Share Exchange Agreement dated August 23, 2022 by and among Enviro Technologies U.S., Inc., Banner Midstream Corp. and Ecoark Holdings, Inc
Exhibit 2.1
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement (the “Agreement”), dated as of the 23rd day of August 2022, by and among Enviro Technologies U.S., Inc., a Florida corporation (“Enviro”), Banner Midstream Corp., a Delaware corporation (“Banner Midstream”)’ and Ecoark Holdings, Inc. a Nevada corporation ( “Ecoark”) and the sole shareholder of Banner Midstream:
A. As of the date of this Agreement, Enviro has authorized capital stock consisting of 250,000,000 shares of Common Stock, $0.001 par value per share (“Enviro Common Stock”), of which such shares, 5,570,125 shares are issued and outstanding and 7,250,000 shares of Preferred Stock, par value $0.001 per share (the “Enviro Preferred Stock”), of which of which no shares of Enviro Preferred Stock are issued and outstanding as of the date of this Agreement; and
B. Banner Midstream is a corporation organized under the laws of Delaware. As of the date of this Agreement, Banner Midstream has 50,000,000 shares of authorized capital stock, par value $0.0001 per share, consisting of 45,000,000 shares of authorized Common Stock and 5,000,000 shares of authorized Preferred Stock, with 5,565,976 shares of Common Stock issued and outstanding, consisting of 5,565,976 shares of Common Stock held by Ecoark and no Preferred Stock issued and outstanding.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
SHARE EXCHANGE
1.01 Exchange by Ecoark. Ecoark shall sell, transfer, convey, assign and deliver to Enviro all of the capital stock of Banner Midstream owned by Ecoark, which represents 100% of the issued and outstanding shares of Banner Midstream (the “Banner Midstream Shares”) free and clear of any lien, charge, encumbrance, leases, license, easement, restriction, encroachment, security interest, claim or similar interest (each, an “Encumbrance”) in exchange for 12,996,958 shares of Enviro Common Stock (the “Enviro Shares”) (the “Exchange”).
1.02 Tax Structure. The Exchange of Banner Midstream Shares for Enviro Shares is intended to constitute a reorganization within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”), or such other tax free reorganization or restructuring provisions as may be available under the Code.
ARTICLE 2
THE CLOSING
2.01 Subject to the terms and conditions herein, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place on or before September ___, 2022, by email, or at such place or date and time as may be agreed to in writing by the parties hereto, at the earliest practicable time after satisfaction or waiver of the conditions hereof (the “Closing Date”).
2.02 The following conditions are a part of this Agreement and must be completed on
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or as of the Closing Date, or such other date specified by the parties:
(a) At the Closing, the Board of Directors of Enviro shall fix the number of directors of Enviro at four and shall appoint two individuals designated by Banner Midstream. The identity of such members are reflected on Schedule 2.02(b). As such time as Enviro complies with Section 14(f) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 14f-1 thereunder, the two current Enviro directors shall resign.
(b) Immediately prior to the Closing, the sole officer of Enviro shall have tendered his resignation as the sole officer of Enviro, and the Board of Directors of Enviro shall appoint Jim Galla as Enviro’s Chief Executive Officer and Chief Financial Officer as well as such other officers as Banner Midstream shall designate, effective upon the Closing.
(c) Prior to the Closing, Enviro shall have obtained consent of its Board of Directors to consummate the transactions contemplated by this Agreement.
(d) Banner Midstream shall have delivered to Enviro its unaudited financial statements for the: (i) the year ended December 31, 2021 and 2022 and (ii) the three and six month period ended June 30, 2022 and 2021, which shall have been prepared in compliance with generally accepted accounting principles in the U.S. (“U.S. GAAP”).
(e) As of the date of this /Agreement, Enviro shall issue John A. DiBella and Raynard Veldman convertible promissory notes in the principal amount of eight hundred fifteen thousand five hundred sixty- five dollars ($815,565) in the form of Exhibit A (the “DiBella Convertible Note”) and ninety thousand dollars ($90,000) in the form of Exhibit B (the “Veldman Convertible Note”), respectively, with a maturity date of twelve (12) months from the Closing Date in satisfaction all of their accrued payroll and advances to Enviro, excluding amounts payable under Section 2.02(g) below.
(g) At the Closing Enviro shall issue John DiBella a promissory note in the principal amount of one hundred thirty- nine thousand dollars ($139,000) in the form of Exhibit C (the “DiBella Note”) with a maturity date of three months from the Closing Date in satisfaction of Mr. DiBella’s advances to Enviro.
(h) The transfer agent for Enviro shall have issued the Enviro Shares to Ecoark or its designee(s) in book entry form.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ENVIRO
Enviro hereby represents and warrants to Banner Midstream and Ecoark as follows, which representations are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date, except as reflected on the numbered Disclosure Schedules.
3.01 Organization, Standing and Power. Enviro is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida, has all requisite power and
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authority to own, lease and operate its properties and to carry on its business as now being conducted, and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary.
3.02 Subsidiaries. All of the direct and indirect subsidiaries of Enviro are set forth on Schedule 3.02. Enviro owns, directly or indirectly, all of the capital stock or other equity interests of each such subsidiary free and clear of any Encumbrance, and all of the issued and outstanding shares of capital stock or equity interests of each subsidiary are validly issued and are fully paid, non-assessable and free of pre-emptive and similar rights to subscribe for or purchase securities. Each of Enviro’s subsidiaries is an entity duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization, and has the power and authority to own and use its properties and assets and to carry on its business as currently conducted.
3.03 Capital Structure.
(a) The capitalization of Enviro is as stated in the recitals hereto.
(b) The Enviro Shares to be issued pursuant to this Agreement shall be validly issued, fully paid and non-assessable and not subject to preemptive rights.
(c) Except as set forth in the SEC Reports (as defined below), there are no options, warrants, calls, agreements or other rights to purchase or otherwise acquire from Enviro at any time, or upon the happening of any stated event, any shares of the capital stock of Enviro whether or not presently issued or outstanding.
(d) Except as set forth on Schedule 3.03(d) hereto, there are no affiliates, including (i) owners of 5% or more of the shares of any class of Enviro or (ii) owners of any securities of Enviro, whether equity or debt, convertible into 5% or more of the shares of any class of Enviro capital stock.
(e) Enviro has provided Banner Midstream and Ecoark a complete and accurate shareholder registry showing the names and addresses of all of its shareholders, including non-objecting beneficial owners, as of June 30, 2022.
3.04 Articles of Incorporation and Bylaws. The copies of the Articles of Incorporation and of the Bylaws of Enviro which have been delivered to Banner Midstream and Ecoark are true, correct and complete copies thereof.
3.05 Authority. Enviro has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Board of Directors of Enviro. No other corporate or shareholder proceedings on the part of Enviro are necessary to authorize the Exchange contemplated by this Agreement, or the other transactions contemplated hereby.
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3.06 Conflict with Other Agreements; Approvals. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of a material benefit under, or the creation of any Encumbrance on assets (any such conflict, violation, default, right of termination, cancellation or acceleration, loss or creation, a “violation”) pursuant to any provision of the Articles of Incorporation or Bylaws or any organizational document of Enviro or its subsidiaries or, result in any violation of any loan or credit agreement, note, mortgage, indenture, lease, benefit plan or other agreement, obligation, instrument, Permit (as defined in Section 3.23), concession, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Enviro which violation is reasonably likely to have a material adverse effect on Enviro taken as a whole. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic, or foreign (a “Governmental Entity”) is required by or with respect to Enviro in connection with the execution and delivery of this Agreement by Enviro or the consummation by Enviro of the transactions contemplated hereby, except as contemplated by this Agreement or required under the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws.
3.07 Books and Records. Enviro has made and will make available for inspection by Banner Midstream and Ecoark upon reasonable request all the books of Enviro relating to the business of Enviro. Such books of Enviro have been maintained in the ordinary course of business. All documents furnished or caused to be furnished to Banner Midstream and Ecoark by Enviro are true and correct copies, and there are no amendments or modifications thereto except as set forth in such documents.
