UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One) |
|
[ X ] | Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2013 | |
[ ] | Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to |
Commission file number 000-53765
BLAZE ENERGY CORP.
(Exact name of small business issuer as specified in its charter)
DELAWARE | 26-0316964 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
3350 Americana Terrace, Suite 200, Boise, Idaho 83706
(Address of principal executive offices)
(208) 287-4471
(Issuers telephone number, including area code)
______________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [ ] Yes x No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer[ ] Non-accelerated filer [ ] Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No x
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 227,408,685 shares of Common Stock as of March 14, 2014.
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BLAZE ENERGY CORP.
FORM 10-Q REPORT INDEX
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Item 4. Controls and Procedures.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults upon Senior Securities.
Item 4. Mine Safety Disclosures.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLAZE ENERGY CORP.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2013 AND DECEMBER 31, 2012
September 30, 2013 | December 31, 2012 | |||
(Unaudited) | (Unaudited) | |||
ASSETS | ||||
Due from shareholder | $ 2,460 | $ 2,459,794 | ||
Total current assets | 2,460 | 2,459,794 | ||
Equipment, net of accumulated depreciation | - | 1,170 | ||
West Virginia coal rights | 51,000,000 | - | ||
Total Assets | $ 51,002,460 | $ 2,460,964 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Accounts payable | $ 70,256 | $ 154,600 | ||
Accrued ad valorem taxes | 60,435 | - | ||
Advances from Wastech, Inc. | 35,757 | - | ||
Total current liabilities | 166,448 | 154,600 | ||
Total liabilities | 166,448 | 154,600 | ||
STOCKHOLDERS' EQUITY | ||||
Preferred Stock, $0.001 par value, 5,000,000 shares authorized; no shares issued and outstanding | - | - | ||
Common stock, par value $0.001 per share; 500,000,000 shares authorized, 90,865,804 and 225,498,074 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively | 225,498 | 90,866 | ||
Additional paid in capital | 57,194,596 | 8,758,532 | ||
Accumulated deficit | (6,584,082) | (6,543,034) | ||
50,836,012 | 2,306,364 | |||
Total liabilities and stockholders' equity | $ 51,002,460 | $ 2,460,964 |
See accompanying notes to financial statements.
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BLAZE ENERGY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
(UNAUDITED)
Nine months ending September 30, | Three months ending September 30, | |||||||
2013 | 2012 | 2013 | 2012 | |||||
Revenue | $ - | $ - | $ - | $ - | ||||
Expenses | ||||||||
Professional fees | $ 10,000 | $ - | $ - | $ - | ||||
Property taxes | 26,437 | - | 20,145 | - | ||||
Depreciation expense | 1,170 | 2,758 | - | 919 | ||||
Miscellaneous | 3,441 | - | - | - | ||||
41,048 | 2,758 | 20,145 | 919 | |||||
|
|
|
|
|
| |||
Loss from operations | (41,048) |
| (2,758) |
| (20,145) |
| (919) | |
Net Loss | $ (41,048) |
| $ (2,758) |
| $ (20,145) |
| $ (919) | |
Net loss per common share - basic and fully diluted | $ (0.00) |
| $ (0.00) | $ (0.00) | $ (0.00) | |||
Weighted average number of common shares outstanding | 140,300,564 |
| 90,865,804 | 225,498,074 | 90,865,804 |
See accompanying notes to financial statements.
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BLAZE ENERGY CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
(UNAUDITED)
2013 | 2012 | ||||
Cash flows from operating activities | |||||
Net Loss | $ (41,048) | $ (2,758) | |||
Depreciation | 1,170 | 2,758 | |||
Increase (decrease) in operating assets and liabilities: | |||||
Due from shareholder | 2,457,333 | - | |||
Accounts payable | (84,344) | - | |||
Accrued ad valorem taxes | 60,435 | - | |||
Advances from Wastech, Inc. | 35,757 | - | |||
Net cash used in operating activities | 2,429,303 | - | |||
Cash flows from investing activities | |||||
Acquisition of West Virginia mineral rights | (51,000,000) | - | |||
Net cash used in investing activities | (51,000,000) | - | |||
Cash flows from financing activities | |||||
Issuance of common shares | 50,946,147 | - | |||
Cancellation of common shares | (2,375,450) | - | |||
Net cash provided by financing activities | 48,570,697 | - | |||
Net increase in cash | - | - | |||
Cash - beginning of period | $ - | $ - | |||
Cash - end of period | $ - | $ - | |||
SUPPLEMENTARY DISCLOSURE OF NON-CASH TRANSACTIONS | |||||
Shares issued for acquisition | 50,946,147 | - |
See accompanying notes to financial statements
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BLAZE ENERGY CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013
(UNAUDITED)
ADDITIONAL | ||||||||
COMMON STOCK | PAID IN | ACCUMULATED | ||||||
SHARES | AMOUNT | CAPITAL | DEFICIT | TOTAL | ||||
Balance as of December 31, 2012 | 90,865,804 | 90,866 | 8,758,532 | (6,543,034) | 2,306,364 | |||
Cancellation of common shares by affiliate | (69,724,378) | (69,724) | (2,305,726) | - | (2,375,450) | |||
Issuance of common shares for mineral rights | 204,356,648 | 204,357 | 50,741,790 | - | 50,946,147 | |||
Net loss | - | - | - | (41,048) | (41,048) | |||
Balance as of September 30, 2013 | 225,498,074 | 225,498 | 57,194,596 | (6,584,082) | 50,836,012 |
See accompanying notes to financial statements.
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BLAZE ENERGY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
(UNAUDITED)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Blaze Energy Corp. (the Company, we or us) was originally formed as Overthrust Dome Energy, Inc. in the State of Utah on February 8, 1983. Our name was changed to Data Conversion International, Inc. on August 11, 1983, and to Aztec Energy Corporation on August 27, 1991. Effective May 17, 2007, we reincorporated in the State of Delaware by merging with and into Blaze Energy Corp., our wholly-owned subsidiary.
The Company is currently engaged in two lines of business. First, the Company owns approximately 40,978 net acres of coal and coalbed methane mineral rights in West Virginia, and generates income from selling or leasing the properties to third parties. Second, the Company is engaged in the business of operating a coal reclamation facility in Gary, West Virginia.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
We recognize revenue from our coal reclamation operations when (1) there is persuasive evidence of an arrangement existing, (2) delivery has occurred, (3) our price to the buyer is fixed or determinable and (4) collectability of the receivables is reasonably assured. We recognize the costs of these revenues at the time revenue is recognized.
With respect to our coal and coalbed methane properties, revenue is recognized when earned according to lease and royalty agreements. Lease income is recognized as earned on a monthly basis according to the terms of the lease. Royalty income is recognized as minerals are extracted.
Cash and Cash Equivalents
Cash and cash equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less. Because of the short maturity of these investments, the carrying amounts approximate their fair value.
Facilities and equipment
Expenditures for new facilities or equipment and expenditures that extend the useful lives of existing facilities or equipment are capitalized and recorded at cost. The facilities and equipment are depreciated using the straight-line method at rates sufficient to depreciate such costs over the estimated productive lives, which do not exceed the related estimated mine lives, of such facilities based on proven and probable reserves.
Impairment of Long-Lived Assets
The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows are
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estimated based on quantities of recoverable minerals, expected gold and other commodity prices (considering current and historical prices, price trends and related factors), production levels and operating costs of production and capital, all based on life-of-mine plans. Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization other than proven and probable reserves and other material that is not part of the measured, indicated or inferred resource base, are included when determining the fair value of mine site reporting units at acquisition and, subsequently, in determining whether the assets are impaired. The term recoverable minerals refers to the estimated amount of gold or other commodities that will be obtained after taking into account losses during mineral processing and treatment. Estimates of recoverable minerals from such exploration stage mineral interests are risk adjusted based on managements relative confidence in such materials. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Companys estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold and other commodity prices, production levels and operating costs of production and capital are each subject to significant risks and uncertainties.
Goodwill
The Company evaluates, on at least an annual basis during the fourth quarter, the carrying amount of goodwill to determine whether current events and circumstances indicate that such carrying amount may no longer be recoverable. To accomplish this, the Company compares the estimated fair value of its reporting units to their carrying amounts. If the carrying value of a reporting unit exceeds its estimated fair value, the Company compares the implied fair value of the reporting units goodwill to its carrying amount, and any excess of the carrying value over the fair value is charged to earnings. The Companys fair value estimates are based on numerous assumptions and it is possible that actual fair value will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold and other commodity prices, production levels and operating costs of production and capital are each subject to significant risks and uncertainties.
Stock Based Compensation
The Company has issued and may issue stock in lieu of cash for certain transactions. The fair value of the stock, which is based on comparable cash purchases, third party quotations, or the value of services, whichever is more readily determinable, is used to value the transaction
Use of Estimates
The Companys Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the Companys Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.
Basic and Diluted Per Common Share
Basic earnings (loss) per share exclude any dilutive effects of options, warrants and convertible securities. Basic earnings (loss) per share is computed using the weighted-average number of outstanding common stocks during the applicable period. Diluted earnings per share is computed using the weighted-average number of common and common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is antidilutive.
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Research and Development
The Company expenses research and development costs as incurred.
Income Taxes
The Company files a consolidated federal income tax return with its subsidiaries and separate state income tax returns. Due to significant changes in ownership, the Companys use of its existing net operating losses may be limited.
Potential Environmental Liability
The Companys coal, coalbed methane and coal reclamation activities are subject to local, state and federal laws and regulations governing environmental quality and pollution control in the United States. In addition, former affiliates of the Company may have incurred liabilities for the deterioration of the environment as a result of its past future operations, and may incur environmental liabilities as a result of future operations.
Significant fines and penalties may be imposed for the failure to comply with environmental laws and regulations. Some environmental laws provide for joint and several strict liability for remediation of releases of hazardous substances, rendering a person liable for environmental damage without regard to negligence or fault on the part of such person. In addition, the Company may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances, such as oil and gas related products. Any substantial liability for environmental damage could materially adversely affect the operating results and financial condition of the Company. Since the Company has no insurance coverage for environmental liabilities, if the Company were to incur liability for environmental damage, its business and financial condition could be materially adversely affected.
NOTE 3 - RELATED PARTY TRANSACTIONS
Separation Agreement with EESV
On April 30, 2013, the Company entered into a Separation Agreement with Environmental Energy Services, Inc. (EESV) Under the Separation Agreement, the Company released EESV from liability on a promissory note with a principal balance of $2,475,386.61, plus accrued interest at the prime rate plus 2% since 2009, and conveyed to EESV the Companys wholly-owned subsidiary, EESV Fayetteville, Inc. In consideration for the release of EESV, the Company received the following benefits from EESV and its affiliates:
·
The cancellation of 69,724,378 shares of common stock of the Company held by EESV, which represented approximately 76.7% of the issued and outstanding common stock at the time;
·
Released the Company from any liability under a management agreement;
·
Procured the release of $51,460 owed by the Company to a prior landlord;
·
Assumed any liability of the Company to eight trade creditors; and
·
Procured the resignation of all officers and directors of the Company other than A. Leon Blaser.
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NOTE 4 LOANS PAYABLE
During 2013, Wastech, Inc. advanced the Company an aggregate of $35,757 in various transactions to pay liabilities of the Company. The loans were interest-free, demand loans.
NOTE 5 ACQUISITION OF ASSETS
Acquisition of Blaze Minerals, LLC
On June 4, 2013, the Company entered into a Securities Exchange Agreement with Wastech, Inc. (Wastech), under which the Company acquired all of the issued and outstanding shares of Blaze Minerals, LLC in consideration for 204,356,648 shares (the Blaze Stock) of common stock. Blaze Minerals, LLC owns approximately 40,978 net acres of coal and coalbed methane mineral rights in 22 counties in West Virginia.
As part of the acquisition, the Company granted Wastech an option to reacquire all of the stock of Blaze Minerals, LLC for up to two years after closing date of the acquisition (the Exercise Term). The exercise price of the option depends on when the option is exercised, and is as follows: (i) from the closing date until six (6) months thereafter, 100% of the Blaze Stock; (ii) from six (6) months and one day from the closing date through twelve (12) months thereafter, 85% of the Blaze Stock, or 173,703,151 shares; (iii) from twelve (12) months and one day from the closing date through eighteen (18) months thereafter, 80% of the Blaze Stock, or 163,485,318 shares; and (iv) from eighteen (18) months and one day from the closing date through the end of the Exercise Term, 75% of the Blaze Stock, or 153,267,486 shares.
The option held by Wastech, Inc. automatically terminates when all of the following conditions are true: (i) if the Companys common stock is trading on the OTCQX over the counter market system, with a daily closing price (the Market Value) equal to or above Fifty Cents ($0.50) per share for a period of ninety (90) consecutive days prior to the expiration of the Exercise Term; provided, that, during the said Exercise Term, Wastech and the Company, refrain from, and shall cause respective officers and directors to refrain from, engaging in market transactions in the sale or purchase of the Companys common stock, which, in and of themselves, cause the Market Value of the Companys common stock to equal, exceed or be less than (as the case may be) Fifty Cents ($0.50) per share; (ii) the Company has filed a Form 10 registration statement with the Securities and Exchange Commission to register its common stock pursuant to Section 12(g) of the Securities and Exchange Act, and such registration statement has become effective and all comments resolved to the satisfaction of the Securities and Exchange Commission; (iii) the Company is current in its reporting requirements under Sections 13 or 15 of the Securities Exchange Act; and (iv) the Companys common stock is then trading on the OTCQX over the counter market system.
The Company recorded the acquisition of Blaze Minerals, LLC at a gross value of $51,000,000. The valuation was based upon a January 8, 2010 appraisal of the mineral rights owned by Blaze Minerals, LLC which valued the assets at $130,000,000, which was adjusted downward to take into account changes in the market price of coal since the valuation as well as the disposition of certain properties since the valuation date.
NOTE 6 COMMITMENTS AND CONTINGENCIES
The Company has granted Wastech an option to reacquire the Companys wholly-owned subsidiary, Blaze Minerals, LLC. (See Note 5. Acquisitions of Assets)
NOTE 7 - CAPITAL STOCK
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The Company is authorized to issue 500,000,000 shares of common stock with a par value of $0.001 per share, and 5,000,000 shares of preferred stock with a par value of $0.001 per share. As of September 30, 2013 and December 31, 2012, there were 225,498,074 and 90,865,804 shares of common stock issued and outstanding, respectively. As of September 30, 2013 and December 31, 2012, there were no shares of preferred stock issued and outstanding.
During the nine months ended September 30, 2013, the Company issued and repurchased shares of common stock in the following transactions:
·
The Company cancelled 69,724,378 shares of common stock held by EESV (See Note 3. Related Party Transactions).
·
The Company issued 204,356,648 shares of common stock to acquire Blaze Minerals, LLC (See Note 5. Acquisition of Assets).
The Company has outstanding 1,000,000 stock options issued to prior officers and employees. The options have a weighted average price per share of $1.16 per share.
NOTE 8 GOING CONCERN
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. However, the Company incurred a net loss of ($41,048) for the nine months ended September 30, 2013. The Company needs to raise capital to fund working capital needs at its coal reclamation operations. These factors, among others, raise substantial doubt about the Companys ability to continue as a going concern for a reasonable period of time.
NOTE 9 SUBSEQUENT EVENTS
Issuance of Shares
On November 16, 2013, the Company issued 300,000 shares of common stock to an investor in consideration for an aggregate investment of $30,000.
On December 3, 2013, the Company issued 300,000 shares of common stock to an investor in consideration for an aggregate investment of $30,000.
On February 5, 2014, the Company issued 300,000 shares of common stock to an investor in consideration for an aggregate investment of $30,000.
Greenfields Coal Company Agreement
On October 1, 2013, the Company entered into a Coal Sales and Services Partnership Agreement (the Coal Sales Agreement) with Greenfields Coal Company, LLC (Greenfields). Greenfields is the operator of a coal reclamation mine in or near Gary, West Virginia that was previously owned and operated by U.S. Steel Corporation, and includes deposits of an estimated 10 million tons of coal fines and 20 to 25 million tons of coarse coal accumulated over approximately 40 years of mining operations.
Under the Agreement, the Company was granted the status of additional operator at the GreenFields coal mine for the limited purpose of processing and re-selling raw fine coal and raw coarse coal mined from the site. The Company agreed to
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purchase between 5,000 and 11,000 short tons of raw fine coal per month at $12 per short ton, and between 40,000 and 60,000 short tons of raw coarse coal per month at $7 per short ton. The Companys plan is to blend the fine and coarse coal from the Greenfields site with coal purchased from three nearby coal mines. The Agreement permits the Company to transport up to 60,000 short tons of coal from neighboring mines to the Greenfields site to process with the fine and coarse coal mined from the site. Commencement of operations was contingent on the Companys execution of a coal purchase agreement to sell the blended fine coal, coarse and regular coal from the site. The Company reached a letter of intent with Invicta Petroleum, LLC to purchase 80,000 metric tons of coal per month. The letter of intent contemplates the execution of a formal purchase and sale agreement between the parties after the raw coal that the Company has agreed to purchase from three nearby mines has been tested to verify that it meets the buyers purchase requirements. The Agreement also provides that the Company would make up to $600,000 of improvements to equipment and rail load-out at the Greenfields site, and make an advance to Greenfields of $500,000 to prepay for fine and coarse coal that the Company is obligated to purchase under the agreement.
Blaze Logistics LLC Agreement
On October 1, 2013, the Company entered into an agreement with Blaze Logistics, LLC (Logistics), under which the parties agreed upon certain terms relating to the operation of the coal reclamation facility in Gary, West Virginia that is the subject of the Coal Sales and Services Partnership Agreement with Greenfields executed the same day. Under the agreement, the Company is responsible for (a) obtaining the rights to operate the coal reclamation facility; (b) securing all contracts for the purchase and sale of coal from the facility; and (c) providing any such corporate guarantees, financial or otherwise, as may be necessary in furtherance of the business contemplated by the Agreement, subject to its right to reimbursement from Logistics for any amounts paid thereunder to the extent the guarantee is of an amount that Logistics is required to pay. Logistics is responsible for (a) providing any equipment or assets, through lease, purchase or otherwise, as may be required to operate the business to the extent such equipment is not already in place at the business, and (b) providing all capital and any such financing as may be required to sufficiently capitalize the business (the Monetary Obligations). Both the Company and Logistics agreed to bear the cost of their own officers and employees who supervise and manage the business, except that they shall be entitled to reimbursement from the business of any out-of-pocket travel and entertainment expenses that they incur in the course of managing and supervising the business. All monetary amounts provided by Logistics in fulfillment of its Monetary Obligations shall be considered a loan to the Company (the Logistics Loan), which shall bear interest at 12% per annum, be convertible into the Companys common stock at the average of the closing price of the common stock for the ten business days prior to the conversion, shall be convertible into common stock only at the option of the Company, and shall be repayable only from the Royalty. Commencing on the date hereof and ending on the termination of the business, Logistics shall receive a royalty from the business equal to (i) Five Dollars ($5.00) per ton on all processed Coarse coal at the facility, and (ii) Two Dollars ($2.00) per ton on all processed or unprocessed Fine coal at the facility (the Royalty). Payments of the Royalty shall be applied first to interest due under the Logistics Loan, and second to principal due under the Logistics Loan. After the Logistics Loan has been paid in full, Blaze Energy shall continue to receive the Royalty. The Royalty is Logistics sole compensation for the capital and services it provides under the agreement.
Permanent Agreement
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Effective January 8, 2014, the Company entered into an Agreement with Gary Coal Company, LLC, Gary Partners, LLC and Advanced Coal Technology, LLC (collectively, Gary Coal) (the Permanent Agreement). Under the Permanent Agreement, the Company was granted the exclusive right to operate the coal reclamation facility that is the subject of the Coal Sales Agreement. Under the Permanent Agreement, the Company agreed to pay all expenses incurred and accrued during the term of the Permanent Agreement, and is entitled to retain all revenues accruing during such term. The Company is entitled to retain 50% of any profits that are generated, and agreed to bear any losses that occur, during such term. Under the Permanent Agreement, the parties agreed to terminate the Coal Sales Agreement. The Permanent Agreement acknowledges that the Company has advanced Gary Coal in excess of $618,324, and agrees that such advances, plus any other sums paid by the Company in payment of debts of Gary Coal, will be secured by the assets of Gary Coal. The Permanent Agreement has an initial term that expires on February 1, 2016, and will automatically renew for an additional two year term unless one of the parties notifies the other party at least 60 days prior to the expiration of the initial term that it does not intend to renew the Permanent Agreement. Furthermore, commencing nine months after the execution of the Permanent Agreement, either party has the right to terminate the Permanent Agreement on 30 days notice to the other party in the event the Company fails to achieve 66 2/3% of its projected earnings before interest, taxes and depreciation for any two consecutive quarters.
Settlement of Disputed Claims
On November 26, 2013, the Company entered into an agreement with Greg Holsted to settle certain claims by Mr. Holsted. The Company owed Mr. Holsted $70,256 for accounting services. Mr. Holsted claimed additional damages arising out of the Companys failure to pay the consulting fees, which brought his total claim to $353,714. The Company agreed to issue Mr. Holsted 1,010,611 shares of common stock in full satisfaction of his claim.
Office Lease
On December 7, 2013, the Company entered into a lease agreement with Americana Terrace, LLC to lease office space in Boise, Idaho. The lease agreement provides for annual rent of $15,000, payable on execution of the agreement, and a term of one year. Americana Terrace, LLC is controlled by A. Leon Blaser, the Companys chairman and chief executive officer.
Share Exchange Agreement with Kentucky Diversified Fuels, LLC, et al.
On February 4, 2014, the Company entered into a Share Exchange Agreement with Kentucky Diversified Fuels, LLC (Kentucky Diversified), Maxgo, LLC and BMM-Empire, LLC, Middle Fork Development Services, LLC and MXP, LLC (the KDF Agreement). Under the KDF Agreement, the Company agreed to acquire all of the issued and outstanding membership units of Kentucky Diversified in consideration for 50,000,000 shares of the Companys common stock. The Company expects to close on the purchase on or before March 31, 2014. Kentucky Diversified owns and operates a coal mine in the State of Kentucky through its wholly-owned subsidiary, Middle Fork Development Services, LLC, and is in development of a coal-to-fuel production facility through its other wholly-owned subsidiary, MXP, LLC.
Share Exchange Agreement with BMM-Empire, LLC, et al.
On February 5, 2014, the Company entered into a Share Exchange Agreement with BMM-Empire, LLC (BMM), Frank Rosso and W. Keith Hall (the BMM Agreement). Under the BMM Agreement, the Company agreed to acquire all of the issued and outstanding membership units of BMM in consideration for 38,136,657 shares of the Companys common stock. The Company expects to close on the purchase on or before March 31, 2014. The Company owns a parcel of property in Phelps, Kentucky containing approximately 43.63 acres which is used for coal impoundment.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Disclosure Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q includes forward looking statements (Forward Looking Statements). All statements other than statements of historical fact included in this report are Forward Looking Statements. In the normal course of its business, the Company, in an effort to help keep its shareholders and the public informed about the Companys operations, may from time-to-time issue certain statements, either in writing or orally, that contain or may contain Forward-Looking Statements. Although the Company believes that the expectations reflected in such Forward Looking Statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, past and possible future, of acquisitions and projected or anticipated benefits from acquisitions made by or to be made by the Company, or projections involving anticipated revenues, earnings, levels of capital expenditures or other aspects of operating results. All phases of the Company operations are subject to a number of uncertainties, risks and other influences, many of which are outside the control of the Company and any one of which, or a combination of which, could materially affect the results of the Companys proposed operations and whether Forward Looking Statements made by the Company ultimately prove to be accurate. Such important factors (Important Factors) and other factors could cause actual results to differ materially from the Companys expectations are disclosed in this report. All prior and subsequent written and oral Forward Looking Statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Important Factors described below that could cause actual results to differ materially from the Companys expectations as set forth in any Forward Looking Statement made by or on behalf of the Company.
Overview
Until September 2009, the Company owned working interests in the Fayetteville Shale field in central Arkansas. On September 3, 2009, the Company sold its interest in the field to Petrohawk Energy, Inc.
The Company is currently engaged in two lines of business. First, the Company owns approximately 40,978 net acres of coal and coalbed methane mineral rights in West Virginia, and generates income from selling or leasing the properties to third parties, which it acquired in June 2013. Second, since October 1, 2013, the Company has been engaged in the business of operating a coal reclamation facility in Gary, West Virginia.
Results of Operations
Nine months ended September 30, 2013 and 2012
During the nine month periods ended September 30, 2013 and 2012, the Company did not have any revenues. The revenues reported by the Company are not reflective of future revenues as a result of agreements entered into by the Company in the fourth quarter of 2013 and the first quarter of 2014 to operate a coal reclamation facility in Gary, West Virginia.
During the nine months ending September 30, 2013, our operating expenses were $41,048, as compared to $2,758 for the nine months ending September 30, 2012. As a result, the Company had operating losses of ($41,048) and ($2,758) in the nine months ended September 30, 2013 and 2012, respectively.
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The Company realized a net loss for the nine months ended September 30, 2013 of ($41,048) as compared to a net loss of ($2,758) in the nine months ended September 30, 2012.
The revenues and operating expenses reported by the Company in the period are not reflective of future revenues and expenses as a result of agreements entered into by the Company in the fourth quarter of 2013 and the first quarter of 2014 to operate a coal reclamation facility in Gary, West Virginia.
Three months ended September 30, 2013 and 2012
During the three month periods ended September 30, 2013 and 2012, the Company did not have any revenues.
During the three months ending September 30, 2013, our operating expenses were $20,145, as compared to $919 for the three months ending September 30, 2012. As a result, the Company had operating losses of ($20,145) and ($919) in the three months ended September 30, 2013 and 2012, respectively
The Company realized a net loss for the three months ended September 30, 2013 of ($20,145), as compared to a net loss of ($919) in the three months ended September 30, 2012.
The revenues and operating expenses reported by the Company in the period are not reflective of future revenues and expenses as a result of agreements entered into by the Company in the fourth quarter of 2013 and the first quarter of 2014 to operate a coal reclamation facility in Gary, West Virginia.
Liquidity and Sources of Capital
The following table sets forth the major sources and uses of cash for the nine months ended September 30, 2012 and 2013:
Nine months ended September 30, | |||
2012 | 2013 | ||
Net cash provided by (used) in operating activities | - | 2,429,303 | |
Net cash provided by (used) in investing activities | - | (51,000,000) | |
Net cash provided by (used) in financing activities | - | 48,570,697 | |
Net (decrease) increase in unrestricted cash and cash equivalents | - | - | |
Comparison of 2013 and 2012
In the nine months ended September 30, 2013, we financed our operations primarily through advances from Wastech, Inc. We did not have any operations in 2012.
Operating activities provided $2,429,303 of cash in 2013, as compared to $0 in 2012. Major non-cash items that affected our cash flow from operations in 2013 were the cancellation of 69,724,738 shares held by our majority shareholder in return for cancellation of $2,457,333 of indebtedness, and the shareholders assumption of $84,344 of accounts payable.
Investing activities used ($51,000,000) of cash in 2013, all of which related to the acquisition of West Virginia coal rights.
Financing activities supplied $48,570,697 of cash in 2013, which largely related to the issuance of shares to acquire West Virginia coal rights.
15
Liquidity
Our balance sheet as of September 30, 2013 reflects current assets of $2,460, current liabilities of $166,448, and a working capital deficit of ($163,988). After September 30, 2013, we entered into a series of agreements to enter the business of operating a coal reclamation facility in Gary, West Virginia. Although we expect to need substantial capital to finance remediation efforts at the site, and meet other working capital needs, we have entered into an agreement with Blaze Logistics, LLC to provide such capital in return for a royalty on production from the site. We believe that Blaze Logistics, LLC has the resources to provide the capital we need to resume operations at the coal reclamation site.
