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): April 17, 1999
CROWN ENERGY CORPORATION
- --------------------------------------------------------------------------------
Exact name of registrant as specified in its charter
Utah 0-19365 87-0368981
- ------------------------------- --------------- ---------------------
State or other jurisdiction Commission IRS Employer ID #
of incorporation File No.
215 South State, Suite 650, Salt Lake City, Utah 84111
- --------------------------------------------------------------------------------
Address and zip code of principal executive offices
801-537-5610
- --------------------------------------------------------------------------------
Registrant's telephone number
<PAGE>
Item 1. Changes in Control of Registrant
Not Applicable
Item 2. Acquisition or Disposition of Assets
(a) On April 17, 1999 Crown Energy Corporation ("Crown"), and its
wholly-owned subsidiary, Crown Asphalt Products Company ("Capco"),
executed and delivered an Asset Purchase Agreement under which Capco
acquired all assets, properties, rights, titles and interests of every
kind and nature, whether owned or leased, used in the operation of two
separate asphalt terminals located, respectively, in Laurel, Montana
and Williston, North Dakota (collectively, the "Terminals").
On April 17, 1999, Capco also executed and delivered a
Purchase Agreement and Bill of Sale under which Capco acquired the raw
materials, work in process, finished goods and other asphalt products
related inventory, wherever located, then being processed at or
otherwise related to the operations at the Terminals (the "Inventory").
Capco acquired the Terminals from Asphalt Supply & Service,
Inc., a Montana corporation ("ASSI"), and Inoco, Inc., a Montana
corporation ("Inoco"), and acquired the Inventory from Interstate
Asphalt Company, a North Dakota corporation ("Interstate") (ASSI, Inoco
and Interstate are collectively referred to herein as the "Sellers").
The Sellers are not affiliated with Crown.
In exchange for the Terminals, Crown agreed to pay aggregate
consideration of $4,000,000 consisting of (i) cash in the amount of
$750,000 and (ii) 2.5 million shares of Crown common stock. As of the
date of this Current Report on Form 8-K, Crown has paid $50,000 in
cash. The remainder of the purchase price is due and payable upon a
"Funding Date" which will occur after Sellers have satisfied certain
conditions precedent (such as the assignment of contracts, delivery of
contractual consents of third parties, delivery of title commitments
and policies of title insurance, and related matters). Crown
anticipates that all conditions precedent to the Funding Date will be
satisfied in the near future.
Crown retains certain voting rights over 2,000,000 shares of
the common stock to be issued to the Sellers, and has the right to
repurchase up to 2,000,000 of the common stock shares at a purchase
price of $2.05 per share. Further, the Sellers are subject to certain
restrictions on the transfer of the shares, and the Sellers have the
right to require Crown to repurchase all 2,500,000 shares at a price of
$1.10 per share under certain conditions.
The purchase price for the Inventory will be determined as of
the Funding Date in an amount equal to the cost of the Inventory, plus
any interest, expenses and other costs or expenses reasonably related
thereto, as mutually agreed upon by Interstate and Capco and subject to
such reasonable substantiation requirements as may be imposed by Capco
at the Funding Date.
The purchase price for the Terminals and the Inventory was
determined through arms-length negotiations between Crown and the
Sellers and Interstate. With respect to the cash portion of the
2
<PAGE>
purchase price, Crown will rely upon one or more financing arrangements
or lines of credit as determined by Crown.
Capco's majority-owned subsidiary, Crown Asphalt Distribution
L.L.C. ("Crown Distribution"), was formed as a joint venture between
Crown and MCNIC Pipeline & Processing Company, a Michigan corporation
("MCNIC"). Crown Distribution's operating agreement allows Crown
Distribution, or a newly formed legal entity owned by Capco and MCNIC,
to participate in additional business opportunities under certain
circumstances. These participation rights generally provide Capco and
MCNIC, or their respective affiliates, the option, but not the
obligation, to acquire up to a 50% sharing ratio or equity interest in
any new opportunity which is properly subject to the participation
rights. Crown and MCNIC may determine to operate the Terminals through
such a joint venture relationship.
(b) The Terminals and Inventory were used by the Sellers for the
production, manufacture, processing, distribution and sale of asphalt
and asphalt-related products. Capco intends to continue such uses of
the Terminals and to integrate such facilities with Capco's other
asphalt distribution terminals in the intermountain west. Capco
management believes that the acquisition of these assets increases the
vertical integration of Crown's overall asphalt business and adds
further capacity to its distribution network.
Item 3. Bankruptcy or Receivership
Not Applicable
Item 4. Changes in Registrant's Certifying Accountant
Not Applicable
Item 5. Other Events
Not Applicable
Item 6. Resignation of Registrant's Directors
Not Applicable
Item 7. Financial Statement, Pro Forma Financial Information and Exhibits
(a) The Sellers have not maintained detailed books and records and it
is impracticable to provide financial statements relative to the prior
operations of the Terminals or the Inventory at this time. As permitted
by SEC rules and regulations applicable to this Current Report, Crown
3
<PAGE>
will file any required financial statements as an amendment to this
report on Form 8-K as soon as practicable, but not later that 60 days
after the date this Current Report on Form 8-K was required to be filed
pursuant to applicable SEC regulations.
(b) The Sellers have not maintained detailed books and records and it
is impracticable to provide pro forma financial information relative to
the Terminals and Inventory at this time. As permitted by SEC rules and
regulations applicable to this Current Report, Crown will file any
required financial statements as an amendment to this report on Form
8-K as soon as practicable, but not later that 60 days after the date
this Current Report on Form 8-K was required to be filed pursuant to
applicable SEC regulations.
(c) The following exhibits are furnished herewith in accordance with
the provisions of Item 601 of Regulation S-K:
Exhibit No. Description
2.1 Asset Purchase Agreement, dated April 17, 1999
2.2 Purchase Agreement and Bill of Sale, dated April
17, 1999
Item 8. Changes in Fiscal Year
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CROWN ENERGY CORPORATION
/s/ Richard Rawdin
--------------------------
Richard Rawdin
Secretary
DATED: May 2, 1999
4
ASSET PURCHASE AGREEMENT
dated as of April 17, 1999
among
CROWN ASPHALT PRODUCTS COMPANY
CROWN ENERGY CORPORATION
ASPHALT SUPPLY & SERVICE, INC.
and
INOCO, INC.
<PAGE>
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, the following terms
shall have the following meanings:
"Affiliate": as to any Person (as hereinafter defined below),
any other Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. The term
"control" (including, with correlative meanings, the terms "controlled
by" and "under common control with"), as applied to any Person, means
the possession, whether directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or other ownership
interest, by contract or otherwise.
"Agreement": this Asset Purchase Agreement, together with all
schedules and exhibits referenced herein, as amended, modified or
supplemented from time to time.
"Assumed Liabilities": the liabilities and obligations to be
assumed by Purchaser as of the Closing Date under certain contracts and
leases identified in Section 2.2 below.
"Audit": any audit, assessment of Taxes, other examination by
any Tax Authority, proceeding or appeal of such proceeding relating to
Taxes.
"Boards of Directors": the boards of directors of Sellers or,
to the extent legally permissible, a duly constituted committee
thereof.
"Business Day": a day other than a Saturday or a Sunday or
other day on which commercial banks in Salt Lake City, Utah are
authorized or required by law to close.
"Closing": has the meaning set forth in Section 2.3.
"Closing Date": has the meaning set forth in Section 2.3.
"Common Stock": the common stock, $.02 par value, of Crown
Energy Corporation. The Common Stock is registered under Section 12(g)
of the Securities Exchange Act of 1934 and traded on the OTC Bulletin
Board (OTCBB) established by the National Association of Securities
Dealers.
"Code": the Internal Revenue Code of 1986, as amended.
"Crown". Crown Energy Corporation, a Utah corporation.
"Crown Shares": the shares of Common Stock to be issued to
Sellers at the Closing pursuant to Section 2.4(c) below.
"Damages": has the meaning set forth in Section 8.1.
2
<PAGE>
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Environmental Laws": any and all foreign, federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other requirements of law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any
time on or prior to the Closing Date be in effect.
"Environmental Permit": any license, permit, order, approval,
concession, registration, authorization, or qualification required
under any Environmental Law.
"Environmental Report": any report, study, assessment, audit,
or other similar document that addresses any issue of actual or
potential non-compliance with, or actual or potential liability under,
any Environmental Law that may in any way affect Sellers.
"FICA": Federal Insurance Contributions Act.
"Financial Statements": has the meaning set forth in Section
3.5.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity (including
without limitation a court) exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to,
government.
"Governmental Order": as to any Person, any judgment,
injunction, decree, order or other determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices); (b) any other indebtedness of
such Person which is evidenced by a note, bond, debenture or similar
instrument; (c) all obligations of such Person under financing leases;
(d) all obligations of such Person in respect of acceptances issued or
created for the account of such Person; and (e) all liabilities secured
by any Lien (as hereinafter defined) on any property owned by such
Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Inventory": the entire inventory of raw materials, work in
process, finished goods or other products located at either of the
Terminals as of the Closing Date and owned by any person other than
Sellers.
3
<PAGE>
"Intellectual Property" has the meaning set forth in Section
3.11.
"Knowledge of Sellers": actual knowledge after reasonable
investigation of either Seller, any Shareholder or any officer of a
Seller, including actual knowledge of facts which should reasonably
have placed such Seller, Shareholder or officer on notice of the
matters in question.
"Lien": any mortgage, pledge, hypothecation, assignment for
security purposes, deposit arrangement, encumbrance, lien (statutory or
other), claim, charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever (including without limitation any conditional
sale or other title retention agreement and any financing lease having
substantially the same economic effect as any of the foregoing).