3.08 Compliance with Laws. Enviro is and has been in compliance in all material respects with all laws, regulations, rules, orders, judgments, decrees and other requirements and policies imposed by any Governmental Entity applicable to it, its properties or the operation of its businesses, including without limitation laws, regulations, rules, orders, judgments, decrees and other requirements and policies relating to the production, possession, marketing, distribution and sale of cannabis and cannabis-related products imposed by state and local governments in markets in which Enviro operates or plans to operate (but excluding the U.S. federal government), Taxes, environmental protection, occupational health and safety, COVID-19, product quality and safety and employment and labor matters.
3.09 SEC Reports. As of the date hereof, Enviro is required to file reports with the Securities and Exchange Commission (“SEC”) under Section 13 of the Exchange Act. All documents voluntarily filed, including periodic and current reports and exhibits thereto, filed under the Exchange Act (the “SEC Reports”) have been so filed, as if Enviro was required to file SEC Reports and all material contracts so filed as exhibits are, in full force and effect, except those which have expired in accordance with their terms, and Enviro is not in material default with respect to such contracts. As of its respective filing date, each SEC Report complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder and the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder. Each of the SEC Reports has complied in all material respects with the
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Exchange Act in effect as of their respective dates. None of the SEC Reports, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
3.10 Financial Statements. Enviro’s audited financial statements for the fiscal years ended December 31, 2021 and 2020 and the unaudited financial statements for the three and six months ended June 30, 2022 are part of the SEC Reports. The financial statements included in the SEC Reports comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with the U.S. GAAP (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the financial position of Enviro as of the dates thereof and the results of its operations and cash flows for the periods shown (subject, in the case of unaudited statements, to normal year-end audit adjustments). To Enviro’s knowledge, none of its filings with the SEC is the subject of an ongoing SEC review, inquiry or investigation, and there are no outstanding or unresolved SEC comments related to such filings.
3.11 Banks. Enviro has delivered to Banner Midstream and Ecoark a true and complete list (in all material respects), as of the date of this Agreement, showing (a) the name of each bank in which Enviro has an account or safe deposit box, and (b) the names and addresses of all signatories.
3.12 Litigation. There is no suit, action or proceeding pending, or, to the knowledge of Enviro, threatened against or affecting Enviro which is reasonably likely to have a material adverse effect on Enviro, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Enviro having, or which, insofar as reasonably can be foreseen, in the future could have, any such effect.
3.13 Employees. The employees and consultant contracts of Enviro and its subsidiaries are as set forth on Schedule 3.13.
3.14 Encumbrances, Leases and Contracts. Enviro does not have any Encumbrances in or on any of its assets. Except as disclosed on Schedule 3.14 hereto, Enviro does not have any leases (whether of real or personal property), contracts, promissory notes, mortgages, licenses, franchises, or other written agreements to which Enviro is a party, except any of said instruments which terminate or are cancelable without penalty.
3.15 Absence of Undisclosed Liabilities. Except as reflected in Enviro’s balance sheets contained in its SEC Reports, Enviro does not have any liabilities of any nature, whether fixed, absolute, contingent or accrued, except Enviro has liabilities for attorneys’ fees arising in connection with this Agreement and liabilities arising in the ordinary course of business which are not material.
3.16 Absence of Changes. Since June 30, 2022 there has not been any material adverse change in the condition (financial or otherwise), assets, liabilities, earnings or business of Enviro.
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3.17 Brokers and Finders. No broker or finder is entitled to any brokerage fees, commissions or finders’ fees in connection with the transactions contemplated herein.
3.18 Valid Issuance of Securities. The Enviro Shares, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein will be duly and validly issued, fully paid and non-assessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement and under applicable state and federal securities laws. The Enviro capital stock outstanding immediately prior to the Closing has been validly issued, fully paid and non-assessable and has been sold in compliance with all applicable securities laws.
3.19 Tax Matters. Enviro has filed all Tax Returns that it was required to file, and has paid all Taxes shown thereon as owing. No claim has ever been made by an authority in a jurisdiction where Enviro does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.
(a) Enviro has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate. All Taxes shown to be due on such Tax Returns, or otherwise owed, has been timely paid. Enviro has furnished to Banner Midstream and Ecoark true and correct copies of its most recent Tax Returns.
(b) The most recent financial statements contained in the SEC Reports reflect an adequate reserve for all Taxes payable by Enviro (in addition to any reserve for deferred Taxes to reflect timing differences between book and Tax items) for all taxable periods and portions thereof through the date of such financial statements. No deficiency with respect to any Taxes has been proposed, asserted or assessed against Enviro, and no requests for waivers of the time to assess any such Taxes are pending.
(c) There are no Encumbrances for Taxes (other than for current Taxes not yet due and payable) on the assets of Enviro. Enviro is not bound by any agreement with respect to Taxes.
(d) For purposes of this Agreement:
“Taxes” includes all forms of taxation, whenever created or imposed, and whether of the United States or elsewhere, and whether imposed by a local, municipal, governmental, state, foreign, federal or other Governmental Entity, or in connection with any agreement with respect to Taxes, including all interest, penalties and additions imposed with respect to such amounts.
“Tax Return” means all federal, state, local, provincial and foreign Tax returns, declarations, statements, reports, schedules, forms and information returns and any amended Tax return relating to Taxes.
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3.20 Non-shell Status. Enviro is not a “shell company” as defined under Rule 405 of the Securities Act.
3.21 Bad Actors. Neither Enviro nor any of its affiliates:
(a) Is subject to a final order of a state securities commission (or an agency of a state performing similar functions); a state authority that supervises or examines banks, savings associations, or credit unions; a state insurance commission (or an agency or officer of a state performing like functions); an appropriate federal banking agency; the U.S. Commodity Futures Trading Commission; or the National Credit Union administration that:
(i) At the time of such sale, bars the person from:
| (1) | Association with an entity regulated by such commission, authority, agency, or officer; or |
| (2) | Engaging in the business of securities, insurance or banking; or |
| (3) | Engaging in savings association or credit union activities; or |
(ii) Constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct entered within ten years before such sale;
(b) Is subject to an order of the SEC entered pursuant to section 15(b) or 15B(c) of the Exchange Act (15 U.S.C. 78o(b) or 78o-4(c)) or section 203(e) or (f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(e) or (f)) that, at the time of such sale:
(i) Suspends or revokes such person's registration as a broker, dealer, municipal securities dealer or investment adviser;
(ii) Places limitations on the activities, functions or operations of such person; or
(iii) Bars such person from being associated with any entity or from participating in the offering of any penny stock;
(c) (i) Has been convicted, within ten years before such sale (or five years, in the case of issuers, their predecessors and affiliated issuers), of any felony or misdemeanor:
(ii) In connection with the purchase or sale of any security;
(iii) Involving the making of any false filing with the SEC; or
(iv) Arising out of the conduct of the business of an underwriter, broker,
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dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities;
(d) For the past five years been convicted of a felony or been the subject of a filing in bankruptcy or filed a petition in bankruptcy, or made a general assignment for the benefit of creditors; or been an officer, director or principal of any entity which filed a petition in bankruptcy, was reorganized in bankruptcy, or made a general assignment for the benefit of creditors. Is subject to any order of the SEC entered within five years before such sale that, at the time of such sale, orders the person to cease and desist from committing or causing a violation or future violation of:
(i) Any scienter-based anti-fraud provision of the federal securities laws, including without limitation section 17(a)(1) of the Securities Act (15 U.S.C. 77q(a)(1)), section 10(b) of the Exchange Act (15 U.S.C. 78j(b)) and 17 CFR 240.10b-5, section 15(c)(1) of the Exchange Act (15 U.S.C. 78o(c)(1)) and section 206(1) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-6(1)), or any other rule or regulation thereunder; or
(ii) Section 5 of the Securities Act (15 U.S.C. 77e).
(e) Is suspended or expelled from membership in, or suspended or barred from association with a member of, a registered national securities exchange or a registered national or affiliated securities association for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade;
(f) Has filed (as a registrant or issuer), or was or was named as an underwriter in, any registration statement or Regulation A offering statement filed with the SEC that, within five years before such sale, was the subject of a refusal order, stop order, or order suspending the Regulation A exemption, or is, at the time of such sale, the subject of an investigation or proceeding to determine whether a stop order or suspension order should be issued; or
(g) Is subject to a United States Postal Service false representation order entered within five years before such sale, or is, at the time of such sale, subject to a temporary restraining order or preliminary injunction with respect to conduct alleged by the United States Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations.
