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SECURITIES AND EXCHANGE COMMISSION
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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):
NOVEMBER 30, 1999 (NOVEMBER 19, 1999)
BETA OIL & GAS, INC.
(Exact name of registrant as specified in its charter)
Nevada 333-68381 86-0876964
(State or other (Commission File Number) (I.R.S. Employer Identification No.)
jurisdiction of
incorporation
or organization)
901 Dove Street, #230, Newport Beach, Ca 92660
(Address of principal executive offices) (Zip Code)
(949) 752-5212
(Registrant's telephone number, including area code)
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Item 5. OTHER EVENTS
Agreement and Plan of Merger
On November 19, 1999, Beta Oil & Gas, Inc. ("Beta") entered into a binding
Agreement and Plan of Merger pursuant to which it will acquire Red River Energy,
Inc. ("Red River") of Tulsa, Oklahoma, a private oil and natural gas production
company. The purchase, which will be paid by the issuance of 2.25 million shares
of Beta common stock and the guaranty by Beta of certain of Red River's bank
indebtedness, received unanimous Board approval. The purchase is subject to
approval by Beta shareholders.
The Agreement and Plan of Merger will be referred to in this document simply as
the agreement. Upon the closing of this agreement, the Red River shareholders
will convert all the issued and outstanding capital stock of Red River into
2,250,000 shares of Beta Common Stock. For purposes of effecting this
transaction, Beta has formed a wholly owned subsidiary called Beta Acquisition
Company, Inc. At closing, Red River will be merged into Beta Acquisition
Company, Inc. and Red River shall continue as the surviving corporation. After
closing, Red River will change its name to Beta Operating Company, Inc., "Beta
Operating," and shall continue as Beta's wholly-owned operating and acquisition
subsidiary.
The agreement provides that, among other things:
(_) Beta Operating will execute employment agreements with the Red River
shareholders providing employment and non-compete terms ranging from a
minimum of one to three years. Mr. Rolf Hufnagel, current president of Red
River shall be appointed to the board of directors of Beta.
(_) Beta will use best efforts to cause the release of personal guarantees
executed by the Red River shareholders which currently secure Red River's
indebtedness with the Bank of Oklahoma of approximately $7.6 million. Beta
has agreed that, upon closing of the agreement, it will execute a guaranty
required by the bank in substitution of the personal guarantees of Red
River shareholders.
(_) The 2,250,000 shares of Beta Common Stock to be issued to the Red River
shareholders are subject to registration rights. The registration rights
require Beta to file a shelf registration statement on or before March 31,
1999 for the purpose of registering the 2,250,000 for resale in the market
from time to time.
The agreement is included as an exhibit to this report. The reader of this
report is encouraged to read the agreement in its entirety for a complete
description of all the relevant terms and conditions of the agreement and how it
affects Beta.
Description of Properties Being Acquired
The assets of Red River Energy, Inc. consist of four components:
1) a 97.4% working interest (80% net revenue interest) in a 30,160 acre unit
which is currently producing approximately 3.65 MMBTU/d and 120 Bopd from
22 active wells in the Hunton Limestone formation in Central Oklahoma;
2) an 85% working interest (68% net revenue interest) in 7,500 acres which are
currently producing 960 MMBTU/d from 45 wells in the Atoka and Gilcrease
formations in Eastern Oklahoma;
3) a gas gathering system consisting of 40 miles of pipeline which is
currently transporting approximately 1650 MMBTU/d in Eastern Oklahoma; and
4) a 46 well coal bed methane project also located in Eastern Oklahoma which
is currently under development and producing approximately 600 MMBTU/d.
Excluding the coal bed methane project, the properties being acquired contain
estimated proved producing recoverable reserves totaling approximately 22.5
billion cubic feet of natural gas and 504,000 barrels of oil having a net
present value discounted at 10% of approximately $23.5 million. Red River and
Beta believe the coal bed methane and Hunton project acreage have additional
development potential. Red River Energy, Inc. is the operator of all its
properties. Beta intends to retain, operate and develop the properties through
its wholly-owned subsidiary, Beta Operating Company, Inc.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibits
See Exhibit 2.0 immediately following the signature page which contains the
Agreement and Plan of Merger dated November 19, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned who is duly authorized.
BETA OIL & GAS, INC.
Date: November 30, 1999 By /s/ J. Chris Steinhauser
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J. Chris Steinhauser
Chief Financial Officer,
Principal Accounting Officer
and Director
Exhibit 2.0
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made this 19th day
of November, 1999, by and among Beta Oil & Gas, Inc., a Nevada corporation
("Purchaser"), Beta Acquisition Company, Inc., an Oklahoma corporation ("Merger
Sub"), and Red River Energy, Inc., an Oklahoma corporation ("Company") and the
shareholders listed in Schedule A attached to this Agreement, individually
(collectively, "Red River Shareholders").
RECITALS
A. The Company is engaged in the ownership, leasing, acquisition,
exploration, drilling and development of oil and gas property, located in
Oklahoma and the production and sale of oil and gas; B. The Purchaser owns 100%
of the issued and outstanding capital stock of Merger Sub;
B. The Purchaser owns 100% of the issued and outstanding capital stock
of Merger Sub:;and
C. Purchaser desires to acquire the Company's business by merging the
Merger Sub with and into the Company in accordance with the terms and conditions
of this Agreement in a transaction designed and intended to meet the
requirements of Section ("ss.") 368(a)(l)(A) and ss.368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended ("Code") and as a result of such transaction
the Company, following the merger of Merger Sub with and into the Company which
shall be the Surviving Corporation and, as such, shall become a subsidiary of
the Purchaser.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. CERTAIN DEFINITIONS. The definitions set forth below shall apply to the
meaning of the terms as used throughout this Agreement. All other capitalized
terms shall have the meaning as defined in other sections of this Agreement.
1.1 "AFFILIATE" shall mean with reference to a particular 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 particular Person;
(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 particular
Person; or (iii) any Person, directly or indirectly, controlled by, controlling
or under common control with such particular Person
1.2 "AGREEMENT" shall mean this Agreement and Plan of Merger.
1.3 "BETA COMMON STOCK" shall mean the $.001 par value voting common stock
of the Purchaser.
1.4 "CLOSING" shall mean the consummation of the transactions contemplated
by this Agreement.
1.5 "CLOSING DATE" shall mean the date on which the Closing occurs pursuant
to Section 2.4 hereof.
1.6 "COMMISSION" shall mean the United States Securities and Exchange
Commission.
1.7 "COMPANY" shall mean Red River Energy, Inc., an Oklahoma corporation,
and its predecessor, Red River Energy, L.L.C. which became a wholly owned
subsidiary of Red River Energy, Inc. in a reorganization under ss.351 of the
Code.
1.8 "EFFECTIVE TIME" shall mean the time when the Certificate of Merger is
filed as provided in Section 2.5 hereof and the Merger of Merger Sub with and
into the Company becomes effective under applicable law.
1.9 "RED RIVER SHAREHOLDERS" shall mean the shareholders set forth in
Schedule A attached to this Agreement, who collectively, as of the date of this
Agreement, own all of the issued and outstanding Red River Stock.
1.10 "RED RIVER STOCK" shall mean the $1.00 par value voting common stock
of the Company, which is the only authorized capital stock of the Company.
1.11 "EMPLOYMENT AGREEMENTS" shall mean those Employment Agreements
attached hereto as Exhibit 7.1.9.
1.12 "MERGER" shall have the same meaning as set forth in Section 2.2
hereof.
1.13 "PERSON" shall mean an individual, partnership, corporation, trust,
limited liability company, unincorporated organization, association or joint
venture or a government, or an agency, political subdivision or instrumentality
thereof.
1.14 "Purchaser" shall mean Beta Oil & Gas, Inc., a Nevada corporation.
1.15 "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
1.16 "SURVIVING CORPORATION" shall have the same meaning as set forth in
Section 2.2 of this Agreement.
1.17 "YEAR 2000 COMPLIANCE" shall mean that (a) no value for current date
will cause any interruption in operation; (b) date-based functionality will
behave consistently for dates prior to, during and after Year 2000; (c) in all
interfaces and data storage, the first two digits in the year of any date are
specified either explicitly or by unambiguous algorithms; (d) year 2000 will be
recognized as a leap year; and (e) the year "00" will be read and correctly
interpreted as the year "2000."
All other capitalized terms shall have the meanings as specified
elsewhere in this Agreement.
2. The Merger and Consideration
2.1 Red River Consideration. On the Closing Date, the shares of Red River
Stock owned by the Red River Shareholders, consisting of 1,000 shares of Red
River Stock which constitutes all of the issued and outstanding shares of the
Company's capital stock, shall be converted into and become, and there shall be
paid and issued, in exchange for such shares, Two Million Two Hundred Fifty
Thousand (2,250,000) shares of Beta Common Stock which shall be issued by the
Purchaser to the Red River Shareholders. Such shares of Beta Common Stock shall
be divided and issued to each Red River Shareholder in proportion to their
respective ownership interests in the Red River Stock as set forth in Schedule A
attached hereto.
2.2 Merger. At the Effective Time and subject to and upon the terms and
conditions of this Agreement and in accordance with Oklahoma law, Merger Sub
shall be merged with and into the Company (the "Merger") and as a result of such
Merger the separate corporate existence of the Merger Sub shall cease and the
Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereafter sometimes referred to as the
"Surviving Corporation".
The Merger will have the effect set forth in the Oklahoma General
Corporation Act. The Surviving Corporation may, at any time after the Effective
Time, take any action, including executing and delivering any certificates,
instruments and documents as shall be determined by the Board of Directors of
the Surviving Corporation to be necessary and appropriate, in the name and on
behalf of either the Company or Merger Sub in order to carry out and effectuate
the transactions contemplated by this Agreement.
2.3 Shareholder Approvals. Subsequent to the date of this Agreement and
prior to the Effective Time, the parties hereto shall obtain the requisite
shareholder approval as required under their respective Articles or Certificate
of Incorporation and Bylaws and under Nevada and Oklahoma law as follows:
a. Purchaser Approval. Pursuant to Section 1.4b of Article XII of the
Purchaser's Bylaws, the Purchaser, through its Board of Directors, shall
duly call, give notice of, convene shareholders for the approval of this
Agreement and the issuance of the shares of Beta Common Stock for the
number of shares as contemplated under Section 2.1 hereof, all in
accordance with Nevada law, its Articles of Incorporation and Bylaws. In
addition, the Purchaser as the holder of 100% of Merger Sub's issued and
outstanding Common Stock shall approve, by written consent of its Board of
Directors, this Agreement and the Merger contemplated hereby in accordance
with Oklahoma law and the Certificate of Incorporation of Merger Sub; and
b. Company Approval. The Company, acting through its Board of
Directors shall duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Special Meeting") to consider and vote
upon the approval and adoption of this Agreement and the Merger
contemplated hereby, or shall seek the requisite written consent of its
shareholders, all in accordance with Oklahoma law and its Certificate of
Incorporation and Bylaws. The Company shall hold the Special Meeting or
obtain such written consent as soon as practicable after the date hereof.
2.4 Closing. The Closing Date shall occur on that date which is on or
before three (3) days after the satisfaction and receipt of any and all required
conditions and approvals, including any required approval of the shareholders of
Purchaser; but in no event later than March 31, 2000. The Purchaser and the
Company will use best efforts to close as soon as possible upon execution of
this Agreement. In the event that the Closing Date falls on a Saturday, Sunday
or Federal holiday, then the next succeeding date which is not a Saturday,
Sunday or Federal holiday shall be the Closing Date. The Closing shall take
place at the offices of the Company, 6120 S. Yale, Suite 813, Tulsa, Oklahoma,
10:00 a.m. Central Standard Time on the Closing Date, or at such other time or
place as mutually agreed by the parties hereto. Such Closing may be accomplished
by facsimile transmission of Closing Documents and facsimile signatures,
provided that the original of such signed documents are transmitted to the party
or parties entitled to receive such documents within three (3) business days
following the Closing Date. The Closing shall be effective as of the close of
business of the Closing Date. At the Closing, (a) the Company and the Red River
Shareholders will deliver to Merger Sub and the Purchaser the various
certificates and instruments and documents referred to in Section 7.1 hereof,
(b) Purchaser and Merger Sub will deliver to the Company and the Red River
Shareholders the various certificates, instruments and documents referred to in
Section 7.2 hereof, and (c) Purchaser and Merger Sub will deliver to the Red
River Shareholders in the manner provided below in Section 7.2.1 the Stock
Certificates evidencing the consideration issued in the Merger.
2.5 Consummation of the Transaction at the Closing. Purchaser, Merger Sub
and the Company will each carry out the procedures specified under the
applicable provisions of Oklahoma law as shall be necessary and appropriate to
assure the effectiveness of the Merger. The Merger shall be consummated by
filing the Certificate of Merger with the Secretary of State of Oklahoma in such
form as required by, and executed in accordance with the relevant provisions of
Oklahoma law to the extent required. Such Certificate of Merger shall provide
for an amendment to the Company's Certificate of Incorporation to change its
name to "Beta Operating Company."
2.6 Effect of Merger. At the Effective Time:
2.6.1 Surviving Corporation. Merger Sub shall be merged with and into
the Company, with the Company as the Surviving Corporation, and the
separate existence of Merger Sub shall cease. As a result of the Merger,
the Red River Shareholders who held stock certificates representing the Red
River Stock prior to the Merger shall cease to have any rights with respect
to such stock and all rights, privileges, powers, franchises and interests
of the Company and all of its properties, whether real, personal or mixed,
all debts due on whatever account, and every other interest of the Company,
whether tangible or intangible shall be deemed to vest in the Surviving
Corporation without further act or deed, and all claims, demands, property
and every other interest shall be as of the Effective Time the property of
the Surviving Corporation to the same extent as previously owned or held by
the Company.
2.6.2 Certificate of Incorporation. Except as contemplated by Section
2.5, the Certificate of Incorporation of the Company in effect at and as of
the Effective Time shall remain the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by law.
2.6.3 Bylaws. The Bylaws of the Company, as in effect immediately
prior to the Effective Time, shall be the bylaws of the Surviving
Corporation until thereafter amended as provided by law and provisions of
such Bylaws.
2.6.4 Directors and Officers. Immediately prior to the Effective Time
of the Merger, the directors and officers of the Company as constituted
immediately prior to the Effective Time shall tender their resignations to
the Company as agreed upon in Exhibit 2.6.4. The number of directors of the
Surviving Corporation and the persons serving as Directors of the Surviving
Corporation shall be a minimum of three (3) directors and a maximum of six
(6) directors (the exact number of which shall be determined by resolution
of the directors of the Surviving Corporation). The number of directors and
the individuals who shall serve as directors of the Surviving Corporation
shall be determined by the Purchaser, as the sole shareholder of the
Surviving Corporation immediately following the Effective Time and such
persons as so appointed shall continue to hold office until their
successors have been duly nominated, elected or appointed as provided under
the Surviving Corporation's Bylaws as may subsequently be amended in
accordance with the provisions thereof. The officers of the Surviving
Corporation shall be appointed, immediately following the Effective Time
and the election by the Purchaser of the directors of its Board of
Directors, by the directors of the Surviving Corporation and such officers
as so appointed shall hold such offices in the Surviving Corporation
following the Effective Time, until such time as their successors have been
duly appointed and qualified.
2.6.5 The Merger. From and after the Effective Time, the Merger shall
have all the effects provided for a merger under Oklahoma law, , which law
shall govern the Surviving Corporation.
2.7 Effect on Capital Stock.
2.7.1 Conversion of Red River Stock. At the Effective Time, as a
result of the Merger and without any action on the part of Purchaser,
Merger Sub, the Company or the holders of any of their securities, all of
the issued and outstanding shares of Red River Stock immediately prior to
the Effective Time, held by the Red River Shareholders shall be delivered
for surrender to the Purchaser on the Closing Date and at the Effective
Time converted into the right to receive all of the shares of Beta Common
Stock payable under this Agreement.