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, property, financial condition, results of
operations or prospects of Sellers taken as a whole; (b) the ability of
any Seller or Shareholder to consummate any transactions contemplated
by this Agreement or perform its or his obligations under this
Agreement; or (c) the ability of Purchaser to exercise its rights under
this Agreement.
"Materials of Environmental Concern": any waste, pollutant, or
contaminant (whether or not defined or regulated as such under any
Environmental Law), or any other substance of any kind (including
without limitation petroleum or petroleum products, asbestos or
asbestos-containing materials, urea-formaldehyde insulation,
polychlorinated biphenyls, odors and radioactivity) regulated by or
under, or which may otherwise give rise to liability under, any
Environmental Law.
"Non-Competition Period": has the meaning set forth in Section
5.10(a).
"Permits": as to any Person, all licenses, permits,
franchises, orders, approvals, concessions, registrations,
authorizations and qualifications with and under all federal, state,
local or foreign laws and Governmental Authorities and all industry or
other non-governmental self-regulatory organizations that are issued to
such Person (including without limitation Environmental Permits).
"Person": a natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"Products": has the meaning set forth in Section 5.10(a).
"Purchased Assets": has the meaning set forth in Section 2.1.
"Purchaser": Crown Asphalt Products Company, a Utah
corporation.
4
<PAGE>
"Requirement of Law": as to any Person, the Articles of
Incorporation and Bylaws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or order, writ,
injunction, decree or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any
of its property is subject.
"SEC": the Securities and Exchange Commission or its
successor.
"Securities Act": the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder, all as in
effect from time to time.
"Sellers": ASSI and INOCO.
"Taxes": all federal, state, local and foreign taxes, and
other assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additions to tax, or
penalties applicable thereto.
"Tax Authority": the Internal Revenue Service and any other
domestic or foreign governmental authority responsible for the
administration of any Taxes.
"Tax Returns": all federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and
information returns and any amendments thereto.
"Terminals": all of the assets of Sellers which constitute a
part of Sellers' Laurel, Montana and/or Williston, North Dakota asphalt
terminals, including without limitation all assets located on the
premises of such asphalt terminals and all related Inventory.
1.2 Other Definitional Provisions.
(a) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
ARTICLE II
CLOSING
2.1 Purchase and Sale. On the terms and subject to the conditions of
this Agreement, each Seller shall and hereby does sell, convey, transfer, assign
and deliver to Purchaser, and Purchaser shall and hereby does purchase, acquire
5
<PAGE>
and accept from such Seller, as the case may be, free and clear of all Liens, by
appropriate deeds, bills of sale, assignments and other instruments satisfactory
to Purchaser and its counsel, all assets, properties, rights, titles and
interests of every kind and nature owned or leased by Sellers which constitute a
part of the Terminals (including without limitation all assets located on the
premises of such Terminals and all related Inventory), whether tangible,
intangible, real or personal (the "Purchased Assets"), including without
limitation, all of the following assets owned or leased by Sellers in connection
with the Terminals:
(a) all interests in real estate (including, without
limitation, land, buildings, fixtures, fittings and improvements
thereon, and easements, licenses, rights of way, permits, and the other
appurtenances thereto, including appurtenant rights in and to public
streets, whether or not vacated), whether owned in fee, leased,
subleased or otherwise, including without limitation the fee simple
interest in the real property comprising the Terminals, which is more
particularly described on Schedule 2.1(a) attached hereto;
(b) all raw materials, manufactured and purchased parts,
work-in-process, finished goods, inventories and supplies;
(c) all machinery, equipment, storage tanks, tools, dies,
jigs, molds, patterns, furniture, spare parts and supplies, computers
and all related equipment, telephones and all related equipment and all
other tangible personal property;
(d) all rights existing (A) under insurance policies, (B)
under all contracts, agreements and arrangements listed and expressly
specified to be assumed by Purchaser in Schedule 3.17, and (C) under
all leases and subleases listed and expressly specified to be assumed
by Purchaser in Schedule 3.10(a);
(e) all lists and records pertaining to the Terminals and the
Purchased Assets, including all books, records, ledgers, files,
documents, correspondence, lists, studies, reports, business records
and other printed or written materials relating to the Terminals; and
(f) all Permits, including, without limitation, those listed
in Schedule 3.21, but excluding any such permits or licenses which are
specifically identified in Schedule 3.21 as not being transferable, and
all data and records pertaining thereto.
2.2 Limited Assumption of Liabilities. Purchaser will not assume or in
any way be responsible for any liabilities or obligations of Sellers whatsoever,
including without limitation any liabilities or obligations related to the
operation or condition of the Terminals or the Purchased Assets arising or
attributable to any time prior to the Closing Date. From and after the Closing
Date, Purchaser will assume and agree to pay, defend, discharge and perform as
and when due only liabilities and obligations arising after the Closing Date
under the contracts and leases which are specifically identified on Schedule
3.17 or Schedule 3.10(a), respectively, but only to the extent such contracts
and leases are actually assigned to and assumed by Purchaser, and specifically
excluding any liability or obligation relating to or arising out of such
contracts and leases as a result of (A) any breach of such contracts or leases
occurring on or prior to the Closing Date, (B) any violation of law, breach of
warranty, tort or infringement occurring on or prior to the Closing Date, or (C)
6
<PAGE>
with respect to the foregoing items (A) and (B), any related charge, complaint,
action, suit, proceeding, hearing, investigation, claim or demand (the "Assumed
Liabilities").
Notwithstanding anything to the contrary contained in this
Agreement and regardless of whether such liability is disclosed herein or on any
schedule hereto, Purchaser will not assume or be liable for any liabilities or
obligations of Sellers not described in this Section.
2.3 Closing. The sale, transfer and assignment of the Purchased Assets
shall be and is hereby made effective (the "Closing") as of the date and time
that this Agreement shall have been duly executed and delivered by each party to
all other parties. The date and time of such Closing are herein referred to as
the "Closing Date."
2.4 Consideration. Subject to the conditions contained in this
Agreement, the aggregate consideration for the Purchased Assets shall consist of
$4,000,000.00 (the "Purchase Price"), to be paid as follows:
(a) The $50,000 previously paid by Purchaser to Sellers shall
be applied against the Purchase Price to be paid upon the Funding Date
(as defined in Article VI below).
(b) On the Funding Date, Purchaser shall pay Sellers an
additional $700,000, in cash or other immediately available funds which
funds shall be allocated among the Sellers as set forth in Schedule
2.4.
(c) The balance of the Purchase Price shall be paid upon the
Funding Date by Purchaser delivering to Sellers certificates
representing an aggregate of 2,500,000 shares of Crown's voting Common
Stock (the "Crown Shares"), which shall be allocated among the Sellers
as set forth in Schedule 2.4. The Crown Shares will not be registered
under the Securities Act or under any state securities laws, shall be
"restricted shares" and shall be subject to the terms and conditions
specified in Section 2.5 below.
The parties agree that although the Closing shall be the date of the
execution of this Agreement, the Purchase Price shall not be payable until April
30 , 1999 or such later date as all conditions precedent to Purchaser's
obligation to pay the Purchase Price, as set forth in Article VI below, shall
have been satisfied or waived by Purchaser (the "Funding Date"). The parties
acknowledge that the period of time between the Closing Date and the Funding
Date is to be utilized by Sellers to prepare or produce those items required by
Article VI of this Agreement. . Until such time as all items, documents,
instruments and Purchased Assets required by this Agreement to be delivered by
Sellers to Purchaser have been delivered, Purchaser shall have no obligation to
pay the Purchase Price and Purchaser shall have the option to declare this
Agreement null and void, in which case Sellers shall return to Purchaser the
$50,000 portion of the Purchase Price previously paid to Sellers and the parties
shall thereafter have no further obligation with respect hereto. Purchaser
further agrees that it shall not sell, transfer, convey, encumber or disturb in
any manner, the Purchased Assets during the period running from the Closing Date
until the Funding Date.
7
<PAGE>
2.5 Certain Provisions Governing the Crown Shares.
(a) In the event that the bid price of a share of Common Stock
is less than $1.10 for 120 consecutive trading days at any time between
the Closing and December 31, 2000, Sellers shall have the right to
require Purchaser (or, in Purchaser's discretion, Crown) to repurchase
all but not less than all the Crown Shares for $1.10 per share. To
secure Purchaser's repurchase obligation under this subsection 2.5(a),
Purchaser hereby grants Sellers a security interest in the Purchased
Assets until two years after the Closing Date (at which time the
security interest shall be released by Sellers); except, however, that
the security interest of Sellers shall be partially terminated, and the
amount of Purchaser's repurchase obligation secured thereby reduced,
as, when and each time the transfer restrictions imposed under Section
2.5(c) below lapse in part as to the Crown Shares, by an amount
calculated by multiplying (i) the maximum number of Crown Shares as to
which the Section 2.5(c) restrictions are then no longer applicable by
(ii the higher of (a) $1.10 per share or (b) the then current Fair
Market Value (as defined in Section 2.5(e)). Sellers shall and hereby
do subordinate its security interest to the lien, security interest or
other financial encumbrance of any bank, financial institution,
institutional lender or financing lessor extending credit, financing or
any other financial accommodations to Purchaser or its Affiliates on or
after the date of Closing. Sellers each hereby constitute and appoint
any President or Vice President of Purchaser as its agent and
attorney-in-fact to act in its and their place and stead for the
limited and sole purpose of executing and delivering any agreements,
documents or instruments, including UCC financing statements and
amendments thereof, to confirm, effect or acknowledge such
subordination.
