SHARE PURCHASE AGREEMENT AND PLAN OF REORGANIZATION

SHARE PURCHASE AGREEMENT AND PLAN OF REORGANIZATION

THIS SHARE PURCHASE AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 28, 2004 (the “Agreement”), among Cardinal Minerals, Inc., a Nevada corporation (“Cardinal”), Universal Food and Beverage Company, a Delaware corporation (the “Company”) and those stockholders of the Company set forth on the signature pages to this Agreement, as it may be amended from time to time after the date hereof (the “Sellers”). Together Cardinal and the Company are referred to collectively as the “Parties.”

RECITALS:

WHEREAS, prior to the Closing (as defined herein), the Company may issue (A) up to 19,000,000 shares of Company Common Stock (as defined herein) to the founders ("Founders") of the Company, (B) up to an additional 383,000 shares of the Company Common Stock to Enhanced Beverage Corporation ("EBC") in consideration of the purchase of equipment from EBC (the "EBC Asset Purchase"), (C) up to an additional 10,133,333 shares of Company Common Stock and warrants to purchase up to an additional 10,133,333 shares of Company Common Stock in connection with an ongoing private placement of Company Common Stock to be completed prior to Closing (the "Private Placement"), (D) up to an additional 533,333 shares of Company Common Stock and warrants to purchase up to an additional 533,333 shares of Company Common Stock to the distributor ("Distributor") that enters into the Canadian license and distribution agreement with the Company, and (E) up to an additional 3,000,000 shares of Company Common Stock and warrants to purchase up to 3,000,000 shares of Company Common Stock in connection with the IWG Asset Purchase (as defined herein); and the Founders, EBC, the Investors, the Distributor and IWG as of the Closing will hold all of the Company's issued and outstanding capital stock and are referred to herein as the “Sellers”; 

WHEREAS, Cardinal desires to acquire from the Sellers, and the Sellers desire to sell to Cardinal, all of the issued and outstanding shares of capital stock of the Company (the "Seller's Shares") as of the Closing (as defined herein) in exchange (the “Exchange”) for the issuance by Cardinal of its shares of common stock, $0.01 par value per share (“Cardinal Common Stock”), on a one for one basis, (taking into account and after the reverse split of the Cardinal Common Stock contemplated herein) (the “Exchange Shares”), on the terms and conditions set forth below;

WHEREAS, it is intended that, for federal income tax purposes, the Exchange shall qualify as a reorganization under the provisions of Section 368(b) of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated there under (the “Code”); and

WHEREAS, the Company, the Sellers and Cardinal desire to make certain representations, warranties, covenants and agreements in connection with this Agreement; and

NOW, THEREFORE, in consideration of the premises and mutual promises herein made, and in consideration of the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Definitions. The following terms shall, when used in this Agreement, have the following meanings:

“Affiliate” means, with respect to any Person: (i) any Person directly or indirectly owning, controlling, or holding with power to vote 10% or more of the outstanding voting securities of such other Person (other than passive or institutional investors); (ii) any Person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; and (iv) any officer, director or partner of such other Person. “Control” for the foregoing purposes shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or voting interests, by contract or otherwise.

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"Bottling Plant" means the water bottling facility in Independence, Virginia currently managed by the Company.

“Business Day” means any day other than Saturday, Sunday or a day on which banking institutions in New York are required or authorized to be closed.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Commission” means the Securities and Exchange Commission.

“Company Assets” mean all properties, assets, privileges, powers, rights, interests and claims of every type and description that are owned, leased, held, used or useful in the Company’s business and in which the Company has any right, title or interest or in which the Company acquires any right, title or interest on or before the Closing Date, wherever located, whether known or unknown, and whether or not now or on the Closing Date on the books and records of the Company, but excluding any of the foregoing, if any, transferred prior to the Closing pursuant to this Agreement or any Related Documents.

“Company Business” means (i) the management of the Bottling Plant under a management agreement with IWG, the current owner of the facility, (ii) following the IWG Asset Purchase, the ownership and operation of the Bottling Plant, and (iii) the development, marketing and distribution of bottled water and related products.

“Company Common Stock” means the common shares of the Company.

"Company Warrants" means the Investor Warrants, Distributor Warrants and IWG Warrants.