3.22 COVID-19. Schedule 3.22 sets forth a list of each loan or other financial grant for which Enviro has applied or which it has received pursuant to any federal government loan program following the COVID-19 pandemic.
3.23 Insurance. Schedule 3.23 contains a true, correct and complete list of all insurance policies pursuant to which Enviro is insured. All of Enviro’s insurance policies are fully paid in accordance with their terms. There are no pending claims under such insurance policies. Enviro has not failed to give any material notice or present any material claim under any such
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policy in a due and timely fashion. There are no outstanding unpaid claims by Enviro under any such policy. Enviro has not received a notice of cancellation or non-renewal of any such policy.
3.24 Permits. Except as disclosed on Schedule 3.24, all permits, licenses, franchises, approvals, authorizations, exemptions, certifications, credentials and consents (“Permits”) required to be obtained from Governmental Entities for Enviro to conduct its business as presently conducted and as described in SEC Reports, but excluding U.S. federal government approvals relating to the retail delivery and distribution licenses for its current or planned cannabis operations, have been obtained and are presently effective and possessed by Enviro and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit. True and correct copies of all such Permits have been made available to Banner Midstream and Ecoark. Provided that all necessary notices are given to and all necessary approvals and consents are obtained from the applicable Governmental Entities, to the knowledge of Enviro, none of Enviro’s Permits will be impaired or terminated or become terminable as a result of the transactions contemplated by this Agreement or any other agreement to which Enviro or any subsidiary is a party.
3.25 Environmental Matters.
(a) Except as set forth in Schedule 3.25:
(1) Enviro is and has been in compliance with all applicable Environmental Laws (as defined below);
(2) there is no material claim or action relating to or arising under Environmental Laws that is pending or, to the knowledge of Enviro threatened against or affecting Enviro; and
(3) to the knowledge of Enviro, no facts, circumstances or conditions exist that would reasonably be expected to result in Enviro incurring material Environmental Liabilities.
(b) Except as set forth in Schedule 3.25:
(1) Enviro has obtained and currently maintains all Permits necessary under Environmental Laws for their operations (“Environmental Permits”);
(2) there is no investigation, nor any Action pending or, to the knowledge of Enviro, threatened against or affecting Enviro or any real property owned, operated or leased by Enviro to revoke such Environmental Permits;
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(3) Enviro has not received any written notice from any Person to the effect that there is lacking any Environmental Permit required under Environmental Law for the current use or operation of any property owned, operated or leased by Enviro; and
(4) Neither the execution and delivery of this Agreement by Enviro, nor the consummation by Enviro of the transactions contemplated hereby, nor compliance by Enviro with any of the provisions hereof, will result in the termination or revocation of, or a right of termination or cancellation under, any Environmental Permit.
“Environmental Laws” means all Laws, including federal, state, local, foreign and international Laws, relating in any way to pollution, the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), preservation or reclamation of natural resources, the climate, the presence, management or release of or exposure to hazardous materials (as such term is defined in Environmental Laws), or to human health and safety in respect of the foregoing, or the protection of endangered or threatened species.
“Environmental Liabilities” means all liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including any amounts paid in settlement, all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand by any other Person or in response to any violation of Environmental Law, whether known or unknown, accrued or contingent, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, to the extent based upon, related to, or arising under or pursuant to any Environmental Law, environmental Permit, order or agreement with any Governmental Entity or other person, which relates to any environmental, health or safety condition, violation of Environmental Law or a release or threatened release of hazardous materials.
3.26 Effect of Banner Midstream and Ecoark’s Knowledge. Notwithstanding anything contained herein to the contrary, Enviro shall not have (a) any liability for any breach of or inaccuracy in any representation or warranty made by Enviro to the extent that Banner Midstream, Ecoark, any of their Affiliates or any of their respective officers, employees or other representatives (i) had knowledge at or before the Closing of the facts as a result of which such representation or warranty was breached or inaccurate or (ii) was provided access to, at or before the Closing, a document disclosing such facts; or (b) any liability after the Closing for any breach of or failure to perform before the Closing any covenant or obligation of Enviro to the extent that Banner Midstream, Ecoark, or their Affiliates or any of their respective officers, employees or other representatives (i) had knowledge at or before the Closing of such breach or failure or (ii) was provided access to, at or before the Closing, a document disclosing such breach or failure.
3.27 Full Disclosure. The representations and warranties of Enviro contained in this Agreement (and in any schedule, exhibit, certificate or other instrument to be delivered under this Agreement) are true and correct in all material respects, and such representations and warranties do not omit any material fact necessary to make the statements contained therein, in light of the
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circumstances under which they were made, not misleading. There is no fact of which Enviro has knowledge that has not been disclosed to Enviro pursuant to this Agreement, including the schedules hereto, all taken together as a whole, which has had or could reasonably be expected to have a material adverse effect on Enviro, Banner Midstream or Ecoark or materially adversely affect the ability of Enviro to consummate in a timely manner the transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
BANNER MIDSTREAM
Banner Midstream hereby represents and warrants to Enviro as follows, which representations are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date, except as reflected on the numbered Disclosure Schedules.
4.01 Organization, Standing and Power. Banner Midstream is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted, and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary.
4.02 Subsidiaries. All of the direct and indirect subsidiaries of Banner Midstream are set forth on Schedule 4.02. Banner Midstream owns, directly or indirectly, all of the capital stock or other equity interests of each such subsidiary free and clear of any Encumbrance, and all of the issued and outstanding shares of capital stock of each subsidiary are validly issued and are fully paid, non-assessable and free of pre-emptive and similar rights to subscribe for or purchase securities. Each of Banner Midstream’s subsidiaries is an entity duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has the power and authority to own and use its properties and assets and to carry on its business as currently conducted.
4.03 Capital Structure. The capitalization of Banner Midstream is as stated in the recitals hereto. All outstanding shares of Banner Midstream capital stock are validly issued, fully paid and non-assessable and not subject to preemptive rights or other restrictions on transfer. All of the issued and outstanding shares of Banner Midstream capital stock were issued in compliance with all applicable securities laws. Except as set forth on Schedule 4.03, there are no shares of Banner Midstream capital stock issuable under outstanding options, convertible notes, warrants and other derivative securities, instruments convertible into or exercisable for, or other rights to purchase or otherwise acquire from Banner Midstream, shares of Banner Midstream capital stock.
4.04 Certificate of Incorporation, Bylaws, and Minute Books. The copies of the Certificate of Incorporation and of the Bylaws of Banner Midstream which have been delivered to Enviro are true, correct and complete copies thereof. The minute books of Banner Midstream, which has been made available for inspection, contains accurate minutes of all meetings and accurate consents in lieu of meetings of the Board of Directors (and any committee thereof) and
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of the shareholders of Banner Midstream since the date of incorporation and accurately reflects all transactions referred to in such minutes and consents in lieu of meetings.
4.05 Authority. Banner Midstream has all requisite power to enter into this Agreement including approval of its Board of Directors and has the requisite power and authority to consummate the transactions contemplated hereby. Except as specified herein, no other corporate proceedings on the part of Banner Midstream are necessary to authorize the transactions contemplated hereby.
4.06 Conflict with Agreements; Approvals. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of any provision of the Certificate of Incorporation or Bylaws of Banner Midstream or of any loan or credit agreement, note, mortgage, indenture, lease, benefit plan or other agreement, obligation, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Banner Midstream or its properties or assets. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Banner Midstream in connection with the execution and delivery of this Agreement by Banner Midstream, or the consummation by Banner Midstream of the transactions contemplated hereby, except for filing of Form D and an Information Statement complying with Rule 14f-1 with the SEC, and filings with any state securities regulators.
4.07 Books and Records. Banner Midstream has made and will make available for inspection by Enviro upon reasonable request all the books of Banner Midstream relating to the business of Banner Midstream. Such books of Banner Midstream have been maintained in the ordinary course of business. All documents furnished or caused to be furnished to Enviro by Banner Midstream are true and correct copies, and there are no amendments or modifications thereto except as set forth in such documents.
4.08 Compliance with Laws. Banner Midstream is and has been in compliance in all material respects with all laws, regulations, rules, orders, judgments, decrees and other requirements and policies imposed by any Governmental Entity applicable to Banner Midstream, its properties or the operation of its businesses, including without limitation laws, regulations, rules, orders, judgments, decrees and other requirements and policies relating to Taxes, environmental protection, occupational health and safety, COVID-19, product quality and safety and employment and labor matters.
