SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 14, 1995
Utah Resources International, Inc.
(Exact name of registrant as specified in its charter)
Utah 0-9791 87-0273519
(State of incorporation) (Commission File No.) (IRS Employer Id. No.)
297 W. Hilton Drive, Suite #4
St. George, Utah 84770
(Address of principal executive offices including zip code)
Issuer's telephone number (801) 628-8080
(Not Applicable)
(Former name or former address, if changed since last report)
Item 1. Changes in Control of Registrant
Settlement of Shareholders' Derivative Lawsuit
In April of 1993, John H. Morgan, Jr., Daisy Morgan, Justin R.
Barton, Stanford P. Darger and William F. Delvie, being all of the then
directors of Utah Resources International, Inc. ("URI" or the
"Company"), settled a shareholders' derivative lawsuit brought against
them on behalf of the Company by certain minority shareholders. The
Settlement Agreement provided for: (1) the transfer to URI by
the!directors, and related parties, of a total of 285,000 shares of
URI's common stock; (2) payment of $100,000 by certain of the directors
to the Company; (3) transfer to the Company of certain partnership
interests held by the directors and related parties; (4) replacement of
all five of the directors with directors chosen pursuant to the terms
of the Settlement Agreement (Mr. and Mrs. Morgan continue to be
directors of the Company under those terms); (5) payment of the
plaintiff shareholders' attorneys fees, totaling $800,000, by URI;
(6) mutual releases of all the parties and their agents; and,
(7) covenants by all parties, effective for the three-year term commencing
from the date of the Settlement Agreement, to take all actions
necessary, but not limited to voting all the shares of the Company's
common stock they beneficially own: (a) to retain all five directors
chosen in accordance with the terms of the Settlement Agreement; and,
(b) in favor of all Board of Director decisions made during the
three-year term.
The parties' agreement to vote their shares of common stock in
accordance with the terms of the Settlement Agreement has been
interpreted differently by the Company and the Morgans. The Company,
as well as the plaintiff shareholders, have expressed their view that
the Settlement Agreement requires Mr. and Mrs. Morgan to vote all
shares of the Company's common stock they beneficially owned at the
time of the Agreement, in accordance with the terms of the Agreement.
Mr. and Mrs. Morgan believe they are required only to vote shares as to
which they, personally, are the record owners, in accordance with the
Settlement Agreement's terms. The Company has indicated it may pursue
legal action to require the Morgans to vote their shares as it believes
they are required to do under the Settlement Agreement.
At the annual shareholders meeting held January 26, 1995, Mr. and
Mrs. Morgan did not vote all shares they beneficially owned in
accordance with the terms of the Settlement Agreement. In particular,
a large shareholder of the Company, Morgan Gas & Oil Co., in which Mr.
Morgan is the controlling shareholder, cast its vote against the slate
of directors chosen in accordance with the terms of the Settlement
Agreement. Thereupon, the shareholders' meeting was adjourned, the
Company's directors met, and challenged the ballot of Morgan Gas & Oil
Co. as being violative of the Settlement Agreement. Thereafter, Morgan
Gas & Oil corrected its ballot to vote for the slate of directors.
Although other shares previously claimed to have been beneficially
owned by the Morgans were voted in violation of the Settlement
Agreement (in the Company's view), since the matters presented at the
shareholders meeting were approved despite the negative votes cast by
the Morgans, the Company determined it had not been damaged by the
Morgans' alleged breach of the Settlement Agreement. The Company
reserved the right to bring an action in the future to enforce what it
believes to be the terms of the Settlement Agreement.
If it is determined that the Morgans are not required to vote the
shares of the Company's common stock they beneficially owned at the
time of execution of the Settlement Agreement in accordance with the
terms of the Settlement Agreement, consummation of the transactions
with MidWest Railroad Construction and Maintenance Corporation
("MidWest") and Robert D. Wolff described under Item 2 below may be
considered to have resulted in a change of control of the Company.
Item 2. Acquisition of Disposition of Assets
On June 13, 1995, Utah Resources International, Inc. consummated
the exchange of 590,000 shares of its common stock, representing
approximately 33% of the total issued and outstanding shares of the
Company's common stock following the transaction, for all of the issued
and outstanding shares of the common stock of MidWest, pursuant to a
Plan of Share Exchange and Share Exchange Agreement, dated February 16,
1995. All of the common stock of MidWest, a Wyoming corporation, was
owned by Robert D. Wolff, the Chief Executive Officer of MidWest, and
his wife. MidWest, headquartered in Salt Lake City, is in the railroad
construction and maintenance business, operating out of five regional
offices in Utah, Wyoming, Colorado, Nebraska, and New Mexico. MidWest
also provides railroad engineering, surveying, bridge and structural
maintenance, grade crossing, and in-plant switching services.
In connection with the closing of the transaction, URI obtained
the written opinion of Brown-Wright & Associates, qualified business
appraisers, that the transactions contemplated by the Share Exchange
Agreement were fair, from a financial viewpoint, to the shareholders of
URI.
The Company covenanted: (1) to indemnify MidWest and the Wolffs
from any liability to URI's shareholders, its officers or directors,
whether brought directly by the person or in a derivative capacity,
arising from MidWest's and/or the Wolffs' negotiation, execution, or
consummation of the Share Exchange Agreement; (2) to execute a
three-year employment agreement with Bob Wolff, as MidWest's President,
at the time of consummation of the share exchange; (3) to apply for
listing of its stock on NASDAQ as soon as reasonably practicable
following the Effective Date; and, (4) to lend MidWest, in the form of
a line of credit, a sum not to exceed $250,000, with the first draw
available after February 15, 1995, evidenced by a promissory note in
standard form, bearing an interest rate of 1% over the posted prime
lending rate of First Security Bank of Utah, N.A., as of February 15,
1995, and adjusted each three months thereafter.
Prior to closing, MidWest borrowed a total of $100,000 against the
line of credit. Pursuant to the terms and conditions of the Share
Exchange Agreement, the line of credit from URI becamesubordinate to
MidWest's existing credit line of $350,000,following the closing. The
line of credit was secured by the assets and equipment of MidWest.
The Company has executed a three-year employment agreement with
Mr. Wolff, pursuant to which he serves as Chief Executive Officer of
the Company and of MidWest. Mr. Wolff will receive $125,000 per year
during the term of the employment agreement. In addition, during the
first five quarters of the agreement, beginning July 1, 1995, Mr. Wolff
will receive $25,000 per quarter. In addition to his base salary, Mr.
Wolff will receive an annual bonus computed on the after tax net
earnings of Midwest, as follows: 5% of the first $200,000 in net
earnings of Midwest, 7% of the next $200,000, and 10% of all amounts
over the first $400,000 in net earnings of Midwest.
Under the employment agreement, Mr. Wolff is entitled to
participate in all Company and MidWest expense reimbursement, vacation,
and sick leave plans; all health, life, accident, and disability
insurance programs; all retirement, pension, profit-sharing, stock
option and other similar benefit plans to the extent such plans are
generally made available to executive officers of the Company and to
employees of the Company and Midwest.
The Company may extend Mr. Wolff's employment for an additional
three-year term at a base salary for the extended term of the Agreement
computed as the greater of: (a) $150,000; or, (b) $125,000 + ($125,000
multiplied by the combined percentage increase in the Consumer Price
Index for the initial three-year term of the Agreement). If the
Company does not extend Mr. Wolff's employment, it must, at its
election, either: (1) return all of the common stock of Midwest to the
Wolffs in exchange for all of their shares of common stock of URI; or,
(2) pay Mr. Wolff $1,250,000 in severance pay, payable quarterly over
three years at 10% simple interest.
If Mr. Wolff dies or becomes permanently disabled within three
years of the date of his employment, the Company will pay him or his
heirs the unpaid balance of his base salary.
Mr. Wolff is also subject to a non-competition covenant, for two
years following his employment, and a confidentiality and
non-disclosure agreement. The Company or MidWest may purchase key-man
life insurance on Mr. Wolff's life, with the Company or Midwest named
as the beneficiary of the policies. Mr. Wolff's employment may be
terminated prior to the end of three years upon Mr. Wolff's breach of
the employment agreement or for cause, defined as criminal or
fraudulent conduct, or Employee's willful failure or refusal to perform
the usual and customary duties of his employment.
The parties executed an Operating Agreement as of the closing. It
provides for the appointment of the following officers in Utah
Resources, MidWest, and Tonaquint, Inc.:
R. Dee Erickson URI - Chairman of the Board Robert D. Wolff
URI - Chief Executive Officer Steve McCormick URI - Chief
Financial Officer, Treasurer Maryann Hausse URI - Secretary
Robert D. Wolff MWR - Chief Executive Officer Bill Busch
MWR - President and Chief Operating Officer Steve McCormick MWR
- - Chief Financial Officer Karl Huffaker MWR - Chief Engineer
Steve Gorton MWR - Manager of Gillette operations Dennis
Olin MWR - Manager of Denver operations Rich Castleberry
MWR - Manager of SLC operations Jim Pledger MWR - Manager of
New Mexico operations Bob Gonzalez MWR - Manager of Green
River operations Carl Brown MWR - Equipment Chris Busch
MWR - Switching Gerry Brown Tonaquint, Inc. -
President Lyle Hurd Tonaquint, Inc. - Vice President of
Marketing Ladd Eldredge Tonaquint, Inc. - Controller
The parties to the Operating Agreement agree that Gerry Brown,
Lyle Hurd, Dee Erickson, Steve Gorton, Steve McCormick, Bill Busch,
Karl Huffaker, and Dennis Olin shall be employed by URI, MWR or
Tonaquint, Inc., respectively, pursuant to written employment
agreements.
The Agreement provides that URI pay Messrs. Erickson and Sheen,
two directors of the company, as full compensation for their services
in connection with the consummation of the Share Exchange, each 38,000
shares of URI's common stock, which shall be registered on Form S-8 as
soon as reasonably practicable, and each $104,000.