Going Concern
Our financial statements have been presented on the basis that we continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements, we incurred a net operating loss in the nine months ended September 30, 2013, and had no revenues during this period. These factors create an uncertainty about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on the success of our plan to operate a coal reclamation facility in Gary, West Virginia. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Our significant accounting policies are described in Note 2 of Notes to Financial Statements. At this time, we are not required to make any material estimates and assumptions that affect the reported amounts and related disclosures of assets, liabilities, revenue, and expenses. However, as we begin actual mining operations, we will be required to make estimates and assumptions typical of other companies in the mining business.
For example, we will be required to make critical accounting estimates related to future metals prices, obligations for environmental, reclamation, and closure matters, mineral reserves, and accounting for business combinations. The estimates will require us to rely upon assumptions that were highly uncertain at the time the accounting estimates are made, and changes in them are reasonably likely to occur from period to period. Changes in estimates used in these and other items could have a material impact on our financial statements in the future.
Our estimates will be based on our experience and our interpretation of economic, political, regulatory, and other factors that affect our business prospects. Actual results may differ significantly from our estimates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Because the Company is a smaller reporting company, it is not required to provide the information called for by this Item.
16
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
A. Leon Blaser, our chief executive officer and chief financial officer, is responsible for establishing and maintaining our disclosure controls and procedures. Disclosure controls and procedures means controls and other procedures that are designed to ensure that information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and to ensure that information required to be disclosed by us in those reports is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of September 30, 2013. Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of the evaluation date, such controls and procedures were effective.
Changes in internal controls
There were no changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On June 4, 2013, we issued 204,356,648 shares of common stock to acquire Blaze Minerals, LLC. The shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
ITEM 5. OTHER INFORMATION.
None.
17
ITEM 6. EXHIBITS.
10.1 | Separation Agreement between the Company and Environmental Energy Services, Inc. |
10.2 | Joint Working Agreement between the Company and Blaze Logistics, LLC dated October 1, 2013 |
10.3 | Securities Exchange Agreement dated June 4, 2013 by and between the Company and Wastech, Inc. |
10.4 | Agreement dated January 8, 2014 by and among Advanced Coal Technology, LLC, Gary Coal Company, LLC, Gary Partners, LLC and the Company |
10.5 | Share Exchange Agreement by and among BMM-Empire, LLC, Frank Rosso, W. Keith Hall and the Company dated February 5, 2014 |
10.6 | Share Exchange Agreement by and among Kentucky Diversified Fuels, LLC, BMM-Empire, LLC, MaxGo, LLC, MXP, LLC, Middle Fork Development Services, LLC and the Company dated February 5, 2014 |
31 | Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 |
32 | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
18
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BLAZE ENERGY CORP. |
Date: March 28, 2014 | /s/ A. Leon Blaser |
| By: A. Leon Blaser, Chief Executive Officer and Chief Financial Officer (principal executive officer and principal financial and accounting officer) |
19
Exhibit 10.1
SEPARATION AGREEMENT
This SEPARATION AGREEMENT (this Agreement), dated as of the ___ day of April 2013, by and between BLAZE ENERGY CORP., a Delaware corporation ("Blaze"), and ENVIRONMENTAL ENERGY SERVICES, INC., a Delaware corporation (EESV").
R E C I T A L S
A.
Blaze and EESV entered into that certain Agreement dated effective June 26, 2007, wherein Blaze acquired EESVs wholly owned subsidiary, EESV Fayetteville, Inc. (EESV Fayetteville), in consideration for 70,000,000 shares of Blazes common stock.
B.
As of the date of this Agreement, EESV owns 69,724,378 shares of Blaze common stock (the Blaze Shares).
C.
EESV has outstanding unsecured loans owed to Blaze in the amount of $2,475,386.61 as of December 31, 2008, plus accrued interest at the prime rate plus 2% from April 1, 2008 (the EESV Loan), which loans are evidenced by a promissory note executed by EESV payable to Blaze on or about January 16, 2008 (the EESV Note).
D.
Blaze is indebted to EESV for amounts accrued under a Management Agreement dated January 16, 2009 at the rate of $90,000 per month from January 1, 2009 to the date of the Management Agreements termination in April 2009.
E.
On September 2, 2009, Blaze sold all of its assets to Petrohawk Properties, L.P., and used the proceeds to most, but not all, of its creditors.
F.
EESV terminated operations in 2009, and allowed all of its oil and gas leases to expire, and currently has no operations or assets, and therefore the EESV Loan is uncollectible.
G.
EESV pledged 15,000,000 of the Blaze Shares to Leon Blaser and Bruce Blaser by a Pledge Agreement dated December 15, 2008, which contained a negative covenant with respect to the unpledged Blaze Shares which prevents EESV from taking certain actions with respect to the unpledged Blaze Shares without the consent of Leon Blaser and Bruce Blaser.
AGREEMENTS
In consideration of the foregoing Recitals and of the mutual covenants herein contained, Blaze and EESV hereby agree as follows:
1.
Separation. On the Closing Date (as hereinafter defined), EESV and Blaze shall consummate the following transactions:
(a)
Transfer of Blaze Shares. In consideration for the cancellation of the EESV Loan, and the other terms and conditions of this Agreement, EESV hereby conveys, assigns, transfers and delivers to Blaze all of EESVs right, title and interest in and to the Blaze Shares free and clear of any lien, encumbrance, security interest, mortgage, pledge, charge, claim, option, right of first refusal or call, or restriction of any kind (collectively, "Liens").
1
(b)
Cancellation of EESV Loan. In consideration for the return and cancellation of the Blaze Shares, and the other terms and conditions of this Agreement, Blaze hereby cancels and discharges the EESV Loan and the EESV Note without recourse of any kind or nature whatsoever.
(c)
Transfer of EESV Fayetteville. As further consideration, Blaze hereby conveys, assigns, transfers and delivers to EESV all of Blazes right title and interest in and to EESV Fayetteville, subject to any Liens as may now or hereinafter so exist.
2.
Cancellation of Blaze Shares. On the Closing Date, EESV shall effect the transfer and cancellation of the Blaze Shares to Blaze by (a) delivering the certificates representing the Blaze Shares to Blaze duly endorsed or accompanied by stock powers duly executed in blank with appropriate transfer stamps, if any, affixed, and a board of directors resolution of EESV authorizing the transfer of the Blaze Shares to Blaze, or (b) if the Blaze Shares cannot be located, execute such affidavits or documents that the transfer agent for Blaze may request to effect the reissuance of replacement certificates for the Blaze Shares and the simultaneous cancellation thereof pursuant to this Agreement, and pay any fees or bond premium that may be required by the transfer agent. If EESV has not effected the transfer of the Blaze Shares to Blaze by the means described in subparagraph (a) above within thirty days after the date of this Agreement, then EESV shall provide the documentation described in subparagraph (b) instead.
3.
Transfer of EESV Fayetteville. On the Closing Date, EESV shall effect the transfer of EESV Fayetteville to EESV by delivering the certificate(s) representing 100% of the authorized and issued capital stock of EESV Fayetteville to EESV, duly endorsed or accompanied by stock powers duly executed in blank with appropriate transfer stamps, if any, affixed.
4.
Cancellation of EESV Loan. On the Closing Date, Blaze agrees to return the EESV Note to EESV marked paid in full.
5.
Closing. The parties shall consummate the transactions described in Paragraph 1 herein at a mutually convenient time in the offices of EESV within five days after EESV has satisfied the following conditions (the Closing Date):
(a)
The Cancellation of Pledge Agreement in the form attached hereto as Exhibit A has been executed by EESV, Leon Blaser and Bruce Blaser;
(b)
The Cancellation of Lease Agreement in the form attached hereto as Exhibit B has been executed by Americana Terrace, LLC and Blaze; and
(c)
Certain former officers, directors, employees and consultants have executed the resignations and releases in the forms attached hereto as Exhibit C;
6.
Further Assurances. Each party agrees to execute such additional documents that the other shall reasonably request to evidence the consummation of the transactions described herein.
2
7.
Hold Harmless Against Creditor Claims. EESV agrees to pay, assume and hold Blaze harmless against any creditor claims against Blaze, including without limitation those claims listed and described on Exhibit D hereto.
8.
EESV Release. EESV hereby irrevocably releases and forever discharges Blaze and its officers, directors, employees, agents and independent contractors of and from all manner of action, causes of action, counterclaims or third party actions, controversies, agreements, promises, damages, expenses, claims, monetary demands and other demands whatsoever (whether known or unknown, fixed or contingent) existing at (or at any time prior to and including) the date of this Release, in law, in equity, or otherwise, which the Parties have, or may ever have, unto the other, upon or by reason of any events that have occurred or shall hereinafter occur as and by reason of conducting business with each other, except for any obligation of Blaze to EESV created by this Agreement.
9.
Blaze Release. Blaze hereby irrevocably releases and forever discharges EESV and its officers, directors, employees, agents and independent contractors of and from all manner of action, causes of action, counterclaims or third party actions, controversies, agreements, promises, damages, expenses, claims, monetary demands and other demands whatsoever (whether known or unknown, fixed or contingent) existing at (or at any time prior to and including) the date of this Release, in law, in equity, or otherwise, which the Parties have, or may ever have, unto the other, upon or by reason of any events that have occurred or shall hereinafter occur as and by reason of conducting business with each other, including any obligation of EESV to Blaze pursuant to that promissory note executed on or about January 16, 2008, except for any obligation of EESV to Blaze created by this Agreement.
10.
Covenant Not To Sue. The Parties covenant and agree not to institute any suit or action at law or equity against the other, nor institute, prosecute or in any way aid in the institution or prosecution of any claim, demand, action, or cause of action for damages, costs, loss of services, expenses, or compensation for or on the account of any damage, resulting or to result, known or unknown, past, present, or future which are, were, might or could have been asserted against the other in connection with any of the matters released herein, except for any action to enforce the terms of this Agreement.
11.
Indemnification. Each Party agrees to indemnify the other Party against and hold harmless from all damages, including all losses, judgments, amounts in settlement of actions or claims, liabilities, damages, and reasonable costs and expenses, including, but not limited to, attorneys fees, which accrue from or result by reason of any breach of any of the representations, warranties, covenants, or agreements made or to be performed by the other Party pursuant to this Agreement.
12.
No Impairment. EESV shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Blaze against impairment.
3
13.
Remedies. The parties stipulate that the remedies at law of either in the event of any default or threatened default by the other in the performance of or compliance with any of the terms of this Separation Agreement are not and will not be adequate and that, without limiting any other remedy available at law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof. The rights and remedies of the parties are cumulative and not exclusive of any rights or remedies that the parties might otherwise have.
14.
Survival. The various rights and obligations of the parties as set forth herein shall survive the exercise of this Separation Agreement at any time or from time to time.
15.
Notices. Whenever any notice or other communication (any such notice or other communication, a "Delivery") is required to be given or delivered under the terms of this Separation Agreement, it shall be in writing and delivered by hand delivery or Federal Express or registered or certified United States mail, postage prepaid and return receipt requested, and will be deemed to have been given or delivered on the date such notice or other communication is so delivered. Any Delivery to Blaze shall be addressed to 520 Folly Road, Suite P285, Charleston, South Carolina 29412, or to such other address as Blaze may hereafter designate to EESV in writing; any Delivery to EESV shall be addressed to 3350 Americana Terrace, Suite 200, Boise, Idaho 83706, or to such other address as the EESV may hereafter designate to Blaze in writing.
16.
Change; Waiver. Neither this Separation Agreement nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. No failure or delay of a party in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.
17.
Covenants to Bind Successor and Assigns. The terms of this Separation Agreement shall bind the successors and permitted assigns of EESV and Blaze.
18.
Severability. In case any one or more of the provisions contained in this Separation Agreement shall be invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
19.
Governing Law. This Agreement shall be governed by the laws of Idaho.
IN WITNESS WHEREOF, the parties hereto have duly executed this Separation Agreement as of the date first above written.
[SIGNATURES ON FOLLOWING PAGE]
4
BLAZE ENERGY CORP.
By:
Name:
Bruce Blaser
Its:
ENVIRONMENTAL ENERGY SERVICES, INC.
By:
Name:
Leon Blaser
Its:
Chief Executive Officer
5
Exhibit A
CANCELLATION OF PLEDGE AGREEMENT
Environmental Energy Services, Inc. (EESV), A. Leon Blaser and Bruce Blaser hereby cancel and terminate that Pledge Agreement dated December 15, 2008. Accordingly, Messrs. Blaser and Blaser hereby quitclaim and release any lien that they may have on 15,000,000 shares of common stock of Blaze Energy Corp. pledged by EESV to Messrs. Blaser under said agreement, and release EESV from any obligations or covenants of EESV under said agreement.
ENVIRONMENTAL ENERGY SERVICES, INC.
By:
Name: A. Leon Blaser
Its: Chief Executive Officer
______________________________
A. Leon Blaser
______________________________
Bruce Blaser
6
Exhibit B
CANCELLATION OF LEASE AGREEMENT
Americana Terrace, LLC (Americana) and Blaze Energy Corp. (Blaze) hereby cancel and terminate that Lease Agreement dated June 1, 2008, effective as of December 31, 2009. Accordingly, Blaze hereby quitclaims and releases any claim or interest that it has in and to the space covered by such Lease Agreement, and Americana hereby releases Blaze for any claim or obligation under the Lease Agreement, whether for unpaid rent or common area charges to the date of termination, as well as any claim for future rent or damages that may be due as a result of the termination of the Lease Agreement prior to the expiration of its stated term.
BLAZE ENERGY CORP.
By:
Name: A. Leon Blaser
Its: Chief Executive Officer
AMERICANA TERRACE, LLC
By:
Name: Bruce Blaser
Its: Manager
7
Exhibit C
I hereby confirm that I resigned all positions with Blaze Energy Corp. (the Company), whether as director, officer, employee or independent contractor, effective as of December 31, 2009. I hereby waive and relinquish any claim that I have against the Company or its subsidiaries, including for compensation or reimbursement of expenses, and agree that any agreement that I have or had with the Company was terminated as of December 31, 2009.
Date: ____________________ | ||
Bruce Blaser |
I hereby confirm that I resigned all positions with Blaze Energy Corp. (the Company), whether as director, officer, employee or independent contractor, effective as of December 31, 2009. I hereby waive and relinquish any claim that I have against the Company or its subsidiaries, including for compensation or reimbursement of expenses, and agree that any agreement that I have or had with the Company was terminated as of December 31, 2009.
Date: ____________________ | ||
Robert J. Mottern |
I hereby confirm that I resigned all positions with Blaze Energy Corp. (the Company), whether as director, officer, employee or independent contractor, effective as of December 31, 2009. I hereby waive and relinquish any claim that I have against the Company or its subsidiaries, including for compensation or reimbursement of expenses, and agree that any agreement that I have or had with the Company was terminated as of December 31, 2009.
Date: ____________________ | ||
Michael Thompson |
I hereby confirm that I resigned all positions with Blaze Energy Corp. (the Company), whether as director, officer, employee or independent contractor, effective as of December 31, 2009. I hereby waive and relinquish any claim that I have against the Company or its subsidiaries, including for compensation or reimbursement of expenses, and agree that any agreement that I have or had with the Company was terminated as of December 31, 2009.
Date: ____________________ | ||
Vaughn Featherstone |
I hereby confirm that I resigned all positions with Blaze Energy Corp. (the Company), whether as director, officer, employee or independent contractor, effective as of December 31, 2009. I hereby waive and relinquish any claim that I have against the Company or its subsidiaries, including for compensation or reimbursement of expenses, and agree that any agreement that I have or had with the Company was terminated as of December 31, 2009.
Date: ____________________ | ||
Vaughn W. Fisher, Jr. |
I hereby confirm that I resigned all positions with Blaze Energy Corp. (the Company), whether as officer, employee or independent contractor (but not as a director), effective as of December 31, 2009. I hereby waive and relinquish any claim that I have against the Company or its subsidiaries, including for compensation or reimbursement of expenses, and agree that any agreement that I have or had with the Company was terminated as of December 31, 2009.
Date: ____________________ | ||
A. Leon Blaser. |
I hereby confirm that I resigned all positions with Blaze Energy Corp. (the Company), whether as director, officer, employee or independent contractor, effective as of December 31, 2009. I hereby waive and relinquish any claim that I have against the Company or its subsidiaries, including for compensation or reimbursement of expenses, and agree that any agreement that I have or had with the Company was terminated as of December 31, 2009.
Date: ____________________ | ||
William L. Tuorto. |
9
Exhibit D
List of Creditors
Fishers | 762.00 |
Market Wire | 1,200.00 |
MicroTek | 904.95 |
MXLogic | 100.00 |
NSA | 23,651.26 |
OTC | 600.00 |
TJA | 1,312.50 |
Daily & Woods | 2,220.00 |
10
Exhibit 10.2
SECURITIES EXCHANGE AGREEMENT
dated effective as of June 4, 2013
by and among
BLAZE ENERGY CORP.
and
WASTECH, INC.
SECURITIES EXCHANGE AGREEMENT
THIS SECURITIES EXCHANGE AGREEMENT (the Agreement), dated effective as of June 4, 2013 (the Effective Date), is entered into by and among Wastech, Inc., an Oklahoma corporation (Wastech), and Blaze Energy Corp., a Delaware corporation (Blaze). Certain capitalized terms used in this Agreement are defined in Section 8.3 hereof.
W I T N E S S E T H:
WHEREAS, as of the Effective Date, there were 1,000 issued and outstanding membership units of the common stock, no par value, of Blaze Minerals, LLC, c. a West Virginia limited liability company (the Subsidiary), all of which shares (the Subsidiary Stock) are beneficially owned by Wastech;
WHEREAS, Blaze proposes to acquire all of the Subsidiary Stock in exchange for the issuance of an aggregate of 204,356,648 shares of common stock, $0.001 par value, of Blaze (the Exchange); and
WHEREAS, the Boards of Directors of Blaze and Wastech have determined that it is desirable to effect a plan of reorganization pursuant to 26 U.S.C. §368(a)(1)(B).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants, agreements, representations and warranties contained herein, the parties hereto agree as follows:
ARTICLE I
ISSUANCE AND EXCHANGE OF SHARES
1.1
Issuance and Exchange. At the Closing (as defined in Section 2.1 below), to be held in accordance with the provisions of Article II below and subject to the terms and agreements set forth herein, Blaze shall (a) authorize Blazes transfer agent to issue to Wastech 204,356,648 shares of duly authorized and newly issued shares of common stock, $0.001 par value, of Blaze (the Blaze Stock), in consideration for all of the issued and outstanding shares of common stock of Subsidiary.
1
1.2
Exchange of Shares. Wastech shall have delivered to counsel for Blaze, prior to Closing, certificates evidencing the Subsidiary Stock, together with duly executed stock powers to effectuate the transfer, and Blaze shall have delivered to counsel for Blaze, prior to Closing, certificates evidencing the Blaze Shares. Counsel for Blaze shall release the Subsidiary Stock and the Blaze Stock, over which he has custody, to Blaze and Wastech, respectively, at the Closing, assuming satisfaction by Blaze and Wastech of all applicable conditions set forth in this Agreement.
ARTICLE II
CLOSING
2.1
Closing. The consummation of the Exchange by Blaze and Wastech (the Closing) shall occur at a time and place elected by Wastech, subject to the satisfaction or waiver of all of the conditions to Closing, or at such other place as the parties may agree upon.
2.2
Deliveries by Blaze. Blaze shall deliver, or cause to be delivered, to Wastech:
(a)
At or as soon as practicable after the Closing, certificates for the shares of Blaze Stock being exchanged, it being understood that the certificates will be prepared by Blazes transfer agent and delivered to Wastech;
(b)
At the Closing, the items specified in Article VI below; and
(c)
At the Closing, all of the books and records of Blaze.
2
2.3
Deliveries by Wastech. At the Closing, Wastech shall deliver to Blaze the items specified in Article VI below.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WASTECH
Wastech represents and warrants to Blaze as follows (it being acknowledged that Blaze is entering into this Agreement in material reliance upon each of the following representations and warranties, and that the truth and accuracy of each, as evidenced by their signature set forth on the signature page, constitutes a condition precedent to the obligations of Blaze hereunder):
3.1
Ownership of Stock. Wastech is the lawful owner of the Subsidiary Stock to be transferred to Blaze free and clear of all preemptive or similar rights, Liens, and the delivery to Blaze of the Subsidiary Stock pursuant to the provisions of this Agreement will transfer to Blaze valid title thereto, free and clear of all Liens. To the Knowledge of Wastech, the Subsidiary Stock to be exchanged herein has been duly authorized and validly issued and is fully paid and nonassessable.
3.2
Authority to Execute and Perform Agreement; No Breach. Wastech has the full legal right and power and all authority and approval required to enter into, execute and deliver this Agreement, and to sell, assign, transfer and convey the Subsidiary Stock and to perform fully the respective obligations hereunder. This Agreement has been duly executed and delivered by Wastech and, assuming due execution and delivery by, and enforceability against, Blaze, constitutes the valid and binding obligation of Wastech enforceable in accordance with its terms, subject to the qualifications that enforcement of the rights and remedies created hereby is subject to (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors, and (b) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). No approval or consent of, or filing with, any Governmental Entity, and no approval or consent of, or filing, with any other Person is required to be obtained by Wastech or in connection with the execution and delivery by Wastech of this Agreement and consummation and performance by them of the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Wastech and the consummation of the transactions contemplated hereby in accordance with the terms and conditions hereof by Wastech will not:
(a)
violate, conflict with or result in the breach of any of the terms of, or constitute (or with notice or lapse of time or both would constitute) a default under, any contract, lease, agreement or other instrument or obligation to which Wastech is a party;
(b)
violate any order, judgment, injunction, award or decree of any court, arbitrator, governmental or regulatory body, by which Wastech or the securities, assets, properties or business of Wastech is bound; or
(c)
violate any statute, law or regulation to which Wastech is subject.
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3.3
Securities Matters. Wastech hereby represents, warrants and covenants to Blaze as follows:
(a)
Wastech has been advised that the Blaze Stock has not been registered under the Securities Act, or any state securities act in reliance on exemptions therefrom.
(b)
The Blaze Stock is being acquired solely for Wastechs own account, for investment and are not being acquired with a view to or for the resale, distribution, subdivision or fractionalization thereof. Wastech has no present plans to enter into any such contract, undertaking, agreement or arrangement and further understands that the Blaze Stock may only be resold pursuant to a registration statement under the Securities Act, or pursuant to some other available exemption.
(c)
Wastech agrees that the certificate or certificates representing the Blaze Stock will be inscribed with substantially the following legend:
The securities represented by this certificate have not been registered under the Securities Act of 1933. The securities have been acquired for investment and may not be sold, transferred or assigned in the absence of an effective registration statement for these securities under the Securities Act of 1933 or an opinion of counsel acceptable to the issuer of the securities represented by this certificate that registration is not required under said Act.
(d)
Wastech acknowledges that an investment in Blaze is subject to a high degree of risk and that, even though Blazes common stock is quoted on the Pink Sheets, there exists no established trading market for the Blaze Stock.
3.4
Capital Structure. As of the Effective Date, 1,000 shares of Subsidiary Stock were issued and outstanding and held by Wastech and no shares of Subsidiary Stock were held by Subsidiary in its treasury. All outstanding shares of Subsidiary Stock will have been duly authorized and validly issued, and will be fully paid and nonassessable and not subject to preemptive or similar rights. No bonds, debentures, notes or other indebtedness of Subsidiary having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which Wastech may vote are issued or outstanding. Subject to Section 3.5 below, Subsidiary does not have and, at or after Closing will not have, any outstanding options, warrants, calls, subscriptions or other rights, agreements or commitments which either (a) obligates Subsidiary to issue, sell or transfer, repurchase, redeem or otherwise acquire or vote any shares of the capital stock of Subsidiary, or (b) restricts the voting, disposition or transfer of shares of capital stock of Subsidiary. There are no outstanding stock appreciation rights or similar derivative securities or rights of Subsidiary.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BLAZE
Blaze hereby represents and warrants to Wastech as follows (it being acknowledged that Wastech is entering into this Agreement in material reliance upon each of the following representations and warranties, and that the truth and accuracy of each, as evidenced by the execution of this Agreement by a duly authorized officer of Blaze, constitutes a condition precedent to the obligations of Wastech hereunder):
4.1
Organization, Standing and Power. Blaze is duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to carry on its business as now being conducted. Blaze is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) would not have a Blaze Material Adverse Effect. For purposes of this Agreement, the term Blaze Material Adverse Effect means any Material Adverse Effect with respect to Blaze, taken as a whole, or any change or effect that adversely, or is reasonably expected to adversely, affect the ability of Blaze to consummate the transactions contemplated by this Agreement in any material respect or materially impairs or delays Blazes ability to perform its obligations hereunder. Blaze has made available to Wastech complete and correct copies of its charter documents and bylaws.
4.2
Capital Structure. As of the Effective Date, the authorized capital stock of Blaze consists of 500,000,000 shares of common stock and 5,000,000 shares of preferred stock. No shares of common stock of Blaze will be held by Blaze in its treasury. All outstanding shares of capital stock of Blaze will have been duly authorized and validly issued, and will be fully paid and nonassessable and not subject to preemptive or similar rights.
4.3
Authority: Noncontravention. Blaze has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance of this Agreement by Blaze and the consummation by Blaze of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Blaze. This Agreement has been duly executed and delivered by Blaze and, assuming this Agreement constitutes the valid and binding agreement of Wastech, constitutes a valid and binding obligation of Blaze, enforceable against Blaze in accordance with its terms, subject to (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors, and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions hereof, will not, (x) conflict with any of the provisions of the charter documents or bylaws of Blaze, (y) subject to the governmental filings and other matters referred to in the following sentence, conflict with, result in a breach of or default (with or without notice or lapse of time, or both) under, or give rise to a right of first refusal, termination, cancellation or acceleration of any obligation (including to pay any sum of money) or loss of a benefit under, or require the consent of any Person under, any indenture or other agreement, Permit, concession, ground lease or similar instrument or undertaking to which Blaze is a party or by which Blaze or any of its assets are bound or affected, result in the creation or imposition of a Lien against any material asset of Blaze, which, singly or in the aggregate, would have a Blaze Material Adverse Effect, or (z) subject to the governmental filings and other matters referred to in the following sentence, contravene any law, rule or regulation, or any order, writ, judgment, injunction, decree, determination or award binding on Blaze currently in effect, which in the case of clauses (y) and (z) above, singly or in the aggregate, would have a Blaze Material Adverse Effect. No consent, approval or authorization of, or declaration or filing with, or notice to, any Governmental Entity or any third party which has not been received or made is required by or with respect to Blaze in connection with the execution and delivery of this Agreement by Blaze or the consummation by Blaze of the transactions contemplated hereby, except for consents, approvals, authorizations, declarations, filings and notices that, if not obtained or made, will not, individually or in the aggregate, result in a Blaze Material Adverse Effect.
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4.4
Subsidiaries. Blaze does not own, directly or indirectly, any of the capital stock of any other corporation or any equity, profit sharing, participation or other interest in any corporation, partnership, joint venture or other entity.
4.5
Intellectual Property. Blaze does not own or use any trademarks, trade names, service marks, patents, copyrights or any applications with respect thereto. Blaze has no Knowledge of any claim that, or inquiry as to whether, any product, activity or operation of Blaze infringes upon or involves, or has resulted in the infringement of, any trademarks, trade names, service marks, patents, copyrights or other proprietary rights of any other Person, corporation or other entity; and no proceedings have been instituted, are pending or are threatened with respect thereto.
4.6
Absence of Certain Changes or Events; No Undisclosed Material Liabilities.