(b) The Crown Shares shall be registered in the name of
Sellers as provided in Section 2.4. On the Funding Date, the
certificates representing the Crown Shares shall be delivered to
Purchaser, duly endorsed by Seller in blank or accompanied by a
separate stock assignment, in either case in form and substance
acceptable to Purchaser. The certificates may contain such legend or
legends as deemed appropriate by Purchaser or Crown to reflect the
restrictions on transfer imposed under this Agreement or under
applicable securities laws. The Crown Shares shall be held by
Purchaser, and Sellers grant to Purchaser a security interest in and to
the Crown Shares until one year after the Closing Date (at which time
the security interest shall be released by Purchaser), in order to
secure Sellers' obligation to indemnify Purchaser pursuant to Section
7.1.
(c) Sellers agree to hold all of the Crown Shares, and not to
sell or otherwise transfer any of the Crown Shares, until one year
after the Closing Date. After such date, Sellers agree not to sell more
than 500,000 Crown Shares in the aggregate in any calendar quarter,
provided that Sellers further agree to hold and not to sell or
otherwise transfer 500,000 of the Crown Shares for a period of two (2)
years after the Closing Date, and provided further that any and all
proposed sales and transfers of the Crown Shares shall be subject to
the purchase option specified in subsection (e) below.
(d) Purchaser and/or Crown shall have the right to repurchase
from Sellers up to 2,000,000 of the Crown Shares at any time and from
time to time for a purchase price of $2.05 per share. Purchaser and/or
Crown may exercise this right by written notice to Sellers. Under no
8
<PAGE>
circumstances, however, shall Purchaser and/or Crown have the right to
purchase the remaining 500,000 Crown Shares. The full purchase price
for any such repurchased Crown Shares shall be paid by Purchaser or
Crown to Sellers, in cash or other immediately available funds, within
30 days after Sellers deliver share certificates representing the
repurchased Crown shares duly endorsed in blank or otherwise in form
and substance acceptable to Purchaser or Crown, as the case may be.
(e) Sellers shall not transfer or attempt to transfer any
Crown Shares by way of sale, gift, assignment, pledge or other
voluntary or involuntary transfer or encumbrance (each, whether actual
or proposed, a "Transfer") unless Sellers first offer such shares to
Purchaser and Crown as provided in this Section 2.5. Any Transfer of
Crown Shares by Sellers without first complying with this Section 2.5
shall be void ab initio. Upon the occurrence of any Transfer, Sellers
agree that Purchaser and Crown shall have the right and option to
purchase the Crown Shares made the subject of such Transfer and the
following procedures shall be applicable. Sellers shall give Purchaser
and Crown written notice of any Transfer. Sellers' notice shall state
the name and address of the proposed transferee of the Crown Shares and
the material terms of any Transfer. Purchaser and Crown shall have the
right and option, within 60 calendar days after receipt of Sellers'
transfer notice (the "exercise period"), to purchase the Crown Shares
covered by such Transfer notice. If Sellers' Transfer notice indicates
Sellers' intention to Transfer Crown Shares in one or more market
transactions effected through a national securities exchange or other
inter-dealer quotation system, (i) the purchase price per share shall
be the Market Value (as defined below) and (ii) the purchase price
shall be payable in cash against Sellers' delivery of share
certificates representing the subject Crown Shares, duly endorsed in
blank or otherwise in form and substance acceptable to Purchaser or
Crown, as the case may be. Conversely, if Sellers' Transfer notice
indicates Sellers' intention to Transfer Crown Shares in a manner other
than a market transaction effected on a national securities exchange or
inter-dealer quotation system, (i) the purchase price and terms shall
be as specified in Sellers' Transfer notice (except that Purchaser
shall have the right to pay cash in an amount equal to the fair market
value of any non-cash consideration described in Sellers' Transfer
Notice) and (ii) Purchaser or Crown may elect to pay the purchase price
in eight (8) equal quarterly installments of principal and interest, at
the rate per annum of 8%, commencing 90 days after the date of Sellers'
Transfer notice and then continuing on the same day of each third month
thereafter.
For purposes of this Section 2.5(e), "Market Value" of the
Crown Shares shall be: (i) if at the time of valuation Crown's Common
Stock is listed on any national securities exchange, the average
closing price on such exchange, or, if listed on more than one such
exchange, on the exchange on which the Crown's Common Stock shall have
had the largest total trading volume, during the thirty day period
preceding the date of the Transfer notice; (ii) if at the time of
valuation Crown's Common Stock is publicly traded but not listed on any
national securities exchange, the average of the closing bid-prices
appearing on the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or, if not listed on NASDAQ, the
average of the closing bid prices as reported by the National Quotation
Bureau, Inc. or a comparable general quotation service, during the
thirty day period preceding the date of the Transfer notice.
9
<PAGE>
If both Purchaser and Crown fail to notify Sellers in writing
of their intention to exercise the purchase option within the exercise
period, Purchaser and Crown shall be deemed to have rejected and
declined the purchase option with respect to the Crown Shares made the
subject of the Transfer notice. If the purchase options granted to
Purchaser and Crown in this Section are not exercised as to all of the
Crown Shares subject to such options, then, after the applicable
exercise period has lapsed, Sellers may transfer any such Crown Shares
as to which no exercise of such options was made; provided, however,
that Sellers may only transfer such Shares: (i) on terms specified in
the Transfer Notice, (ii) in the case of a Transfer in a non-market
transaction, on terms no more favorable to the transferee than the
terms specified in Sellers Transfer notice, and (iii) only during the
90 calendar day period following the lapse of the exercise period under
this Section, after which the Crown Shares shall again be subject to
the restrictions on transferability set forth in this Section.
The purchase options granted to Purchaser and Crown pursuant
to this Agreement may be exercised on one or more successive occasions
and shall not be deemed extinguished or waived by the failure of
Purchaser or Crown to exercise such purchase options as to Crown Shares
on any particular occasion.
(f) The numbers of shares and prices per share described in
this Section 2.5 will be subject to proportional adjustment upon the
occurrence of certain events (e.g., stock splits, recapitalizations)
from time to time.
(g) Sellers hereby grant to Parent the right to vote and
irrevocable proxy with respect to 2,000,000 Crown Shares. The foregoing
right to vote and proxy is and shall be coupled with the interest of
Parent in the Crown Shares and irrevocable. The right to vote and proxy
shall be noted conspicuously on the certificate(s) representing the
Crown Shares. The foregoing right to vote and proxy shall include any
and all voting rights related to the Crown Shares and shall terminate
two (2) years after the Closing Date; provided, however, that such
right to vote and proxy shall terminate as to any Crown Shares that are
sold by Sellers in strict compliance with all conditions and
restrictions imposed by this Agreement.
2.6 Closing Deliveries.
(a) At the Closing, Sellers shall deliver to Purchaser:
(i) title to and possession of the Purchased Assets;
(ii) a copy of the resolutions duly adopted by the
Boards of Directors and shareholders (if legally required) of
each Seller, authorizing the execution, delivery and
performance by Sellers of this Agreement and the other
agreements contemplated hereby, certified by the Secretary or
an Assistant Secretary of each Seller;
10
<PAGE>
(iii) a certificate of the Secretary or an Assistant
Secretary of each Seller as to the incumbency and signature of
the officers of that Seller executing this Agreement and any
other agreements and certificates contemplated hereby;
(iv) a certificate of corporate good standing from
the secretary of state or other governmental agency having
jurisdiction over each of the Seller corporations under the
corporate laws of such jurisdictions;
(v) such Bills of Sale as shall further evidence the
sale, transfer or assignment to Purchaser of any tangible
personal property included within the Purchased Assets; and
(vi) such other documents or instruments as Purchaser
reasonably requests to effect the transactions contemplated
hereby.
(b) At the Closing, Purchaser shall deliver to Sellers the
following instruments, in each case duly executed and in form and
substance acceptable to Sellers:
(i) a copy of the resolutions duly adopted by the
Boards of Directors of Purchaser, authorizing the execution,
delivery and performance by Purchaser of this Agreement and
the other agreements contemplated hereby, certified by the
Secretary or an Assistant Secretary of Purchaser;
(ii) a certificate of the Secretary or an Assistant
Secretary of Purchaser as to the incumbency and signature of
the officers of that Purchaser executing this Agreement and
any other agreements and certificates contemplated hereby;
(iii) a certificate of corporate good standing from
the secretary of state or other governmental agency having
jurisdiction over Purchaser under the corporate laws of such
jurisdictions;
(iv) such other documents or instruments as Sellers
reasonably request to effect the transactions contemplated
hereby.
(c) At the Closing, Seller shall execute and deliver to a
title insurance company of its choice and acceptable to Purchaser (the
"Escrow Agent"), a Warranty Deed (the "Deed") transferring and
conveying to Purchaser all of Sellers rights, title and interest with
respect to that certain real property having a street address of 501
27th Ave. East, Williston, North Dakota 58801 and more particularly
described in that Quit Claim Deed dated January 31, 1997 recorded in
the Register of Deeds, Williams County, North Dakota, microfilm number
569401. The Deed shall be complete, accurate and in recordable form. At
the Closing, Sellers and Purchase shall each execute and deliver escrow
instructions under which the Escrow Agent shall not record the Deed
until such time as it has received further escrow instructions, duly
signed by Purchaser, confirming satisfaction of a conditions precedent
under Article VI and otherwise authorizing the recording of the Deed.
11
<PAGE>
2.7 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Purchased Assets, the non-competition agreements and other items as
set forth in Schedule 2.7, which shall be completed by Purchaser and affixed
hereto on or prior to the Funding Date. Sellers and Purchaser shall make all
appropriate tax filings on a basis consistent with such allocation.