By the terms of the Operating Agreement, URI agrees to make
available to MidWest not less than $150,000 of operating capital on an
ongoing basis, and to authorize Messrs. Wolff and McCormick to make the
necessary transfers of funds, without the necessity of further action
by URI's Board of Directors. The parties agree that the funds will
constitute, and be accounted for as, an intercompany revolving line of
credit from URI to MidWest, and will be repaid on the terms and
conditions agreed upon by the Boards of Directors of URI and MidWest
from time to time. If the Company elects not to renew Wolff's
employment agreement following its initial three-year term, any
outstanding balance on the revolving line of credit shall become a term
loan, payable in quarterly installments of principal and interest over
a two-year period.
The Operating Agreement provides that URI shall adopt the
accounting policies and procedures, and shall acquire the equipment and
services, necessary to coordinate its internal accounting and tie into
the existing system of MidWest, provided, however, that to the extent
other accounting practices or procedures are mandated by URI's nature
as an SEC reporting company, by generally accepted account principles,
by Regulation S-X under the federal securities laws, by the Board of
Directors of URI, or are recommended for adoption company-wide by URI's
outside auditors, URI, MidWest and Tonaquint, Inc. shall adopt such
practices and procedures as required.
Mr. Wolff is given authority to negotiate business transactions
not in the ordinary course of business, on behalf of URI, MWR and
Tonaquint, Inc., including but not limited to negotiations to dispose
of or acquire assets or businesses, and to negotiate with investment
bankers and others; provided, however, that Mr. Wolff may not bind any
of the companies as to business transactions not in the ordinary course
of business without the prior approval of the respective Board of
Directors.
The Wolffs have acknowledged in the Share Exchange Agreement, that
the Company and various directors and shareholders of URI are parties
to a Settlement Agreement, dated April 3, 1993, associated with the
settlement of a stockholders' derivative lawsuit, described below. The
Wolffs have covenanted that, until May 7, 1996, they will vote all the
shares of URI common stock they beneficially own, as that term is
defined by the SEC, for each of the directors appointed to the URI
Board of Directors in accordance with the terms of the Settlement
Agreement, and in favor of any decisions made by the Board of Directors
that are brought to the URI shareholders for their approval. After May
7, 1996, the Wolffs agree to vote the shares of URI common stock they
beneficial own in favor of an amendment to URI's Articles of
Incorporation to establish cumulative voting for directors of URI. The
shares of URI common stock the Wolffs received at closing contained a
restrictive legend relating to their covenant to so vote their shares.
The Company has also covenanted to take any and all actions necessary
or desirable, including but not limited to taking legal action, to
enforce the terms of the Settlement Agreement. URI also agreed not to
act to change the current composition of the Board of Directors of
MidWest prior to May 7, 1996.
The shares of common stock acquired by the Wolffs in the
transaction have not been registered and are restricted securities, as
that term is defined in Rule 144 under the Securities Act of 1933. The
certificate representing shares of stock acquired by the Wolffs
contains a restrictive legend evidencing the unregistered nature of the
shares. Generally, the Wolffs will be unable to sell any portion of
the shares acquired in the Share Exchange for two years, absent their
registration pursuant to the rules and regulations of the Securities
Exchange Commission.
For five years after closing, the Wolffs have the opportunity to
request inclusion in any registered stock offering conducted by the
Company. If the Wolffs request inclusion and the offering is to be
underwritten, URI will request the underwriters of the offering to
purchase and sell the Wolffs' stock in the offering. If the
underwriter determines that not all shares requesting inclusion in the
offering as "selling shareholders" can be offered, due to marketing
factors, the Wolffs will be entitled to participate on a pro-rata basis
with other selling shareholder.
Immediately following URI's annual shareholders meeting in 1996,
anticipated in June, 1996, the Company's Board of Directors will be
expanded by two, to a total of seven, and Mr. Wolff shall have the
right to nominate the persons to fill the two new seats, until the next
annual meeting of shareholders thereafter.
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information.
Unaudited pro forma condensed balance sheet, pro forma condensed
statements of income, and accompanying explanatory notes are not yet
available with respect to the above transaction and will be filed by
amendment.
(c) Exhibits.
Exhibit 3. PLAN of SHARE EXCHANGE and SHARE EXCHANGE AGREEMENT,
dated February 16, 1995, among Utah Resources International, Inc.,
MidWest Railroad Construction and Maintenance Corporation, Robert D.
Wolff and Judith Wolff.
Exhibit 10.1. EMPLOYMENT AGREEMENT dated June 13, 1995, between
Utah Resources International, Inc. and Robert D. Wolff.
Exhibit 10.2. OPERATING AGREEMENT dated June 13, 1995, between
Utah Resources International, Inc., MidWest Railroad Construction and
Maintenance Corporation, and Robert D. Wolff.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: June 29, 1995
Utah Resources International, Inc.
By R. Dee Erickson (SIGNATURE)
Chairman of the Board
PLAN OF SHARE EXCHANGE AND SHARE EXCHANGE AGREEMENT
THIS PLAN OF SHARE EXCHANGE AND SHARE EXCHANGE AGREEMENT, dated
February 16, 1995 is among Utah Resources International, Inc., a Utah
corporation ("URI"), MidWest Railroad Construction and Maintenance
Corporation, a Wyoming corporation ("MWR"), and Robert D. Wolff ("Bob
Wolff") and Judith Wolff, the shareholders of MWR (Mr. and Mrs. Wolff
are collectively referred to as the "Wolffs").
RECITAL
A. The respective Boards of Directors of URI and MWR deem it
advisable to accomplish a share exchange pursuant to the terms and
conditions of this Agreement, effective upon the filing of Articles of
Share Exchange with the Utah State Department of Commerce, Division of
Corporations and Commercial Code.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual benefits,
representations, warranties, conditions and promises contained in this
Agreement, URI, MWR and the Wolffs agree as follows:
ARTICLE I - DEFINITIONS
1.1 Definition of Terms Used in the Agreement. For purposes of
this Agreement, the following terms are defined as indicated:
1.1.1 "Agreement" means the Plan of Share Exchange and Share
Exchange Agreement, dated February 16, 1995, among URI, MWR and the
Wolffs.
1.1.2 "Articles of Share Exchange" means the articles to be
executed and filed for recording with the Utah State Department of
Commerce, Division of Corporations and Commercial Code, at the time of
or following the Closing Date.
1.1.3 "Closing Date" means the date on which the transactions
contemplated by this Agreement shall be closed which, unless another
date and place are agreed to by the parties, shall be April 26, 1995,
at 2:00 p.m., at the law offices of Moyle & Draper, P.C., No. 15 East
100 South, 600 Deseret Plaza, Salt Lake City, Utah.
1.1.4 "Effective Date" means the date on which the share exchange
shall become effective in accordance with Utah law, following the
filing of the Articles of Share Exchange with the Utah State Department
of Commerce, Division of Corporations and Commercial Code.
1.1.5 "Exchange Agent" means Fidelity Transfer Company or any
other transfer agent or independent party chosen by URI to act as URI's
agent in the exchange of securities by the Wolffs with URI.
1.1.6 "Hazardous Materials" means material, waste or by-products
defined as "hazardous substances," "hazardous wastes" or "solid wastes"
in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Section 9601-9657 and any amendments thereto
("CERCLA"), or the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901-6987 and any amendments thereto ("RCRA"), or any other
federal, state or local environmental statute or regulation or any
unwholesome toxic or radioactive material.
1.1.7 "MWR" means MidWest Railroad Construction and Maintenance
Corporation, a Wyoming corporation, and the company all of whose issued
and outstanding shares of common stock are being acquired by URI.
1.1.8 "MWR Common Stock" means all of the issued and outstanding
common stock of MidWest Railroad Construction and Maintenance
Corporation immediately prior to the Effective Date, as owned by Robert
D. Wolff and Judith Wolff.
1.1.9 "MWR Subsidiary" means any corporation of which MWR owns,
directly or indirectly, more than 50% of the outstanding voting
securities.
1.1.10 "URI" means Utah Resources International, Inc., a Utah
corporation, and the company that is acquiring all of the MWR Common
Stock for shares of its authorized but unissued shares of common stock.
For purposes of the provisions of Section 16-10a-1102 et seq. of the
Utah Revised Business Corporation Act, URI is the acquiring corporation.
1.1.11 "URI Subsidiary" means any corporation of which URI owns,
directly or indirectly, more than 50% of the outstanding voting
securities.
1.1.12 The "Wolffs" mean Robert D. Wolff and Judith Wolff, the
only shareholders of MWR.
ARTICLE II - SUMMARY AND GENERAL
2.1 Execution of Articles of Share Exchange. Subject to the
provisions of this Agreement, Articles of Share Exchange to complete
the share exchange shall be executed and acknowledged by URI and
delivered to the Utah State Department of Commerce, Division of
Corporations and Commercial Code for filing and recording in accordance
with applicable law on the Closing Date.
2.2 Reservation of URI Shares. URI agrees that on the
Effective Date it will have sufficient shares of its common stock
authorized and reserved for issuance to the Wolffs, or their nominees
as allowed by the provisions of Section 3.2 of this Agreement. URI
further agrees that on the Effective Date it will have sufficient
shares of its common stock authorized to reserve shares for issuance
pursuant to an Incentive Stock Option Plan, or similar broadly-based
employee stock option or ownership plan, to be adopted by URI, whose
terms shall be mutually agreed upon by URI and Bob Wolff.
2.3 Further Action. The parties shall take all necessary or
appropriate action to effectuate the transactions contemplated by this
Agreement. If, after the Effective Date, any further action is
necessary or desirable to carry out the purposes of this Agreement and
to vest URI with full title to all properties, assets, rights,
approvals, immunities and franchises of MWR, the agents or
representatives of the respective corporations and/or the Wolffs, at
the expense of URI, shall take the appropriate action.
ARTICLE III - EXCHANGE OF MWR COMMON STOCK
3.1 Exchange of Stock. On the Effective Date, all outstanding
shares of MWR Common Stock, including all shares issuable upon exercise
of all outstanding options, notes or other convertible instruments,
shall be exchanged for Five Hundred Ninety Thousand (590,000) shares of
unregistered, authorized, but presently unissued URI common stock.
