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SECURITIES and EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
June 2, 1988
Tengasco, Inc.
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(Exact Name of Registrant as specified in its charter)
Commission File Number 0-20975
Tennessee 87-0267438
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.
603 Main Avenue, Suite 500, Knoxville, Tennessee 37902
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(Address of Principal Executive Office
(423) 523-1124
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(Registrant's Telephone number)
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Item 2. Acquisition or Disposition of Assets.
On June 2, 1998, Tengasco, Inc. (the "Company"), entered
into an agreement to acquire all of the assets (collectively the "Assets") of
Twister Gas Services L.L.C., an Oklahoma limited liability company ("Twister
Gas") and all of the assets of Twister Partners L.L.C., an Oklahoma limited
liability company ("Twister Partners") from Twister Transmission Company, an
Oklahoma corporation ("Twister Transmission"), ZG Exploration Corporation
("ZGX"), an Oklahoma corporation and Twister Partners. (Twister Partners,
Twister Transmission and ZGX are sometimes collectively referred to hereafter
as the "Sellers")
The aggregate purchase price to be paid by the Company for
the assets is $12,500,000 in cash and 250,000 shares of unregistered common
stock of the Company to be paid at closing.
Consummation of the transaction is conditioned, among other
things, upon the completion by the Company of a due diligence investigation
and the success of efforts by the Company to raise the requisite funds for the
closing.
The Company is planning to raise the necessary funds by
means of a private placement of its securities.
There are no material relationships among the Sellers, their
affiliates, associates, officers and directors, and the Company and its
affiliates, associates, officers and directors.
The Sellers use the Assets in the oil and gas business, and
the Company intends to continue use of the Assets in a similar business.
Item 7. Financial Statements and Exhibits
(a) Financial statements of the businesses acquired.
The Company intends to file the required financial
statements in an amendment to this report on Form 8-K as soon as practicable,
but not later than sixty (60) days after this report.
(b) Pro forma financial information.
The Company intends to file the required pro forma financial
information in an amendment to this report on Form 8-K as soon as practicable,
but not later than sixty (60) days after this report.
(c) Exhibits.
10.8 Agreement dated June 2, 1998 between Tengasco, Inc. and
Twister Gas Services L.L.C., Twister Partners L.L.C. and Twister
Transmission Company.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused and authorized this report to be signed
on its behalf by the undersigned.
Dated: June 16, 1998
Tengasco, Inc.
By:/s/Malcolm E. Ratliff
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Malcolm E. Ratliff,
Chief Executive Officer
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TENGASCO, INC.
603 Main Avenue, Suite 500
Knoxville, Tennessee 37902
June 2, 1998
Mr. Michael P. Cross, President
Twister Transmission Company
Michael Cross and Chris Gordon, Managers
Twister Partners L.L.C.
Chris Gordon, President
ZG Exploration, Inc.
Michael Cross, Manager
Twister Gas Services L.L.C.
5600 N. May, Suite 190
Oklahoma City, Oklahoma 73112
Re: Agreement to Purchase all of
Twister Entities by Tengasco, Inc.
Gentlemen:
This will confirm our agreement with ech of the undersigned regarding
the purchase by Tengasco, Inc., a Tennessee corporation ("Buyer"), of all
interests in Twister Gas Services L.L.C. an Oklahoma limited liability company
("Twister Gas") and all of the assets of Twister Partners, L.L.C., an Oklahoma
limited liability company ("Twister Partners"), from Twister Transmission
Company, an Oklahoma Corporation, ("Twister Transmission"), ZG Exploration, Inc.
an Oklahoma Corporation ("ZGX"), and Twister Partners L.L.C. Twister
Transmission, ZGX, and Twister Partners L.L.C. are sometimes referred to
hereafter collectively as the "Sellers." Twister Gas, Twister Partners, Twister
Transmission and ZGX are sometimes referred to hereinafter collectively as the
"Business." The consideration for this agreement is ten dollars each to the
other in hand paid, the costs and the expenses incurred by the parties to date
and agreement to incur future costs of due diligence of each party. Each party
to pay their own costs. The Interests (as hereafter defined) owned by each
Seller will be acquired by Tengasco as follows:
1. Terms. The Buyer will acquire the Interests on the terms set forth
on Schedule "A" attached as a part hereof. The parties hereby agree that the
"Interests" consist of all of the ownership interests in Twister Gas and all of
the assets of Twister Partners owned by the Sellers and that Sellers own all of
the interest in Twister Gas. Each Seller's obligation will be limited to the
delivery of all of the Interests owned by such Seller fee and clear of all
liens, claims and encumbrances.
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2. Representations by Sellers. Sellers represent to Buyer that Twister
Gas Services L.L.C. is owned 100% by Twister Transmission and ZGX and that
Michael P. Cross is the President of Twister Transmission and Chris Gordon is
President of ZGX, Michael P. Cross and Chris Gordon are the Managers of Twister
Partners L.L.C. Sellers further represent that Twister Gas Services L.L.C. is
the gas marketing operating company of the Twister group of affiliated companies
which includes Twister Transmission, ZGX, Twister Gas and Twister Partners
L.L.C. Further, Sellers represent that the oil and gas properties included in
the January 1, 1998 appraisal by Lee Keeling & Associates, Inc. are all owned
and held in the name of Twister Gas Services, L.L.C. or Twister Partners L.L.C.
3. Purchase Agreement. Upon the execution of this letter agreement by
all parties, the Buyer and the Sellers will, in good faith, negotiate a Purchase
and Sale Agreement (the "Agreement") containing the primary terms set forth on
Schedule "A" together with the representations, warranties and covenants as
usual and customary in transactions of this nature. The Agreement and the
remaining documents will be prepared by Buyers and be subject to approval by the
Sellers.