4.09 Financial Statements. Banner Midstream’s unaudited financial statements for the fiscal years ended December 31, 2022 and 2021 and period ended June 30, 2022 and 2021 have been furnished to Enviro by Banner Midstream, are true and correct, comply as to form in all material respects with U.S. GAAP and fairly present the financial position of Banner Midstream as of the dates thereof and the results of its operations and cash flows for the periods shown (subject, in the case of interim periods, to normal year-end adjustments).
4.10 Litigation. There is no suit, action or proceeding pending, or, to the knowledge of Banner Midstream or its subsidiaries, threatened against, likely to be made, or affecting Banner
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Midstream or any subsidiary which is reasonably likely to have a material adverse effect, on Banner Midstream, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Banner Midstream or any subsidiary having, or which, insofar as reasonably can be foreseen, in the future could have, any such effect.
4.11 Employees. The employees and consultant contracts of Banner Midstream are as set forth on Schedule 4.11.
4.12 Leases and Contracts. Schedule 4.12 sets forth all leases (whether of real or personal property), contracts, promissory notes, mortgages, licenses, franchises, or other written agreements to which Banner Midstream is a party which involve or can reasonably be expected to involve aggregate future payments or receipts by Banner Midstream in excess of $20,000 per year (whether by the terms of such lease, contract, promissory note, license, franchise or other written agreement or as a result of a guarantee of the payment of or indemnity against the failure to pay same) except any of said instruments which terminate or are cancelable without penalty.
4.13 Absence of Undisclosed Liabilities. Except as set forth on Schedule 4.13, as reflected in Banner Midstream’s balance sheets contained in its financial statements prepared and delivered in accordance with this Agreement, or arising in the ordinary course of business, Banner Midstream has no liabilities of any nature, whether fixed, absolute, contingent.
4.14 Absence of Changes. Since June 30, 2022, there has not been any material adverse change in the condition (financial or otherwise), assets, liabilities, earnings, business or prospects of Banner Midstream.
4.15 Intellectual Property. Except as set forth on Schedule 4.15, Banner Midstream has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with its business (the “Intellectual Property Rights”). Banner Midstream has not received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two years from the date of this Agreement. Banner Midstream has not received, since June 30, 2022, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any person or entity, except as could not have or reasonably be expected to not have a material adverse effect on Banner Midstream. All such Intellectual Property Rights are enforceable and to the knowledge of Banner Midstream there is no existing infringement by another person or entity of any of the Intellectual Property Rights. Banner Midstream has taken reasonable security measures to protect the secrecy, confidentiality and value of all of its intellectual properties.
4.16 Insurance. Schedule 4.16 contains a true, correct and complete list of all insurance policies pursuant to which Banner Midstream is insured. All of Banner Midstream’s insurance policies are fully paid in accordance with their terms. There are no pending claims under such insurance policies. Banner Midstream has not failed to give any material notice or present any material claim under any such policy in a due and timely fashion. There are no outstanding unpaid claims by Banner Midstream under any such policy. Banner Midstream has not received a
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notice of cancellation or non-renewal of any such policy.
4.17 Regulatory Permits. Banner Midstream possesses all Permits issued by the appropriate Governmental Entities necessary to conduct its business, and Banner Midstream has not received any notice of proceedings relating to the revocation or modification of any such Permit.
4.18 Title to Assets. Banner Midstream has good and marketable title in fee simple to all real property owned by it and good and marketable title in all personal property owned by it that is material to the business thereof including the assets set forth on Schedule 4.18, in each case free and clear of any Encumbrance, except for (i) Encumbrances for the payment of federal, state or local taxes, for which appropriate reserves have been made therefor in accordance with U.S. GAAP and, the payment of which is neither delinquent nor subject to penalties, and (ii) those Encumbrances set forth on Schedule 4.18. Except as set forth on Schedule 4.18, any real property and facilities held under lease by Encumbrances are held by Banner Midstream under valid, subsisting and enforceable leases with which Banner Midstream is in compliance.
4.19 Broker and Finders. No broker or finder is entitled to any brokerage fees, commissions or finders’ fees in connection with the transactions contemplated herein.
4.20 Tax Matters. Banner Midstream has filed all Tax Returns that it was required to file, and has paid all Taxes shown thereon as owing. No claim has ever been made by an authority in a jurisdiction where Banner Midstream does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.
(a) Banner Midstream has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate. All Taxes shown to be due on such Tax Returns, or otherwise owed, has been timely paid. Banner Midstream has furnished true and correct copies of its most recent Tax Returns to Enviro.
(b) The most recent financial statements which have been furnished to Enviro reflect an adequate reserve for all Taxes payable by Banner Midstream (in addition to any reserve for deferred Taxes to reflect timing differences between book and Tax items) for all taxable periods and portions thereof through the date of such financial statements. No deficiency with respect to any Taxes has been proposed, asserted or assessed against Banner Midstream, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and would not have a material adverse effect.
(c) There are no Encumbrances for Taxes (other than for current Taxes not yet due and payable) on the assets of Banner Midstream. Banner Midstream is not bound by any agreement with respect to Taxes.
4.21 Bad Actors. Neither Banner Midstream nor any of its affiliates:
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(a) Is subject to a final order of a state securities commission (or an agency of a state performing similar functions); a state authority that supervises or examines banks, savings associations, or credit unions; a state insurance commission (or an agency or officer of a state performing like functions); an appropriate federal banking agency; the U.S. Commodity Futures Trading Commission; or the National Credit Union administration that:
(i) At the time of such sale, bars the person from:
| (1) | Association with an entity regulated by such commission, authority, agency, or officer; or |
| (2) | Engaging in the business of securities, insurance or banking; or |
| (3) | Engaging in savings association or credit union activities; or |
(ii) Constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct entered within ten years before such sale;
(b) Is subject to an order of the SEC entered pursuant to section 15(b) or 15B(c) of the Exchange Act (15 U.S.C. 78o(b) or 78o-4(c)) or section 203(e) or (f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(e) or (f)) that, at the time of such sale:
(i) Suspends or revokes such person's registration as a broker, dealer, municipal securities dealer or investment adviser;
(ii) Places limitations on the activities, functions or operations of such person; or
(iii) Bars such person from being associated with any entity or from participating in the offering of any penny stock;
(c) (i) Has been convicted, within ten years before such sale (or five years, in the case of issuers, their predecessors and affiliated issuers), of any felony or misdemeanor:
(ii) In connection with the purchase or sale of any security;
(iii) Involving the making of any false filing with the SEC; or
(iv) Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities;
(d) For the past five years been convicted of a felony or been the subject of a filing in bankruptcy or filed a petition in bankruptcy, or made a general assignment for the benefit
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of creditors; or been an officer, director or principal of any entity which filed a petition in bankruptcy, was reorganized in bankruptcy, or made a general assignment for the benefit of creditors. Is subject to any order of the SEC entered within five years before such sale that, at the time of such sale, orders the person to cease and desist from committing or causing a violation or future violation of:
(i) Any scienter-based anti-fraud provision of the federal securities laws, including without limitation section 17(a)(1) of the Securities Act (15 U.S.C. 77q(a)(1)), section 10(b) of the Exchange Act (15 U.S.C. 78j(b)) and 17 CFR 240.10b-5, section 15(c)(1) of the Exchange Act (15 U.S.C. 78o(c)(1)) and section 206(1) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-6(1)), or any other rule or regulation thereunder; or
(ii) Section 5 of the Securities Act (15 U.S.C. 77e).
(e) Is suspended or expelled from membership in, or suspended or barred from association with a member of, a registered national securities exchange or a registered national or affiliated securities association for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade;
(f) Has filed (as a registrant or issuer), or was or was named as an underwriter in, any registration statement or Regulation A offering statement filed with the SEC that, within five years before such sale, was the subject of a refusal order, stop order, or order suspending the Regulation A exemption, or is, at the time of such sale, the subject of an investigation or proceeding to determine whether a stop order or suspension order should be issued; or
(g) Is subject to a United States Postal Service false representation order entered within five years before such sale, or is, at the time of such sale, subject to a temporary restraining order or preliminary injunction with respect to conduct alleged by the United States Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations.
