchanged Shares have entered into this Agreement, the
parties shall proceed with the Closing.
1.3 Taking of Necessary Actions. DAVIS, acting as the representative
of the Shareholders (the "Representative") ESSI, and CHEROKEE shall each take
all such actions at the Closing as may be reasonably necessary or appropriate
in order to effectuate the transactions contemplated hereby and to make the
Reorganization effective as of the Effective Date. If at any time after the
Effective Date any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest CHEROKEE with full title to all of the
Exchanged Shares, the Representative, on behalf of the Shareholders, and the
officers and directors of ESSI and CHEROKEE, at the expense of the CHEROKEE,
shall take all such necessary or appropriate action. To effect the intents
and purposes of this Agreement, the following actions shall be taken at the
Closing, shall be deemed to occur simultaneously, and the accomplishment of
which actions by the parties whose duty it is to perform such actions is duly
acknowledged by the execution of this Agreement by the parties hereto:
1.3.1 Election of Directors. At the Closing, CHEROKEE shall
deliver to the Representative letters of resignation of the incumbent
directors of CHEROKKE and a Certificate of Secretary of CHEROKEE evidencing
the adoption by the Board of Directors of CHEROKEE of resolutions electing and
appointing (i) DAVIS, RONALD L. LaFORD, MARK S. BREWER, JOHN W. NAGEL, and
BRUCE H. HAGLUND as the members of the Board of Directors of CHEROKEE, and
(ii) DAVIS as Chairman of the Board and Chief Executive Officer, RONALD L.
LaFORD as President and Chief Operating Officer, MARK S. BREWER as Vice
President, JOHN W. NAGEL as Chief Financial Officer, and BRUCE H. HAGLUND as
Secretary of CHEROKEE.
1.3.2 Shareholder Approvals. At the Closing, the Representative
shall deliver a Certificate of Secretary evidencing the authorization of the
execution, delivery, and performance of this Agreement by the Shareholders.
1.3.3 Delivery of Exchanged Shares to CHEROKEE; Delivery of the
Cherokee Shares to the Common Shareholders. At the Closing, in consideration
of the tender by the Shareholders of their Exchanged Shares, CHEROKEE shall
deliver the Cherokee Shares to the Representative, on behalf of the
Shareholders.
1.3.4 Assumption of Obligations to Issue Shares. At the
Closing, CHEROKEE will assume the obligations of ESSI with respect to the
contingent issuance of shares pursuant to ESSI's stock option plan and
commitments to issue shares as set forth in Exhibit "C," a copy of which is
attached hereto and incorporated herein by this reference.
1.3.5 Amended Articles of Incorporation. ESSI agrees to permit
CHEROKEE to file a fictitious name statement to allow CHEROKEE to do business
as "Hydro-Maid International, Inc." As soon as practicable after the Closing,
CHEROKEE shall deliver a certified copy of the Amended Articles of
Incorporation of CHEROKEE evidencing the change of CHEROKEE's name to
"Hydro-Maid International, Inc."
1.3.6 Legal Opinions. At the Closing, Counsel to CHEROKEE shall
deliver to the Representative an opinion of counsel addressed to the
Shareholders in the form reasonably satisfactory to counsel for ESSI. At the
Closing, counsel to ESSI shall deliver to the Representative an opinion of
counsel addressed to CHEROKEE in the form reasonably satisfactory to counsel
for CHEROKEE.
ARTICLE II
EXCHANGE OF SHARES
2.1 Exchange of Shares. Subject to the terms and conditions of this
Agreement, on the Closing Date, by virtue of the Reorganization and without
any further action on the part of the Shareholders, ESSI, or CHEROKEE, all of
the Exchanged Shares shall be exchanged for the Cherokee Shares in the amounts
to the Shareholders as set forth in Exhibit "A." Each share of the Cherokee
Shares shall be validly issued, fully paid, and nonassessable shares of the
Common Stock of CHEROKEE as of the Closing Date.
2.2 Exchange of Certificates. At the Closing, CHEROKEE shall
present and deliver to the Representative the stock certificates representing
all of the Cherokee Shares. Upon delivery thereof, the Representative shall
present and deliver to CHEROKEE all of the certificates representing the
Exchanged Shares, or lost certificate affidavits in form acceptable to
CHEROKEE.
2.3 Further Rights. From and after the Closing Date, holders of
certificates formerly evidencing the Exchanged Shares shall cease to have any
rights as shareholders of ESSI, except as provided herein or by law. Those
persons identified in Exhibit "C" shall have the right to the number of shares
of CHEROKEE as set forth in Exhibit "C."
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF ESSI
Except as set forth in the Schedule of Exceptions attached hereto and
incorporated herein by reference as Exhibit "D," ESSI represents and warrants
to, and covenants with, CHEROKEE, as of the date hereof and as of the Closing
Date, as follows:
3.1 Organization and Corporate Power. ESSI is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada, and is duly qualified and in good standing to do business as
a foreign corporation in each jurisdiction in which such qualification is
required and where the failure to be so qualified would have a materially
adverse effect upon ESSI. ESSI has all requisite corporate power and
authority to conduct its business as now being conducted and to own and lease
the properties which it now owns and leases. True and correct copies of the
Articles of Incorporation as amended to the Closing Date, certified by the
Secretary of State of Nevada, the Bylaws of ESSI as amended to the Closing
Date, the resolutions of ESSI's directors authorizing the execution, delivery,
and performance of this Agreement, the approval by the Shareholders will be
delivered to CHEROKEE at the Closing, all certified by the President and the
Secretary of ESSI.
3.2 Authorization. ESSI has full corporate power, legal capacity,
and authority to enter into this Agreement, to execute all attendant documents
and instruments contemplated hereby, and to perform all of its obligations
hereunder. This Agreement, and each and every other agreement, document and
instrument to be executed by ESSI in connection herewith, has been effectively
authorized by all necessary action on the part of ESSI, including without
limitation the approvals of ESSI's Board of Directors (subject to approval of
the Shareholders), which authorizations remain in full force and effect, have
been duly executed and delivered by ESSI. No other authorizations or
proceedings on the part of ESSI, other than approval of the Shareholders, are
required to authorize this Agreement and/or the transactions contemplated
hereby. This Agreement, when approved by the Shareholders, will constitute
the legal, valid and binding obligation of ESSI and each of the Shareholders
and will be enforceable against each of them in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization, priority or other laws or court decisions relating to or
affecting generally the enforcement of creditors' rights or affecting
generally the availability of equitable remedies.
3.3. No Conflicts; No Consents. Neither the execution and
delivery of this Agreement, nor the consummation by ESSI or the Shareholders
of any of the transactions contemplated hereby, or compliance with any of the
provisions hereof, will (i) conflict with or result in a material breach of,
violation of, or default under, any of the terms, conditions or provisions of
any material note, bond, mortgage, indenture, license, lease, credit agreement
or other agreement, document, instrument, permit, authorization, or obligation
(including, without limitation, any of its charter documents) to which ESSI is
a party or by which it or any of its assets or properties may be bound, or
(ii) violate any judgment, order, injunction, decree, statute, rule or
regulation applicable to ESSI or its assets or properties, the violation of
which would have a material adverse effect upon the business, properties, or
assets, or in the condition (financial or otherwise) of ESSI. No
authorization, consent or approval of any public body or authority was or is
necessary for the consummation by ESSI or the Shareholders of the transactions
contemplated by this Agreement.
3.4 Capitalization. The authorized capital stock of ESSI
consists of ten million (10,000,000) shares of common stock, par value $.01.
As of the date hereof, there are five million five hundred thousand
(5,500,000) shares of common stock issued and outstanding. Other than as set
forth in Exhibit "D," there are no outstanding contracts or other rights to
subscribe for or purchase, or contracts or obligations to issue or grant any
rights to acquire any equity security of ESSI. ESSI does not have any
contracts or obligations to redeem, repurchase, or otherwise reacquire any
equity security of ESSI. All of the Exchanged Shares are duly authorized,
validly issued and outstanding, fully paid, and nonassessable and have been
issued in conformity with all applicable laws.
3.5 No Pending Material Litigation or Proceedings. There are no
actions, suits or proceedings pending or, to the best knowledge of ESSI,
threatened against or affecting ESSI affecting the Shareholders' rights in the
Exchanged Shares (including actions, suits or proceedings where liabilities
may be adequately covered by insurance) at law or in equity or before or by
any Federal, state, municipal or other governmental department, commission,
court, board, bureau, agency or instrumentality, domestic or foreign, or
affecting any of the officers, directors of ESSI or the Shareholders in
connection with the business, operations or affairs of either of them, which
might reasonably be expected to result in any material adverse change in the
business, properties or assets, or in the condition (financial or otherwise)
of ESSI, or which question or challenge the Reorganization.