“Company Shareholders” means, as of any particular date, the holders of Company Common Stock on that date.

“Encumbrance” means any material mortgage, pledge, lien, encumbrance, charge, security interest, security agreement, conditional sale or other title retention agreement, limitation, option, assessment, restrictive agreement, restriction, adverse interest, restriction on transfer or exception to or material defect in title or other ownership interest (including restrictive covenants, leases and licenses).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“GAAP” means United States generally accepted accounting principles as in effect from time to time.

“Cardinal Assets” mean all properties, assets, privileges, powers, rights, interests and claims of every type and description that are owned, leased, held, used or useful in the Cardinal Business and in which Cardinal holds title or any interest or in which Cardinal acquires any right, title or interest on or before the Closing Date, wherever located, whether known or unknown, and whether or not now or on the Closing Date on the books and records of Cardinal.

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“Cardinal Business” means the business conducted by Cardinal.

“Cardinal Common Stock” means the common shares of Cardinal, $0.01 par value.

“Cardinal Securities Filings” means Cardinal’s annual report on Form 10-KSB for the year ended December 31, 2003, its quarterly reports on Form 10-QSB, and all other reports and schedules (including proxy materials) filed with the Commission after December 31, 2003 and prior to the Closing.

“Exchange Shares” means the shares of Cardinal Common Stock deliverable by Cardinal in exchange for Seller Shares.

"IWG" means Independence Water Group, LLC.

"IWG Asset Purchase" means the purchase of the Bottling Facility and related assets from IWG.

“Legal Requirement” means any statute, ordinance, law, rule, regulation, code, injunction, judgment, order, decree, ruling, or other requirement enacted, adopted or applied by any Regulatory Authority, including judicial decisions applying common law or interpreting any other Legal Requirement. Without limiting the foregoing, the laws, rules and regulations of and pursuant to the Sarbanes Oxley Act of 2002 as well as the accounting requirements included in the rules and regulations of the Commission, are included with in the term Legal Requirement.

“Losses” shall mean all damages, awards, judgments, assessments, fines, sanctions, penalties, charges, costs, expenses, payments, diminutions in value and other losses, however suffered or characterized, all interest thereon, all costs and expenses of investigating any claim, lawsuit or arbitration and any appeal there from, all actual attorneys’, accountants’, investment bankers’ and expert witness’ fees incurred in connection therewith, whether or not such claim, lawsuit or arbitration is ultimately defeated and, subject to Section 9.4, all amounts paid incident to any compromise or settlement of any such claim, lawsuit or arbitration.

“Liability” means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

“Material Adverse Effect” means a material adverse effect on (i) the assets, Liabilities, or properties of the Parties, (ii) the validity, binding effect or enforceability of this Agreement or the Related Documents or (iii) the ability of any Party to perform its obligations under this Agreement and the Related Documents; provided, however, that none of the following shall constitute a Material Adverse Effect on the Company: (i) the filing, initiation and subsequent prosecution, by or on behalf of shareholders of any Party, of litigation that challenges or otherwise seeks damages with respect to the Exchange, this Agreement and/or transactions contemplated thereby or hereby, (ii) occurrences due to a disruption of a Party’s business as a result of the announcement of the execution of this Agreement or changes caused by the taking of action required by this Agreement, (iii) general economic conditions, or (iv) any changes generally affecting the industries in which a Party operates.

“Person” means any natural person, corporation, partnership, trust, unincorporated organization, association, limited liability company, Regulatory Authority or other entity.

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“Regulatory Authority” means: (i) the United States of America; (ii) any state, commonwealth, territory or possession of the United States of America and any political subdivision thereof (including counties, municipalities and the like); (iii) any foreign (as to the United States of America) sovereign entity and any political subdivision thereof; or (iv) any agency, authority or instrumentality of any of the foregoing, including any court, tribunal, department, bureau, commission or board.

“Representative” means any director, officer, employee, agent, consultant, advisor or other representative of a Person, including legal counsel, accountants and financial advisors.

“Related Documents” mean the Exhibits and any other documents, instruments and certificates to be executed and delivered by the Parties hereunder.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations there under.

