EXHIBIT 10.1
STOCK EXCHANGE AGREEMENT
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STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (THIS "AGREEMENT"), DATED FEBRUARY 26, 1999
("Closing Date"), by and between Triad Innovations Inc., a Nevada corporation
(the "Company"), and Forum Energy, Ltd. c/o Bank of Belize, 60 Market Square,
Belize City, Belize, Central America ("Seller") and Mike Childers
("Shareholder"). PRELIMINARY STATEMENTS
A. Shareholder is the owner of Seller.
B. Seller is the owner of 58,100 shares (the "Prentice Oil Shares") of
common stock of Prentice Oil & Gas, Inc., a Texas corporation ("Prentice Oil");
and
C. Prentice Oil is the owner of certain gas leases comprising the Prentice
Field, located in Kimble County, Texas, as more particularly described on
Exhibit A hereto (the "Prentice Field"); and
D. Seller has agreed to transfer all of the issued and outstanding capital
stock of Prentice Oil (the "Prentice Oil Shares") to the Company in exchange for
shares of capital stock of the Company subject to the terms and conditions set
forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and the
respective mutual agreements, covenants, representations and warranties herein
contained, and intending to be legally bound thereby, it is agreed between the
parties hereto as follows:
1. SHARES TO BE TRANSFERRED. PRICE AND TERMS.
(A) PRENTICE OIL SHARES. On the Closing Date (as hereafter defined), Seller
shall sell, transfer and deliver good and indefeasible title to the Company of
the Prentice Oil shares, free and clear of all liens, claims and encumbrances.
The Prentice Oil Shares will, on the Closing Date, constitute all of the issued
and outstanding capital stock of Prentice Oil, and stock powers relating to the
Prentice Oil Shares shall be duly endorsed to the Company.
(B) COMPANY SHARES. The aggregate number of shares to be issued to Seller
in exchange for the Prentice Oil Shares shall be 580,000 shares of common stock,
par value $.001 1 per share, of the Company (the "Company Shares") consisting
of:
1. 16,000 unrestricted Company Shares to be delivered at the Closing,
2. 464,000 restricted Company Shares delivered at the Closing; and
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3. 37,000 unrestricted Company Shares to be delivered 60 days after the
Closing Date and,
4. 63,000 restricted Company Shares to be delivered 60 days after the
Closing Date.
2. REPRESENTATIONS AND WARRANTIES BY THE COMPANY.
The Company represents and warrants the following:
(A) ORGANIZATION AND GOOD STANDING. The Company is duly organized, validly
existing and in good standing under the laws of Nevada and is qualified as a
corporation under the laws of each jurisdiction where such qualifications is
required. The Company has full corporate power to carry on its business as now
conducted and to own and operate its assets as now owned and operated.
(B) AUTHORIZED OUTSTANDING STOCK. At the Closing, the authorized capital
stock of the Company shall consist of 25,000,000 common shares, of which no more
than 20,000,000 will be issued and outstanding. At the Closing, the Company
Shares to be delivered at the Closing shall be validly issued, fully paid and
nonassessable.
(C) CONSENTS AND APPROVALS: NO VIOLATION. There is no requirement
applicable to the Company to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
as a condition to the lawful consummation by the Company of the transactions
contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER. To induce the
Company to enter into this Agreement and to consummate the transactions
contemplated hereby, Seller and Shareholder represent and warrant, as of the
date hereof, as follows:
(A) CORPORATE EXISTENCE AND AUTHORITY OF SELLER. Seller is a company duly
organized, validly existing and in good standing organized and domiciled under
the laws of the Belize. Seller has full right, power and authority to enter into
this Agreement and to sell the Shares to Purchaser. The execution, delivery and
performance of this Agreement by Seller have been fully authorized by the Board
of Directors of Seller and by Shareholder, and no further corporate action will
be necessary on the part of Seller to make this Agreement valid and binding upon
Seller in accordance with its terms.