3.6 Financial Statements; Absence of Undisclosed Liabilities and
Certain Developments. At the Closing, the Company will deliver to CHEROKEE
financial statements of ESSI for the nine months ended September 30, 1998
(unaudited) and for the years ended December 31, 1997 (unaudited) and 1996
(unaudited), consisting of ESSI's balance sheets as of such date (the "Balance
Sheets"), the related statements of profit or loss for the periods then ended,
and the respective notes thereto. Such financial statements (and the notes
related thereto) are herein sometimes collectively referred to as the "ESSI
Financial Statements." At the Closing, ESSI shall deliver an Officer's
Certificate certifying that the ESSI Financial Statements (i) have been
derived from the books and records of ESSI, which books and records fairly and
accurately reflect, the assets and liabilities of ESSI, (ii) fairly present
the financial condition of ESSI on the date of such statements and the results
of its operations for the periods indicated, except as may be disclosed in the
notes thereto, and (iii) have been prepared in all material respects in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved.
3.7 Applicable Permits; Compliance with Laws. ESSI (i) holds all
licenses, franchises, permits, and authorizations necessary for the lawful
conduct of its business as presently conducted and which the failure to so
hold would have a material adverse effect upon the business, properties, or
assets, or the condition (financial or otherwise) of ESSI, and (ii) has
complied in all material respects with all applicable statutes, laws,
ordinances, rules, and regulations of all governmental bodies, agencies and
subdivisions having, asserting or claiming jurisdiction over it, which the
failure to comply with would have a material adverse effect upon the business,
properties, or assets, or the condition (financial or otherwise) of ESSI.
3.8 Disclosure. Neither this Agreement, nor any certificate,
exhibit, or other written document or statement, furnished to CHEROKEE by or
on behalf of ESSI or, to its knowledge, the Shareholders in connection with
the transactions contemplated by this Agreement contained or contains any
untrue statement of a material fact or omitted or omits to state a material
fact necessary to be stated in order to make the statements contained herein
or therein, when taken as a whole, not misleading. Neither ESSI nor, to its
knowledge, any of the Shareholders has any knowledge of any fact which has not
been disclosed in writing to CHEROKEE which may reasonably be expected to
materially and adversely affect the business, properties, or assets, or the
condition (financial or otherwise) of ESSI or title of the Shareholders to the
Exchanged Shares or their ability to perform all of the obligations to be
performed by them under this Agreement and/or any other agreement between
ESSI, the Shareholders, and CHEROKEE to be entered into pursuant to any
provision of this Agreement.
3.9 Ownership of ESSI. ESSI issued each Shareholder that number of
Shares set forth opposite the Shareholder's respective name on Exhibit "A,"
which shares together constitute all of the issued and outstanding shares of
common stock of ESSI. The Shares are duly authorized, validly issued and
outstanding, fully paid and nonassessable and were issued by ESSI in
conformity with all applicable laws.
3.10 Subsidiaries. ESSI has no subsidiaries and no investments,
directly or indirectly, or other financial interest in any other corporation
or business organization, joint venture or partnership of any kind whatsoever
except as reflected in the ESSI Financial Statements.
3.11 Real Property. All leases of real property to which ESSI is a
party and which are material to the business of ESSI are fully effective in
accordance with their respective terms and afford ESSI peaceful and
undisturbed possession of the subject matter of the lease, and there exists no
default on the part of ESSI or termination thereof. The building and all
fixtures and improvements located on such real property are in good operating
condition, ordinary wear and tear excepted. To the best of its knowledge,
ESSI is not in violation of any zoning, building or safety ordinance,
regulation or requirement, or other law or regulation applicable to the
operation of owned or leased properties, and ESSI has not received any notice
of violation with which its has not complied.
3.12 Tangible Personal Property. ESSI has good and marketable title
to, or in the case of leased equipment a valid leasehold interest in, and is
in possession of, all such items of personal property owned or leased by it,
free and clear of all title defects, mortgages, pledges, security interests
conditional sales agreements, liens, restrictions or encumbrances, the
presence of which would result in a material adverse change in the business,
properties, or assets, or the condition (financial or otherwise) of ESSI. All
leases of tangible personal property to which ESSI is a party and which are
material to the business of ESSI are fully effective in accordance with their
respective terms, and there exists no default on the part of ESSI or
termination thereof, the presence of which would result in a material adverse
change in the business, properties, or assets, or the condition (financial or
otherwise) of ESSI. Each item of capital equipment which is used in the
current conduct of ESSI's business is in good operating and usable condition
and repair, ordinary wear and tear excepted, and is and will be suitable for
use in the ordinary course of ESSI's business and fit for its intended
purposes.
3.13 Tax Matters. ESSI has, since its inception, duly filed all
Federal, state, municipal, local, and other tax returns required to have been
filed by it in those jurisdictions where the nature or conduct of its business
requires such filing and where the failure to so file would be materially
adverse to ESSI. Copies of all such tax returns have been made available for
inspection by CHEROKEE prior to the execution hereof. All Federal, state,
municipal, local, and other taxes, including but not limited to those taxes
due with respect to ESSI's properties, income, gross receipts, excise,
occupation, franchise, permit, licenses, sales, payroll, and inventory due and
payable as of the date of the Closing by ESSI have been paid or will be paid
prior to the time they become delinquent.
3.14 Inventory. ESSI has good and marketable title to all of its
inventories of raw materials, work-in-process, and finished goods, including
models and samples, free and clear of all security interests, liens, claims
and encumbrances, the presence of which would result in a material adverse
change in the business, properties, or assets, or the condition (financial or
otherwise) of ESSI.
3.15 Contracts and Commitments. ESSI has no contract, agreement,
obligation or commitment, written or oral, expressed or implied, which
involves a commitment or liability of ESSI in excess of one hundred thousand
dollars ($100,000) (other than obligations which are included in accounts
payable), and no union contracts, employee or consulting contracts, financing
agreements, debtor or creditor arrangements, licenses, franchise,
manufacturing, distributorship or dealership agreements, leases, or bonus,
health or stock option plans, except as described in Exhibits "C" and "D."
3.17 Proprietary Information. Except as disclosed in Exhibit "E," ESSI
does not have any patents, applications for patents, trademarks, applications
for trademarks, trade names, licenses or service marks relating to the
business of ESSI, nor does any present or former shareholder, officer,
director or employee of ESSI own any patent rights relating to any products
manufactured, rented or sold by ESSI. ESSI has the unrestricted right to use,
free and clear of any claims or rights of others, all trade secrets, customer
lists, and manufacturing and secret processes reasonably necessary to the
manufacture and marketing of all products made or proposed to be made by ESSI,
except for any rights the presence of which would not result in a material
adverse change in the business, properties, or assets, or the condition
(financial or otherwise) of ESSI, and the continued use thereof by CHEROKEE
following the Closing will not conflict with, infringe upon, or otherwise
violate any rights of others. ESSI has not used and is not making use of any
confidential information or trade secrets of any present or past employee of
ESSI.
3.18 Insurance. ESSI maintains insurance with reputable insurance
companies on such of its equipment, tools, machinery, inventory, and
properties as are usually insured by companies similarly situated and to the
extent customarily insured, and maintains products and personal liability
insurance, and such other insurance against hazards, risks and liability to
persons and property as is customary for companies similarly situated. All
such insurance policies currently are in full force and effect.
3.19 Arrangements with Employees; Labor Relations. No stockholder,
director, officer or employee of ESSI is presently a party to any transaction
with ESSI, including without limitation any contract, loan or other agreement
or arrangement providing for the furnishing of services by, the rental of real
or personal property from or to, or otherwise requiring loans or payments to,
any such stockholder, director, officer or employee, or to any member of the
family of any of the foregoing, or to any corporation, partnership, trust or
other entity in which any stockholder, director, officer or employee or any
member of the family of any of them has a substantial interest or is an
officer, director, trustee, partner or employee. There are no bonus, pension,
profit sharing, commission, deferred compensation or other plans or
arrangements in effect as of the date of this Agreement, except as set forth
in Exhibit "D." ESSI has no obligations under any collective bargaining
agreement or other contract with a labor union, under any employment contract
or consulting agreement, or under any executive's compensation plan, agreement
or arrangement, nor is any union, labor organization or group of employees of
ESSI presently seeking the right to enter into collective bargaining with ESSI
on behalf of any of its employees.
3.20 Bank Accounts. All bank and savings accounts, and other accounts
at similar financial institutions, of ESSI existing at date of Closing are
listed on Exhibit "F." Exhibit "F" contains a list of the name of each person
or entity authorized to sign on the bank accounts, borrow money, or incur or
guarantee indebtedness on behalf of ESSI.
3.21 Powers of Attorney. No valid powers of attorney from ESSI to any
person or entity exist as of the date of this Agreement, except with respect
to powers of attorney granted to the Representative by the Shareholders to
facilitate the Closing.