2.8 Right of Offset. In the event the Purchased Assets are not free and
clear of Liens, or Sellers' representations or warranties are incorrect in any
material respect, on the Funding Date Purchaser shall have the right, at its
election, to offset any costs, expenses, damages, claims, payments or monetary
damages directly arising therefrom or related thereto against the Purchase
Price. Upon any such offset, Schedule 2.4 shall be appropriately amended to
reflect any differing allocation of Crown Shares as a result thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of Sellers hereby jointly and severally represents and warrants to
Purchaser as follows, in each case effective and deemed made, stated or
restated, as the case may be, as of the Closing Date and as of the Funding Date:
3.1 Organization and Capacity. ASSI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Montana and
INOCO is a corporation duly organized, validly existing and in good standing
under the laws of the State of North Dakota. Each of Sellers is (i) duly
qualified to transact business as a foreign corporation and in good standing
under the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification and (ii) in
compliance with all Requirements of Law, except to the extent that the failure
to be in good standing, to qualify as a foreign corporation or to comply with
such requirements would not, individually or in the aggregate with all such
other failures, have a Material Adverse Effect. Each of Sellers has the
corporate power and authority and the legal right to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is engaged, except to the extent the failure to have such
power, authority or legal right would not, individually or in the aggregate with
all such other failures, have a Material Adverse Effect. Each of Sellers has all
requisite corporate power and authority to enter into and deliver this Agreement
and the other agreements contemplated hereby and to perform its obligations
hereunder and thereunder. Each of Sellers has heretofore delivered to Purchaser
accurate and complete copies of its Articles of Incorporation and By-laws as
currently in effect.
3.2 Authorization and Validity. The execution, delivery and performance
by Sellers of this Agreement and the other agreements contemplated hereby and
the performance by them of the transactions contemplated hereby and thereby have
been duly and validly authorized by the respective Boards of Directors and
shareholders of Sellers, and no other corporate action on the part of Sellers is
necessary for the execution, delivery and performance by them of this Agreement
12
<PAGE>
and the other agreements contemplated hereby and the consummation by them of the
transactions contemplated hereby and thereby. This Agreement and the other
agreements contemplated hereby which are to be signed by them, respectively,
have been duly executed and delivered by Sellers and, assuming due
authorization, execution and delivery by Purchaser, this Agreement and the other
agreements contemplated hereby which are to be executed by them, respectively,
constitute the legally valid and binding obligations of Sellers, enforceable
against them in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) or by an implied covenant of good faith and fair
dealing.
3.3 No Conflict. Except as set forth in Schedule 3.3, neither the
execution, delivery or performance by Sellers of this Agreement and the other
agreements contemplated hereby nor the consummation by them of the transactions
contemplated hereby and thereby and compliance by Sellers with any of the
provisions hereof or thereof will (a) require any consent, approval or notice
under, violate or result in the violation of, conflict with or result in a
breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, result in
the termination of, accelerate the performance required by or result in a right
of termination or acceleration, result in the loss of a material benefit under
or result in the creation of any Lien upon any of the Purchased Assets or the
Terminals under any of the terms, conditions or provisions of any contract of
Sellers or (b) violate, or result in the violation of, any Requirement of Law.
3.4 Governmental Consents. Except as set forth in Schedule 3.4, no
consent, order or authorization of, or registration, declaration or filing with,
any Governmental Authority is required in connection with the execution,
delivery and performance of this Agreement or the other agreements contemplated
hereby or the consummation of the transactions contemplated hereby or thereby by
Sellers.
3.5 Financial Statements. [omitted.]
3.6 Absence of Certain Changes. Except as and to the extent set forth
in Schedule 3.6, since December 31, 1998, none of the Sellers has:
(a) suffered any Material Adverse Effect;
(b) incurred any liabilities or obligations (absolute,
accrued, contingent or otherwise) except non-material items incurred in
the ordinary course of business and consistent with past practice, none
of which exceeds $10,000 (counting obligations or liabilities arising
from one transaction or a series of similar transactions, and all
periodic installments or payments under any lease or other agreement
providing for periodic installments or payments, as a single obligation
or liability), or increased, or experienced any change in any
assumptions underlying, or methods of calculating, any bad debt,
contingency or other reserves;
(c) permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any
Liens, except for liens for current Taxes not yet due;
13
<PAGE>
(d) written down the value of any inventory (including
write-downs by reason of shrinkage or mark-down) or written off as
uncollectible any notes or accounts receivable, except for immaterial
write-downs and write-offs in the ordinary course of business and
consistent with past practice;
(e) cancelled any debts or waived any claims or rights of
substantial value;
(f) sold, transferred, or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible),
except in the ordinary course of business and consistent with past
practice;
(g) granted any increase in the compensation or benefits of
any officer or employee (including any such increase pursuant to any
bonus, pension, profit sharing or other plan or commitment) or any
increase in the compensation or benefits payable, or to become payable,
to any officer or employee, and no such increase is customary on a
periodic basis or required by agreement or understanding;
(h) made any change in severance policy or practices;
(i) made any capital expenditure or acquired any property or
assets (other than new materials and supplies) in excess of $10,000.00
individually or $100,000.00 in the aggregate;
(j) declared, paid or set aside for payment any dividend or
other distribution in respect of its capital stock or redeemed,
purchased or otherwise acquired, directly or indirectly, any shares of
capital stock or other securities of Sellers;
(k) made any change in any method of Tax or financial
accounting or accounting practice, or made or changed any election for
federal income Tax purposes;
(l) made any Tax election, settled or compromised any federal,
state, local or foreign Tax liability or claim, waived or extended the
statute of limitations in respect of any such Taxes;
(m) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets (real, personal or
mixed, tangible or intangible) to, or entered into any agreement or
arrangement with, any of its officers, directors or shareholders or any
affiliate or associate of any of its officers, directors or
shareholders except for directors' fees, and compensation to officers
at rates not exceeding the rates of compensation paid during the fiscal
year ended December 31, 1998; or
(n) agreed, whether in writing or otherwise, to take any
action described in this Section.
3.7 Legal Proceedings. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority has been formally commenced, is
pending or, to the Knowledge of Sellers, threatened by or against Sellers or
14
<PAGE>
against any of their respective properties or revenues. None of Sellers is a
party or subject to the provisions of any order or decree of any Governmental
Authority under which any obligation remains to be performed by Sellers. There
is no action, suit, proceeding, arbitration or investigation by Sellers
currently pending or which Sellers presently intend to initiate.
3.8 Compliance with Laws.
(a) To the Knowledge of Sellers, each of Sellers is in
compliance with all Requirements of Law, holds all Permits that are
material to the conduct of its business or the ownership of its
properties, and is in material compliance with each such Permit, except
where such failure to comply with any such Requirements of Law, to hold
any such Permits or to comply with any such Permits could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(b) None of Sellers has received any notice from any
Governmental Authority asserting that it is not in compliance with any
Requirement of Law or any Permit.
3.9 Certain Agreements. None of Sellers is a party to any (i) agreement
with any of its executive officers or other employees (A) any benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction of the nature contemplated by this Agreement; (B)
which will not be terminable without liability to Sellers by Sellers on 30 days'
or less notice; or (C) providing severance benefits or other benefits which are
conditioned upon a change of control or sale of assets after the termination of
employment of such employment regardless of the reason for such termination of
employment, or (ii) agreement or plan, including without limitation any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be materially increased, or the vesting of benefits of
which will be materially accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
3.10 Title and Condition of Properties.
(a) Leased Properties. Schedule 3.10(a) lists and describes
briefly all leased real property that is used or occupied by Sellers
and the leases, subleases and agreements by which such property is used
and occupied. Except as otherwise described on Schedule 3.10(a), with
respect to each such parcel of leased real property:
(i) the leases and subleases described on Schedule
3.10(a) constitute all of the leases, subleases and agreements
under which Sellers hold any leasehold interest in real
estate;
(ii) Sellers have delivered to Purchaser and its
counsel true, correct and complete copies of all of the
leases, subleases and agreements described on Schedule
3.10(a);
15
<PAGE>
(iii) each such lease, sublease or agreement is
legal, valid, binding, enforceable and in full force and
effect, and is fully assignable to Purchaser (or Sellers have
obtained the consent of the lessor to such assignment);
(iv) neither Sellers nor, to Sellers' Knowledge, any
other party to any such lease, sublease or agreement is in
breach or default thereof, and no event has occurred which,
with notice or the lapse of time, or both, would constitute
such a breach or default or permit termination, modification
or acceleration thereof or thereunder:
(v) no party to any such lease, sublease or agreement
has repudiated any provision thereof:
(vi) there are no disputes, oral agreements or
forbearance programs in effect as to any such lease, sublease
or agreement; and
(vii) no such lease, sublease or agreement has been
modified in any respect, except to the extent disclosed in
documents delivered to Purchaser and its counsel.
(b) Owned Properties. Schedule 3.10(b) lists and contains the
legal description of all real property that is owned by Sellers and
used in connection with Seller's business at the Terminals. Each of
Sellers owns good and marketable title, free and clear of all Liens (or
any Liens shall be satisfied or released by Sellers on or prior to the
Funding Date), to all of the real, personal and intangible personal
property and assets of such Seller included within the Purchased Assets
(including the real property described on Schedule 3.10(b)), except for
rights of licensors and lessors of such Purchased Assets which are
subject to license or lease as described in Schedule 3.10(a) or
Schedule 3.10(b) and Liens for current Taxes not yet due and payable.
At the Closing, each of Sellers will convey good and marketable title
to all of its real and personal property and assets included within the
Purchased Assets, free and clear of all Liens (other than rights of
licensors and lessors of such Purchased Assets which are subject to
license or lease as described in Schedule 3.10(a) or Schedule 3.10(b)
and Liens for current Taxes not yet due and payable for which adequate
reserves have been properly recorded). The Purchased Assets so conveyed
will include all of those assets (real, personal, tangible and
intangible) used during the twelve months prior to the Closing Date
(other than inventory or raw materials used, sold or consumed in the
ordinary course of business and worn out or obsolete fixed assets
disposed of in the ordinary course of business) and will enable
Purchaser to operate the business of the Terminals in the same manner
as operated by Sellers prior to and as of the Closing Date.