3.2 Issuance of URI Certificates. On the Effective Date, URI
shall cause the Exchange Agent to issue and deliver to the Wolffs, or
their nominees as described below, one or more stock certificates
representing a total of Five Hundred Ninety Thousand (590,000) shares
of URI common stock, containing the restrictive legends contemplated by
Sections 4.2 and 7.3 of this Agreement. The Wolffs may require any
portion of the shares to be issued in the name of an entity created by
the Wolffs for estate planning purposes, but only if the entity is
under the control of Bob Wolff, and only if the entity agrees in
writing to be bound by the terms of this Agreement as they relate to
restrictions on transfer and voting of the URI common stock by the
Wolffs or the holders thereof.
3.3 Surrender of MWR Certificates. On the Effective Date, the
Wolffs shall surrender to URI all stock certificates representing MWR
Common Stock, for transfer or cancellation. After the Effective Date
there shall be no further registry of transfers on the records of MWR
of shares of MWR Common Stock issued prior to the date of this
transaction and, if a certificate representing such shares is presented
to MWR or URI, it shall be transferred to URI as though surrendered on
the Effective Date to URI, without further consideration.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of MWR and Bob Wolff. MWR
and Bob Wolff represent and warrant to URI as follows:
4.1.1 Organization, Standing and Power. MWR is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Wyoming, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business
as now being conducted, and is in good standing as a foreign
corporation in each jurisdiction in which the character of its
operations requires such qualification and where failure to so qualify
would have a material adverse effect on the business or financial
condition of MWR. There are no MWR Subsidiaries. Prior to the Closing
Date, MWR will deliver to URI complete and correct copies of: (a) the
Articles of Incorporation of MWR and all amendments to date of
delivery; and,(b) the Bylaws of MWR as amended to the date of delivery.
4.1.2 Capitalization. The authorized capital stock of MWR
consists of 1,000 shares of common stock, having no par value. As of
the date of this Agreement, 1,000 shares of MWR Common Stock were
outstanding; no shares of MWR Common Stock were reserved for issuance
upon the exercise of outstanding warrants; no shares of MWR Common
Stock were reserved for issuance upon conversion of outstanding debt;
no shares of MWR Common Stock were held by MWR; no shares of MWR Common
Stock were subject to options; and all of the outstanding shares of MWR
Common Stock are validly issued, fully paid and nonassessable. There
are no other classes of stock authorized. MWR has delivered to URI,
for its inspection and copying, MWR's stock ledger, and all other
records evidencing stock issuances and transfers.
4.1.3 Authority. Subject to the approval of this Agreement by
the Board of Directors of MWR and the Wolffs, as the shareholders of
MWR, as contemplated by Section 8.2, the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action
on the part of MWR, and this Agreement is a valid and binding
obligation of MWR and the Wolffs, except to the extent that the
enforce-ability thereof may be limited by: (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect
and affecting the rights of creditors generally; (b) limitations upon
the power of a court to grant specific performance or any other
equitable remedy; and, (c) a finding by a court of competent
jurisdiction that the indemnification provisions herein are
unenforceable.
4.1.4 Effect of Share Exchange. Other than as set forth on
Schedule 4.1.4, to be furnished by MWR and Bob Wolff to URI prior to
the Closing Date, neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, nor
compliance by MWR or the Wolffs with any of the provisions of this
Agreement will: (a) conflict with or result in a material breach of any
provision of MWR's Articles of Incorporation or Bylaws; (b) result in a
material default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement,
contract or other instrument or obligation to which MWR or either of
the Wolffs is a party, by which MWR or any of its properties or assets
may be bound; except for defaults (or rights of termination,
cancellation or acceleration) for which requisite waivers or consents
either shall have been obtained by MWR or the Wolffs prior to the
Effective Date or the obtaining of which shall have been waived by URI
and except for defaults (or rights of termination, cancellation or
acceleration) which taken as a whole are not material to the business
or financial condition of MWR; or, (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to MWR or
any of its properties or assets. No consent or approval by any
governmental authority, other than compliance with applicable federal
and state securities laws, is required in connection with the execution
and delivery by MWR of this Agreement and the Articles of Share
Exchange or the consummation by MWR of the transactions contemplated
hereby.
4.1.5 Financial Statements. Schedule 4.1.5, to be furnished by
MWR to URI prior to the Closing Date, sets forth the balance sheets of
MWR as of and at December 31 in each of the last three fiscal years,
and the related statements of income and retained earnings,
stockholders' equity and changes in financial positions for the periods
then ended, with the statements for 1992 and 1993 having being reviewed
by Dave Jacobsen & Associates, C.P.A., Chicago, Illinois, and the
statements for 1994 having been audited by the same certified public
accountants. The financial statements and their accompanying notes are
correct and complete, are in accordance with the books and records of
MWR and fairly present the financial position and the results of the
operations, changes in stockholders' equity and changes in financial
position of MWR as, at and for the periods indicated, in each case in
conformity with generally accepted accounting principles consistently
applied except as otherwise indicated in the statements.
4.1.6 Absence of Undisclosed Liabilities. MWR has no liabilities
of any nature, known or unknown, fixed or contingent, which were not
reflected on the MWR Schedule 4.1.5 financial statements or notes.
4.1.7 Tax Matters. Except as disclosed on Schedule 4.1.7, to be
furnished by MWR to URI prior to the Closing Date, MWR has filed all
federal, state and local tax returns required to be filed and all taxes
shown by the returns to be due and payable have been paid or are being
contested in good faith and are disclosed on Schedule 4.1.7; and MWR
has not given or been required to give waivers of any statutes of
limitations relating to the payment of federal, state or local taxes.
4.1.8 Options, Warrants, etc. There are no options, warrants,
calls, commitments or agreements of any character to which MWR is a
party or by which it is bound, calling for the issuance of shares of
the capital stock of MWR or any security representing the right to
purchase or otherwise receive any capital stock.
4.1.9 Property. Except as disclosed on Schedule 4.1.9, to be
furnished by MWR to URI prior to the Closing Date, MWR owns all
property reflected on its financial statements free and clear of all
mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever, and except for liens for current taxes not yet due and
payable, and the encumbrances and imperfections of title, if any, as
are not substantial in character, amount or extent and do not
materially interfere with the present or proposed use of the property
or otherwise materially impair business operations. All property and
assets material to the business operations or financial condition of
MWR, in which it has an interest, are in substantially good operating
condition and repair.
4.1.10 Contracts. Except for (i) customary utility contracts,
(ii) contracts not calling for, in the aggregate, payment of an amount
in excess of $10,000.00, and (iii) contracts set forth on Schedule
4.1.10, to be furnished by MWR to URI prior to the Closing Date, MWR
has no existing contract, agreement, lease, obligation, pension or
employment contract, arrangement, option, right, warrant or other
obligation or commitment, oral or written. All of the existing
contracts are in good standing, and, to the best of MWR and the Wolffs'
knowledge, have been complied with fully by all of the parties thereto
and no known default with respect to any is current or threatened. MWR
has no obligation of any nature which would affect this transaction
except as disclosed in this Agreement or its Schedules.
4.1.11 Labor contracts. MWR is not a party to any collective
bargaining agreement, nor does it have any labor controversy of any
nature.
4.1.12 Insurance. Schedule 4.1.12 shall contain a list and brief
description of all policies of fire, liability and other forms of
insurance held by MWR respecting MWR's assets or business. MWR has its
buildings, plants and property, including but not limited to,
machinery, equipment and inventory, and their sale of products insured
against loss or damage and all other hazards or risks of the character
usually insured against by companies in the same or similar business
and such insurance coverage will be continued in full force and effect
through the Closing Date. MWR has not been refused any insurance by
any insurance carrier to which it has applied for insurance during the
past three years.
4.1.13 Legal Proceedings, etc. Except as disclosed on Schedule
4.1.13, to be furnished by MWR and Bob Wolff to URI prior to the
Closing Date, there is no legal, administrative, arbitration or other
proceeding or governmental investigation pending or threatened which
might result in money damages payable by MWR or the Wolffs of more than
$1,000 or which might result in a permanent injunction against MWR or
the Wolffs. MWR has substantially complied with, and is not in default
in any respect under, any laws, ordinances, requirements, regulations,
or orders applicable to its business, the violations of which might
materially adversely affect it, including but not limited to the
Americans with Disabilities Act of 1990, 42 U.S.C. Sec. 12101 et seq.
MWR is not a party to any agreement or instrument, or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree, rule, regulations codes or ordinance which
materially and adversely affects, or might reasonably be expected
materially and adversely to affect, the business operations, prospects,
properties, assets or condition, financial or otherwise, of MWR.
4.1.14 Absence of Changes. Since December 31, 1994, except as
disclosed on Schedule 4.1.14, to be furnished by MWR to URI prior to
the Closing Date, there has not been any material adverse change in the
condition (financial or otherwise), assets, liabilities, earnings or
business of MWR.
4.1.15 Brokers and Finders. The parties agree that George A.
Matthews, Jr. is entitled to a finders' fee in connection with the
transactions contemplated by this Agreement, to be paid solely by URI.
4.1.16 Accuracy of Information Supplied by MWR to URI. All
Schedules furnished by MWR and Bob Wolff to URI shall be correct and
complete in all material respects as of the Closing Date. None of the
information which has been or will be supplied by MWR or the Wolffs to
URI, whether included in the Schedules to this Agreement or not, will,
at the time of its delivery to URI, be false or misleading for any
material fact, or omit to state any material fact necessary in order to
make the statements not misleading. If at any time prior to the
Effective Date, any event relating to MWR should occur which would
render prior information provided to URI false or misleading, MWR shall
promptly inform URI of the event.
4.1.17 Hazardous Materials.
(i) MWR has not received any notice from any governmental agency
with respect to any "alleged material violation," i.e., an alleged
violation which would have a material adverse effect on MWR's business,
by it of any applicable federal, state or local environmental or health
and safety statutes and regulations in connection with its business,
nor does MWR know of any basis for any investigation or proceeding
against it by any federal, state or local environmental or health and
safety enforcement agency in connection with the operation of its
business. To the best knowledge of MWR: Neither MWR nor any
predecessor of MWR has been alleged to be in violation of, or has been
subject to any administrative or judicial proceeding pursuant to, such
laws and regulations with respect to any of its business locations,
either now or at any time during the past five years, and so far as MWR
is aware, there are no such threatened or proposed violations with
respect to its business.