(a)
Blaze has conducted its business only in the ordinary course, and there has not been (i) any change, destruction, damage, loss or event which has had or could reasonably be expected to have, individually or in the aggregate a Blaze Material Adverse Effect; (ii) any declaration, setting aside or payment of any dividend or other distribution in respect of shares of Blazes capital stock, or any repurchase, redemption or other acquisition by Blaze of any shares of their respective capital stock or equity interests, as applicable; (iii) any increase in the rate or terms of compensation payable or to become payable by Blaze to its directors, officers or key employees; (iv) any entry into, or increase in the rate or terms of, any bonus, insurance, severance, pension or other employee or retiree benefit plan, payment or arrangement made to, for or with any such directors, officers or employees; (v) any entry into any agreement, commitment or transaction by Blaze, or waiver, termination, amendment or modification to any agreement, commitment or transaction, which is material to Blaze taken as a whole; (vi) any material labor dispute involving the employees of Blaze; (vii) any change by Blaze in accounting methods, principles or practices except as required or permitted by GAAP; (viii) any write-off or write-down of, or any determination to write-off or write-down, any asset of Blaze or any portion thereof; (ix) any split, combination or reclassification of any of Blazes capital stock or issuance or authorization relating to the issuance of any other securities in respect of, in lieu of or in substitution for shares of Blazes capital stock; (x) any amendment of any material term of any outstanding security of Blaze; (xi) any loans, advances or capital contributions to or investments in, any other Person in existence on the Effective Date made by Blaze; (xii) any sale or transfer by Blaze of any of the assets of Blaze, cancellation of any material debts or claims or waiver of any material rights by Blaze; or (xiii) any agreements by Blaze to (a) do any of the things described in the preceding clauses (i) through (xii) other than as expressly contemplated or provided for herein or (b) take, whether in writing or otherwise, any action which, if taken prior to the Effective Date, would have made any representation or warranty of Blaze in this Agreement untrue or incorrect in any material respect.
(b)
Blaze has no Liabilities, except as otherwise incurred in the ordinary course of business, and except for a convertible promissory note dated June 6, 2003 in the original principal amount of $15,000.00.
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4.7
Books and Records. The books of account and other financial records of Blaze, all of which have been made available to Wastech, are complete and correct and represent actual, bona fide transactions.
4.8
Employee Benefit Plans. Blaze has no (a) non-qualified deferred or incentive compensation or retirement plans or arrangements, (b) qualified retirement plans or arrangements, (c) other employee compensation, severance or termination pay or welfare benefit plans, programs or arrangements or (d) any related trusts, insurance contracts or other funding arrangements maintained, established or contributed to by Blaze.
4.9
Compliance with Applicable Laws. Blaze has and after giving effect to the transactions contemplated hereby will have in effect all Permits necessary for it to own, lease or operate its properties and assets and to carry on its business as now conducted, and to the Knowledge of Blaze there has occurred no default under any such Permit, except for the lack of Permits and for defaults under Permits which individually or in the aggregate would not have a Blaze Material Adverse Effect. To Blazes Knowledge, Blaze is in compliance with, and has no liability or obligation under, any applicable statute, law, ordinance, rule, order or regulation of any Governmental Entity, including any liability or obligation to undertake any remedial action under Hazardous Substances Laws (as hereinafter defined), except for instances of non-compliance, liabilities or obligations, which individually or in the aggregate would not have a Blaze Material Adverse Effect.
4.10
Insurance. Blaze has no insurance policies in effect.
4.11
Litigation, etc. As of the Effective Date, (a) there is no suit, claim, action or proceeding (at law or in equity) pending or, to the Knowledge of Blaze, threatened against Blaze (including, without limitation, any product liability claims) before any court or governmental or regulatory authority or body, and (b) Blaze is not subject to any outstanding order, writ, judgment, injunction, order, decree or arbitration order that, in any such case described in clauses (a) and (b), (i) could reasonably be expected to have, individually or in the aggregate, a Blaze Material Adverse Effect or (ii) involves an allegation of criminal misconduct or a violation of the Racketeer and Influenced Corrupt Practices Act. As of the Closing, there are no suits, actions, claims or proceedings pending or, to Blazes Knowledge, threatened, seeking to prevent, hinder, modify or challenge the transactions contemplated by this Agreement.
4.12
Real Property. Blaze does not own or lease any real property.
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4.13
Quotation. As of the Closing Date, the Blaze Stock is eligible for quotation on the OTC Markets.
4.14
Environmental Matters. Blaze has not received any written notice from any Governmental Entity that there exists any violation of any Hazardous Substances Law (as hereinafter defined). Blaze has no Knowledge (a) of any Hazardous Substances (as hereinafter defined) present on, under or about any Blaze asset, and to Blazes Knowledge no discharge, spillage, uncontrolled loss, seepage or filtration of Hazardous Substances has occurred on, under or about any Blaze asset, (b) that any Blaze assets violates, or has at any time violated, any Hazardous Substance Laws, and (c) that there is a condition on any asset for which Blaze has an obligation to undertake any remedial action pursuant to Hazardous Substance Laws. For purposes hereof, Hazardous Substances means, without limitation (i) those substances included within definitions of any one or more of the terms Hazardous Substance, and Hazardous Waste, Toxic Substance and Hazardous Material in the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. § 90,601, et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. § 6901, et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651, et seq., (insofar as it relates to employee health and safety in relation to exposure to Hazardous Substances) and any other local, state, federal or foreign laws or regulations related to the protection of public health or the environment (collectively, Hazardous Substances Laws); (ii) such other substances, materials or wastes as are or become regulated under, or as are classified as hazardous or toxic under Hazardous Substance Laws; and (iii) any materials, wastes or substances that can be defined as (v) petroleum products or wastes; (w) asbestos; (x) polychlorinated biphenyl; (y) flammable or explosive; or (z) radioactive.
4.15
Anti-takeover Plan: State Takeover Statutes. Blaze does not have in effect any plan, scheme, device or arrangement, commonly or colloquially known as a poison pill or anti-takeover plan or any similar plan, scheme, device or arrangement. The Board of Directors of Blaze has approved this Agreement. No other state takeover statute or similar statute or regulation applies or purports to apply to the Exchange, this Agreement or any of the transactions contemplated by this Agreement.
4.16
Solicitation. None of Blaze, its officers, directors, Affiliates or agents, or any other Person acting on its behalf has solicited, directly or indirectly, any Person to enter into a merger or similar business combination transaction with Blaze by any form of general solicitation, including, without limitation, any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
4.17
Disclosure. The representations and warranties and statements of fact made by Blaze in this Agreement are, as applicable, accurate, correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein not false or misleading.
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ARTICLE V
INDEMNIFICATION
5.1
Indemnification of Wastech.
(a)
Blaze shall, from and after the Closing, indemnify, defend and hold harmless Wastech, and Wastechs officers, directors, Affiliates or agents, and any other Person acting on its behalf (the Wastech Indemnified Parties) against all losses, claims, damages, costs, expenses (including reasonable attorneys fees and expenses), liabilities or judgments or amounts that are paid in settlement with the approval of the indemnifying party (the Wastech Indemnified Liabilities) based on, or arising out of, or pertaining to this Agreement or the transactions contemplated hereby, in each case, to the fullest extent permitted under the laws of the State of Delaware.
(b)
The Wastech Indemnified Parties shall have the right to conduct the defense of any action giving rise to a claim for indemnity under this Agreement with counsel of their own choosing. Wastech and Blaze agree that all rights to indemnification, including provisions relating to advances of expenses incurred in defense of any action or suit, existing in favor of the Wastech Indemnified Parties with respect to matters occurring through the Closing, shall survive the Exchange and shall continue in full force and effect for a period of not less than one year from the Closing; provided, however, thatall rights to indemnification in respect of any Wastech Indemnified Liabilities asserted or made within such period shall continue until the disposition of such Wastech Indemnified Liabilities.
(c)
The provisions of this Section 5.1 are intended to be for the benefit of, and shall be enforceable by, each Wastech Indemnified Party, his or her heirs and his or her personal representatives and shall be binding upon all successors and assigns of Blaze and Wastech.
5.2
Indemnification of Blaze.
(a)
Wastech shall, from and after the Closing, indemnify, defend and hold harmless Blaze and Blazes officers, directors, Affiliates or agents, and any other Person acting on its behalf (the Blaze Indemnified Parties) against all losses, claims, damages, costs, expenses (including reasonable attorneys fees and expenses), liabilities or judgments or amounts that are paid in settlement with the approval of the indemnifying party (the Blaze Indemnified Liabilities) based on, or arising out of, or pertaining to this Agreement or the transactions contemplated hereby, in each case, to the fullest extent permitted under the laws of the State of Delaware.
(b)
The Blaze Indemnified Parties shall have the right to conduct the defense of any action giving rise to a claim for indemnity under this Agreement with counsel of their own choosing. Wastech and Blaze agree that all rights to indemnification, including provisions relating to advances of expenses incurred in defense of any action or suit, existing in favor of the Blaze Indemnified Parties with respect to matters occurring through the Closing, shall survive the Exchange and shall continue in full force and effect for a period of not less than one year from the Closing; provided, however, that all rights to indemnification in respect of any Blaze Indemnified Liabilities asserted or made within such period shall continue until the disposition of such Blaze Indemnified Liabilities.
(c)
The provisions of this Section 5.2 are intended to be for the benefit of, and shall be enforceable by, each Blaze Indemnified Party, his or her heirs and his or her personal representatives and shall be binding upon all successors and assigns of Blaze and Wastech.
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ARTICLE VI
CONDITIONS PRECEDENT
6.1
Conditions to Each Partys Obligation to Effect the Exchange. The respective obligation of each party to effect the Exchange is subject to the satisfaction or written waiver of the following conditions:
(a)
No Injunctions or Restraints. No statute, rule, regulation, temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Exchange shall be in effect; provided, however, that the party invoking this condition shall use its best efforts to have any such temporary restraining order, injunction, order, restraint or prohibition vacated.
(b)
Governmental and Regulatory Consents. All material filings required to be made prior to the Closing with, and all material consents, approvals, permits and authorizations required to be obtained prior to the Closing from, Governmental Entities, in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by Wastech and Blaze will have been made or obtained (as the case may be).
6.2
Conditions to Obligations of Wastech. The obligations of Wastech to effect the Exchange are further subject to the satisfaction or written waiver on or prior to the Closing of the following conditions:
(a)
Representations and Warranties. The representations and warranties of Blaze set forth in Article IV that are qualified as to materiality or Material Adverse Effect shall be true and correct and the representations and warranties of Blaze set forth in Article IV that are not so qualified shall be true and correct in all material respects, in each case as of the Closing, except to the extent such representations and warranties speak as of an earlier date. In addition, all such representations and warranties shall be true and correct as of the Closing, except to the extent such representation or warranty speaks of an earlier date (without regard to any qualifications for materiality or Material Adverse Effect) except to the extent that any such failure to be true and correct (other than any such failure the effect of which is immaterial) individually and in the aggregate with all such other failures would not have a Material Adverse Effect, and Wastech shall have received a certificate signed on behalf of Blaze by the chief executive officer of Blaze to the effect set forth in this paragraph.
(b)
Performance of Obligations of Blaze. Blaze shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing.
(c)
Board Representation. At the Closing and pursuant to a written consent to action of the Board of Directors of Blaze, the Board of Directors shall (i) affirm A. Leon Blaser, as Chairman and CEO, (ii) reserve two (2) additional nominee at the sole election of Wastech, and without objection by Blaze, and (iii) all other existing officers and directors shall resign from respective positions in Blaze.
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6.3
Conditions to Obligations of Blaze. The obligation of Blaze to effect the Exchange is further subject to the satisfaction or written waiver on or prior to Closing of the following conditions:
(a)
Representations and Warranties. The representations and warranties of Wastech set forth in Article III that are qualified as to materiality or Material Adverse Effect shall be true and correct and the representations and warranties of Wastech set forth in Article III set forth in Article III that are not so qualified shall be true and correct in all material respects, in each case as of the Closing. In addition, all such representations and warranties shall be true and correct as of the Closing, except to the extent such representation or warranty speaks of an earlier date (without regard to any qualifications for materiality or Material Adverse Effect) except to the extent that any such failure to be true and correct (other than any such failure the effect of which is immaterial) individually and in the aggregate with all such other failures would not have a Material Adverse Effect, and Blaze shall have received a certificate signed on behalf of Wastech by the president of Wastech to the effect set forth in this paragraph.
(b)
Performance of Obligations of Wastech. Wastech shall have performed in all material respects all obligations required to be performed by them under this Agreement at or prior to the Closing.
ARTICLE VII
CONDITIONS SUBSEQUENT
7.1
Call Option.
(a)
Blaze hereby grants to Wastech the right and option to purchase the Subsidiary Stock (the Call Option) for the Exercise Price (as hereinafter defined). The Call Option may only be exercised by Wastech delivering a written notice of exercise of the Call Option to Blaze at its executive offices, located at 3350 Americana Terrace, Suite 200, Boise Idaho 83706, or such other place as the Purchaser may designate by written notice to the Seller, together with the Exercise Price, duly endorsed by the Seller. The Call Option granted hereunder may only be exercised in whole. Except as set forth in Section 7.1(b), the Call Option may be exercised at any time, and for any reason in its sole discretion, prior to the second anniversary (24 months) from the Closing Date herein (the Exercise Term).
(b)
The Call Option shall automatically terminate when all of the following conditions are true: (i) if Blazes common stock is trading on the OTCQX over the counter market system, with a daily closing price (the Market Value) is equal to or above Fifty Cents ($0.50) per share for a period of Ninety (90) consecutive days prior to the expiration of the Exercise Term; provided, that, during the said Exercise Term, Wastech and Blaze, refrain from, and shall cause respective officers and directors to refrain from, engaging in market transactions in the sale or purchase of Blazes common stock, which, in and of themselves, cause the Market Value of Blazes common stock to equal, exceed or be less than (as the case may be) Fifty Cents ($0.50) per share for purposes of invoking or avoiding (as the case may be) the provision set forth in this Section 7.1(b); (ii) Blaze has filed a Form 10 registration statement with the Securities and Exchange Commission to register its common stock pursuant to Section 12(g) of the Securities and Exchange Act, and such registration statement has become effective and all comments resolved to the satisfaction of the Securities and Exchange Commission; (iii) Blaze is current in its reporting requirements under Sections 13 or 15 of the Securities Exchange Act; and (iv) Blazes common stock is then trading on the OTCQX over the counter market system.
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(c)
For purposes of this Section 7.1 the term Exercise Price shall mean: (i) from the Closing Date until six (6) months thereafter, 100% of the Blaze Stock; (ii) from six (6) months and one day from the Closing Date through twelve (12) months thereafter, 90% of the Blaze Stock, or 183,920,984 shares; (iii) from twelve (12) months and one day from the Closing Date through eighteen (18) months thereafter, 85% of the Blaze Stock, or 173,703,151 shares; and (iv) from eighteen (18) months and one day from the Closing Date through the end of the Exercise Term, 75% of the Blaze Stock, or 153,267,486 shares.
(d)
The Call Option shall be deemed to have been exercised, and Wastech shall be deemed to be the owner and holder of record of all of the Subsidiary Stock, as of the date of the notice of exercise of the Call Option (the Exercise Date).
(e)
In the event Wastech exercises the Call Option, it agrees that it will take the Subsidiary Stock, AS IS, without any representation of any kind or nature whatsoever.
(f)
Blaze hereby agrees that is shall not sell, assign, pledge, hypothecate, or otherwise grant any lien or encumbrance on the Subsidiary Stock during the Exercise Term without the prior written consent of the Seller.
ARTICLE VIII
GENERAL PROVISIONS
8.1
Survival of Representations and Warranties. Except as otherwise contemplated herein, the representations and warranties in this Agreement and in any instrument delivered pursuant to this Agreement shall survive the Closing for a period of one year.
8.2
Fees and Expenses. Blaze hereby agrees on or before Ninety (90) days from the Effective Date hereof, to pay Wastech Fifty Thousand Dollars and No Cents ($50,000.00) for expenses incidental to preparing for, entering into and carrying out this Agreement and the consummation of the transactions contemplated hereby.
8.3
Definitions. For purposes of this Agreement, and except as otherwise defined in this Agreement:
(a)
Affiliate of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person;
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(b)
Governmental Entity means any domestic or foreign governmental agency or regulatory authority;
(c)
Knowledge means actual knowledge. In order for an individual to have Knowledge of a fact or matter, the individual must be actually aware of that fact or matter. A Person (other than an individual) will be deemed to have Knowledge of a particular fact or matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor or trustee of that Person (or in any similar capacity) has, or at any time had, Knowledge of that fact or matter.
(d)
Liens means, collectively, all material pledges, claims, liens, charges, mortgages, conditional sale or title retention agreements, hypothecations, collateral assignments, security interests, easements and other encumbrances of any kind or nature whatsoever;
(e)
Material Adverse Effect with respect to any Person means an event that has had or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of such Person and its subsidiaries taken as a whole;
(f)
Permits means federal, state, local and foreign governmental approvals, authorizations, certificates, filings, franchises, licenses, notices, permits an rights; and
(g)
Person means an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity.
(h)
Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(i)
Securities Act means the Securities Act of 1933, as amended.
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8.4
Usage. In this Agreement, unless a clear contrary intention appears:
(a)
the singular number includes the plural number and vice versa;
(b)
reference to any Person includes such Persons successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;
(c)
reference to any gender includes each other gender or, in the case of an entity, the neuter;
(d)
reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof, and shall be deemed to refer as well to all addenda, exhibits and schedules;
(e)
reference to a Section or Schedule, such reference shall be to a Section of, or a Schedule to, this Agreement unless otherwise indicated
(f)
reference to any law means such law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any section or other provision of any law means that provision of such law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision;
(g)
the table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
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(h)
hereunder, hereof, hereto and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Article, Section or other provision thereof;
(i)
including (and with correlative meaning include) means including without limiting the generality of any description preceding such term;
(j)
or is used in the inclusive sense of and/or; and
(k)
with respect to the determination of any period of time, from means from and including and to means to but excluding.
8.5
Counterparts. This Agreement may be executed in two or more counterparts.
8.6
Entire Agreement; Third-Party Beneficiaries. This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement. This Agreement is not intended to confer upon any Person other than the parties hereto and the third party beneficiaries referred to in the following sentence, any rights or remedies. The parties hereto expressly intend the provisions of Sections 5.1 and 5.2 to confer a benefit upon and be enforceable by, as third party beneficiaries of this Agreement, the third Persons referred to in, or intended to be benefited by, such provisions.
8.7
Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF SOUTH CAROLINA REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
8.8
Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, and any such assignment that is not consented to shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.
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8.9
Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of Idaho, this being in addition to any other remedy to which they are entitled at law or in equity.
8.10
Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.
IN WITNESS WHEREOF, Blaze, Wastech have executed this Agreement to be effective as of the Effective Date.
BLAZE ENERGY CORP.
By:__________________________
A. Leon Blaser, CEO
WASTECH, INC.
By:__________________________
Richard Tuorto, CEO
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Exhibit10.3
JOINT WORKING AGREEMENT
THIS JOINT WORKING AGREEMENT (this "Agreement") is made and entered into as of this 1st day of October, 2013, by and among Blaze Energy Corp., a Delaware corporation (Blaze Energy), at 3350 Americana Terrace, Suite 200, Boise Idaho 83706, and Blaze Logistics, LLC, a South Carolina limited liability company (Blaze Logistics), at 520 Folly Road, Suite 285, Charleston, SC 29412. All herein shall collectively be referred to as the Parties.
W I T N E S S E T H:
WHEREAS, Blaze Energy is a publicly-held corporation, currently trading on the OTC Markets, with the symbol BLZE, and Blaze Logistics is a privately-held company, in the business of managing and operating coal related businesses and assets; and
WHEREAS, the Parties agree that each has unique and proprietary relationships that, on a transaction-by-transaction basis, is in their best interests to jointly operate in conjunction with one another; and
WHEREAS, the Parties are now desirous of forming a joint working agreement (this JWA), for the purposes set forth herein, and defining between themselves, their respective responsibilities, interests, and liabilities in connection with the performance of the business contemplated by this JWA; and
NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, the Parties intending to be legally bound, hereby do covenant, agree and certify as follows:
ARTICLE I GENERAL PROVISIONS
1.01 Business Purpose. The sole and exclusive business of this JWA shall be as follows:
To obtain the right to operate that certain coal reclamation facility in Gary, West Virginia, otherwise known as GreenFields Coal Company (GreenFields), for the purpose of the purchase and sale of coal domestically and abroad (the Business), which Blaze Energy has the right to operate pursuant to an agreement with the owners thereof (the Greenfields Agreement).
1.02 Term of the Agreement. This Agreement shall commence on the date first above written and shall continue in existence as long as the Greenfields Agreements is in force.
1.03 The Parties. Each Party warrants and represents that it is validly formed and in good standing in its state of incorporation. True and correct copies of the By-Laws, Articles of Incorporation, Articles of Organization, or Operating Agreements, together with all exhibits and amendments thereto, if any, shall be made available upon request of any of the Parties. The Parties further warrant and represent that no other parties or persons (real or corporate) have any right and/or interests, direct or indirect, which could or would affect the validity and finality of this Agreement.
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1.04 Capital Contribution(s). There shall be no capital contributions to this JWA that the Parties should be required to make.
1.05 Legal Status. This JWA shall in no way be considered an entity for taxation purposes, each Party is acting independently of one another, and nothing contained herein shall otherwise make either party a partner or co-venturer of the other.
ARTICLE II OBLIGATIONS OF THE PARTIES
2.01 Blaze Energy will be responsible for (a) obtaining the rights to operate the Business, whether through acquisition, merger, or similar business transaction, including any governmental licenses, consents or other qualifications, sufficient to effectuate the Business contemplated by this Agreement; (b) securing all contracts for the purchase and sale of coal from the GreenFields facility; and (c) providing any such corporate guarantees, financial or otherwise, as may be necessary in furtherance of the Business contemplated by this Agreement (the Contractual Obligations), subject to its right to reimbursement from Blaze Logistics for any amounts paid thereunder to the extent the guarantee is of an amount that Blaze Logistics is required to pay pursuant to Section 2.02.
2.02 Blaze Logistics will be responsible for (a) providing any equipment or assets, through lease, purchase or otherwise, as may be required to operate the Business to the extent such equipment is not already in place at the Business, and (b) providing all capital and any such financing as may be required to sufficiently capitalize the Business, subject to any guarantees by Blaze Energy, as provided for herein (the Management Obligations). Blaze Logistics shall conduct all Management Obligations in its own name, including banking, financing, and any assets acquired in connection with the Business.
2.04 The Parties agree that the Business shall bear the cost of its on-site personnel and local management, accounting and administrative personnel (Local Personnel). Both Blaze Energy and Blaze Logistics shall bear the cost of their own officers and employees who supervise and manage the Local Personnel, except that they shall be entitled to reimbursement from the Business of any out-of-pocket travel and entertainment expenses that they incur in the course of managing and supervising the Business.
2.03 All monetary amounts provided by Blaze Logistics in fulfillment of its Monetary Obligations shall be considered a loan to Blaze Energy (the Logistics Loan), which shall bear interest at 12% per annum, be convertible into Blaze Energy common stock at the average of the closing price of the common stock for the ten business days prior to the conversion, shall be convertible into common stock only at the option of Blaze Energy, and shall be repayable only from the Royalty.
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ARTICLE III ALLOCATIONS
3.01 Commencing on the date hereof and ending on the termination of the Business, Blaze Logistics shall receive a royalty from the Business equal to (i) Five Dollars ($5.00) per ton on all processed Coarse coal at the Greenfields facility, and (ii) Two Dollars ($2.00) per ton on all processed or unprocessed Fine coal at the Greenfields facility (the Royalty). Payments of the Royalty shall be applied first to interest due under the Logistics Loan, and second to principal due under the Logistics Loan. After the Logistics Loan has been paid in full, Blaze Energy shall continue to receive the Royalty. The Royalty shall be Blaze Logistics sole compensation for the capital and services it provides hereunder.
3.02
Blaze Energy shall be entitled to all profits generated from the Business, subject to its obligation to pay the Royalty to Blaze Logistics.
ARTICLE IV RIGHTS AND DUTIES
4.01 Business of the JWA. In furtherance of Article II hereinabove, Richard Tuorto, as duly appointed nominee of Blaze Logistics, and A. Leon Blaser, as duly appointed nominee of Blaze Energy, shall jointly, and yet only with unanimity, have full, exclusive and complete authority and discretion in the management and control of the Business for the purposes herein stated and shall make all decisions affecting the Business. Notwithstanding the foregoing, no authority shall exist to constitute the act of, and serve to contractually bind the prospective Business, without the express written consent of the other Party. Messrs. Tuorto and Blaser shall manage and control the affairs of the Business to the best of their abilities and shall use their best efforts to carry out its business.
4.02 Assignment. Neither party may assign this Agreement, in whole or in part, without first obtaining the prior written consent of all Parties, unless such assignment is to an entity owned or controlled by the Party seeking assignment.
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ARTICLE V AGREEMENTS WITH THIRD PARTIES AND WITH AFFILIATES
5.01 Validity of Transactions. Affiliates, as defined below, of the Parties to this Agreement may be engaged to perform services for the Business. The validity of any transaction, agreement or payment involving the Business and any Affiliates of the Parties to this Agreement otherwise permitted by the terms of this Agreement shall not be affected by reason of the relationship between them and such Affiliates or the approval of said transactions, agreement or payment. For purposes of this Agreement, an Affiliate of an entity is a person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control of such entity.
5.02 Other Business of the Parties to this Agreement. The Parties to this Agreement and their respective Affiliates may have interests in businesses other than the Business. This Agreement shall not entitle either Party to the income or proceeds derived from such other business interests and, even if they are competitive with the Business, such business interests shall not be deemed wrongful or improper.
ARTICLE VI PAYMENT OF EXPENSES
All reasonable and necessary expenses of this Agreement shall be paid by each respective Party.
ARTICLE VII INDEMNIFICATION
The Parties to this Agreement shall have no liability to the other for any loss suffered which arises out of any action or inaction if, in good faith, it is determined that such course of conduct was in the best interests of the Business and such course of conduct did not constitute negligence or misconduct. The Parties to this Agreement shall each be indemnified by the other against losses, judgments, liabilities, expenses and amounts paid in settlement of any claims sustained by it in connection with the Business.
ARTICLE VIII [INTENTIONALLY OMITTED]
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ARTICLE IX MISCELLANEOUS PROVISIONS
9.01 Books and Records. Each Party shall keep books and records at its place of business, ensuring each Party having originals of any executed binding documents relating to their duties and obligations hereunder, setting forth a true and accurate account of all business transactions arising out of and in connection with the conduct of this Agreement. All Parties hereto will receive timely copies (or originals) of documents in the others custody and can inspect eithers books and records to the limited extent of the business of this Agreement at any time.
9.02 Validity. In the event that any provision of this Agreement shall be held to be invalid, the same shall not affect in any respect whatsoever the validity of the remainder of this Agreement.
9.03 Integrated Agreement. This Agreement constitutes the entire understanding and agreement among the Parties hereto with respect to the subject matter hereof, and there are no agreements, understandings, restrictions or warranties among the Parties other than those set forth herein provided for.
9.04 Headings. The headings, titles and subtitles used in this Agreement are for ease of reference only and shall not control or affect the meaning or construction of any provision hereof.
9.05 Notices. Except as may be otherwise specifically provided in this Agreement, all notices required or permitted hereunder shall be in writing and shall be deemed to be delivered when deposited in the United States mail, postage prepaid, certified or registered mail, return receipt requested, addressed to the parties at their respective addresses set forth in this Agreement or at such other addresses as may be subsequently specified by written notice.
9.06 Applicable Law and Venue. This Agreement shall be construed and enforced under the laws of the state of Idaho.
9.07 Taxes. Each respective Party shall be responsible file all federal, state, county, local and foreign income, franchise, gross receipts, excise, real property, personal property, sales, use, value added and any and all other kinds of tax returns or reports required to have been filed on or prior thereto.
9.08 Other Instruments. The Parties hereto covenant and agree that they will execute each such other and further instruments and documents as are or may become reasonably necessary or convenient to effectuate and carry out the purposes of this Agreement.
9.09 Notices. Any and all notices, demands or requests permitted or required to be made under this Agreement shall be in writing and shall be (a) sent by registered, certified, or express United States mail, postage prepaid, (b) sent by Federal Express or any similar service requiring a receipt, or (c) hand delivered to the other Party at the addresses or numbers, as set forth below, or to such other Party or such other address or number within the continental United States as may have theretofore been designated in writing. The date of receipt or delivery of such notice, election or demand or request shall be the date of actual receipt of same. For the purposes of this Agreement, the following addresses shall be followed for the giving of notice:
9.10 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and assigns.