(c) All Properties. Except as otherwise described on Schedule
3.10(c), with respect to each parcel of leased or owned real property:
(i) Sellers have not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in any
fee or leasehold interest;
16
<PAGE>
(ii) To the Knowledge of Sellers, all buildings,
improvements and other property on the leased or owned
properties have received all approvals of governmental
authorities (including certificates of occupancy, permits and
licenses) required in connection with the operation thereof
and have been operated and maintained in accordance with all
applicable legal requirements and are not in violation of any
applicable zoning, building code or subdivision ordinance,
regulation, order or law;
(iii) all buildings, improvements and other property
thereon are supplied with utilities and other services
necessary for the operation thereof (including gas,
electricity, water, telephone, sanitary and storm sewers and
access to public roads);
(iv) there are no pending (or, to Seller's Knowledge,
threatened) condemnation proceedings, lawsuits, or other
administrative actions relating to such properties or other
matters affecting adversely the current use, occupancy, or
value of such properties;
(v) other than the documents described in Schedule
3.10(a), there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to
any Person the right of use or occupancy of any portion of
such properties; and
(vi) no Person (other than Sellers) is in possession
of such properties.
(d) Condition of Assets. All buildings and improvements
located on property described in Schedule 3.10(a) and Schedule 3.10(b)
and all of Sellers' machinery, equipment and other tangible personal
property and assets which are included in the Purchased Assets are in
good condition and repair in all respects, except for ordinary wear and
tear not caused by neglect, and are useable in the ordinary course of
business. The Purchased Assets include all assets necessary to conduct
Sellers' businesses at the Terminals as presently conducted, other than
inventory sold or otherwise disposed of in the ordinary course of
business to non-affiliated third parties in accordance with past custom
and practice.
3.11 Intellectual Property.
(a) The Purchased Assets include all patents, patent
applications, copyrights, copyright applications, trademarks, service
marks, trade names, slogans, logos, designs, trade secrets,
confidential or proprietary technical information, designs, processes,
research in progress and inventions (whether patentable or
unpatentable), technology, know-how and computer software used by
Sellers in connection with the Terminals or other Purchased Assets
(collectively, the "Intellectual Property"). Sellers own or have valid
and transferable licenses to use all of the Intellectual Property in
connection with the Terminals and the Purchased Assets.
(b) Sellers are not, nor will they be as a result of the
execution and delivery of this Agreement or the performance of their
obligations under this Agreement, in breach of any license, sublicense
or other agreement relating to the Intellectual Property;
17
<PAGE>
(c) No former or present employees, officers or directors of
Sellers hold any right, title or interest directly or indirectly, in
whole or in part, in or to any of the Intellectual Property;
3.12 Employee Benefit Plans. Sellers do not maintain, and have not
maintained during the preceding three-year period, any "employee
benefit plan" (within the meaning of Section 3(3) of ERISA (including
without limitation multiemployer plans within the meaning of ERISA
Section 3(37)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation or other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not
subject to ERISA (including any funding mechanism therefor now in
effect or required in the future as a result of the transaction
contemplated by this Agreement or otherwise), whether formal or
informal, oral or written, legally binding or not, under which any
employee or former employee of Sellers has any present or future right
to benefits or under which Sellers have any present or future liability
("Seller Plans").
3.13 Taxes. Except as set forth in Schedule 3.13:
(a) Each of Sellers has timely filed, or will file or cause to
be filed as soon as is practicable after the Closing Date, all material
Tax Returns required by applicable law to be filed by it prior to or as
of the Closing Date. All such Tax Returns are or will be true, complete
and correct in all material respects.
(b) Each of Sellers has paid, or where payment is not yet due,
has established, an adequate accrual for the payment of all material
Taxes due with respect to any period ending prior to or as of the
Closing Date.
(c) No Audit by a Tax Authority is pending or, to the
Knowledge of Sellers, threatened with respect to any material Taxes due
from Sellers. There are no outstanding waivers extending the statutory
period of limitation relating to the payment of material Taxes due from
Sellers for any taxable period ending prior to the Closing Date which
are expected to be outstanding as of the Closing Date.
(d) No issue has been raised by any Tax Authority in any Audit
of Sellers that, if raised with respect to any other period not so
audited, could be expected to result in a proposed deficiency for any
period not so audited. Further, no deficiency or adjustment for any
Taxes has been threatened, proposed, asserted or assessed against
Sellers.
(e) None of the Sellers is bound by or is a party to any
agreement related to Taxes, including any agreement with any Tax
Authority that can affect a Tax period commencing after the Closing
Date.
18
<PAGE>
(f) There is no contract or agreement, plan or arrangement by
Sellers covering any person that, individually or collectively, could
give rise to the payment of any amount that would not be deductible by
Sellers by reason of Section 280G of the Code, as now in effect.
3.14 Environmental Laws. Except as set forth in Schedule 3.14, (A) to
the Knowledge of Sellers, each of Sellers complies and has complied with all
Environmental Laws, and possesses and complies with and has possessed and
complied with all Environmental Permits required under such laws except where
any non-compliance or failure to possess any Environmental Permit has not had or
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; (B) to the Knowledge of Sellers, there are no past,
present or anticipated future events, conditions, circumstances, practices,
plans or legal requirements that could reasonably be expected to result in
liability under applicable Environmental Laws, prevent, or reasonably be
expected to increase the burden on Sellers, complying with applicable
Environmental Laws or of obtaining, renewing, or complying with applicable
Environmental Permits required under such laws; (C) there are and have been no
Materials of Environmental Concern or other conditions at any property owned,
operated or otherwise used by Sellers now or in the past, or at any other
location that could reasonably be expected to give rise to liability of Sellers
under any Environmental Law, except for such liabilities which, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect and, there are no underground storage tanks that are subject to
regulation under the federal Resource Conservation and Recovery Act, or any
equivalent state law on or under any property currently owned, leased or
otherwise operated by Sellers. Sellers have provided to Purchaser true and
complete copies of all Environmental Reports in their possession or control.
3.15 Affiliate Transactions. Schedule 3.15 contains a summary of all
transactions (including without limitation the provision of any services or the
sale of any goods) since December 31, 1995 and all proposed transactions between
any Seller, on the one hand, and any shareholder or other Affiliates of any
Seller on the other hand, other than employment agreements or arrangements and
employee benefit plans. Schedule 3.15 also contains a summary of all
transactions since December 31, 1995 and all proposed transactions between any
Seller, on the one hand, and any current or former director, officer or employee
of any Seller, or any person in which any such director, officer or employee has
a direct or indirect material interest (including, without limitation,
Associates, as defined in Rule 405 promulgated under the Securities Act), other
than employment agreements or arrangements and employee benefit plans.
3.16 Brokers, Finders, etc. No Seller has employed, nor is it subject
to the valid claim of, any broker, finder or other financial intermediary or
incurred any liability that would be payable by Sellers for any brokerage,
finder's or other fees or commissions in connection with the transaction
contemplated by this Agreement.
3.17 Contracts and Commitments.
(a) Sellers have identified and described on Schedule 3.17 any
and all agreements, contracts, commitments, or restrictions that are
material to their businesses, prospects, financial condition, working
capital, assets, liabilities (absolute, accrued, contingent or
19
<PAGE>
otherwise), reserves or operations or that require the making of any
charitable contribution; or that relate to any purchase contracts or
commitments, or that relate to outstanding sales contracts, commitments
or proposals of Sellers for the delivery of products;
(b) No Seller has any outstanding contracts with officers,
employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that are not cancelable by it
on notice of not longer than 30 days and without liability, penalty, or
premium or any agreement or arrangement providing for the payment of
any bonus or commission based on sales or earnings;
(c) No Seller is in default, nor is there any basis for any
valid claim of default, under any material contract made or obligation
owed by it;
(d) No Seller is restricted by agreement from carrying on its
business anywhere in the world;
(e) No Seller is under any material liability or obligation
with respect to the return of inventory or merchandise in the
possession of wholesalers, distributors, retailers or other customers;
(f) Except as set forth in Schedule 3.17, none of the
officers, directors or shareholders of Sellers has any interest in any
property, real or personal, tangible or intangible, including without
limitation the Intellectual Property, that is used in the business of
Sellers.
3.18 Personnel. [omitted.]
3.19 Insurance. [omitted.]
3.20 Customers. Schedule 3.20 sets forth a list of Sellers' twenty (20)
largest customers in terms of gross revenues. Except as set forth in Schedule
3.20, since December 31, 1998, there have not been any material adverse changes
in the business relationships of Sellers with any of the customers named
therein.
3.21 Permits. Schedule 3.21 contains a complete listing and summary
description of all Permits used by Sellers in the conduct of their businesses.
Except as indicated in Schedule 3.21, Sellers own or possess all right, title
and interest in and to all of the Permits that are necessary to own and operate
the Terminals and the Purchased Assets and to conduct their businesses as
presently constituted, including, without limitation, all Permits required under
any federal, state or local law relating to public health and safety, employee
health and safety, pollution or protection of the environment. Sellers are in
compliance with the terms and conditions of such Permits and have received no
notices that they are in violation of any of the terms or conditions of such
Permits. Sellers have taken all necessary action to maintain such Permits. No
loss or expiration of any such Permit is threatened, pending or reasonably
foreseeable other than expiration in accordance with the terms thereof. Except
20
<PAGE>
as indicated in Schedule 3.21, all of the Permits are transferable to Purchaser
and will be transferred by Sellers to Purchaser on or before the Closing Date.