The certificate or certificates representing Red River Stock shall
after the Effective Time cease to have any rights with respect to such
shares of Red River Stock except the right to the issuance of the number of
shares of Beta Common Stock as provided in Schedule A attached hereto for
such Red River Stock upon the surrender of such certificate or certificates
in accordance with this Section 2.7 hereof. Upon the filing of the
Certificate of Merger with the Secretary of State of Oklahoma, as a
consequence of the Merger and without any other action on the part of the
parties to this Agreement, each of the issued and outstanding shares of Red
River Stock shall be cancelled and retired by the Surviving Corporation in
exchange for the shares of Beta Common Stock as provided in Section 2.1
hereof and as set forth in Schedule A attached hereto and all other shares
of the Company's capital stock shall automatically be cancelled and retired
and no payment by the Purchaser or Merger Sub shall be made with respect to
any such other capital stock, if any, of the Company. At the Closing, the
Company shall issue to the Purchaser a stock certificate, registered on the
Company's stock transfer records, in the Purchaser's name representing
1,000 shares of the Surviving Corporation's Common Stock, which shall have
been duly authorized by the Board of Directors of the Company as
constituted immediately prior to the Closing Date and such shares as so
issued shall constitute the only issued and outstanding shares of the
Surviving Corporation.
2.7.2 Subsequent Transfer: Loss, Stolen or Destroyed Certificates.
After the Effective Time, there shall be no transfer on the stock transfer
books of the Surviving Corporation of shares of Red River Stock that were
registered as outstanding immediately prior to the Effective Time other
than the shares issued in the name of the Purchaser as required in Section
2.7.1 hereof. If any registered certificate for the Company shall have been
lost, stolen or destroyed, the Surviving Corporation, upon making of an
Affidavit signed by the person claiming such certificate to have been lost,
stolen or destroyed and setting forth the facts and other information
relating to such loss or destruction shall, subject to the provisions of
this Section 2.7.2, deliver a stock certificate for the appropriate shares
of Beta Common Stock for the Red River Stock represented by such
certificate in accordance with Section 2.1.1 hereof to the Person(s)
legally entitled thereto. The Surviving Corporation, in the sole discretion
of its Board of Directors and as a condition precedent to the delivery of
the shares of Beta Common Stock in exchange for the shares of Red River
Stock represented by such certificate, may require the owner of such lost,
stolen or destroyed certificate to provide a bond or other security in such
sum as it reasonably may direct as indemnity against any claim that may be
made against the Surviving Corporation with respect to the certificate
alleged to have been so lost, stolen or destroyed.
2.7.3 Merger Sub Stock. Each share of the $.001 par value common stock
of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be cancelled and converted into the 1,000 shares of the
Surviving Corporation's Common Stock as provided in Section 2.7.1 hereof,
all of which shares shall be owned and held of record in the name of the
Purchaser.
2.7.4 Dissenting Shares. As provided in Section 3.1.4 hereof, the Red
River Shareholders shall take whatever action is necessary and appropriate
effectively to waive under the applicable provision of the Oklahoma General
Corporation Act their rights to an appraisal of the shares of Red River
Stock held by each of them, which represent all the authorized, issued and
outstanding shares of the Red River Stock on and prior to the Closing Date.
3. Conditions Precedent to Obligations
3.1 Conditions Precedent to the Purchaser's and Merger Sub's Obligations.
The obligations of Purchaser and Merger Sub to be performed under this Agreement
on or before the Closing Date are subject to each and all of the following
conditions, any one or more of which may, however, be waived in whole or in part
by Purchaser.
3.1.1 Representations and Warranties. The representations and
warranties of the Company herein contained shall be true on and as of the
date hereof and as of the Closing Date in all material respects with the
same force and effect as though made on and as of said date.
3.1.2 Performance of Obligations. The Company shall have performed in
all material respects all of the Company's covenants, undertakings,
obligations, conditions and agreements required to be performed by it under
this Agreement.
3.1.3 Performance at Closing. The Company shall have performed each of
the acts it is required to perform and delivered each of the certificates
and other documents it is required to deliver, or appeared at Closing
ready, willing and able to perform each of the acts it is required to
perform and deliver each of the certificates and other documents it is
required to deliver.
3.1.4 Waiver of Dissenter's Rights. The Red River Shareholders shall
have provided the Company prior to Closing a legally binding instrument
executed by such Shareholders waiving all of their rights for an appraisal
of the Red River Stock owned by them in accordance with the Oklahoma
General Corporation Act and any other applicable provisions under Oklahoma
law and to the extent applicable under Nevada law.
3.1.5 Absence of Restraining Action. No suit, action or other
proceeding shall be pending, or threatened, before any court or
governmental agency in which it will be, or it is, sought to restrain or
prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereunder.
3.1.6 Absence of Litigation. The Company shall have disclosed to
Purchaser in Exhibit 4.1.20 all suits, actions or other proceedings pending
before any court or governmental agency, or threatened against or affecting
the Company and Purchaser shall be satisfied that no such suit, action or
other proceeding, if adversely determined, would have a material adverse
effect on the value of the business, assets, or properties of the Company,
or the value of the Red River Stock.
3.1.7 No Attachment. None of the Company's assets or properties shall
have been attached or levied upon or passed into the hands of a receiver or
assignee for the benefit of creditors. No petition or similar instrument
shall have been filed with respect to the Company under any bankruptcy or
insolvency law, and no injunction or restraining order shall have been
instituted against the Company that would have a material adverse effect on
the Company.
3.1.8 No Liens, Indebtedness. Except as set forth in Exhibit 3.1.8,
the Company shall not be subject to indebtedness nor its properties or
assets subject to liens or encumbrances of any kind, other than (i)
indebtedness and liens for current taxes, wages and operating expenses in
the normal course of business, payment of which at the time of Closing
shall not yet be due; (ii) indebtedness identified in the Company's
Financial Statements as set forth in Exhibit 4.1.7 attached hereto; (iii)
any accounts payable or loans advanced to the Company subsequent to the
Financial Statement Date which were incurred in the ordinary course of its
business; (iv) any other indebtedness approved by the Purchaser; or (v)
Permitted Encumbrances (as hereinafter defined).
3.1.9 Resignations. Purchaser and Merger Sub shall have received the
resignation dated as of the Closing Date of each director of the Company
and the officers of the Company as agreed upon in Exhibit 2.6.4 that
Purchaser requests so resign prior to the Closing.
3.1.10 Corporate Records. Purchaser and Merger Sub shall have received
the stock books, minute books, and corporate seal (if any) of the Company
and its subsidiaries, if any.
3.1.11 Consents and Waivers. All consents from third parties,
including without limitation the Notification and Report Form only to the
extent required to be filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder ("HSR
Act"), as well as any other consent or waiver required under any other
Licenses, Leases, Permits, Approvals or Contracts set forth in Exhibits
4.1.17, 4.1.22, 4.1.24 and 4.1.28 attached hereto and as provided in
Section 4.1.31 hereof and any other person or governmental bodies,
necessary for the consummation of the transactions contemplated hereby
shall have been obtained.
3.1.12 Absence of Adverse Changes. The Company shall not have suffered
any material adverse change in its financial condition, business, property
or assets since the date of the Company's Financial Statements as set forth
in Exhibit 4.1.7 attached hereto
3.1.13 Opinion of Counsel. Purchaser and Merger Sub shall have
received an opinion of counsel for the Company dated as of the Closing Date
in form or substance as may reasonably requested by Purchaser.
3.1.14 Certificates. Purchaser and Merger Sub shall have received the
certificates and other closing documents required to be received under
Section 7.1.6 and otherwise under Section 7.1 hereof on or prior to the
Closing Date.
3.1.15 Shareholder Approval. The shareholders of the Company shall
have approved the Merger and the other transactions contemplated by this
Agreement in accordance with the Oklahoma General Corporation Act.
3.2 Conditions Precedent to the Company's and Red River Shareholders'
Obligations. The obligations of the Company and the Red River Shareholders to be
performed under this Agreement at Closing are subject to each and all of the
following conditions, any one or more of which may, however, be waived in whole
or in part by the Company or the Red River Shareholders.
3.2.1 Representations and Warranties. The representations and
warranties of Purchaser and Merger Sub set forth in this Agreement shall be
true and correct in all material respects on and as of the date hereof and
as of the Closing Date with the same effect as if made on and as of the
said date.
3.2.2 Performance of Obligations. Purchaser and Merger Sub shall have
performed or complied with all of Purchaser's and Merger Sub's covenants,
undertakings, obligations, conditions and agreements herein to be performed
on or before Closing as contained in this Agreement, including, but not
limited to, Purchaser's obligation to undertake the filing of the Shelf
Registration pursuant to the requirements of and by no later than the date
set forth in Section 9.15 and execution by the Surviving Corporation and
Purchaser of the Employment Agreements.
3.2.3 Performance at Closing. Each of Purchaser and Merger Sub shall
have performed each of the acts it is required to perform and delivered
each of the certificates and other documents it is required to deliver, or
appeared at Closing ready, willing and able to perform each of the acts it
is required to perform and deliver each of the certificates and other
documents it is required to deliver.
3.2.4 Absence of Restraining Action. No suit, action or other
proceeding shall be pending, or threatened, before any court or
governmental agency in which it will be, or it is, sought to restrain or
prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereunder.
3.2.5 Absence of Litigation. Purchaser shall have disclosed to the
Company and the Red River Shareholders all suits, actions or other
proceedings pending before any court or governmental agency, or threatened
against or affecting Purchaser or Merger Sub and the Company and the Red
River Shareholders shall be satisfied that no such suit, action or other
proceeding which, if adversely determined, would have a material adverse
effect on the value of the business, assets, or properties of the Purchaser
or Merger Sub or the value of the Beta Common Stock.
3.2.6 Certificates. The Company shall have received such certificates
as are required by Section 7.2.3 hereof on or prior to the Closing Date.
3.2.7 Opinion of Counsel. An opinion of counsel for Purchaser and
Merger Sub shall have been delivered to the Company and the Red River
Shareholders dated as of the Closing Date, substantially in the form or
substance as may reasonably requested by the Company and the Red River
Shareholders.
3.2.8 Purchaser Shareholder Approval. The shareholders of the
Purchaser shall have approved the Merger and the other transactions
contemplated by this Agreement in accordance with the General Corporation
Law of Nevada.
3.2.9 Employment Agreements. Purchaser shall have caused the Company
to execute and deliver the Employment Agreements.
3.2.10 Absence of Adverse Changes. Neither Purchaser nor Merger Sub
shall have suffered any material adverse change in its financial condition,
business, property or assets since the date of this Agreement.
3.2.11 Consents and Waivers. All consents from third parties,
including without limitation the Notification and Report Form only to the
extent required to be filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder ("HSR
Act"), as well as any other consent or waiver required under any other
Licenses, Leases, Permits, Approvals or Contracts set forth in Exhibits
4.1.17, 4.1.22, 4.1.24 and 4.1.28 attached hereto and as provided in
Section 4.1.31 hereof and any other person or governmental bodies,
necessary for the consummation of the transactions contemplated hereby
shall have been obtained.
3.2.12 Filing of Shelf Registration. Purchaser shall undertake to file
a Shelf Registration Statement with the Commission to the extent and within
the time period required by Section 9.15 relating to the future resale of
the shares of Beta Common Stock to be received by the Red River
Shareholders.
3.2.13 Nasdaq Listing of Shares. Purchaser shall undertake to file the
necessary documents requesting that the shares of Beta Common Stock to be
issued to the Red River Shareholders be listed on and available for trading
on The Nasdaq Stock Market.
3.2.14 Director Appointment. Rolf N. Hufnagel shall have been
appointed as a director of the Purchaser, effective immediately after the
Effective Time.
4. Representations and Warranties
4.1 Representations and Warranties of Seller. The Company and the Red River
Shareholders, represent and warrant to Purchaser and Merger Sub as of the date
hereof and as of the Closing Date, as follows:
4.1.1 Good Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Oklahoma, with full corporate power and authority to own, operate and lease
its properties and its interests in properties (including its interests in
oil and gas properties) and to carry on its business as now being
conducted. The Company is qualified to do business and is in good standing
in all jurisdictions where its properties, assets and/or activities and
operations so require, which states are listed in Exhibit 4.1.1 attached
hereto, except where the failure to qualify would not have a material
adverse effect on the Company. True and correct copies of the Company's
Certificate of Incorporation and all amendments thereto and restatements
thereof, and the Company's Bylaws and all amendments thereof and
restatements thereto are set forth in Exhibit 4.1.1 attached hereto.
4.1.2 Binding Agreement. This Agreement has been executed and
delivered by the Company and each of the Red River Shareholders as set
forth above, constitutes the valid and binding obligation of the Company
and the Red River Shareholders enforceable in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium, general principles of equity, or similar laws
affecting the rights of creditors generally, and will not conflict with,
cause a breach, violate or be in contravention of or result in a default
under the Company's Certificate of Incorporation, Bylaws or any other
organizational or governing instrument of the Company, or of any Contract,
Lease, indenture, promissory notes, agreement, mortgage or other instrument
to which the Company is a party or by which any of its assets or property
is bound or affected or, to the best of the Company's knowledge, any law,
rule, License, regulation, judgment, decree or order of any court, agency
or other authority to which jurisdiction the Company is subject. All
corporate action necessary for the approval and/or ratification of this
Agreement has been taken or will have been taken on or before the Closing.
4.1.3 Authorized Stock The only authorized capital stock of the
Company is 50,000 shares of its $1.00 par value common stock, of which, as
of the date hereof, 1,000 shares of Red River Stock are issued and
outstanding. The Red River Shareholders own such portions of the issued and
outstanding shares of Red River Stock as set forth in Schedule A attached
hereto. No other person has any legal ownership interest in and to any
shares of the Red River Stock.
4.1.4 Stock Fully Paid and Ownership of Securities. All issued and
outstanding shares of the Red River Stock have been duly authorized and
validly issued and are fully paid and non-assessable. As of the date
hereof, there are not, and as of the Closing Date there will not be, any
(i) options, warrants, purchase rights, subscription rights or other
contract rights or commitments, stock appreciation rights, phantom stock or
other any rights to purchase any shares of the Red River Stock or any debt
or securities convertible into such shares or (ii) obligations of the
Company, contractual or contingent, to issue any such options, warrants,
rights or shares. As of the date hereof, record ownership of the Red River
Stock is held 100% by the Red River Shareholders, and each such Shareholder
owns of record and beneficially the number of shares set forth opposite
such Shareholder's name in Schedule A attached to this Agreement. The Red
River Shareholders represent and warrant that as of the Closing Date such
Red River Stock will be free and clear of all pledges, liens, security
interests, encumbrances or other restrictions (excluding restrictions
imposed on the transfer of the Red River Stock under the Securities Act)
and of all voting trusts, voting agreements, proxies and other voting
restrictions.
4.1.5 Indefeasible. The Red River Shareholders have good and
indefeasible title to the shares of the Red River Stock to be transferred
pursuant to the terms hereof and such shares at the Closing will be
presented to the Surviving Corporation, free and clear of all pledges,
liens, security interests, encumbrances, equities, claims or other
restrictions (other than restrictions imposed under the Securities Act),
and such Shareholders have full power and authority to consummate the
transactions described herein.
4.1.6 No Agreements. There are no agreements with any person with
respect to (i) the sale, lease, exchange or other disposition of any of the
Company's properties or assets, except in the ordinary course of its
business; or (ii) the sale, pledge, hypothecation, transfer, assignment or
other disposition of the ownership, direct or indirect, of any of the
shares of the Red River Stock, the operation of which may in the future
result in a change in control of the Company.