4.22 COVID-19. Schedule 4.22 sets forth a list of each loan or other financial grant for which Banner Midstream has applied or which it has received pursuant to any federal government loan program following the COVID-19 pandemic.
4.23 Transactions with Related Parties. Except as set forth on Schedule 4.23, none of the officers, directors or 5% shareholders of Banner Midstream has engaged in a transaction with Banner Midstream (other than for services as employees, officers and directors) involving an amount exceeding $20,000.
4.24 Environmental Matters.
(a) Except as set forth in Schedule 4.24:
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(1) Banner Midstream is and has been in compliance with all applicable Environmental Laws;
(2) there is no material claim or action relating to or arising under Environmental Laws that is pending or, to the knowledge of Banner Midstream, threatened against or affecting Banner Midstream; and
(3) to the knowledge of Banner Midstream, no facts, circumstances or conditions exist that would reasonably be expected to result in Banner Midstream incurring material Environmental Liabilities.
(b) Except as set forth in Schedule 4.24:
(1) Banner Midstream has obtained and currently maintains all Environmental Permits;
(2) there is no investigation, nor any Action pending or, to the knowledge of Banner Midstream, threatened against or affecting Banner Midstream or any real property owned, operated or leased by Banner Midstream to revoke such Environmental Permits;
(3) Banner Midstream has not received any written notice from any Person to the effect that there is lacking any Environmental Permit required under Environmental Law for the current use or operation of any property owned, operated or leased by Banner Midstream; and
(4) Neither the execution and delivery of this Agreement by Banner Midstream, nor the consummation by Banner Midstream of the transactions contemplated hereby, nor compliance by Banner Midstream with any of the provisions hereof, will result in the termination or revocation of, or a right of termination or cancellation under, any Environmental Permit.
4.25 Effect of Enviro’s Knowledge. Notwithstanding anything contained herein to the contrary, Banner Midstream shall not have (a) any liability for any breach of or inaccuracy in any representation or warranty made by Banner Midstream to the extent that Enviro, any of its Affiliates or any of its or their respective officers, employees or other representatives (i) had knowledge at or before the Closing of the facts as a result of which such representation or warranty was breached or inaccurate or (ii) was provided access to, at or before the Closing, a document disclosing such facts; or (b) any liability after the Closing for any breach of or failure to perform before the Closing any covenant or obligation of Banner Midstream to the extent that Enviro, or its Affiliates or any of its or their respective officers, employees or other representatives (i) had knowledge at or before the Closing of such breach or failure or (ii) was provided access to, at or before the Closing, a document disclosing such breach or failure.
4.26 Full Disclosure. The representations and warranties of Banner Midstream contained in this Agreement (and in any schedule, exhibit, certificate or other instrument to be
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delivered under this Agreement) are true and correct in all material respects, and such representations and warranties do not omit any material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. There is no fact of which Banner Midstream has knowledge that has not been disclosed to Enviro pursuant to this Agreement, including the schedules hereto, all taken together as a whole, which has had or could reasonably be expected to have a material adverse effect on Banner Midstream, Enviro or materially adversely affect the ability of Banner Midstream to consummate in a timely manner the transactions contemplated hereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
ECOARK
Ecoark hereby represents and warrants to Enviro as follows, which representations are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date, except as reflected on the numbered Disclosure Schedules.
5.01 Organization and Authority of Ecoark. Ecoark has full power and authority to enter into this Agreement, to carry out its obligations under this Agreement, and to consummate the contemplated transactions of Ecoark. The execution and delivery by Ecoark of this Agreement, the performance of its obligations and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action on the part of Ecoark. This Agreement has been duly executed and delivered by Ecoark, and (assuming due authorization, execution and delivery by Enviro and Banner Midstream) this Agreement constitutes a legal, valid and binding obligation of Ecoark enforceable against them in accordance with its terms.
5.02 No Conflicts; Consents. Except as set forth on Schedule 5.02, the execution, delivery and performance by Ecoark of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the organizational documents of Ecoark; (b) conflict with or result in a violation or breach of any provision of any law, regulation or governmental order applicable to Ecoark; or (c) require the consent, notice or other action by any person or entity under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any contract to which Ecoark is a party or by which Ecoark is bound or to which any of its respective properties and assets are subject, except with respect to (b), (c) and (d), where such conflict, violation, breach, default, lien or encumbrance, as the case may be, would not, individually or in the aggregate, have a material adverse effect.
5.03 Purchase Entirely for Own Account. The Enviro Shares proposed to be acquired by Ecoark hereunder will be acquired by Ecoark for investment for its own account, and not with a view to the resale or distribution of any part thereof, and Ecoark has no present intention of selling or otherwise distributing the Enviro Shares, except as set forth in Schedule 5.03 and in compliance with applicable securities laws.
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5.04 Available Information. Ecoark has such knowledge and experience in financial and business matters as is necessary to render it capable of evaluating the merits and risks of an investment in Enviro.
5.05 No Registration. Ecoark understands that the Enviro Shares have not been registered under the Securities Act and, if issued in accordance with the provisions of this Agreement, will be issued by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Ecoark’s representations as expressed herein.
5.06 Restricted Securities. Ecoark acknowledges and agrees that the Enviro Shares are deemed “restricted securities” under the Securities Act inasmuch as this Agreement contemplates that, if acquired by Ecoark pursuant hereto, the Enviro Shares would be acquired in a transaction not involving a public offering. Ecoark further acknowledges that if the Enviro Shares are issued to Ecoark in accordance with the provisions of this Agreement, such Enviro Shares may not be resold without registration under the Securities Act or the existence of an exemption therefrom. Ecoark represents and warrants that it is familiar with Rules 144 and 145 promulgated under the Securities Act as presently in effect and understands the resale limitations imposed thereby and by the Securities Act.
5.07 Legends. It is understood that due to the fact that the offer and sale of the Enviro Shares being issued in connection with the Exchange have not been registered under the Securities Act by virtue of the exemption provided in Section 4(a)(2) of the Securities Act, such shares will contain the following legend:
The offer and sale of the securities represented by this certificate have not been registered under the Securities Act of 1933 (the “Securities Act”), or any applicable state securities laws. Such securities have been acquired for investment purposes and may not be offered for sale, sold, delivered after sale, transferred, pledged or hypothecated in the absence of an effective registration statement filed by the issuer with the Securities and Exchange Commission covering such offer and sale under the Securities Act or an opinion of counsel satisfactory to the issuer that such registration is not required.
and any legend required by the “blue sky” laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended.
5.08 Effect of Enviro’s Knowledge. Notwithstanding anything contained herein to the contrary, Ecoark shall not have (a) any liability for any breach of or inaccuracy in any representation or warranty made by Ecoark to the extent that Enviro, any of its Affiliates or any of its or their respective officers, employees, counsel or other representatives (i) had knowledge at or before the Closing of the facts as a result of which such representation or warranty was breached or inaccurate or (ii) was provided access to, at or before the Closing, a document disclosing such facts; or (b) any liability after the Closing for any breach of or failure to perform before the Closing
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any covenant or obligation of Ecoark to the extent that Enviro, or its Affiliates or any of its or their respective officers, employees, counsel or other representatives (i) had knowledge at or before the Closing of such breach or failure or (ii) was provided access to, at or before the Closing, a document disclosing such breach or failure.
ARTICLE 6
COVENANTS AND ADDITIONAL AGREEMENTS
6.01 Access to Information. From the date hereof until the Closing, each party shall afford the other party full and free access to and the right to inspect all of the properties, assets, premises, books and records, contracts and other documents and data related to the other party, as the case may be; and furnish the other party with such financial, operating and other data and information related to its business and operations as the other party may reasonably request. No investigation by either party or other information received by either party shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by such party in this Agreement.
6.02 Press Release. The parties shall issue a mutually agreed upon press release on the next morning that the Nasdaq Stock Market is open after the execution of this Agreement.
ARTICLE 7
RESERVED
ARTICLE 8
CONDITIONS TO CLOSING
8.01 Conditions to Obligations of Banner Midstream and Ecoark. The obligations of each of Banner Midstream and Ecoark to perform under this Agreement are subject in each case to the satisfaction of the following conditions on or before the Closing unless waived in writing by each such party.