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9.11 Litigation. In the event litigation is required by either Party to enforce the terms of this Agreement, the prevailing Party of such action shall, in addition to all other relief granted or awarded by the court, be entitled to judgment for reasonable attorneys fees incurred by reason of such action and all costs of suit and those incurred in preparation thereof at both the trial, appellate and post-judgment collection levels and proceedings. This provision shall survive Closing or any termination of this Agreement.
9.12 Time. The Parties hereto agree that time is of the essence with respect to this Agreement and the performance of each and every obligation contained herein.
IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto on the day and year first above written.
BLAZE ENERGY CORP. a Delaware Corporation
By:_____________________________ A. Leon Blaser President & CEO
BLAZE LOGISTICS, LLC, a South Carolina limited liability company
By:____________________________ Richard D, Tuorto President & CEO |
Exhibit 10.4
AGREEMENT
THIS AGREEMENT (Agreement) is made effective as of the 8th day of January, 2014, by and between ADVANCED COAL TECHNOLOGY, LLC, a Delaware limited liability company (ACT), its majority-controlled subsidiaries, GARY COAL COMPANY, LLC, a West Virginia limited liability company (Gary Coal), and GARY PARTNERS, LLC, a West Virginia limited liability company (Gary Partners or the Company, and together with ACT and Gary Coal, the ACT Parties), and BLAZE ENERGY CORP., a Delaware corporation (Blaze). All herein collectively referred to as the Parties.
RECITALS
WHEREAS, the Company is engaged in, among other things, the business of owning and operating a coal reclamation facility (the Business), situated on 906.72 acres, located in McDowell County, Gary, West Virginia (the Property);
WHEREAS, the Company operates the Business on approximately 322 acres, pursuant to authorization by the West Virginia Department of Environmental Protection (WVDEP), permit Number 0-20-84 (the Permit);
WHEREAS, the WVDEP has temporarily closed the operations of the Business on the Property, for, among other things, delinquent monetary royalties due the WVDEP and specific improvements that need to be made upon the Property;
WHEREAS, Blaze and GreenFields Coal Company LLC were parties to that certain Coal Sales and Services Partnership Agreement, dated October 1, 2013, wherein Blaze and or its assigns was, among other things, granted the right to purchase, process and re-sell coal upon the Property (the Coal Sales Agreement). The Coal Sales Agreement has heretofore been terminated and is no longer in effect.
NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties contained herein, and intending to be legally bound hereby, the Parties hereto hereby agree as follows:
1.
Recitals Incorporated.
The recitals set forth above are restated by this reference.
2.
Term.
This Agreement shall commence as of the date hereof and shall continue until February 1, 2016 (the Initial Term). The initial Term shall automatically renew for a like-term, unless the ACT Parties, on the one hand, or Blaze, on the other, gives written notice to the other Party or Parties, as applicable, that it will not renew at least 60 days prior to the end of the Initial Term. The period from the date hereof until the expiration of the Initial Term together with any successive term or earlier termination as provided herein shall be referred to as the Term. The Coal Sales Agreement is hereby terminated and without further force or effect and this Agreement shall thereupon remain the exclusive agreement among the parties hereto with respect to the subject matter hereof. Upon termination of this Agreement, Blaze shall have 90 days to remove any equipment located or installed on the Companys property.
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3.
Rights Granted to Blaze; Relationship of Company and Blaze.
Blaze is hereby granted the right to exclusively operate the Business of the Company during the Term, with all rights and privileges to conduct such operations that were being conducted by GreenFields, the former operator of the Business for Gary Partners. Blaze, at all times, shall be independent of the Company. Legal and equitable beneficial ownership to the Business and all of the Companys assets, real or personal (the Assets), shall at all times remain in the name of the Company during the term of this Agreement, including without limitation, the Permit. For the avoidance of doubt, the term Business excludes the business of the Company related to technology agreements entered into by the Company or their affiliates prior to the date hereof, including any agreements entered into by GreenFields CAST LLC.
4.
Obligations of the Company.
At all times during the Term of this Agreement, the Company shall not, without Blazes prior written consent:
(a)
Modify, amend, or do anything to adversely affect any of the Business of the Company;
(b)
Create or incur any indebtedness or other liability or obligation in connection with the Assets of the Company or the Business of the Company;
(c)
Enter into or terminate any lease, agreement, contract or other commitment in connection with the Business;
(d)
Release or create or incur any mortgage, lien or other encumbrance with respect to the Assets of the Company or Business of the Company;
(e)
Sell, abandon or otherwise dispose of any of the accounts of the Company;
(f)
Make any commitment relating to any of the accounts of the Company; or
(g)
Cancel or waive any claim or right with respect to the accounts of the Business.
5.
Additional Agreements of Company.
At all times during the Term of this Agreement, the Company shall:
(a)
Do nothing, and allow nothing to be done (which is within the control of the Company), which will or might cause the Company to operate in an improper or illegal manner.
(b)
Other than a default existing as of the date hereof, not cause default in any of the terms, conditions and obligations of any of the contracts and other agreements of the Company.
(c)
To the extent permissible by law, maintain in full force its Permit and licenses in the State of West Virginia, and comply fully with all laws respecting its formation, existence, activities and operations. The foregoing Paragraph 5(c) presumes the Permit shall be reinstated and refers to such time immediately thereafter and during the Term of this Agreement,
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(d)
Allow Blaze and the employees, attorneys, accountants and other representatives of Blaze full and free access to the Companys books and records, and all of the facilities of the Company relating to the Business.
(e)
Assist Blaze to name itself as an additional named insured under all policies of insurance and give all notices and present all claims under all policies of insurance in due and timely fashion. All such premiums for insurance being duly paid by Blaze.
6.
Obligations of Blaze.
At all times during the Term of this Agreement, Blaze shall not, without the Companys prior written consent:
(a)
Create or incur any indebtedness or other liability or obligation in connection with the Assets of the Company or the Business of the Company, except those necessary in the ordinary course of operating the Business;
(b)
Create or incur any mortgage, lien or other encumbrance with respect to the Assets of the Company or Business of the Company;
(c)
Sell, abandon or otherwise dispose of any of the Assets of the Company;
(d)
Make any commitment relating to any of the Assets of the Company; or
(e)
Cancel or waive any claim or right with respect to the Assets of the Business.
7.
Additional Agreements of Blaze.
At all times during the Term of this Agreement, Blaze shall:
(a)
Do nothing, and permit nothing to be done (which is within the control of Blaze), which will or might cause the Company to operate in an improper or illegal manner.
(b)
Not cause default in any of the terms, conditions and obligations of any of the contracts and other agreements of the Company.
(c)
To the extent permissible by law, utilize its best efforts to reinstate the Permit, and thereafter maintain in full force the Permit and licenses in the State of West Virginia in the name of the Company, and comply fully with all laws respecting its formation, existence, activities and operations.
(d)
Allow the Company and the employees, attorneys, accountants and other representatives of the Company full and free access to the Companys books and records, and all of the facilities of the Company relating to the Business.
(e)
On or before the tenth (10th) day of each calendar month, provide the ACT Parties with an operating report that describes all tonnage processed from the Property, all tonnage sold from the Property and all other tonnage blended, processed and sold at the Property, as well as the amount of capital expenses, operating expenses, sales results, profits and similar information, for the immediately prior full calendar month.
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8.
Billing and Expenses; Profits.
During the Term of this Agreement, the financial affairs of the Business shall be handled as follows:
(a)
Revenues; Accounts Receivable. Blaze will be entitled to all revenues generated during the Term of this Agreement, and will invoice all customers in its own name. The Company will be entitled to all accounts receivable existing as of the date of this Agreement, if any.
(b)
Operating Expenses. Blaze will be responsible for paying all operating expenses incurred and accrued by the Business during the Term of this Agreement, except that the Company will be responsible for payment of any expenses necessary to reinstate the Permit, whether incurred by Blaze or the Company (Reinstatement Expenses), as well as any debts, obligations or payables of the Business existing as of the date of this Agreement (Company Debt). Operating Expenses shall include a royalty in the amount of (i) Five Dollars ($5.00) per ton on all Coarse coal processed at the Business, and (ii) Two Dollars ($2.00) per ton on all Fine coal processed at the Business payable to Blaze Logistics, LLC up to an amount equal to $1,450,000, plus 12% simple interest (the Blaze Logistics Royalty).
(c)
Capital Expenses. Blaze shall be responsible for making any capital expenditures that it deems necessary to continue the operation of the Business, and shall be entitled to enter into any lease or purchase money financing arrangements it deems necessary to finance such capital expenditures.
(d)
Net Profits and Net Losses. Net Profits and Net Losses of the Business during the term of this Agreement shall be determined in accordance with generally accepted accounting principles, except for the following adjustments: (i) Net Profits and Net Losses shall be calculated without including any revenue or expenses allocable to the Company under this Agreement, such as Reinstatement Expenses, (ii) Net Profits and Net Losses shall not include depreciation or amortization deductions associated with Company property, and (ii) Net Profits and Net Losses shall include depreciation or amortization deductions associated with capital expenditures of Blaze under this Agreement, provided that such capital expenditures shall be depreciated or amortized over the period from the purchase of the asset to the end of the original Term of this Agreement, notwithstanding that generally accepted accounting principles may allow or require a longer time period. Net Profits shall be calculated at end of each calendar quarter within 45 days after the end of each quarter. In the event of a dispute between the Company and Blaze as to the calculation of Net Profits and Losses, the decision of Blazes independent auditor shall be final and conclusive.
(e)
Division of Net Profits and Losses. Blaze shall be responsible for any Net Losses of the Business during the Term of this Agreement, subject to its right to recoup Net Losses from Net Profits as described below. Within 15 days after the calculation of Net Profits and Net Losses for a quarter, Blaze shall pay the Company 50% of any Adjusted Net Profits for the quarter. Adjusted Net Profits for any calendar quarter shall equal the cumulative Net Profits and Net Losses for the Business from the commencement of this Agreement to the end of the calendar quarter for which Net Profits and Net Losses are being calculated, minus the aggregate amount Net Profits for which the Company has paid Blaze its 50% share in prior periods.
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(f)
Payment of Loans. Any allocation of Net Profits to the Company pursuant to the prior paragraph shall first be applied to repay any Loans owed by the Company, and after all Loans have been paid in full any allocation of Net Profits shall be paid to the Company. Notwithstanding the foregoing or any other provision in this Agreement to the contrary, any payments made to Blaze Logistics, LLC on account of the Blaze Logistic Royalty shall be credited against any and all sums due by the Company on account of Loans owed to Blaze.
9.
Approved Company Debt; Existing and Additional Loans; Security Interest.
(a)
The Parties acknowledge and agree that as of the date of this Agreement, Blaze is owed sums in excess of $618,324 by the ACT Parties for loans pursuant to the Coal Sales Agreement (the Loans); and
(b)
The Parties additionally agree that all Reinstatement Expenses, Company Debt and obligations of the Companys affiliates paid for Blaze, in cash or its equivalent, during the Term of this Agreement shall be added to the Loans. The Loans shall at all times be secured by, and Blaze shall have a continuing lien on any and all assets of the Company, now owned or hereinafter acquired, including but not limited to; (i) all Equipment; (ii) all inventory; (iii) all receivables; (iv) all Records; (v) all coal, processed or unprocessed, refined or unrefined; (vi) and all products and proceeds of the foregoing, in any form, including, without limitation, insurance proceeds and all claims against third parties for loss or damage to or destruction of any or all of the foregoing (collectively, the Collateral). The Loans shall not bear interest, and shall be due and payable at the expiration of the Term of this Agreement.
(c)
The Company will execute, deliver, file and record, in such manner and form as Blaze shall require, or permit Blaze to file and record: (i) a Deed of Trust on the Property in favor of Blaze, (ii) all financing statements, (iii) all carbon, photographic or other reproductions of financing statements or this Agreement (which shall be sufficient as a financing statement hereunder), (iv) all endorsements to title to any vehicles or other Collateral as may be required in order to perfect the security interests therein, and (v) all specific assignments or other papers that may be necessary or desirable, or that Blaze may request, in order to create, preserve, perfect or validate any security interest or to enable Blaze to execute and enforce its rights hereunder with respect to any of the Collateral, Gary Partners hereby appoints Blaze as the Companys attorney-in-fact to execute and file, in the name and on behalf of the Company, such additional financing statements and other assignments and documents as it may request.
10.
Sale; Good Faith Efforts; Covenants and Restrictions.
The Parties agree that during the Term of this Agreement they shall continue good faith negotiations for the purchase and sale of the Business, through any business combination the Parties deem appropriate (the Blaze Acquisition Agreement). ACT and the Company agree not to market or sell the Business to any other parry during the Term of this Agreement without the prior written consent of Blaze.
11.
Additional Provisions.
(a)
No Waiver. This Agreement shall not act as a waiver of any legal rights or claims against either Party;
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(b)
Assignment. The terms of this Agreement shall bind upon and inure to the benefit of the successors and assign of the Parties, and may only be assigned by an entity owned or controlled by Blaze, or an affiliate thereof;
(c)
Amendments. No change, amendment, or modification hereof shall be valid unless it be made in writing and signed by all Parties hereto;
(d)
Governing Law. This Agreement and all matters relating thereto shall be governed by and construed and interpreted in accordance with the laws of the State of South Carolina;
(e)
Business Plan. Blaze has furnished the Company with a business plan (the Business Plan) which sets forth a forecast of financial operations for the Company under Blazes management for the two year period ending January 31, 2016. In the event the Company fails to achieve 66 2/3% of the projected earnings before interest, taxes and depreciation (EBITDA), as set forth in the Management Presentation, for any two consecutive quarters, commencing nine (9) months from the execution of this Agreement, the ACT Parties, on the one hand, and Blaze, on the other, shall each have the right to terminate this Agreement by 30 days written notice to such effect to the other Party or Parties, as applicable, and thereupon the Company shall take such steps as are necessary to transfer the Permit to a new manager. Notwithstanding the foregoing, unless otherwise agreed to by Blaze, the ACT Parties may not terminate this Agreement without first repaying all Loans and Additional Loans as may be due and outstanding to Blaze.
(f)
Execution in Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument, and in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart;
(g)
Severability. If any term or provision of this Agreement is determined to be illegal, unenforceable, or invalid in whole or in part for any reason, such illegal, unenforceable, or invalid provisions or portion thereof shall be severed from this Agreement, and such provision shall not affect the legality, enforceability, or validity of the remainder of this Agreement. If any provision or part thereof of this Agreement is severed in accordance with the provisions of this Section, then the severed provision shall be replaced, to the extent possible, with a legal, enforceable, and valid provision that is as similar in tenor to the severed provision as is legally possible;
(h)
Interpretation. The language in this Agreement shall be interpreted as to its fair meaning and not strictly for or against any Party; and
(i)
Entire Argument. This Agreement constitutes the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, among the Parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
(SIGNATURE PAGE TO FOLLOW)
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COMPANY:
ADVANCED COAL TECHNOLOGY, LLC
By:
__________________________________
Name:
__________________________________
Its
__________________________________
GARY PARTNERS, LLC
By:
__________________________________
Name:
__________________________________
Its
__________________________________
BLAZE:
BLAZE ENERGY CORP.
By:
__________________________________
Name:
__________________________________
Its
__________________________________
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Exhibit 10.5
SHARE EXCHANGE AGREEMENT
By and Among
BMM-EMPIRE, L.L.C.
the Company
FRANK ROSSO and W. KEITH HALL,
the Members of the Company
All collectively, the Seller
And
BLAZE ENERGY CORP.
the Purchaser
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SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT (this Agreement), dated the 5th day of February 2014, by and among BMM-EMPIRE, L.L.C., a Kentucky limited liability company (the Company), Frank Rosso and W. Keith Hall, the members of the Company (the Members, and with the Company, collectively referred to as the Seller), and Blaze Energy Corp., a Delaware corporation (the Purchaser) (the Purchaser and the Seller being collectively referred to as the Parties).
RECITALS
WHEREAS, the Company is a duly authorized Kentucky limited liability company,
WHEREAS, the Purchaser, pursuant to a Share Exchange Agreement of even date by and among Purchaser, Kentucky Diversified Fuels, LLC, Frank Rosso, W. Keith Hall, Philip Haan and Richard Fons and Middle Fork Development Services LLC and MXP, LLC, as subsidiaries (the Diversified Agreement), will acquire that certain coal impoundment real property in Phelps, Kentucky, consisting of approximately 24.68 acres (the Dotson Fork Site), described in more detail in that Coal Mine Refuse Evaluation Report prepared by Marshall Miller & Associates, dated October 12, 2012, attached hereto and incorporated (the Marshall Miller Report);
WHEREAS, the Company is the owner in fee simple of that certain coal impoundment real property in Phelps, Kentucky, consisting of approximately 43.63 acres, described in more detail in the Marshall Miller Report (the School House Branch Site);
WHEREAS, the Members are the owners of one hundred percent (100%) of the issued and outstanding membership units of the Company (the Units);
WHEREAS, the Purchaser is a duly authorized, publicly held, Delaware corporation, trading over the OTC Markets under the call symbol BLZE, doing business at 3350 Americana Terrace, Suite 200, Boise, Idaho 83706;
WHEREAS, the Seller desires to sell, and the Purchaser desires to purchase, by and through an exchange of stock, all of the Sellers right, title, and interest of the Members in and to one hundred percent (100%) of the Companys issued and outstanding Units, on the terms and conditions set forth in this Agreement;
WHEREAS, the parties intend that this be a tax-exempt reorganization under Section 368 of the Internal Revenue Code; and
NOW, THEREFORE, in consideration of the mutual promises, covenants, and representations, warranties, and guarantees herein set forth, the Parties, intending to be legally bound, hereto agree as follows:
I.
DEFINITIONS
1.1
Definitions. As used in this Agreement, the capitalized terms below shall have the following meanings. The singular or plural of such terms shall apply as the context of the Agreement requires.
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Act shall mean the Securities Act of 1933, as amended.
Action shall mean any and all actions, suits, investigations, proceedings, demands, assessments, audits, judgments and claims (including employment-related claims) relating to the Assets, the Real Property, the Permits, the Business, or any Person.
Assets as to the Company shall mean the fixed and operating assets, accounts, the Permits, rights, and entitlements listed on Schedule A, attached hereto and made a part hereof, all of which are owned by the Company.
Assets as to the Purchaser shall mean the fixed and operating assets, accounts, the Permits, rights and entitlements listed on Schedule B, attached hereto and made a part hereof, all of which are owned by Purchaser.
Business as to the Company shall mean the business of owning and operating the coal mine, otherwise known as the School House Branch Site.
Business as to the Purchaser shall mean owning approximately 40,000,000 acres of subsurface coal and coal bed methane rights in the State of West Virginia; the coal bed methane is leased out to CNX Gas Company which is currently extracting and producing coal bed methane gas.
Closing Date shall be as defined in Section 2.5 hereof
Closing shall mean the closing of the Transactions on the Closing Date.
Code shall mean the Internal Revenue Code of 1986, as amended.
Company shall mean BMM-Empire LLC, a Kentucky limited liability company.
Consents shall mean any consents required pursuant to this Agreement, as more specifically set forth in the Disclosure Schedule of the Company and Purchaser, attached hereto and made a part hereof.
Damages shall mean any and all damages, losses, obligations, deficiencies, liabilities, claims, encumbrances, penalties, costs, and expenses, including reasonable attorneys' fees and disbursements (including, without limitation, expert and consulting fees, costs and expenses).
Disclosure Schedule means the disclosure schedule of Purchaser and Seller to be delivered at or prior to the Closing Date.
Encumbrances shall mean any debt, claim, mortgage, assignment, assessment, conditional sale, lease, consignment, bailment, contingent interest, lien, pledge, option, charge, easement, security interest, encumbrance, claim of forfeiture, fine, penalty, or other right, demand or claim of any Person (including any Governmental Authority), excluding liens for Taxes not yet due and payable and minor matters that are not material in amount and that do not materially detract from or limit the use of the Assets, the Permits, or the conduct of the Business.
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ERISA shall mean the Federal Employee Retirement Income Security Act of 1974, as amended (ERISA), and the related provisions of the Code.
Financial Statements shall mean as to the Company the unaudited financial statements of the Company prepared by Seller and presented to the Purchaser pursuant to this Agreement and shall mean as to the Purchaser the unaudited financial statements of Purchaser prepared by Purchaser and presented to Seller pursuant to this Agreement.
Governmental Authority shall mean any domestic, federal, state or local department, official, commission, authority, board, bureau, agency or other public body.
IRS shall mean the United States Internal Revenue Service.
Knowledge or Belief (whether such term is capitalized or not). Knowledge or belief of the Seller shall mean the actual knowledge or belief of any officer or director of the Company or of the Members. Knowledge or belief of Purchaser shall mean the actual knowledge or belief of each Board of Director of Purchaser.
Laws shall mean all federal, state, county, or local laws, statutes, ordinances, regulations and rules applicable to any Person, including, without limitation, all laws, statutes, ordinances, regulations and rules issued by any Governmental Authority, relating to or regulating the Assets, the Business of the Company or the actions of the Parties.
Members shall mean Frank Rosso and W. Keith Hall.
Orders shall mean all orders, judgments, writs, injunctions, decrees, authorizations, or awards of any court or administrative body or of any other Governmental Authority, which may be applicable to the Assets, the Permits, and the Business, or to any Person in connection therewith.
Parties shall mean the Company, the Purchaser, the Members and the Seller, collectively.
Permits shall mean all permits, licenses, and authorizations, and all zoning variances, approvals, consents, orders, agreements with, or other authorizations issued by any Governmental Authority to or affecting the Company in connection with the Assets or the Business.
Person shall mean any natural person, corporation, partnership, unincorporated association, limited liability company, trust, joint venture or trade group, the federal, state or local government, any Governmental Authority, or any entity or group that is a part of, or associated with, any of the foregoing.
Purchase Price shall be as defined in Section 2.3 hereof.
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Purchaser shall mean Blaze Energy Corp., a state of Delaware corporation and unless the context provides otherwise, includes its Subsidiary.
Purchaser SEC Documents means all documents filed by the Purchaser with the Securities and Exchange Commission (SEC), including an Information and Disclosure Statement prepared pursuant to Rule15c2-(11)(a)(5) up to and including the date of Closing.
Representative shall mean any officer, director, principal, attorney, attorney-in-fact, agent, accountant, consultant, or employee of any Party.
Securities Laws shall mean any securities law (other than the Act) of any state, territory, or commonwealth of the United States.
Seller shall mean the Person listed as such in the Preamble of this Agreement, each of whom shall execute this Agreement in such capacity.
Subsidiary shall mean Blaze Minerals, LLC.
Taxes shall mean all taxes, fees, levies, duties, charges or other like assessments, including, without limitation, any and all income, withholding, gross receipts, excise, real or personal property, asset, sales, use, license, payroll, transaction, capital, net worth, and franchise taxes imposed by or payable to any federal, state, county or local government taxing authority, or any subdivision or agency thereof, including all interest, penalties, or incremental amounts added thereto in accordance with such provisions or by any governmental action.
Tax Return shall mean any report, return, declaration or other information required to be supplied to any taxing authority in connection with Taxes.
Transactions shall mean the transactions contemplated under this Agreement and the other instruments and agreements referred to herein.
Units shall mean 100 membership units of the Company, issued in the name of the Members, which constitute all of the issued and outstanding units of the Company.
II.
THE SHARE EXCHANGE
2.1
Exchange of Units. Upon the terms and subject to the conditions of this Agreement, at the Closing (as hereinafter defined), Members will convey, assign, transfer and deliver to Purchaser, and Purchaser will acquire and accept from Members, all right, title and interest in and to the Units, free and clear of any lien, encumbrance, security interest, mortgage, pledge, charge, claim, option, right of first refusal or call, or restriction of any kind (collectively, Liens).
2.2
Conveyance. Such conveyance, assignment, transfer and delivery shall be effected by delivery to the Purchaser of the Units, duly endorsed or accompanied by stock powers duly executed in blank with appropriate transfer stamps, if any, affixed, and any other documents that are necessary to transfer title to the Units to Purchaser, free and clear of any and all Liens.
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2.3
Consideration. In consideration for the Units, and upon the terms and subject to the conditions of this Agreement, Purchaser will deliver or cause to be delivered Thirty-Eight Million One Hundred Thirty-Six Thousand Six Hundred and Fifty-Seven (38,136,657) duly authorized, validly issued, fully paid and nonassessable shares of common stock of Purchaser (the Blaze Stock) to the Members, which shares shall bear a restrictive legend in accordance with Rules 144 and 502 promulgated under the Securities Act of 1933.
2.4
Transfer Restrictions; Legend.
(a)
The shares of Blaze Stock to be issued to the Members pursuant hereto will not be registered under the Securities Act of 1933, as amended (the Securities Act), on the Closing Date and may not be transferred, sold or otherwise disposed of by Members except pursuant to an effective registration statement under the Securities Act or in accordance with an exemption from the registration requirements of the Securities Act.
(b)
Each certificate representing shares of Blaze Stock issued by Purchaser to the Members in accordance with Section 1.3 shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ACT) AND ARE RESTRICTED SECURITIES AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE ACT, AS AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT COMPLIANCE WITH THE APPLICABLE SECURITIES AND EXCHANGE COMMISSION RULES AND REGULATIONS
2.5
Closing Schedule. The Parties intend to close on or before March 31, 2014 (the Closing Date), or at such other place or time as the Parties may agree.
2.6
Liabilities to be Assumed. The Purchaser will not assume, accept and become liable for any the Company debts, liabilities or obligations, or for any Taxes or Encumbrances, affecting the Assets, the Permits, or the Business.
2.7
Collateral Agreements. Contemporaneous with the Closing, the Parties hereto agree to execute the following agreements in a form mutually agreed upon by the Parties and their counsel at or prior to Closing (which, with this Agreement, shall be collectively referred to as the Closing Documents):
(a)
Warranty Deed (School House Branch);
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(b)
Voting Agreement;
(c)
Opinion of Robert Mottern, Esq.;
(d)
Opinion of Pearlman Schneider LLP; and
(e)
Resolution of the Board of Directors of the Purchaser approving the execution, delivery and performance of the Closing Documents.
2.8
Board Representation/Purchaser. At Closing, the Purchaser agrees to cause its Board of Directors to be reconstituted, pursuant to the terms and conditions of a Voting Agreement, executed of even date herewith, and incorporated herein as part of the Closing Documents.
2.9
Control of the Company. At Closing, the board of directors of the Company shall resign, and be replaced with nominees of the Purchaser, as determined at Closing.
III.
REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties of the Seller. The Seller represents and warrants to the Purchaser as follows:
(a)
Organization, Standing and Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Kentucky and has all requisite corporate power and authority to own, lease, operate and carry on the Companys business as it is now being conducted. Other than Kentucky, the Company is not required to be licensed, qualified or authorized as a foreign corporation in any jurisdiction. The Seller shall deliver to the Purchaser complete and correct copies of the Articles of Organization, the Operating Agreement, and the minute book of the Company. The minute books of the Company contain an accurate record of meetings of the Companys Management Committee and of its Members. All such records have been made available to the Purchaser for inspection prior to Closing.
(b)
Capital Structure and Ownership of the Units. The Company has authorized One Hundred (100) membership units, all of which are issued and outstanding, and prior to Closing are held exclusively by the Members. The Units have been duly authorized and validly issued and are fully paid and non-assessable. The Members owns one hundred (100%) percent of the Units, free and clear of all Taxes and Encumbrances.
(c)
Authority. This Agreement has been duly authorized by all necessary corporate action of the Company and the Members. This Agreement has been validly executed and delivered by each of said Parties and constitutes a valid and binding obligation of each of them, enforceable against each of them in accordance with its terms. The execution, delivery, and performance by the Company and the Members of this Agreement does and will not (1) conflict with, or result in a breach or violation of or default, (or give rise to any right of termination, cancellation or acceleration), under the Operating Agreement or Articles of Organization of the Company, or conflict with, or
7
result in a breach or violation of, or default under (or give rise to any right of termination, cancellation or acceleration under) any note, bond, mortgage, indenture, lease, license, permit, agreement, Encumbrance, or any other instrument or obligation to which the Company or the Members may be a party, or by which the Company, the Members may be bound; or (2) violate any Law or Order applicable to the Company or the Members. Except for the Consents to be obtained by the Seller and provided to the Purchaser prior to the Closing Date, which Consents are specifically listed in the Disclosure Schedule, attached hereto and made a part hereof, no consent or approval by any Governmental Authority is required in connection with the execution, delivery, and performance of this Agreement by the Company and the Members.