“Subsidiary” of a specified Person means (a) any Person if securities having ordinary voting power (at the time in question and without regard to the happening of any contingency) to elect a majority of the directors, trustees, managers or other governing body of such Person are held or controlled by the specified Person or a Subsidiary of the specified Person; (b) any Person in which the specified Person and its subsidiaries collectively hold a 50% or greater equity interest; (c) any partnership or similar organization in which the specified Person or subsidiary of the specified Person is a general partner; or (d) any Person the management of which is directly or indirectly controlled by the specified Person and its Subsidiaries through the exercise of voting power, by contract or otherwise.

“Tax” means any U.S. or non U.S. federal, state, provincial, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, intangible property, recording, occupancy, sales, use, transfer, registration, value added minimum, estimated or other tax of any kind whatsoever, including any interest, additions to tax, penalties, fees, deficiencies, assessments, additions or other charges of any nature with respect thereto, whether disputed or not.

ARTICLE II

EXCHANGE OF SHARES AND ISSUANCE OF WARRANTS

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS

The Company and each of the Sellers (as to Sections 3.1-3.13, to the best knowledge of such Seller) represent and warrant to Cardinal that the statements contained in this ARTICLE III are correct and complete as of the date of this Agreement and, except as provided in Section 7.1, will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE III, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by this Agreement).

(a) As of the Closing, the authorized, issued and outstanding capital stock and other ownership interests of the Company, will be set forth on Schedule 3.2(a). Other than the Company Common Stock, there are no other classes of capital stock outstanding. As of the Closing, all the owners of the Company’s stock will be listed on Exhibit 2.1(a) hereto.

(b) As of the Closing, except as set forth on Schedule 3.2(b), there will be no outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests (collectively “Options”).

(c) As of the Closing, all of the issued and outstanding capital stock of Company will be duly authorized and validly issued and outstanding, fully paid and nonassessable. As of the Closing, all the Options will have been duly authorized and validly issued and outstanding. As of the Closing, the capital stock and the Options will have been issued in compliance with applicable securities laws and other applicable Legal Requirements or transfer restrictions under applicable securities laws.

(d) All of the capital stock of the Company to be issued between the date of this Agreement and the Closing will be duly authorized and will be validly issued and outstanding as of the Closing, fully paid and nonassessable, and will be issued in compliance with applicable securities laws and other applicable Legal Requirements or transfer restrictions under applicable securities laws.

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The Company covenants and agrees with Cardinal that the Company shall obtain an audit of the Company Financial Statements and file within the number of days permitted by the Legal Requirements of the SEC after the Closing, but in no event more than 60 days after the Closing, such Company Financial Statements and pro forma statements together with all other required financial statements and footnotes with the SEC pursuant to the Securities Exchange Act of 1934, and the rules promulgated thereunder. Fulfillment of this covenant and agreement by the Company is a material condition subsequent to all of the transactions under and contemplated by this Agreement.

(a) Each Seller is acquiring the Exchange Shares for investment, for such Seller’s own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and such Seller has no present intention of selling, granting any participation in, or otherwise distributing the same. Each Seller further represents that such Seller does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Company Shares.

(b) Each Seller understands that the Exchange Shares are not registered under the Securities Act, that Cardinal’s sale and the issuance of its securities hereunder is exempt from registration under the Securities Act pursuant to Section 4(2) thereof, and that Cardinal’s reliance on such exemption is predicated on such Seller’s representations set forth herein. Such Seller is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Act.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF CARDINAL

Cardinal, represents and warrants to the Company and the Sellers that the statements contained in this ARTICLE IV are correct and complete as of the date of this Agreement and, except as provided in Section 8.1, will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE IV, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by the Agreement).

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(a) As of the date hereof, Cardinal’s authorized capital stock of 100,000,000 shares of common stock, $0.01 par value, and 25,000,000 shares of preferred stock, $0.01 of which there are 21,316,914 shares of common stock outstanding and 1,054,562 shares of preferred stock outstanding designated as the Class C Preferred Stock (“Class C Preferred Stock”), which has no voting or dividend rights but has the right to convert into three shares of Cardinal Common Stock for each share of Class C Preferred Stock. Except as immediately set forth, there are no other shares of capital stock outstanding.

(b) Except for the Class C Preferred Stock, there are no outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require Cardinal to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests.