(B) CORPORATE EXISTENCE AND AUTHORITY OF PRENTICE OIL. Prentice Oil is a
corporation duly organized, validly existing and in good standing organized and
domiciled under the laws of the State of Texas. Prentice Oil has all requisite
corporate power to conduct its business and to own or lease its property.
Prentice Oil is not required to be qualified to do business in any jurisdiction
other than Texas.
(C) CAPITALIZATION OF PRENTICE OIL. The authorized capital stock of
Prentice Oil consists of 200,000 shares of common stock, par value $100.00 per
share, of which, on the Closing Date, the Prentice Oil Shares shall constitute
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the only issued and outstanding shares of capital stock of Prentice Oil. No
other shares of capital stock of Prentice Oil are issued and outstanding. All of
the Prentice Oil Shares have been duly and validly issued in accordance and
compliance with all applicable laws, rules and regulations and are fully paid
and nonassessable. There are no options, warrants, rights, calls, commitments,
plans, contracts or other agreements of any character granted or issued by
Prentice Oil which provide for the purchase, issuance or transfer of any shares
of the capital stock of Prentice Oil, nor are there any outstanding securities
granted or issued by Prentice Oil that are convertible into any shares of the
capital stock of Prentice Oil, and none is authorized. Prentice Oil is not
obligated or committed to purchase, redeem or otherwise acquire any of its
capital stock. All presently exercisable voting rights in Prentice Oil are
vested exclusively in the Prentice Oil Shares, each share of which is entitled
to one vote on every matter to come before Prentice Oil's shareholders. There
are no voting trusts or other voting arrangements with respect to any of
Prentice Oil's capital stock.
(D) THE PRENTICE OIL SHARES. Seller owns the entire legal and beneficial
interest in and to the Prentice Oil Shares. The Prentice Oil Shares are free and
clear of any lien, adverse claim or encumbrance of any kind whatsoever, and
Purchaser will acquire good and valid title to the Prentice Oil Shares, free and
clear of any lien, adverse claim, charge or encumbrance. No written or oral
agreement or understanding has been made by Seller with respect to the
disposition of the Prentice Oil Shares, or any rights therein, in any manner
other than by this Agreement.
(E) SUBSIDIARIES. Prentice Oil has no subsidiaries.
(F) EXECUTION OF AGREEMENTS. The execution, delivery and performance of
this Agreement by Seller and Shareholder do not, and the consummation by Seller
of the transactions contemplated hereby will not: (i) violate, conflict with,
modify or cause any default under or acceleration of (or give any party any
right to declare any default or acceleration upon notice or passage of time or
both), in whole or in part, any character, article of incorporation, bylaw,
mortgage, lien, deed of trust, indenture, lease, agreement, instrument, order,
injunction, decree, judgment, law or any other restriction of any kind or
character to which Seller or Prentice Oil is a party or by which Seller or
Prentice Oil or any of their respective properties are subject or bound; or (ii)
result in the creation of any security interest, lien, encumbrance, adverse
claim, proscription or restriction on any property or asset (whether real,
personal, mixed, tangible or intangible), right, contract, agreement or business
of Prentice Oil or with respect to the Prentice Oil Shares.
(G) VALIDITY AND ENFORCEABILITY. This Agreement constitutes a valid and
binding agreement of Seller and Shareholder, enforceable against Seller in
accordance with its terms by Purchaser and Prentice Oil.
(H) FINANCIAL STATEMENTS. Seller has delivered to the Company, prior to the
date of this Agreement, the following financial statements: The financial
statements of Prentice Oil consisting of balance sheet as of October 9, 1998 and
the related statement of income, statement of cash flows, statement of
stockholders' equity, together with related notes, which financial statements
have been audited with an unqualified audit report by the independent accounting
firm of Fox, Byrd & Golden, P.C.