(ii) To MWR's best knowledge, there are no permits, licenses,
consents, filing or other approvals necessary or required to be
obtained or made by laws and regulations relating to hazardous
material, pollution controls and environmental contamination in
connection with the operation of its business.
(iii) To MWR's best knowledge, MWR is not a party to any contract
or other agreement with respect to its business, relating to the
storage, transportation or disposal of Hazardous Materials.
(iv) MWR is unaware of any claims or facts or circumstances that
MWR reasonably believes could form the basis for the assertion of any
claim relating to environmental matters with respect to its business,
including, but not limited to, any claim arising from past or present
environmental practices of its business asserted under CERCLA, RCRA,
any other federal, state or local environmental statute, or the
generation, use, treatment, disposal, discharge, ownership, operation,
transportation, storage of Hazardous Materials, or any other related
act or omission of MWR with respect to its business.
For the purposes of this warranty, the term "claim" shall mean any
and all claims, demands, causes of action, suits, hearings,
administrative proceedings, losses, judgments, decrees, debts, damages,
liabilities, costs, and attorneys' fees and other expenses regarding or
against its business with respect to such.
4.2 Representations, Warranties and Covenants of the Wolffs
Purchase for Own Account; Restrictions on Transfer. The Wolffs
represent, warrant and agree that they are acquiring the URI common
stock for their own account, and not with a view to a subsequent
distribution. The Wolffs understand that the shares have not been
registered under applicable Federal and state securities laws and
regulations and the Wolffs agree not to sell, hypothecate, transfer or
otherwise dispose of the shares without a proper registration statement
covering them or pursuant to an exemption from registration of the
shares or the transaction under applicable Federal and state securities
laws and regulations. The Wolffs understand and agree that URI will
not be obligated to recognize any subsequent transfer of the shares
without an effective registration statement or an opinion of counsel,
in form satisfactory to URI, that such registration is not required in
the particular situation. The Wolffs understand the certificate(s)
representing the shares will have restrictive legends on them and URI
will issue stop transfer instructions to URI's Transfer Agent
evidencing the above restrictions.
4.3 Representations and Warranties of URI. URI represents and
warrants to MWR and Bob Wolff as follows:
4.3.1 Organization, Standing and Power. URI is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Utah, and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business
as now being conducted, and is in good standing as a foreign
corporation in each jurisdiction in which the character of its
operations requires such qualification and where failure to so qualify
would have a material adverse effect on it. Prior to the Closing Date,
URI will deliver to MWR complete and correct copies of: (a) the
Articles of Incorporation of URI and all amendments to the date of
delivery; and, (b) the Bylaws of URI as amended to the date of delivery.
4.3.2 Capitalization. The authorized capital stock of URI
consists of 5,000,000 shares of common stock, par value $.10 per share.
At the close of business on the business day next preceding the date
of this Agreement, 1,181,278 shares of URI common stock were
outstanding; 150,000 shares of URI common stock were reserved for
issuance upon the exercise of outstanding options; no shares of URI
common stock were held by URI; and all the outstanding shares of URI
common stock were validly issued, fully paid and nonassessable.
4.3.3 Authority. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the
part of URI, and this Agreement is a valid and binding obligation of
URI, except to the extent that the enforceability thereof may be
limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors
generally,
(b) limitations upon the power of a court to grant specific performance
or any other equitable remedy, and (c) a finding by a court of
competent jurisdiction that the indemnification provisions herein are
in violation of public policy. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated
hereby nor compliance by URI with any of the provisions of this
Agreement will: (a) conflict with or result in a material breach of any
provision of its Articles of Incorporation or Bylaws; (b) result in a
material default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement
or other instrument or obligation to which it or its subsidiary is a
party, by which it or any of its properties or assets may be bound
except for defaults (or rights of termination, cancellation or
acceleration) for which requisite waivers or consents either shall have
been obtained by it prior to the Effective Date or the obtaining of
which shall have been waived by MWR and except for defaults (or rights
of termination, cancellation or acceleration) which taken as a whole
are not material to the business or financial condition of URI; or, (c)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to URI, any URI subsidiary or any of their
properties or assets. No consent or approval by any governmental
authority, other than compliance with applicable federal and state
securities laws, is required in connection with the execution and
delivery by URI of this Agreement and the Articles of Share Exchange or
the consummation by URI of the transactions contemplated hereby.
4.3.4 Equity Investments and Subsidiaries. Schedule 4.3.4, to be
furnished by URI to MWR prior to the Closing Date, sets forth
information concerning each corporation, partnership, joint venture or
other entity in which URI has, directly or indirectly, at least a 10%
equity interest. Except as set forth on the Schedule, all equity
interests listed on the Schedule as owned, directly or indirectly, by
URI are owned of record and beneficially, free and clear of all
mortgages, liens, pledges and encumbrances, and are validly issued,
fully paid and nonassessable; there are no voting trusts or other
agreements or understanding for the voting of URI's equity interest in
any of the listed entities, except as noted. There are no existing
options, warrants, calls, commitments or agreements of any character
calling for the issuance of authorized by unissued shares of capital
stock or the transfer of any issued shares of capital stock of any URI
subsidiary. Each of the URI subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power
and authority to own, lease and operate its properties and to carry on
its business as now being conducted and is duly qualified and in good
standing to do business in every jurisdiction in which qualification is
deemed by URI's management to be necessary.
4.3.5 Financial Statements. Schedule 4.3.5, to be furnished by
URI to MWR prior to the Closing Date, sets forth the consolidated
balance sheets of URI and the URI subsidiaries as of and at December 31
in each of the last three fiscal years, with the related consolidated
statements of income and retained earnings, stockholders' equity and
changes in financial positions for the periods then ended, all have
being certified by Tanner + Co. or DeNiro & Thorne, C.P.A. The
financial statements (and their accompanying notes) are correct and
complete, are in accordance with the books and records of URI and the
URI subsidiaries and fairly present the consolidated financial position
and the results of the operations, changes in stockholders' equity and
changes in financial position of URI and URI subsidiaries as, at and
for the periods indicated, in each case in conformity with generally
accepted accounting principles consistently applied except as otherwise
indicated in the statements.
4.3.6 Absence of Undisclosed Liabilities. Except as disclosed on
Schedule 4.3.6, to be furnished by URI to MWR prior to the Closing
Date, URI and the URI subsidiaries have no material liabilities of any
nature, known or unknown, fixed or contingent, which were not reflected
on the URI Schedule 4.3.5 financial statements.
4.3.7 Tax Matters. Except as disclosed on attached Schedule
4.3.7, to be furnished by URI to MWR prior to the Closing Date, URI and
each of the URI subsidiaries have filed all federal, state and (to the
best of the knowledge of URI) local tax returns required to be filed
and all taxes shown by the returns to be due and payable have been paid
or are being contested in good faith and are disclosed on Schedule
4.3.7; and neither URI nor any URI subsidiary has given or been
required to give waivers of any statutes of limitations relating to the
payment of federal, state or local taxes.
4.3.8 Options, Warrants, etc. Except as disclosed on Schedule
4.3.8, to be furnished by URI to MWR prior to the Closing Date, there
are no options, warrants, calls, commitments or agreements of any
character to which URI or any URI subsidiary is a party or by which it
is bound, calling for the issuance of shares of capital stock of URI or
any security representing the right to purchase or otherwise receive
any capital stock.
4.3.9 Property. Except as disclosed on Schedule 4.3.9, to be
furnished by URI to MWR prior to the Closing Date, URI and the URI
subsidiaries own all property reflected on their financial statements
free and clear of all mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever, and except for liens for current
taxes not yet due and payable, and the encumbrances and imperfections
of title, if any, as are not substantial in character, amount or extent
and do not materially interfere with the present or proposed use of the
property or otherwise materially impair business operations. All
property and assets material to the business operations or financial
condition of URI or the URI subsidiaries, in which they or any of them
have an interest, are in substantially good operating condition and
repair.
4.3.10 Contracts. Except for (i) customary utility contracts,
(ii) contracts not calling for, in the aggregate, payment of an amount
in excess of $10,000.00, and (iii) contracts set forth on Schedule
4.3.10, to be furnished by URI to MWR prior to the Closing Date, URI
and the URI subsidiaries have no existing contract, agreement, lease,
obligation, pension or employment contract, arrangement, option, right,
warrant or other obligation or commitment, oral or written. All of the
existing contracts are in good standing, and have been complied with
fully by all of the parties thereto and no default with respect to any
is current or threatened. Neither URI nor any URI subsidiary has any
obligation of any nature which would affect this transaction except as
disclosed in this Agreement or its Schedules.
4.3.11 Labor contracts. Neither URI nor any URI subsidiary is a
party to any collective bargaining agreement, nor does any of them have
any labor controversy of any nature.
4.3.12 Insurance. Schedule 4.3.12, to be furnished by URI to MWR
prior to the Closing Date, is a list and brief description of all
policies of fire, liability and other forms of insurance held by URI or
a URI subsidiary. URI and its subsidiaries have their buildings,
plants and property, including but not limited to, machinery, equipment
and inventory, and their sale of products insured against loss or
damage and all other hazards or risks of the character usually insured
against by companies in the same or similar business and such insurance
coverage will be continued in full force and effect after the Effective
Date.
4.3.13 Legal Proceedings, etc. Except as disclosed on Schedule
4.3.13, to be furnished by URI to MWR prior to the Closing Date, there
is no legal, administrative, arbitration or other proceeding or
governmental investigation pending or (to the knowledge of the officers
or directors of URI) threatened which might result in money damages
payable by URI or any URI subsidiary of more than $10,000, which might
result in a permanent injunction against URI or a URI subsidiary, or
which might result in a change in the zoning or building ordinances
materially affecting the property or leasehold interests of URI or any
URI subsidiary. URI and the URI subsidiaries have substantially
complied with, and are not in default in any respect under, any laws,
ordinances, requirements, regulations, or orders applicable to their
respective businesses, the violations of which in the aggregate might
materially adversely affect them, including but not limited to the
Americans with Disabilities Act of 1990, 42 U.S.C. Sec. 12101 et seq..