4. Conditions to the Consummation of the Transaction. In addition to
the usual and customary conditions in transactions of this nature, the Buyer's
obligation to acquire the Interests and Seller's obligation to sell and to
consummate the Agreement will be conditioned on: (a) the satisfactory completion
by the Buyer and the Buyer's representatives of preacquisition due diligence of
all aspects of the Businesses and Interests being conveyed; (b) obtaining any
consents which are reasonably determined by the Buyer to be necessary to the
conveyance of any of the Interests including but not limited to Board of
Directors and Shareholders approval of the Buyer; (c) successful efforts by the
Buyer to raise the capital necessary for this transaction; (d) the satisfactory
completion by the Sellers and the Sellers representatives of preacquisition due
diligence of all aspects of the Buyer; and (e) obtaining any consents which are
reasonably determined by the Sellers to be necessary for the conveyance of the
Interests including Board of Director and shareholder approval of the Sellers.
5. Access. Subsequent to the execution of this letter through the
closing date (as defined in Schedule "A"), the Sellers will provide and permit
the Buyer reasonable access to: (a) all locations where the Businesses conduct
business; (b) the books, records, computer systems and computer files relating
to the Businesses and the Interests; (c) the Business's representatives
including, without limitation, all of the officers, directors, employees and
accountants; and (d) Buyer further agrees to provide and permit Sellers
reasonable access to the books, records, all business locations, computer
files, and without limitation the officers, directors, employees and
accountants of the Buyer.
6. Disclosure. Upon the completed execution of this letter agreement,
the Sellers and the Buyer will issue a joint press release to the drafted and
agreed to by Buyer and by Cross disclosing to the public the agreement entered
into herein.
7. Conduct of Business. During the period from the date of this letter
until the closing date, the Sellers will: (a) operate the Businesses in a
businesslike manner in the ordinary
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course of business with prior practices; (b) to the best of the Sellers'
ability, maintain the Businesses and the Interests; (c) to best of Sellers
ability maintain all contracts, arrangements and relations with the employees,
suppliers, lessors and contractors for the Businesses; (d) to best of Sellers
ability not change or permit the operation of the Businesses to be changed in
a manner that is materially adverse; and (e) not transfer any assets of the
business other than transfers in the ordinary course of business.
If the foregoing meets with your approval, please sign and return one
copy of this letter by telefacsimile to our offices no later than 5:00 p.m.,
central daylight savings time, June 2, 1998. The parties hereby agree that a
telefacsimile of this letter signed by all of the parties will constitute an
agreement in accordance with the terms hereof as if all of the parties had
executed an original of this letter. Such letters may be signed in counterparts.
On receipt of a signed letter, we will proceed in accordance with the Timelines.
This agreement shall be interpreted under the laws of Oklahoma. Time is of the
essence and closing shall occur within 60 days of execution of this letter by
the Sellers.
Best Regards,
Tengasco, Inc.
/s/ Michael Ratliff
Michael Ratliff
Chief Executive Officer
AGREED TO AND ACCEPTED in Oklahoma City, Oklahoma this 2nd day of June 1998.
Twister Transmission Company
(an Oklahoma corporation)
by /s/ Michael P. Cross
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MICHAEL P. CROSS, President
ZG Exploration, Inc.
(an Oklahoma corporation)
by /s/ Chris Gordon
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CHRIS GORDON, President
Twister Partners L.L.C.
(an Oklahoma limited liability company)
by /s/ Michael P. Cross
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MICHAEL P. CROSS, Manager
by /s/ Chris Gordon
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CHRIS GORDON, Manager
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SCHEDULE "A"
1. Acquisition Type: Tengasco, Inc. ("TI") will acquire the Interests as
follows:
A. 100% of members' interests in Twister Gas Services L.L.C.
B. 100% of the assets of Twister Partners L.L.C.
C. The oil and gas properties as contained in the Appraisal by
Lee Keeling & Associates, Inc. dated January 1, 1998 and
any oil and gas properties not included in the report but
owned by entities, and any oil and gas properties acquired
since January 1, 1998 and not included in such report with
the exception of the Topping=State and Murl Cole wells which
have been sold for cash.
D. Rights to any and all oil and gas prospects currently under
consideration by any Twister Gas or affiliated personnel
except for the personal commitments previously entered into
by Twister personnel.
E. Properties shall be free from all liens except those
disclosed to Buyers.
2. Purchase Price: The purchase price will be as follows and will be
allocated among the Sellers according to the Purchase
and Sale Agreement and in accordance with their
Interests:
Cash at Closing: $12,500,000
TI Stock: 250,000 shares of unregistered common stock
with a discounted value of $10.00. The stock
will be subject to sale under Rule 144 and
Sellers will also receive appropriate
piggyback registration rights.
3. Employment Contract: Employment contracts with Michael P. Cross, Chris
Gordon and James Zaslaw for two years the terms of
which have been agreed to which includes salary,
stock options of Tengasco, Inc., and a two year
covenant (from employment termination) not to
compete in gas marketing with Twister Gas or its
successors.
4. Effective Date: Closing date or to be determined.
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5. Timelines: Execute Letter Agreement to Purchase ASAP
Tengasco Board Approval 20 Days
Twister Group Board and Shareholder Approval 30 Days
Twister Partners member approval 30 Days
Written financing Commitment 45 Days
Tengasco Stockholder Approval 50 Days
Closing 60 Days
Due Diligence At Closing
Execution of Purchase and Sale Agreement At Closing
Execution of Employment Contracts At Closing
Execution of Non-compete agreements At Closing
Execution of Stock option agreements At Closing
6. Compliance: News release Upon Execution of Letter
Agreement to Purchase
Form 8KSB to SEC 68 Days
