STOCK PURCHASE AND EXCHANGE AGREEMENT
THIS STOCK PURCHASE AND EXCHANGE AGREEMENT ("Agreement") is executed and entered
into effective the date set forth below by and between KBS Technologies,
Inc. ("KBS") and Denver Oil & Mineral Corporation. ("Denver").
WHEREAS, Denver owns a non-cost bearing overriding royalty interest in the oil
and gas mineral estate in US federal waters on the Outer Continental Shelf off
the coast of California as described in Exhibit A hereto (Royalty); and
WHEREAS, KBS has filed a Form 10-SB with the SEC and has cleared all comments
from the SEC with respect thereto; and
WHEREAS, Denver desires to exchange the Royalty for common stock of KBS, and
KBS desires to acquire the Royalty in exchange for the issuance of its common
stock to Denver therefor; and
WHEREAS, the parties have set forth herein the terms and conditions upon which
the exchange of KBS shares for the Royalty will take place.
NOW, THEREFORE, for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, and subject to the
terms and conditions of this Agreement, the parties agree as follows:
1. Exchange
of Royalty for KBS Shares. At the Closing, Denver agrees to sell, assign,
convey, transfer and deliver to KBS at the Closing, and KBS agrees to issue to
Denver the number of shares of common stock of KBS listed in Exhibit C in
exchange for the Royalty in accordance with the terms and conditions set forth
herein.
2.
Closing. Subject to satisfaction of all the conditions precedent to the
Closing, the Closing shall take place at the offices of Frederick K. Slicker,
4444 East 66th Street, Suite 201, Tulsa, OK 74136-4206, as soon as
possible after the execution of the Agreement at a mutually agreed date, no
later than June 20, 2000, or at such other place and time as soon thereafter as
possible as may be mutually agreed between the parties hereto in writing. The
parties may mutually agree to extend the time for Closing.
(a) Deliveries by KBS at Closing. At the Closing, KBS shall deliver
to Denver or to the designees of Denver:
(i) Certificates representing the Shares in the names and amounts
designated by Denver; and
(ii) An executed officer's certificate; and
Such other documents as shall be reasonably required or necessary to consummate
the transactions contemplated by this Agreement as the parties shall agree.
(b) Deliveries by Denver at Closing. At the Closing, Denver shall deliver
to KBS:
(i) The executed and acknowledged Assignment of Overriding Royalty
Interest ("Assignment") covering the Royalty to KBS; and
Such other documents as shall be reasonably required or necessary to consummate
the transactions contemplated by this Agreement as the parties mutually agree.
3. Representations and Warranties of KBS.
KBS represents and warrants to Denver that:
(a) Organization, Good Standing and Corporate Power. KBS is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Oklahoma, with all requisite
corporate power and authority to carry on the business of KBS as now
conducted and to consummate the transactions contemplated hereby.
(b) Authorization. The execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of KBS; and this Agreement
is a valid and legally binding obligation of KBS enforceable in
accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or similar laws affecting
the enforcement of creditors' rights and by the availability of
injunctive relief or specific performance.
(c) No Conflicting Agreements. Neither the execution and delivery of
this Agreement by
KBS nor the fulfillment of or compliance by KBS with the terms
thereof will result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in a
violation of, the corporate charter or bylaws of KBS or any
agreement, contract, instrument, order, judgment or decree to
which KBS is a party or by which it or its assets are bound, or
violate any provision of any applicable law, statute, rule or
regulation or any order, decree, writ or injunction of any court
or governmental entity which materially affects the business of
KBS.
(d) Consents. No consent from or approval of any court,
governmental entity or any other person is necessary in
connection with the execution and performance by KBS of this
Agreement or the transactions contemplated hereby; and the
consummation of the transactions contemplated hereby will not
require the approval of any entity or person which has not been
obtained in order to prevent the termination of any material
right, privilege, license or agreement of KBS.
(e) The Shares. The Shares have been duly and validly authorized
for issuance to Denver pursuant to the terms and conditions of
this Agreement, and when issued in exchange for the Royalty will
be duly authorized, validly issued, fully paid, non-assessable
and free and clear of all claims, liens, mortgages, options,
restrictions, security agreements and other encumbrances of every
kind or nature whatsoever. The Shares issued to Denver pursuant
to this Agreement represent approximately 93% of the issued and
outstanding shares of common stock of KBS immediately after the
date of Closing.
(f) Form 10-SB and Financial Statements. The Form 10-SB of KBS
and the financial statements of KBS ("KBS Financial Statements")
contained in its Form 10-SB previously delivered to Denver have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis, except in the case of
interim statements which do not include complete footnotes or
customary year-end adjustments. The KBS Financial Statements
present fairly the financial position and the results of
operations of KBS on the dates and for the periods shown therein.