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(I) ABSENCE OF LIABILITIES. There are no liabilities, obligations or
commitments of Prentice Oil attributable to or arising in connection with any
business activity, ownership or lease of any property, action, omission or event
of any nature (whether known or unknown, absolute, accrued, contingent, due or
to become due) including but not limited to, liabilities or obligations (i) to
pay federal, state, local or other taxes, withholding amounts, penalties, or
assessments of any kind, (ii) under any oral or written contract, agreement,
arrangement or understanding, (iii) under any employee benefit, (iv) to any
current or former employee, agent, officer or director, (v) under any
environmental laws or (vi) to pay any penalty or fine assessed by any foreign,
federal, state or local regulatory authority.
(J) DISPUTES AND LITIGATION. There is no suit, action, litigation,
proceeding, investigation, claim, complaint or accusation pending or threatened
against or affecting Prentice Oil or its properties, assets or business or to
which Prentice Oil is a party, in any court or before any arbitrator of any kind
or before or by any governmental agency (including, without limitation, any
federal, state, local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality). There is no outstanding order, writ,
injunction, decree, judgment or award by any court, arbitrator or governmental
body against Prentice Oil. There is no litigation, proceeding, investigation,
claim, or complaint, formal or informal, or arbitration pending, or any of the
aforesaid threatened, or any contingent liability, which would give rise to any
right of indemnification or similar right on the part of any director or officer
of Prentice Oil or any such person's heirs, executors or administrators as
against Prentice Oil.
(K) COMPLIANCE WITH LAWS. Prentice Oil has complied with all applicable
federal, state, local, foreign and other laws, rules and regulations, and
Prentice Oil has not received notice of any claimed violation of any such law,
rule or regulation. Prentice Oil has timely filed all returns, reports and other
documents and furnished all information required or requested by any federal,
state or foreign governmental agency and all such returns, reports, documents
and information are true and complete in all material respects.
(L) BANKING ARRANGEMENTS AND POWERS OF ATTORNEY. Prentice Oil has no bank
accounts, credit lines or safe deposit boxes, except for the bank accounts
identified on Exhibit B hereto. No person holds any powers of attorney from
Prentice Oil.
(M) ARTICLES OF INCORPORATION AND BYLAWS. Prior to the date of this
Agreement, Seller has delivered to Purchaser true and complete copies of the
Articles of Incorporation and Bylaws of Prentice Oil. Such Articles of
Incorporation and Bylaws were duly adopted and are in full force and effect, and
there are no amendments or modifications thereto except as included in said
Articles of Incorporation and Bylaws.
(N) BOOKS AND RECORDS. Prentice Oil keeps its books, records and accounts
(including, without limitation, those kept for financial reporting purposes and
for tax purposes) in sufficient detail to accurately and fairly reflect the
transactions and dispositions of its assets, liabilities and equities. The
minute books of Prentice Oil contain complete and accurate records of all of its
shareholders' and directors' meetings and of all action taken by such
shareholders and directors. The meetings of directors and shareholders referred
to in such minute books were duly called and held, and the resolutions appearing
in such minute books were duly adopted. The signatures appearing on all
documents contained in such minute books are the true signatures of the persons
purporting to have signed the same. The stock certificate records and stock
transfer records of Prentice Oil are correct and complete and reflect accurately
the number of shares of stock held by its shareholders.
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(O) GOVERNMENTAL AND OTHER CONSENTS. No consent, approval or authorization
of, or designation, declaration or filing with, any governmental authority or
other person is required on the part of Seller or Prentice Oil in connection
with the execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(P) FULL DISCLOSURE. As of the date of this Agreement, Seller and
Shareholder have disclosed in writing to Purchaser all events, conditions or
facts known to Seller and Shareholder which could adversely affect the financial
condition of Prentice Oil. No representation or warranty by Seller or
Shareholder in this Agreement contains or will contain any untrue statement of
material fact or omits or will omit to state any material fact necessary to make
the statements and information contained or therein not misleading.
(Q) TITLE TO MINERAL INTEREST.
(i) CERTAIN DEFINITIONS. For the purposes of this Section 3(q), the
following terms shall have the meanings as set forth below:
(1) "Prentice Field" shall mean the specified decimal or fractional
interest set forth in Exhibit A in and to the oil and gas leases; oil, gas
mineral leases, permits, fee mineral, royalty, overriding royalty and other
interest in oil, gas and other minerals described in Exhibit A.