3.22 Products; Product Warranties. Schedule 3.22 contains a true and
complete list of (i) all products manufactured, marketed or sold by Sellers that
have been recalled or withdrawn (whether voluntarily or otherwise) at any time
during the past four years and (ii) all proceedings (whether completed or
pending) at any time during the past three years seeking the recall, withdrawal,
suspension or seizure of any product sold by Sellers.
3.23 Real Property Holding Corporation. None of Sellers is or has ever
been a United States real property holding corporation as defined in Section 897
of the Code.
3.24 Projections. Sellers have previously participated in and provided
accurate information to Purchaser with respect to the preparation of projections
of Sellers' financial performance through the year 1999 (the "Projections") (a
true and complete copy of which is attached hereto as Exhibit 3.24). Sellers
acknowledge that the Projections have been material to Purchaser in its decision
to enter into this Agreement and to purchase the Purchased Assets hereunder.
Sellers believe that the financial projections and other estimates contained in
the Projections are based on reasonable expectations at the time such
projections and estimates were made; and Sellers believe that Purchaser is
justified in relying thereon. Sellers have no reason to believe, and do not
believe, that any assumptions of fact underlying the Projections are
unreasonable, untrue or false.
3.25 Conduct of Business. Sellers have conducted their respective
businesses and operations in compliance with the terms, conditions and
limitations set forth in Paragraph 8 of that certain Letter of Intent dated as
of December 29, 1999, a copy of which is attached hereto on Exhibit 3.25.
3.26 Legal and Tax Advice. Sellers have consulted with their own legal
and tax advisors as to the legal, financial and tax consequences related to or
arising from the transactions contemplated by this Agreement. Sellers have not
received, obtained or relied upon any legal or tax advice from Purchaser or
Purchaser's attorney, accountants, or advisors.
3.27 Crown Shares. The Crown Shares, when issued under this Agreement,
shall be duly authorized, validly issued, fully paid and non-assessable and free
and clear of any Liens (except for restrictions on transferability or resale
imposed under this Agreement or under applicable securities laws).
3.28 Full Disclosure. No representation or warranty by Sellers in this
Agreement and no statement contained in any document (including, without
limitation, Sellers' Financial Statements), schedule or certificate furnished or
to be furnished by Sellers to Purchaser or any of its representatives pursuant
to the provisions hereof, or in connection with the transactions contemplated
hereby, contains as of the date hereof or will contain as of the Funding Date,
any untrue statement of material fact or omits or will omit to state any
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. There is,
21
<PAGE>
to the Knowledge of Sellers, no fact that does have or could reasonably be
expected to have a Material Adverse Effect that has not been set forth in this
Agreement or the Schedules and Exhibits hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to each of Sellers as follows:
4.1 Due Organization and Authority of Purchaser. Purchaser 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
enter into and deliver this Agreement and the other agreements contemplated
hereby and perform its obligations hereunder and thereunder.
4.2 Authorization and Validity of Agreement. The execution, delivery
and performance by Purchaser of this Agreement and the other agreements
contemplated hereby and the performance by it of the transactions contemplated
hereby and thereby have been duly and validly authorized by the Board of
Directors of Purchaser, and no other corporate action on the part of Purchaser
is necessary for the execution, delivery and performance by Purchaser of this
Agreement and the other agreements contemplated hereby and the consummation by
it of the transactions contemplated hereby and thereby. This Agreement and the
other agreements contemplated hereby which are to be executed by Purchaser have
been duly and validly executed and delivered by Purchaser and, assuming due
authorization, execution and delivery by Sellers, this Agreement and such other
agreements constitute legally valid and binding agreements of Purchaser,
enforceable against it in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered a proceeding
in equity or at law) or by an implied covenant of good faith and fair dealing.
4.3 No Conflict. Neither the execution, delivery or performance by
Purchaser of this Agreement or the other agreements contemplated hereby nor the
consummation by it of the transactions contemplated hereby and thereby and
compliance by Purchaser with any of the provisions hereof or thereof will (a)
violate, or result in the violation of, any Requirement of Law; (b) require any
consent, approval or notice under, violate or result in violation of, conflict
with or result in a breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required
by, or result in a right of termination or acceleration or result in the loss of
a material benefit under any of the provisions of any organizational or
governing documents or contract of Purchaser.
4.4 Governmental Consents. No consent, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is required
in connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby by Purchaser, except
for such consents, authorizations, filings, approvals and registrations that, if
not obtained or made, would not, individually or in the aggregate, have a
Material Adverse Effect.
22
<PAGE>
4.5 Brokers, Finders, etc. Purchaser has not employed, nor is it
subject to the valid claim of, any broker, finder or other financial
intermediary or incurred any liability that would be payable by Sellers for any
brokerage, finders or other fees or commissions in connection with the
transaction contemplated by this Agreement.
4.6 Full Disclosure. No representation or warranty by Purchaser in this
Agreement and no statement contained in any document, schedule or certificate
furnished or to be furnished by Purchaser to Sellers or any of their
representatives pursuant to the provisions hereof, or in connection with the
transactions contemplated hereby, contains as of the date hereof or will contain
as of the Closing, any untrue statement of material fact or omits or will omit
to state any material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE V
COVENANTS
5.1 Sellers' and Principals Non-Competition and Non-Solicitation. As a
substantial inducement to Purchaser to enter into and perform its obligations
under this Agreement, each of Sellers and each Principal agrees and covenants
that:
(a) For a period of five (5) years after the Closing Date (the
"Non-Competition Period"), no Seller and no Principal shall sell,
without the prior written consent of Purchaser, anywhere in North
Dakota, South Dakota, Wyoming, Idaho, Washington, Oregon, Utah,
Colorado, Nevada, Arizona, California or New Mexico, directly or
indirectly, either for itself or for any other Person, own, operate,
manage, control, engage in, participate in, invest in, permit its name
to be used by, act as consultant or advisor to, render services for
(alone or in association with any Person) or otherwise assist in any
manner, any Person that engages in or owns, invests in, operates,
manages or controls any venture or enterprise which directly or
indirectly engages or proposes to engage in the processing, blending,
sale or distribution of liquid asphalt products or the operation of an
asphalt terminal Nothing herein shall prohibit Seller or any Principal
from being a passive owner of not more than 5% of the outstanding stock
of any class of securities of a publicly traded corporation engaged in
such business, so long as he, she or it has no active participation in
the business of such corporation; provided, however, that the security
ownership of Sellers and each and all Principals shall be aggregated
for purposes of this provision.
(b) During the Non-Competition Period, no Seller and no
Principal will directly or indirectly solicit to employ or hire (in any
capacity) any former employee of Sellers who is hired by Purchaser
without the prior written consent of Purchaser.
(c) If, at the time of enforcement of this Section 5.1, a
court shall hold that the duration, scope, geographic area or other
restrictions stated herein are unreasonable under circumstances then
23
<PAGE>
existing, the parties agree that the maximum duration, scope,
geographic area or other restrictions deemed reasonable under such
circumstances by such court shall be substituted for the stated
duration, scope, geographic area or other restrictions.
(d) Each Seller and each Principal recognizes and affirms that
in the event of breach by it of any of the provisions of this Section
5.1, money damages would be inadequate and Purchaser would have no
adequate remedy at law. Accordingly, each Seller and each Principal
agrees that Purchaser shall have the right, in addition to any other
rights and remedies existing in its favor, to enforce its rights and
Sellers' and each Principal's obligations under this Section 5.1 not
only by an action or actions for damages, but also by an action or
actions for specific performance, injunctive and/or other equitable
relief, without being required to post a bond or other security as a
condition or prerequisite to such an action, in order to enforce or
prevent any violations (whether anticipatory, continuing or future) of
the provisions of this Section 5.1 (including, without limitation, the
extension of the Non-Competition Period by a period equal to (i) the
length of the violation of this Section 5.1 plus (ii) the length of any
court proceedings necessary to stop such violation). In the event of a
breach or violation by either Seller of any of the provisions of this
Section 5.1, the running of the Non-Competition Period (but not of
Sellers' obligations under this Section 5.1) shall be tolled with
respect to Sellers during the continuance of any actual breach or
violation.
5.2 Communications. All mail and other communications received by
Sellers at any time after the Closing Date related to the Terminals, the
Purchased Assets or the operations of Purchaser at the Terminals shall be
promptly turned over to Purchaser.
5.3 Confidentiality. After the Closing, Sellers and their shareholders,
officers, directors, employees and agents shall continue to maintain the
confidentiality of all information, documents and materials relating to Sellers'
businesses, including all such materials which remain in the possession of
Sellers, except to the extent disclosure of any such information is required by
law or authorized by Purchaser or reasonably occurs in connection with disputes
over the terms of this Agreement, and Purchaser shall maintain the
confidentiality of all information, documents and materials relating to Sellers
(other than that relating to the Purchased Assets) which Purchaser has obtained
in connection with this Agreement or with the transactions contemplated herein,
except to the extent disclosure of any such information is required by law or
authorized by Sellers or reasonably occurs in connection with disputes over the
terms of this Agreement. In the event that any party reasonably believes after
consultation with counsel that it is required by law to disclose any
confidential information described in this Section 5.3, the disclosing party
will (a) provide the other party with prompt notice before such disclosure in
order that any party may attempt to obtain a protective order or other assurance
that confidential treatment will be accorded such confidential information, and
(b) cooperate with the other party in attempting to obtain such order or
assurance. The provisions of this Section 5.3 shall not apply to any
information, documents or materials which are, as shown by appropriate written
evidence, in the public domain or, as shown by appropriate written evidence,
shall come into the public domain, other than by reason of breach by the
applicable party bound hereunder or its Affiliates.