3.22 Absence of Questionable Payments. To the best of its knowledge,
neither ESSI nor any shareholder, director, officer, agent, employee,
consultant or other person associated with or acting on behalf of any of them,
has (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any direct or indirect unlawful payments to governmental officials or
others from corporate funds, engaged in any payments or activity which would
be deemed a violation of the Foreign Corrupt Practices Act or rules or
regulations promulgated thereunder, or (iii) established or maintained any
unlawful or unrecorded accounts.
3.23 Relationships with Customers and Suppliers. No present
substantial customer or substantial supplier to ESSI has indicated an
intention to terminate or materially and adversely alter its existing business
relationship therewith, ESSI has no reason to believe that any of the present
customers of or substantial suppliers to ESSI intends to do so.
(The remainder of this page is intentionally blank.)
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF CHEROKEE
Except as set forth in the Schedule of Exceptions attached hereto and
incorporated herein by this reference as Exhibit "G," CHEROKEE hereby
represents and warrants to, and covenants with, each of the Shareholders and
ESSI as follows:
4.1 Organization and Corporate Power. CHEROKEE is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, and is duly qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which such
qualification is required and where the failure to be so qualified would have
a materially adverse effect upon CHEROKEE. CHEROKEE has all requisite
corporate power and authority to conduct its business as now being conducted
and to own and lease the properties which it now owns and leases. The
Articles of Incorporation as amended to date, certified by the Secretary of
State of Nevada, the Bylaws of CHEROKEE as amended to date, and the
resolutions of CHEROKEE's shareholders and directors authorizing the
execution, delivery, and performance of this Agreement, all certified by the
President and the Secretary of CHEROKEE, which have previously been provided
to ESSI by CHEROKEE, are true and complete copies thereof as currently in
effect.
4.2 Authorization. CHEROKEE has full corporate power, legal
capacity and corporate authority to enter into this Agreement, to execute all
attendant documents and instruments contemplated hereby, to enter into this
Reorganization, and to perform all of its obligations hereunder. This
Agreement, and each and every other agreement, document and instrument to be
executed by CHEROKEE in connection herewith, has been effectively authorized
by all necessary action on the part of CHEROKEE, including without limitation
the approvals of CHEROKEE's Board of Directors and its shareholders, which
authorizations remain in full force and effect, have been duly executed and
delivered by CHEROKEE, and no other authorizations or proceedings on the part
of CHEROKEE, or otherwise, are required to authorize this Agreement and/or the
transactions contemplated hereby. This Agreement constitutes the legal,
valid, and binding obligation of CHEROKEE and is enforceable against CHEROKEE
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, priority or other laws or court
decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies.
4.3. No Conflicts; No Consents. Neither the execution and
delivery of this Agreement, nor the consummation by CHEROKEE of any of the
transactions contemplated hereby, or compliance with any of the provisions
hereof, will (i) conflict with or result in a material breach of, violation
of, or default under, any of the terms, conditions or provisions of any
material note, bond, mortgage, indenture, license, lease, credit agreement or
other agreement, document, instrument or obligation (including, without
limitation, any of its charter documents) to which CHEROKEE is a party or by
which it or any of its assets or properties may be bound, or (ii) violate any
judgment, order, injunction, decree, statute, rule or regulation applicable to
CHEROKEE or its assets or properties, the violation of which would have a
material adverse effect upon the business, properties, or assets, or in the
condition (financial or otherwise) of CHEROKEE. No authorization, consent or
approval of any public body or authority was or is necessary for the
consummation by CHEROKEE of the transactions contemplated by this Agreement.
4.4 Capitalization. The authorized capital stock of CHEROKEE
consists of thirty million (30,000,000) shares of common stock, par value one
hundredth of one cent ($.001). As of the Closing Date, there will be one
million nine hundred twenty thousand (1,920,000) shares of common stock issued
and outstanding. All of the shares of common stock issued and outstanding are
validly issued, fully paid, and nonassessable. There are no outstanding
contracts or other rights to subscribe for or purchase, or contracts or
obligations to issue or grant any rights to acquire any equity security of
CHEROKEE. CHEROKEE does not have any contracts or obligations to redeem,
repurchase or otherwise reacquire any equity security of CHEROKEE. All of the
Cherokee Shares, when issued to the Shareholders, will be duly authorized,
validly issued and outstanding, fully paid and nonassessable and were issued
in conformity with all applicable laws.
4.5 Financial Statements of CHEROKEE; Absence of Undisclosed
Liabilities; No Adverse Changes. Attached hereto as Exhibit "H" are the
audited financial statements of CHEROKEE for the years ended December 31,
1997, and 1996, and the unaudited financial statements for the quarters ended
March 31, 1998, June 30, 1998, and September 30, 1998, consisting of
CHEROKEE's balance sheets as of such date (the "Balance Sheets"), the related
statements of profit or loss for the periods then ended, and the respective
notes thereto. Such financial statements (and the notes related thereto) are
herein sometimes collectively referred to as the "CHEROKEE Financial
Statements." The CHEROKEE Financial Statements (i) are derived from the
books and records of CHEROKEE, which books and records have been consistently
maintained in a manner which reflects, and such books and records do fairly
and accurately reflect, the assets and liabilities of CHEROKEE, (ii) fairly
and accurately present the financial condition of CHEROKEE on the date of such
statements and the results of its operations for the periods indicated, except
as may be disclosed in the notes thereto, and (iii) have been prepared in all
material respects in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise
disclosed in the notes thereto). Except as and to the extent reflected or
reserved against in the Balance Sheets, and as to matters arising in the
ordinary course of its business since the respective dates of the Balance
Sheets, CHEROKEE has no liability or obligation (whether accrued, to become
due, contingent or otherwise) which individually or in the aggregate could
have a materially adverse effect on the business, assets, condition (financial
or otherwise) or prospects of CHEROKEE. Except as set forth in Exhibit "G,"
since the dates of the respective Balance Sheets, there has been (a) no
declaration, setting aside or payment of any dividend or other distribution
with respect to the common stock of CHEROKEE or redemption, purchase or other
acquisition of any of the common stock of CHEROKEE or any split-up or other
recapitalization relative to any of the common stock of CHEROKEE or any action
authorizing or obligating CHEROKEE to do any of the foregoing, (b) no loss,
destruction or damage to any material property or asset of CHEROKEE, whether
or not insured, (c) no acquisition or disposition of assets (or any contract
or arrangement therefor), or any other transaction by CHEROKEE otherwise than
for fair value and in the ordinary course of business, (d) no discharge or
satisfaction by CHEROKEE of any lien or encumbrance or payment of any
obligation or liability (absolute or contingent) other than current
liabilities shown on the Balance Sheets, or current liabilities incurred since
the date thereof in the ordinary course of business, (e) no sale, assignment
or transfer by CHEROKEE of any of its tangible or intangible assets except in
the ordinary course of business, cancellation by CHEROKEE of any debts, claims
or obligations, or mortgage, pledge, subjection of any assets to any lien,
charge, security interest or other encumbrance, or waiver by CHEROKEE of any
rights of value which, in any such case, is material to the business of
CHEROKEE, (f) no payment of any material bonus to or material change in the
compensation of any director, officer or employee, whether directly or by
means of any bonus, pension plan, contract or commitment, (g) no write-off or
material reduction in the carrying value of any asset which is material to the
business of CHEROKEE, (h) no disposition or lapse of rights as to any
intangible property which is material to the business of CHEROKEE, (i) except
for ordinary travel advances, no loans or extensions of credit to
shareholders, officers, directors or employees of CHEROKEE, (j) no agreement
to do any of the things described in this Section 4.5, and (k) no material
adverse change in the condition (financial or otherwise) of CHEROKEE or in its
assets, liabilities, properties, business, or prospects.
4.6 Tax Matters. CHEROKEE has, since its inception, accurately
prepared and duly filed all Federal, state, county and local tax returns
required to have been filed by it in those jurisdictions where the nature or
conduct of its business requires such filing and where the failure to so file
would be materially adverse to CHEROKEE. Copies of all such tax returns have
been made available for inspection by ESSI and the Shareholders prior to the
execution hereof. All Federal, state, county and local taxes, including but
not limited to those taxes due with respect to CHEROKEE's properties, income,
gross receipts, excise, occupation, franchise, permit, licenses, sales,
payroll, and inventory due and payable as of the date of the Closing by
CHEROKEE have been paid or will be paid prior to the time they become
delinquent. The amount reflected in the Balance Sheets of CHEROKEE as
liabilities or reserves for taxes which are due but not yet payable is
sufficient for the payment of all accrued and unpaid taxes of the types
referred to hereinabove.
4.7 No Pending Material Litigation or Proceedings. There are no
actions, suits or proceedings pending or, to the best knowledge of CHEROKEE,
threatened against or affecting CHEROKEE (including actions, suits or
proceedings where liabilities may be adequately covered by insurance) at law
or in equity or before or by any Federal, state, municipal or other
governmental department, commission, court, board, bureau, agency or
instrumentality, domestic or foreign, or affecting any of the shareholders,
officers or directors of CHEROKEE in connection with the business, operations
or affairs of CHEROKEE, which might result in any material adverse change in
the business, properties or assets, or in the condition (financial or
otherwise) of CHEROKEE, or which question or challenge the Reorganization.