4.1.7 Financial Representations. To be attached hereto within 15 days
from the date hereof as Exhibit 4.1.7 are a Balance Sheet, Statement of
Income (Loss and Deficit) and Statement of Changes in Financial Position
(including notes to such financial statements) as of September 30, 1999,
and for the Nine (9) month period then ended (collectively the "Financial
Statements"). The Financial Statements will have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis, except as disclosed therein, and will present fairly the
financial position of the Company as of September 30, 1999, ("Financial
Statement Date") and the results of operations for the Nine (9) month
period then ended.
4.1.8 No Liabilities. As of the Financial Statement Date, the Company
had no material liabilities or obligations of any nature (whether accrued,
absolute, contingent, and due or to become due) except as disclosed or
reflected in the Financial Statements, or as set forth in Exhibit 4.1.8
attached hereto.
4.1.9 No Change In Financial Condition. Except as set forth in Exhibit
4.1.9 attached hereto, since the Financial Statement Date, there has not
been, and neither the Red River Shareholders nor the Company know of (i)
any event, condition or state of facts that has resulted or may reasonably
be expected to result in any material adverse change in the financial
condition, business, sales, income, properties, assets or liabilities of
the Company from that shown on the Financial Statements; or (ii) any
material adverse change with respect to any contracts to which the Company
is a party or any event, circumstance, fact or other occurrence which may
result in any material adverse change to the financial condition, business,
sales, income, properties or assets of the Company; or (iii) any material
damage, destruction or loss to the properties, assets or business of the
Company, whether or not covered by insurance, as the result of any fire,
explosion, accident, casualty, labor disturbance or interruption,
requisition or taking of property by any governmental body or agency,
flood, embargo, or act of God or the public enemy, or cessation,
interruption or diminution of operations, which has materially and
adversely affected or impaired or which may be reasonably expected to
materially or adversely affect or impair the conduct of the Company's
operations or business; or (iv) any labor trouble other than routine
grievances (including without limitation any negotiation, or request for
negotiation, for any representation or any labor contract) or to the Red
River Shareholders' and the Company's knowledge any event or condition of
any character which has materially and adversely affected or which may be
reasonably expected to materially and adversely affect or impair the
conduct of the Company's operations or business; or (v) any declaration,
setting aside or payment of any dividend, or any distribution, in respect
of the Red River Stock; or (vi) any redemption, purchase or other
acquisition by the Company of any shares of the Red River Stock; or (vii)
any significant loss of customers of the Company.
4.1.10 Certain Tax Matters. The Company has, or shall have, prepared
and duly filed (and to the best of its knowledge has done so accurately and
correctly) all federal, state, county and local income, franchise, sales,
use, real property personal property, ad valorem, production and severance
tax returns and reports required to be filed as of the date hereof, and
which shall be required to be filed on or before the Closing Date, with
respect to the Company and has, or shall have duly paid, withheld or
reserved for all taxes, penalties and other governmental charges required
to be paid as of the date hereof that have been assessed or levied against
or upon it or its properties, assets, income, franchises, licenses or
sales, including, without limitations, federal, state, county and local
income taxes, gross receipt property taxes franchise, sales, use, real
property, personal property, ad valorem, production, severance and similar
taxes and assessments (based on production of hydrocarbons or receipt of
proceeds therefrom on the oil and gas properties or other assets and the
business owned and operated by the Company, or to the extent that they
relate to periods on or prior to the Financial Statement Date are reflected
as a liability on the Financial Statements, or if not paid, is contesting
such amounts in good faith by the appropriate proceedings. All such taxes
and assessment, which have become due prior to the Effective Time have been
or will have been timely and properly paid. In the event the Company is
contesting such amounts in good faith, the Company has established a
reserve for financial accounting purposes in connection with the business
currently conducted by the Company, neither the Red River Shareholders nor
the Company know of any proposal by any taxing authority for additional
taxes or assessments against or upon the Company. To the best of the
knowledge of the Red River Shareholders and the Company, all monies
required to be withheld by the Company from employees for income taxes,
social security and unemployment insurance taxes have, as of the date
hereof, been collected or withheld, and as of the Closing Date shall have
been collected and withheld, and either paid to the appropriate
governmental agencies or set aside in cash for such purpose. The Company
has not entered into any agreement for the extension of time or the
assessment of any tax or tax delinquency, nor has the Company received any
outstanding or unresolved notices from the Internal Revenue Service or any
taxing body of any proposed examination or of any proposed deficiency or
assessment or of any tax returns or tax liabilities due and payable. The
Company has or will within ten (10) days of the date hereof, deliver to
Purchaser an accurate, correct and complete copy of each return or
statement filed by, on behalf of or including the Company for federal
income tax purposes or state and local income or franchise tax purposes for
the last three (3) tax years of the Company or for such period as the
Company has been in existence. All material elections with respect to the
taxes affecting the Company as of the date hereof are set forth in Exhibit
4.1.10. After the date hereof, no written election permitted under federal,
state or local income, property, franchise or other tax laws, ordinances,
codes, rules or regulations will be made by the Company without Purchaser's
and Merger Sub's express written consent. The provisions of this Section
4.1.10 shall not apply to any federal or state income tax returns that may
be due for a short period as a result of the Merger but rather shall be
subject to filing by the existing officers of the Company within the time
period normally required for any such filings following the Effective Date.
4.1.11 Financial Disclosure. The Company has made available to
Purchaser and Merger Sub, all information known to the Red River
Shareholders or the Company with respect to (i) accounts, borrowing
resolutions and deposit boxes maintained by the Company at any bank or
other financial institution and the account numbers and the names and
addresses of all of the persons authorized to effect transactions in such
accounts and pursuant to such resolutions and with access to such boxes;
and (ii) the names of all persons, firms, associations, corporations or
business organizations holding general or special powers of attorney from
the Company and a summary of the terms thereof.
4.1.12 Condition of Tangible Assets. To the best of the knowledge of
the Company and the Red River Shareholders, all material tangible portions
of the assets, and properties owned by the Company or in which the Company
has a leasehold interest or a working interest, royalty interest, farmout
or farmin interest or any other leasehold or mineral interest of any kind
whatsoever in oil and gas or mineral properties, including the well
equipment, pipe and other structures located thereon, including all real
properties or leasehold interests in real property and structures thereon,
are in good operating condition and repair, subject only to ordinary wear
and tear in light of their respective ages and the respective uses for
which they are currently used, and that the use of such tangible properties
and assets conform and comply in all material respects with all rules,
regulations and standards applicable to the Company or its assets or
property, imposed by applicable federal, state or local laws, ordinances,
codes, orders, rules or regulations.
4.1.13 All Assets. The properties and assets of the Company as of the
date hereof include (i) all properties and assets, whether or not reflected
on the balance sheet included in the Financial Statements, including
Licenses, Permits, Leases, Contracts, customer lists, goodwill and any
other tangible or intangible assets disclosed in the Exhibits attached to
this Agreement, and (ii) assets and properties acquired by the Company
after the Financial Statement Date and on or before the date hereof in the
ordinary course of business or as disclosed in the Exhibits attached to
this Agreement, other than such properties and assets as shall have been
transferred or otherwise disposed of by the Company in the ordinary course
of business.
4.1.14 Stock Transfer Records and Minute Books. The stock transfer
records and corporate minutes books of the Company and its subsidiaries
will be furnished to the Purchaser and Merger Sub at least ten (10) days
prior to the Closing Date and will be complete and correct in all respects.
The minutes books will accurately reflect all meetings, consents and other
actions of the shareholders and Board of Directors of the Company since its
incorporation.
4.1.15 Defensible Title. Except for Permitted Encumbrances (as defined
herein), the Company has good and defensible title to all of its assets and
properties, including fee interests in real property and title to all its
other properties and assets owned as of the date hereof, free and clear of
all mortgages, liens, pledges, charges, claims (real or asserted) or
encumbrances of any nature whatsoever. Title to the oil and gas interests
included in the Company's assets and properties is not subject to being
reduced by virtue of any reversionary or back-in interests or reassignments
or payments required of the Company; the oil and gas interests are not
subject to any joint venture agreements, farmout agreements, operating
agreements, oil and or gas sales or processing contracts, preferential
rights of purchase, consents to assignment, drilling and or development
obligations or other burden, restriction or limitation with respect to the
ownership interest of the Company therein, the operation thereof, or the
disposition and processing of production attributable thereto which are not
ordinary and customary in the oil and gas industry, or which contain any
terms, provisions, conditions or agreements which are not ordinary and
customary in the oil and gas industry or which decrease the Company's net
revenue interest or increase the Company's working interest from the
working interest and net revenue interests set forth in Exhibit 4.1.28. The
Company owns the Working interest and net revenue interest shown in Exhibit
4.1.28 in the oil and gas properties in which it has an interest. (b)
Except as set forth in Exhibit 4.1.15 with respect to the oil, gas and
other mineral leases, unit agreements, pooling agreements, communization
agreements, and other documents creating oil, gas and mineral interest
included in the oil and gas interests, (a) the Company has fulfilled all
requirements for filings, certificates, disclosures of parties in interest,
and other similar matters contained in (or otherwise applicable thereto by
law, rule or regulation) the Leases or other documents applicable to it and
is fully qualified to own and hold all such Leases or other interests; (b)
there are no obligations (excluding implied covenants, if any) to engage in
continuous development operations in order to maintain any such Lease or
other interest in force and effect for the areas and depths covered
thereby; (c) there are no provisions applicable to such Leases or other
documents which increase the royalty share of the lessor thereunder, except
where such increase would not decrease the Company's net revenue interest
below those shown on Exhibit 4.1.28; and (d) subject to any express or
implied covenants, upon the establishment of production in commercial
quantities, the Leases and other interests are to be in full force and
effect over the economic life of the property involved and do not have
terms fixed by a certain number of years. With respect to tangible personal
property held by the Company under lease, all such agreements are valid,
binding and in full force and effect and the Company is not in default
under any such Lease. As used in this Agreement with respect to an oil and
gas property, the term "good and defensible title" shall mean title to such
oil and gas property which is free and clear of liens and encumbrances
(other than Permitted Encumbrances) and which entitles the Company to a net
revenue interest in such oil and gas property that is no less than the net
revenue interest that is set forth in Exhibit 4.1.28 and to a working
interest in such oil and gas property that is no greater than the working
interest shown in Exhibit 4.1.28 without a corresponding increase in net
revenue interest.
4.1.16 Permitted Encumbrances. The following liens, charges and other
encumbrances of a similar nature are collectively referred to herein as the
"Permitted Encumbrances" with respect to the properties and assets of the
Company:
(i) liens for current state or local property taxes not yet due
and payable or subject to penalties; zoning ordinances, building laws,
restrictions and regulations imposed by governmental authorities, if
any, none of which is materially violated by existing buildings and
uses by the Company;
(ii) any assessment for local benefits levied by any governmental
authority and not now a lien upon all or any portion of such real
property; provided, however, neither the Red River Shareholders nor
the Company know or have reason to know of any such assessment;
(iii) liens of carriers, warehousemen, mechanics, laborers,
materialmen, landlords, vendors, workmen, and operators arising by
operation of law in the ordinary course of business or by a written
agreement existing as of the date hereof and necessary or incident to
the exploration, development, operation, and maintenance of oil and
natural gas properties and related facilities and assets for sums not
yet due or being contested in good faith by appropriate proceedings,
which proceedings are disclosed in Exhibit 4.1.16 attached hereto and
which liens Purchaser has approved as Permitted Encumbrances;
(iv) any mortgage, deeds of trust or other encumbrances on
leasehold properties which the Company is leasing from a third party
and which is from the owner of the property. and does not adversely
affect the Company's working interest or net revenue interest in the
oil and gas properties;
(v) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance, and
other social security legislation (other than ERISA) to the extent
such liens are for amounts not yet due;
(vi) liens, easements, rights-of-way, restrictions, servitude,
permits, conditions, covenants, exceptions, reservations, and other
similar encumbrances incurred in the ordinary course of business or
existing on property and not materially impairing the value of the
assets of the Company or interfering with the ordinary conduct of the
Company's business or rights to their assets,
(vii) all rights to consent by, required notices to, filings
with, or other actions by governmental authorities to the extent
customarily obtained subsequent to closing,
(viii) farmout, carried working interest, joint operating,
unitization, royalty, overriding royalty, sales, and similar
agreements relating to the exploration or development of, or
production from, oil and natural gas properties entered into in the
ordinary course of business, unless such agreements decrease the
Company's net revenue interest or increase the Company's working
interest from the interests set forth in Exhibit 4.1.28 attached
hereto,
(ix) any defects, irregularities, or deficiencies in title to
easements, rights-of-way, or other surface use agreements that do not
adversely affect the value of any asset of the Company,
(x) preferential rights to purchase and third-party consents that
would not be activated or triggered by the Merger and the other
transactions contemplated by this Agreement, except that any such
rights which affect the West Hunton Lime Unit shall be Permitted
Encumbrances if they are listed in Exhibit 4.1.16 attached hereto and
approved by Purchaser as Permitted Encumbrances;
(xi) liens approved in writing by or on behalf of Purchaser,
(xii) any liens, mortgages or security interests disclosed in the
Financial Statements or on Exhibit 4.1. 16,
(xiii) such imprefections of title, liens, easements or
encumbrances, if any, as are not material in character, amount or
extent and do not, severally or in the aggregate, materially detract
from the value or materially and adversely interfere with the present
use of the property subject thereto or affected thereby or otherwise
materially impair the business and operations of the Company (for
purposes of this subsection only, "material" shall mean the foregoing
title defects with a cumulative value which in the aggregate exceeds
$100,000).
4.1.17 Leases and Licenses. Exhibit 4.1.17 attached hereto sets forth,
as of the date hereof and which shall set forth as of the Closing Date, an
accurate and complete list of all leases and purchases of real property or
leases, including without limitation oil and gas leases or mineral
interests and agreement relating thereto, license agreements and purchases
of personal property (covering property with a purchase price as of the
date hereof greater than $25,000) to which the Company is a party (whether
as purchaser, lessor, lessee, licenser or licensee) (collectively, the
"Leases and Licenses"). The Company, as purchaser, lessee or licensee, has
entered into all such Leases and Licenses which the Company reasonably
believes may be necessary for the conduct of the business and operation as
now conducted. The Company has furnished to Purchaser accurate and complete
copies of all such Leases and Licenses. The Company has good and defensible
title to each of the leasehold and other interests created by the Leases
and Licenses, free and clear of all security interests, claims, liens and
encumbrances of any nature, other than Permitted Encumbrances. Each such
Lease and License is in full force and effect. Each such Lease and License
constitutes the legal, valid and binding obligation of the Company and, to
the best of the knowledge of the Company and the Red River Shareholders,
the other party or parties thereto, enforceable against the Company in
accordance with its respective terms of each such lease or license except
as may be limited by bankruptcy, insolvency, reorganization, readjustment
of debt, moratorium, general principles of equity or other laws of general
application related to or affecting the enforcement of creditor's rights
generally. Neither the Company nor the Red River Shareholders have received
notice or have any reason to know, of any claimed material default under
any such Leases and Licenses except as set forth in Exhibit 4.1.17.
4.1.18 Insurance. Exhibit 4.1.18 attached hereto sets forth, as of the
date hereof, an accurate and complete list and brief description of the
terms of all policies of insurance carried by the Company and designating
the Company as the insured thereunder. The description of each policy
consists of a description of the subject property, the insurance coverage,
the deductibles and the additional insureds. The Company has furnished to
the Purchaser and Merger Sub an accurate and complete copy of all such
insurance policies. Except as set forth in Exhibit 4.1.18, to the best of
the knowledge of the Red River Shareholders and the Company, no insurance
carrier has refused any application for insurance by the Company or any
other person on behalf of the Company with respect to any of its properties
or assets or any of its Leases and Licenses.