There have been no material adverse changes in the nature of the
business, the prospects of KBS, the value of the assets of KBS or
the financial condition of KBS since the date of the KBS
Financial Statements.
(g) Taxes. All returns, reports, statements and other similar
filings required to be filed by KBS with respect to any federal,
state, or local taxes, assessments, interests, penalties,
deficiencies, fees and other governmental charges or impositions
applicable to the operation of KBS have been filed with the
appropriate governmental agencies in all jurisdictions in which
such tax returns are required to be filed; and all such tax
returns properly reflect in all material respects the liabilities
of KBS for taxes for the periods, property or events covered
thereby. All taxes, whether or not reflected on those tax
returns, and all taxes payable from operations of KBS by any
taxing authority, have been properly accrued or paid. KBS has not
received any notice of assessment or proposed assessment in
connection with any tax returns, and there are no pending tax
examinations of or tax claims asserted against KBS or any of its
assets or properties. KBS has not extended or waived the
application of any statute of limitations in any jurisdiction
regarding the assessment or collection of any taxes. There are no
tax liens (other than any lien for current taxes not yet due and
payable) on any of the assets of KBS. KBS has no knowledge of any
basis for any additional assessment of taxes upon KBS.
(h) Absence of Certain Changes or Events. KBS has not:
(i) Sold, encumbered, assigned or transferred any its assets or
properties, except for the sale of inventory in the ordinary
course of business consistent with past practice; or
(ii) Amended or terminated any material agreement, contract,
commitment, lease or plan to which it is a party or by which it
is bound; or
(iii) Suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting its
business, operations, assets or prospects of KBS or suffered any
recurring or prolonged shortage, cessation or interruption of
material supplies or utilities or other material services
required to conduct its business and operations; or
(iv) Received notice or had knowledge of any actual or threatened
labor trouble, strike or other occurrence, event or condition of
any similar character which has had or might have a material
adverse effect on its business, operations, assets or prospects
of KBS; or
(v) Made any material change in its customary operating methods
(including its purchasing, marketing, selling and pricing
practices and policies), except for changes necessitated by
reduction or elimination of credit terms by the customers of KBS;
or
(vi) Made any commitments or agreements for capital expenditures
or capital additions or betterment, except as may be involved in
ordinary repair, maintenance or replacement of its assets of KBS;
or
(vii) Made any advances (excluding advances for ordinary and
necessary business expenses) or loans to any employees or made
any increase in, or any addition to, other benefits to which any
of its employees may be entitled; or
(viii) Changed any of the accounting principles followed by it or
the methods of applying such principles; or
(ix) Entered into any transaction relating to KBS or the assets
thereof other than in the ordinary course of business consistent
with past practice; or
(x) Agreed, whether in writing or otherwise, to take any of the
actions set forth in this paragraph.
(i) Material Contracts.
KBS has previously provided to Denver a complete and correct copy
of all material agreements, contracts and commitments, whether
written or oral, by which any of the assets of KBS is bound or to
which KBS is a party or is bound and which relate to the business
of KBS.
(j) Compliance with Laws. KBS is in compliance with all
applicable laws, ordinances, statutes, rules, regulations and
orders promulgated by any foreign, federal, state or local
governmental body or agency relating to the business of KBS; and
KBS owns, holds, possesses or lawfully uses in the operation of
its business, all franchises, licenses, permits, easement, right,
application, filing, registration and other authorization which
are necessary for it to conduct business, all of which are valid
and in full force and effect, and each is in full compliance
therewith.
(k) Litigation. There is no suit, action or any arbitration,
administrative, legal or other proceeding of any kind or
character or, to the knowledge of KBS, threatened against KBS
which would, if adversely determined, individually or in the
aggregate, materially and adversely affect their assets or the
business of KBS.
(l) Books and Records. The books and records of KBS are complete
and accurate, fairly present the business of KBS, have been
maintained in accordance with good business practices, and
accurately reflect in all material respects the business and
financial condition of KBS.
(m) No Brokers' Fees. KBS has not incurred any form of brokers'
fees, sales commissions, finders' fees, financial advisory fees
or other fees or expenses in connection with the transactions
contemplated hereby.
(n) No Undisclosed Liabilities. KBS does not have any material
undisclosed debt, liability or obligation that would have a
material adverse effect on the business or financial condition of
KBS or the assets thereof for which Denver shall be liable in any
respect.