(d)
Compliance with Law. The Company possesses all rights, privileges, memberships, licenses, franchises, leases, and Permits which are material to the ownership and operation of the Assets or the conduct of the Business of the Company in all places where such Business is now being conducted. To the best of the knowledge and belief of the Seller, neither the Company nor its Members, officers, directors, or employees has been denied admission or authority to conduct any type of business in any jurisdiction or had a license or qualification to conduct its business in any jurisdiction revoked or suspended, nor to the best of the knowledge and belief of the Seller, is any such action pending or threatened. To the best of the knowledge and belief of the Seller, neither the Company, nor its Members, directors, officers, or employees, is in violation of any applicable Law or Order in connection with the Business of the Company.
(e)
Financial Statements. Attached as Schedule C hereto and made a part hereof, are the unaudited Financial Statements of the Company for the fiscal years ended December 31, 2012 (if applicable) and 2013. The Financial Statements have been compiled by the Seller's Accountants and are correct and complete, were prepared in accordance with generally accepted accounting principles, are in accordance with the books and records of the Company, have been prepared in accordance with good business practices, consistently applied throughout the periods covered thereby, and fairly present the financial position of the Company, at the respective dates thereof and the results of the Companys operations for the respective periods then ended.
(f)
Absence of Material Adverse Change. Between January 1, 2014 and the date of this Agreements Closing, there has been no material adverse change in the condition (financial or otherwise), of the Company, the Units, assets, liabilities, earnings, net worth, business activities, or prospects of the Company, that has not been disclosed to Purchaser in the Disclosure Schedule.
(g)
Absence of Undisclosed Liabilities. Between January 1, 2014 and the date of this Agreements Closing, except as reflected in the Financial Statements of the Company, the Company has no liabilities of any nature whatsoever, known or unknown, fixed or contingent, except liabilities incurred in the ordinary course of business (which unpaid liabilities incurred other than in the ordinary course do not in the aggregate exceed Fifteen Thousand ($15,000) Dollars.
(h)
Documents Furnished. The Seller has previously delivered to the Purchaser a list, which is attached hereto as Schedule D and made a part hereof, of the following documents, and a true and complete copy of all documents referred to have been delivered or have or will be made available to the Purchaser or its Representatives for inspection upon reasonable notice:
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(i)
all instruments representing or providing for any Encumbrance upon the Assets, any outstanding indebtedness of or held by the Company, for money borrowed and all credit agreements and letters of credit to which the Company is a party;
(ii)
all collective bargaining, employment, consulting, termination, executive compensation, incentive compensation, deferred compensation, bonus, profit sharing, retirement, pension, group insurance, liability, death benefit and other agreements plans relating, officers or employees of the Company;
(iii)
the names and current compensation of each director, officer, employee of the Company, whose annual compensation is in excess of $25,000;
(iv)
all interests in real property owned, leased or otherwise used or claimed by the Company and, with respect to each such interest, the amount of any mortgage or lien encumbering any of the same and the nature of any improvements situated thereon;
(v)
all insurance policies of whatsoever kind now in force held by the Company, or under which the Company, the Assets, the Business, and/or the Companys officers, directors, employees, and Members are insured in regards to their activities for or on behalf of the Company, together with copies of all claims submitted by, against, or on behalf of the Company, under such policies within the past five (5) years;
(vi)
all Permits held by the Company, or by any of its Members, directors, officers, and or employees with respect to the Assets or the Business of the Company;
(vii)
all servicing, franchise, warranty, referral, waste brokerage, pending sales, independent contractor, consulting and management agreements to which the Company is a party or pursuant to which the Company is a beneficiary;
(viii)
the names of all pensioned employees of the Company, whose pensions are unfunded or are not paid pursuant to a written Plan or arrangement, and their respective ages and current annual pension rates;
(ix)
all bank accounts, escrow deposit accounts, and safe deposit boxes of the Company, with an identification of the name of the bank, account number and the Persons authorized to draw thereon or having access thereto. The Members will not take any action to change the authorized signatories on the Companys bank and/or financial accounts;
(x)
the nature and location of, any documentation relating to, any other real estate or other facilities of the Company which have been sold or closed or otherwise terminated within the past five (5) years;
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(xi)
each other contract or agreement not listed with respect to the above items to which the Company is a party, and which involves or may involve aggregate future payments to or by the Company in excess of Ten Thousand ($10,000) Dollars. The Seller warrants that the aggregate payments involved under all such contracts or agreements not disclosed in writing to the Purchaser do not exceed in the aggregate Twenty Five Thousand ($25,000) Dollars;
(xii)
the names of all persons holding powers of attorney, if any, with respect to the Company, or holding proxies, if any, with respect to the Units; and
(xiii)
each notice and all correspondence received by the Company, or any Members, from any Governmental Authority or Taxing Authority, with respect to Assets, the Permits, or the Business, within the past year.
(i)
Tax Matters. The Company, to the best of its knowledge and belief, has filed all Tax Returns required to be filed and all Taxes shown by such returns or claimed by any taxing authority to be due and payable have been paid or accrued by the Company and the Members as the case may be. To their knowledge and belief, no examination of the Tax Returns of the Company has ever been made by the IRS. There are no agreements, waivers or other arrangements providing for extensions of time with respect to the assessment or collection of any unpaid Tax against the Company, nor are there any Orders now pending against the Company in respect of any unpaid Tax, or any matters under discussion with any Governmental Authority relating to any amount of unpaid Taxes. Except to the extent of any reserves which are specifically reflected on the latest quarterly balance sheets of the Company, heretofore furnished by the Seller to the Purchaser, there are no liabilities to any federal, state or local taxing authority, which is due or which will become due for any period commencing prior to the date of such balance sheets.
(j)
Options, Warrants, etc. Except as set forth in the Disclosure Schedule and made a part hereof, there are no options, warrants, calls, commitments or agreements of any character to which the Company, or the Members may be a party, or by which any of them is bound, which provides (1) for the issuance or sale of Units or any other class of capital stock of the Company, or any securities representing the right to purchase, acquire, or otherwise receive any such capital stock (including the Units), or (2) the sale or right of first refusal by the Company of any interest in the Assets or the Business of the Company.
(k)
Permits, Licenses, Copyrights, Patents, Trademarks and Trade Names. The Company and the Members have previously furnished to the Purchaser a list of all Permits, licenses, copyright, patents, trademarks, trade names, service marks and registrations and applications therefor, possessed or used by the Company; all license, copyright, patent, trademark, trade name or service mark license, assignments, or royalty agreements to which the Company is a party; and all contracts with employees or others relating in whole or in part to disclosure, nondisclosure, assignment or patenting of inventions, discoveries, improvements, processes, formulas or other know-how. Such list is set forth in the Disclosure Schedule and made a part hereof. The Company has clear record title to all Permits, licenses, copyrights, patents, trademarks, trade names, service marks and registrations and applications thereof listed on said list; has not entered in to any agreements, contracts or licenses that would impair free and unencumbered use of the items listed. The Seller does not know of any asserted infringement by the Company, and does not believe that the Company is infringing, upon any copyright, patent, trademark, trade name, or service mark of another Person. The Permits, licenses, copyrights, patents, trademarks, trade names, and service marks used or possessed by the Company are sufficient to enable it to continue conducting its Business as it is now being conducted.
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(l)
The Assets.
(i)
The Company has good and marketable title to the Assets listed on Schedule A, all of which are carried on its books and reflected on its latest Financial Statements furnished by Seller to the Purchaser (except personal property sold or otherwise disposed of since the date of such balance sheet in the ordinary course of business and having an aggregate value of not more than Fifteen Thousand ($15,000) Dollars, free and clear of all Encumbrances of any nature whatsoever, except for Encumbrances reflected in such Financial Statements and liens for current Taxes not yet due and payable; and
(ii)
Except as set forth in the Disclosure Schedule, attached hereto and made a part hereof, all Assets used in the Business or operations of the Company, are, in all material respects, in good operation and repair. The character and nature of such Assets are adequate to permit the Company to operate the Business as it is currently being conducted.
(iii)
Except as set forth in the Disclosure Schedule, attached hereto and made a part hereof, are all the excluded assets which are not used in the Business or operation of the Company, which have previously been disposed of by the Company, and disclosed to Purchaser.
(m)
Agreements in Force and Effect. All contracts, agreements, plans, leases, policies, permits, licenses, and other documents furnished by the Seller to the Purchaser or referred to in any list or schedule or updated schedule furnished by the Seller to the Purchaser are complete, accurate, valid and enforceable in accordance with their respective terms, and at the time of Closing will be in full force and effect. To the best of the knowledge and belief of the Seller, the Company is not in breach of any material provision of, or in default in any material respect under the terms of any such contract, agreement, plan, lease, policy, Permit, license or document to which the Company is a party or under any Law or Order relating thereto.
(n)
Legal Proceedings, etc. Except as set forth in the Disclosure Schedule attached hereto and made a part hereof, to the best of the knowledge and belief of the Seller, there is no basis for, nor is there any Order, or any legal, equitable, administrative, arbitration or other proceeding or governmental investigation pending or threatened with respect to the Assets, the Permits, or the Business, which, alone or in the aggregate, might result in money damages payable by the Company, or which might result in an injunction against the Company, or the Members, or which might adversely affect the condition (financial or otherwise), Business, operations, prospects, properties, Units, earnings or net worth of the Company. Neither the Company, nor any of the Members is a party to any agreement or instrument, or subject to any charter or other corporate restrictions or any judgment, Law, Order, writ injunction, decree, rule, regulation, code or ordinance which adversely affects, or might reasonably be expected to adversely affect, the Business, operations, prospects, Assets, the Units or condition (financial or otherwise) of the Company.
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(o)
Labor Relations. There are no controversies pending or, to the knowledge of the Seller, threatened between the Company and its Members, directors, officers, employees, or consultants. The Seller has no knowledge of any organizational efforts respecting employees of the Company presently being made or threatened by or on behalf of any labor organization. The Company is not in violation of any applicable labor Law or Order with respect to its Business.
(p)
Books and Records. The books and records of the Company are in all material respects complete and accurate and have been maintained in accordance with good business practices, consistently applied, and all applicable Laws, Orders, and regulations.
(q)
Questionable Payments. Neither the Company, nor its Members, directors, officers, agents, employees or other persons associated with or active on behalf of the Company have used any corporate funds of the Company for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to foreign or domestic government officials or employees from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended; established or maintained, or any unlawful or unrecorded fund of corporate monies or other Company assets; made any false or fictitious entries on the books or records of the Company; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment; or any material favor or gift which is not deductible for Tax purposes.
(r)
Insurance. All insurance policies listed in the Disclosure Schedule, attached hereto and made a part hereof, are in full force and effect and, to the knowledge and belief of the Seller, adequately insure the Company against risks relating to the Assets, or incurred in the Business.
(s)
Compliance with ERISA. To the best of the knowledge and belief of the Seller, the Company is in substantial compliance with the provisions of and regulations under ERISA, and the Code, which are applicable to any pension or other employee benefit plan established or maintained by the Company or to which contributions are made by the Company (the or a Plan) and the Company has met all of the funding standards applicable to each Plan, and there exists no event or condition which would permit the institution of proceedings to terminate any Plan under any provision of applicable Law. The estimated current value of the benefits vested under each Plan does not, and upon termination of such Plan will not, exceed the estimated current value of such Plans assets. The Company has not, with respect to any Plan, engaged in a prohibited transaction, as provided in Section 406 of ERISA or Section 4975(c) of the Code.
(t)
Affiliate Transactions. Set forth on the Disclosure Schedule are the types of transactions, if any, since January 1, 2014, which have taken place between the Company and the Members, or any Person or entity in which the Members, or any of them, have or has an interest.
12
(u)
Deposits. There is no shortage or deficiency in any account containing funds deposited by or held on behalf of the Company.
(v)
Operations up and until this Agreements Closing date:
(i)
The Company has operated its business in substantially the ordinary course, and used its best efforts to preserve intact its present business organization and its relationships with persons having business dealings with it.
(ii)
The Company has not (1) entered into or amended any of the Plans, agreements, arrangements listed in the Disclosure Schedule or made contributions thereto; (2) created or otherwise become liable with respect to any indebtedness for money borrowed (including any guarantee of indebtedness) or purchase money indebtedness; (3) amended its Articles of Organization or Operating Agreement of similar formation agreement; (4) issued, transferred or purchased or contracted to issue, transfer or purchase any Units or membership equity or securities exchangeable for, or convertible into, Units; (5) declared or made any dividend or distribution on its Units or securities exchangeable for, or convertible into, Units; (6) made any capital expenditures, capital additions or capital improvements in excess of $50,000 in the aggregate, except as may be accurately reflected in the books and records of the Company; (7) entered into or assumed or amended any contract or obligation except in the ordinary course of business; or (8) waived any right of substantial value.
(iii)
The Company has maintained its books, accounts and records in accordance with good business practices in the usual, regular and ordinary manner, on a basis consistent with prior years and no changes have been made in accounting practices or procedures.
(w)
Disclosure. Neither this Agreement nor any document or information furnished to the Purchaser pursuant to this Agreement or in connection with the Transactions contemplated hereby contains any untrue statement of a material fact or omissions of any state a material fact necessary to make the statements contained herein or therein not misleading.
(x)
Environmental Matters. To the best of the knowledge and belief of the Seller, the Company has obtained all Permits, licenses and other authorizations which are required in connection with the conduct of the Business under regulations relating to pollution or protection of the environment, including federal, state, county and local regulations relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including without limitation ambient air, surface water, groundwater, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
To the best of the knowledge and belief of the Seller, the Company is in full compliance in the conduct of the Business with all terms and conditions of the required Permits, licenses and authorizations, and is also in full compliance with all other environmental limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in those laws or contained in any state, Federal or local regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder.
13
In connection with the Business, the Seller, to the best of the knowledge and belief of the Seller, is not aware of, nor has the Company, or the Seller received notice of, any past, present or future events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent compliance or continued compliance with those laws or any regulations, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, or which may give rise to any common law or legal liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation, based on or related to the, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, chemical, or industrial, toxic, controlled, or hazardous substance or waste.
To the best of the knowledge and belief of the Seller, there is no civil, criminal or administrative action, suit, demand, claim, hearing, notice or demand letter, notice of violation, investigation, or proceeding pending or threatened against the Company in connection with the conduct of the Business, relating in any way to the foregoing laws or any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder.
The Seller agrees to cooperate with the Purchaser in connection with the Purchaser's application for the transfer, renewal or issuance of any Permits, licenses, approvals or other Company owned or used Permits, licenses, or other authorizations or to satisfy any environmental regulatory requirements involving the Business conducted by the Company.
(y)
Purchaser SEC Documents. The Members represents and warrants that it has read the Purchaser SEC Documents, and has been afforded the opportunity to ask the Purchaser any questions which it desires about the Purchaser's business, financial condition, and corporate history prior to the Closing.
3.2
Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Seller as follows:
(a)
Organization, Standing and Power. The Purchaser is a business corporation duly organized, validly existing and in good standing under the laws of the state of Delaware and has all requisite corporate power and authority to own, lease, operate and carry on the Purchasers business as it is now being conducted. Other than West Virginia, the Purchaser is not required to be licensed, qualified or authorized as a foreign corporation in any jurisdiction. The Purchaser shall deliver to the Seller complete and correct copies of the Articles of Incorporation, the Bylaws, and the minute book of the Purchaser. The minute books of the Purchaser contain an accurate record of meetings of the Companys Board of Directors and its shareholders. All such records have been made available to the Seller for inspection prior to Closing.
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(b)
Capital Structure. The authorized capital stock of the Purchaser consists of Five Hundred Million (500,000,000) shares of the $0.001 par value common stock, of which approximately 222,453,037 shares are issued and are outstanding, and 1,000,000 shares of $0.001 par value preferred stock, of which no shares are issued and outstanding. The Common Stock has been duly authorized and validly issued and is fully paid and non-assessable, except as set forth on the Disclosure Schedule.
(c)
Authority. The execution, delivery, and performance of this Agreement, and all related instruments and agreements by the Purchaser have been duly authorized by all necessary corporate action, and will not (1) conflict with or result in any breach or violation of or default (or give rise to any right of termination, cancellation or acceleration) under, the respective By-Laws or Certificate of Incorporation of the Purchaser, or any note, bond, mortgage, indenture, lease, license, permit, agreement or other instrument or obligation to which the Purchaser is a party or by which either of them is bound; or (2) violate any law, order, rule or regulation applicable to the Purchaser. No consent or approval by any Governmental Authority is required in connection with the execution and delivery of this Agreement by the Purchaser, except such as has been obtained, as more specifically set forth on the Disclosure Schedule, attached hereto and made a part hereof.
(d)
Corporate Issues. The Blaze Stock issuable to Seller shall (i) have equal ratable rights to dividends from funds legally available therefor, when, as and if declared by the Board of Directors of the Purchaser: (ii) upon the liquidation, dissolution or winding up of the affairs of the Purchaser, after payments have been made to holders of senior securities, if any, the holders of the common stock are entitled to share ratably in all the assets of the Purchaser available for distribution to holders of common stock; and (iii) are entitled to one vote per share in the election of directors and on all other matters which properly come before the shareholders of the Purchaser.
(e)
Compliance with Law. The Purchaser possesses all rights, privileges, memberships, licenses, franchises, leases, and Permits which are material to the ownership and operation of the Assets or the conduct of the Business of the Purchaser in all places where such Business is now being conducted. To the best of the knowledge and belief of the Purchaser, neither the Purchaser nor its officers, directors, or employees has been denied admission or authority to conduct any type of business in any jurisdiction or had a license or qualification to conduct its business in any jurisdiction revoked or suspended, nor to the best of the knowledge and belief of the Purchaser, is any such action pending or threatened. To the best of the knowledge and belief of the Purchaser, neither the Purchaser, nor its directors, officers, or employees, is in violation of any applicable Law or Order in connection with the Business of the Purchaser.
(f)
Purchaser SEC Documents. Purchaser is not current with the filing of documents with the SEC pursuant to the Securities Exchange Act of 1934 with the last filing being made in December 2008. The Information and Disclosure Statement prepared by Purchaser pursuant to Rule 15c2-(11)(a)(5) of the Exchange Act and included as Schedule E and made a part hereof is true and accurate in all material respects and does not contain any omissions or misstatements of a material fact.
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(g)
Issuance of Blaze Stock. The Blaze Stock, upon issuance to the Members, will represent validly issued, fully paid and non-assessable shares of common stock of Purchaser and that the issuance of a certificate representing the Blaze Stock is not in violation of any of the provisions of its Articles of Incorporation or Bylaws, or any agreements, instruments or other obligations entered into by Purchaser.
(h)
Exempt Issuance. The issuance of the Blaze Stock will be exempt from the registration and prospectus delivery requirements of the Securities Act and from the qualification or registration requirements of any applicable state blue sky or securities laws.
(i)
Investment Company. Purchaser is not an investment company within the meaning of Section 3 of the Investment Company Act.
(j)
Financial Statements. Attached as Schedule F hereto and made a part hereof, are the unaudited Financial Statements of the Purchaser for the fiscal years ended December 31, 2012 (if applicable) and 2013. The Financial Statements have been compiled by the Purchaser's Accountants and are correct and complete, were prepared in accordance with generally accepted accounting principles, are in accordance with the books and records of the Purchaser, have been prepared in accordance with good business practices, consistently applied throughout the periods covered thereby, and fairly present the financial position of the Purchaser, at the respective dates thereof and the results of the Purchasers operations for the respective periods then ended.
(k)
Absence of Material Adverse Change. Between January 1, 2014 and the date of this Agreements Closing, there has been no material adverse change in the condition (financial or otherwise), of the Purchaser, assets, liabilities, earnings, net worth, business activities, or prospects of the Purchaser, that has not been disclosed in the Disclosure Schedule.
(l)
Absence of Undisclosed Liabilities. Between January 1, 2014 and the date of this Agreements Closing, except as reflected in the Financial Statements of the Purchaser and its Subsidiary, the Purchaser and its Subsidiary have no liabilities of any nature whatsoever, known or unknown, fixed or contingent, except liabilities incurred in the ordinary course of business (which unpaid liabilities incurred other than in the ordinary course do not in the aggregate exceed Fifteen Thousand ($15,000) Dollars.
(m)
Documents Furnished. The Purchaser has previously delivered to the Seller a list, which is attached hereto as Schedule G and made a part hereof, of the following documents, and a true and complete copy of all documents referred to have been delivered or have or will be made available to the Seller or its Representatives for inspection upon reasonable notice:
(i)
all instruments representing or providing for any Encumbrance upon the Assets, any outstanding indebtedness of or held by the Seller, for money borrowed and all credit agreements and letters of credit to which the Seller is a party;
(ii)
all collective bargaining, employment, consulting, termination, executive compensation, incentive compensation, deferred compensation, bonus, profit sharing, retirement, pension, group insurance, liability, death benefit and other agreements plans relating, officers or employees of the Purchaser;
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(iii)
the names and current compensation of each director, officer, employee of the Purchaser, whose annual compensation is in excess of $25,000;
(iv)
all interests in real property owned, leased or otherwise used or claimed by the Purchaser and, with respect to each such interest, the amount of any mortgage or lien encumbering any of the same and the nature of any improvements situated thereon;
(v)
all insurance policies of whatsoever kind now in force held by the Purchaser, or under which the Purchaser, its Subsidiary, the Assets, the Business, and/or the Purchasers officers, directors, employees, and shareholders are insured in regards to their activities for or on behalf of the Purchaser, together with copies of all claims submitted by, against, or on behalf of the Purchaser, under such policies within the past five (5) years;
(vi)
all Permits held by the Purchaser, or by its Subsidiary, directors, officers, and or employees with respect to the Assets or the Business of the Purchaser;
(vii)
all servicing, franchise, warranty, referral, waste brokerage, pending sales, independent contractor, consulting and management agreements to which the Purchaser is a party or pursuant to which the Purchaser is a beneficiary;
(viii)
the names of all pensioned employees of the Purchaser, whose pensions are unfunded or are not paid pursuant to a written Plan or arrangement, and their respective ages and current annual pension rates;
(ix)
all bank accounts, escrow deposit accounts, and safe deposit boxes of the Purchaser, with an identification of the name of the bank, account number and the Persons authorized to draw thereon or having access thereto. The directors will not take any action to change the authorized signatories on the Purchasers bank and/or financial accounts;
(x)
the nature and location of, any documentation relating to, any other real estate or other facilities of the Purchaser which have been sold or closed or otherwise terminated within the past five (5) years;
(xi)
each other contract or agreement not listed with respect to the above items to which the Purchaser is a party, and which involves or may involve aggregate future payments to or by the Purchaser in excess of Ten Thousand ($10,000) Dollars. The Purchaser warrants that the aggregate payments involved under all such contracts or agreements not disclosed in writing to the Seller do not exceed in the aggregate Twenty Five Thousand ($25,000) Dollars;
17
(xii)
the names of all persons holding powers of attorney, if any, with respect to the Purchaser, or holding proxies, if any, with respect to the shares of Purchasers common stock; and
(xiii)
each notice and all correspondence received by the Company, or any Members, from any Governmental Authority or Taxing Authority, with respect to Assets, the Permits, or the Business, within the past year.
(n)
Tax Matters. The Company and its Subsidiary, to the best of its knowledge and belief, has filed all Tax Returns required to be filed and all Taxes shown by such returns or claimed by any taxing authority to be due and payable have been paid or accrued by the Company and its Subsidiary as the case may be. To their knowledge and belief, no examination of the Tax Returns of the Company has ever been made by the IRS. There are no agreements, waivers or other arrangements providing for extensions of time with respect to the assessment or collection of any unpaid Tax against the Purchaser, nor are there any Orders now pending against the Company in respect of any unpaid Tax, or any matters under discussion with any Governmental Authority relating to any amount of unpaid Taxes. Except to the extent of any reserves which are specifically reflected on the latest quarterly balance sheets of the Company, heretofore furnished by the Seller to the Purchaser, there are no liabilities to any federal, state or local taxing authority, which is due or which will become due for any period commencing prior to the date of such balance sheets.
(o)
Options, Warrants, etc. Except as set forth in the Disclosure Schedule and made a part hereof, there are no options, warrants, calls, commitments or agreements of any character to which the Purchaser, or its officers, directors or employees may be a party, or by which any of them is bound, which provides (1) for the issuance or sale of shares or any other class of capital stock of the Purchaser, or any securities representing the right to purchase, acquire, or otherwise receive any such capital stock, or (2) the sale or right of first refusal by the Purchaser of any interest in the Assets or the Business of the Purchaser.
(p)
Permits, Licenses, Copyrights, Patents, Trademarks and Trade Names. Purchaser has previously furnished to the Seller a list of all Permits, licenses, copyright, patents, trademarks, trade names, service marks and registrations and applications therefor, possessed or used by the Purchaser; all license, copyright, patent, trademark, trade name or service mark license, assignments, or royalty agreements to which the Purchaser is a party; and all contracts with employees or others relating in whole or in part to disclosure, nondisclosure, assignment or patenting of inventions, discoveries, improvements, processes, formulas or other know-how. Such list is set forth in the Disclosure Schedule and made a part hereof. The Purchaser has clear record title to all Permits, licenses, copyrights, patents, trademarks, trade names, service marks and registrations and applications thereof listed on said Schedule; has not entered in to any agreements, contracts or licenses that would impair free and unencumbered use of the items listed in the Schedule. The Purchaser does not know of any asserted infringement by the Purchaser, and does not believe that the Purchaser is infringing, upon any copyright, patent, trademark, trade name, or service mark of another Person. The Permits, licenses, copyrights, patents, trademarks, trade names, and service marks used or possessed by the Purchaser are sufficient to enable it to continue conducting its Business as it is now being conducted.
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(q)
The Assets.
(i)
The Purchaser has good and marketable title to the Assets listed on Schedule B, all of which are carried on its books and reflected on its latest Financial Statements furnished by Purchaser to the Seller (except personal property sold or otherwise disposed of since the date of such balance sheet in the ordinary course of business and having an aggregate value of not more than Fifteen Thousand ($15,000) Dollars, free and clear of all Encumbrances of any nature whatsoever, except for Encumbrances reflected in such Financial Statements and liens for current Taxes not yet due and payable; and
(iv)
Except as set forth on the Disclosure Schedule attached hereto and made a part hereof, all Assets used in the Business or operations of the Purchaser, are, in all material respects, in good operation and repair. The character and nature of such Assets are adequate to permit the Company to operate the Business as is currently being conducted.
(v)
Set forth in the Disclosure Schedule and made a part hereof, are all the excluded assets which are not used in the Business or operation of the Company, which have previously been disposed of by the Company, and disclosed to Purchaser.
(r)
Agreements in Force and Effect. All contracts, agreements, plans, leases, policies, permits, licenses, and other documents furnished by the Purchaser to the Seller or referred to in any list or schedule or updated schedule furnished by the Purchaser to the Seller are complete, accurate, valid and enforceable in accordance with their respective terms, and at the time of Closing will be in full force and effect. To the best of the knowledge and belief of the Purchaser, the Purchaser is not in breach of any material provision of, or in default in any material respect under the terms of any such contract, agreement, plan, lease, policy, Permit, license or document to which the Purchaser is a party or under any Law or Order relating thereto.
(s)
Legal Proceedings, etc. Except as set forth in the Disclosure Schedule attached hereto and made a part hereof, to the best of the knowledge and belief of the Purchaser, there is no basis for, nor is there any Order, or any legal, equitable, administrative, arbitration or other proceeding or governmental investigation pending or threatened with respect to the Assets, the Permits, or the Business, which, alone or in the aggregate, might result in money damages payable by the Purchaser, or which might result in an injunction against the Purchaser, or which might adversely affect the condition (financial or otherwise), Business, operations, prospects, properties, earnings or net worth of the Purchaser. Purchaser is not a party to any agreement or instrument, or subject to any charter or other corporate restrictions or any judgment, Law, Order, writ injunction, decree, rule, regulation, code or ordinance which adversely affects, or might reasonably be expected to adversely affect, the Business, operations, prospects, Assets, the Units or condition (financial or otherwise) of the Purchaser.