(a) Representations and Warranties. There shall be no information disclosed in the schedules delivered by Enviro which would materially and adversely affect the proposed transaction and intent of the parties as set forth in this Agreement. The representations and warranties of Enviro set forth in Article 3 hereof shall be true and correct in all material respects (except for representations and warranties qualified by materiality which shall be true and correct in all respects) as of the date of this Agreement and as of the Closing as though made on and as of the Closing, except as otherwise permitted by this Agreement.
(b) Performance of Obligations. Enviro shall have in all material respects performed all agreements required to be performed by it under this Agreement and shall have performed in all material respects any actions contemplated by this Agreement prior to or on the Closing and Enviro shall have complied in all material respects with the course of conduct required by this Agreement.
(c) Corporate Action. Enviro shall have furnished minutes, certified copies of
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corporate resolutions, a certificate of good standing as to the good standing of Enviro under Florida law and/or other documentary evidence satisfactory to counsel for Banner Midstream that Enviro have submitted with this Agreement and any other documents required hereby to such parties for approval as provided by applicable law.
(d) Consents. Executed consents, approvals and/or waivers of any party listed in any section of this Agreement or on any schedule delivered by Enviro whose consent, approval and/or waiver is required to consummate the transactions contemplated by this Agreement shall have been obtained and delivered to Banner Midstream and Ecoark.
(e) Governmental Approval. All authorizations, consents, approvals, permits and orders of all federal and state Governmental Entities required to be obtained by Enviro for consummation of the transactions contemplated by this Agreement shall have been obtained.
(f) Market Condition. Up to and including the Closing Date, Enviro shall have maintained its quotation on the OTC Pink Market, without any trading and quotation halts or other notices of deficiency received by or imposed against Enviro.
(g) Changes in Financial Condition of Enviro. There shall not have occurred any material adverse change in the financial condition or in the operations of the business of Enviro, except expenditures in furtherance of this Agreement.
(h) Authorization for Issuance of Stock. Banner Midstream and Ecoark shall have received in form and substance satisfactory to counsel for such parties: satisfactory evidence that the Enviro Shares have been duly authorized for issuance and have been issued in book entry form to Ecoark in accordance with the terms of this Agreement upon surrender by Ecoark of its Banner Midstream Shares duly endorsed for transfer, and a letter from said transfer agent acknowledging receipt of the letter of instruction and stating to the effect that the transfer agent holds adequate supplies of stock certificates necessary to comply with the letter of instruction and the terms and conditions of this Agreement.
(i) Absence of Pending Litigation. Enviro shall not be engaged in or threatened with or have knowledge of any possible suit, action, or legal, administrative or other proceedings or governmental investigations pertaining to this Agreement or the consummation of the transactions contemplated hereunder.
(j) Books and Records. Enviro shall have delivered to Banner Midstream and Ecoark all books and records of Enviro.
8.02 Conditions to Obligations of Enviro. The obligations of Enviro to perform this Agreement are subject to the satisfaction of the following conditions on or before the Closing unless waived in writing by Enviro.
(a) Representations and Warranties. There shall be no information disclosed in the schedules delivered by Banner Midstream which would materially adversely affect the proposed transaction and intent of the parties as set forth in this Agreement. The representations
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and warranties of Banner Midstream set forth in Article 4 and the representations and warranties of Ecoark set forth in Article 5 hereof shall be true and correct in all material respects, except for those representations and warranties qualified by materiality, which shall be true and correct in all respects) as of the date of this Agreement and as of the Closing as though made on and as of the Closing, except as otherwise permitted by this Agreement.
(b) Performance of Obligations. Banner Midstream and Ecoark shall have in all material respects performed all agreements required to be performed by them under this Agreement and shall have performed in all material respects any actions contemplated by this Agreement prior to or on the Closing and Banner Midstream shall have complied in all respects with the course of conduct required by this Agreement.
(c) Banner Midstream Bank Accounts. As of the Closing, Banner Midstream shall have satisfied all Enviro third party long-term liabilities at or before Closing and shall have at least five hundred thousand dollars ($500,000) in cash in its bank accounts at Closing, subject to the exclusive control of Banner Midstream.
(c) Corporate Action. Banner Midstream and Ecoark shall have furnished minutes, certified copies of corporate resolutions, a certificate of good standing as to the good standing of Banner MidStream under Delaware law and/or other documentary evidence satisfactory to counsel for Enviro that Banner Midstream and Ecoark have submitted with this Agreement and any other documents required hereby to such parties for approval as provided by applicable law.
(d) Statutory Requirements. All statutory requirements for the valid consummation by Banner Midstream of the transactions contemplated by this Agreement shall have been fulfilled.
(e) Governmental Approval. All authorizations, consents, approvals, permits and orders of all federal and state governmental agencies required to be obtained by Banner Midstream for consummation of the transactions contemplated by this Agreement shall have been obtained.
(f) Consents. Executed consents, approvals and/or waivers of any party listed on any schedule delivered by Banner Midstream whose consent, approval and/or waiver is required to consummate the transactions contemplated by this Agreement shall have been obtained and delivered to Enviro.
(g) Absence of Pending Litigation. Banner Midstream shall not be engaged in or threatened with or have any knowledge of any possible suit, action, or legal, administrative or other proceedings or governmental investigations pertaining to this Agreement or the consummation of the transactions contemplated hereunder.
(h) Books and Records. Banner Midstream shall have delivered to Enviro all books and records of Banner Midstream.
(i) Intercompany Transactions. All intercompany balances owed by Banner
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MidStream to Ecoark shall have been eliminated.
8.03. Conditions to Obligations of the Parties. The obligation of the parties to perform this Agreement is subject to the satisfaction of the following conditions on or before the Closing unless waived in writing by the parties:
(a) No Governmental Entity shall have enacted, issued, promulgated, enforced, or entered any order that is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions, or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.
ARTICLE 9
MATTERS SUBSEQUENT TO CLOSING
9.01 Covenant of Further Assurance. The parties covenant and agree that they shall, from time to time, execute and deliver or cause to be executed and delivered all such further instruments of conveyance, transfer, assignments, receipts and other instruments, and shall take or cause to be taken such further or other actions as the other party or parties to this Agreement may reasonably deem necessary in order to carry out the purposes and intent of this Agreement.
9.02 Advisory Agreement. Within 15 days after the Closing Date, the Parties will make best efforts to execute a mutually agreed upon advisor agreement with John DiBella.
9.03 Form 8-K. In connection with the transactions contemplated hereby, Enviro herby agrees to prepare a Current Report on Form 8-K (the “Form 8-K”) to disclose the transactions contemplated hereby, which disclosure shall be in accordance with the requirements set forth by the SEC and the rules and regulations thereof; provided, however, Banner Midstream shall approve in writing the form and substance of such Form 8-K prior to any submission thereof to any governmental authority or other third party (to the extent that each of Enviro and Banner Midstream shall have previously approved (such approval not be unreasonably withheld, conditioned, or delayed by either such party) in writing the form and substance of the Form 8-K, Enviro shall promptly file the Form 8-K with the SEC (disclosing the change of control of Enviro, the resignations of officers and directors of Enviro, the appointment of the officers and directors of Enviro and any other matters required to be set forth therein: and all other required filings with any state and federal regulators.
9.04 Director Resignations. Following compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, John DiBella and Raynard Veldman shall resign from the Board of Directors of Enviro.
ARTICLE 10
NATURE OF REPRESENTATIONS
10.01 All statements contained in any written certificate, schedule, exhibit or other written
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instrument delivered by Enviro, or Banner Midstream or Ecoark pursuant hereto, or otherwise adopted by any of Enviro, Banner Midstream or Enviro by their respective written approval, or in connection with the transactions contemplated hereby, shall be deemed representations and warranties by Enviro, or Banner Midstream or Ecoark, as the case may be. All representations, warranties and agreements made by any party pursuant to this Agreement shall survive for the period of the applicable statute of limitations.
ARTICLE 11
INDEMNIFICATION AND DISPUTE RESOLUTION
11.01 Indemnity of Banner Midstream and Ecoark by Enviro. Subject to the terms and conditions set forth in this Article 11, Enviro agrees to defend, indemnify and hold harmless each of Banner Midstream and Ecoark from and against, and to reimburse Banner Midstream and Ecoark with respect to, all liabilities, losses, costs and expenses, including, without limitation, reasonable attorneys’ fees and disbursements, asserted against or incurred by Banner Midstream and Ecoark to the extent arising out of, or in connection with any material breach of any representation or warranty contained in this Agreement made by Enviro or in any document or certificate delivered by Enviro pursuant to the provisions of this Agreement or in connection with the transactions contemplated thereby.