CHEROKEE is not subject to any voluntary or involuntary proceeding under
applicable bankruptcy laws and has not made an assignment for the benefit of
creditors.
4.8 Compliance with Laws. CHEROKEE (i) holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business as presently conducted and which the failure to so hold would have a
material adverse effect upon the business, properties, or assets, or the
condition (financial or otherwise) of CHEROKEE, and (ii) has complied with all
applicable statutes, laws, ordinances, rules and regulations of all
governmental bodies, agencies and subdivisions having, asserting or claiming
jurisdiction over it, which the failure to comply with would have a material
adverse effect upon the business, properties, or assets, or the condition
(financial or otherwise) of CHEROKEE.
4.9 Disclosure. Neither this Agreement, nor any certificate, exhibit,
or other written document or statement, furnished to ESSI or the Shareholders
by or on behalf of CHEROKEE in connection with the transactions contemplated
by this Agreement contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary to be stated in
order to make the statements contained herein or therein, when taken as a
whole, not misleading. CHEROKEE has no knowledge of any fact which has not
been disclosed in writing to ESSI or the Shareholders which may reasonably be
expected to materially and adversely affect the business, properties,
operations, and/or prospects of CHEROKEE or the ability of CHEROKEE to perform
all of the obligations to be performed by CHEROKEE under this Agreement and/or
any other agreement between ESSI and CHEROKEE to be entered into pursuant to
any provision of this Agreement.
4.10 Subsidiaries. CHEROKEE has no subsidiaries and no investments,
directly or indirectly, or other financial interest in any other corporation
or business organization, joint venture or partnership of any kind whatsoever
except as reflected in the CHEROKEE Financial Statements.
4.11 Offering. Subject to the accuracy of the Shareholders
representations in Section 5.4 hereof, the offer, sale, and issuance of the
Cherokee Shares to be issued in conformity with the terms of this Agreement
and the transactions contemplated hereby, constitute transactions exempt from
the registration requirements of Section 5 of the Securities Act of 1933, as
amended, and from all applicable state registration or qualification
requirements.
4.12 Applicable Permits; Compliance with Laws. CHEROKEE (i) holds
all licenses, franchises, permits, and authorizations necessary for the lawful
conduct of its business as presently conducted and which the failure to so
hold would have a material adverse effect upon the business, properties, or
assets, or the condition (financial or otherwise) of CHEROKEE, and (ii) has
complied with all applicable statutes, laws, ordinances, rules, and
regulations of all governmental bodies, agencies and subdivisions having,
asserting or claiming jurisdiction over it, which the failure to comply with
would have a material adverse effect upon the business, properties, or assets,
or the condition (financial or otherwise) of CHEROKEE.
4.13 Real Property. No real property is owned by, leased to, occupied
or subleased by CHEROKEE.
4.14 Tangible Personal Property. CHEROKEE owns no tangible personal
property.
4.15 Accounts Receivable. CHEROKEE has no accounts receivable.
4.16 Inventory. CHEROKEE has no inventory.
4.17 Contracts and Commitments. CHEROKEE has no contract, agreement,
obligation or commitment, written or oral, expressed or implied, which
involves a commitment or liability of CHEROKEE in excess of one thousand
($1,000), and no union contracts, employee or consulting contracts, financing
agreements, debtor or creditor arrangements, licenses, franchise,
manufacturing, distributorship or dealership agreements, leases, or bonus,
health or stock option plans.
4.18 Proprietary Information. CHEROKEE does not have any patents,
applications for patents, trademarks, applications for trademarks, trade
names, licenses or service marks relating to the business of CHEROKEE, nor
does any present or former shareholder, officer, director or employee of
CHEROKEE own any patent rights relating to any products manufactured, rented
or sold by CHEROKEE.
4.19 Insurance. CHEROKEE maintains insurance with reputable insurance
companies on such of its equipment, tools, machinery, inventory, and
properties as are usually insured by companies similarly situated and to the
extent customarily insured, and maintains products and personal liability
insurance, and such other insurance against hazards, risks and liability to
persons and property as is customary for companies similarly situated.
4.20 Bank Accounts. All bank and savings accounts, and other accounts
at similar financial institutions, of CHEROKEE existing at date of Closing are
listed on Exhibit "I." Exhibit "I" contains a list of the name of each person
or entity authorized to sign on the bank accounts, borrow money, or incur or
guarantee indebtedness on behalf of CHEROKEE.
4.21 Powers of Attorney. No valid powers of attorney from CHEROKEE to
any person or entity exist as of the date of this Agreement.
4.22 Absence of Questionable Payments. To the best of its knowledge,
neither CHEROKEE nor any shareholder, director, officer, agent, employee,
consultant or other person associated with or acting on behalf of any of them,
has (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any direct or indirect unlawful payments to governmental officials or
others from corporate funds, engaged in any payments or activity which would
be deemed a violation of the Foreign Corrupt Practices Act or rules or
regulations promulgated thereunder, or (iii) established or maintained any
unlawful or unrecorded accounts.
4.23 Reporting Requirements. CHEROKEE has complied with and will
maintain its compliance with all of the reporting requirements under the Act
and the Securities Exchange Act of 1934, as amended.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each of the Shareholders, severally and not jointly, represent and
warrant to and covenant with CHEROKEE, as of the date hereof, as follows:
5.1 Power of Attorney. The Shareholder has duly and irrevocably
executed and delivered a power of attorney in the form of Exhibit "J"
appointing the Representative as attorney-in-fact with full power of
substitution and with full authority to take any actions as may be necessary
or desirable, at the discretion of such attorneys-in-fact, to carry out the
provisions of this Agreement on behalf of the Shareholders (the "Power of
Attorney").
5.2 Authority. The Shareholder has full rights, power, and authority
to enter into this Agreement and the Power of Attorney; the execution,
delivery, and performance of this Agreement and the Power of Attorney by the
Shareholder and the consummation by the Shareholder or the Shareholder's
attorney-in-fact of the transactions contemplated hereby will not conflict
with or result in a breach of any agreement to which the Shareholder is a
party and which a conflict or breach thereof would have a material adverse
effect upon the Shareholder or the Shareholder's properties or assets.
5.3 Title. The Shareholder has valid and marketable title to the
number of Shares set forth opposite such Shareholder's name on Exhibit "A,"
free and clear of any pledge, lien, security interest, or encumbrance other
than pursuant to this Agreement. As of the date hereof there is, and at the
Closing Date there will be, no lien, charge, mortgage, pledge, conditional
sale agreement, or other encumbrance of any kind or nature recorded in the
book of registry of shareholders of ESSI with respect to any of the Exchanged
Shares owned by the Shareholder and the Exchanged Shares set forth in Exhibit
"A" are duly registered in the name of the Shareholders as set forth in
Exhibit "A."
5.4 Restricted Stock. The Shareholder acknowledges that the Exchanged
Shares being issued to the Shareholders hereunder will be issued by CHEROKEE
without registration or qualification or other filings being made under the
Act, or the securities or "blue sky" laws of any state, in reliance upon
specific exemptions therefrom, and in furtherance thereof the Shareholder
represents that he is acquiring and will hold the shares to be delivered
hereunder for his own account, for investment only, and not for distribution
within the meaning of the U.S. Federal securities laws. The Shareholder
acknowledges that a legend, substantially in the following form, shall be
placed upon the face of each certificate representing any of Cherokee Shares
being delivered to the Shareholders hereunder:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), ARE
RESTRICTED SECURITIES, AND NO OFFER, SALE, TRANSFER OR OTHER DISPOSITION OF
THIS CERTIFICATE OR THE SECURITIES REPRESENTED HEREBY, OR OF ANY INTEREST
HEREIN, MAY BE MADE WITHOUT SUCH REGISTRATION UNLESS, IN THE OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY, AN EXEMPTION FROM REGISTRATION UNDER THE
ACT IS AVAILABLE.
5.5 Access to Information. The Shareholder acknowledges the receipt
of CHEROKEE's Annual Report on Form 10-KSB for the year ended December 31,
1997 and Quarterly Report on Form 10-QSB for the nine months ended September
30, 1998. The Shareholder further acknowledges that such Shareholder has had
access to such information from ESSI as such Shareholder has deemed necessary
to enable such Shareholder to make an informed decision with respect to the
transactions contemplated hereby.
5.6 Waiver of Claims. As a condition precedent to CHEROKEE's
obligations hereunder, the Shareholder agrees to waive and compromise any and
all claims against ESSI, CHEROKEE, and any of their affiliates (as that term
is defined in the Federal securities laws) as of the Closing Date, including
but not limited to claims relating to the issuance of the securities of ESSI.