(o) Full Disclosure. All representations or warranties of KBS are
true, correct and complete in all material respects on the date
hereof and shall be true, correct and complete in all material
respects as of the Closing as if they were made on such date.
4. Representations and Warranties of Denver. Denver represents and
warrants to KBS that:
(a) Authorization. The execution, delivery and performance of
this Agreement to which it is a party and the consummation by
Denver of the transactions contemplated hereby have been duly and
validly authorized by Denver; and this Agreement is a valid and
legally binding obligation of Denver, duly enforceable in
accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or similar laws affecting
the enforcement of creditors' rights and by the availability of
injunctive relief or specific performance.
(b) No Conflicting Agreements. To the best knowledge of Denver,
neither the execution or delivery of this Agreement, nor the
fulfillment of or compliance by Denver with the terms or
provisions thereof, will result in a breach of the terms,
conditions or provisions of, or constitute a default under, or
result in a violation of any agreement, contract, instrument,
order, judgment or decree to which Denver is a party or by which
Denver or the Royalty is bound or violate any provision of any
applicable law, statute, rule or regulation or any order, decree,
writ or injunction of any court or governmental entity relating
to Denver or the Royalty.
(c) Ownership of the Royalty. Denver owns the Royalty free and
clear of all liens, claims, and encumbrances of every kind,
character and description; and at the Closing, KBS shall acquire
title to the Royalty, free and clear of all liens, claims,
encumbrances or impediments of title of every kind, character and
description. The Royalty is assignable to KBS in accordance
herewith.
(d) No Brokers' Fees. Denver has incurred no brokers' fees, sales
commissions, finders' fees, financial advisory fees or other fees
or expenses for which KBS shall be liable.
(e) Full Disclosure. All representations and warranties of Denver
are true, correct and complete in all material respects on the
date hereof and shall be true, correct and complete in all
material respects as of the Closing as if they were made on such
date.
5. Conditions Precedent to Closing.
(a) Conditions to Closing by KBS. The obligation of KBS to
complete the Closing is subject, at the sole discretion of KBS,
to the fulfillment of each of the following conditions at or
prior to the Closing, and parties shall use their best good faith
diligent reasonable efforts to cause each such condition to be so
fulfilled:
All representations and warranties of Denver contained herein shall be true and
correct in all material respects when made and shall be true and correct at the
Closing as though made as of the time of Closing; and
All covenants, agreements and obligations required by the terms of this
Agreement to be performed by Denver at or before the Closing shall have been
duly and properly performed in all material respects; and
(iii) Denver shall deliver the executed and acknowledged Assignment; and
(iv) Denver shall have delivered to KBS the Bill of Sale; and
(v) Denver shall have delivered to KBS the Subscription Agreement
which is attached hereto as Exhibit B; and
(vi) KBS shall be satisfied, in its sole discretion, with the
results of reasonable due diligence procedures (including
updates, supplements and corrections) and all other information
and documentation delivered by Denver relating to this Agreement
or to the Royalty; and
(vii) All necessary governmental approvals and any other required
approvals and consents required of any person other than Denver
shall have been duly obtained, to the extent such approvals and
consents shall be necessary the full benefits of ownership of the
Royalty; and
(viii) No action or proceeding at law or in equity shall be
pending which seeks to enjoin the transactions herein
contemplated or materially interferes with the Royalty.
(b) Conditions to Closing by Denver. The obligations of Denver to
complete the Closing are subject, at the sole discretion of
Denver, to the fulfillment of each of the following conditions at
or prior to the Closing, and the parties shall use their best
good faith diligent reasonable efforts to cause each such
condition to be so fulfilled:
(i) All representations and warranties of KBS contained herein
shall be true and correct in all material respects when made and
at the Closing as though made as of the time of Closing; and
(ii) All covenants, agreements and obligations required by the
terms of this Agreement to be performed by KBS at or before the
Closing shall have been duly and properly performed in all
material respects; and
(iii) KBS shall have delivered the Shares to Denver; and
(iv) KBS shall have delivered to Denver a certificate executed by
the President of KBS, dated as of the Closing Date, certifying
that the conditions set forth in clauses (i) and (ii) have been
fulfilled; and
(v) No action or proceeding at law or in equity shall be pending which
seeks to enjoin the transactions herein contemplated.
6. Investment Representations by Denver. Denver represents and
warrants that the investment representations and all other
information regarding Denver set forth in the Subscription
Agreement attached hereto as Exhibit B are true and correct.
7. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given on the date of receipt, if served
personally on the party to whom notice is to be given by actual
in person delivery, telephone, facsimile (confirmed in writing),
telegraph or similar means of communication, or on the 5th day
after transmission or mailing (if mailed) and addressed to the
party to whom notice is to be given, by first class mail, return
receipt requested, postage prepaid as follows:
To KBS: Kipp Slicker, President
4444 East 66th Street, Suite 201
Tulsa, OK 74136-4206
Phone: 918-496-9020
Fax: 918-496-9024
To Denver: William Stuart Price
C/o Denver Oil & Mineral Corporation
1020 Petroleum Club Building
601 South Boulder
Tulsa, OK 74119-1300
Phone: 918-599-0060
Fax: 918-599-0062
Each party shall be entitled to specify a different person or
address by giving notice as aforesaid to the other.
8. Miscellaneous.
(a) Entire Agreement. This Agreement and the Exhibits attached
thereto, constitute the entire agreement between the parties with
respect to the subject matters hereof and supersede all prior and
contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written. The Exhibits referred to in
this Agreement are incorporated by reference herein and
constitute a part of this Agreement for all purposes. All of the
terms and provisions of this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective permitted transferees, successors and assigns. No
supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the parties. No waiver of
any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof, nor shall such
waiver constitute a continuing waiver unless otherwise expressly
provided. Paragraph headings are not to be considered in
interpreting this Agreement, are included solely for convenience
and are not intended to be a full or accurate description of the
contents thereof. This Agreement may be executed in counterparts,
all of which taken together shall constitute one and the same
instrument.
(b) Expenses. Each party agrees to pay all reasonable fees and
expenses incurred by them in connection with the negotiation and
consummation of the transactions contemplated hereby, including
all investment banking, financial advisory, legal, accounting,
finders' fees , brokers' fees, consultants' fees, transfer taxes,
sales taxes, if any, appraisal and other fees and expenses
incurred. Each party will hold the other party harmless from and
against any and all claims or liabilities arising in connection
therewith for which it is liable.
(c) No Assignment. Neither party hereto may assign its rights or
obligations hereunder without the prior written consent of the
other.
(d) Applicable Law. This Agreement shall be governed, construed
and enforced inaccordance with the laws of the State of Oklahoma.
(e) Parties in Interest. Notwithstanding any other provision of
this Agreement, this Agreement shall not create any rights or
benefits on behalf of any employee, organization, third party or
other person, and this Agreement shall be effective only as to
the parties hereto, their successors and permitted assigns.
(f) Further Assurances. Each party agrees to execute, acknowledge
and deliver all such further assignments, conveyances, transfer
documents, in form and substance reasonably acceptable to the
other, and other assurances as reasonably may be requested by the
other party.
(g) Illegality. If a court of competent jurisdiction declares
that any provision of this Agreement or any Exhibit hereto is
illegal, invalid or unenforceable, then such provision shall be
modified automatically to the extent necessary to make such
provision fully enforceable. If such court does not modify any
such provision as contemplated herein, but instead declares it to
be wholly illegal, invalid or unenforceable, then such provision
shall be severed from this Agreement and such declaration shall
in no way affect the legality, validity and enforceability of the
other provisions of this Agreement to which such declaration does
not relate. In this event, this Agreement shall be construed as
if it did not contain the particular provision held to be
illegal, invalid or unenforceable, the rights and obligations of
the parties hereto shall be construed and enforced accordingly,
and this Agreement shall remain in full force and effect.
(h) Arbitration. The parties agree to seek with good faith
diligent efforts to resolve any differences or disputes that may
arise in connection with this Agreement. In the event the parties
do no reach a mutually agreed resolution of any such dispute, any
party may initiate arbitration proceedings pursuant to the
Commercial Rules of Arbitration of the American Arbitration
Association. Each party agrees to submit to arbitration any such
dispute if the other party initiates such arbitration
proceedings. The parties agree to be bound by the decision of the
arbitrators, which decision shall be final and binding for all
purposes in accordance with applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered this 19th day of June, 2000.
KBS Technologies, Inc. Denver Oil Mineral Corporation
By /s/ Frederick K. Slicker
Frederick K. Slicker, Vice President
By /s/ William Stuart Price
William Stuart Price, President
<PAGE>
EXHIBIT A TO THE STOCK PURCHASE AND EXCHANGE AGREEMENT
BY AND BETWEEN
KBS TECHNOLOGIES, INC.
AND
DENVER OIL MINERAL CORPORATION ASSIGNMENT OF OVERRIDING ROYALTY
INTEREST KNOW ALL MEN BY THESE PRESENTS: That DENVER OIL MINERAL
CORPORATION, hereinafter referred to as Assignor, FOR GOOD AND VALUABLE
CONSIDERATION, the receipt and adequacy of which are hereby acknowledged,
does hereby grant, transfer, assign and convey unto KBS TECHONOLOGIES, INC.