4.1.19 Intellectual Property Rights. Exhibit 4.1.19 attached hereto
sets forth, as of the date hereof, an accurate and complete list of all
letters patent, patent applications, trademarks, service marks, trade
names, brands, logos, copyrights and licenses both domestic and foreign,
and rights with respect to the foregoing, whether or not registered or
registrable with any governmental authority, now owned or used by the
Company. Neither the Red River Shareholders nor the Company have received
notice, or otherwise have any reason to know, of any claimed or threatened
infringement of the rights of others with respect to any patents,
trademarks, service marks, trade names, brands, logos, copyrights and
licenses used or owned by the Company, the loss of which would have a
material adverse effect upon the business, operations, assets or financial
condition of the Company.
4.1.20 No Litigation. Except as set forth in Exhibit 4.1.20 attached
hereto, there are no existing or pending or, to the best of the knowledge
of the Company and the Red River Shareholders, threatened suits, actions,
claims, or litigation, administrative, arbitration or other proceedings or
governmental investigations or inquiries to which the Company or the Red
River Shareholders are a party or to which any of the properties or assets
thereof is subject.
4.1.21 No Violation of Laws or Regulations. To the best knowledge of
the Company and Red River Shareholders, the Company has materially complied
with, and is not in any material respect in default under or in violation
of, any laws, ordinances, requirements, regulations or orders applicable to
its businesses and properties, nor is the Company in violation of or in
default of any order, writ, injunction, judgment or decree of any court,
arbitrator, or federal, state or local department official, commission,
authority, board, bureau, agency or other instrumentality issued or pending
against the Company which might adversely affect the Company's or the Red
River Shareholders' ability to execute, deliver and perform their
obligations under this Agreement or to consummate the transactions
contemplated hereby or which challenges or seeks to prevent, enjoin, alter
or materially delay any such transactions. Neither the Red River
Shareholders nor the Company have received notice, or otherwise have any
reason to know, of any claimed default or violation with respect to any of
the foregoing. There have been no illegal payments, kickbacks, bribes or
political contributions made by the Company to any person, entity or
governmental or regulatory body in the United States or any foreign country
or political subdivision.
4.1.22 Approvals. All consents necessary or required to be obtained by
the Company for the consummation of the transactions contemplated hereby
are set forth in Exhibit 4.1.22 attached hereto. The Company will have
obtained, on or before the Closing Date, all such consents, approvals and
authorizations of all designations, declarations and notices required to be
obtained or given, as the case may be, pursuant to the Certificate of
Incorporation or the Bylaws of the Company or under or in accordance with
any Lease, License, Permit, Contract, agreement, indenture or other
instrument to which the Company is a party or by which the Company or any
of its properties or assets are bound in connection with the execution,
delivery and performance of this Agreement and the consummation of each
transaction referred to in this Agreement. Subject to obtaining the
approvals set forth in Exhibit 4.1.22, attached hereto, neither the
execution, delivery or performance of this Agreement nor the conclusion of
any transaction contemplated by this Agreement will result in any violation
of, be in conflict with or constitute a default under any term or provision
of the Certificate of Incorporation or the Bylaws of the Company or any
such Lease, License, Permit, Contract, indenture or other agreement or
instrument or the rules and regulations of any regulatory body.
4.1.23 Labor Agreements. There are (i) no collective bargaining
agreements between the Company and any labor union or other representative
of employees, including local agreements. amendments, supplements, letters
and memoranda of understanding of all kinds and (ii) no employment or
consulting contracts which are not terminable at will without penalty to
which the Company is a party.
4.1.24 Contracts. Exhibit 4.1.24 attached hereto sets forth, as of the
date hereof and as of the Closing Date, accurate and complete lists of the
following:
(i) except for the Leases and Licenses, all agreements,
contracts, arrangements, commitments, understandings or obligations,
oral or written, of the Company which are to be performed in whole or
in part on or after the date hereof and which require or may require
the payment by the Company in an amount, or under which the Company is
required or may be required to provide goods or services of a value,
greater than twenty-five thousand dollars ($25,000) during any period
of twelve (12) consecutive months;
(ii) any agreement to which the Company is a party or by which
its properties or assets are bound that limits the freedom of such
corporation to compete in any line of business or with any person; and
(iii) all other agreements, contracts, arrangements, commitments,
understandings or obligations, oral or written (other than oral
contracts of employment), between the Company on the one part and one
or more or all of the Red River Shareholders or any other officer or
director of the Company on the other part, or in which any of such
persons or entities has any financial interest, direct or indirect
(including without limitation any agreements affecting the Company's
properties or assets and agreements to make loans).
The Red River Shareholders have furnished to the extent requested by
Purchaser or Merger Sub or have made available for inspection by Purchaser
and Merger Sub a copy of each agreement, contract, arrangement, commitment
or obligation set forth on Exhibit 4.1.24, attached hereto. Collectively
the contracts, agreements, arrangements, commitments or obligations set
forth in this Section and listed in Exhibit 4.1.24, attached hereto, are
referred to throughout this Agreement as the "Contracts." Except as set
forth in Exhibit 4.1.24, each such Contract is in full force and effect and
to the best of the Company's and the Red River Shareholders' knowledge the
Company has performed in all material respects all of the obligations under
each Contract required to be performed by it as of the date hereof and as
of the Closing Date and no such Contract is in default, nor has any event
occurred, which with the passage of time or giving of notice or both, will
result in the occurrence of a default under any such Contract.
4.1.25 Employees. The Company is not a party to any agreement,
contract, arrangement, plan, commitment or understanding which has resulted
or would result, upon the consummation of the transactions contemplated
under this Agreement or otherwise, separately or in the aggregate, in the
payment of any "excess parachute payment" within the meaning of Code
ss.280G nor is the Company obligated to pay any severance arrangements with
any current or former employees of the Company or any of its subsidiaries.
Attached hereto as Exhibit 4.1.25 is a true and complete list of all
employees of the Company compensated by the Company. There are no employees
of the Company who have employment contracts or employee benefit rights
which cannot be terminated upon reasonable notice, except to the extent
employment benefit rights must be continued as required by state and
federal law.
4.1.26 Environmental Matters. To the best knowledge of the Company and
the Red River Shareholders, the Company has duly complied with, and the
operation of its business, equipment and other assets in the facilities
owned or leased by the Company and its subsidiaries, if any, are in
compliance with the provisions of all applicable federal, state and local
environmental, health and safety laws, statutes, ordinances, rules and
regulations of any governmental or quasi governmental authority relating to
(i) omissions, (ii) discharges, release or seepage to surface water or
ground water, (iii) solid or liquid waste disposal, (iv) the use, storage,
generation, handling, transport, discharge, release or disposal of toxic or
hazardous substances or waste, or (vi) other environmental, health or
safety matters, including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
by the Superfund Amendments and Authorization Act of 1986; the Occupational
Safety and Health Act, as amended; the Resource Conservation and Recovery
Act of 1976; the Federal Water Pollution Control Act of 1970, as amended;
the Safe Drinking Water Act of 1974; the Toxic Substances Control Act of
1976; the Emergency Planning and Community Right to Know Act of 1986, as
amended; and the Clean Air Act, as amended; the Federal Water Pollution
Control Act, as amended; the Oil Pollution Act of 1990, as amended; the
Rivers and Harbors Act of 1899; the Hazardous and Solid Waste Amendments
Act of 1984, as amended; and the Hazardous Materials Transportation Act, as
amended (collectively "Environmental and Health Laws"). To the best
knowledge of the Company and the Red River Shareholders, there are no
investigations, administrative proceedings, judicial actions, orders,
claims or notices which are pending, anticipated or threatened against the
Company, relating to violations of the Environmental and Health Laws. The
Company has not received a notice of, and does not know or have any reason
to suspect, any facts which might constitute a violation of any
Environmental or Health Laws which relate to the use, ownership or
occupancy of any property or facilities used by the Company in connection
with the operation of its business or any activity of the Company's
business which would result in a violation or threatened violation of any
Environmental or Health Laws.
4.1.27 Stock Representations. Subject to the rights of the Red River
Shareholders under Section 9.15, the Red River Shareholders (i) intend to
acquire the shares of the Beta Common Stock pursuant to Section 2.1 hereof
solely for the purpose of investment and not for the resale and
distribution thereof, and has no present intention to offer, sell, , assign
or otherwise dispose of the same; (ii) are either accredited investors
within the meaning of Rule 501(a) of Regulation D as promulgated under the
Securities Act of 1933, as amended ("Securities Act") or sophisticated
investors within the meaning of the judicial and regulatory rulings and
interpretations of Section 4(2) of the Securities Act and Rule
506(b)(2)(ii) of Regulation D as promulgated under the Securities Act;
(iii) will be required in connection with any reoffer or resale of the Beta
Common Stock to (a) comply with Rule 144 and, in the case of those Red
River Shareholders who are Affiliates of the Company, with Rule 145(d), as
shall be applicable, (b) comply with any other exemption from registration
under the Securities Act, or (c) offer and sell their shares of Beta Common
Stock pursuant to an effective registration statement under the Securities
Act; (iv) agree that they will not offer, sell., transfer, assign or
otherwise dispose of ("disposition") any such shares of Beta Common Stock
unless any such disposition shall comply with either Rule 145 or Rule 144,
as the case may be, of the Securities Act or be registered or be exempt
from registration under the Securities Act and shall comply with Rule 144,
all applicable federal and state securities laws, and (v) agree and
acknowledge that the stock certificates representing the shares of Beta
Common Stock which will be acquired by the Red River Shareholders under
this Agreement will contain a legend restricting the transferability of the
shares of Beta Common Stock as provided herein and that stop order
instructions may be imposed by the Purchaser's transfer agent restricting
the transferability of such shares.
4.1.28 Licenses, Facilities.
(i) All licenses and authorizations material to the operation of
the Company's oil and gas wells and other facilities owned, operated
or leased by the Company, such oil and gas wells and other facilities
being identified at Exhibit 4.1.28, attached hereto, and/or to the
conduct of the Company's business are listed at Exhibit 4.1.28
attached hereto. The Company is operating the oil and gas wells and
other facilities identified in full compliance with the authorizations
identified; neither the Red River Shareholders nor the Company have
any knowledge of any matters which might result in the supervision or
revocation of such authorizations, or the issuance of any citation or
forfeiture to the Company. To the best of the knowledge of the Company
and the Red River Shareholders, there are no unsatisfied citations or
notices of apparent liability issued or investigations ongoing, by any
federal or state government agency, commission or other authority with
respect to the oil and as wells and other facilities owned, operated
or leased by the Company or their operation.
(ii) The Company owns all of the equipment necessary or useful in
the operation of the oil and gas wells and other facilities in
accordance with their licenses and with the Company obligations under
any agreements now in effect (the "Equipment"). All of the Equipment
is in good repair and operable condition, ordinary wear and tear
excepted, and have been, and will be, prior to Closing, operated in
accordance with the authorizations for the oil and gas wells and other
facilities and the rules and regulations of the federal and state
regulatory agency, commission or other authority having jurisdiction
over such oil and gas wells and other facilities.
(iii) Purchaser, Merger Sub, the Red River Shareholders and the
Company will cooperate in seeking authorizations or consents to the
transfer of control to the Surviving Corporation, and each party will
bear its expenses incurred in requesting such authorizations or
consents required to be obtained under the provisions of this
Agreement by such party. Purchaser, Merger Sub, the Red River
Shareholders and the Company shall cooperate fully in responding
promptly to any inquiries or objections related to such requests for
authorizations or consents.
4.1.29 Accounts Receivable. All of the accounts receivable of the
Company as disclosed in the Financial Statements constitute valid
receivables deemed collectible, have been incurred in the ordinary course
of business consistent with past practices and, to the Company's and the
Red River Shareholders' knowledge are collectible in the ordinary course of
the Company's business, except to the extent of the reserve for bad debts
or doubtful accounts as set forth in the Financial Statements attached
hereto as Exhibit 4.1.7, and are not subject to any setoffs or
counterclaims. To the knowledge of the Company and the Red River
Shareholders, no part of such accounts receivable is contingent upon the
performance by the Company of any obligation, and no agreements for
deduction or discounts have been made with respect to any part of such
receivables.
4.1.30 Payables. The list of itemized accounts payable of the Company
as shown on Exhibit 4.1.30 as of the Financial Statement Date attached
hereto represent a complete list of all of the Company's accounts payable
to its creditors as of such date, are true and correct and are not
currently in default as of the date hereof and as of the Closing Date. The
Company shall not incur any additional accounts payable between the date
hereof and the Closing Date other than in the ordinary course of business
without Purchaser's express written consent.
4.1.31 Permits. To the best knowledge of the Company and the Red River
Shareholders, the Company has obtained all permits, licenses and any other
approvals or authorizations (collectively "Permits") in connection with the
ownership, operation, or leasing of the oil and gas wells and facilities in
which the Company has an interest and the drilling and completion, or
proposed drilling and completion, of oil and gas wells and the extraction,
removal, transportation and gathering of oil and gas under any existing oil
and gas leases or other Leases, Licenses or Contracts relating to the
operation of its oil and gas properties or leasehold interests which are
presently being operated or which are currently in effect. All such Permits
are presently valid and in full force and effect and no revocation,
cancellation, or withdrawal thereof has been effective or to the best of
the knowledge of the Company and the Red River Shareholders, threatened.
Except as disclosed herein, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will
not result in the termination of, or change in, any such Permits.
4.1.32 Employee Benefit Matters.
(i) Employee Salaries and Benefits. Exhibit 4.1.32 consists of a
true and complete list of all of the salaries of all employees of the
Company and a true and complete list of the plans, programs and
arrangements providing profit sharing, retirement, pension, savings,
thrift, deferred compensation, stock options, stock purchases, group
insurance, accident, sickness, medical, dental and disability
benefits, and all vacation pay, severance pay, incentive compensation,
consulting agreements, bonuses and other employee benefits or fringe
benefits maintained currently or at any time in the past three (3)
years by the Company or with respect to which contributions are made
or have been made at any time in the past six (6) years by the Company
(including health insurance, life insurance and other benefit plans
maintained for retirees) whether or not such plans, programs and
arrangements consist "employee benefit plans" within the meaning of
Section 3(3) of the Employees Retirement Income Security Act of 1974,
as amended ("ERISA"), whether or not such plans, programs and
arrangements are in the nature of formal or informal understandings,
and whether or not such plans, programs and arrangements are pursuant
to any collective bargaining arrangements. Such plans, programs and
arrangements are collectively referred to herein as "Benefit Plans".
(ii) Compliance with ERISA. To the best knowledge of the Company
and the Red River Shareholders, each Benefit Plan of the Company which
is covered by ERISA complies in all material respects and has been
administered in all material respects in accordance with the
applicable provisions of ERISA and the Code, including, without
limitations, the satisfaction of all applicable recording, disclosure,
fiduciary and tax qualification requirements under ERISA and the Code.
The Company has filed or caused to be filed with the Internal Revenue
Service annual reports on form 5500 or 5500C or 5500R, as applicable,
for each Benefit Plan for all years and periods for which such reports
were required. To the best knowledge of the Company and the Red River
Shareholders, all statements and disclosures made on the documents or
forms filed or distributed pursuant to the applicable reporting and
disclosure requirements under ERISA and the Code have been true and
complete in all material respects and have been filed or distributed
timely. No Benefit Plan has incurred any excise tax liability.
(iii) Funding. The Company has made all payments and
contributions to all Benefit Plans on a timely basis as required by
the terms of each such Plan, ERISA and the Code. All such payments and
contributions have been deducted fully by the Company for federal
income tax purposes. Such deductions have not been challenged or
disallowed by any governmental authority and the Company has no reason
to believe that such deductions are not properly allowable. The
Company has funded or will fund each Benefit Plan in accordance with
the terms of each Benefit Plan and, with respect to the current plan
year for benefits accrued through the Closing Date, including the
payment of applicable premiums on any insurance contract funding a
Benefit Plan for coverage provided through the date hereof.