(t)
Labor Relations. There are no controversies pending or, to the knowledge of the Purchaser, threatened between the Purchaser and its directors, officers, employees, or consultants. The Seller has no knowledge of any organizational efforts respecting employees of the Purchaser presently being made or threatened by or on behalf of any labor organization. The Purchaser is not in violation of any applicable labor Law or Order with respect to its Business.
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(u)
Books and Records. The books and records of the Purchaser are in all material respects complete and accurate and have been maintained in accordance with good business practices, consistently applied, and all applicable Laws, Orders, and regulations.
(v)
Questionable Payments. Neither the Purchaser, nor its directors, officers, agents, employees or other persons associated with or active on behalf of the Purchaser have used any corporate funds of the Purchaser for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to foreign or domestic government officials or employees from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended; established or maintained, or any unlawful or unrecorded fund of corporate monies or other Purchaser assets; made any false or fictitious entries on the books or records of the Purchaser; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment; or any material favor or gift which is not deductible for Tax purposes.
(w)
Insurance. All insurance policies listed on the Disclosure Schedule attached hereto and made a part hereof, are in full force and effect and, to the knowledge and belief of the Seller, adequately insure the Purchaser against risks relating to the Assets, or incurred in the Business.
(x)
Compliance with ERISA. To the best of the knowledge and belief of the Purchaser, the Company is in substantial compliance with the provisions of and regulations under ERISA, and the Code, which are applicable to any pension or other employee benefit plan established or maintained by the Company or to which contributions are made by the Company (the or a Plan) and the Company has met all of the funding standards applicable to each Plan, and there exists no event or condition which would permit the institution of proceedings to terminate any Plan under any provision of applicable Law. The estimated current value of the benefits vested under each Plan does not, and upon termination of such Plan will not, exceed the estimated current value of such Plans assets. The Company has not, with respect to any Plan, engaged in a prohibited transaction, as provided in Section 406 of ERISA or Section 4975(c) of the Code.
(y)
Deposits. There is no shortage or deficiency in any account containing funds deposited by or held on behalf of the Purchaser.
(z)
Disclosure. Neither this Agreement nor any document or information furnished to the Seller pursuant to this Agreement or in connection with the Transactions contemplated hereby contains any untrue statement of a material fact or omissions of any state a material fact necessary to make the statements contained herein or therein not misleading.
(aa)
Environmental Matters. To the best of the knowledge and belief of the Purchaser, the Purchaser has obtained all Permits, licenses and other authorizations which are required in connection with the conduct of the
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Business under regulations relating to pollution or protection of the environment, including federal, state, county and local regulations relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including without limitation ambient air, surface water, groundwater, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
To the best of the knowledge and belief of the Purchaser, the Purchaser is in full compliance in the conduct of the Business with all terms and conditions of the required Permits, licenses and authorizations, and is also in full compliance with all other environmental limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in those laws or contained in any state, Federal or local regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder.
In connection with the Business, the Purchaser, to the best of the knowledge and belief of the Purchaser, is not aware of, nor has the Purchaser received notice of, any past, present or future events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent compliance or continued compliance with those laws or any regulations, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, or which may give rise to any common law or legal liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation, based on or related to the, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, chemical, or industrial, toxic, controlled, or hazardous substance or waste.
To the best of the knowledge and belief of the Purchaser, there is no civil, criminal or administrative action, suit, demand, claim, hearing, notice or demand letter, notice of violation, investigation, or proceeding pending or threatened against the Purchaser in connection with the conduct of the Business, relating in any way to the foregoing laws or any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder.
The Purchaser agrees to cooperate with the Seller in connection with the Seller's application for the transfer, renewal or issuance of any Permits, licenses, approvals or other Purchaser owned or used Permits, licenses, or other authorizations or to satisfy any environmental regulatory requirements involving the Business conducted by the Purchaser.
(bb)
Purchaser SEC Documents. The Members represents and warrants that it has read the Purchaser SEC Documents, and has been afforded the opportunity to ask the Purchaser any questions which it desires about the Purchaser's business, financial condition, and corporate history prior to the Closing.
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IV.
COVENANTS AND AGREEMENTS
4.1
Covenants and Agreements of the Seller. The Seller covenants and agrees with the Purchaser as follows:
(a)
Use of Name. On and after the Closing Date, the Company and the Purchaser will have the right to use the names and service marks, alone or together with any other similar names. The Seller will not use and will not authorize any corporation, partnership, entity or other Person (other than the Purchaser) to use in connection with any coal mine or other environmental business the name School House Branch Site, alone or together with any other name, or any name which may be confusingly similar thereto, and if the Seller have authorized any such use, the Seller will promptly cause any such corporation, partnership, entity or other Person so using such name to change its name and to cease using the name School House Branch Site in any respect.
(b)
Confidentiality. Neither the Seller nor Purchaser will disclose the terms of the Transactions contemplated by this Agreement and all other documents relating to or delivered in connection herewith, without the prior written consent of the other Party, except to the extent such disclosure is required by Law or an Order, or is made to representatives and advisors to the Parties, who shall be similarly bound.
(c)
Instruments of Transfer. At the Closing, the Members shall deliver or cause to be delivered to the Purchaser the original stock certificates evidencing the ownership of the Units, each such certificate signed in blank by Members thereof, guaranteed by a bank or other financial institution reasonably acceptable to the Purchaser. On or before the Closing Date, Members will cause the Company to execute and deliver all deeds, assignments, bills of sale, and other instruments and certificates and to take any and all actions necessary (1) to effectively vest in the Purchaser all the right, title and interest of the Members in and to the Units, and (2) to confirm and assure all right title and interest of the Company in and to the Assets, the Permits, and the Business, effective as of the Closing Date.
(d)
Liabilities of the Company. Other than those liabilities to be expressly assumed by the Purchaser at the Closing, the Purchaser shall not be assuming or be liable for any indebtedness of the Members, the Company.
(e)
Employee Benefit Plan. Prior to the Closing Date, or as soon after the Closing Date as is possible, the Company will take all action necessary to terminate and liquidate the Companys Plans, if any. The Seller will indemnify the Purchaser against, and hold the Purchaser harmless from, all losses, judgments, amounts paid in settlement of action or claims, liabilities, costs, damages and expresses, including but not limited to attorneys fees, accruing from or resulting by reason of the termination of the Plans.
(f)
Sellers Cooperation Regarding Purchasers Applications. The Seller will exercise their best efforts to support all of the Purchasers applications for Permits with all Governmental Authorities, including the Purchasers intended applications and agreements with local Governmental Authorities with respect certain applications with respect to additional permitted waste classifications, and shall take such actions and execute and deliver such further documentation as may be reasonably required by the Purchaser in connection with such matters.
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V.
CONDITIONS TO CLOSING
5.1
Conditions to the Obligations of the Purchaser. The obligations of the Purchaser to be performed under this Agreement are subject to the satisfaction of the following conditions on or before the Closing Date, unless otherwise waived in writing by the Purchaser.
(a)
Representations and Warranties. The representations and warranties of the Seller set forth in Section III hereof shall be true and correct in all material respects as of the Closing Date, as though made on and as of the Closing Date.
(b)
Performance of Obligations. The Seller shall have performed all obligations, covenants and agreements to be performed by them under this Agreement on or prior to the Closing Date.
(c)
No Adverse Change. No materially adverse change shall have occurred after the date hereof and remain in effect as of the Closing Date with respect to the condition of the Units or the condition and/or performance of the Assets, the Permits, or the Business being operated by the Company.
(d)
Permits and Environmental Compliance. The Purchaser shall have obtained an assignment, if required, of all Permits and pending applications of the Company regarding the Assets, the Business, together with the Seller's and the Companys consent thereto. The Purchaser shall have obtained, or at its option applied for, all other Permits, licenses, and other authorizations required in connection with the operation of the Assets, including Laws and regulations relating to pollution or protection of the environment, including regulations relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including without limitation ambient air, surface water, groundwater, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
(e)
Acceptance by the Purchaser. All actions, proceedings, instruments, opinions and documents required or contemplated by this Agreement shall have been approved by counsel for the Purchaser, which approval shall not be unreasonably withheld or delayed.
(f)
Instruments of Transfer. The Purchaser shall have received such instruments of sale, assignment, transfer, and conveyance as are necessary to vest in the Purchaser all of the right, title, and interest in the Units.
(g)
Consents. Members will have taken, and caused the Company to have taken, all actions necessary to obtain any consents or approvals required in connection with the purchase of the Units by the Purchaser.
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5.2
Conditions to the Obligations of the Seller. The obligations of the Seller to be performed under this Agreement are subject to the satisfaction on or before the Closing Date of the following conditions unless waived, in writing, by the Purchaser.
(a)
Representations and Warranties. The representations and warranties of the Purchaser set forth in Section IV hereof shall be true and correct in all material respects as of the Closing Date, as though made on and as of the Closing Date.
(b)
Performance of Obligations. The Purchaser shall have performed all obligations, covenants, and agreements required to be performed under this Agreement prior to the Closing Date.
(c)
Authorization. All action necessary to authorize the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby by the Purchaser shall remain in full force and effect.
VI.
INDEMNITIES
6.1
Indemnity by the Seller. The Seller agrees to indemnify the Purchaser against and hold harmless from all Damages, including all losses, judgments, amounts in settlement of actions or claims, liabilities, damages, and reasonable costs and expenses, including, but not limited to, attorneys fees, which accrue from or result by reason of any breach of any of the representations, warranties, covenants, or agreements made or to be performed by the Seller pursuant to this Agreement.
The Seller also agrees that the indemnity provided pursuant to this Section 6.1 shall extend to losses and reasonable costs and expenses, including, but not limited to, attorneys fees incurred in connection with the defense by the Purchaser of a claim asserted by a third party which, if successful, would constitute a breach by the Members or the Company of any of the representations, warranties, covenants or agreements made or to be performed by the Members or the Company pursuant to this Agreement.
Notwithstanding anything contained herein to the contrary, Purchaser shall not have right to seek indemnification hereunder from Seller unless the aggregate amount of indemnification to which Purchaser is entitled exceeds $75,000, at which time the Seller shall be liable for any amounts over said $75,000.
6.2
Indemnity by the Purchaser. The Purchaser agrees to indemnify the Seller against, and hold them harmless from, all Damages, including all losses, judgments, amounts paid in settlement of actions or claims, liabilities, damages and reasonable costs and expenses, including but not limited to, attorneys fees, which accrue from or result by reason of any breach of any of the representations, warranties, covenants or agreements made or to be performed by the Purchaser pursuant to this Agreement. The Purchaser shall have no other liability under this provision for any other failure of performance except to the extent that any such misrepresentation or failure of performance is the result of willful misconduct or intentional material misrepresentation.
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The Purchaser also agrees that the foregoing agreement to indemnify shall, as limited above, extend to loses and reasonable costs and expenses, including, but not limited to attorneys fees incurred in connection with the defense by the Seller of a claim asserted by a third party, which, if successful, would constitute a breach by the Purchaser of any of the representations, warranties, covenants or agreements made or to be performed by the Purchaser pursuant to this Agreement.
6.3
Right to Defend. Each indemnified party will promptly notify each indemnifying party of any claim, action or proceeding for which indemnification will be sought pursuant to this Agreement, and the indemnifying party or parties will have the right at (his, her or their) expense to assume the defense thereof; provided, however, that the Purchaser shall have the right to participate at their own expense with respect to any such claim, action or proceeding and that no such claim, action or shall be settled without the prior written consent of the Purchaser. In connection with any such defense, the parties agree to cooperate with each other and to provide each other with access to relevant books and records now or hereafter in their possession or control.
6.4
Compliance with Bulk Sales Laws. The Purchaser and the Seller hereby waive compliance with the bulk sales laws and any similar laws of the state of Kentucky in respect of the transactions contemplated by this Agreement. The Seller shall indemnify the Purchaser from, and shall hold the Purchaser harmless against, any Encumbrances, Taxes, fees, liabilities, damages, costs, penalties, and expenses (including reasonable attorneys fees) resulting from or arising out of (1) the Parties failure to comply with any of such Laws in respect of the transactions contemplated by this Agreement, or (2) any Order or action proceeding brought or levy made as a result thereof.
6.5
Other Rights and Remedies Not Affected. The indemnification rights of the Parties under this Article 6 are independent of and in addition to such rights and remedies as the Parties may have at law or in equity or otherwise for any misrepresentation, breach of warranty or failure to fulfill any agreement or covenant hereunder on the part of any party hereto, including without limitation, the right to seek specific performance, rescission, or restitution, none of which rights or remedies shall be affected or diminished hereby.
VII.
MISCELLANEOUS
7.1
Publicity. All press releases and other publicity and communications relating to the Transactions contemplated by this Agreement, and the method of release thereof, will require the mutual written approval of the Seller and Purchaser.
7.2
Survival. All representations, warranties, covenants, guarantees, and agreements contained in this Agreement shall remain operative and in full force and effect, regardless of the results of any due diligence investigation made by or on behalf of any Party hereto, and shall survive the Closing Date.
7.3
Descriptive Headings. Descriptive headings used in this Agreement are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.
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7.4
Notices. All notices or other communications which are required or permitted hereunder shall be in writing and shall be sufficient if delivered or mailed by either (1) certified express mail, postage paid, returned receipt requested, or (2) express delivery service or hand delivery with proof of such delivery, and shall be effective two business (2) days after such mailing or upon delivery, whichever is earlier, to the following addresses or other such addresses as the appropriate Party may advise each other Party hereto.
If to the Purchaser:
To:
Blaze Energy Corp.
Attn: A. Leon Blaser
3350 Americana Terrace, Suite 200
Boise, Idaho 83706
Phone: 208-352-3492
Facsimile: 888-501-1528
Email: leonblaser@blazeenergycorp.com
With a copy to:
Robert Mottern, Esq.
Investment Law Group of Davis Gillett Mottern & Sims
1230 Peachtree Street, NE, Suite 2445
Atlanta, Georgia 30309
Telephone: 404-607-6933
Facsimile: 678-840-2126
Email: bmottern@investmentlawgroup.com
If to the Seller:
To:
BMM-Empire, L.L.C.
Attn: Frank Rosso.
2400 East Commercial Blvd, Suite 711
Fort Lauderdale, FL 33309
Telephone: 954-933-3933
Email: Ffrankjrosso@aol.com
With a copy to:
Charles B. Pearlman, Esq.
Pearlman Schneider LLP
2200 Corporate Blvd., NW, Suite 210
Boca Raton, Florida 33431
Telephone: 561-362-9595
Facsimile: 561-362-9612
Email: charlie@pslawgroup.net
7.5
Binding Nature; Assignments. This Agreement is binding upon, and inures to the benefit of the Parties and their respective heirs, successors and assigns. This Agreement may not be assigned without the prior written consent of the other Party.
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7.6
Controlling Law. This Agreement and all questions relating to its validity, interpretation, performance, remediation and enforcement (including, without limitation, provisions concerning limitations of actions) shall be governed by and construed in accordance with the domestic laws of the state of Kentucky, notwithstanding any choice-of-laws doctrines of such jurisdiction or any other jurisdiction which ordinarily would cause the substantive law of another jurisdiction to apply, without the aid of any canon, custom or rule of law requiring construction against the draftsman.
7.7
Venue. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement shall be brought against any of the Parties in the courts of the state of Kentucky, or, if it has or can acquire the necessary jurisdiction, in the United States District Court for the applicable District of Kentucky, and each of the Parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world.
7.8
Payments. Payments hereunder, if any, shall be made by checks drawn on clearing house funds. Payment of all other amounts due to any party under this Agreement will be made in immediately available funds by wire transfer or by certified or cashiers check.
7.9
Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.
7.10
Waiver. The failure of any Party to insist upon strict performance of any of the terms or conditions of this Agreement will not constitute a continuing waiver thereof or of any of such Partys rights hereunder.
7.11
Severability. If any provision of this Agreement is held illegal, invalid, or unenforceable, such illegality, invalidity, or unenforceability will not affect any other provisions hereof. This Agreement shall, in such circumstances, be deemed modified to the extent necessary to render enforceable the remaining provisions hereof.
7.12
Further Actions and Assurances. The Parties shall execute and deliver such additional documents and shall cause such additional action to be taken, before, on and after the Closing Date, as may be required, necessary or appropriate, to effect or evidence the provisions of this Agreement and the Transactions contemplated hereby, including without limitation all such documents and actions as may be required.
7.13
Fiscal Year of the Purchaser. The fiscal year of the Company ends on the 31st day of December of each year.
7.14
Termination by the Purchaser. This Agreement may be terminated by the Purchaser if any Order, litigation, proceeding, or investigation to restrain or prohibit the consummation of the Transactions contemplated by this Agreement shall have been instituted or threatened prior to the Closing Date or if the Purchaser reasonably believes that the consummation of such Transactions may result in any such Order, litigation, proceeding or investigation.
27
7.15
Specific Performance. The Parties agree that money damages shall not constitute an adequate remedy at law for the Purchaser in the event of the failure by Seller to deliver title to the Units in accordance with this Agreement. The parties further agree that the Purchaser shall be entitled, at its sole option, to obtain specific performance by the Seller of the obligations hereunder and to seek other equitable remedies with respect to such default by the Seller.
7.16
Expenses. Each of the Parties shall bear its own expenses in connection herewith, including all accounting, legal, appraisal fees, and settlement charges.
7.17
Entire Agreement. This Agreement and the closing documents, exhibits, schedules, and attachments specifically referred to or incorporated herein constitute the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, among the Parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock Purchase Agreement as of the date first written.
THE SELLER:
THE COMPANY:
BMM-EMPIRE, L.L.C.
By:
Name:
Frank Rosso
Its:
Authorized Member
THE MEMBERS:
FRANK ROSSO
By:
KEITH HALL
By:
THE PURCHASER
BLAZE ENERGY CORP.
28
By:
Name:
A. Leon Blaser
Its:
Chief Executive Officer
29
SCHEDULE A
LIST OF ASSETS AS TO THE COMPANY
30
SCHEDULE B
LIST OF ASSETS AS TO THE PURCHASER
School House Branch Site
Real property in Phelps, Kentucky, consisting of approximately 43.63 acres, described in more detail in the Marshall Miller Report
31
SCHEDULE C
FINANCIAL STATEMENTS OF THE COMPANY
32
SCHEDULE D
LIST OF COMPANY DOCUMENTS FURNISHED
33
SCHEDULE E
PURCHASER SEC DOCUMENTS
34
SCHEDULE F
FINANCIAL STATEMENTS OF THE PURCHASER
None
35
SCHEDULE G
LIST OF DOCUMENTS FURNISHED
1. Term Sheet, dated October 23, 2014, between High Ridge Mining, LLC and the Company;
2. Warranty Deed of S&K Properties as Grantor and Company as Grantee.
36
Exhibit 10.6
SHARE EXCHANGE AGREEMENT
By and Among
KENTUCKY DIVERSIFIED FUELS, LLC,
the Company
BMM-EMPIRE, L.L.C. and MAXGO, LLC,
the Members of the Company
MXP, LLC, MIDDLE FORK DEVELOPMENT SERVICES, LLC,
The Subsidiaries of the Company
All collectively, the Seller
And
BLAZE ENERGY CORP.
the Purchaser
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT (this Agreement), dated the 5th day of February 2014, by and among Kentucky Diversified Fuels, LLC, a Kentucky limited liability company (the Company), MAXgo, LLC, a Delaware limited liability company, and BMM-Empire, L.L.C., a Kentucky limited liability company, the members of the Company (the Members), Middle Fork Development Services, LLC, a Kentucky limited liability company (MFDS), a subsidiary of the Company, and MXP, LLC, a Delaware limited liability company (MXP) (MXP and MFDS collectively referred to as the Subsidiaries, and with the Company and the Members are hereinafter collectively referred to as the Seller), and Blaze Energy Corp., a Delaware corporation (the Purchaser) (the Purchaser and the Seller being collectively referred to as the Parties).
RECITALS
WHEREAS, the Company is a duly authorized Kentucky limited liability company, which owns and operates that certain coal mine in the State of Kentucky, by and through its subsidiary, Middle Fork Development Services, LLC (MFDS), and is in development of a coal-to-fuel production facility, by and through its subsidiary, MXP, LLC (MXP), which facility is to be constructed on a 24.68 acre coal impoundment, otherwise known as the Dotson Fork Site (Dotson Fork);
WHEREAS, the Purchaser pursuant to a Share Exchange Agreement of even date by and among Purchaser, BMM-Empire LLC, Frank Rosso and W. Keith Hall will acquire that certain coal impoundment real property known as the School House Branch Site;
WHEREAS, MFDS is a duly authorized Kentucky limited liability company, with 100 membership units issued and outstanding, and MXP is a duly authorized Delaware limited liability company, with 100 membership units issued and outstanding;
WHEREAS, the Members are the owners of one hundred percent (100%) of the issued and outstanding membership units of the Company (the Units), and the Company is the owner of one hundred percent (100%) of the issued and outstanding membership units of the Subsidiaries (the Sub Units);
WHEREAS, the Purchaser is a duly authorized, publicly held, Delaware corporation, trading over the OTC Markets under the call symbol BLZE, doing business at 3350 Americana Terrace, Suite 200, Boise, Idaho 83706;
WHEREAS, the Seller desires to sell, and the Purchaser desires to purchase, by and through an exchange of stock, all of the Sellers right, title, and interest of the Members in and to one hundred percent (100%) of the Companys issued and outstanding Units, on the terms and conditions set forth in this Agreement;
WHEREAS, the parties intend that this be a tax-exempt reorganization under Section 368 of the Internal Revenue Code; and
NOW, THEREFORE, in consideration of the mutual promises, covenants, and representations, warranties, and guarantees herein set forth, the Parties, intending to be legally bound, hereto agree as follows:
1
I. DEFINITIONS
1.1
Definitions. As used in this Agreement, the capitalized terms below shall have the following meanings. The singular or plural of such terms shall apply as the context of the Agreement requires.
Act shall mean the Securities Act of 1933, as amended.
Action shall mean any and all actions, suits, investigations, proceedings, demands, assessments, audits, judgments and claims (including employment-related claims) relating to the Assets, the Real Property, the Permits, the Business, or any Person.
Assets as to the Company shall mean the fixed and operating assets, accounts, the Permits, rights, and entitlements listed on Schedule A, attached hereto and made a part hereof, all of which are owned by the Company.
Assets as to the Purchaser shall mean the fixed and operating assets, accounts, the Permits, rights and entitlements listed on Schedule B, attached hereto and made a part hereof, all of which are owned by Purchaser.
Business as to the Company shall mean the business of owning and operating the coal mine, otherwise known as Middle Fork Development Services, the development of a coal-to-fuel production facility, upon a 24.68 acre coal impoundment, otherwise known as the Dotson Fork Site and owning and operating the coal mine otherwise known as the School House Branch Site;
Business as to the Purchaser shall mean owning approximately 40,000,000 acres of subsurface coal and coal bed methane rights in the State of West Virginia.
Closing Date shall be as defined in Section 2.5 hereof
Closing shall mean the closing of the Transactions on the Closing Date.
Code shall mean the Internal Revenue Code of 1986, as amended.
Company shall mean Kentucky Diversified Fuels, LLC, a Kentucky limited liability company. Unless the context provides otherwise, the Company shall include its Subsidiaries.
Consents shall mean any consents required pursuant to this Agreement, as more specifically set forth in the Disclosure Schedule of the Company and the Purchaser, attached hereto and made a part hereof.
2
Damages shall mean any and all damages, losses, obligations, deficiencies, liabilities, claims, encumbrances, penalties, costs, and expenses, including reasonable attorneys' fees and disbursements (including, without limitation, expert and consulting fees, costs and expenses).
Disclosure Schedule means the disclosure schedule of Purchaser and Seller to be delivered at or prior to the Closing Date.
Encumbrances shall mean any debt, claim, mortgage, assignment, assessment, conditional sale, lease, consignment, bailment, contingent interest, lien, pledge, option, charge, easement, security interest, encumbrance, claim of forfeiture, fine, penalty, or other right, demand or claim of any Person (including any Governmental Authority), excluding liens for Taxes not yet due and payable and minor matters that are not material in amount and that do not materially detract from or limit the use of the Assets, the Permits, or the conduct of the Business.
ERISA shall mean the Federal Employee Retirement Income Security Act of 1974, as amended (ERISA), and the related provisions of the Code.
Financial Statements as to the Company shall mean the unaudited financial statements of the Company and the Subsidiaries prepared by Seller and presented to the Purchaser pursuant to the Agreement and shall mean as to the Purchaser the unaudited financial statements of Purchaser prepared by Purchaser and presented to Seller pursuant to this Agreement.
Governmental Authority shall mean any domestic, federal, state or local department, official, commission, authority, board, bureau, agency or other public body.
IRS shall mean the United States Internal Revenue Service.
Knowledge or Belief (whether such term is capitalized or not). Knowledge or belief of the Seller shall mean the actual knowledge or belief of any officer or director of the Company or of the Members. Knowledge or belief of Purchaser shall mean the actual knowledge or belief of each Board of Director of Purchaser.
Laws shall mean all federal, state, county, or local laws, statutes, ordinances, regulations and rules applicable to any Person, including, without limitation, all laws, statutes, ordinances, regulations and rules issued by any Governmental Authority, relating to or regulating the Assets, the Business of the Company or the actions of the Parties.
Members shall mean Frank Rosso, W. Keith Hall, Philip Haan, and Richard Fons.
Orders shall mean all orders, judgments, writs, injunctions, decrees, authorizations, or awards of any court or administrative body or of any other Governmental Authority, which may be applicable to the Assets, the Permits, and the Business, or to any Person in connection therewith.
3
Parties shall mean the Company, the Purchaser, the Members and the Seller, collectively.
Permits shall mean all permits, licenses, and authorizations, and all zoning variances, approvals, consents, orders, agreements with, or other authorizations issued by any Governmental Authority to or affecting the Company and the Subsidiaries in connection with the Assets or the Business.
Person shall mean any natural person, corporation, partnership, unincorporated association, limited liability company, trust, joint venture or trade group, the federal, state or local government, any Governmental Authority, or any entity or group that is a part of, or associated with, any of the foregoing.
Purchase Price shall be as defined in Section 2.3 hereof.
Purchaser shall mean Blaze Energy Corp., a state of Delaware corporation and unless the context provides otherwise, includes its Subsidiary.
Purchaser SEC Documents means all documents filed by the Purchaser with the Securities and Exchange Commission (SEC), including an Information and Disclosure Statement prepared pursuant to Rule15c2-(11)(a)(5) up to and including the date of Closing.
Representative shall mean any officer, director, principal, attorney, attorney-in-fact, agent, accountant, consultant, or employee of any Party.
Securities Laws shall mean any securities law (other than the Act) of any state, territory, or commonwealth of the United States.
Seller shall mean the Person listed as such in the Preamble of this Agreement, each of whom shall execute this Agreement in such capacity.
Subsidiaries as to the Company shall mean MXP, LLC, a Delaware limited liability company, and Middle Fork Development Services, LLC, a Kentucky limited liability company.
Subsidiary as to the Purchaser shall mean Blaze Minerals LLC.
Sub Units shall mean 100 membership units of MXP, issued in the name of the Company, which constitute all of the issued and outstanding units of the MXP, and 100 membership units of MFDS, issued in the name of the Company, which constitute all of the issued and outstanding units of the MFDS.
Taxes shall mean all taxes, fees, levies, duties, charges or other like assessments, including, without limitation, any and all income, withholding, gross receipts, excise, real or personal property, asset, sales, use, license, payroll, transaction, capital, net worth, and franchise taxes imposed by or payable to any federal, state, county or local government
4
taxing authority, or any subdivision or agency thereof, including all interest, penalties, or incremental amounts added thereto in accordance with such provisions or by any governmental action.