(c) All of the issued and outstanding shares of Cardinal Common Stock and Class C Preferred Stock have been, and all prior issuances of Cardinal Common Stock and preferred stock were, issued in compliance with applicable securities laws and all other applicable Legal Requirements.

(d) Upon conversion of the Class C Preferred Stock and the issuance of any additional shares of Cardinal Common Stock pursuant to the terms of this Agreement and the terms of the instruments defining the Class C Preferred Stock, all of such shares of Cardinal Common Stock will be duly authorized, validly issued and outstanding and will be fully paid and non-assessable, and will be issued in compliance with all applicable securities laws and all other applicable Legal Requirements.

(e) Cardinal has authorized two stock award plans, however, there are no awards issued and outstanding thereunder and there are no commitments to issue any awards thereunder.

(d) The Exchange Shares, when issued in accordance with this Agreement, will have been duly authorized, validly issued and outstanding and will be fully paid and nonassessable.

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(a) The historical financial statements (including the notes thereto) contained (or incorporated by reference) in the Cardinal Securities Filings have been prepared in accordance with all applicable Legal Requirements and GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto), and present fairly the financial condition of Cardinal and its results of operations as of the dates and for the periods indicated, subject in the case of the unaudited financial statements only to normal year-end adjustments (none of which will be material in amount) and the omission of footnotes.

(b) The Cardinal Securities Filings did not, as of their filing dates, contain (directly or by incorporation by reference) any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (or incorporated therein by reference), in light of the circumstances under which they were or will be made, not misleading.

 

(c)    Cardinal maintains accurate books and records reflecting its assets and liabilities and maintains proper and adequate internal accounting controls which provide assurance that transactions are executed with management's authorization and recorded as necessary to permit preparation of the financial statements of Cardinal.

 

(a)    Cardinal is current in its obligations to file with the Commission all of its reports, schedules and other filings under applicable Legal Requirements, and when filed complied with the Legal Requirements for such Cardinal Securities Filings and all such Cardinal Securities Filings, when filed, did not contain any untrue statement of a material fact, or omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. Since the date of the most recent Cardinal Securities Filings, there have been no material change in the business or financial condition of Cardinal that would require the filing of any amendment, supplement or report to disclose a material change, and there is no disclosure required pursuant to Form 8-K, other than in respect of this Agreement and the actions to be taken hereunder, required to be disclosed in any Cardinal Securities Filings other than in the ordinary course.

 

(b)    The Cardinal Securities Filings include all the material contracts of Cardinal representing current obligations of or benefits for Cardinal as Item 10 Exhibits, and there are no other material contracts of Cardinal.

 

(c)    Prior to October 15, 2004, Cardinal has provided the Company with all comment letters received from the Staff of the Commission and all responses to such comment letters by or on behalf of the Cardinal.

 

(d)    The Company maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures are effective to ensure that all material information concerning Cardinal is made known on a timely basis to the individuals responsible for the preparation of Cardinal's Securities Filings and other public disclosure documents.

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(e)    The Chief Executive Officer and the Chief Financial Officer of Cardinal have signed, and Cardinal has furnished to the Commission, all certifications required by Section 906 of the Sarbanes-Oxley Act of 2002; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neither Cardinal nor any of its officers has received notice from any Regulatory Authority questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications.

(f)    Each of Cardinal, its directors and its senior financial officers has consulted with Cardinal's independent auditors and with Cardinal's outside counsel with respect to, and (to the extent applicable to Cardinal) is familiar in all material respects with all of the requirements of, the Sarbanes-Oxley Act of 2002. Cardinal is in compliance with the provisions of the Sarbanes-Oxley Act of 2002 applicable to it as of the date hereof and has implemented such programs and has taken reasonable steps, upon the advice of Cardinal's independent auditors and outside counsel, respectively, to ensure Cardinal's future compliance (not later than the relevant statutory and regulatory deadlines therefore) with all provisions of the Sarbanes-Oxley Act of 2002 which shall become applicable to Cardinal after the date hereof.

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ARTICLE V

COVENANTS OF THE COMPANY

Between the date of this Agreement and the Closing Date:

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ARTICLE VI

COVENANTS OF CARDINAL

Between the date of this Agreement and the Closing Date,

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ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF CARDINAL

All obligations of Cardinal under this Agreement shall be subject to the fulfillment at or prior to Closing of each of the following conditions, it being understood that Cardinal may, in their sole discretion, to the extent permitted by applicable Legal Requirements, waive any or all of such conditions in whole or in part.