ARTICLE VI
MISCELLANEOUS
6.1 Taxes and Expenses.
6.1.1 Except as otherwise expressly provided in 6.1.2
immediately below, each of ESSI and CHEROKEE shall pay all of their own
respective taxes, attorneys' fees and other costs and expenses payable in
connection with or as a result of the transactions contemplated hereby and the
performance and compliance with all agreements and conditions contained in
this Agreement respectively to be performed or observed by each of them.
6.1.2 The Shareholders shall pay all income taxes, if any, which
become due on account of the sale and transfer of the Exchanged Shares to
CHEROKEE.
6.1.3 The representations and warranties of ESSI, the
Shareholders, and CHEROKEE contained herein and in any other document or
instrument delivered by or on behalf of ESSI and/or the Shareholders or on
behalf of CHEROKEE pursuant hereto, as such may be qualified in Exhibits "C,"
"D," or "G," respectively, shall survive the Closing and any investigations
made by or on behalf of CHEROKEE made prior to the Closing, and shall remain
in full force and effect for a period of two (2) full years from the date of
the Closing the ("Warranty Period"), and thereupon expire.
6.2 Other Documents. Each of the parties hereto shall execute and
deliver such other and further documents and instruments, and take such other
and further actions, as may be reasonably requested of them for the
implementation and consummation of this Agreement and the transactions herein
contemplated.
6.3 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, the heirs, personal
representatives, successors and assigns of CHEROKEE, the Shareholders, and
ESSI, but shall not confer, expressly or by implication, any rights or
remedies upon any other party.
6.4 Governing Law. This Agreement is made and shall be governed in
all respects, including validity, interpretation and effect, by the laws of
the State of Nevada.
6.5 Notices. Any notice or the delivery of any item to be
delivered by a party hereto shall be delivered personally, by U.S. mail,
return receipt requested, or by Federal Express, next-day delivery. Any
personal delivery made shall be deemed to have been made upon the execution of
a receipt for the item to be delivered by the party to whom delivery is made.
Delivery by U.S. mail or Federal Express shall be deemed to have been made
when delivered by Federal Express to the party to whom addressed. All such
deliveries shall be made to the following addresses, or such other addresses
as the parties may have instructed the others in accordance with the
provisions of this Section:
If to CHEROKEE: Cherokee Minerals and Oil, Inc.
8999 South Scofield Circle
Sandy, Utah 84093
Attention: Chief Executive Officer
With a copy to: Leonard W. Burningham, Esq.
455 East 5th South
Salt Lake City, Utah 84111-3323
If to ESSI or the Shareholders: Environmental Systems & Solutions,
Inc.
12226 South 1000 East, Suite 10
Draper, Utah 84020
Attention: Chief Executive Officer
With a copy to: Bruce H. Haglund, Esq.
Gibson, Haglund & Johnson
2 Park Plaza, Suite 450
Irvine, California 92614
Any party hereto may change its address by written notice to the other party
given in accordance with this Section 6.5.
6.6 Entire Agreement. This Agreement and the exhibits attached hereto
contains the entire agreement between the parties and supersede all prior
agreements, understandings and writings between the parties with respect to
the subject matter hereof and thereof. Each party hereto acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by any party, or anyone acting with authority on behalf of any
party, which are not embodied herein or in an exhibit hereto, and that no
other agreement, statement or promise may be relied upon or shall be valid or
binding. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally. This Agreement may be amended or any term
hereof may be changed, waived, discharged or terminated by an agreement in
writing signed by CHEROKEE, ESSI, and the Shareholders.
6.7 Severability. If any provision of this Agreement is determined to
be invalid, illegal or unenforceable by any court, department, official,
political subdivision, agency or other instrumentality of any government,
whether state, local or Federal, the remaining provisions of this Agreement to
the extent permitted by law shall remain in full force and effect. To the
extent permitted by law, the parties hereto waive any provision of law that
renders any provision hereof invalid or unenforceable in any respect.
6.8 Headings. The captions and headings used herein are for
convenience only and shall not be construed as a part of this Agreement.
6.9 Attorneys' Fees. In the event of any litigation between
CHEROKEE, ESSI, and the Shareholders, the prevailing party shall receive its
reasonable expenses, including attorneys' fees, from the non-prevailing party
in connection therewith.
6.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute but one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
CHEROKEE MINERALS AND OIL, INC.
a Nevada corporation
By:/s/Joe K. Johnson
Chief Executive Officer
By:/s/Melinda Johnson
Secretary
ENVIRONMENTAL SYSTEMS & SOLUTIONS, INC.
a Nevada corporation
By:/s/Culley W. Davis
Chief Executive Officer
By:/s/Bruce H. Haglund
Secretary
SHAREHOLDERS:
(Signature of Shareholder)
(Printed Name of Shareholder)
(Signature of Shareholder)
(Printed Name of Shareholder)
(Signature of Shareholder)
(Printed Name of Shareholder)
(Signature of Shareholder)
(Printed Name of Shareholder)
(Signature of Shareholder)
(Printed Name of Shareholder)
EXHIBIT "A"
List of ESSI Shareholders
# of ESSI # of Cherokee
Shares Shares
Ackel, Barry 18,000 72,000
Acomb, Julie Marie & Daniel C. Lowrance 100 400
Acomb, Sterling 150 600
Adamson, Rex L. 18,000 72,000
Adorable, Reynardo 9,000 36,000
Aguayo, Ben 8,500 34,000
Aguayo, Isabel de-Key Bank F.B.O. 12,000 48,000
Alexander, James T. & Becky 18,000 72,000
Allen, Paul George 3,240 12,960
Ames, Park 90,000 360,000
Anderson, Chad 9,000 36,000
Andrus Rick 6,875 27,500
Andrus, Bradley 15,750 63,000
Andrus, Brent 29,000 116,000
Andrus, Millard 3,000 12,000
Andrus, Randall Brock 1,250 5,000
Ashton, John 36,000 144,000
Aymond, Jimmy 144,000 576,000
Baker, Ed 9,000 36,000
Barbari, Allen 9,000 36,000
Barlow, Frankie 2,250 9,000
Barton, Russell & Sue 18,000 72,000
Barton, Sherry 500 2,000
B.C.Warner Irrevocable Trust 5,000 20,000
Beal, Scott 6,660 26,640
Beckstead, Brent & Jan 2,250 9,000
Bellini, Mark 18,000 72,000
Belsito, Alphonson 9,000 36,000
Belt, Alfred 1,000 4,000
Bennett, Brian D. 2,500 10,000
Bennett, J. Brad 2,500 10,000
Berkes, Stephen 18,000 72,000
Berlin, Marvin 5,410 21,640
Berna, Bonnie 10,683 42,732
Berna, Russ 10,683 42,732
Birmingham, Daniel 9,000 36,000
Bisaillon, Mark 3,000 12,000
Blaimres, James 18,000 72,000
Blake, Jade 3,000 12,000
Boggess, Lars L 1,000 4,000
Bolinder,Bruce L. 9,000 36,000
Bower Family Trust 18,000 72,000
Boyke, Mark 1,000 4,000
Boyke, Mark & Debra 25,200 100,800
Brenchley, Richard & 1,000 4,000
Breunig , Tom 3,600 14,400
Brewer, Mark S. 9,000 36,000
Brigham, Terry W. 18,000 72,000
Bullen, Jonathan 50,000 200,000
Burkhardt, Donna 3,500 14,000
Burningham, Jerry 2,000 8,000
Burningham, Rick 2,000 8,000
Cannon, Garff - Richmark, LTD. 18,000 72,000
Cannon, Mark 18,000 72,000
Cannon, Wilford W. 2,340 9,360
Castle, David 6,000 24,000
Castle, John 2,000 8,000
Chang-Tung, Eric 3,250 13,000
Chapman, Amber 281 1,123
Chapman, Brianne 281 1,123
Chase, Duane 18,000 72,000
C.J. Prestman Co. 5,000 20,000
Clonts, Jeff & Laurie 9,000 36,000
Collins Family Trust (Carol) 2,500 10,000