Neither URI nor any URI subsidiary is a party to any agreement or
instrument, or subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree, rule, regulations codes
or ordinance which materially and adversely affects, or might
reasonably be expected materially and adversely to affect, the business
operations, prospects, properties, assets or condition, financial or
otherwise, of URI, and the URI subsidiaries, taken as a whole.
4.3.14 Absence of Changes. Since December 31, 1994, except as
disclosed on Schedule 4.3.14, to be furnished by URI to MWR prior to
the Closing Date, there has not been any material adverse change in the
condition (financial or otherwise), assets, liabilities, earnings or
business of URI and the URI subsidiaries taken as a whole.
4.3.15 Brokers and Finders. The parties agree that George A.
Matthews, Jr. is entitled to a finders' fee in connection with the
transactions contemplated by this Agreement, to be paid solely by URI.
4.3.16 Accuracy of Information Supplied by URI to MWR. All
Schedules furnished by URI to MWR shall be correct and complete in all
material respects as of the Closing Date. None of the information
which has been or will be supplied by URI to MWR, whether included in
the Schedules to this Agreement or not, will, at the time of its
delivery to MWR, be false or misleading for any material fact, or omit
to state any material fact necessary in order to make the statements
not misleading. If at any time prior to the Effective Date, any event
relating to URI should occur which would render prior information
provided to MWR false or misleading, URI shall promptly inform MWR of
the event.
4.3.17 Hazardous Materials. Except as disclosed on Schedule
4.3.17, to be furnished by URI to MWR:
(i) URI has not received any notice from any governmental agency
with respect to any "alleged material violation," i.e., an alleged
violation which would have a material adverse effect on URI's business,
by it of any applicable federal, state or local environmental or health
and safety statutes and regulations in connection with its business,
nor does URI know of any basis for any investigation or proceeding
against it by any federal, state or local environmental or health and
safety enforcement agency in connection with the operation of its
business. To the best knowledge of URI: Neither URI nor any
predecessor of URI has been alleged to be in violation of, or has been
subject to any administrative or judicial proceeding pursuant to, such
laws and regulations with respect to any of its business locations,
either now or at any time during the past five years, and so far as URI
is aware, there are no such threatened or proposed violations with
respect to its business.
(ii) To URI's best knowledge, there are no permits, licenses,
consents, filing or other approvals necessary or required to be
obtained or made by laws and regulations relating to hazardous
material, pollution controls and environmental contamination in
connection with the operation of its business.
(iii) To URI's best knowledge, URI is not a party to any contract
or other agreement with respect to its business, relating to the
storage, transportation or disposal of Hazardous Materials.
(iv) URI is unaware of any claims or facts or circumstances that
URI reasonably believes could form the basis for the assertion of any
claim relating to environmental matters with respect to its business,
including, but not limited to, any claim arising from past or present
environmental practices of its business asserted under CERCLA, RCRA,
any other federal, state or local environmental statute, or the
generation, use, treatment, disposal, discharge, ownership, operation,
transportation, storage of Hazardous Materials, or any other related
act or omission of URI with respect to its business.
For the purposes of this warranty, the term "claim" shall mean any
and all claims, demands, causes of action, suits, hearings,
administrative proceedings, losses, judgments, decrees, debts, damages,
liabilities, costs, and attorneys' fees and other expenses regarding or
against its business with respect to such.
ARTICLE V - CONDUCT PRIOR TO EFFECTIVE DATE
5.1 Access to Records and Properties. Between the date of
this Agreement and the Effective Date, the parties agree to give one
another full access to all the premises and books and records
(including tax returns filed and those in preparation) of the other and
its subsidiaries, and to cause one another's officers to furnish the
other with financial and operating data and other information for their
business and properties as reasonably requested; provided, however,
that any investigation shall be conducted in a manner as not to
interfere unreasonably with the operation of the respective businesses.
If this Agreement is terminated without consummation of the share
exchange, each party will return to the other all documents, work
papers and other material (including all copies) obtained in connection
with the transactions contemplated hereby and will use all reasonable
efforts to keep confidential any information obtained pursuant to this
Agreement unless the information is readily ascertainable from public
or published information or trade sources. The parties mutually agree
that no communication to shareholders of URI or to the press or public
generally shall be made except as both parties agree, although MWR and
Wolff hereby acknowledge that URI is a Securities and Exchange
Commission reporting company, publicly traded, and, in that regard,
they agree not to unduly hamper URI in its need to report regard, they
agree not to unduly hamper URI given its need to report to the SEC, the
National Association of Securities Dealers, the financial press, its
shareholders, and others regarding material financial and business
information.
5.2 Board of Directors Authorizations. URI and MWR agree to
obtain the written authorizations from their respective boards of
directors to enter into and consummate the terms and conditions of this
Agreement, all in conformity with and as required the Utah Revised
Business Corporation Act, and all as evienced by Certificates of
Resolution signed by the company's President and Secretary confirming
the actions of the respective boards of directors.
5.3 Shareholder Authorization. The Wolffs, as the only
shareholders of MWR, agree to execute a written shareholder consent
resolution, in form and substance necessary to satisfy the requirements
of the Utah Revised Business Corporation Act as it relates to the
obtaining of authorization from the acquired corporation's shareholders
to enter into and consummate the share exchange under this Agreement.
5.4 Restrictions on MWR. MWR agrees that from the date of
this Agreement to the Effective Date, except as set forth on Schedule
5.4 and except to the extent that URI shall otherwise consent, it will
operate its business substantially as presently operated and only in
the ordinary course, and, consistent with such operation, it will use
its best efforts to preserve intact its present business organization
and its relationship with persons having business dealings with it.
MWR agrees that from the date of this Agreement until the Effective
Date, it will not create or otherwise become liable for any
indebtedness for money borrowed or purchase money indebtedness, will
not make extraordinary payments to employees, shareholders, suppliers
or others, except as mutually agreed upon with URI. MWR agrees not to
issue any additional shares of its capital stock, nor instruments
convertible into shares. It agrees not to amend its Articles of
Incorporation or Bylaws.
5.5 Restrictions on URI. URI agrees that from the date of
this Agreement to the Effective Date, except as set forth on Schedule
5.5 and except to the extent that MWR shall otherwise consent, it will
operate its business substantially as presently operated and only in
the ordinary course, and, consistent with such operation, it will use
its best efforts to preserve intact its present business organization
and its relationship with persons having business dealings with it; and
it will cause each URI subsidiary to do likewise.
5.6 No Purchase of the Other's Common Stock. Prior to the
Effective Date, neither MWR, on the one hand, nor URI, on the other
hand, will purchase any shares of the other's common stock.
ARTICLE VI - CONDITIONS OF SHARE EXCHANGE
6.1 Conditions of Obligations of URI. The obligations of URI
to perform this Agreement are subject to the satisfaction of the
following conditions unless waived by it.
6.1.1 Representations and Warranties. The representations and
warranties of MWR set forth in Section 4.1 and the representations and
warranties of the Wolffs set forth in Section 4.2 shall be true and
correct in all material respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date,
except as otherwise contemplated by this Agreement, and URI and MWR
shall have received a certificate signed by the Chairman of the Board
or the President and by the Treasurer of MWR to that effect.
6.1.2 Performance of Obligations. MWR and the Wolffs shall have
performed all obligations required to be performed by them under this
Agreement prior to the Closing Date and there shall have been no
material change in the business of MWR and no discovery during URI's
due diligence investigation of material information which would have a
material adverse impact on MWR's business or its or the Wolffs' ability
to conclude the share exchange.
6.1.3 Authorization of Share Exchange. All action necessary to
authorize the execution, delivery and performance of this Agreement by
MWR, and the consummation of the transactions contemplated hereby,
including shareholder approval, shall have been duly and validly taken
by the Boards of Directors and the shareholders of the parties, and MWR
and the Wolffs shall have full power and right to consummate the terms
of this Agreement.
6.1.4 Opinion of MWR's Counsel. URI shall have received an
opinion dated the Closing Date of Cohne, Rappaport & Segal, counsel to
MWR and the Wolffs, satisfactory to counsel to URI, to the effect that:
(a) MWR is a corporation duly organized and in good standing
under the laws of the State of Wyoming and is duly qualified to do
business in each of the following jurisdictions: __________,
_____________, _____________, and ______________. To the best of
counsel's knowledge, MWR has not failed to qualify in any jurisdiction
in which the failure to so qualify would have a material adverse affect
on its business. Certificates of Good Standing for Wyoming and for
each state in which MWR is qualified as a foreign corporation shall be
obtained and delivered to URI as part of the opinion of counsel.
(b) MWR has full corporate power to carry out the transactions
provided for in this Agreement and the Articles of Share Exchange; all
corporate and other proceedings required to be taken by or on the part
of MWR to authorize it to execute and deliver this Agreement and the
Articles of Share Exchange and to consummate the transactions
contemplated hereby have been duly and validly taken; and this
Agreement and the Articles of Share Exchange have been duly and validly
authorized, executed and delivered by MWR and the Wolffs and constitute
valid and binding obligations of MWR and the Wolffs except to the
extent that the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws from
time to time in effect and affecting the rights of creditors generally,
(ii) limitations upon the power of a court to grant specific
performance or any other equitable remedy, and (iii) a finding by a
court of competent jurisdiction that the indemnification provisions
herein are in violation of public policy.