(2) "Revenue Interest" shall mean that portion of production of
hydrocarbons from a well attributable to Prentice Oil's working interest
and other ownership interests in and to the "Prentice Field" after
deducting all royalties, overriding royalties, production payments or other
burdens on or measured by production, except ad valorem. production,
severance, gathering and other similar taxes.
(3) "Working Interest" shall mean Prentice Oil's obligation, on a
percentage basis, to bear costs and expenses of exploring, drilling and
operating for and production of hydrocarbons from a well located on or
forming a part of the "Prentice Field".
(ii) REPRESENTATION AND WARRANTY. Prentice Oil has such title ("Defensible
Title") to the Prentice Field, free and clear of all liens, encumbrances,
burdens, claims, or other defects, that now and in the future (1) entitles
Prentice Oil to receive no less than the Revenue Interest set forth in Exhibit A
hereto of all hydrocarbons and other minerals marketed from or allocated to each
lease comprising the Prentice Field together with all proceeds therefrom and
other revenues attributable thereto and (2) obligates Prentice Oil to bear costs
and expenses relating to each lease comprising the Prentice Field in an amount
not greater than the Working Interest therefore set forth in Exhibit A hereto,
unless such increase in Working Interest is accompanied by a proportionate
increase in the Revenue Interest received by Prentice Oil and except for
customary provisions contained in an operating agreement disclosed to Purchaser
(i) requiring Prentice Oil to bear a greater share of costs and expenses in the
case of a default in payment or (ii) non-consent elections to the extent not
presently in effect by other parties to such operating agreement.
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(R) TITLE TO PROPERTIES. Prentice Oil has good and marketable title to all
of its properties and assets (whether real, personal, mixed, tangible or
intangible), rights, contracts, agreements, goodwill and businesses, free and
clear of all adverse interests, security interests, liens, mortgages, deeds of
trust, encumbrances, claims, proscriptions, restrictions, conditions, covenants
and easements. There have not been filed any liens, mortgages, deeds of trust or
financing statements under the Uniform Commercial Code or other similar statute
on the properties or assets, whether real, personal or mixed, of Prentice Oil,
nor has Prentice Oil signed any security agreement or similar agreement
authorizing any secured party thereunder to file any such lien, mortgage or
financing statement.
(S) SECURITIES LAWS. Seller and Shareholder hereby acknowledge that the
restricted Company Shares have not been registered under the United States
Securities Act of 1933 (the "Act") or any State Blue Sky laws and, accordingly,
may not be offered, sold, or otherwise transferred, unless such offer, sale or
transfer is either registered pursuant to or is exempt from registration under
the Act and any applicable State Blue Sky law. Seller represents and warrants
that the restricted Company Shares are being acquired for Seller's own account
and for investment only, without a view to distribution, as that phrase has
meaning under the Act, and the rules and regulations of the Securities and
Exchange Commission, and no disposition be made of all or any part of the
Company Shares; unless such restricted Company Shares are registered under the
Act or an applicable exemption from registration is available; and that Seller's
acquisition of the restricted Company Shares and Seller's continued holding
thereof are consistent with Seller's financial position. Seller and Shareholder
represent that they have such knowledge and experience in business and financial
matters that they are able to understand and evaluate the risks and merits of
acquiring and holding the Company Shares. Seller and Shareholder represent that
they will not, directly or indirectly, offer or sell, pledge, hypothecate or
otherwise transfer or dispose of any of the restricted Company Shares except
pursuant to an effective registration under the Act and any applicable State
Blue Sky laws or pursuant to a transfer that is exempt from the registration
requirements of the Act or any such State Blue Sky laws.
4. COVENANTS OF SELLER AND SHAREHOLDER. Seller and Shareholder hereby covenant
and agree with the Purchaser and the Company as follows:
(a) Seller shall cause Prentice Oil to name officers designated by
Purchaser as an authorized signatory on all bank accounts of Prentice Oil.