24
<PAGE>
5.4 Title Commitments. Upon or within fifteen (15) days following the
Closing Date, Sellers shall deliver to Purchaser commitments for the issuance of
title insurance covering each parcel of real property included in the Purchased
Assets, from title insurance companies acceptable to Purchaser (the "Title
Commitments"). The Title Commitments shall provide for the issuance to Purchaser
and any lender, if requested by Purchaser, of ALTA owner's and lender's title
insurance policies, as the case may be, covering each parcel of real property
included in the Purchased Assets (allocating the Purchase Price among the
various parcels in a manner reasonably acceptable to Purchaser and Sellers),
subject only to the following permitted exceptions (the "Permitted
Encumbrances"): (i) current real estate taxes not yet due and payable (to be pro
rated as of the Closing Date), (ii) non-delinquent assessments for any general
or special improvement districts not yet due and payable (to be pro rated as of
the Closing Date), (iii) covenants, conditions, restrictions, easements,
reservations, and other matters of record as of the dates of the Title
Commitments which are acceptable to Purchaser, and (iv) the standard exceptions
found in ALTA title commitments. Sellers shall also deliver or cause title
companies to deliver to Purchaser and any lender, if requested by Purchaser,
legible and complete copies of all recorded documents referenced in the Title
Commitments If Purchaser proceeds to Closing, Sellers shall cause the title
companies to deliver to Purchaser an ALTA title insurance policy in accordance
with the Title Commitments as to each of the parcels of real estate included in
the Purchased Assets (the "Policies"). The Policies shall name Purchaser and any
lender as the insured and shall provide coverage in the allocated dollar amounts
agreed upon between Purchaser and Sellers. Sellers shall cause the title
companies to issue the owner's and lender's Policies to Purchaser and any
lender(s) on or prior to the Funding Date, but effective as of the Closing Date.
Sellers shall bear the cost of providing the Title Commitments and the Policies.
.In the event that Sellers fail to provide the Title Commitments or the Policies
on or before April 30, 1999, Purchaser may elect to obtain such Title
Commitments and/or Policies at the cost and expense of Sellers (and to offset
such costs and expenses against the Purchase Price) or may terminate this
Agreement.
5.5 [Omitted.]
5.6 Corporate Names. Prior to the Funding Date and at all times
thereafter until the expiration of the Non-Competition Period, Sellers shall not
use, directly or indirectly, the name or tradenames of Asphalt Supply & Service
or Interstate Asphalt Company (or any similar variations thereof). Sellers shall
change their corporate names to comply with the foregoing provisions and hereby
confirms the sale, transfer and assignment of such names and tradenames to
Purchaser as part of the Purchased Assets.
ARTICLE VI
CONDITIONS PRECEDENT TO PAYMENT OF PURCHASE PRICE
6.1 Conditions to the Obligations of Purchaser. The obligations of
Purchaser to pay the Purchase Price under Section 2.4 and to indemnify Sellers
under Section 7.2, and Crown's guaranty obligations under Section 8.1 are
subject to fulfillment (or waiver by Purchaser) at or prior to the Funding Date
of each of the following conditions precedent:
25
<PAGE>
(a) Other Documents to be Delivered. On or prior to the
Funding Date, Sellers will have delivered to Purchaser, at Sellers'
expense, each of the following:
(i) such instruments of sale, transfer, assignment,
conveyance and delivery (including, without limitation,
warranty deeds, bills of sale and assignments of Intellectual
Property), in form and substance satisfactory to counsel for
Purchaser, as are required in order to confirm the transfer to
Purchaser good and marketable title to the Purchased Assets,
free and clear of all Liens;
(ii) with respect to each of the real property leases
listed in Schedule 3.10(a) and included in the Purchased
Assets, an estoppel letter from the landlords listed in said
Schedule, in form and content reasonably satisfactory to
Purchaser, stating the following: (a) the copy of the lease or
sublease, as applicable, attached to the estoppel letter is a
true, correct and complete copy of the lease or sublease, and
represents the entire agreement between the landlord and the
applicable Seller; (b) to landlord's knowledge, the Seller is
not in breach or default under the lease or sublease and no
event has occurred which, with notice or the passage of time,
would constitute a breach or default, or permit termination,
modification or acceleration under the lease or sublease; (c)
the landlord has not repudiated any provision of the lease or
sublease; (d) there are no disputes, oral agreements or
forbearance programs in effect as to the lease or sublease;
(e) the amount of rent due under the lease and the date
through which rent has been paid; (f) to landlord's knowledge,
the Seller has satisfied all obligations as tenant under the
lease or sublease; and (g) such other matters as Purchaser may
reasonably request;
(iii) the Title Commitments and Policies;
(iv) such amendments to Seller's corporate charter as
may reflect changes in corporate names in compliance with this
Agreement;
(v) Such releases of Liens as may be necessary to
reflect the transfer of the Purchased Assets free of Liens or
encumbrances; and
(vi) such other documents or instruments as Purchaser
reasonably requests to effect the transactions contemplated
hereby.
(b) Bulk Sales Compliance. Sellers shall have complied with
any applicable bulk sales laws and provided appropriate evidence or
certifications to Purchaser.
(c) Satisfactory Forms and Proceedings. All proceedings to be
taken by Sellers in connection with the satisfaction or waiver of
conditions precedent to the Funding Date and the other transactions
contemplated hereby and all certificates, opinions, instruments and
other documents required to effect the transactions contemplated hereby
reasonably requested by Purchaser will be reasonably satisfactory in
form and substance to Purchaser and its counsel.
26
<PAGE>
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Sellers. Subject to the other provisions of this
Article VII, each Seller shall, jointly and severally, indemnify, defend and
hold harmless Purchaser and its successors, assigns and Affiliates and the
agents and employees of any of them (collectively, the "Purchaser Parties") from
and against any and all costs, expenses, losses, damages and liabilities
(including, without limitation, attorneys' fees and expenses) ("Damages")
suffered by any of the Purchaser Parties to the extent resulting from, arising
out of, or incurred with respect to, or (in the case of claims asserted against
any Purchaser Party by a third party) alleged to result from, arise out of or
have been incurred with respect to, (i) any breach of any representation or
warranty of any of Sellers contained in this Agreement, (ii) any breach of any
covenant of any of Sellers contained in this Agreement, or (iii) any liability
or obligation of any kind or nature of any Seller, whether or not related to the
Terminals or the Purchased Assets (other than the Assumed Liabilities), or (iv)
the operation or ownership of the Terminals or the Purchased Assets prior to the
Closing.
7.2 Indemnification by Purchaser. Subject to the other provisions of
this Article VII, Purchaser shall indemnify, defend and hold harmless Sellers
and their respective successors, assigns and Affiliates and the agents and
employees of any of them (collectively, the "Seller Parties") from and against
any Damages suffered by any of the Seller Parties resulting from, arising out
of, or incurred with respect to, or (in the case of claims asserted against any
Seller Party by a third party) alleged to result from, arise out of or have been
incurred with respect to, (i) any breach of any representation or warranty of
Purchaser contained in this Agreement, (ii) any breach of any covenant of
Purchaser contained in this Agreement requiring performance after the Closing
Date, (iii) the assertion against any Seller Party of any liability or claim
against a Seller Party relating to any Assumed Liability, or (iv) any liability
arising under any Environmental Laws as a results of utilization of the
Purchased Assets by Purchaser after Closing.
27
<PAGE>
7.3 Notice and Resolution of Claim.
(a) An indemnified party under this Agreement will promptly
give written notice to the indemnifying party after obtaining knowledge
of: (i) any claim the indemnified party has against the indemnifying
party not involving a third party claim or litigation; or (ii) any
third party claim or litigation against the indemnified party as to
which recovery may be sought against the indemnifying party because of
the indemnity set forth in Section 7.1 or 7.2, specifying in reasonable
detail the claim or litigation and the basis for indemnification;
provided that the failure of the indemnified party promptly to notify
the indemnifying party of any such matter shall not release the
indemnifying party, in whole or in part, from its obligations under
this Article VII except to the extent the indemnified party's failure
to so notify actually prejudices the indemnifying party's ability to
defend against such third party claim or litigation. If such claim for
indemnity arises from the claim or litigation of a third party, the
indemnified party shall permit the indemnifying party to assume the
defense of any such claim, litigation or any litigation resulting from
such claim.
(b) If the indemnifying party assumes the defense of any such
third party claim or litigation, the obligations of the indemnifying
party under this Agreement shall include taking all steps necessary in
the investigation, defense or settlement of such claim or litigation
(including the retention of legal counsel) and holding the indemnified
party harmless from and against any and all losses caused by or arising
out of any settlement approved by the indemnifying party or any
judgment in connection with such claim or litigation. The indemnifying
party shall not, in the defense of such claim or litigation, consent to
entry of any judgment (except with the written consent of the
indemnified party), or enter into any settlement (except with the
written consent of the indemnified party): (i) that does not include as
an unconditional term thereof the giving by the claimant or the
plaintiff to the indemnified party a complete release from all
liability in respect of such claim or litigation; or (ii) the effect of
which is to permit any injunction, declaratory judgment, other order or
other equitable relief to be entered, directly or indirectly, against
any indemnified party. The indemnifying party shall permit the
indemnified party to participate in such defense or settlement through
counsel chosen by the indemnified party, with the fees and expenses of
such counsel borne by the indemnified party.
(c) Failure by the indemnifying party to notify the
indemnified party of its election to assume the defense of any such
claim or litigation by a third party within thirty (30) days after
notice thereof has been given to the indemnifying party shall be deemed
a waiver by the indemnifying party of its right to assume the defense
of such claim or litigation. If the indemnifying party does not assume
the defense of such claim or litigation by a third party, the
indemnified party may defend or settle such claim or litigation in such
manner as the indemnified party may deem appropriate and may settle
such claim or litigation on such terms as it may deem appropriate.