Tax Return shall mean any report, return, declaration or other information required to be supplied to any taxing authority in connection with Taxes.
Transactions shall mean the transactions contemplated under this Agreement and the other instruments and agreements referred to herein.
Units shall mean 100 membership units of the Company, issued in the name of the Members, which constitute all of the issued and outstanding units of the Company.
II. THE SHARE EXCHANGE
2.1
Exchange of Company Units. Upon the terms and subject to the conditions of this Agreement, at the Closing (as hereinafter defined), Members will convey, assign, transfer and deliver to Purchaser, and Purchaser will acquire and accept from Members, all right, title and interest in and to the Units, free and clear of any lien, encumbrance, security interest, mortgage, pledge, charge, claim, option, right of first refusal or call, or restriction of any kind (collectively, Liens).
2.2
Conveyance. Such conveyance, assignment, transfer and delivery shall be effected by delivery to the Purchaser of the Units, duly endorsed or accompanied by stock powers duly executed in blank with appropriate transfer stamps, if any, affixed, and any other documents that are necessary to transfer title to the Units to Purchaser, free and clear of any and all Liens.
2.3
Consideration. In consideration for the Units, and upon the terms and subject to the conditions of this Agreement, Purchaser will deliver or cause to be delivered Fifty Million (50,000,000) duly authorized, validly issued, fully paid and nonassessable shares of common stock of Purchaser (the Blaze Stock) to the Members, which shares shall bear a restrictive legend in accordance with Rules 144 and 502 promulgated under the Securities Act of 1933..
2.4
Transfer Restrictions; Legend.
(a)
The shares of Blaze Stock to be issued to the Members pursuant hereto will not be registered under the Securities Act of 1933, as amended (the Securities Act), on the Closing Date and may not be transferred, sold or otherwise disposed of by Members except pursuant to an effective registration statement under the Securities Act or in accordance with an exemption from the registration requirements of the Securities Act.
(b)
Each certificate representing shares of Blaze Stock issued by Purchaser to the Members in accordance with Section 1.3 shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ACT) AND ARE RESTRICTED SECURITIES AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE ACT, AS AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT COMPLIANCE WITH THE APPLICABLE SECURITIES AND EXCHANGE COMMISSION RULES AND REGULATIONS
5
2.5
Closing Schedule. The Parties intend to close on or before March 31, 2014 (the Closing Date), or at such other place or time as the Parties may agree.
2.6
Liabilities to be Assumed. The Purchaser will not assume, accept and become liable for any the Company debts, liabilities or obligations, or for any Taxes or Encumbrances, affecting the Assets, the Permits, or the Business.
2.7
Collateral Agreements. Contemporaneous with the Closing, the Parties hereto agree to execute the following agreements in a form mutually agreed upon by the Parties and their counsel at or prior to Closing (which, with this Agreement, shall be collectively referred to as the Closing Documents):
(a)
Loan Agreement;
(b)
Voting Agreement;
(c)
Opinion of Robert Mottern, Esq.;
(d)
Opinion of Pearlman Schneider LLP; and
(e)
Resolution of the Board of Directors of the Purchaser approving the execution, delivery and performance of the Closing Documents.
2.8
Board Representation/Purchaser. At Closing, the Purchaser agrees to cause its Board of Directors to be reconstituted, pursuant to the terms and conditions of a Voting Agreement, executed of even date herewith, and incorporated herein as part of the Closing Documents.
III. REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties of the Seller. The Seller represents and warrants to the Purchaser as follows:
(a)
Organization, Standing and Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Kentucky and has all requisite corporate power and authority to own, lease, operate and carry on the Companys business as it is now being conducted. Other than Kentucky, the Company is not required to be licensed, qualified or authorized as a foreign corporation in any jurisdiction. The Seller has delivered to the Purchaser complete and correct copies of the Articles of Organization and LLC Formation Agreement of the Company. The minute books of the Company contain an accurate record of meetings of the Companys Management Committee and of its Members. All such records have been made available to the Purchaser for inspection prior to Closing.
6
(b)
Capital Structure and Ownership of the Units. The Company has authorized One Hundred (100) membership Units, all of which are issued and outstanding, and prior to Closing are held exclusively by the Members. The Units have been duly authorized and validly issued and are fully paid and non-assessable. The Members own one hundred (100%) percent of the Units, free and clear of all Taxes and Encumbrances.
MFDS and MXP have each authorized One Hundred (100) membership Sub Units, outstanding and are held exclusively by the Members. The Sub Units have been duly authorized and validly issued and are fully paid and non-assessable. The Company owns one hundred (100%) percent of the Sub Units, free and clear of all Taxes and Encumbrances.
(c)
Authority. This Agreement has been duly authorized by all necessary corporate action of the Company and the Members. This Agreement has been validly executed and delivered by each of said Parties and constitutes a valid and binding obligation of each of them, enforceable against each of them in accordance with its terms. The execution, delivery, and performance by the Company and the Members of this Agreement does and will not (1) conflict with, or result in a breach or violation of or default, (or give rise to any right of termination, cancellation or acceleration), under the Operating Agreement or Articles of Organization of the Company, or conflict with, or result in a breach or violation of, or default under (or give rise to any right of termination, cancellation or acceleration under) any note, bond, mortgage, indenture, lease, license, permit, agreement, Encumbrance, or any other instrument or obligation to which the Company or the Members may be a party, or by which the Company, the Members may be bound; or (2) violate any Law or Order applicable to the Company or the Members. Except for the Consents to be obtained by the Seller and provided to the Purchaser prior to the Closing Date, which Consents are specifically listed on the Disclosure Schedule, attached hereto and made a part hereof, no consent or approval by any Governmental Authority is required in connection with the execution, delivery, and performance of this Agreement by the Company and the Members.
(d)
Compliance with Law. The Company possesses all rights, privileges, memberships, licenses, franchises, leases, and Permits which are material to the ownership and operation of the Assets or the conduct of the Business of the Company in all places where such Business is now being conducted. To the best of the knowledge and belief of the Seller, neither the Company nor its Members, officers, directors, or employees has been denied admission or authority to conduct any type of business in any jurisdiction or had a license or qualification to conduct its business in any jurisdiction revoked or suspended, nor to the best of the knowledge and belief of the Seller, is any such action pending or threatened. To the best of the knowledge and belief of the Seller, neither the Company, nor its Subsidiaries, Members, directors, officers, or employees, are in violation of any applicable Law or Order in connection with the Business of the Company or Subsidiaries.
7
(e)
Financial Statements. Attached as Schedule C hereto and made a part hereof, are the unaudited Financial Statements of the Company and the Subsidiaries for the fiscal years ended December 31, 2012 and 2013. The Financial Statements have been compiled by the Seller's Accountants and are correct and complete, were prepared in accordance with generally accepted accounting principles, are in accordance with the books and records of the Company and the Subsidiaries respectively, have been prepared in accordance with good business practices, consistently applied throughout the periods covered thereby, and fairly present the financial position of the Company and the Subsidiaries respectively, at the respective dates thereof and the results of the Companys and its Subsidiaries operations for the respective periods then ended.
(f)
Absence of Material Adverse Change. Between January 1, 2014, and the date of this Agreements Closing, there has been no material adverse change in the condition (financial or otherwise), of the Company or its Subsidiaries, the Units, assets, liabilities, earnings, net worth, business activities, or prospects of the Company or Subsidiaries, that has not been disclosed to Purchaser in the Disclosure Schedule.
(g)
Absence of Undisclosed Liabilities. Between January 1, 2014 and the date of this Agreements Closing, except as reflected in the Financial Statements of the Company and its Subsidiaries, neither the Company nor any of its Subsidiaries has liabilities of any nature whatsoever, known or unknown, fixed or contingent, except liabilities incurred in the ordinary course of business (which unpaid liabilities incurred other than in the ordinary course do not in the aggregate exceed Fifteen Thousand ($15,000) Dollars.
(h)
Documents Furnished. The Seller has previously delivered to the Purchaser a list, which is attached hereto as Schedule D and made a part hereof, of the following documents, and a true and complete copy of all documents referred to have been delivered or have or will be made available to the Purchaser or its Representatives for inspection upon reasonable notice:
(i)
all instruments representing or providing for any Encumbrance upon the Assets, any outstanding indebtedness of or held by the Company or the Subsidiaries, for money borrowed and all credit agreements and letters of credit to which the Company or its Subsidiaries are a party;
(ii)
all collective bargaining, employment, consulting, termination, executive compensation, incentive compensation, deferred compensation, bonus, profit sharing, retirement, pension, group insurance, liability, death benefit and other agreements plans relating, officers or employees of the Company or its Subsidiaries;
(iii)
the names and current compensation of each director, officer, employee of the Company or its Subsidiaries, whose annual compensation is in excess of $25,000;
(iv)
all interests in real property owned, leased or otherwise used or claimed by the Company or its Subsidiaries and, with respect to each such interest, the amount of any mortgage or lien encumbering any of the same and the nature of any improvements situated thereon;
8
(v)
all insurance policies of whatsoever kind now in force held by the Company, its Subsidiaries, or under which the Company, its Subsidiaries, the Assets, the Business, and/or the Companys or Subsidiaries officers, directors, employees, and Members are insured in regards to their activities for or on behalf of the Company or the Subsidiaries respectively, together with copies of all claims submitted by, against, or on behalf of the Company or Subsidiaries, under such policies within the past five (5) years;
(vi)
all Permits held by the Company, its Subsidiaries, or by any of its Members, directors, officers, and or employees with respect to the Assets or the Business of the Company;
(vii)
all servicing, franchise, warranty, referral, waste brokerage, pending sales, independent contractor, consulting and management agreements to which the Company or the Subsidiaries is a party or pursuant to which the Company or the Subsidiaries are a beneficiary;
(viii)
the names of all pensioned employees of the Company or Subsidiaries, whose pensions are unfunded or are not paid pursuant to a written Plan or arrangement, and their respective ages and current annual pension rates;
(ix)
all bank accounts, escrow deposit accounts, and safe deposit boxes of the Company and its Subsidiaries, with an identification of the name of the bank, account number and the Persons authorized to draw thereon or having access thereto. The Members will not take any action to change the authorized signatories on the Companys or Subsidiaries bank and/or financial accounts;
(x)
the nature and location of, any documentation relating to, any other real estate or other facilities of the Company or its Subsidiaries which have been sold or closed or otherwise terminated within the past five (5) years;
(xi)
each other contract or agreement not listed with respect to the above items to which the Company or the Subsidiaries are a party, and which involves or may involve aggregate future payments to or by the Company or Subsidiaries in excess of Ten Thousand ($10,000) Dollars. The Seller warrants that the aggregate payments involved under all such contracts or agreements not disclosed in writing to the Purchaser do not exceed in the aggregate Twenty Five Thousand ($25,000) Dollars;
(xii)
the names of all persons holding powers of attorney, if any, with respect to the Company or its Subsidiaries, or holding proxies, if any, with respect to the Units; and
(xiii)
each notice and all correspondence received by the Company, its Subsidiaries, or any Members, from any Governmental Authority or Taxing Authority, with respect to Assets, the Permits, or the Business, within the past year.
(i)
Tax Matters. The Company and its Subsidiaries, to their knowledge and belief, have filed all Tax Returns required to be filed and all Taxes shown by such returns or claimed by any taxing authority to be due and
9
payable have been paid or accrued by the Company and the Members as the case may be. To their knowledge and belief, no examination of the Tax Returns of the Company or its Subsidiaries has ever been made by the IRS. There are no agreements, waivers or other arrangements providing for extensions of time with respect to the assessment or collection of any unpaid Tax against the Company or its Subsidiaries, nor are there any Orders now pending against the Company or its Subsidiaries in respect of any unpaid Tax, or any matters under discussion with any Governmental Authority relating to any amount of unpaid Taxes. Except to the extent of any reserves which are specifically reflected on the latest quarterly balance sheets of the Company or its Subsidiaries, heretofore furnished by the Seller to the Purchaser, there are no liabilities to any federal, state or local taxing authority, which is due or which will become due for any period commencing prior to the date of such balance sheets.
(j)
Options, Warrants, etc. Except as set forth in the Disclosure Schedule and made a part hereof, there are no options, warrants, calls, commitments or agreements of any character to which the Company, its Subsidiaries, or the Members may be a party, or by which any of them is bound, which provides (1) for the issuance or sale of Units or any other class of capital stock of the Company or its Subsidiaries, or any securities representing the right to purchase, acquire, or otherwise receive any such capital stock (including the Units), or (2) the sale or right of first refusal by the Company or its Subsidiaries of any interest in the Assets or the Business of the Company or its Subsidiaries.
(k)
Permits, Licenses, Copyrights, Patents, Trademarks and Trade Names. The Company and the Members have previously furnished to the Purchaser a list of all Permits, licenses, copyright, patents, trademarks, trade names, service marks and registrations and applications therefor, possessed or used by the Company or its Subsidiaries; all license, copyright, patent, trademark, trade name or service mark license, assignments, or royalty agreements to which the Company or its Subsidiaries is a party; and all contracts with employees or others relating in whole or in part to disclosure, nondisclosure, assignment or patenting of inventions, discoveries, improvements, processes, formulas or other know-how. Such list is set forth in the Disclosure Schedule attached hereto and made a part hereof. The Company and its Subsidiaries have clear record title to all Permits, licenses, copyrights, patents, trademarks, trade names, service marks and registrations and applications thereof listed on said list; has not entered in to any agreements, contracts or licenses that would impair free and unencumbered use of the items listed. The Seller does not know of any asserted infringement by the Company or its Subsidiaries, and does not believe that the Company or its Subsidiaries is infringing, upon any copyright, patent, trademark, trade name, or service mark of another Person. The Permits, licenses, copyrights, patents, trademarks, trade names, and service marks used or possessed by the Company or its Subsidiaries are sufficient to enable it to continue conducting its Business as it is now being conducted.
(l)
The Assets.
(i)
The Company and the Subsidiaries have good and marketable title to the Assets listed on Schedule A, all of which are carried on its books and reflected on its latest Financial Statements furnished by Seller to the Purchaser (except personal property sold or otherwise disposed of since the date of such balance sheet in the ordinary course of business and having an aggregate value of not more than Fifteen Thousand ($15,000)
10
Dollars, free and clear of all Encumbrances of any nature whatsoever, except for Encumbrances reflected in such Financial Statements and liens for current Taxes not yet due and payable; and
(ii)
Except as set forth in the Disclosure Schedule attached hereto and made a part hereof, all Assets used in the Business or operations of the Company and the Subsidiaries, are, in all material respects, in good operation and repair. The character and nature of such Assets are adequate to permit the Company and its Subsidiaries to operate the Business as is currently being conducted.
(iii)
Except as set forth in the Disclosure Schedule, attached hereto and made a part hereof, are all the excluded assets which are not used in the Business or operation of the Company or its Subsidiaries, which have previously been disposed of by the Company or the Subsidiaries respectively, and disclosed to Purchaser.
(m)
Agreements in Force and Effect. All contracts, agreements, plans, leases, policies, permits, licenses, and other documents furnished by the Seller to the Purchaser or referred to in any list or schedule or updated schedule furnished by the Seller to the Purchaser are complete, accurate, valid and enforceable in accordance with their respective terms, and at the time of Closing will be in full force and effect. To the best of the knowledge and belief of the Seller, neither the Company nor its Subsidiaries are in breach of any material provision of, or in default in any material respect under the terms of any such contract, agreement, plan, lease, policy, Permit, license or document to which the Company or its Subsidiaries are a party or under any Law or Order relating thereto.
(n)
Legal Proceedings, etc. Except as set forth in the Disclosure Schedule attached hereto and made a part hereof, to the best of the knowledge and belief of the Seller, there is no basis for, nor is there any Order, or any legal, equitable, administrative, arbitration or other proceeding or governmental investigation pending or threatened with respect to the Assets, the Permits, or the Business, which, alone or in the aggregate, might result in money damages payable by the Company or its Subsidiaries, or which might result in an injunction against the Company, its Subsidiaries, or the Members, or which might adversely affect the condition (financial or otherwise), Business, operations, prospects, properties, Units, earnings or net worth of the Company or its Subsidiaries. Neither the Company, its Subsidiaries, nor any of the Members is a party to any agreement or instrument, or subject to any charter or other corporate restrictions or any judgment, Law, Order, writ injunction, decree, rule, regulation, code or ordinance which adversely affects, or might reasonably be expected to adversely affect, the Business, operations, prospects, Assets, the Units or condition (financial or otherwise) of the Company or its Subsidiaries.
(o)
Labor Relations. There are no controversies pending or, to the knowledge of the Seller, threatened between the Company, the Subsidiaries, and its Members, directors, officers, employees, or consultants. The Seller has no knowledge of any organizational efforts respecting employees of the Company or its Subsidiaries presently being made or threatened by or on behalf of any labor organization. Neither the Company, nor its Subsidiaries are in violation of any applicable labor Law or Order with respect to its Business.
11
(p)
Books and Records. The books and records of the Company and its Subsidiaries are in all material respects complete and accurate and have been maintained in accordance with good business practices, consistently applied, and all applicable Laws, Orders, and regulations.
(q)
Questionable Payments. Neither the Company, the Subsidiaries, nor its Members, directors, officers, agents, employees or other persons associated with or active on behalf of the Company or its Subsidiaries have used any corporate funds of the Company or its Subsidiaries respectively for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to foreign or domestic government officials or employees from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended; established or maintained, or any unlawful or unrecorded fund of corporate monies or other Company or Subsidiaries assets; made any false or fictitious entries on the books or records of the Company or its Subsidiaries; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment; or any material favor or gift which is not deductible for Tax purposes.
(r)
Insurance. All insurance policies listed in the Disclosure Schedule, attached hereto and made a part hereof, are in full force and effect and, to the knowledge and belief of the Seller, adequately insure the Company and its Subsidiaries against risks relating to the Assets, or incurred in the Business.
(s)
Compliance with ERISA. To the best of the knowledge and belief of the Seller, the Company and the Subsidiaries are in substantial compliance with the provisions of and regulations under ERISA, and the Code, which are applicable to any pension or other employee benefit plan established or maintained by the Company or to which contributions are made by the Company (the or a Plan) and the Company has met all of the funding standards applicable to each Plan, and there exists no event or condition which would permit the institution of proceedings to terminate any Plan under any provision of applicable Law. The estimated current value of the benefits vested under each Plan does not, and upon termination of such Plan will not, exceed the estimated current value of such Plans assets. The Company has not, with respect to any Plan, engaged in a prohibited transaction, as provided in Section 406 of ERISA or Section 4975(c) of the Code.
(t)
Affiliate Transactions. The Seller has previously disclosed to the Purchaser, in sufficient detail, the types of transactions, if any, since January 1, 2014, which have taken place between the Company and the Members, or any Person or entity in which the Members, or any of them, have or has an interest.
(u)
Deposits. There is no shortage or deficiency in any account containing funds deposited by or held on behalf of the Company or its Subsidiaries.
(v)
Operations up and until this Agreements Closing date:
(i)
The Company and the Subsidiaries have operated its business in substantially the ordinary course, and used its best efforts to preserve intact its present business organization and its relationships with persons having business dealings with it.
12
(ii)
The Company or the Subsidiaries have not (1) entered into or amended any of the Plans, agreements, arrangements listed in the Disclosure Schedule or made contributions thereto; (2) created or otherwise become liable with respect to any indebtedness for money borrowed (including any guarantee of indebtedness) or purchase money indebtedness; (3) amended its Articles of Organization or Operating Agreement of similar formation agreement; (4) issued, transferred or purchased or contracted to issue, transfer or purchase any units or membership equity or securities exchangeable for, or convertible into, Units; (5) declared or made any dividend or distribution on its Units or securities exchangeable for, or convertible into, Units; (6) made any capital expenditures, capital additions or capital improvements in excess of $50,000 in the aggregate, except as may be accurately reflected in the books and records of the Company or its Subsidiaries; (7) entered into or assumed or amended any contract or obligation except in the ordinary course of business; or (8) waived any right of substantial value.
(iii)
The Company has maintained its books, accounts and records in accordance with good business practices in the usual, regular and ordinary manner, on a basis consistent with prior years and no changes have been made in accounting practices or procedures.
(w)
Disclosure. Neither this Agreement nor any document or information furnished to the Purchaser pursuant to this Agreement or in connection with the Transactions contemplated hereby contains any untrue statement of a material fact or omissions of any state a material fact necessary to make the statements contained herein or therein not misleading.
(x)
Environmental Matters. To the best of the knowledge and belief of the Seller, the Company and its Subsidiaries have obtained all Permits, licenses and other authorizations which are required in connection with the conduct of the Business under regulations relating to pollution or protection of the environment, including federal, state, county and local regulations relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including without limitation ambient air, surface water, groundwater, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
To the best of the knowledge and belief of the Seller, the Company and its Subsidiaries are in full compliance in the conduct of the Business with all terms and conditions of the required Permits, licenses and authorizations, and is also in full compliance with all other environmental limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in those laws or contained in any state, Federal or local regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder.
In connection with the Business, the Seller, to the best of the knowledge and belief of the Seller, is not aware of, nor has the Company, the Subsidiaries, or the Seller received notice of, any past, present or future events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent compliance or continued compliance with those laws or any regulations, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, or which may give rise to any common law or legal liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation, based on or related to the, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, chemical, or industrial, toxic, controlled, or hazardous substance or waste.
13
To the best of the knowledge and belief of the Seller, there is no civil, criminal or administrative action, suit, demand, claim, hearing, notice or demand letter, notice of violation, investigation, or proceeding pending or threatened against the Company in connection with the conduct of the Business, relating in any way to the foregoing laws or any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder.
The Seller agrees to cooperate with the Purchaser in connection with the Purchaser's application for the transfer, renewal or issuance of any Permits, licenses, approvals or other Company or Subsidiary owned or used Permits, licenses, or other authorizations or to satisfy any environmental regulatory requirements involving the Business conducted by the Company or its Subsidiaries.
(y)
Purchaser SEC Documents. The Members represents and warrants that it has read the Purchaser SEC Documents, and has been afforded the opportunity to ask the Purchaser any questions which it desires about the Purchaser's business, financial condition, and corporate history prior to the Closing.
3.2
Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Seller as follows:
(a)
Organization, Standing and Power. The Purchaser is a business corporation duly organized, validly existing and in good standing under the laws of the state of Delaware and has all requisite corporate power and authority to own, lease, operate and carry on the Purchasers business as it is now being conducted. Other than West Virginia, the Purchaser is not required to be licensed, qualified or authorized as a foreign corporation in any jurisdiction. The Purchaser shall deliver to the Seller complete and correct copies of the Articles of Incorporation, the Bylaws, and the minute book of the Purchaser. The minute books of the Purchaser contain an accurate record of meetings of the Companys Board of Directors and its shareholders. All such records have been made available to the Seller for inspection prior to Closing.
(b)
Capital Structure. The authorized capital stock of the Purchaser consists of Five Hundred Million (500,000,000) shares of the $0.001 par value common stock, of which approximately 222,453,037 shares are issued and are outstanding, and 1,000,000 shares of $0.001 par value preferred stock, of which no shares are issued and outstanding. The Common Stock has been duly authorized and validly issued and is fully paid and non-assessable, except as set forth on the Disclosure Schedule.
14
(c)
Authority. The execution, delivery, and performance of this Agreement, and all related instruments and agreements by the Purchaser have been duly authorized by all necessary corporate action, and will not (1) conflict with or result in any breach or violation of or default (or give rise to any right of termination, cancellation or acceleration) under, the respective By-Laws or Certificate of Incorporation of the Purchaser, or any note, bond, mortgage, indenture, lease, license, permit, agreement or other instrument or obligation to which the Purchaser is a party or by which either of them is bound; or (2) violate any law, order, rule or regulation applicable to the Purchaser. No consent or approval by any Governmental Authority is required in connection with the execution and delivery of this Agreement by the Purchaser, except such as has been obtained, as more specifically set forth on the Disclosure Schedule, attached hereto and made a part hereof.
(d)
Corporate Issues. The Blaze Stock issuable to Seller shall (i) have equal ratable rights to dividends from funds legally available therefor, when, as and if declared by the Board of Directors of the Purchaser: (ii) upon the liquidation, dissolution or winding up of the affairs of the Purchaser, after payments have been made to holders of senior securities, if any, the holders of the common stock are entitled to share ratably in all the assets of the Purchaser available for distribution to holders of common stock; and (iii) are entitled to one vote per share in the election of directors and on all other matters which properly come before the shareholders of the Purchaser.
(e)
Compliance with Law. The Purchaser possesses all rights, privileges, memberships, licenses, franchises, leases, and Permits which are material to the ownership and operation of the Assets or the conduct of the Business of the Purchaser in all places where such Business is now being conducted. To the best of the knowledge and belief of the Purchaser, neither the Purchaser nor its officers, directors, or employees has been denied admission or authority to conduct any type of business in any jurisdiction or had a license or qualification to conduct its business in any jurisdiction revoked or suspended, nor to the best of the knowledge and belief of the Purchaser, is any such action pending or threatened. To the best of the knowledge and belief of the Purchaser, neither the Purchaser, nor its directors, officers, or employees, is in violation of any applicable Law or Order in connection with the Business of the Purchaser.
(f)
Purchaser SEC Documents. Purchaser is not current with the filing of reports with the SEC pursuant to the Securities Exchange Act of 1934 (the Exchange Act) with the last filing being made in December 2008.
(g)
Issuance of Blaze Stock. The Blaze Stock, upon issuance to the Members, will represent validly issued, fully paid and non-assessable shares of common stock of Purchaser and that the issuance of a certificate representing the Blaze Stock is not in violation of any of the provisions of its Articles of Incorporation or Bylaws, or any agreements, instruments or other obligations entered into by Purchaser.
(h)
Exempt Issuance. The issuance of the Blaze Stock will be exempt from the registration and prospectus delivery requirements of the Securities Act and from the qualification or registration requirements of any applicable state blue sky or securities laws.
15
(i)
Investment Company. Purchaser is not an investment company within the meaning of Section 3 of the Investment Company Act.
(j)
Financial Statements. Attached as Schedule F hereto and made a part hereof, are the unaudited Financial Statements of the Purchaser for the fiscal years ended December 31, 2012 and 2013. The Financial Statements have been compiled by the Purchaser's Accountants and are correct and complete, were prepared in accordance with generally accepted accounting principles, are in accordance with the books and records of the Purchaser, have been prepared in accordance with good business practices, consistently applied throughout the periods covered thereby, and fairly present the financial position of the Purchaser, at the respective dates thereof and the results of the Purchasers operations for the respective periods then ended.
(k)
Absence of Material Adverse Change. Between January 1, 2014 and the date of this Agreements Closing, there has been no material adverse change in the condition (financial or otherwise), of the Purchaser, assets, liabilities, earnings, net worth, business activities, or prospects of the Purchaser, that has not been disclosed in the Disclosure Schedule.
(l)
Absence of Undisclosed Liabilities. Between January 1, 2014 and the date of this Agreements Closing, except as reflected in the Financial Statements of the Purchaser and its Subsidiary, the Purchaser and its Subsidiary have no liabilities of any nature whatsoever, known or unknown, fixed or contingent, except liabilities incurred in the ordinary course of business (which unpaid liabilities incurred other than in the ordinary course do not in the aggregate exceed Fifteen Thousand ($15,000) Dollars.