(i) Certified copies of the Company’s articles of incorporation and by-laws and certified resolutions of the board of directors of the Company authorizing the execution of this Agreement and the Related Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby.

(ii) The written joinder of each of the Sellers to this Agreement and the Related Documents.

(iii) Such other documents and instruments as Cardinal may reasonably request: (A) to evidence the accuracy of the Company’s representations and warranties under this Agreement, the Related Documents and any documents, instruments or certificates required to be delivered there under; (B) to evidence the performance by the Company of, or the compliance by the Company with, any covenant, obligation, condition and agreement to be performed or complied with by the Company under this Agreement and the Related Documents; or (C) to otherwise facilitate the consummation or performance of any of the transactions contemplated by this Agreement and the Related Documents.

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ARTICLE VIII

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLERS

All obligations of the Company and the Sellers under this Agreement shall be subject to the fulfillment at or prior to Closing of the following conditions, it being understood that the Company and the Sellers may, in their sole discretion, to the extent permitted by applicable Legal Requirements, waive any or all of such conditions in whole or in part.

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(i) Certified copies of the articles of incorporation and by-laws of Cardinal and certified resolutions by the board of directors authorizing the execution of this Agreement and the Related Documents and the consummation of the transactions contemplated hereby.

(ii) Such other documents and instruments as the Company may reasonably request: (A) to evidence the accuracy of the representations and warranties of Cardinal under this Agreement and the Related Documents and any documents, instruments or certificates required to be delivered there under; (B) to evidence the performance by Cardinal of, or the compliance by Cardinal with, any covenant, obligation, condition and agreement to be performed or complied with by Cardinal under this Agreement and the Related Documents; or (C) to otherwise facilitate the consummation or performance of any of the transactions contemplated by this Agreement and the Related Documents.

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(iii) Any additional letters of resignation from Cardinal’s current officers and directors to be effective upon the Closing Date, as requested by the Company and the Sellers.

(iv) Copies of the board resolutions from Cardinal’s current directors appointing only the Directors and the Officers, effective the Closing Date.

(v) All other corporate books and records of Cardinal.

ARTICLE IX

INDEMNIFICATION

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ARTICLE X

TERMINATION

(a) by mutual written agreement of Parties; or

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(b) by either the Company or Cardinal upon notification to the non-terminating party by the terminating party provided that:

(c) by the Company on or before October 15, 2004, if it discovers though its due diligence review of Cardinal any breach of a representation or warranty of Cardinal or a condition that is reasonably likely to prevent Cardinal from being able to meet a covenant or a condition to Closing under this Agreement, provided that to terminate this Agreement under this provision, the Company must give written notice of the breach or condition to Cardinal and Cardinal will have five days in which to cure the breach or condition, which if not cured to the reasonable satisfaction of the Company, the Company shall then provide written notice of termination of this Agreement within two days of the end of the cure period. If the Company elects not to terminate this Agreement after serving written notice of a breach or condition, then the representation or warranty or the covenant or condition will be deemed modified to either create an exception or waiver, and the Company will not be in breach or put into breach of this Agreement for any purpose thereto related.

ARTICLE XI

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(a) If to Cardinal, to:

Cardinal Minerals, Inc.

2950 E. Flamingo Road, Suite B

Las Vegas, Nevada 89121

Attention:

Telephone:

Fax:

With a copy to:

Andrew D. Hudders, Esq.

Graubard Miller

600 Third Avenue, 32^nd F.

New York, New York 10016

Telephone: 212 ###-###-####

Fax:: 212 ###-###-####

If to the Company and the Sellers to:

Universal Food & Beverage Company

c/o Michael J. Boland, Esq.

Holland & Knight LLP

131 South Dearborn Street

30^th Floor

Chicago, Il 60603

Telephone: 312 ###-###-####

Fax:: 312 ###-###-####

Any Party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section.

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[Signature Page to Follow.]

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the day and year first above written.

Cardinal Minerals, Inc., a Nevada corporation

By:

__________________________________

Roland Vetter, President

Universal Food & Beverage Company, a Delaware corporation

By:

_________________________________

Duane Martin, President

 

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