11.02 Indemnity of Enviro by Banner Midstream. Subject to the terms and conditions set forth in this Article 11, Banner Midstream agrees to defend, indemnify and hold harmless Enviro from and against, and to reimburse Enviro with respect to, all liabilities, losses, costs and expenses, including, without limitation, reasonable attorneys’ fees and disbursements, asserted against or incurred by Enviro to the extent arising out of, or in connection with any material breach of any representation or warranty contained in this Agreement made by Banner Midstream, or in any document or certificate delivered by Banner Midstream pursuant to the provisions of this Agreement or in connection with the transactions contemplated thereby.
11.03 Indemnity of Enviro by Ecoark. Subject to the terms and conditions set forth in this Article 11 Ecoark agrees to defend, indemnify and hold harmless Enviro from and against, and to reimburse Enviro with respect to, all liabilities, losses, costs and expenses, including, without limitation, reasonable attorneys’ fees and disbursements, asserted against or incurred by Enviro to the extent , arising out of, or in connection with any breach of any representation or warranty contained in this Agreement made by Ecoark, or in any document or certificate delivered by Ecoark pursuant to the provisions of this Agreement or in connection with the transactions contemplated thereby. For the avoidance of doubt, Ecoark’s liability under this section 11.03 shall be limited to any liability incurred by its own breach of any representation or warranty.
11.04 Indemnification Procedure. A party (an “Indemnified Party”) seeking indemnification shall give prompt notice to the other party (the “Indemnifying Party”) of any claim for indemnification arising hereunder this Article 11. The Indemnifying Party shall have the right to assume and to control the defense of any such claim with counsel of its choosing that is reasonably acceptable to such Indemnified Party, at the Indemnifying Party’s own cost and expense, including the cost and expense of reasonable attorneys’ fees and disbursements for one law firm in connection with such defense, in which event the Indemnifying Party shall not be
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obligated to pay the fees and disbursements of separate counsel for such in such action. In the event, however, that such Indemnified Party’s legal counsel shall determine that defenses may be available to such Indemnified Party that are different from or in addition to those available to the Indemnifying Party, in that there could reasonably be expected to be a conflict of interest if such Indemnifying Party and the Indemnified Party have common counsel in any such proceeding, or if the Indemnified Party has not assumed the defense of the action or proceedings, then such Indemnifying Party may employ separate counsel to represent or defend such Indemnified Party, and the Indemnifying Party shall pay the reasonable fees and disbursements of counsel for such Indemnified Party. No settlement of any such claim or payment in connection with any such settlement shall be made without the prior consent of the Indemnifying Party which consent shall not be unreasonably withheld.
11.05 Limitation of Liability. Except in the case of Environmental Liability, fraud or criminal activity no party will have any liability to indemnify any other party under Article 11 of this Agreement for any Losses (a) until the aggregate amount of all Losses in respect of indemnification under this Article 11 exceeds $50,000 (the “Basket”), in which event the Indemnifying Party shall be liable for all such Losses from the first dollar (subject to the Cap), and (b) to the extent the Indemnifying Party would be required to make indemnification payments under this Article 11 in excess of $100,000 (the “Cap”). Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall limit or otherwise affect any party’s rights or remedies with respect to fraud, or other criminal activity (it being acknowledged and agreed that in the event any Indemnified Party suffers any Losses by reason of a party’s fraud or criminal activity, such Indemnified Party shall be entitled to seek recovery therefor without regard to any limitation set forth in this Agreement (whether a temporal limitation, dollar limitation or otherwise)).
11.06 Indemnification Payments. If any Indemnifying Party becomes obligated to indemnify any Indemnified Party for any Losses under this Article 11 as established pursuant to (a) a final and non-appealable judgment, order, award or determination of a court of competent jurisdiction or other Governmental Entity or (b) the mutual agreement of the Indemnifying Party and the Indemnified Party, such payment shall be made promptly by such Indemnifying Party, but in any event within 30 days.
11.07 Survival. Each of the representations and warranties set forth in this Agreement and all indemnity obligations hereunder related to breaches of such representations and warranties will expire on the date that is 12 months after the Closing Date (the “Expiration Date”). No claim, lawsuit or other proceeding arising out of or related to the breach or inaccuracy of any representation or warranty set forth in this Agreement may be made by any party unless notice of any such claim for indemnification with respect to such breach or inaccuracy is given to the Indemnifying Party on or prior to the Expiration Date. Notwithstanding anything in this Agreement to the contrary, the rights and remedies under this Article 11 with respect to any claim, lawsuit or other proceeding (including recovery of Losses in respect thereof) for which notice has been given prior to the Expiration Date will survive until such claim, lawsuit or other proceeding has been finally resolved.
11.08 Arbitration. In the event that any dispute shall arise between the parties hereto as
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to any matter or thing covered hereby or as to the meaning of this Agreement or to any state of facts which may arise, same shall be settled by the agreement of the parties, or if they are unable to agree, same shall be settled by arbitration in San Antonio, Texas (or such other county in which Ecoark’s principal place of business is then located), by a single arbitrator, who shall be a retired Judge of the local state trial court, and judgment upon any award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The parties hereto acknowledge that the use of this Arbitration process denies to each party the right to sue in a court of law on any issue covered hereby, excluding therefrom the right to sue to enforce his rights hereunder, covered below.
Refusal of one party to arbitrate shall entitle the remaining party to the dispute to specifically enforce this Agreement in a court of competent jurisdiction, and, as a result of said refusal to arbitrate, the remaining party shall be entitled to receive costs, reasonable attorneys’ fees and his share of the arbitration fee. Arbitration by the parties shall take place at a time and place as may be agreed upon, but if no agreement shall be reached, then at the offices of Ecoark’s counsel.
If it is determined by the arbitrator that one party was in default hereof or instituted (or defended) such arbitration proceeding not in good faith or without a reasonable basis in law or fact (“Defaulting Party”), the Defaulting Party shall bear the costs of the arbitration proceeding and pay to the other party or parties the reasonable attorney's fees and costs incurred in such proceeding, which amounts shall be separately determined by the arbitrator in such proceeding and become part of the amount of the arbitration award, payable by the Defaulting Party to the other party or parties.
If the Defaulting Party does not pay to the other party the arbitration award within 10 days of written demand therefor, and the other party may institute suit in a court of competent jurisdiction to enforce said decision, the Defaulting Party shall pay the other party the reasonable attorney’s fees and court costs incurred in such action.
This paragraph is in no way intended to preclude any party from enforcing his rights in a court of competent jurisdiction. It is intended hereby to resolve by arbitration questions of construction of this Agreement and to resolve factual issues that may be disputed by the parties. In the event of litigation, the parties agree that a Defaulting Party shall pay the reasonable attorney’s fees of any non-defaulting party, together with court costs and reasonable expenses of litigation; said amount shall be determined by the trial judge upon completion of the trial prior to entry of judgment. In the event that all parties are found to be Defaulting Parties, no party shall be entitled to court costs, attorney’s fees or litigation expenses.
While any arbitration proceeding is pending, no party is excused from the payment of monies due hereunder, but if it is determined by the arbitrator that monies paid during the arbitration period were not due, the payee shall remit the amount of monies so paid, together with interest at the rate of 10% per annum from the date of receipt to the proper party, within 10 days of the issuance of the arbitration award.
Nothing herein is intended to prevent any party after a default by the other party from
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instituting any action in a court of competent jurisdiction to enforce its rights hereunder. If such enforcement action is not defended or if a defendant does not interpose in its answer as a defense that there are issues of fact which require resolution by arbitration, the court shall have jurisdiction over the subject matter of such dispute. The unsuccessful party in such judicial proceeding or with respect to any motion for relief made in such proceeding shall pay to the successful party the reasonable attorney's fees, court costs and expenses incurred in such proceeding.
Within 30 days of completion of the arbitration hearing, the arbitrator shall deliver to the parties a proposed form of written decision (“Proposed Decision”) which shall include a detailed factual basis of his decision and the applicable law which he determined governed same. The parties shall have 10 days after receipt of the Proposed Decision to respond thereto in writing (“Parties’ Response”); providing each other with a copy of that which such party provided to the arbitrator. The arbitrator shall render his final Decision and any arbitration award within 45 days from the date of his Proposed Decision; making reference therein to the Parties’ Response, if any.