(b) Seller shall deliver to Purchaser the resignations of all directors and
officers of Prentice Oil.
(c) Seller shall deliver to Purchaser the minute book, stock book and
corporate records of Prentice Oil.
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5. INDEMNIFICATION BY SELLER AND SHAREHOLDER. Seller and Shareholder agree to
defend, indemnify and hold harmless Purchaser and Prentice Oil and their
respective affiliates, successors and assigns (and their respective directors,
officers and other employees and all other persons acting on behalf of or under
control of any of them) from and against any and all (i) liabilities, losses,
costs or damages ("Loss") and (ii) attorneys' fees and expenses, costs of
investigation and defense, court costs and all other reasonable out-of-pocket
expenses ("Expense") incurred by Purchaser or Prentice Oil and their respective
affiliates, successors and assigns (and their respective directors, officers and
other employees and all other persons acting on behalf of or under control of
any of them) arising in connection with or related to (i) any breach of any
representation, warranty, covenant or agreement made by Seller or Shareholder
herein, or (ii) any Loss or Expense incurred by Prentice Oil or Purchaser
arising from any claim against Prentice Oil or obligation or liability of
Prentice Oil arising from or related to any activity, act or omission of
Prentice Oil occurring through the date of this Agreement.
(A) NOTICE OF CLAIMS. If Prentice Oil or Purchaser believe that they or it
have suffered or incurred any Loss or Expense and are entitled to indemnity from
any other party under this Section 5, the indemnified person shall so notify
Seller and Shareholder promptly in writing describing such Loss or Expense, the
amount thereof, if known, and the method of computation of such Loss or Expense,
all with reasonable particularity and containing a reference to the provisions
of this Agreement in respect of which such Loss or Expense shall have occurred.
If any action at law or suit in equity is instituted by or against a third party
with respect to which any of the indemnified persons intends to claim any
liability or expense as Loss or Expense under this Section 5, any such
indemnified person shall promptly notify the indemnifying party of such action
or suit. The amount to which an indemnified person shall be entitled under this
Section 5 shall be determined: (i) by the written agreement between the
indemnified person and Seller, (ii) by a judgment, decree, decision or award of
any court, arbitration board or administrative agency of competent jurisdiction,
(iii) by a settlement of the claim or (iv) by any other means to which the
indemnified person and Seller shall agree. In no event shall Purchaser or
Prentice Oil be required to pay the amount of any Loss or Expense prior to
receipt of any indemnification hereunder. Seller and Shareholder agree to pay in
advance upon demand by the Purchaser the amount of any Loss or Expense unless
Seller or Shareholder elect to contest at their sole expense any third party
claim giving rise to a claim for indemnification hereunder.
(B) DEFENSE OF CLAIMS. Upon receipt of notice of any third party claim for
which indemnification is provided hereunder, Seller and Shareholder shall
immediately assume the defense of such claim and conduct and control such action
or suit. If Seller and Shareholder do not assume the defense of such claim, the
indemnified persons shall have the right to defend, contest, settle or
compromise such action or suit in the exercise of their exclusive discretion
using Akin, Gump, Strauss, Hauer & Feld, L.L.P. as counsel to such indemnified
person; and Seller and Shareholder shall, upon request from any of the
indemnified persons, promptly pay to such indemnified persons in accordance with
the other terms of this Section 5 the amount of any Loss resulting from its
liability to the third party claimant and all related Expense. If Seller and
Shareholder assume the defense of such claim, Seller and Shareholder shall have
the right to undertake, conduct and control, through Akin, Gump, Strauss, Hauer
& Feld, L.L.P. as counsel to Seller and Shareholder and at the sole expense of
Seller and Shareholder, the conduct and settlement of such action or suit, and
the indemnified persons shall cooperate with the indemnifying party in
connection therewith; provided that (i) neither Seller nor Shareholder shall
thereby permit to exist any lien, claim or encumbrance upon any asset or
property of any indemnified person; and (ii) Seller and Shareholder shall agree
promptly to reimburse the indemnified persons for the full amount of any Loss
resulting from such action or suit and all related Expense incurred by the
indemnified persons before or after the assumption of the conduct and control of
such action or suit by Seller. So long as Seller and Shareholder are conducting
any such action or suit in good faith, the indemnified persons and Shareholder
shall not pay or settle any such action or suit.