(m)
Documents Furnished. The Purchaser has previously delivered to the Seller a list, which is attached hereto as Schedule G and made a part hereof, of the following documents, and a true and complete copy of all documents referred to have been delivered or have or will be made available to the Seller or its Representatives for inspection upon reasonable notice:
(i)
all instruments representing or providing for any Encumbrance upon the Assets, any outstanding indebtedness of or held by the Seller, for money borrowed and all credit agreements and letters of credit to which the Seller is a party;
(ii)
all collective bargaining, employment, consulting, termination, executive compensation, incentive compensation, deferred compensation, bonus, profit sharing, retirement, pension, group insurance, liability, death benefit and other agreements plans relating, officers or employees of the Purchaser;
(iii)
the names and current compensation of each director, officer, employee of the Purchaser, whose annual compensation is in excess of $25,000;
(iv)
all interests in real property owned, leased or otherwise used or claimed by the Purchaser and, with respect to each such interest, the amount of any mortgage or lien encumbering any of the same and the nature of any improvements situated thereon;
16
(v)
all insurance policies of whatsoever kind now in force held by the Purchaser, or under which the Purchaser, its Subsidiary, the Assets, the Business, and/or the Purchasers officers, directors, employees, and shareholders are insured in regards to their activities for or on behalf of the Purchaser, together with copies of all claims submitted by, against, or on behalf of the Purchaser, under such policies within the past five (5) years;
(vi)
all Permits held by the Purchaser, or by its Subsidiary, directors, officers, and or employees with respect to the Assets or the Business of the Purchaser;
(vii)
all servicing, franchise, warranty, referral, waste brokerage, pending sales, independent contractor, consulting and management agreements to which the Purchaser is a party or pursuant to which the Purchaser is a beneficiary;
(viii)
the names of all pensioned employees of the Purchaser, whose pensions are unfunded or are not paid pursuant to a written Plan or arrangement, and their respective ages and current annual pension rates;
(ix)
all bank accounts, escrow deposit accounts, and safe deposit boxes of the Purchaser, with an identification of the name of the bank, account number and the Persons authorized to draw thereon or having access thereto. The directors will not take any action to change the authorized signatories on the Purchasers bank and/or financial accounts;
(x)
the nature and location of, any documentation relating to, any other real estate or other facilities of the Purchaser which have been sold or closed or otherwise terminated within the past five (5) years;
(xi)
each other contract or agreement not listed with respect to the above items to which the Purchaser is a party, and which involves or may involve aggregate future payments to or by the Purchaser in excess of Ten Thousand ($10,000) Dollars. The Purchaser warrants that the aggregate payments involved under all such contracts or agreements not disclosed in writing to the Seller do not exceed in the aggregate Twenty Five Thousand ($25,000) Dollars;
(xii)
the names of all persons holding powers of attorney, if any, with respect to the Purchaser, or holding proxies, if any, with respect to the shares of Purchasers common stock; and
17
(xiii)
each notice and all correspondence received by the Company, or any Members, from any Governmental Authority or Taxing Authority, with respect to Assets, the Permits, or the Business, within the past year.
(n)
Tax Matters. The Company and its Subsidiary, to the best of its knowledge and belief, has filed all Tax Returns required to be filed and all Taxes shown by such returns or claimed by any taxing authority to be due and payable have been paid or accrued by the Company and its Subsidiary as the case may be. To their knowledge and belief, no examination of the Tax Returns of the Company has ever been made by the IRS. There are no agreements, waivers or other arrangements providing for extensions of time with respect to the assessment or collection of any unpaid Tax against the Purchaser, nor are there any Orders now pending against the Company in respect of any unpaid Tax, or any matters under discussion with any Governmental Authority relating to any amount of unpaid Taxes. Except to the extent of any reserves which are specifically reflected on the latest quarterly balance sheets of the Company, heretofore furnished by the Seller to the Purchaser, there are no liabilities to any federal, state or local taxing authority, which is due or which will become due for any period commencing prior to the date of such balance sheets.
(o)
Options, Warrants, etc. Except as set forth in the Disclosure Schedule and made a part hereof, there are no options, warrants, calls, commitments or agreements of any character to which the Purchaser, or its officers, directors or employees may be a party, or by which any of them is bound, which provides (1) for the issuance or sale of shares or any other class of capital stock of the Purchaser, or any securities representing the right to purchase, acquire, or otherwise receive any such capital stock, or (2) the sale or right of first refusal by the Purchaser of any interest in the Assets or the Business of the Purchaser.
(p)
Permits, Licenses, Copyrights, Patents, Trademarks and Trade Names. Purchaser has previously furnished to the Seller a list of all Permits, licenses, copyright, patents, trademarks, trade names, service marks and registrations and applications therefor, possessed or used by the Purchaser; all license, copyright, patent, trademark, trade name or service mark license, assignments, or royalty agreements to which the Purchaser is a party; and all contracts with employees or others relating in whole or in part to disclosure, nondisclosure, assignment or patenting of inventions, discoveries, improvements, processes, formulas or other know-how. Such list is set forth in the Disclosure Schedule and made a part hereof. The Purchaser has clear record title to all Permits, licenses, copyrights, patents, trademarks, trade names, service marks and registrations and applications thereof listed on said Schedule; has not entered in to any agreements, contracts or licenses that would impair free and unencumbered use of the items listed in the Schedule. The Purchaser does not know of any asserted infringement by the Purchaser, and does not believe that the Purchaser is infringing, upon any copyright, patent, trademark, trade name, or service mark of another Person. The Permits, licenses, copyrights, patents, trademarks, trade names, and service marks used or possessed by the Purchaser are sufficient to enable it to continue conducting its Business as it is now being conducted.
(q)
The Assets.
18
(i)
The Purchaser has good and marketable title to the Assets listed on Schedule A, all of which are carried on its books and reflected on its latest Financial Statements furnished by Purchaser to the Seller (except personal property sold or otherwise disposed of since the date of such balance sheet in the ordinary course of business and having an aggregate value of not more than Fifteen Thousand ($15,000) Dollars, free and clear of all Encumbrances of any nature whatsoever, except for Encumbrances reflected in such Financial Statements and liens for current Taxes not yet due and payable; and
(ii)
Except as set forth on the Disclosure Schedule attached hereto and made a part hereof, all Assets used in the Business or operations of the Purchaser, are, in all material respects, in good operation and repair. The character and nature of such Assets are adequate to permit the Company to operate the Business as is currently being conducted.
(iii)
Set forth in the Disclosure Schedule and made a part hereof, are all the excluded assets which are not used in the Business or operation of the Company, which have previously been disposed of by the Company, and disclosed to Purchaser.
(r)
Agreements in Force and Effect. All contracts, agreements, plans, leases, policies, permits, licenses, and other documents furnished by the Purchaser to the Seller or referred to in any list or schedule or updated schedule furnished by the Purchaser to the Seller are complete, accurate, valid and enforceable in accordance with their respective terms, and at the time of Closing will be in full force and effect. To the best of the knowledge and belief of the Purchaser, the Purchaser is not in breach of any material provision of, or in default in any material respect under the terms of any such contract, agreement, plan, lease, policy, Permit, license or document to which the Purchaser is a party or under any Law or Order relating thereto.
(s)
Legal Proceedings, etc. Except as set forth in the Disclosure Schedule attached hereto and made a part hereof, to the best of the knowledge and belief of the Purchaser, there is no basis for, nor is there any Order, or any legal, equitable, administrative, arbitration or other proceeding or governmental investigation pending or threatened with respect to the Assets, the Permits, or the Business, which, alone or in the aggregate, might result in money damages payable by the Purchaser, or which might result in an injunction against the Purchaser, or which might adversely affect the condition (financial or otherwise), Business, operations, prospects, properties, earnings or net worth of the Purchaser. Purchaser is not a party to any agreement or instrument, or subject to any charter or other corporate restrictions or any judgment, Law, Order, writ injunction, decree, rule, regulation, code or ordinance which adversely affects, or might reasonably be expected to adversely affect, the Business, operations, prospects, Assets, the Units or condition (financial or otherwise) of the Purchaser.
(t)
Labor Relations. There are no controversies pending or, to the knowledge of the Purchaser, threatened between the Purchaser and its directors, officers, employees, or consultants. The Seller has no knowledge of any organizational efforts respecting employees of the Purchaser presently being made or threatened by or on behalf of any labor organization. The Purchaser is not in violation of any applicable labor Law or Order with respect to its Business.
19
(u)
Books and Records. The books and records of the Purchaser are in all material respects complete and accurate and have been maintained in accordance with good business practices, consistently applied, and all applicable Laws, Orders, and regulations.
(v)
Questionable Payments. Neither the Purchaser, nor its directors, officers, agents, employees or other persons associated with or active on behalf of the Purchaser have used any corporate funds of the Purchaser for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to foreign or domestic government officials or employees from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended; established or maintained, or any unlawful or unrecorded fund of corporate monies or other Purchaser assets; made any false or fictitious entries on the books or records of the Purchaser; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment; or any material favor or gift which is not deductible for Tax purposes.
(w)
Insurance. All insurance policies listed on the Disclosure Schedule attached hereto and made a part hereof, are in full force and effect and, to the knowledge and belief of the Seller, adequately insure the Purchaser against risks relating to the Assets, or incurred in the Business.
(x)
Compliance with ERISA. To the best of the knowledge and belief of the Purchaser, the Company is in substantial compliance with the provisions of and regulations under ERISA, and the Code, which are applicable to any pension or other employee benefit plan established or maintained by the Company or to which contributions are made by the Company (the or a Plan) and the Company has met all of the funding standards applicable to each Plan, and there exists no event or condition which would permit the institution of proceedings to terminate any Plan under any provision of applicable Law. The estimated current value of the benefits vested under each Plan does not, and upon termination of such Plan will not, exceed the estimated current value of such Plans assets. The Company has not, with respect to any Plan, engaged in a prohibited transaction, as provided in Section 406 of ERISA or Section 4975(c) of the Code.
(y)
Deposits. There is no shortage or deficiency in any account containing funds deposited by or held on behalf of the Purchaser.
(z)
Disclosure. Neither this Agreement nor any document or information furnished to the Seller pursuant to this Agreement or in connection with the Transactions contemplated hereby contains any untrue statement of a material fact or omissions of any state a material fact necessary to make the statements contained herein or therein not misleading.
(aa)
Environmental Matters. To the best of the knowledge and belief of the Purchaser, the Purchaser has obtained all Permits, licenses and other authorizations which are required in connection with the conduct of the Business under regulations relating to pollution or protection of the environment, including federal, state, county and local regulations relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including without limitation ambient air, surface water, groundwater, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
20
To the best of the knowledge and belief of the Purchaser, the Purchaser is in full compliance in the conduct of the Business with all terms and conditions of the required Permits, licenses and authorizations, and is also in full compliance with all other environmental limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in those laws or contained in any state, Federal or local regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder.
In connection with the Business, the Purchaser, to the best of the knowledge and belief of the Purchaser, is not aware of, nor has the Purchaser received notice of, any past, present or future events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent compliance or continued compliance with those laws or any regulations, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, or which may give rise to any common law or legal liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation, based on or related to the, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, chemical, or industrial, toxic, controlled, or hazardous substance or waste.
To the best of the knowledge and belief of the Purchaser, there is no civil, criminal or administrative action, suit, demand, claim, hearing, notice or demand letter, notice of violation, investigation, or proceeding pending or threatened against the Purchaser in connection with the conduct of the Business, relating in any way to the foregoing laws or any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder.
The Purchaser agrees to cooperate with the Seller in connection with the Seller's application for the transfer, renewal or issuance of any Permits, licenses, approvals or other Purchaser owned or used Permits, licenses, or other authorizations or to satisfy any environmental regulatory requirements involving the Business conducted by the Purchaser.
(bb)
Purchaser SEC Documents. The Members represents and warrants that it has read the Purchaser SEC Documents, and has been afforded the opportunity to ask the Purchaser any questions which it desires about the Purchaser's business, financial condition, and corporate history prior to the Closing.
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IV. COVENANTS AND AGREEMENTS
4.1
Covenants and Agreements of the Seller. The Seller covenants and agrees with the Purchaser as follows:
(a)
Use of Name. On and after the Closing Date, the Company and the Purchaser will have the right to use the names and service marks Kentucky Diversified Fuels, MXP, Middle Fork Development Services, and School House Branch Site, alone or together with any other similar names. The Seller will not use and will not authorize any corporation, partnership, entity or other Person (other than the Purchaser) to use in connection with any coal mine or other environmental business the names Kentucky Diversified Fuels, MXP, Middle Fork Development Services, or School House Branch Site, alone or together with any other name, or any name which may be confusingly similar thereto, and if the Seller have authorized any such use, the Seller will promptly cause any such corporation, partnership, entity or other Person so using such name to change its name and to cease using the names Kentucky Diversified Fuels, MXP, or Middle Fork Development Services in any respect.
(b)
Confidentiality. Neither the Seller nor Purchaser will not disclose the terms of the Transactions contemplated by this Agreement and all other documents relating to or delivered in connection herewith, without the prior written consent of the Purchaser, except to the extent such disclosure is required by Law or an Order, or is made to Representatives and advisors to the Parties, who shall be similarly bound.
(c)
Instruments of Transfer. At the Closing, the Members shall deliver or cause to be delivered to the Purchaser the original stock certificates evidencing the ownership of the Units, each such certificate signed in blank by Members thereof, guaranteed by a bank or other financial institution reasonably acceptable to the Purchaser. On or before the Closing Date, Members will cause the Company to execute and deliver all deeds, assignments, bills of sale, and other instruments and certificates and to take any and all actions necessary (1) to effectively vest in the Purchaser all the right, title and interest of the Members in and to the Units, and (2) to confirm and assure all right title and interest of the Company in and to the Assets, the Permits, and the Business, effective as of the Closing Date.
(d)
Liabilities of the Company. Other than those liabilities to be expressly assumed by the Purchaser at the Closing, the Purchaser shall not be assuming or be liable for any indebtedness of the Members, the Company, or the Subsidiaries.
(e)
Employee Benefit Plan. Prior to the Closing Date, or as soon after the Closing Date as is possible, the Company will take all action necessary to terminate and liquidate the Companys Plans, if any. The Seller will indemnify the Purchaser against, and hold the Purchaser harmless from, all losses, judgments, amounts paid in settlement of action or claims, liabilities, costs, damages and expresses, including but not limited to attorneys fees, accruing from or resulting by reason of the termination of the Plans.
(f)
Sellers Cooperation Regarding Purchasers Applications. The Seller will exercise their best efforts to support all of the Purchasers applications for Permits with all Governmental Authorities, including the Purchasers intended applications and agreements with local Governmental Authorities with respect certain applications with respect to additional permitted waste classifications, and shall take such actions and execute and deliver such further documentation as may be reasonably required by the Purchaser in connection with such matters.
22
V. CONDITIONS TO CLOSING
5.1
Conditions to the Obligations of the Purchaser. The obligations of the Purchaser to be performed under this Agreement are subject to the satisfaction of the following conditions on or before the Closing Date, unless otherwise waived in writing by the Purchaser.
(a)
Representations and Warranties. The representations and warranties of the Seller set forth in Section III hereof shall be true and correct in all material respects as of the Closing Date, as though made on and as of the Closing Date.
(b)
Performance of Obligations. The Seller shall have performed all obligations, covenants and agreements to be performed by them under this Agreement on or prior to the Closing Date.
(c)
No Adverse Change. No materially adverse change shall have occurred after the date hereof and remain in effect as of the Closing Date with respect to the condition of the Units or the condition and/or performance of the Assets, the Permits, or the Business being operated by the Company and its Subsidiaries.
(d)
Permits and Environmental Compliance. The Purchaser shall have obtained an assignment, if required, of all Permits and pending applications of the Company regarding the Assets, the Business, together with the Seller's and the Companys consent thereto. The Purchaser shall have obtained, or at its option applied for, all other Permits, licenses, and other authorizations required in connection with the operation of the Assets, including Laws and regulations relating to pollution or protection of the environment, including regulations relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including without limitation ambient air, surface water, groundwater, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
(e)
Acceptance by the Purchaser. All actions, proceedings, instruments, opinions and documents required or contemplated by this Agreement shall have been approved by counsel for the Purchaser, which approval shall not be unreasonably withheld or delayed.
(f)
Instruments of Transfer. The Purchaser shall have received such instruments of sale, assignment, transfer, and conveyance as are necessary to vest in the Purchaser all of the right, title, and interest in the Units.
(g)
Consents. Members will have taken, and caused the Company to have taken, all actions necessary to obtain any consents or approvals required in connection with the purchase of the Units by the Purchaser.
23
5.2
Conditions to the Obligations of the Seller. The obligations of the Seller to be performed under this Agreement are subject to the satisfaction on or before the Closing Date of the following conditions unless waived, in writing, by the Purchaser.
(a)
Representations and Warranties. The representations and warranties of the Purchaser set forth in Section IV hereof shall be true and correct in all material respects as of the Closing Date, as though made on and as of the Closing Date.
(b)
Performance of Obligations. The Purchaser shall have performed all obligations, covenants, and agreements required to be performed under this Agreement prior to the Closing Date.
(c)
Authorization. All action necessary to authorize the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby by the Purchaser shall remain in full force and effect.
VI. INDEMNITIES
6.1
Indemnity by the Seller. The Seller agrees to indemnify the Purchaser against and hold harmless from all Damages, including all losses, judgments, amounts in settlement of actions or claims, liabilities, damages, and reasonable costs and expenses, including, but not limited to, attorneys fees, which accrue from or result by reason of any breach of any of the representations, warranties, covenants, or agreements made or to be performed by the Seller pursuant to this Agreement.
The Seller also agrees that the indemnity provided pursuant to this Section 6.1 shall extend to losses and reasonable costs and expenses, including, but not limited to, attorneys fees incurred in connection with the defense by the Purchaser of a claim asserted by a third party which, if successful, would constitute a breach by the Members or the Company of any of the representations, warranties, covenants or agreements made or to be performed by the Members or the Company pursuant to this Agreement.
Notwithstanding anything contained herein to the contrary, Purchaser shall not have right to seek indemnification hereunder from Seller unless the aggregate amount of indemnification to which Purchaser is entitled exceeds $75,000, at which time the Seller shall be liable for any amounts over said $75,000.
6.2
Indemnity by the Purchaser. The Purchaser agrees to indemnify the Seller against, and hold them harmless from, all Damages, including all losses, judgments, amounts paid in settlement of actions or claims, liabilities, damages and reasonable costs and expenses, including but not limited to, attorneys fees, which accrue from or result by reason of any breach of any of the representations, warranties, covenants or agreements made or to be performed by the Purchaser pursuant to this Agreement. The Purchaser shall have no other liability under this provision for any other failure of performance except to the extent that any such misrepresentation or failure of performance is the result of willful misconduct or intentional material misrepresentation.
24
The Purchaser also agrees that the foregoing agreement to indemnify shall, as limited above, extend to loses and reasonable costs and expenses, including, but not limited to attorneys fees incurred in connection with the defense by the Seller of a claim asserted by a third party, which, if successful, would constitute a breach by the Purchaser of any of the representations, warranties, covenants or agreements made or to be performed by the Purchaser pursuant to this Agreement.
6.3
Right to Defend. Each indemnified party will promptly notify each indemnifying party of any claim, action or proceeding for which indemnification will be sought pursuant to this Agreement, and the indemnifying party or parties will have the right at (his, her or their) expense to assume the defense thereof; provided, however, that the Purchaser shall have the right to participate at their own expense with respect to any such claim, action or proceeding and that no such claim, action or shall be settled without the prior written consent of the Purchaser. In connection with any such defense, the parties agree to cooperate with each other and to provide each other with access to relevant books and records now or hereafter in their possession or control.
6.4
Compliance with Bulk Sales Laws. The Purchaser and the Seller hereby waive compliance with the bulk sales laws and any similar laws of the state of Kentucky in respect of the transactions contemplated by this Agreement. The Seller shall indemnify the Purchaser from, and shall hold the Purchaser harmless against, any Encumbrances, Taxes, fees, liabilities, damages, costs, penalties, and expenses (including reasonable attorneys fees) resulting from or arising out of (1) the Parties failure to comply with any of such Laws in respect of the transactions contemplated by this Agreement, or (2) any Order or action proceeding brought or levy made as a result thereof.
6.5
Other Rights and Remedies Not Affected. The indemnification rights of the Parties under this Article 6 are independent of and in addition to such rights and remedies as the Parties may have at law or in equity or otherwise for any misrepresentation, breach of warranty or failure to fulfill any agreement or covenant hereunder on the part of any party hereto, including without limitation, the right to seek specific performance, rescission, or restitution, none of which rights or remedies shall be affected or diminished hereby.
VII. MISCELLANEOUS
7.1
Publicity. All press releases and other publicity and communications relating to the Transactions contemplated by this Agreement, and the method of release thereof, will require the mutual written approval of the Seller.
7.2
Survival. All representations, warranties, covenants, guarantees, and agreements contained in this Agreement shall remain operative and in full force and effect, regardless of the results of any due diligence investigation made by or on behalf of any Party hereto, and shall survive the Closing Date.
25
7.3
Descriptive Headings. Descriptive headings used in this Agreement are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.
7.4
Notices. All notices or other communications which are required or permitted hereunder shall be in writing and shall be sufficient if delivered or mailed by either (1) certified express mail, postage paid, returned receipt requested, or (2) express delivery service or hand delivery with proof of such delivery, and shall be effective two business (2) days after such mailing or upon delivery, whichever is earlier, to the following addresses or other such addresses as the appropriate Party may advise each other Party hereto.
If to the Purchaser:
To:
Blaze Energy Corp..
Attn: A. Leon Blaser
3350 Americana Terrace
Suite 200
Boise, Idaho 83706
Phone: 208-352-3492
Facsimile: 888-501-1528
Email: leonblaser@blazeenergycorp.com
With a copy to:
Robert Mottern, Esq.
Investment Law Group of Davis Gillett Mottern & Sims
1230 Peachtree Street, NE, Suite 2445
Atlanta, Georgia 30309
Telephone: 404-607-6933
Facsimile: 678-840-2126
Email: bmottern@investmentlawgroup.com
If to the Seller:
To:
Kentucky Diversified Fuels, LLC, MXP, LLC,
Middle Fork Development Services, LLC
Attn: Frank Rosso.
2400 East Commercial Blvd, Suite 711
Fort Lauderdale, FL 33309
Telephone: 954-933-3933
Email: Ffrankjrosso@aol.com
With a copy to:
Charles B. Pearlman, Esq.
Pearlman Schneider LLP
2200 Corporate Blvd., NW, Suite 210
Boca Raton, Florida 33431
Telephone: 561-362-9595
Facsimile: 561-362-9612
Email: charlie@pslawgroup.net>
26
7.5
Binding Nature; Assignments. This Agreement is binding upon, and inures to the benefit of the Parties and their respective heirs, successors and assigns. This Agreement may not be assigned without the prior written consent of the other Party.
7.6
Controlling Law. This Agreement and all questions relating to its validity, interpretation, performance, remediation and enforcement (including, without limitation, provisions concerning limitations of actions) shall be governed by and construed in accordance with the domestic laws of the state of Georgia, notwithstanding any choice-of-laws doctrines of such jurisdiction or any other jurisdiction which ordinarily would cause the substantive law of another jurisdiction to apply, without the aid of any canon, custom or rule of law requiring construction against the draftsman.
7.7
Venue. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement shall be brought against any of the Parties in the courts of the state of Georgia, or, if it has or can acquire the necessary jurisdiction, in the United States District Court for the applicable District of Georgia, and each of the Parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world.
7.8
Payments. Payments hereunder, if any, shall be made by checks drawn on clearing house funds. Payment of all other amounts due to any party under this Agreement will be made in immediately available funds by wire transfer or by certified or cashiers check.
7.9
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.
7.10
Waiver. The failure of any Party to insist upon strict performance of any of the terms or conditions of this Agreement will not constitute a continuing waiver thereof or of any of such Partys rights hereunder.
7.11
Severability. If any provision of this Agreement is held illegal, invalid, or unenforceable, such illegality, invalidity, or unenforceability will not affect any other provisions hereof. This Agreement shall, in such circumstances, be deemed modified to the extent necessary to render enforceable the remaining provisions hereof.
7.12
Further Actions and Assurances. The Parties shall execute and deliver such additional documents and shall cause such additional action to be taken, before, on and after the Closing Date, as may be required, necessary or appropriate, to effect or evidence the provisions of this Agreement and the Transactions contemplated hereby, including without limitation all such documents and actions as may be required.
27
7.13
Fiscal Year of the Purchaser. The fiscal year of the Company and each of the Subsidiaries ends on the 31st day of December of each year.
7.14
Termination by the Purchaser. This Agreement may be terminated by the Purchaser if any Order, litigation, proceeding, or investigation to restrain or prohibit the consummation of the Transactions contemplated by this Agreement shall have been instituted or threatened prior to the Closing Date or if the Purchaser reasonably believes that the consummation of such Transactions may result in any such Order, litigation, proceeding or investigation.
7.15
Specific Performance. The Parties agree that money damages shall not constitute an adequate remedy at law for the Purchaser in the event of the failure by Seller to deliver title to the Units in accordance with this Agreement. The parties further agree that the Purchaser shall be entitled, at its sole option, to obtain specific performance by the Seller of the obligations hereunder and to seek other equitable remedies with respect to such default by the Seller.
7.16
Expenses. Each of the Parties shall bear its own expenses in connection herewith, including all accounting, legal, appraisal fees, and settlement charges.
7.17
Entire Agreement. This Agreement and the closing documents, Exhibits, Schedules, and attachments specifically referred to or incorporated herein constitute the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, among the Parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock Purchase Agreement as of the date first written.
THE SELLER:
THE COMPANY:
KENTUCKY DIVERSIFIED FUELS, LLC
By:
Name:
Frank Rosso
Its:
Authorized Member
THE MEMBERS:
MAXGO, LLC
By:
Name:
Philip C. Haan
Its:
Managing Partner
28
BMM-EMPIRE, L.L.C.
By:
Name:
Frank J. Rosso
Its:
Co-Director,
THE SUBSIDIARIES:
MXP. LLC
By:
Name:
Frank J. Rosso
Its:
Authorized Member
MIDDLE FORK DEVELOPMENT SERVICES, LLC
By:
Name:
Frank J. Rosso
Its:
Authorized Member
THE PURCHASER
BLAZE ENERGY CORP.
By:
Name:
A. Leon Blaser
Its:
Chief Executive Officer
29
SCHEDULE A
LIST OF COMPANY ASSETS
30
SCHEDULE B
LIST OF PURCHASER ASSETS
31
SCHEDULE C
COMPANY FINANCIAL STATEMENTS
32
SCHEDULE D
COMPANY DOCUMENTS FURNISHED
33
SCHEDULE E
PURCHASER SEC DOCUMENTS
34
SCHEDULE F
PURCHASER FINANCIAL STATEMENTS
35
SCHEDULE G
PURCHASER DOCUMENTS FURNISHED
36
Exhibit 31
CERTIFICATIONS
I, A. Leon Blaser, hereby certify that:
(1) I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2013 (the report) of Blaze Energy Corp.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
(5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: March 28, 2014 | /s/ A. Leon Blaser |
A. Leon Blaser Chief Executive Officer and Chief Financial Officer (principal executive officer, and principal financial and accounting officer ) |
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Blaze Energy Corp., a Delaware corporation (the "Company"), does hereby certify, to the best of his knowledge, that:
1. The Quarterly Report on Form 10-Q for the period ending September 30, 2013 (the "Report") of the Company complies in all material respects with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ A. Leon Blaser
A. Leon Blaser,
Chief Executive Officer and Chief Financial Officer
(principal executive officer, and principal financing and accounting officer)
Date: March 28, 2014
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M+,5ZM6 `(``"X&```9````>&PO=V]R:W-H965T NOTE 3 - RELATED PARTY TRANSACTIONS Separation Agreement with EESV On April 30, 2013, the Company entered into a Separation Agreement with Environmental Energy Services, Inc. ("EESV") Under the Separation Agreement, the Company released EESV from liability on a promissory note with a principal balance of $2,475,386.61, plus accrued interest at the prime rate plus 2% since 2009, and conveyed to EESV the Company's wholly-owned subsidiary, EESV Fayetteville, Inc. In consideration for the release of EESV, the Company received the following benefits from EESV and its affiliates: · The cancellation of 69,724,378 shares of common stock of the Company held by EESV, which represented approximately 76.7% of the issued and outstanding common stock at the time; · Released the Company from any liability under a management agreement; · Procured the release of $51,460 owed by the Company to a prior landlord; · Assumed any liability of the Company to eight trade creditors; and · Procured the resignation of all officers and directors of the Company other than A. Leon Blaser.^6]C]_OSS%MB7:K"ZR`Z_9TOYDPOZV^O67Q8DW
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9 Months Ended
RELATED PARTY TRANSACTIONS [Abstract]
RELATED PARTY TRANSACTIONS