The decision of the arbitrator shall be binding, conclusive and not subject to appeal, except in the event of his failure to comply with the terms of this Agreement, fraud or misapplication of applicable law.
ARTICLE 12
TERMINATION OF AGREEMENT AND
ABANDONMENT OF REORGANIZATION
12.01 Termination. Anything herein to the contrary notwithstanding, this Agreement and any agreement executed as required hereunder and the acquisition contemplated hereby may be terminated at any time before the Closing as follows:
(a) By mutual written consent of the Boards of Directors of Enviro, Banner Midstream and Ecoark.
(b) By the Board of Directors of Enviro if any of the conditions set forth in Section 8.02 shall not have been satisfied by the Closing Date.
(c) By the Boards of Directors of Banner Midstream or Ecoark if any of the conditions set forth in Section 8.01 shall not have been satisfied by the Closing Date.
(d) By any of the Boards of Directors of Enviro, Banner Midstream or Ecoark if the Closing Date is not on or before September _____, 2022, or such later date as the parties may mutually agree (except that a party seeking to terminate this Agreement pursuant to this clause may not do so if the failure to consummate the Exchange contemplated by this Agreement by such date shall be due to the action or failure to act of the party seeking to terminate the Agreement in breach of such party’s obligations under this Agreement).
12.02 Termination of Obligations and Waiver of Conditions; Payment of Expenses. Except as otherwise provided under Section 12.03, in the event this Agreement and the Exchange are terminated and abandoned pursuant to this Article 12 hereof, this Agreement shall become void
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and of no force and effect and there shall be no liability on the part of any of the parties hereto, or their respective directors, officers, shareholders or controlling persons to each other. Any the costs and expenses incident to its negotiation and preparation of this Agreement and any of the documents evidencing the transactions contemplated hereby, including fees, expenses and disbursements of counsel, shall be borne by the party incurring such costs and expenses.
12.03 Termination Fee. Any party terminating this Agreement without the consent of the other party in the event the failure to consummate the Exchange contemplated by this Agreement is solely due to the action or failure to act of such party seeking to terminate this Agreement, shall reimburse the other party the sum of fifty thousand dollars ($50,000).
ARTICLE 13
EXCHANGE SHARES
13.01 Share Issuance. At the Closing, Enviro shall issue a letter to the transfer agent of Enviro with a copy of the resolutions of the Board of Directors of Enviro authorizing and directing the Enviro Shares shall be issued in book entry form with the records of its transfer agent.
13.2 Delivery of Banner Midstream Shares. At the Closing Ecoark shall deliver certificate(s) evidencing the Banner Midstream Shares, free and clear of all Encumbrances, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank.
ARTICLE 14
MISCELLANEOUS
14.01 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by the party incurring such costs and expenses.
14.02 Notices. All notices, offers, acceptance and any other acts under this Agreement shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar overnight next business day delivery, or by email delivery followed by overnight next business day delivery, as follows:
| If to Enviro: | ||
| Enviro Technologies U.S., Inc. | ||
| 821 NW 57th Place | ||
| Fort Lauderdale, FL 33782 | ||
| E-mail: ***@*** | ||
| Attn: John A. DiBella, CEO | ||
| With a copy | ||
| (which shall not constitute notice) to: | ||
| Nason, Yeager, Gerson, Harris & Fumero, P.A. | ||
| 3001 PGA Boulevard, Suite 305 | ||
| Palm Beach Gardens, Florida 33410 |
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| E-mail: ***@*** | ||
| Attention: Brian Pearlman, Esq. | ||
| If to Banner Midstream or Ecoark: | ||
| 303 Pearl Parkway Suite 200 | ||
| San Antonio, TX 78215 | ||
| E-mail: ***@*** | ||
| Attention: Jay Puchir, CFO | ||
| With a copy | ||
| (which shall not constitute notice) to: | ||
| Carmel Milazzo & Feil LLP | ||
| 55 West 39th Street, 18th Floor | ||
| New York, NY 10018 | ||
| E-mail: ***@*** | ||
| Attn: Ross D. Carmel, Esq. |
or to such other address as any of them, by notice to the other may designate from time to time. Time shall be counted from the date of transmission. Each party shall provide five days’ prior written notice to the other party of any change in address.
14.03 Amendment and Waiver. The parties hereby may, by mutual agreement in writing signed by or on behalf of each party, amend this Agreement in any respect. Any term or provision of this Agreement may be waived in writing signed by an authorized officer at any time by the party against which such waiver is to be charged, such waiver right shall include, but not be limited to, the right of either party to:
| (a) | Extend the time for the performance of any of the obligations of the other(s); |
(b) Waive any inaccuracies in representations by the other(s) contained in this Agreement or in any document delivered pursuant hereto;
(c) Waive compliance by the other(s) with any of the covenants contained in this Agreement, and performance of any obligations by the other(s); and
(d) Waive the fulfillment of any condition that is precedent to the performance by the party so waiving of any of its obligations under this Agreement.
Any writing on the part of a party relating to such amendment, extension or waiver as provided in this Section 14.03 shall be valid if authorized or ratified by the Board of Directors of such party.
14.04 Remedies not Exclusive. No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. The election of any one or more remedies by a party shall not constitute a waiver of the right of such party to pursue other available remedies.
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14.05 Attorneys’ Fees. In the event a dispute arises with respect to this Agreement, the party prevailing in such dispute shall be entitled to recover all expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred in ascertaining such party’s rights, in preparing to enforce, or in enforcing such party’s rights under this Agreement, whether or not it was necessary for such party to institute suit.
14.06 Governing Law. Any dispute in the meaning, effect or validity of this Agreement shall be resolved in accordance with the laws of the State of Florida without regard to the conflict of laws provisions thereof.
14.07 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 instrument.
14.08 Benefit. This Agreement shall be binding upon, and inure to the benefit of, the respective successors and assigns of Enviro, Banner Midstream and Ecoark.
14.09 Entire Agreement. This Agreement and the schedules and exhibits attached hereto, represent the entire agreement of the undersigned regarding the subject matter hereof, and supersedes all prior written or oral understandings or agreements between the parties.
14.10 Captions and Section Headings. Captions and section headings used herein are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.
14.11 Scrivener’s Errors. The parties shall have the right to amend the Agreement, upon mutual written consent, to correct any scrivener’s errors in the Agreement, provided that such amendment does not materially adversely affect the rights of the shareholders of the parties.
14.12 Force Majeure. A party shall be excused from any delay in performance or for non-performance of any of the terms and conditions of this Agreement caused by any Force Majeure event. “Force Majeure” shall mean strikes, labor disputes, freight embargoes, quarantines, public health emergencies, or a declared state of emergency, interruption or failure in the Internet, telephone or other telecommunications service or related equipment, material interruption in the mail service or other means of communication within the United States, if the non-performing party shall have sustained a material or substantial loss by fire, flood, accident, hurricane, earthquake, theft, sabotage, quarantine, public health emergencies, declared state of emergency or other calamity or malicious act, whether or not such loss shall have been insured, acts of God, outbreak or material escalation of hostilities or civil disturbances, national emergency or war (whether or not declared), or other calamity or crises including a terrorist act or acts affecting the United States as applicable, future laws, rules, regulations or acts of any Governmental Entity (including any lockdowns or orders arising from any pandemic), or any cause beyond the reasonable control of such non-performing party.
14.13. [Intentionally Omitted]
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14.14. Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction; provided, however, that if any fundamental term or provision of this Agreement, is invalid, illegal, or unenforceable, the remainder of this Agreement shall be unenforceable. Upon a determination that any term or provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement to affect the original intent of the parties as closely as possible in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent compatible with, and possible under, applicable laws and regulations.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties have duly executed this Share Exchange Agreement as of the date first written above.
“Enviro”
Enviro Technologies U.S., Inc.
By: /s/ John A. DiBella
Name: John A. DiBella
Title: Chief Executive Officer
“Banner Midstream”
Banner Midstream Corp.
By: /s/ Jay Puchir
Name: Jay Puchir
Title: President
“Ecoark”
Ecoark Holdings, Inc.
By: /s/ Randy S. May
Name: Randy S. May
Title: Chief Executive Officer
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