(which has determined to change its name to PACIFIC OIL, INC.), hereinafter
referred to as Assignee, its successors and assigns, subject to the
conditions stated below, all of Assignors right, title and interest in and
to that certain overriding royalty interest created under Farmout Agreement
dated May 1, 1997, entered into between Shell Frontier Oil Gas Inc., as
Farmor, and CalResources LLC, as Farmee (Farmout Agreement) which is
attached hereto as Exhibit A and made a part hereof for all purposes. As
described therein, said overriding royalty interest equals one percent (1%)
of one hundred percent (100%) of the oil, gas, and other minerals produced
and sold from those certain Federal Outer Continental Shelf Leases, Pacific
Region, as described on Exhibit B which is attached hereto and made a part
hereof for all purposes (Leases;). Said overriding royalty interest shall
be proportionately reduced to equal the percentage of Farmee’s
ownership in the Leases as of the effective date of the Farmout Agreement.
Further, said overriding royalty interest being conveyed hereunder shall
bear and absorb the burden of all royalty interests, overriding royalty
interests, production payments and any other burdens on production from the
Leases that existed as of the effective date of the Farmout Agreement and
proportionately all reasonable costs of treating and separating any
production to which the overriding royalty applies.
EXCEPT AS SET FORTH IN THAT CERTAIN STOCK PURCHASE AND EXCHANGE
AGREEMENT TO WHICH THIS INSTRUMENT IS EXHIBIT A, ASSIGNOR MAKES THIS
ASSIGNMENT OF OVERRIDING ROYALTY INTEREST WITHOUT WARRANTY WHATSOEVER,
EXPRESS, STATUTORY OR IMPLIED AS TO TITLE, DESCRIPTION, QUALITY, VALUE,
FITNESS FOR PURPOSE, MERCHANTABILITY, OR OTHERWISE, EXCEPT THAT ASSIGNOR
SPECIFICALLY WARRANTS TITLE TO THE OVERRIDING ROYALTY INTEREST BY, THROUGH
AND UNDER ASSIGNOR, BUT NOT OTHERWISE.
Assignee acknowledges that Assignor has made no statements or
representations concerning the present or future value of the anticipated
income, costs or profits, if any, to be derived from the overriding royalty
interest being conveyed hereunder.
TO HAVE AND TO HOLD the same unto Assignee, Assignees successors
and assigns forever, subject to the terms and provisions contained in the
Leases and any agreements or contracts related to or connected with the
Leases.
IN WITNESS WHEREOF, the Assignment is executed, delivered and made
effective this 19th day of June, 2000.
ASSIGNOR:
DENVER OIL & MINERAL CORPORATION
By /s/ William Stuart Price
William Stuart Price, President and Sole Shareholder
ASSIGNEE:
KBS TECHNOLOGIES, INC. ( which is in the process of changing its name to
PACIFIC OIL, INC.)
By /s/ Frederick K. Slicker
Frederick K. Slicker, Vice President and General Counsel
ACKNOWLEDGMENT
STATE OF OKLAHOMA )ss.
)COUNTY OF TULSA
BEFORE ME, the undersigned, a Notary Public, in and for said County
and State, on this 19th day of June, 2000, personally appeared William
Stuart Price, known to me to be the identical person who executed the
foregoing Assignment of Overriding Royalty Interest, and acknowledged to me
that he executed the same as President and Sole Shareholder of DENVER OIL
MINERAL CORPORATION as the free and voluntary act and deed of said
corporation for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my official signature and affixed
my notarial seal the day and year last above written.
By /s/ Tina Marshall
Notary Public in and for Tulsa County, OK
My Commission expires: 7/12/01
__________
[SEAL]
STATE OF OKLAHOMA )ss.
)COUNTY OF TULSA
BEFORE ME, the undersigned, a Notary Public, in and for said County
and State, on this 19th day of June, 2000, personally appeared Frederick K.
Slicker, known to me to be the identical person who executed the foregoing
Assignment of Overriding Royalty Interest, and acknowledged to me that he
executed the same as Vice President of KBS TECHNOLOGIES, INC (which is in
the process of changing its name to PACIFIC OIL, INC.) as the free and
voluntary act and deed of said corporation for the uses and purposes
therein set forth.
IN WITNESS WHEREOF, I hereunto set my official signature and affixed
my notarial seal the day and year last above written.
BY /s/ Tina Marshall
Notary Public in and for Tulsa County, OK
My Commission expires:
__________
[SEAL]