Collins, Rachel 3,333 13,332
Collinsworth, Leonard 2,250 9,000
Cooper-Larsen, Desiree 14,500 58,000
Corbin, Dean 36,000 144,000
Corbin, Merlin 18,000 72,000
Cosgrove, Michael 9,000 36,000
Cozzens Excavating 6,000 24,000
Cozzens, Blaine 1,000 4,000
Cozzens, Don 1,000 4,000
Cozzens, Hal 8,125 32,500
Cozzens, Ken 1,000 4,000
Cozzens, Marty 1,000 4,000
Cozzens, Mitch 1,000 4,000
Crocket, Dennis 18,000 72,000
Cunningham, Nancy 4,000 16,000
Curcie, Stephen 27,000 108,000
Curtis, Cindey or Roger 1,000 4,000
Davis, Culley W. 1,750 7,000
Dance, David 1,000 4,000
David, Mark 9,000 36,000
Delavan, John & Cheryl 36,000 144,000
Dill, Richard 9,000 36,000
Dodson, Frank 9,000 36,000
Duke, John 1,000 4,000
Egan, Dwight 4,500 18,000
Elfstrom, Ronald 17,000 68,000
Enslow, John 5,500 22,000
Eyre, Candyce R. 1,563 6,252
Eyre, Conner M. 281 1,123
Eyre, Quinn Patrick 281 1,123
Ezell, Steven 18,000 72,000
Featherstone, Ed & Joann 18,000 72,000
Ferguson, Marian 18,000 72,000
Finniger, Walter 4,500 18,000
Fletcher, Loyst Jr. 5,000 20,000
Foster, Kenneth 2,250 9,000
Freeze, JP 3,000 12,000
Gadd, Richard 5,500 22,000
Gadd, Richard and Lori 3,000 12,000
Gadd, Vance 4,000 16,000
Gengler, Jan 10,000 40,000
Goodrich, David 2,250 9,000
Green, David 81,000 324,000
Greene, Kim R. 4,500 18,000
Greene, Kim/Sherry 4,500 18,000
Grenier, Marc 27,000 108,000
Grove, J.F. 3,334 13,336
Grove, John 72,000 288,000
Grove, Lisa 3,333 13,332
Grygar, Jiri George 1,000 4,000
Guernsey, Gerald L. 1,000 4,000
H & A Investments 3,750 15,000
Haaga, Bruce Family Trust 10,000 40,000
Hadlock, Brian 4,500 18,000
Hadlock, Jim 13,500 54,000
Hadlock, Steve 18,000 72,000
Hadlock, Steve & Becky 36,000 144,000
Hadlock, Michael or Barbara 2,000 8,000
Hadlock, Mike 18,000 72,000
Haglund, Bruce 18,000 72,000
Hall, Lance 18,000 72,000
Hamilton, J. Chad 18,125 72,500
Hammersley, Georgia & Gary 24,500 98,000
Harman, John 54,000 216,000
Harr, John 10,500 42,000
Harris, Neal 9,000 36,000
Harrison, Beverly J. 1,000 4,000
Haws, David 3,375 13,500
Haws, Eric 3,375 13,500
Haws, John 2,250 9,000
Heaton, Allan & Julie 1,000 4,000
Heil, James 2,500 10,000
Heilman, Gene 127,000 508,000
Helfrich, Cliff 3,250 13,000
Hewlett, John 18,000 72,000
Hewlett, John - Pine Valley, LTD. 18,000 72,000
Hicken, Donald 1,000 4,000
Hicken, Randy 18,000 72,000
Hittner, Glen 36,000 144,000
Hoban, Brian Keith 9,000 36,000
Holt , Daniel 9,000 36,000
Hook, Diane 9,000 36,000
Howsden, F. Lester 5,500 22,000
Hunsaker Bryan 3,875 15,500
Hunsaker, Garrick 625 2,500
Hunsaker, Jason 1,875 7,500
Hunsaker, Weldon 10,625 42,500
Hurt, Ivan 1,121 4,486
Jadeja, Alka 9,000 36,000
James, Mark 1,575 6,300
Jardine, Jared 225 900
Jawitz, Jack 13,500 54,000
JBAT LTD Partnership 9,500 38,000
Jeidy, Amanda Sue 1,000 4,000
Jensen, Richard 1,125 4,500
Jensen, Verl 3,000 12,000
Johnson, Joe 18,000 72,000
Jungreis, Alexander 5,500 22,000
Kallins, Marc 18,000 72,000
Keller, Karen K. 10,000 40,000
Klis, Robert & Allison 18,000 72,000
Knight Family Trust 6,000 24,000
Knight, Shane 2,000 8,000
Knight, Travis 7,500 30,000
Knox, Bruce 1,250 5,000
Kujanpaa, Paul & Lorna 9,000 36,000
Kujanpan, Paul 19,000 76,000
Lavdas, Nicholas 6,000 24,000
Landry, Paul 36,000 144,000
Larsen, Nancy 18,000 72,000
Leason, J.K. & R. H. 9,000 36,000
Ledoux, Donald 5,000 20,000
Lieberman,Lawerence 18,000 72,000
Lish, Harold 5,625 22,500
Livingston, Terry 22,500 90,000
Lloyd, Raymond 2,500 10,000
Loftin, Mike 4,500 18,000
Lowrance, Christy Elaine & Daniel C. 100 400
Lowrance, Daniel C. 2,300 9,200
Lowrance, Joey Michael & Daniel C. 100 400
Lowrance, John Paul & Daniel C. 100 400
Lowrance, John W. & Daniel C. 100 400
Lowrance, Mark Daniel & Daniel C. 100 400
Lowrance, Wendy Anne & Daniel C. 100 400
Lunak, Mitchell 250 1,000
Lunt, Wendell 9,000 36,000
Lyon, Chris & Donna 1,000 4,000
Mahnke, Mike 18,000 72,000
Mansell, Jeffery 9,000 36,000
Manuela, Ronald 4,500 18,000
Maples Bradly 19,000 76,000
Mark Ancel Corp. 9,000 36,000
McCord, Gilbert 118,840 475,360
McCord, Mathew 2,000 8,000
McDermott, James - T-6G Limited 288,000 1,152,000
Mellor, Reed 22,500 90,000
Miller Mark 4,500 18,000
Milroy, Don 5,000 20,000
Mortgage Alternatives Inc. 3,000 12,000
Moss, William W. 18,000 72,000
Munroe, Taylor 612,000 2,448,000
Nadiminti, Yallappa 9,000 36,000
Nelson, Diane 5,000 20,000
Neyland, Dennis 19,000 76,000
Nietz, Bradley R. 18,000 72,000
Nowak, William 27,000 108,000
Oliphant, Arden 500 2,000
Olson, Carrie 10,000 40,000
Onsager, Glenn 36,000 144,000
Onsager, Janine L. 18,000 72,000
Orton, Vince L. 4,000 16,000
Ovadek, Michael 4,500 18,000
Packard, Corinne 5,760 23,040
Palamino, Celestino 4,500 18,000
Palmer, Dean 117,000 468,000
Patterson, Allen 2,160 8,640
Patterson, Merlin 2,160 8,640
Peck, Clay 2,250 9,000
Peck, Cole 2,250 9,000
Peck, David 3,000 12,000
Peck, Tony 1,800 7,200
Peurifoy, J. Tom 18,000 72,000
Pierpont, David 1,125 4,500
Pinnacle Enterprises, Inc. 1,054,147 4,216,590
Porter Family Estate (Lance) 2,000 8,000
Price, Eric 1,125 4,500
Pugh, Kazell 4,500 18,000
Pyper, Todd or Ralph 1,000 4,000
Quality Fire Protection 1,000 4,000
Quayle, Doug 625 2,500
Raiff, Michael 2,750 11,000
Rawson, Robert 4,500 18,000
Ray, Monte C. 5,000 20,000
Repass, Curtis 2,500 10,000
Robinson, Ann Denece 2,563 10,252
Robinson, Duane 4,384 17,536
Rogers, Rainey 19,920 79,680
Rollette, Nancy (Larsen) 4,402 17,608
Rood, Susan 18,000 72,000
Rose, Gilbert Lee 9,000 36,000
Savage, Trent 1,400 5,600
Savage, Ty 1,450 5,800
Scharmann, Mark 2,500 10,000
Schermerham, Mark C. 1,000 4,000
Schmidt, Max 12,500 50,000
Selgas, Tom 18,000 72,000
Seltzer, Bryan 9,000 36,000
Shashidhara, Malery 9,000 36,000
Shephard, Kevin L. 1,000 4,000
Sidney, Stuart 18,000 72,000
Silicone Plastics, Inc. 2,500 10,000
Smith, Gary 18,000 72,000
Smith, Mitch 2,250 9,000
Smoot, Steve 2,340 9,360
Sorenson, Joe & Kathleen 18,000 72,000
Southwick, Jay 36,000 144,000
Spoerl, Charlene 18,000 72,000
Spoerl, Fred 36,000 144,000
Stolk, Lawrence 1,125 4,500
Stroebel, Mark 1,500 6,000
Subbiondo, Robert 9,000 36,000
Sullivan, Don 7,000 28,000
Tanner Trust 2,250 9,000
Taylor, Helen Marie 50,000 200,000
Thayer, Kelly 9,000 36,000
Thomas, Robert 1,000 4,000
Thomas, Thomas 9,000 36,000
Thorbahn, Dave 7,200 28,800
Tillotson, Blake (Da Lebra Corp.) 36,000 144,000
Tillotson, Craig 36,000 144,000
Tillotson, Josephine 9,000 36,000
Truck Pro, LLC 12,500 50,000
Turner, Robert 1,000 4,000
Turner, Ronald M. 21,000 84,000
Valgardson, Don 2,000 8,000
Vanorden, Chad 1,000 4,000
Viola, Vincent 9,000 36,000
Vermeulen, Sinde 9,000 36,000
Waldvogel, David 90,000 360,000
Walter, Claud 4,500 18,000
Warner, Bart 12,500 50,000
Warner, Bart C. Irrevocable Trust 5,000 20,000
Warren, Richard/Ann 2,500 10,000
Warren, Richard/Jerome 2,000 8,000
Waters, Richard" 4,500 18,000
Webber, Curtis S. 1,000 4,000
Weisenberger, Guy 1,250 5,000
Weisenberger, Mary Lou 2,625 10,500
Weisenberger & Sons 7,100 28,400
Welch, Barry 2,000 8,000
Welch, Greg P. 2,000 8,000
Welch, Robert P. 1,500 6,000
Welch, Scott M. 1,000 4,000
Welch, Scott P. 2,000 8,000
Westenskow, Danny 275 1,100
Whaley, Preston Dr. 29,000 116,000
Whitehead, Cann W. 150 600
Whiteherse, James 5,000 20,000
Whitson, Leora 1,000 4,000
Williams, Red & Ann 18,000 72,000
Winterholler, John 1,000 4,000
Woods, Lindsay 75 300
Wright & Assoc. 9,000 36,000
Wright Rex C. 3,000 12,000
Yagoda, Marvin 9,000 36,000
Yates, Cindy 27,675 110,700
Yates, Dustin 6,750 27,000
Yates, Jim 21,250 85,000
Yates, Rod 4,500 18,000
Yates, Shane 19,375 77,500
Young, Catherine 5,000 20,000
Zarbock, Brad 2,000 8,000
Zmyslo Limited Partnership 5,000 20,000
TOTAL 5,520,000 22,080,000
EXHIBIT "B"