(iv) Prohibited Transactions. To the best knowledge of the
Company and the Red River Shareholders, no "prohibited transaction" as
defined in ss.406 of ERISA or ss.4975 of the Code, has occurred with
respect to any Benefit Plan other than any such transaction which is
exempt under ss.408 of ERISA or ss.4975(d) of the Code. No fiduciary
violations, as defined in ss.404 of ERISA, have occurred with respect
to which the Company could have any present or future liability or
obligations. Each Benefit Plan is, and has been, operated and
administered in accordance with the appropriate written plan
documents.
(v) Determination Letters. The Internal Revenue Service has
issued to the Company letters determining that any Benefit Plan
operated by the Company is qualified under ss.401(a) and related
sections of the Code to the extent applicable and the related trust of
such Benefit Plans operated as qualified plans are exempt from federal
income tax under ss.501(a) of the Code. To the best knowledge of the
Company and the Red River Shareholders, there have been no occurrences
since the date of any such determination letter which have adversely
affected or which could adversely affect such qualification.
(vi) Medical Plans. Each Benefit Plan that provides medical and
related benefits has been operated in compliance with all requirements
of ss.ss.601 through 608 of ERISA and either (i) ss.ss.162(i)(2) and
(k) of the Code and the regulations promulgated thereunder (prior to
1989) or (ii) ss.4980(B) of the Code and the regulations promulgated
thereunder (after 1988) relating to the continuation of coverage under
certain circumstances in which coverage could otherwise cease. Exhibit
4.1. 32(vi) attached hereto is a true and complete list of all former
employees of the Company and their respective beneficiaries who, as of
the date hereof, are receiving or who are eligible to elect to receive
benefits pursuant to such plans and the provisions of ERISA and the
Code.
(vii) Post Retirement Benefits. No Plan, program or arrangement
maintained by the Company provides for post-retirement medical
benefits, post-retirement death benefits or other post-retirement
welfare benefits, except to the extent of the continuation coverage
rules as provided under the provisions of ss.4980B of the Code and
ss.ss.601 through 608 of ERISA.
(viii) Communications. All communications with respect to each
Benefit Plan by any person having the requisite authority to make such
communications reflect and always have reflected accurately the plan
documents and operations of each such Benefit Plan. There have been no
written statements or communications, and to the best knowledge of the
Company and the Red River Shareholders, no oral statements or
communications made to any employee or former employee of the Company
in any form by any person (including, without limitation, any officer,
director or any other employee of the Company having the requisite
power to do so) which provide for or could be construed as a contract
or promise by the Company to provide for any pension, welfare or other
insurance type benefits to any such employee or former employee,
whether before or after retirement, other than benefits under the
Benefit Plans listed in Exhibit 4.1.32 attached hereto.
(ix) Severance. The Company has no severance arrangements with
any current or former employee of the Company and neither Purchaser
nor Merger Sub shall have any liability for severance payments to
employees of the Company who voluntarily incur a separation from
service prior to and including the Closing Date or as a result of the
consummation of the transactions contemplated by this Agreement.
4.1.33 Directors and Officers. Exhibit 4.1.33 attached hereto is a
correct and complete list as of the date hereof showing the names of each
of the Officers and Directors of the Company, each of whom has been duly
elected or appointed.
4.1.34 No Subsidiary. Except as set forth in Exhibit 4.1.34, the
Company does not have any subsidiaries and does not own shares of common
stock or capital stock in any other corporation or a participating interest
or other interest in any limited liability company, partnership, joint
venture, strategic alliance or any other entity, association or business
arrangement.
4.1.35 Sale of Production. Except as set forth in Exhibit 4.1.35, no
hydrocarbons produced from the Company's oil and gas properties are subject
to a sales contract (other than a contract or division order terminable
upon no more than 30 days notice), and no person has any call upon, option
to purchase or similar rights with respect to production from the Company's
oil and gas properties. The Company is receiving proceeds from the sale of
production from the properties in a timely manner, and the proceeds payable
to Company are not being held in suspense by any production purchaser or
operator and are not subject to refund.
4.1.36 Prepayments and Imbalances. The Company is not obligated by
virtue of a production payment, prepayment arrangement under any contract
containing a "take or pay", advance payment or similar provision, gas
balancing agreement or other arrangement to deliver hydrocarbons at some
time after the Effective Time, without then or thereafter receiving full
payment therefor.
4.1.37 Demands for Release. The Company has not received any currently
pending demands for release regarding any portion of any oil and gas leases
or demands for reconveyance of any interest in any of the oil and gas
properties.
4.1.38 Operating Agreements. With respect to any and all operating
agreements affecting any of the Company's oil and gas properties: (1) there
are no outstanding calls or payments in excess of $25,000 under authorities
for expenditures for payment which are due from Company and have not been
paid; (2) there are no operations with respect to which either Company is a
non-consenting party or is subject to a prior non-consent election the
effect of which is not reflected in the working interest and net revenue
interest of the Company reflected in Exhibit 4.1.28.
4.1.39 Plugging Operations. There are no pending governmental or other
requests or demands to plug, replug or abandon any well which have not been
satisfied.
4.1.40 Surface Rights. The Company has obtained the surface leases and
rights-of-way necessary to conduct its operations on the Company's oil and
gas properties in the manner in which they have been conducted prior to the
Effective Time.
4.1.41 Suspense Accounts. Suspense accounts for production proceeds
payable to third parties that are maintained by Company are adequate for
the purposes for which they were created, and will contain sufficient
monies at the Closing Date to satisfy obligations to such third parties for
the payment of their proceeds of production as of the Closing Date.
4.1.42 ""Full Disclosure". None of the written information provided by
the Company and the Red River Shareholders to Purchaser and Merger Sub in
connection with the negotiation of this Agreement contains any
intentionally misleading statement of a material fact. No representation or
warranty of the Red River Shareholders set forth in this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein not misleading.
4.2 Representations and Warranties of Purchaser and Merger Sub. Purchaser
and Merger Sub, jointly and severally, represent to the Company and the Red
River Shareholders as follows:
4.2.1 Good Standing. Purchaser and Merger Sub are both corporations
duly organized, validly existing and in good standing under the laws of
Nevada and Oklahoma, respectively, with full corporate power and authority
to own, operate and lease their properties and to carry on their respective
businesses as now being conducted. Purchaser and Merger Sub are both
qualified to do business and in good standing in all jurisdictions where
their properties, assets and operations so require. Purchaser and Merger
Sub have all requisite power and authority to enter into this Agreement and
perform their obligations under this Agreement. A true and correct copy of
Merger Sub's Articles of Incorporation and all amendments thereto and
restatements thereof, certified by the Oklahoma Secretary of State and
Merger Sub's Bylaws and all amendments thereof and restatements thereto,
certified as true, complete and accurate by the Secretary of Merger Sub are
set forth in Exhibit 4.2.1 attached hereto.
4.2.2 Binding Agreement. This Agreement has been executed and
delivered by each of Purchaser and Merger Sub, and constitutes the valid
and binding obligation of Purchaser and Merger Sub enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium, general principles of equity
or similar laws affecting the rights of creditors generally. This Agreement
and the performance of this Agreement by Purchaser and Merger Sub will not
conflict with, breach, violate or be in contravention of or result in a
default under Purchaser's or Merger Sub's Articles or Certificate of
Incorporation, By-laws or any other organizational or governing instrument
of Purchaser or Merger Sub, or of any agreement, mortgage or other
instrument to which either Purchaser or Merger Sub is a party or by which
any of its assets or property is bound or affected or, to the best of
Purchaser's knowledge, any law, rule, license, regulation, judgment, decree
or order of any court, agency or other authority which has jurisdiction
over the business, properties, assets and activities of Purchaser or Merger
Sub. All corporate action necessary for the approval and/or ratification of
this Agreement has been taken, or in the case of the submission of this
Agreement for approval by Purchaser's shareholders in accordance with
Purchaser's Bylaws will have been taken on or before Closing Date.
4.2.3 Litigation. There are no pending or to the best of Purchaser's
and Merger Sub's knowledge, threatened suits, actions, inquiries, claims,
arbitrations, administrative or legal or other proceedings or governmental
investigations or to which either Purchaser or Merger Sub is a party or to
which any of its properties or assets thereof is subject.
4.2.4 No Violation of Laws or Regulations. To the best knowledge of
the Purchaser, Purchaser has materially complied with, and is not in any
material respect in default under or in violation of, any laws, ordinances.
requirements, regulations or orders applicable to its businesses and
properties, nor is Purchaser in violation of or in default of any order,
writ, injunction, judgment or decree of any court, arbitrator, or federal,
state or local department official, commission, authority, board, bureau,
agency or other instrumentality issued or pending against the Purchaser
which might adversely affect the Purchaser's ability to execute, deliver
and perform its obligations under this Agreement or to consummate the
transactions contemplated hereby or which challenges or seeks to prevent,
enjoin, alter or materially delay any such transactions. Purchaser has not
received notice, or otherwise has any reason to know, of any claimed
default or violation with respect to any of the foregoing. There have been
no illegal payments, kickbacks, bribes or political contributions made by
the Purchaser to any person, entity or governmental or regulatory body in
the United States or any foreign country or political subdivision.
4.2.5 Current Filings With SEC. Purchaser has filed all Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q and other applications and
reports required to be filed by Purchaser with the Commission under the
Securities Exchange Act of 1934, as amended ("Exchange Act"). The Company
and the Red River Shareholders have access under the EDGAR system and have
reviewed (i) each registration statement, report on Form 8-K, proxy
statement or information statement prepared by it since December 1, 1998,
and (ii) Purchaser's Quarterly Reports on Form 10-Q for the quarterly
periods ended June 30, and September 30, each in the form (including
exhibits) filed with the Commission (collectively, the "Purchaser SEC
Reports"). As of their respective dates, the Purchaser SEC Reports did not
contain 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 made
therein, in light of the circumstances in which they were made, not
misleading. Each of the consolidated balance sheets included in the
Purchaser SEC Reports (including the related notes and schedules) fairly
presents the consolidated financial position of Purchaser and its
Subsidiaries as of its date and each of the consolidated statements of
income, of stockholders' equity and of cash flows included in or
incorporated by reference into the Purchaser SEC Reports (including any
related notes and schedules) fairly presents the results of operations,
stockholders' equity and cash flows, of Purchaser and its Subsidiaries for
the periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments which will not be material
to Purchaser and its subsidiaries taken as a whole in amount or effect), in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein. Other than the Purchaser SEC Reports, Purchaser has not filed any
other definitive reports or statements with the Commission since January 1,
1999.
4.2.6 Purchaser's Stock. The only authorized capital stock of
Purchaser is fifty million (50,000,000) shares of its $.001 par value
voting common stock, which is the Beta Common Stock. The number of shares
of Beta Common Stock which are issued and outstanding as of the date hereof
is as set forth in Exhibit 4.2.6 attached hereto. All outstanding shares of
capital stock of the Purchaser have been duly authorized and validly issued
and are fully paid and nonassessable. Except as specifically stated in the
SEC Reports and Exhibit 4.2.6 attached hereto, as of the date of this
Agreement, there are outstanding (a) no shares of capital stock or other
voting securities of Purchaser, (b) no securities of Purchaser convertible
into or exchangeable for shares of capital stock or voting securities of
Purchaser, and (c) no options, warrants or other rights to acquire from
Purchaser, and no preemptive or similar rights, subscription or other
rights, convertible securities, agreements, arrangements or commitments of
any character, relating to the capital stock of Purchaser, obligating
Purchaser to issue, transfer or sell, any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of Purchaser or obligating Purchaser to grant, extend or enter
into any such option, warrant, subscription or other right, convertible
security, agreement, arrangement or commitment (the items in clauses
4.2.6(a), 4.2.6(b) and 4.2.6(c) being referred to collectively as the
"Purchaser Securities"). There are no outstanding obligations of Purchaser
to repurchase, redeem or otherwise acquire any Purchaser Securities. Upon
issuance of the 2,250,000 shares of Beta Common Stock to the Red River
Shareholders, such shares of Beta Common Stock will be validly issued,
fully paid and nonassessable. The Beta Common Stock is currently listed on
the Nasdaq Small Cap Market.
4.2.7 Year 2000 Compliance.The Purchaser will not suffer a material
adverse effect attributable to a lack of Year 2000 Compliance in any
system, process or equipment owned or utilized by the Purchaser, or any
other aspect of its business and operations, or any system, process or
equipment of any of its material customers, suppliers or vendors.
4.2.8 Vote Required.The affirmative vote of the holders of a majority
of the outstanding shares of Beta Common Stock is the only vote of the
holders of any class or series of Purchaser Securities or other voting
securities necessary to approve this Agreement, the Merger and the
transactions contemplated hereby.
5. Activities Prior to the Closing Date
5.1 Operation of Company's Business. The Red River Shareholders and the
Company (for purposes of this Section 5, all references to the "Company" shall
include each of the Company's subsidiaries, if any) hereby agree that from and
after the date hereof to the Closing Date, except as otherwise contemplated by
this Agreement, the Company shall conduct its business solely in the ordinary
course consistent with past practices, and the Company shall, and the Red River
Shareholders shall cause the Company to:
5.1.1 Organizational Documents. Not amend its Certificate of
Incorporation or Charter or Bylaws, except as may be necessary to carry out
this Agreement or as required by law;
5.1.2 Corporate Name. Not change its corporate name or permit the use
thereof by any other corporation, person or entity;
5.1.3 Compensation. Not pay or agree to pay any employee, officer, or
director, without the consent of Purchaser and Merger Sub, compensation
which is in excess of the current compensation level of each employee,
officer or director, except for standard periodic increases to
non-management employees consistent with past practices in terms of timing
and amount;
5.1.4 Management. Not make any changes in management without the prior
written consent of Purchaser and Merger Sub;
5.1.5 Reorganizations or Other Related Transactions. Not merge or
consolidate with any other corporation, or acquire, agree to acquire or be
acquired by any corporation, association, partnership, joint venture or
other entity without the prior written consent of Purchaser and Merger Sub;
5.1.6 Disposition or Abandonment of Assets. Not sell, transfer or
otherwise dispose of any of its properties or assets or its interests in
oil and gas properties or other mineral properties nor abandon any of its
oil and gas wells, Equipment or other facilities without the prior written
consent of Purchaser and Merger Sub, except in the ordinary course of
business;
5.1.7 Indebtedness. Not create, incur, assume or guarantee any
indebtedness for money borrowed except for trade and other indebtedness
incurred in the ordinary course of business, unless the Company first
advises Purchaser and receives its consent thereto.