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6. APPLICABLE LAW. This Agreement has been substantially negotiated and executed
and will be substantially performed in the State of Texas. The law of the State
of Texas shall govern the validity, interpretation and due performance of this
Agreement. Venue shall be in Taylor County and/or Dallas County, Texas.
7. PARTIES BOUND. This Agreement shall be binding on and shall inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns.
8. HEADINGS. The headings of the Sections herein are inserted for the
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
9. NOTICES. All notices, consents, demands, requests, waivers, approvals and
other communications which are required or may be given hereunder shall be in
writing or telegram and shall be deemed to have been duly given upon delivery or
receipt. The address of each party is indicated beside each party's signature
hereon and may be changed to such other address as may be designated by written
notice to the other parties hereunder.
10. ENTIRE AGREEMENT. This Agreement, together with the other writings delivered
in connection herewith, embodies the entire agreement and understandings of the
parties hereto with respect to the subject matter hereof and supercedes any
prior agreement and understandings between the parties hereto. This Agreement
may be amended or terminated at any time, only by a writing executed by all of
the parties hereto.
11. COUNTERPARTS. This Agreement has been executed in a number of identical
counterparts, each of which shall evidence the same agreement; but in making
proof of such agreement, it shall never be necessary to establish or account for
more than one such counterpart.
12. CLOSING DATE. The consummation of the transaction contemplated by this
agreement (the "Closing") shall be the date of this Agreement. The Closing Date
shall be the date of this Agreement.
13. EXPENSES. Each party hereto shall bear its or his own expenses incurred
pursuant to this Agreement.
14. AMENDMENTS. This Agreement may be amended only by a written agreement
executed by all of the parties hereto.
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15. SURVIVAL OF REPRESENTATIONS. All statements of fact (including financial
statements), the exhibits, or any other instrument delivered by or on behalf of
the parties hereto, or in connection with the transactions contemplated hereby,
shall be deemed representations and warranties by the party hereunder. All
representations, warranties, agreements and covenants hereunder shall survive
the Closing and remain effective regardless of any investigation or audit an any
time made by or on behalf of the parties or of any information a party may have
in respect thereto. Consummation of the transactions contemplated hereby shall
not be deemed or construed to be a waiver of any right or remedy possessed by
any party hereto, notwithstanding that such party knew or should have known at
the time of Closing that such right or remedy existed.
16. FINDERS' AND RELATED FEES. Each party hereto agrees to be responsible for,
and shall indemnify the other against, any claims for remuneration by their
respective finders or brokers, if any, for services rendered in connection with
the transactions contemplated herein.
17. PUBLIC ANNOUNCEMENTS. Seller shall not make any public announcement with
respect to this Agreement or the transactions contemplated hereby without the
prior consent of the Company, unless required by law or judicial process, in
which case, written notification shall be given to the other party prior to such
disclosure.
IN WITNESS WHEREOF, the parties hereto have entered into this Stock
Exchange Agreement effective the date first written above.
ADDRESS SELLER:
FORUM ENERGY, LTD.
C/O BANK OF BELIZE BY:/S/ANTHONY DAVIDSON
60 MARKET SQUARE NAME:ANTHONY DAVIDSON
BELIZE CITY, BELIZE TITLE:SHAREHOLDER
Central America
PURCHASER:
TRIAD INNOVATIONS, INC.
620 SOUTH TAYLOR BY:/S/JAMES B. LAPORTE
AMARILLO, TEXAS 79101 NAME:JAMES B. LAPORTE
TITLE: PRESIDENT
SHAREHOLDER:
/S/ANTHONY DAVIDSON