Letter of Intent
Incorporated herein by reference from the 8-K Current Report dated October 16,
1998. See Item 7.
EXHIBIT "C"
Schedule of ESSI Options and
Contingent Issuance of Shares
SCHEDULE OF OPTIONS AND CONTINGENT ISSUANCE OF SHARES
ENVIRONMENTAL SYSTEMS & SOLUTIONS, INC. STOCK OPTIONS GRANTED
The following sets forth the number of existing stock options granted by
ESSI and the number of options of CHEROKEE into which such ESSI options
convert:
<TABLE>
ESSI OPITONS CHEROKEE OPTIONS
Number of Exercise Number of Exercise
Name Options Price Options Price
<S> <C> <C> <C> <C>
Mark S. Brewer 37,500 $ 1.00 150,000 $ 0.25
Culley W. Davis 25,000 $ 1.00 100,000 $ 0.25
Bruce H. Haglund 25,000 $ 1.00 100,000 $ 0.25
Ronald L. LaFord 25,000 $ 1.00 100,000 $ 0.25
James Hadlock 18,750 $ 1.00 75,000 $ 0.25
John W. Nagel 7,500 $ 1.00 30,000 $ 0.25
Paul A- Kujanpaa 7,500 $ 1.00 30,000 $ 0.25
Scott Stowers 5,000 $ 1.00 20,000 $ 0.25
Lorene B. Childs 5,000 $ 1.00 20,000 $ 0.25
Edward B. Paulson 3,750 $ 1.00 15,000 $ 0.25
Mark Gamblin 2,500 $ 1.00 10,000 $ 0.25
Stacey N. Holdaway 2,300 $ 1.00 10,000 $ 0.25
Jennifer D. Andrus 2,500 $ 1.00 10,000 $ 0,25
Tina M. Ellis 2,500 $ 1.00 10,000 $ 0.25
Benjamin Aguayo, Jr.1,875 $ 1.00 7,500 $ 0.25
Naoya Nakamura 1,875 $ 1.00 7,500 $ 0.25
Jeremy W. Rawle 1,250 $ 1.00 5,000 $ 0.25
175,000 700,000
</TABLE>
ENVIRONMENTAL SYSTEMS & SOLUTIONS, INC. - AGREEMENTS TO ISSUE SHARES
ESSI has agreed to issue 25,000 shares of ESSI to Hideyuki Nakamura in
connection with the formation of Hydro-Maid Asia, Inc. as a Japanese
corporation, which will be owned 50% by Nakamura and 50% by ESS1, to
manufacture and market the Hydro-Maid product in Asia. Upon the
completion of the Reorganization and the formation of Hydro-Maid Asia, Inc.,
Nakamura will be entitled to receive 100,000 shares of CHEROKEE.
ESSI has agreed to issue 50,000 shares of ESSI to Donald Sullivan in
connection with the acquisition by ESSI of Metric Tools & Dies, an Illinois
corporation. Upon the completion of the reorganization and the acquisition of
Metric Tools & Dies, Sullivan will be entitled to receive 200,000 shares of
CHEROKEE, of which 120,000 shares will be subject to forfeiture if he
terminates his employment with ESSI prior to December 31,1999, 80,000 shares
will be subject to forfeiture if he terminates his employment with ESSI prior
to December 31, 2000, and 40,000 shares will be subject to forfeiture if he
terminates his employment with ESSI prior to December 31, 2001.
EXHIBIT "D"
ESSI Exceptions
NONE
EXHIBIT "E"
ESSI Patents
U.S. Patents
3700178,4082229,4399947,4405159, 4573642, 5404898, and 5520367
U.S. Patents Pending:
ESSI has filed four patent applications that are currently pending.
Trademark Filing:
Hydro-Maid
EXHIBIT "F"
ESSI Bank Accounts
Draper Bank & Trust Account No. 08-0081062499
(Signer: Culley W. Davis)
Key Bank Account No. 445010007372
(Signer: Culley W. Davis)
EXHIBIT "G"
Cherokee Exceptions
NONE
EXHIBIT "H"
Cherokee Financial Statements
See the 10-QSB and 10-SB previously filed with the Securities and Exchange
Commission and incorporated herein by reference. See Item 7.
EXHIBIT "I"
Cherokee Bank Accounts
NONE
EXHIBIT "J"
Form of Power of Attorney
POWER OF ATTORNEY
THE UNDERSIGNED SHAREHOLDER (the "Shareholder") of ENVIRONMENTAL
SYSTEMS & SOLUTIONS, INC. ("ESSI") does hereby:
(i) sells, assigns and transfers unto CHEROKEE MINERALS
AND OIL, INC., a Nevada corporation ("CHEROKEE"), the number of shares
of ESSI set forth opposite his name in Exhibit "A" (the "Shares") to
that certain Agreement and Plan of Reorganization for the Acquisition of
all of the Outstanding shares of Common Stock of Environmental Systems &
Solutions, Inc. by Cherokee Minerals and Oil, Inc. dated November 12,
1998 (the "Agreement").
(ii) irrevocably constitutes and appoints CULLEY W. DAVIS
("DAVIS") as attorney-in-fact to transfer the Shares on the books of
ESSI to Cherokee as set forth in the Agreement, with full power of
substitution in the premises;
(iii) constitutes and appoints DAVIS as his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and
in his name, place, and stead, in any and all capacities (until revoked
in writing) to act on behalf of such Shareholder in connection with the
Agreement and the exchange of the Shares for CHEROKEE shares; and
(iv) grants unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite
or necessary to be done in and about the premises as fully to accomplish
all intents and purposes of the Agreement as such Shareholder might or
could do in person, hereby ratifying and confirming all that the
attorney-in-fact, or his substitute, may lawfully do or cause to be done
by virtue of this power of attorney.
IN WITNESS WHEREOF, the undersigned has executed this power of
Attorney this day of November, 1998.
(Signature of Shareholder)
(Printed Name of Shareholder)
[Hydro Maid letterhead]
November 16, 1998
Shareholder
Environmental Systems & Solutions, Inc.
Re: Agreement and Plan of Reorganization for the Acquisition of
All of the Outstanding Shares of Common Stock of
Environmental Systems & Solutions, Inc. by Cherokee Minerals
and Oil, Inc. (the "Plan)
Dear ESSI Shareholder:
I am contacting you on behalf of Environmental Systems & Solutions, Inc.
("ESSI") to explain the proposed acquisition by Cherokee Minerals and Oil,
Inc. ("Cherokee") and to provide you with the relevant documents for the
transaction.
Cherokee is a publicly traded company, meaning that its shares are
tradeable in the public market place. Cherokee's Over-the-counter Bulletin
board symbol is "CKMR." Cherokee has no ongoing operations. ESSI has agreed
to permit Cherokee to file to do business as Hydro Maid International, Inc.
until the acquisition is completed at which time the name of Cherokee will be
offically changed to Hydro Maid International, Inc. The stock symbol will
also be changed as soon as practicable to be closely identified with the Hydro
Maid name.
ESSI is a privately held company with no public market for its shares.
By being acquired by Cherokee, ESSI will become a publicly traded company
without going through the time and expense associated with registering its own
securities. This letter provides an outline of the Agreement and Plan of
Reorganization for the acquisition of all of the outstanding shares of common
stock of ESSI by Cherokee.