28
<PAGE>
7.4 Offset. Purchaser shall be entitled to offset against any sums
otherwise payable to Sellers, the amount of any and all Damages suffered by
Purchaser with respect to which Purchaser is indemnified pursuant to Section
7.1.
ARTICLE VIII
GUARANTY BY CROWN
8.1 Guaranty of Purchaser's Obligations. Crown, as a party to this
Agreement, hereby unconditionally guaranties all of Purchaser's representations,
warranties and obligations hereunder; provided, however, that such guaranty is
subject to the precedent conditions specified in Article VI. Crown hereby
represents and warrants that the execution of this Agreement and the guaranty
provided for herein have been duly and validly authorized by the Board of
Directors of Crown. All costs and expenses of enforcing this Guaranty, including
but not limited to reasonable attorney and paralegal expenses, will be paid by
Crown.
ARTICLE IX
MISCELLANEOUS
9.1 Expenses. Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses.
9.2 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, as soon as reasonably
practicable, the transactions contemplated by this Agreement. In case at any
time after the Closing Date any further action is necessary, proper or advisable
to carry out the purposes of this Agreement, as soon as reasonably practicable,
each party to this Agreement shall take, or cause its proper officers and/or
directors to take, all such necessary action.
9.3 Transfer Taxes. Sellers shall pay, or cause to be paid, all
transfer Taxes and fees, recordation or similar Taxes or fees, deed, stamp or
other Taxes, recording charges, fees, or other similar cost or expense of any
kind required in connection with the effectuation of the transactions
contemplated by this Agreement, whether such Tax or fee is imposed on Purchaser,
Sellers or others.
29
<PAGE>
9.4 Survival of Representations and Warranties. Each of the
representations and warranties made by the parties in this Agreement, including
the Schedules and Exhibits hereto and the certificates delivered in accordance
herewith (insofar as the Schedules, Exhibits and such certificates relate to
such representations and warranties) shall survive the Closing for a period of
three (3) years after the Closing; provided, however, that the representations
and warranties contained in Section 3.13 shall survive the Closing and shall
remain in full force and effect through the period of any statute of limitations
applicable to such Tax matters, and the representations and warranties contained
in Sections 3.1, 3.2 and 3.10 shall survive the Closing and shall remain in full
force and effect indefinitely.
9.5 Employees. Sellers shall terminate the employment of all of their
respective employees immediately prior to the Closing. Immediately after the
Closing, Purchaser shall offer employment to the employees employed by Sellers
immediately prior to the Closing only to the extent expressly set forth in
Schedule 9.5 attached hereto. Purchaser shall not assume any Seller Plan, and
Purchaser shall not assume any liability or obligation of Sellers to any Person
under any Seller Plan. Nothing contained in this Agreement shall (i) restrict or
otherwise inhibit Purchaser's rights to terminate the employment of any
employees on or after the Closing Date or (ii) be construed or interpreted to
restrict Purchaser's right or authority to amend or terminate (to the extent
permitted by applicable law and contractual obligations) any employee benefit
plans, policies or programs of Purchaser.
9.6 Notices. Any notice, request, consent, approval or other document,
instrument or communication that may be required or permitted to be delivered or
served hereunder shall be effective upon delivery and shall be in writing and
may be personally delivered, mailed by courier, mailed by United States
certified or registered mail, return receipt requested, postage pre-paid, or
sent by facsimile and confirmed by telephone as follows (until notice of a
change thereof is given as provided herein):
if to Purchaser, to:
Crown Asphalt Products Company
215 South State Street, Suite 650
Salt Lake City, Utah 84111
Attention: Jay Mealey
Telephone: (801) 537-5610
Facsimile: (801) 537-5609
with a copy to:
Ray, Quinney & Nebeker
79 South Main Street, 4th Floor
Salt Lake City, Utah 84111
Attention: Lorin E. Patterson
Telephone: (801) 323-3374
Facsimile: (801) 532-7543
30
<PAGE>
if to any of Sellers, to:
Asphalt Supply & Service Inc.
Inoco, Inc.
7606 Duck Creek Road
Laurel, Montana 59044
Attention: Ryan Zimmerman
Telephone: (406) 652-3400
Facsimile: (406) 628-6459
9.7 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.8 No Third Party Beneficiaries. Nothing herein express or implied
shall confer upon any third party any rights or remedies, including without
limitation any right to employment, or continued employment for any specified
period, of any nature or kind under or by reason of this Agreement.
9.9 Amendment and Waiver. This Agreement and the Schedules and Exhibits
hereto may not be amended or waived except by an instrument or instruments in
writing signed and delivered on behalf of each of the parties hereto. No course
of dealing between or among any persons having any interest in this Agreement
will be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any person under or by reason of this
Agreement. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute, a waiver of any other provisions, whether or not similar,
nor shall any waiver constitute a continuing waiver.
9.10 Extension or Waiver. At any time prior to the Closing Date, any
party hereto which is entitled to the benefits hereof may (a) extend the time
for the performance of any of the obligations or other acts of the other party;
(b) waive any inaccuracy in the representations and warranties of the other
party contained herein or in any Schedule and Exhibit hereto or in any document
delivered pursuant hereto; and (c) waive compliance with any of the agreements
of the other parties hereto or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed and delivered on behalf of such
party.
9.11 Entire Agreement. This Agreement (including the Schedules,
Exhibits, documents and instruments referred to herein) constitute the entire
agreement and supersede all other prior agreements and understandings, both
written and oral, among the parties hereto with respect to the subject matter
hereof.
9.12 Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their respective successors and
permitted assigns. Notwithstanding the foregoing, this Agreement shall not be
assignable by any party hereto (other than by operation of law) without the
prior written consent of the other parties hereto; provided, that Purchaser may
assign its rights hereunder to any of its Affiliates.
31
<PAGE>
9.13 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF MONTANA (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE MONTANA PRINCIPLES OF CONFLICTS OF LAW) AS TO ALL MATTERS, INCLUDING
BUT NOT LIMITED TO MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PREFERENCE AND
REMEDIES. EACH PARTY HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MONTANA, OR IF THAT COURT
DOES NOT HAVE SUBJECT MATTER JURISDICTION, IN ANY STATE COURT LOCATED IN THE
CITY OF BILLINGS, MONTANA. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, (I) ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO LAYING VENUE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS
AND (II) ANY CLAIM THAT ANY SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
9.14 No Strict Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person. The use of the word "including" in this Agreement or in any of the
agreements contemplated hereby shall be by way of example rather than by
limitation.
9.15 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute a single agreement. Facsimile signatures shall be binding on
the parties for all purposes as if they were originals.
[Balance of page intentionally left blank]
32
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, or caused this Agreement to be executed by their respective officers
thereunto duly authorized, all as of the date first above written.
CROWN ASPHALT PRODUCTS COMPANY
By:/s/ Jay Mealey
-----------------------
Jay Mealey, President
CROWN ENERGY CORPORATION
By:/s/ Jay Mealey
-----------------------
Jay Mealey, President
ASPHALT SUPPLY & SERVICE, INC.
By:/s/ R. Ryan Zimmerman
-----------------------
Name:R. Ryan Zimmerman
Title: President
INOCO, INC.
By:/s/ Robert A. Zimmerman
-----------------------
Name: Robert A. Zimmerman
Title: President
/s/ Robert A. Zimmerman
-----------------------
Robert Zimmerman, solely for
purposes of Section 5.1 hereof
/s/ Ryan Zimmerman
-----------------------
Ryan Zimmerman, solely for
purposes of Section 5.1 hereof
33
PURCHASE AGREEMENT
AND BILL OF SALE
(Interstate Asphalt Company)
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which is hereby acknowledged, Interstate Asphalt Company, a North Dakota
corporation ("Interstate"), hereby sells, conveys, transfers and assigns to
Crown Asphalt Products Company, a Utah corporation ("Capco"), all of
Interstate's rights, title, and interest in and to its raw materials, work in
process, finished goods or other asphalt products related inventory, wherever
located (the "Inventory").
The purchase price for such Inventory shall be equal to the cost of
such Inventory, plus any interest expenses and other costs or expenses
reasonably related thereto, as mutually agreed upon by Interstate and Capco and
subject to such reasonable substantiation requirements as may be imposed by
Capco (the "Purchase Price").
Capco shall pay the Purchase Price to Interstate on the Funding Date
(as such term is defined in that certain Asset Purchase Agreement dated of even
date herewith and made and executed by Capco and the owners of certain asphalt
terminal properties located in Williston, North Dakota and Billings, Montana);
provided, however, that all conditions precedent to Purchaser's funding
obligations specified in Article VI have been satisfied or waived.
Interstate hereby represents and warrants to Capco (a) that Interstate
has good and marketable title in and to the Inventory and (b) that Capco shall
have good and marketable title to the Inventory, free and clear of any liens or
encumbrances of any kind and nature, as of the date hereof (or, if the Inventory
is subject to any such liens or encumbrances, that Interstate shall and does
agree to remove, satisfy, extinguish or discharge such liens on or prior to the
Funding Date). In the event the Inventory is not free and clear of liens or
encumbrances, or Interstate's representations or warranties are incorrect in any
material respect, on the Funding Date Capco shall have the right, at its
election, to offset any costs, expenses, damages, claims, payments or monetary
damages directly arising therefrom or related thereto against the Purchase
Price.
IN WITNESS WHEREOF, this Master Assignment, Purchase Agreement and Bill
of Sale has been executed as of April 17, 1999.
INTERSTATE ASPHALT COMPANY
By:/s/ Connie R. Zimmerman
---------------------------
Print name:Connie R. Zimmerman
Title:President
Crown Asphalt Products Company
/s/ Jay Mealey
------------------------------
Jay Mealey, President