5.1.8 Encumbrances. Not create or suffer to exist any Encumbrance on
any of its properties or assets, including without limitation its interests
in oil and gas properties or other mineral properties, equipment or other
facilities, except for Permitted Encumbrances and those in existence on the
date hereof;
5.1.9 Increase of Indebtedness. Not increase the amount of any
indebtedness outstanding under any loan agreement, mortgage or borrowing
arrangement in existence on the date hereof, unless the Company first
advises Purchaser and Merger Sub and receives their consent thereto except
for additional borrowings required to fund the working capital needs of the
Company in the ordinary course of business under any line of credit loan
identified in the Company's Financial Statements to the extent permitted
thereunder by the documentation relating thereto in effect as of the date
hereof and then only to the extent that the Company has first notified
Purchaser of any such borrowings under the line of credit subsequent to the
date hereof and both Purchaser and Merger Sub approve such borrowings;
5.1.10 Payables. Pay when due, in accordance with past practices, all
of its accounts payables and trade obligations;
5.1.11 Maintenance of Assets. Maintain its facilities, assets and
properties, including without limitation the Equipment in good operating
repair, order and condition, reasonable wear and tear excepted, and notify
Purchaser and Merger Sub promptly upon any loss of, damage to or
destruction of any of its facilities, properties or assets;
5.1.12 Insurance. Not allow to lapse and maintain in full force and
effect all insurance coverage of the types and in the amounts set forth in
the Exhibits attached hereto and apply the proceeds received under any
insurance policy or as a result of any loss of, damage to, or destruction
of any of its facilities, properties or assets, including the Equipment, to
the repair or replacement of such facilities, properties or assets,
including the Equipment;
5.1.13 Contracts and Permits. Maintain in full force and effect all
Leases, Licenses, Contracts and Permits for or related to the operation of
its business in all respects and in all places as its business is now
conducted;
5.1.14 Goodwill. Use its best efforts to preserve its business
organization in tact, to keep available the services of its present
employees and to preserve the goodwill of its customers and others having
business relations with it;
5.1.15 Issuance of Securities. Not issue any additional capital stock,
options, warrants, or other rights to purchase capital stock or securities
convertible into or exchangeable for capital stock of the Company; not
declare, set aside or pay any dividend or make any other distributions in
respect of any of the Company's shares of capital stock;
5.1.16 Repurchase of Securities and Repayment of Indebtedness. Except
as approved by Purchaser after first being notified of any such event, not
make any direct or indirect redemption, purchase or other acquisition of
shares of the Company's capital stock or make any direct or indirect
repurchase, repayment or retirement of any principal of, or interest on,
any indebtedness other than regularly scheduled payments of principal and
interest as provided in the promissory note evidencing any of the Company's
indebtedness;
5.1.17 Litigation. Promptly advise Purchaser and Merger Sub in writing
of the commencement of, and of any known threat to commence, any suit,
claim, action, arbitration, legal or administrative proceedings,
governmental investigation or tax audit against the Company;
5.1.18 Monthly Financial Statements. Deliver to Purchaser and Merger
Sub as soon as available monthly financial statements ("Monthly Financial
Statements") of the Company commencing with the month of October, 1999, and
for each calendar month thereafter prior to the Closing Date;
5.1.19 Elections to Participate and Nonconsents. Not to elect to not
participate in operations for the drilling of any new well or the
fracturing or recompletion of any existing well, without the prior written
consent of Purchaser. Purchaser shall respond timely to any requests for
such consent.
5.1.20 Miscellaneous. Not enter into any agreement or otherwise agree
to take any action in violation of the negative covenants set forth in this
Section 5 or take, agree to take or omit to take any action that would make
any representation or warranty inaccurate.
5.2 Access to Information.
(a) The Company and Red River Shareholders will cooperate fully with
Purchaser and Merger Sub, and the Company shall provide, and the Red River
Shareholders shall cause the Company to provide, to Purchaser and its
accountants, counsel and other representatives (collectively "Advisors")
during normal business hours, (i) full access to the books, records,
Equipment, oil and gas leases, title opinions and other information
concerning the oil and gas properties and other real estate owned or leased
by the Company or in which the Company has an interest, and all other
Contracts, Leases, Licenses and Permits relating to the assets and
operations of the Company's oil and gas business and properties and all
work papers relating to the Company of the Company's independent
accountants and (ii) full opportunity to discuss the Company's business
affairs and assets with its officers, employees, agents and independent
accountants ("Company's Advisors") and furnish to Purchaser, Merger Sub and
their Advisors copies of such documents, records and information with
respect to the affairs of the Company as Purchaser, Merger Sub or its
Advisors may reasonably request.
(b) The Purchaser will cooperate fully with the Company and the Red
River Shareholders, and the Purchaser shall provide to the Company and its
Advisors during normal business hours, (i) full access to the books,
records, Equipment, oil and gas leases, title opinions and other
information concerning the oil and gas properties and other real estate
owned or leased by the Purchaser or in which the Purchaser has an interest,
and all other Contracts, Leases, Licenses and Permits relating to the
assets and operations of the Purchaser's oil and gas business and
properties and all work papers relating to the Purchaser of the Purchaser's
independent accountants and (ii) full opportunity to discuss the
Purchaser's business affairs and assets with its officers, employees,
agents and independent accounts ("Purchaser's Advisors") and furnish to the
Company, the Red River Shareholders and their Advisors copies of such
documents, records and information with respect to the affairs of the
Purchaser as the Company, the Red River Shareholders or their Advisors may
reasonably request.
5.3 Confidentiality. Purchaser, Merger Sub, their respective officers,
directors and employees shall retain in confidence and shall cause their
Advisors to retain in confidence, all information obtained by them pursuant to
the investigations made by Purchaser or its Advisors pursuant to Section 5.2
(the "Confidential Information"). The Red River Shareholders, the Company, its
officers, directors and employees and the Company's Advisors shall retain in
confidence, all information obtained by them in connection with any
investigation undertaken by such persons as a result of Purchaser or Merger Sub
providing such Persons such access to information of the Purchaser or Merger Sub
as provided in this Agreement. The parties agree that Confidential Information
shall not include information which (i) was or becomes generally available to
the public other than as a result of a Red River disclosure by Purchaser, Merger
Sub, the Red River Shareholders, the Company or any of their officers, directors
or employees or any of their Advisors, (ii) was or becomes available to
Purchaser, Merger Sub, the Red River Shareholders, the Company, any of their
officers, directors or employees or their Advisors on a non-confidential basis
from a source other than Purchaser, Merger Sub, the Red River Shareholders, the
Company or the Company's Advisors, provided that such source is not bound by a
confidential agreement or (iii) was, or in the future is, developed
independently by Purchaser, Merger Sub or their Advisors or by the Red River
Shareholders, the Company or their Advisors without reference to the information
furnished by the Purchaser, Merger Sub, the Red River Shareholders or the
Company or the Company's Advisors, as the case may be. The parties understand
and agree that all of the Confidential Information supplied to Purchaser, Merger
Sub or their Advisor or to the Red River Shareholders or the Company or their
Advisors is provided on the understanding that such Confidential Information
shall remain the property of Purchaser, Merger Sub or the Company, as the case
may be, and that all copies and originals of any Confidential Information
furnished pursuant to this Agreement from one party to another will be returned
to the party furnishing such Confidential Information or, at the option of the
party to whom the Confidential Information belongs, destroyed promptly upon such
party's request after termination of this Agreement as provided under Section 8
hereof. Pending the Closing of the transactions contemplated hereby or if this
Agreement is terminated as provided in Section 8 hereof, a party receiving the
Confidential Information of another party shall not use such information to its
economic or financial advantage or benefit.
5.4 Benefit Plans. Between the date hereof and the Closing Date the Company
will not establish or implement a new Benefit Plan of any kind whatsoever.
5.5 Best Efforts and Standstill. Subject to the other provisions of this
Agreement, the Red River Shareholders and the Company will use their best
efforts to cause the conditions listed in Section 3.1 hereof to be satisfied on
or before the Closing Date. Subject to the other conditions of this Agreement,
Purchaser and Merger Sub will use their best efforts to cause the conditions
listed in Section 3.2 hereof to be satisfied on or before the Closing Date. The
Red River Shareholders and the Company further agree that they will not enter
into, request, solicit or engage in any Red River discussions, negotiations,
understandings or agreements with any person or entity other than Purchaser and
Merger Sub relating to the merger, consolidation or sale of the Company or Red
River Stock or the properties and assets of the Company (other than in the
ordinary course of business) unless this Agreement is terminated pursuant to
Section 8 hereof.
5.6 Listing of Purchaser Common Stock. Purchaser shall notify The Nasdaq
Stock Market of the issuance of the shares of Beta Common Stock in connection
with the consummation of the Merger and to use its reasonable best efforts to
list and cause such shares of Beta Common Stock to be eligible for trading on
the Nasdaq Small Cap Market or the Nasdaq National Market System if the Beta
Common Stock is then eligible for listing thereon.
5.7 Meeting of Stockholders of Purchaser. If Purchaser does not obtain the
written consent required for the Merger by the holders of a majority of the
outstanding shares of Beta Common Stock ("Purchaser Stockholder Consent"),
Purchaser shall cause a meeting of its stockholders (the "Purchaser Stockholder
Meeting") to be duly called and held as soon as reasonably practicable, for the
purpose of voting on the approval and adoption of this Agreement and the Merger
(the "Purchaser Stockholder Approval"). The board of directors of Purchaser
shall recommend approval and adoption of this Agreement by Purchaser's
stockholders. In connection with the Purchaser Stockholder Consent or the
Purchaser Stockholder Meeting, as the case may be, Purchaser (x) will promptly
prepare and file with the Commission, will use its reasonable best efforts to
have cleared by the Commission and will thereafter mail to its stockholders as
promptly as practicable the Purchaser Information Statement or Purchaser Proxy
Statement and all other proxy materials for the Purchaser Stockholder Meeting,
as applicable, (y) will use its best efforts, subject to the immediately
preceding sentence, to obtain the Purchaser Stockholder Consent or the Purchaser
Stockholder Approval and (z) will otherwise comply with all legal requirements
applicable to the Purchaser Stockholder Consent or the Purchaser Stockholder
Meeting.
6. Post-Closing Covenants. The Red River Shareholders, the Company and Purchaser
and Merger Sub agree as follows with respect to the period following the
Closing.
6.1 Cooperation of The Red River Shareholders and Former Officers of
Company. The Red River Shareholders and the current officers and directors of
the Company, will reasonably cooperate upon and after the Closing Date in
effecting the Merger and the orderly transfer of the assets and properties as
well as the control of the Company to Purchaser by using their reasonable
efforts to cause any federal, state or local governmental body, and every agency
and department and instrumentality thereof, to have contracts between such
government, agency, department and instrumentality and the Company, to the
extent required under any existing Contracts between the Company and such
governmental body, as a result of the change of control of the Company, to be
approved and transferred into the name of the Company under the control of the
Purchaser following the Closing. To the extent that any other contract between
the Company and any other third parties require approval as a result of the
Merger, the Red River Shareholders and the current officers and directors of the
Company will reasonably cooperate in effecting any such approval such that the
Contracts will remain intact and enforceable in accordance with the terms
thereof. To the extent required to effect any such approval and transfer of
control, the Red River Shareholders and the current officers and directors of
the Company will execute any appropriate and reasonable documents or instruments
required to accomplish such result.
6.2 Litigation Support. If and to the extent that the Company is actively
contesting or defending against any charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand (collectively "Proceedings") in
connection with (i) any transaction contemplated under this Agreement, or (ii)
any fact, situation, circumstance, status, condition, activity, practice,
planning, occurrence, event, incident, action, failure to act, or transaction on
or prior to the Closing Date involving the Company, the Company, the Red River
Shareholders and the current officers and directors of the Company will
reasonably cooperate with Purchaser, Merger Sub and their counsel in contesting
or defending against any such Proceedings, making available any personnel of the
Company, and providing such testimony in access to their books and records as
shall be reasonably necessary in connection with contesting or defending against
such Proceedings. Except to the extent that Purchaser and Merger Sub are
entitled to indemnification with respect to contesting or defending any such
Proceedings, Purchaser and Merger Sub shall bear the cost and expense of
contesting or defending against any such Proceedings.
6.3 Disposition of Confidential Information. After the Closing, the Red
River Shareholders and the current officers and directors of the current Company
will treat and hold as such all of the Confidential Information, refrain from
using any of the Confidential Information except in connection with this
Agreement, and deliver promptly to the Purchaser and Merger Sub or destroy, at
the request and option of Purchaser and Merger Sub, all tangible correspondence,
documents, instruments, memorandums and all other writings (and all copies
thereof) which embody the Confidential Information which are in such persons'
possession. Afer the Closing, if the Red River Shareholders or current officers
or directors of the Company are requested or required (by oral question or
request for information or document in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to Red River, disclose
any Confidential Information, the Red River Shareholders and the current
officers or directors of the Company will notify Purchaser and Merger Sub
promptly of any such request or requirement to enable Purchaser and Merger Sub
to seek an appropriate remedy to enjoin the Red River disclosure of such
Confidential Information or waive compliance with the provisions of this
Section. The foregoing provision shall not apply to any Confidential Information
which is generally available to the public immediately prior to the time of Red
River disclosure.
6.4 Other Transitional Matters. The Red River Shareholders and the current
officers and directors of the Company will not take any action which primarily
is designed or intended to have the effect of Red River discouraging lessor,
licenser, customer, supplier, or other business associate of the Company or any
of its subsidiaries from maintaining the same business relationships with the
Company and its subsidiaries after the Closing as it maintained with the Company
and its subsidiaries prior to the Closing. The Red River Shareholders and the
current officers and directors of the Company will refer all lessor, licensor,
customer and supplier inquiries relating to the business of the Company and any
of its subsidiaries to Purchaser from and after the Closing Date.
6.5 Employee Benefits.
(a) Following the consummation of the Merger, Purchaser shall continue
to provide to individuals who are employed by the Company as of the
effective time of the Merger (the "Effective time") and who, if any, remain
employed with Purchaser or any Subsidiary of Purchaser ("Affected
Employees"), for so long as such Affected Employees remain employed by
Purchaser or any Subsidiary of Purchaser, employee benefits (other than
salary or incentive compensation) pursuant to employee benefit plans,
programs, policies or arrangements maintained by Purchaser or any
Subsidiary of Purchaser providing coverage and benefits which, in the
aggregate, are generally comparable to those provided to employees of
Purchaser in positions comparable to positions held by Affected Employees
with Purchaser or its Subsidiaries from time to time after the Effective
Time.
(b) Purchaser will, or will cause the Surviving Corporation to, (i)
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable
to the Affected Employees under any welfare benefit plans that such
employees may be eligible to participate in after the Effective Time, other
than limitations or waiting periods that are already in effect with respect
to such employees and that have not been satisfied as of the Effective Time
under any welfare plan maintained for the Affected Employees immediately
prior to the Effective Time, and (ii) provide each Affected Employee with
credit for any co-payments and deductibles paid prior to the Effective Time
in satisfying any applicable deductible or out-of-pocket requirements under
any welfare plans that such employees are eligible to participate in after
the Effective Time.
6.6 Cooperation After Closing. In case at any time after the Closing Date
any further action is necessary or desirable to carry out and accomplish the
purposes of this Agreement and the transactions contemplated hereunder, the Red
River Shareholders and the current officers and directors of the Company, in the
case of the Company's and the Red River Shareholder's performance under this
Agreement, and Purchaser, in the case of Purchaser's and Merger Sub's
performance under this Agreement, will take such further action as the party
seeking or requesting such performance ("Requesting Party") may reasonably
request, including executing and delivering such further instruments and
documents as shall be necessary or appropriate to accomplish and effectuate such
transaction. Except as to costs and damages associated with the indemnification
of Purchaser and Merger Sub, as provided below, all costs and expenses relating
to any such matters after the Closing Date will be borne by Purchaser and Merger
Sub.
6.7 Continuity of Business. Following the Merger, the Surviving Corporation
will continue the historic business of the Company or use a significant portion
of the Company's business assets in a business.
6.8 Bank Guarantees. Following the Closing, Purchaser shall use its best
efforts to cause the release of the personal guarantees executed by the Red
River Shareholders which secure the Company's indebtedness to the Bank of
Oklahoma, National Association ("Bank") as described in Exhibit 6.8 attached
hereto to the extent that the Bank is willing to consent to such a release. As
an inducement for the Bank to release the Red River Shareholders from their
personal guarantees of the indebtedness described in Exhibit 6.8, Purchaser will
execute a guaranty required by the Bank to guarantee such indebtedness in
substitution of the personal guarantees of the Red River Shareholders only to
the extent of their current guarantees with the Bank. After the Closing,
Purchaser shall indemnify and hold the Red River Shareholders harmless from and
against any and all amounts which any or all of the Red River Shareholders are
required to pay on account of the guaranties set forth in Exhibit 6.8 attached
hereto prior to their release from such guaranties only, however, to the extent
of their personal guarantee obligations as currently in effec
6.9 Tax Treatment. Purchaser shall not take any action and shall not fail
to take any action which action or failure to act would prevent, or would be
reasonably likely to prevent, the Merger from qualifying as a reorganization
under Section 368 of the Code.