Enclosed you will find two packets of materials containing the following
documents:
Packet 1: (Large Packet-you keep.)
Agreement and Plan of Reorganization with the following exhibits:
Exhibit A-List of ESSI Shareholders
Exhibit B-Letter of Intent
Exhibit C-Schedule of Options and Contingent
Issuance of Shares
Exhibit D-Exceptions
Exhibit E-ESSI Patents
Exhibit F-ESSI Bank Accounts
Exhibit G-Cherokee Exceptions
Exhibit H-Cherokee Financial Statements (included in
Cherokee's registration statement filed on
Form 10-SB and its 10-QSB for the Quarter
ended September 30, 1998)
Exhibit I-Cherokee Bank Accounts
Exhibit J-Form of Power of Attorney
Accredited Investor Questionnaire
Stock Power
Packet 2: (Small Packet-return to ESSI in the return package.)
Accredited Investor Questionnaire
Signature Page to Agreement and Plan of Reorganization
Stock Power
Power of Attorney
This first packet is for your record and includes a copy of each of the
documents contained in the second packet. Additional information concerning
Cherokee is available at the Securities and Exchange Commissions web site at
www.sec.gov. You may also contact Joe Johnson, Cherokee's President, at (801)
550-9892. If you desire any further information concerning Cherokee.
What should you do with the information provided?
First, read the Accredited Investor Questionnaire to determine if you
are an "accredited investor." This is an objective "net worth" test and does
not depend on you education or investment experience. If you are an
accredited investor, you may participate in the Plan immediately. If you are
not an accredited investor and you want to participate in the Plan, you are
provided the same opportunity to exchange your shares as all other
participants in the Plan, but you may be required to wait up to six months to
have your stock exchanged. All non-accredited investors, except the first 35
who return the required information and signature pages to our office, who
choose to participate in the Plan will be subject to the waiting period. We
encourage all investors to discuss the Plan with your attorney to help you
decide if you should agree to the stock exchange.
Second, read the Information Statement and the Plan, including Exhibits
A through J, and the other documentation contained in both packets.
Third, if after reviewing all of the materials enclosed you decide to
participate in the exchange of ESSI shares of Cherokee shares, consider the
following: If all shareholders of ESSI participate in the acquisition,
existing ESSI shareholders will be diluted from 100% ownership in ESSI to
approximately 92% ownership of Cherokee. In other words, after the
acquisition, Cherokee shareholders will own aproximately 8% of the stock
outstanding even though they have no ongoing operations or revenues, and ESSI
shareholders will own approximately 92% of the stock outstanding.
You also need to know that the Cherokee shares are unregistered and
restricted and that you will commence a new holding period once the Plan is
completed with respect to the Cherokee shares you receive; accordingly, you
may not be able to sell these shares in the public market or avail yourself of
the provisions of Rule 144 of the Securities and Exchange Commission for at
least one year from the completion of your exchange.
By accepting the Plan, you will be waiving any claims you may have
arising our to ESSI's sale and your purchase ESSI shares in the past and the
issuance of Cherokee shares in place of your ESSI shares. To determine
available federal and state exemptions relied, upon by ESSI to offer and sell
its shares involves a complex factual analysis of all ESSI documentation
including all information provided to ESSI by its shareholders. Cherokee is
requiring that all ESSI shareholders agree to waive and compromise all claims
they may have related to the sale and purchase of ESSI shares, including
federal and state securities law claims to avoid the otherwise necessary
gathering, reviewing and analyzing of ESSI and its shareholder documentation
gathered over the past six years.
You should also understand that this Plan will not be completed unless
persons owning at lest 80% of the ESSI shares agree to the Plan and stock
exchange.
Fourth, if, after you have reviewed all of the Exhibits and have had
your questions answered, you want to participate in the Plan, please complete
and sign all documents in Packet 2 and return them to us in the return evelope
enclosed along with your ESSI stock certificate. (If you don't have your
certificate, we are holding it for you and you need only return the signed
documents.) The Power of Attorney permits me to execute any last minute
documentation on you behalf as a shareholder to complete the transaction, and
the Stock Power permits ESSI to cancel your ESSI certificate and Cherokee to
issue a new certificate in its place.
In the event 80% of the shareholders do not approve the Plan within 30
days, your ESSI stock certificate will be returned to you. If 80% of the
shareholders do approve the Plan, a Cherokee stock certificate will be sent to
you. Your new stock certificate will bear a restrictive legend as outlined in
the Plan.
If you want any further information regarding this transaction, please
contact me at the ESSI office or ESSI's attorneys, Bruce H. Haglund at (949)
752-1100 or Ted B. Paulsen at (801)501-7800.
We at ESSI greatly appreciate the support you have provided to us
through the years, and we look forward to an exciting future.
Very truly yours,
/s/Culley W. Davis
CWD/lbc
enclosures
AGREEMENT AND PLAN OF REORGANIZATION
See exhibit 10 above.
ACCREDITED INVESTOR QUESTIONNAIRE
ENVIRONMENTAL SYSTEMS & SOLUTIONS, INC.
ACCREDITED INVESTOR QUESTIONNAIRE
You, as a shareholder of Environmental Systems & Solutions, Inc.
("ESSI") are required to review this form to determine if you are an
accredited or non-accredited investor. Accredited investors must complete
this form and return it to participate in the Agreement and Plan of
Reorganization (the "Plan"), whereby common stock shares of ESSI will be
exchanged for common stock shares ("Shares") of Cherokee Minerals and Oil,
Inc. ("Cherokee"). Accredited Investor shares will be exchanged at the Plan
closing scheduled to occur in December 1998. Non-accredited investors, other
than the first 35 who return the required information to ESSI's office, who
choose to participate in the Plan, will be subject to a waiting period of up
to six months before their shares are exchanged.
1. Definition of Accredited Investor.
a. a natural person who had an individual income of more than $200,000 in
each of the most recent two years or joint income with his or her spouse in
excess of $300,000 in each of the most recent two years and reasonably expect
to reach that same income level for the current year ("income," for purposes
hereof, should be computed as follows: individual adjusted gross income as
reported (or to be reported) on a Federal income tax return, increased by (1)
any deduction of long-term capital gains under section 1202 of the Internal
Revenue Code of 1986 (the "Code"), (2) any deduction for depletion under
Section 611 et seq. of the Code, (3) any exclusion for interest under Section
103 of the Code, and (4) any losses of a partnership as reported on Schedule E
of Form 1040);
b. a natural person whose individual net worth (i.e., total assets in
excess of total liabilities), or joint net worth with his or her spouse, will
at the time of purchase of the Shares be in excess of $1,000,000;
c. a corporation, partnership, Massachusetts or similar business trust, or
organization described in Section 501 (c)(3) of the Internal Revenue Code of
1986, as amended (tax exempt organization), not formed for the specific
purpose of acquiring the Shares, having total assets in excess of $5,000,000;
or
d. an entity (other than a trust) in which all of the equity owners meet
the requirements of at least one of the above subparagraphs.
2. Representations of Accredited Investor. I represent and warrant that I
am an "Accredited Investor" as defined above, or I am acting in a fiduciary
capacity for a person or entity exchanging the Shares and such person or
entity is an Accredited Investor. I understand that the Company will be
relying upon my representation that I am an Accredited Investor in
determining my investor status for purposes of the Plan and Share exchange.
Dated:
(Signature of Shareholder)
(Print or Type Name of ESSI Shareholder)
STOCK POWER
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, I, (name
of transferor), hereby sell, assign and transfer unto
(name of transferee), shares of the
Common Stock of Environmental Systems & Solutions,
Inc., a Nevada corporation (the "Corporation"), represented by certificate(s)
numbered registered in my name on the books of said Corporation, and
do hereby irrevocably constitute and appoint the Secretary of the Corporation
as
attorney-in-fact to transfer the said shares on the books of the Corporation,
with full power of substitution in the premises.
Dated:
(Signature of Transferor)
(Print Name of Transferor)
[Hydro Maid letterhead]
November 18, 1998
Dear Shareholders:
This letter is written in connection with the enclosed package containing
the Agreement and Plan of Reorganization for the Acquisition of All of the
Outstanding Shares of Common Stock of Environmental Systems & Solutions, Inc.
by Cherokee Minerals and Oil, Inc.
Exhibit "C" to the Agreement is a list of the shareholders of ESSI based
on information available as of this date. However, our stock ledger and
financial records are being audited to insure that the number of shares
matches the investment made by each of you.
If the number of shares set forth in the shareholders list does not
correspond to your records, please contact me at your earliest opportunity so
we can resolve the discrepancy.
If the audit demonstrates that the number of shares set forth in the
shareholders list is not accurate, ESSI reserves the right to adjust the
number of shares to conform to the amount invested. However, no adjustment
will be made until after you are contacted so we can discuss the cause for the
discrepancy and resolve the matter.
Thank you for your prompt attention to these matters.
Very truly yours,
/s/Culley W. Davis