(c) Neither MWR nor the Wolffs is a party to or bound by any
outstanding option or agreement, other than this Agreement, to sell
issue, buy or otherwise dispose of or acquire any shares of capital
stock or other security of MWR;
(d) execution and delivery by MWR and the Wolffs of this
Agreement and the Articles of Share Exchange, consummation by MWR and
the Wolffs of the transactions contemplated hereby and compliance by
MWR and the Wolffs with the provisions of this Agreement and of the
Articles of Share Exchange will not conflict with or result in a breach
of any provisions of its Articles of Incorporation or Bylaws or, to
counsel's knowledge, constitute a default (or give rise to a right of
termination, cancellation or acceleration) under any of the terms,
conditions, or provisions of any note, mortgage, indenture, license,
agreement or any other instrument or obligation other than such as may
be waived by URI, or violate any court order, writ, injunction or
decree applicable to MWR, or any of its properties or assets;
(e) to counsel's knowledge, any consent or approval by any
governmental authority which is required in connection with the
consummation by MWR of the transactions contemplated hereby has been
obtained;
(f) to counsel's knowledge, there is not any litigation,
proceeding or investigation that is pending or threatened, except as
disclosed in the opinion or in Schedule 4.1.13, which might result in
money damages payable by MWR or the Wolffs of more than $1,000 or which
might result in a permanent injunction against MWR or the Wolffs; and,
(g) to counsel's knowledge, there has not been any default under,
or the occurrence of any event which with the lapse of time or action
by a third party would result in a default under, any outstanding
indenture, contract or agreement or under any governmental license or
permit or a breach of any provision of MWR's Articles of Incorporation
or Bylaws.
As to any matter contained in the opinion which involves other
than federal or Utah law, counsel may rely, without independent
investigation, upon the opinion of local counsel of established
reputation. Counsel may also rely on certificates of officers of MWR as
to factual information.
6.1.5 Fairness Opinion. URI shall have received, prior to the
Closing Date, an opinion from a qualified and experienced financial
advisor (investment banker, accountant, business appraiser or other
qualified person or firm), chosen by URI, that the transactions
contemplated by this Agreement and consummation of the Share Exchange
on those terms are fair, from a financial viewpoint, to the
shareholders of URI.
6.2 Conditions of Obligation of MWR. The obligation of MWR to
perform this Agreement is subject to the satisfaction of the following
conditions unless waived by MWR:
6.2.1 Representations and Warranties. The representations and
warranties of URI set forth in Section 4.3 shall be true and correct in
all material respects as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement, and MWR shall have received a
certificate signed by the Chairman of the Board or the President and by
the Treasurer of URI to that effect.
6.2.2 Performance of Obligations of URI. URI shall have
performed all obligations required to be performed by it under this
Agreement prior to the Closing Date and there shall have been no
material change in the business of URI and no discovery during MWR's
due diligence investigation of material information which would have a
material adverse impact on URI's business or its ability to conclude
the share exchange.
6.2.3 Authorization of Share Exchange. All action necessary to
authorize the execution, delivery and performance of this Agreement by
the parties and the consummation of the transactions contemplated
hereby shall have been duly and validly taken by the Board of Directors
of URI, and URI shall have full power and right to consummate the
transactions contemplated by this Agreement on the terms provided.
6.2.4 Opinion of URI's Counsel. MWR shall have received an
opinion dated the Closing Date of Moyle & Draper, P.C., counsel to URI,
satisfactory to counsel to MWR, to the effect that:
(a) URI is a corporation duly organized and in good standing
under the laws of the State of Utah and is duly qualified to do
business in all jurisdictions in which the failure to so qualify would
have a material adverse affect on its business, and shareholders
approval of the transactions contemplated hereby is not required under
Utah law.
(b) URI has full corporate power to carry out the transactions
provided for in this Agreement an the Articles of Share Exchange; all
corporate and other proceedings required to be taken by or on the part
of URI to authorize it to execute and deliver this Agreement and the
Articles of Share Exchange and to consummate the transactions
contemplated hereby have been duly and validly taken; and this
Agreement and the Articles of Share Exchange have been duly and validly
authorized, executed and delivered by URI and constitute valid and
binding obligations of URI, except to the extent that the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect
and affecting the rights of creditors generally, (ii) limitations upon
the power of a court to grant specific performance or any other
equitable remedy, and (iii) a finding by a court of competent
jurisdiction that the indemnification provisions herein are in
violation of public policy.
(c) the shares of URI common stock to be issued at the Effective
Date to the Wolffs are duly authorized and reserved for issuance, and
when issued as contemplated by this Agreement, will be validly issued,
fully paid and nonassessable.
(d) except as disclosed in this Agreement and its schedules and
exhibits, URI's financial statements, or URI's Annual Report on Form
10-K for the year ended December 31, 1993, neither URI nor any URI
Subsidiary is a party to or bound by any outstanding option or
agreement, other than this Agreement, to sell issue, buy or otherwise
dispose of or acquire any shares of capital stock or other security of
either URI or any URI Subsidiary, and URI is current in its reporting
requirements under Sections 13 and 15 of the Securities Exchange Act of
1934;
(e) execution and delivery by URI of this Agreement and the
Articles of Share Exchange, consummation by URI of the transactions
contemplated hereby and compliance by URI with the provisions of this
Agreement and of the Articles of Share Exchange will not conflict with
or result in a breach of any provisions of its Certificate of
Incorporation or Bylaws or, to counsel's knowledge, constitute a
default (or give rise to a right of termination, cancellation or
acceleration) under any of the terms, conditions, or provisions of any
note, mortgage, indenture, license, agreement or any other instrument
or obligation other than such as may be waived by MWR, or violate any
court order, writ, injunction or decree applicable to URI, any of the
URI Subsidiaries or any of their properties or assets;
(f) to counsel's knowledge, any consent or approval by any
governmental authority which is required in connection with the
consummation by URI of the transactions contemplated hereby has been
obtained;
(g) to counsel's knowledge, there is not any litigation,
proceeding or investigation that is pending or threatened, except as
disclosed in the opinion or in Schedule 4.3.13, which might result in
money damages payable by URI or any URI Subsidiary of more than $10,000
or which might result in a permanent injunction against URI or a URI
Subsidiary;
(h) to counsel's knowledge, there has not been any default under,
or the occurrence of any event which with the lapse of time or action
by a third party would result in a default under, any outstanding
indenture, contract or agreement or under any governmental license or
permit or a breach of any provision of URI's Articles of Incorporation
or Bylaws;
As to any matter contained in the opinion which involves other than
federal or Utah law, counsel may rely, without independent
investigation, upon the opinion of local counsel of established
reputation.
6.2.5 Receipt of Indemnification Agreement. MWR and the Wolffs
shall have received from URI a binding agreement, in the form of
Schedule 6.2.5, to indemnify MWR and the Wolffs from any liability to
URI's shareholders, its officers or directors, whether brought directly
by the person or in a derivative capacity, arising from MWR's and/or
the Wolffs' negotiation, execution, or consummation of this Agreement
and the transactions contemplated hereby.
ARTICLE VII - ADDITIONAL COVENANTS AND TERMINATION
7.1 Schedules Provided. As a condition precedent, all Schedules
referred to in the Agreement shall have been provided prior to closing.
Any Schedule referred to herein is incorporated herein and made a part
of this Agreement, with the same force and effect as though it was set
out in its entirety in this Agreement.
7.2 Employment Agreement with Bob Wolff. As a condition
precendent, URI agrees to execute a three-year employment agreement
with Bob Wolff in the form of Schedule 7.1.
7.3 Assumption and Payment of Note. URI agrees to lend MWR, in
the form of a line of credit, a sum not to exceed $200,000, with the
first draw available after February 15, 1995. The line of credit shall
be evidenced by a promissory note in standard form, bearing an interest
rate of 1% over the posted prime lending rate of First Security Bank of
Utah, N.A., as of February 15, 1995, and adjusted each three months
thereafter. All assets and equipment of MWR shall serve as collateral
for repayment of the line of credit. If the transactions contemplated
by this Agreement are not closed by May 31, 1995, the line of credit
shall be due and payable, with accrued interest, within 180 days of the
date the determination not to close is made. If the closing occurs,
payment of the line of credit shall be subordinated to MWR's existing
line of credit with American National Bank of Chicago, Ill.
7.4 Agreement to Vote Shares in Accordance with Terms of
Settlement Agreement. The parties acknowledge that URI and various
directors and shareholders of URI are parties to a certain Settlement
Agreement, dated April 3, 1993, associated with the settlement of a
stockholders' derivative lawsuit, all as described more fully in URI's
Form 10-KSB for the year ended December 31, 1993. The Wolffs agree
that, until May 7, 1996, they will vote the shares of URI common stock
they beneficial own, as the term beneficial ownership is defined in the
rules and regulations of the Securities and Exchange Commission, for
each of the directors appointed to the URI Board of Directors in
accordance with the terms of the Settlement Agreement, and in favor of
any decisions made by the Board of Directors that are brought to the
URI shareholders for their approval. After May 7, 1996, the Wolffs
agree to vote the shares of URI common stock they beneficial own in
favor of an amendment to URI's Articles of Incorporation to establish
cumulative voting for directors of URI. The Wolffs agree that the
certificates representing shares of URI common stock to be delivered to
them in connection with the transactions contemplated by this Agreement
shall contain the following legend:
"The voting of these shares is subject to the terms and conditions of
Section 7.3 of the Plan of Share Exchange and Share Exchange Agreement,
dated February 16, 1995, among Utah Resources International, Inc.,
MidWest Railroad Construction and Maintenance Corporation, Robert D.
Wolff and Judith Wolff."
URI also agrees to abide by the terms and conditions of the Settlement
Agreement, including maintaining the present number and composition of
the Board of Directors until May 7, 1996, and thereafter using its best
efforts to create cumulative voting rights for its shareholders. URI
further agrees to take any and all actions necessary or desirable,
including but not limited to taking legal action, to enforce the terms
of the Settlement Agreement. URI also agrees not to act to change the
current composition of the Board of Directors of MWR priot to May 7,
1996.
7.5 Expansion of Board of Directors. Immediately following URI's
annual shareholders meeting in 1996 (anticipated to be held in June of
1996), URI's Board of Directors shall be expanded by two, to a total of
seven, and Bob Wolff shall have the right to nominate the persons to
fill the two new seats, until the next annual meeting of shareholders
thereafter.