7. Delivery of Closing Documents.
7.1 Delivery of Closing Documents to Purchaser and Merger Sub. Subject to
the fulfillment of all of the conditions set forth in Section 3.1 hereof, at the
Closing, the following documents, agreements, and instruments shall be duly
delivered by the Company and the Red River Shareholders:
Certificates representing the shares of Red River Stock which shall be
duly executed in blank or with a duly executed stock power attached thereto,
endorsed in blank, in order to effect the transfer of the shares of Red River
Stock from the Red River Shareholders to Purchaser, with all stock transfer, tax
stamps, if any, affixed and cancelled and if required by Purchaser's transfer
agent shall be guaranteed by a United States Commercial Bank or by a broker who
is a member of the New York Stock Exchange or is otherwise approved by the
transfer agent of Purchaser to guarantee signatures in connection with such
transfer;
7.1.1 The Resignations of the Officers and Directors of the Company as
agreed upon in Exhibit 2.6.4 and as requested by Purchaser prior to the
Closing;
7.1.2 The books and records referred to in Section 3.1.10 hereof;
7.1.3 The opinion of Conner & Winters, A Professional Corporation,
counsel for the Company in the form and substance reasonably requested by
Purchaser;
7.1.4 A certificate of good standing from the State of
Oklahoma certified by the appropriate official of such
state, dated as of the date not more than five (5) days prior to the Closing
Date evidencing that the Company is duly qualified and in good standing and in
effect indicating that the Company has filed all franchise tax returns due to
the date of such certificate, that all taxes shown on such returns to be due
have been paid in full, and that there are no outstanding franchise tax claims
or assessments against the Company as of the date of such certificate;
7.1.5 All consents and approvals referred to in section 3.1.11 hereof;
7.1.6 The Company's closing certificate in the form of Exhibit 7.1.6
attached hereto;
7.1.7 Certificate of Merger as contemplated by Section 2.5 hereof;
7.1.8 To the extent appropriate and only if any secured loan, for
which the Company is currently obligated is paid in whole or in part on or
prior to the Closing Date (which is not contemplated as of the date
hereof), documentation (including without limitation, duly executed UCC-3
termination statements) satisfactory in form and substance to Purchaser and
Merger Sub as requested by Purchaser and Merger Sub to release all or a
portion of such Encumbrances to the extent of such loan repayment, if any,
in favor of any of the holders of any such indebtedness on the property and
assets of the Company;
7.1.9 Employment Agreement between the Surviving Corporation and Rolf
N. Hufnagel and Robert E. Davis, Jr., executed by them and the Purchaser in
the form attached hereto as Exhibit 7.1.9; and
7.1.10 Such other documents or instruments of further assurance or
conveyance as shall be deemed necessary and appropriate by the Purchaser
and Merger Sub.
7.2 Delivery of Documents to the Company and the Red River Shareholders.
Subject to the fulfillment of all conditions set forth in Section 3.2 hereof, at
the Closing, the following documents, agreements and instruments shall be duly
delivered by the Purchaser and Merger Sub to the Company and Red River
Shareholders:
7.2.1 Stock Certificates representing shares of Beta Common Stock to
be issued to each of the Red River Shareholders in the amounts set forth in
Schedule A attached hereto;
7.2.2 Certificates of good standing from the Nevada and Oklahoma
Secretary of State (as appropriate), dated not more than five (5) days
prior to the Closing Date evidencing that Purchaser and Merger Sub are duly
qualified and in good standing and in effect indicating that Merger Sub has
filed all franchise taxes on the date of such certificate, that all taxes
shown on such returns to be due have been paid in full, and that there are
no outstanding franchise tax claims or assessments against Merger Sub as of
the date of such certificate;
7.2.3 Purchaser's and Merger Sub's closing certificate in the form of
Exhibit 7.2.3 attached hereto;
7.2.4 The opinion of Clanahan, Tanner, Downing & Knowlton, P.C. to be
in form and substance reasonably requested by the Company and the Red River
Shareholders; and
7.2.5 Employment Agreements between the Surviving Corporation, Rolf N.
Hufnagel and Robert E. Davis, Jr., executed by Surviving Corporation and
the Purchaser, in the form attached hereto as Exhibit 7.1.9.
7.2.6 Certificate of Merger as contemplated by Section 2.5 hereof; and
7.2.7 Such other documents and instruments of further assurance and
conveyance as shall be deemed necessary and appropriate to the Closing of
the transactions contemplated hereby.
8. Termination
8.1 Events of Termination. Anything contained elsewhere in this Agreement
to the contrary notwithstanding, prior to the Closing Date, this Agreement may
be terminated by written notice of termination as follows:
8.1.1 Mutual Consent. Any time by mutual consent of the Company and
Purchaser or Merger Sub;
8.1.2 Prior to Closing Date. By the Company or Purchaser or Merger Sub if
the other party shall have (i) misstated to any material extent any
representation or been in breach of any warranty contained herein, or (ii)
breached any covenant, undertaking or restriction contained herein, and such
misstatement or breach has not been cured by the earlier of (a) thirty (30) days
after the giving of notice of such party of such misstatement or breach or (b)
the Closing Date
8.1.3 Delay. By either party by written notice to the other party if the
Closing shall not have occurred on or prior to March 31, 2000; provided,
however, that the right to terminate this Agreement under this Section 8.1.3
shall not be available to any party whose failure to fulfill or perform any
obligation under this Agreement has been a substantial cause of, or has
substantially resulted in, the failure of the Closing to occur on or before such
date.
8.1.4 Amendment of Exhibits. By the party ("Receiving Party") receiving
Exhibits, Schedules or Attachments or amendments thereto from the other party to
this Agreement which disclose information which such Receiving Party determines
to materially adversely affect the economic, financial or business
considerations previously determined by the Receiving Party in entering into
this Agreement setting forth its or his objection to such Exhibit, Schedule or
Attachment and to which such Receiving Party gives ten (10) days written notice
to the party furnishing such Exhibits, Schedules or Attachments.
8.1.5 Consequences of Termination. In the event of a termination and
abandonment hereof pursuant to the provisions of this Section 8, this Agreement
shall become void and have no effect, without any liability on any of the
parties or their directors or officers or stockholder in respect of this
Agreement, except that (a) the agreements contained in this Section 8.1.5, in
Section 5.3 and in Section 9.2 shall survive the termination hereof and (b) no
such termination shall relieve any party of any liability or damages resulting
from a breach by that party of its representations, warranties, covenants,
agreements or other obligations under this Agreement prior to such termination.
In addition, if this Agreement is terminated as provided under Section 8.1.2
hereof, the party, misstating or breaching this Agreement shall be obligated to
pay the other party's costs and expenses incurred in connection with this
Agreement, including actual attorney's fees. Otherwise, if the transactions
contemplated hereunder cannot be consummated for reasons beyond the control of
the parties hereto, provided they have used their best efforts to acquire the
approvals and consents hereunder, or this Agreement is terminated under the
provisions of Sections 8.1.1 or 8.1.3 hereof , then each party hereto will pay
its own expenses, including without limitation its attorneys' fees and costs.
9. Miscellaneous
9.1 Notices. Any notices under this Agreement shall be in writing, signed
by the party giving the same and transmitted by registered or certified United
States Mail or by a generally accepted national courier service providing
confirmation of delivery, and addressed to the party to receive the notice at
the address set forth below or such other address as any party may specify by
notice to the other party, and shall be deemed properly given and received when
actually given and received:
If to Purchaser: Beta Acquisition Company, Inc.
901 Dove Street, Suite 230
Newport Beach, California 92660
Attn: Steve Antry
With a copy to: J. Chris Steinhauser
If to the Company
and Red River Shareholders: Red River Energy, Inc.
6120 South Yale Avenue, Suite 813
Tulsa, Oklahoma 74136
With a copy to: Conner & Winters, A Professional
Corporation
3700 First National Tower
15 East 5th Street
Tulsa, Oklahoma 74103
Attention: Lynnwood R. Moore, Jr.
9.2 Brokerage Commissions.
9.2.1 The Company hereby represents and warrants to Purchaser that the
Company has not engaged or utilized the services of any broker or finder in
connection with this transaction and that no commissions are payable with
respect to this transaction. The Company hereby agrees to indemnify and
hold Purchaser and the Company harmless from and against any liability for
any claims of any broker or finder claiming by, through or under the
Company or the Red River Shareholders.
9.2.2 Purchaser and Merger Sub hereby represent and warrant to the
Company and the Red River Shareholders that neither the Purchaser nor
Merger Sub have engaged or utilized the services of any broker or finder in
connection with this transaction and that no commissions are payable with
respect to this transaction. Purchaser and Merger Sub hereby agree to
indemnify and hold the Red River Shareholders and the Company harmless from
and against any liability for any claims of any other broker or finder
claiming by, through or under Purchaser and Merger Sub.
9.3 Successors and Assigns. This Agreement is personal to the parties
hereto and may not be assigned, transferred, delegated or nullified without the
prior written consent of all of the parties hereto. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns.
9.4 Arbitration. Any dispute arising pursuant to or in any way related to
this Agreement or the transactions contemplated hereby shall be settled by
arbitration at a mutually agreed upon location in Newport Beach, California;
provided, however, that nothing in this Section shall restrict the right of
either party to apply to a court of competent jurisdiction for emergency relief
pending final determination of a claim by arbitration in accordance with this
Section. All arbitration shall be conducted in accordance with the rules and
regulations of the American Arbitration Association, in force at the time of any
such dispute, by a panel of three (3) single arbitrators selected in accordance
with the procedures of the American Arbitration Association. Each party shall
pay its own expenses associated with such arbitration, including 50% of the
expenses of the arbitrator, provided that the prevailing party in any
arbitration shall be entitled to reimbursement of reasonable attorney's fees and
expenses (including, without limitation, arbitration expenses) relating to such
arbitration. The award of the arbitrator, based upon written findings of fact
and conclusions of law, shall be binding upon the parties; and judgment in
accordance with that decision may be entered in any court having jurisdiction
thereof.
9.5 No Oral Modifications. No amendments or modifications to this Agreement
shall be made or deemed to have been made unless in writing executed and
delivered by the party to be bound thereby. Any provision of this Agreement may
be waived, amended, supplemented or modified only by agreement in writing of the
parties hereto.
9.6 Waiver. The failure of any party to this Agreement to insist upon
strict performance of any of the terms of this Agreement will not constitute a
waiver of any of its rights under this Agreement or its right subsequently to
assert, rely upon, or enforce any provision of this Agreement.
9.7 Governing Law. This Agreement shall be interpreted, governed by and
enforced according to the laws of the State of Oklahoma.
9.8 Severability. If any provision of this Agreement shall be held invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Agreement will not in any way be affected or
impaired thereby.
9.9 Headings and Captions for Convenience. The headings and captions
contained in this Agreement are for convenience only and shall not be considered
in interpreting the provisions hereof.
9.10 Counterparts. This agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, all of which
together shall constitute one and the same instrument.
9.11 Representations, Warranties and Covenants. Notwithstanding any
investigation made by or on behalf of the Company, the Red River Shareholders or
Purchaser prior to or after the Closing Date, all representations, warranties
and covenants of the parties hereto contained herein shall survive and remain in
full force and effect for a period equal to the earlier of (i) the date that the
first independent consolidated audit report of Purchaser and the Surviving
Corporation is issued after the Closing Date, or (ii) one year after the Closing
Date.
9.12 Remedies for Misrepresentation or Breach by Red River Shareholders. In
the event of:
(a) any inaccuracy in any representation or the breach of any warranty
made by the Red River Shareholders and the Company in or pursuant to this
Agreement or any Exhibit, Schedule or other attachment to this Agreement,
(b) any failure by the Red River Shareholders and the Company duly to
perform or observe any term, provision, covenant, or agreement in this
Agreement to be performed or observed on the part of the Red River
Shareholders and the Company, or
(c) action, suit, investigation, proceeding, demand, assessment,
audit, judgment and claim, including any employment-related claim arising
out of the foregoing (collectively "Claims"), against the Company or any of
its subsidiaries, even though such Claims may not be filed or come to light
until after the Closing Date, Purchaser shall have the right to demand an
adjustment to the number of shares of the Beta Common Stock issued to the
Red River Shareholders as provided in Section 2.1 hereof and a return of a
portion of the shares of the Beta Common Stock to recompense Purchaser for
the amount of the loss resulting from such misrepresentation or breach ,
the number of shares to be determined by dividing the amount of the loss by
the closing price per share of Beta Common Stock as quoted at the Nasdaq
Small Cap Market or the Nasdaq National Market System (as applicable) on
the Closing Date. Notwithstanding anything contained in the foregoing to
the contrary, any and all such adjustments in the number of shares of Beta
Common Stock shall not exceed in the aggregate 225,000 shares of Beta
Common Stock over the period provided in Section 9.11 hereof.
Purchaser and Merger Sub hereby covenant and agree to immediately
provide to the Red River Shareholders any and all notifications or other
correspondence it receives related to matters which may affect this indemnity.
The Red River Shareholders' obligation to return shares of Beta Common
Stock to Purchaser as provided hereunder shall not exceed in the aggregate ten
percent (10%) of the total shares issued to them as determined on the Closing
Date. The Red River Shareholders shall have no obligation to return shares of
Beta Common Stock until the aggregate losses as provided under this Section 9.12
exceed One Hundred Thousand Dollars ($100,000) and shall be liable to return a
portion of the shares of Beta Common Stock received by them on the Closing Date
only for the losses in excess of such amount. The amount of any losses for which
an adjustment is required to be made under this Section 9.12 bythe Red River
Shareholders shall be computed net of any insurance proceeds received by the
Surviving Corporation or Purchaser with respect to the matter out of which such
liability arose. Each party agrees to use commercially reasonable efforts to
mitigate any damage or expense resulting from any matter giving rise to the
losses covered under this Section. It is agreed that the obligations of the Red
River Shareholders under this Section 9.12 shall be solely for the benefit of
Purchaser, Merger Sub and the Surviving Corporation and may not be enforced by
any insurer under any subrogation or similar agreement or arrangement or by any
governmental authority except as a receiver for Purchaser or Surviving
Corporation. The liability of the Red River Shareholders hereunder shall be
joint and several. No claims for losses under this Section 9.12 may be asserted
by Purchaser or Surviving Corporation under this section from and after the
period set forth in Section 9.11 of this Agreement. If one or more of the Red
River Shareholders who are required to return shares of Beta Common Stock under
the provisions of this Section 9.12 have sold all or a portion of their shares
of Beta Common Stock such that such shareholder(s) are unable to return shares
of Beta Common Stock as provided herein, such shareholder(s) obligation
hereunder shall be paid in cash in an amount equal to the closing market price
of the shares of Beta Common Stock, as determined on the Closing Date, for which
delivery thereof to Purchaser cannot be made.
Any dividends accruing or paid on the shares of Beta Common Stock
required to be returned under this Section 9.12 shall be returned to Purchaser
upon determination of the loss in the manner provided in this Section 9.12.
As used in this Section 9.12 and Section 9.13, the term "loss" shall
mean and include (y) all losses, damages, costs and expenses, including without
limitation pre- and post-judgment interest, penalties, court costs and
attorneys' fees and expenses, and (z) all demands, claims, actions, costs of
investigation, causes of action, proceedings, arbitrations, judgments,
settlements and assessments.
<PAGE>
After the Closing, the remedies provided in this Section 9.12 to
Purchaser, Merger Sub and the Surviving Corporation shall be exclusive of any
other rights or remedies available to Purchaser, Merger Sub or the Surviving
Corporation, either at law or in equity, for breach of this Agreement or any
certificates delivered pursuant hereto; provided that none of Purchaser, Merger
Sub or the Surviving Corporation waives the right to seek specific performance
or injunctive relief.