7.6 Operating Agreement. On the Effective Date, the parties
agree to execute a mutually acceptable Operating Agreement providing
for the appointment of appropriate officers of URI, and the adoption of
mutually acceptable financial, accounting, and day-to-day operating
procedures for URI following consummation of the transactions
contemplated by this Agreement.
7.7 Right to Join in Registration. If any time prior to the
expiration of five years following the Effective Date, URI proposes to
file a Registration Statement under the Securities Act of 1933 seeking
registration of any securities of URI for sale for cash to the public,
either for its own account or for the account of any holder of
securities of URI, URI shall notify the Wolffs, in writing, of its
intention to file the Registration Statement, and will afford the
Wolffs the opportunity to request inclusion in the Registration
Statement of all or any part of the shares of URI common stock then
owned by the Wolffs. If the Wolffs request inclusion and the offering
is to be underwritten, URI will request the underwriters of the
offering to purchase and sell the Wolffs' stock in the offering. If the
underwriter determines that not all shares requesting inclusion in the
offering as "selling shareholders" can be offered, due to marketing
factors, the Wolffs will be entitled to participate on a pro-rata basis
with other selling shareholders. URI may decline to file a
Registration Statement after notice to the Wolffs, or withdraw the
Registration Statement after filing and after such notice, but prior to
the effectiveness thereof. The Wolffs may withdraw their common stock
from any Registration Statement prior to the effectiveness thereof.
URI shall be obligated to notify the Wolffs of any and all public
offerings made during the five-year term of this Section, and the
Wolffs shall be entitled to make requests for inclusion in all public
offerings made during the five-year term.
7.8 Application for NASDAQ Listing. URI agrees to apply for
listing of its stock on NASDAQ as soon as reasonably practicable
following the Effective Date.
7.9 Termination. This Agreement shall be terminated, and the
share exchange abandoned by:
(a) the mutual consent of URI, MWR and Wolff;
(b) if events occur which render impossible of compliance one or
more of the conditions set forth in Article VI, including but not
limited to the ability of the financial advisor to render the fairness
opinion required, and are not waived by the non-obligated party;
(c) any of the corporate parties, if the Board of Directors of
any corporate party shall have determined in its sole discretion
exercised in good faith that the share exchange contemplated by this
Agreement has become inadvisable or impracticable by reason of the
threat or the institution of litigation or proceeding or the
institution of a formal investigation, in either case to restrain or
prohibit the consummation of the transactions contemplated by this
Agreement or to obtain other relief in connection with this Agreement,
which action or threatened action is deemed by the Board of Directors
to be material and non-curable; or,
(d) the closing has not occurred by June 30, 1995.
7.10 Effect of Termination. In the event of the termination and
abandonment of this Agreement and the Share Exchange, this Agreement
shall become void and have no effect, without any liability on the part
of any party or its directors, officers or shareholders.
7.11 Waiver. Any term or provision of this Agreement may be
waived at any time by the party which is or whose shareholders are,
entitled to its benefits.
ARTICLE VIII - MISCELLANEOUS
8.1 Entire Agreement. This Agreement contains the entire
agreement among the parties for the Share Exchange and the related
transactions and supersedes all prior arrangements or understandings.
This Agreement cannot be modified by the parties except in writing.
8.2 Descriptive Headings. Descriptive headings are for
convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
8.3 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if
delivered personally or sent by registered or certificate mail, postage
prepaid, addressed as follows:
If to MWR:
MidWest Railroad Construction and Maintenance Corporation
1525 Beck Street
Salt Lake City, Utah 84116
Attn: Robert D. Wolff, President
with a copy to:
Bruce Cohne, Esq.
Cohne, Rappaport & Segal
525 East 100 South #500
Salt Lake City, Utah 84102
If to URI:
Utah Resources International, Inc.
297 West Hilton Drive, Suite #4
St. George, Utah 84770
Attn: Gerry T. Brown, President
with a copy to:
E. Jay Sheen, Esq.
Moyle & Draper, P.C.
600 Deseret Plaza
No. 15 East First South
Salt Lake City, Utah 84111-1915
8.4 Counterparts. This Agreement may be executed in any number
of counterparts, and each counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be executed on its behalf and its corporate seal to be hereunto
affixed and attested by its officers thereunder duly authorized.
UTAH RESOURCES INTERNATIONAL, INC.
By /s/ R. Dee Erickson
R. Dee Erickson
Its Director
MIDWEST RAILROAD AND MAINTENANCE CONSTRUCTION
By /s/ Robert D. Wolff
Robert D. Wolff
Its President
/s/ Robert D. Wolff
Robert D. Wolff, individually
/s/ Judith Wolff
Judith Wolff, individually
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated June 13,
1995, is between Utah Resources International, Inc. (the "Company") and
Robert D. Wolff ("Employee").
In consideration of Employee's employment by the Company, and the
mutual covenants of the parties hereto, the parties agree as follows:
1. Term of Employment. The Company employs Employee and
Employee accepts employment under the terms and conditions and as of
the date of this Agreement for a term of three years, unless sooner
terminated in accordance with this Agreement, or extended pursuant to
paragraph 5 of this Agreement. During the term of employment, Employee
agrees to devote substantially all of his business time to the affairs
of the Company.
2. Office and Duties. Employee is employed as the Chief
Executive Officer of the Company and Chief Executive Officer of Midwest
Railroad Construction and Maintenance Corporation, a wholly-owned
subsidiary of the Company. Employee's duties shall be those
customarily associated with the position of President, including but
not limited to being the principal executive officer of the Company and
Midwest and, subject to the control of the Board of Directors of the
Company and Midwest, supervising and controlling all of the business
and affairs of the Company and Midwest, and in general performing all
of the duties incident to the office of President and all other duties
assigned him by the Company and Midwest from time to time.
3. Salary and Benefits. Employee shall receive a minimum
salary of $125,000 per year during the term of this Agreement, with
payments made bi-monthly, or monthly, as Midwest determines. In
addition, during the first five quarters of Employee's employment with
the Company, he shall receive $25,000 per quarter, payable beginning
July 1, 1995. During the term of Employee's employment, he shall
receive a monthly car allowance of a reasonable amount. Commensurate
with his position, Employee shall be a participant in all Company and
Midwest expense reimbursement, vacation, and sick leave plans; all
health, life, accident, and disability insurance programs; all
retirement, pension, profit-sharing, stock option and other similar
benefit plans to the extent such plans are generally made available to
executive officers of the Company and to employees of the Company and
Midwest.
4. Annual Bonus. In addition to the base salary, Employee
shall receive an annual bonus computed on the after tax net earnings of
Midwest, as follows: 5% of the first $200,000 in net earnings of
Midwest, 7% of the next $200,000, and 10% of all amounts over the first
$400,000 in net earnings of Midwest. For purposes of computing
Midwest's net earnings under this paragraph, the bonus amount shall be
deducted from Midwest's net earnings. The bonus shall be payable
within 60 days December 31st of each year.
5. Option to Extend Term. The Company shall have the option
to extend the term of Employee's employment pursuant to this Agreement
for an additional three-year term, by notifying Employee, in writing,
of the Company's decision to extend the term of Employee's employment.
Employee agrees to accept, as a base salary for the extended term of
the Agreement, the greater of: (a) $150,000 (20% above his original
base salary); or, (b) $125,000 + ($125,000 multiplied by the combined
percentage increase in the Consumer Price Index for the initial
three-year term of the Agreement). If the Company elects not to extend
the term of Employee's employment following expiration of the first
three-year term of the Agreement, it must make an election to exchange
stock with Employee or pay him severance pay as required by paragraph
13.
6. Representations and Warranties. Employee represents and
warrants he has no agreements with any third person that would conflict
with the representations, warranties and covenants Employee makes in
this Agreement. The Company represents and warrants it has full
authority to enter into this Agreement and those executing the
Agreement have full authority to do so. Both parties represent and
warrant the Agreement, upon execution, will be a binding legal
obligation of each of them.
7. Non-competition. Employee acknowledges that: (i) Employee
is involved in promoting Midwest's various business interests in each
of the States in which Midwest does or may operate in the future, (ii)
it is intended that Midwest's services will be sold throughout the
United States, (iii) any person, company or other entity performing
services similar to those of Midwest in any State of the United States
in which Midwest conducts business, now or in the future, is likely to
jeopardize Midwest's business, and (iv) the ability of Midwest to
attain its goals is likely to be materially jeopardized if Employee
competes with Midwest or assists others in competing with Midwest in
connection with its present or future business. During the term of
Employee's employment and for a period of two (2) years after the
termination of Employee's employment (voluntary or involuntary and
regardless of the circumstances of termination) Employee agrees not to,
directly or indirectly, individually, or as an officer, director,
employee or consultant for any entity, be engaged in, or assist any
business that is involved in selling or providing services similar to
those of Midwest in any State in which Midwest is then doing business.
It shall not be a violation of this paragraph for Employee to own less
than 5% of the shares of any public company involved in selling or
providing services similar to those of Midwest.
8. Confidential Information. Employee acknowledges that
Employee has been working in the business now conducted by one of the
Company's subsidiaries, and has and will in the future have access to
or discover information which is of a proprietary nature to the Company
("Proprietary Information"), including methods of doing business,
forecasts, strategies, customer lists and information, billing and
collection methods and information, and marketing studies and
information, whether previously developed by Employee, the Company or
others or developed, engaged in or researched by the Company during the
term of Employee's employment. Employee agrees not to disclose any
Proprietary Information to any person, partnership, corporation or
other entity for purposes outside the scope of Employee's employment by
the Company. Employee shall only use Proprietary Information for the
benefit of the Company. Employee shall not remove Proprietary
Information in written or physical form, or copies of the same, from
the Company's business premises unless necessary to the performance of
Employee's duties. Upon Employee's termination of employment all
materials disclosing or embodying Proprietary Information shall be left
with or returned to the Company.
9. Inventions and Copyrights. All inventions, whether or not
patentable or copyrightable, and all ideas, reports, and other creative
works made or conceived in whole or in party by Employee while employed
by the Company that relate in any manner to the business, existing or
proposed, of the Company and its subsidiaries, will be promptly
disclosed to the Company and will be the sole and exclusive property of
the Company. Any copyrightable work created pursuant to Employee's
employment by the Company shall be considered a work make for hire,
whether published or unpublished, and all rights shall be the property
of the Company as author and owner of the copyright in the work.