9.13 Purchaser's Indemnification. In the event of:
(a) any inaccuracy in any representation or the breach of any warranty
made by Purchaser or Merger Sub in or pursuant to this Agreement or any
Exhibit, Schedule or other attachment to this Agreement of Purchaser or
Merger Sub; or
(b) any failure by Purchaser or Merger Sub of their duty to perform or
observe any item, provision, covenant or agreement in this Agreement to be
performed or observed on the part of Purchaser or Merger Sub,
Purchaser shall be obligated to issue additional shares of Beta Common
Stock to each of the Red River Shareholders in proportion to the number of
shares issued to them by Purchaser on the Closing Date to cover any losses
resulting from any such misrepresentation or breach provided in (a) and (b)
above. The obligation to issue additional shares of Beta Common Stock to the Red
River Shareholders under this Section 9.13 shall not exceed 225,000 shares of
Beta Common Stock and shall be determined based on the closing price of the
shares of the Beta Common Stock as determined on the Closing Date. The
provisions of Section 9.12 regarding the determination of the loss, , the
limitation concerning the aggregate amount of losses (i.e., $100,000) which must
be incurred before the adjustment in the number of shares is required, and the
offset of such losses by any insurance proceeds received are hereby incorporated
by reference as part of this Section 9.13 and shall apply with equal force and
effect to Purchaser with respect to its obligations under this Section 9.13 as
it applies to the Red River Shareholders under Section 9.12 and in furtherance
thereof for purposes of this Section 9.13 all references to the Red River
Shareholders under Section 9.12 shall be to Purchaser where applicable.
9.14 No Benefit To Others. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and their respective heirs, successors, assigns, and such
representations, warranties, covenants and agreements shall not be construed as
conferring, and are not intended to confer, any rights on any other persons.
9.15 Registration of Securities.(a) As used in this Section 9.15, the
following terms have the meanings set forth below:
"Disadvantageous Condition" has the meaning set forth in Section 9.15(b)(iv).
"Holders" means the Red River Shareholders or any person who becomes a holder of
Subject Securities after the Closing Date as a result of a No-Sale Transaction.
"No-Sale Transaction" means a transfer from a Holder of Subject Securities that
does not constitute a "sale" (as such term is understood and defined under the
Securities Act), including without limitation a distribution from a Holder that
is a corporation, partnership, joint venture, limited liability company,
association or trust to the owner of a beneficial interest in such Holder.
"Registration Expenses" has the meaning set forth in Section 9.15(e).
"Registration Termination Date" means the second anniversary of the date when
the Commission first declares the Shelf Registration Statement effective.
"Shelf Registration Statement" means a registration statement on Form S-1 or S-3
filed with the Commission under the Securities Act.
"Subject Securities" means the shares of Beta Common Stock issued to the Red
River Shareholders pursuant to the Merger and any common stock or other security
issued or issuable as a dividend or other distribution with respect to, or in
exchange for, or upon conversion or in replacement of, any of such Beta Common
Stock.
"Suspension Notice" has the meaning set forth in Section 9.15(b)(iv).
(b) (i) By no later than March 31, 2000, Purchaser shall prepare and
file with the Commission a Shelf Registration Statement for the purpose of
registering the resale in the market from time to time of the Subject
Securities by Holders or by potential assignees of such Holders to which
all or a portion of such Holders' Subject Securities may be transferred in
a No-Sale Transaction.
(ii) Purchaser will use its best efforts to have the Shelf
Registration Statement promptly declared effective by the Commission on or
after the filing of such Shelf Registration Statement and thereafter to
maintain the effectiveness of the Shelf Registration Statement and to
maintain such Shelf Registration Statement "current" (as below defined) at
all times until the Registration Termination Date. Purchaser shall promptly
give written notice to the Holders when the Registration Statement has been
declared effective by the Commission and is available for use by Holders
for the resale of Subject Securities.
(iii) The Shelf Registration Statement shall not be considered to be
"current" at any time when, by reason of occurrence of any event or by
reason of the passage of time, the Shelf Registration Statement does not
meet the requirements of Section 10, Section 12(2) or Section 17 of the
Securities Act, or the Shelf Registration Statement contains an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading. The Shelf Registration Statement shall disclose that Holders
may elect to resell Subject Securities without registration of such sales
under the Shelf Registration Statement, by making such sales under and as
permitted by Rules 144 or 145, as applicable, of the Commission under the
Securities Act.
(iv) If at any time or times after the Shelf Registration Statement is
declared effective by the Commission, Purchaser determines that the
offering of Beta Common Stock under the Shelf Registration Statement would
be significantly disadvantageous to Purchaser because of, or improper in
view of (or improper without disclosure in the prospectus included in the
Shelf Registration Statement of), the existence or anticipation of a
material financing, merger, acquisition or other material transaction or
event involving Purchaser or its subsidiaries that has not been publicly
disclosed, the unavailability of any required financial statements for
reasons substantially beyond the control of the Purchaser, or other similar
events or conditions involving Purchaser or its subsidiaries that have not
been publicly disclosed (a "Disadvantageous Condition"), Purchaser shall be
entitled to either suspend the effectiveness of the Shelf Registration
Statement with the Commission or suspend the availability of the Shelf
Registration for resales of Subject Securities by Holders, or may take both
such actions, and shall promptly notify all Holders thereof by delivery of
written notice (a "Suspension Notice"); provided, however, that Purchaser's
obligation to maintain the Shelf Registration Statement current under this
Section 9.15(b) shall not be suspended by reason of Purchaser's failure to
disclose information at a time when public disclosure of such information
is required by law. Upon receipt of a Suspension Notice, Holders shall
immediately discontinue the use of the Shelf Registration Statement for any
purpose until notified by Purchaser that the Shelf Registration Statement
is current and available for use by Holders for sales of Subject
Securities. Purchaser shall not be entitled to suspend the effectiveness of
the Shelf Registration Statement until the later of (X) the removal of the
Disadvantageous Conditions or (Y) for a period of not more than 60
consecutive days, or (B) 180 days within any twelve-month period. As
promptly as practicable after the public disclosure of such Disadvantageous
Condition or the Purchaser determines that the Disadvantageous Condition no
longer exists, Purchaser shall amend or supplement the Shelf Registration
Statement to the extent necessary to make the Shelf Registration Statement
current, and shall give prompt written notice to all Holders when the Shelf
Registration Statement is again available for resales of Subject
Securities.
(v) Purchaser shall promptly notify all Holders of Subject Securities
of, and confirm in writing, the issuance by the Commission of any stop
order suspending the effectiveness of the Shelf Registration Statement or
the initiation of any proceedings for that purpose. Purchaser shall use its
best efforts to obtain the withdrawal of any order suspending the
effectiveness of the Shelf Registration Statement at the earliest possible
time.
(vi) Purchaser will cause all of the Subject Securities to be listed
on each securities exchange or market, as the case may be, on which similar
securities issued by Purchaser are then listed no later than the effective
date of the Shelf Registration Statement.
(c) If at any time the Purchaser proposes to file a registration
statement under the 1933 Act with respect to an offering by the Purchaser
for its own account or for the account of any other Person of any class of
equity security, including any warrants, options or other security
convertible into or exchangeable for any equity security (other than a
registration statement on Forms S-4 or S-8 (or their successor forms) or
filed in connection with an exchange offer or an offering of securities
solely to the Purchaser's existing stockholders, and other than as set
forth in subsection (c)(i) below), then the Purchaser shall in each case
give written notice of such proposed filing to the Holders at least twenty
(20) days before the anticipated filing date, and such notice shall offer
such Holders the opportunity to register such number of Subject Securities
as each such Holder may request (a "Piggy-back Registration"). The
Purchaser shall use reasonable efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the Holders
requested to be included in the registration for such offering to include
such securities in such offering on the same terms and conditions as any
similar securities of the Purchaser included therein. Similarly, Purchaser
may include the shares of any other Person in the Shelf Registration
Statement as contemplated in subsection (b) above. Notwithstanding the
foregoing, if the managing underwriter or underwriters of such offering
delivers an opinion to the Holders that the total amount of securities
which they and any other Persons (other than the Purchaser) intend to
include in such offering is sufficiently large to materially and adversely
affect the success of such offering, then the amount of Subject Securities
to be offered for the accounts of Holders of Subject Securities shall be
reduced pro rata with all securities held by holders of securities having
rights for inclusion therein to the extent necessary, in the opinion of
such managing underwriter, to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing
underwriter. In connection with the rights set forth in this subsection
9.15(c), it is agreed that:
(i) Notwithstanding anything to the contrary contained in this
Agreement, the Purchaser shall not be required to include Subject
Securities in any registration statement if the proposed registration
is (1) a registration of a stock option or other employee incentive
compensation or employee benefit plan or of securities issued or
issuable pursuant to any such plan, or a registration statement
relating to warrants, options or shares of capital stock granted or to
be granted or sold primarily to employees, directors or officers of
the Purchaser, (2) a registration of securities issued or issuable
pursuant to a stockholder reinvestment plan or other similar plan, (3)
a registration of securities issued in exchange for any securities or
any assets of, or in connection with a merger or consolidation with,
an unaffiliated Purchaser, (4) a registration of securities pursuant
to a "rights" or other similar plan designed to protect the
Purchaser's stockholders from a coercive or other attempt to cause a
change in control of the Purchaser, (5) a registration of securities
filed pursuant to Rule 145 under the 1933 Act or any successor rule,
or (6) a registration of preferred stock or securities issued in
connection with any debt or preferred stock financing of the
Purchaser.
(ii) The Purchaser may withdraw any registration statement and
abandon any proposed offering initiated by the Purchaser without the
consent of any Person, including the Holders, notwithstanding the
request of any such Holder to participate therein in accordance with
this provision, if the Purchaser determines in its sole discretion
that such action is in the best interests of the Purchaser and its
stockholders (for this purpose, the interest of the Holders shall not
be considered).
(d) Purchaser will indemnify and hold harmless each Holder, each of
such Holder's officers, directors, partners, or members, as the case may
be, and each Person controlling such Holder, with respect to which
registration or qualification of Subject Securities has been effected
pursuant to this Section 9.15 against all claims, losses, damages, and
liabilities, joint or several (or actions in respect thereof), arising out
of or based upon any untrue statement (or alleged untrue statement) of a
material fact contained in the Shelf Registration Statement, prospectus, or
offering circular, or in any document incorporated by reference in any of
the foregoing, or arising out of or based upon any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation
by Purchaser of any rule or regulation promulgated under the Securities Act
applicable to Purchaser and relating to action or inaction required of
Purchaser in connection with the Shelf Registration, each of such Holder's
officers, directors, partners, or members, as the case may be, and each
Person controlling such Holder, for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claims, loss, damage, liability or action; PROVIDED, however, that
Purchaser will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based upon
any untrue statement or omission based upon written information furnished
to Purchaser by such Holder specifically for inclusion in any such
registration statement, prospectus or offering circular. The obligations of
Purchaser under the foregoing indemnity agreement shall survive the
completion of the offering of Subject Securities under the Shelf
Registration Statement .
(e) Each Holder with respect to which registration or qualification of
Subject Securities has been effected pursuant to this Section 9.15 will
indemnify and hold harmless Purchaser, each of Purchaser's officers,
directors, and each Person controlling Purchaser, against all claims,
losses, damages, and liabilities, joint or several (or actions in respect
thereof), arising out of or based upon any untrue statement (or alleged
untrue statement) of a material fact contained in any registration
statement, prospectus, or offering circular, or in any document
incorporated by reference in any of the foregoing, or arising out of or
based upon any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by such Holder of any rule or
regulation promulgated under the Securities Act or Exchange Act applicable
to such Holder and relating to action or inaction required of such Holder
in connection with any such registration or qualification, and will
promptly reimburse Purchaser, each of Purchaser's officers, directors, and
each Person controlling Purchaser, for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claims, loss, damage, liability or action; PROVIDED, however, that such
Holder will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense does not arise out of or is not
based upon any untrue statement or omission based upon written information
furnished by such Holder specifically for inclusion in any such
registration statement, prospectus or offering circular. The obligations of
Holders under the foregoing indemnity agreement shall survive the
completion of the offering of Subject Securities under any registration
statement provided for in this Section 9.15.
(f) All expenses incident to Purchaser's performance of or compliance
with this Section 9.15, including, without limitation, all registration and
filing fees, fees and expenses of compliance with securities or blue sky
laws (including fees and disbursements of counsel in connection with blue
sky qualifications of the Subject Securities), rating agency fees, printing
expenses, messenger and delivery expenses, internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the fees and expenses incurred in
connection with the listing of the securities to be registered on The
Nasdaq Stock Market and all securities exchanges on which similar
securities issued by Purchaser are then quoted or listed, the fees and
disbursements of counsel for Purchaser and its independent certified public
accountants (including the expense of any special audit or comfort letters
required by or incident to such performance), securities act liability
insurance (if Purchaser elects to obtain such insurance), the fees and
expenses of any special experts retained by Purchaser in connection with
such registration, and fees and expenses of other Persons retained by
Purchaser, in connection with each registration hereunder (but not
including discounts, commissions, fees or expenses payable to underwriters
that are attributable to the Subject Securities offered on behalf of the
Selling Holder or the fees and expenses of counsel for any selling Holder)
(collectively, the "Registration Expenses") will be borne by Purchaser.
(g) Purchaser will also take such action as may be required to be
taken under applicable blue sky laws in connection with the issuance of
Beta Common Stock pursuant to this Agreement and in connection with resale
of Subject Securities by Holders pursuant to the Shelf Registration
Statement; PROVIDED that Purchaser will not be required to become qualified
as a foreign corporation in any jurisdiction.
9.16 Publicity. Prior to the Closing Date, all notices to third parties and
all other publicity relating to the transactions contemplated by this Agreement
shall be jointly planned, coordinated and approved by the Company, and Purchaser
or Merger Sub; provided, however, that such approval shall not be unreasonably
withheld.
9.17 Exhibits. The Exhibits, Schedules and Attachments referred to herein
are incorporated into this Agreement by reference. Such Exhibits, Schedules and
Attachments may be amended or modified by a party provided that the other party
("Receiving Party") has been furnished with a copy of the Amendment or
modification to such Exhibit, Schedule or Attachment; provided, however, that if
any such amendment shall materially adversely affect the economics, financial or
business considerations of the transactions contemplated under this Agreement as
determined by the Receiving Party, such Receiving Party may terminate this
Agreement in accordance with Section 8.1.4.
9.18 Entire Agreement. This Agreement, together with Exhibits, Schedules
and Attachments hereto, represents the entire agreement between the parties
hereto with respect to the subject matter hereof and all prior agreements,
understandings or negotiations shall be deemed merged herein. No
representations, warranties, promises or agreements, express or implied, shall
exist between the parties, except as stated herein.
9.19 Currency Amounts. All references to dollar amounts in this Agreement
shall refer to, and be interpreted solely as referring to, the dollar amount
under the United States monetary system.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
BETA OIL & GAS, INC.
a Nevada corporation
By: _/s/ J. Chris Steinhauser
Its: _Chief Financial Officer
BETA ACQUISITION COMPANY, INC.
an Oklahoma corporation
By: _/s/ J. Chris Steinhauser
Its: _ President
RED RIVER ENERGY, INC.
an Oklahoma corporation
By: __/s/ Rolf N. Hufnagel
Its: __President
THE RED RIVER SHAREHOLDERS
/s/ Rolf N. Hufnagel
Rolf N. Hufnagel
/s/ Robert E. Davis, Jr.
Robert E. Davis, Jr.
/s/ Stephen J. Vogel
Stephen J. Vogel
/s/ Janet L McGeehee
Janet L. McGeehee
/s/ Billy L. Basinger, Jr.
Billy L. Baysinger, Jr.
/s/ Brent A. Biggs
Brent A. Biggs
/s/ Mark A. Biggs
Mark A. Biggs