10. Successor Employer Notification. For a period of one (1)
year after termination of employment with the Company, Employee shall
notify any new employer, prior to accepting employment, of the
existence of this Agreement and provide the employer with a copy.
11. Injunctive Relief. Employee agrees that the violation of
the terms of paragraphs 7, 8, 9, or 10 of this Agreement will cause
irreparable injury to the Company and that the remedy at law for any
violation or threatened violation would be inadequate. Employee hereby
agrees that, upon Employee's breach of any of the terms of paragraph 7,
8, 9, or 10, the Company shall be entitled to temporary and permanent
injunctive relief and/or specific performance without the necessity of
proving actual damages, in addition to any other rights or remedies
available to the Company at law or equity.
12. Key-Man Life Insurance. Employee agrees the Company or
Midwest may purchase, during the term of this Agreement and any
extension thereof, one or more key-man life insurance policies on the
life of Employee, with the Company or Midwest named as the beneficiary
of the policies. Employee agrees to execute any documents or take any
other action to facilitate the Company's or Midwest's obtaining the
policies of life insurance.
13. Termination; Buy-Out Options. This Agreement shall only
terminate before expiration of its three-year term upon the first to
occur of the following:
(a) the death or permanent disability of Employee;
(b) breach of this Agreement by Employee; or,
(c) termination of Employee's employment for cause, defined as
criminal or fraudulent conduct, or Employee's wilful failure or refusal
to perform the usual and customary duties of his employment.
Should Employee die or become permanently disabled within three years
of the date of this Agreement, the Company shall pay Employee, his
heirs, or personal representatives the unpaid balance of three full
years of base salary. If the Company fails to extend the term of
Employee's employment after the first three-year term, the Company must
elect to do one of the following: (a) return all of the common stock
of Midwest to Employee in exchange for all of Employee's shares of
common stock of URI; or, (b) pay Employee $1,250,000 in severance pay,
payable quarterly over three years at 10% simple interest.
14. Construction. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision and the invalid or unenforceable
provision shall be curtailed or limited but only to the minimum extent
necessary to bring it within the requirements of law. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the consummation of the transactions provided
for in the Agreement.
15. Parties Bound. The parties agree that this Agreement
shall be binding on successors, assigns and any other legal
representative of a party. The Company may enforce any provision of
this Agreement.
16. Attorneys' Fees. The prevailing party in any action to
enforce the terms and conditions of this Agreement shall be entitled to
payment by the other party of the prevailing party's actual attorneys'
fees and costs of enforcement, whether in litigation or negotiated
settlement.
17. Assignment. This Agreement may not be assigned by either
party without the other's prior written consent, which may be withheld
for any reason.
18. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Utah.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
UTAH RESOURCES INTERNATIONAL, INC.
By /s/ R. Dee Erickson
R. Dee Erickson
Its Chairman of the Board
"EMPLOYEE"
/s/ Robert D. Wolff
Robert D. Wolff
OPERATING AGREEMENT
THIS OPERATING AGREEMENT ("Agreement"), dated June 13,
1995, is between Utah Resources International, Inc. ("URI"), MidWest
Railroad Construction and Maintenance Corporation ("MWR"), and Robert
D. Wolff ("Wolff").
RECITALS
A. URI, MWR and Wolff are parties to a Plan of Share Exchange
and Share Exchange Agreement, dated February 16, 1995 (the "Exchange
Agreement").
B. This Agreement is entered into pursuant to the terms of
Section 7.6 of the Exchange Agreement.
In consideration of the mutual covenants of the parties hereto,
they agree as follows:
AGREEMENT
1. Officers, Key Employees and Organization of the Companies.
The parties represent and acknowledge that the current members of the
Boards of Directors of both URI and Tonaquint, Inc., URI's wholly-owned
subsidiary, are: (1) John H. Morgan, Jr.; (2) Daisy Morgan; (3) Lyle
Hurd; (4) Dee Erickson; and, (5) Jay Sheen. The parties represent and
acknowledge that the current members of the Board of Directors of MWR
are: (1) Robert D. Wolff; (2) Steve Gorton; (3) Steve McCormick; (4)
Bill Busch; and, (5) Dennis Olin. The parties agree that from the date
of this Agreement until June 1, 1996, the Board of Directors of MWR
shall remain as presently constituted unless change is necessitated by
resignation or otherwise, in which case Wolff shall have the sole
authority to appoint replacement directors for the unexpired term of
the resigning or withdrawing member. The parties agree that from the
date of this Agreement until June 1, 1996, the persons listed below
shall be appointed to be the indicated officers and/or fill the
indicated management positions in URI, MWR, and Tonaquint, Inc.:
Name Company and Position
R. Dee Erickson URI - Chairman of the Board
Robert D. Wolff URI - Chief Executive Officer
Steve McCormick URI - Chief Financial Officer, Treasurer
Maryann Hausse URI - Secretary
Robert D. Wolff MWR - Chief Executive Officer
Bill Busch MWR - President and Chief Operating Officer
Steve McCormick MWR - Chief Financial Officer
Karl Huffaker MWR - Chief Engineer
Steve Gorton MWR - Manager of Gillette operations
Dennis Olin MWR - Manager of Denver operations
Rich Castleberry MWR - Manager of SLC operations
Jim Pledger MWR - Manager of New Mexico operations
Bob Gonzalez MWR - Manager of Green River operations
Carl Brown MWR - Equipment
Chris Busch MWR - Switching
Gerry Brown Tonaquint, Inc. - President
Lyle Hurd Tonaquint, Inc. - Vice President of Marketing
Ladd Eldredge Tonaquint, Inc. - Controller
2. Employment Agreements. The parties acknowledge that Bob
Wolff is employed by URI pursuant to a written employment agreement.
The parties agree that Gerry Brown, Lyle Hurd, Dee Erickson, Steve
Gorton, Steve McCormick, Bill Busch, Karl Huffaker, and Dennis Olin
shall be employed by URI, MWR or Tonaquint, Inc., respectively,
pursuant to written employment agreements set out in Exhibit A. These
individuals, along with Mr. Wolff, shall also be entitled to
participate in any employee benefit programs, pension, profit-sharing,
stock option, bonus or incentive plans, and receive such other
perquisites, all as the Board of Directors of URI shall establish and
determine from time to time.
3. Payments to Messrs. Erickson and Sheen. The parties
acknowledge and agree that Messrs. Erickson and Sheen were instrumental
and performed valuable services in connection with obtaining and
consummating the share exchange. Upon closing of the transactions
contemplated by the Exchange Agreement, the parties agree that URI
shall pay Messrs. Erickson and Sheen, as full compensation for their
services, each 38,000 shares of URI's common stock, which shall be
registered on Form S-8 as soon as reasonably practicable, and each
$104,000. The parties represent, acknowledge and agree that the
compensation due Messrs. Erickson and Sheen is reasonable and fair to
URI.
4. Intercompany Revolving Line of Credit. The parties
acknowledge and agree that MWR's need for cash to fund its operations
fluctuates during the year and that MWR needs a dependable source of
financing during negative cash flow periods. URI agrees to make
available to MWR not less than $150,000 of operating capital on an
ongoing basis, and to authorize Wolff and Steve McCormick to make the
necessary transfers of funds, without the necessity of further action
by URI's Board of Directors. The parties agree that the funds will
constitute, and be accounted for as, an intercompany revolving line of
credit from URI to MWR, and will be repaid on the terms and conditions
agreed upon by the Boards of Directors of URI and MWR from time to
time. If the Company elects not to renew Wolff's employment agreement
following its initial three-year term, any outstanding balance on the
revolving line of credit shall become a term loan, payable in quarterly
installments of principal and interest over a two-year period.
5. Internal Accounting System. The parties acknowledge that
MWR has an internal accounting system covering its widely dispersed
offices and operations. The parties agree that URI shall adopt the
accounting policies and procedures, and shall acquire the equipment and
services, necessary to coordinate its internal accounting and tie into
the existing system of MWR; provided, however, that to the extent other
accounting practices or procedures are mandated by URI's nature as an
SEC reporting company, by generally accepted account principles, by
Regulation S-X under the federal securities laws, by the Board of
Directors of URI, or are recommended for adoption company-wide by URI's
outside auditors, URI, MWR and Tonaquint, Inc. shall adopt such
practices and procedures as required.
6. Authority to Negotiate. Wolff, as Chief Executive Officer,
has the responsibility and authority to manage the day-to-day
operations of URI and its subsidiaries, subject to the direction and
control of the Board of Directors. In addition, Wolff shall be and
hereby is given the authority to negotiate business transactions not in
the ordinary course of business, on behalf of URI, MWR and Tonaquint,
Inc., including but not limited to negotiations to dispose of or
acquire assets or businesses, and to negotiate with investment bankers
and others; provided, however, that Wolff may not bind any of the
companies as to business transactions not in the ordinary course of
business without the prior approval of the respective Board of
Directors.
7. Construction. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision and the invalid or unenforceable
provision shall be curtailed or limited but only to the minimum extent
necessary to bring it within the requirements of law. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the consummation of the transactions provided
for in the Agreement.
8. Parties Bound. The parties agree that this Agreement shall
be binding on successors, assigns and any other legal representative of
a party.
9. Attorneys' Fees. The prevailing party in any action to
enforce the terms and conditions of this Agreement shall be entitled to
payment by the other party of the prevailing party's actual attorneys'
fees and costs of enforcement, whether in litigation or negotiated
settlement.
10. Assignment. This Agreement may not be assigned by either
party without the other's prior written consent, which may be withheld
for any reason.
11. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Utah.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
UTAH RESOURCES INTERNATIONAL, INC.
By /s/ R. Dee Erickson
R. Dee Erickson
Its Director
MIDWEST RAILROAD AND MAINTENANCE CONSTRUCTION
By /s/ Robert D. Wolff
Robert D. Wolff
Its President
