SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-11498
SARATOGA RESOURCES, INC.
(Exact name of small business issuer in its charter)
Delaware 76-0453392
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2000 Dairy Ashford South, Suite 410 Houston, Texas 77077
(Address of principal executive offices, including Zip Code)
(281) 531-0022
(Registrant's telephone number, including area code)
Check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of March 10, 1997, there were 4,336,029 issued and outstanding
shares of Registrant's common stock, $.001 par value.
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SARATOGA RESOURCES, INC.
QUARTERLY REPORT ON FORM 10-QSB
INDEX
Page No.
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - 3
March 31, 1997 and December 31, 1996
Condensed Consolidated Statements of Operations - 4
Quarter ended March 31, 1997 and 1996
Condensed Consolidated Statements of Cash Flows - 5
Three Months ended March 31, 1997 and 1996
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operations
PART II. Other Information 13
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
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SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS (Unaudited)
MARCH 31, DECEMBER 31,
1997 1996
<S> <C> <C>
Current assets - cash ...................................... $ 1,167 $ 1,350
Receivables:
Trade ........................................... 46 50
Other ........................................... 25 25
------- -------
71 75
Equipment, net of accumulated depreciation ................. 20 20
------- -------
Total Assets ............................................... $ 1,258 $ 1,445
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities ........ 110 218
Legal suspense .................................. 18 19
------- -------
Total current liabilities .................................. 128 237
Commitments and contingencies (Note 3)
Stockholders' Equity
Preferred stock, $.001 par value; 5,000,000 shares authorized
Common stock $.001 par value; 50,000,000 shares authorized,
6,809,400 shares issued and outstanding in 1996 and
4,336,029 shares issued and outstanding in 1997 ....... 4 7
Additional paid-in capital ............................... 2,912 2,909
Accumulated deficit ...................................... (1,783) (1,706)
Treasury stock, at cost .................................. (3) (2)
------- -------
Total stockholders' equity ................................. 1,130 1,208
Total Liabilities and Stockholders's Equity ................ $ 1,258 $ 1,445
======= =======
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
Revenues:
Oil and gas ............................. $ -- $ 684
Other ................................... $ 75 1
------- -------
$ 75 $ 685
Costs and Expenses:
Production .............................. -- 271
Severance tax ........................... -- 43
Depletion, depreciation
& amortization ........................ -- 362
General and administrative .............. 152 268
Interest expense ........................ -- 434
------- -------
152 1,378
Net loss ........................................... $ (77) $ (693)
======= =======
Net loss per share ................................. $ (.01) $ (.10)
======= =======
Weighted average number of common
shares outstanding ............................... 5,573 6,699
======= =======
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net loss .......................................... $ (77) $(693)
Adjustments to reconcile net loss to
net cash provided by (used in) operating
activities:
Depreciation, depletion and amortization .......... -- 362
Amortization of debt discount ..................... -- 23
Changes in operating assets and liabilities:
Decrease in accounts receivable ................... 4 (28)
Increase (decrease) in accounts payable
& accrued liabilities ........................... (108) 371
Other ............................................. -- 64
------- -----
Net cash provided by (used in) operating
activities ......................................... (182) 99
------- -----
Cash flows from investing activities:
Property and equipment additions .................. -- (39)
Acquisition of oil and gas properties ............. -- (0)
------- -----
Net cash used in investing actives ................... -- (39)
------- -----
Cash flows from financing activities:
Purchase of Treasury Stock ........................ (1) (60)
------- -----
Net cash provided by financing activities ............ (1) (60)
------- -----
Net (decrease) increase in cash ...................... (183) 0
Cash at beginning of period .......................... 1,350 604
------- -----
Cash at end of period ................................ $ 1,167 $ 604
======= =====
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Saratoga Resources, Inc., a Delaware Corporation (the "Company",
"Saratoga", or the "Registrant") was merged with Sterling Resources Corporation
("Sterling") in February 1994. Sterling, formerly Primo Corporation, had been
incorporated in Utah on September 21, 1972.
The Company has been engaged in oil and gas exploration and
development of properties located in far southwest and east Texas and in
Louisiana. Sterling had been a passive organization with no assets nor
liabilities until September 8, 1993. At that time, Sterling acquired all of the
outstanding shares of Saratoga Resources, Inc., a Texas Corporation
("Saratoga-Texas"). The stockholders of Saratoga-Texas received 1,000,000 shares
of Sterling preferred stock and 100,000 shares of Sterling common stock. Shares
belonging to various Sterling stockholders were placed in a voting trust which,
along with voting rights of the stock issued to former Saratoga-Texas
stockholders, resulted in the former Saratoga-Texas stockholders exercising
voting control over 90% of the votes of Sterling's security holders. The
acquisition resulted in a complete reorganization of the Company and a change in
management. On January 22, 1994 the stockholders of the Company voted to 1)
change the name of the Company to Saratoga Resources, Inc.; 2) relocate the
domicile of the Company from Utah to Delaware; and, 3) institute a 1 for 30
reverse stock split on the Company's common stock. In addition, the preferred
stock of Sterling was converted into common stock.
The consolidated financial statements included herein are those of
the Company and its subsidiaries, all of which are wholly owned. All significant
intercompany accounts and transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS: The Company considers cash equivalents to
include all cash items, such as time deposits and short term investments, with
maturities of three months or less upon acquisition.
EQUIPMENT: Depreciation of equipment is generally provided on the
straight-line basis over the estimated useful lives of the assets as follows:
Office equipment 5 - 10 years
Leasehold improvements 3 - 5 years
Automobiles 5 years
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Ordinary maintenance and repairs are charged to expense, and
expenditures which extend the physical or economic life of the assets are
capitalized. Gains or losses on disposition of assets are recognized in income
and the related assets and accumulated depreciation accounts are adjusted
accordingly.
INCOME TAXES: The Company accounts for income taxes in accordance
with the asset and liability method of accounting for income taxes. Under the
asset and liability method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates during the periods they are expected to be recovered or
settled.
DERIVATIVE FINANCIAL INSTRUMENTS: To reduce price sensitivity of the
cash flows for periods subsequent to June 30, 1994, the Company entered into a
Swap Agreement with Internationale Nederlanden (U.S.) Securities Corporation
("ING Securities"), an affiliate of Internationale Nederlanden (U.S.) Capital
Corporation ("ING"). This Swap Agreement hedged 4,400 barrels of oil per month
from July to December 1994 and 3,400 barrels of oil per month from January to
December 1995 at $18.15 per barrel. On April 11, 1995, two new transactions were
entered into under the Swap Agreement. Under the terms, the Company agreed to
sell 2,000 barrels of oil per month from May 1, 1995 to October 31, 1996, at a
price of $18.47 per barrel, and agreed to sell 3,000 barrels of oil per month
from June 1, 1995 to May 31, 1996, at a price of $18.40 per barrel. In addition,
on April 20, 1995, the Company agreed to sell 60,000 MMBtu's of natural gas per
month from July 1, 1995 to March 31, 1997, at a price of $1.85 per MMBtu.
As discussed in Note 4, pursuant to the Disbursement Agreement dated
May 7, 1996, all Swap Agreements of the Company were settled by the Trustee from
cash proceeds from the Foreclosure Sale.
OIL AND GAS REVENUES: The Company historically recognized oil and gas
revenues as the sales occurred. The Company currently has no oil and gas
production.
NET INCOME (LOSS) PER SHARE: Net income (loss) per share was computed
by dividing net income (loss) by the weighted average common shares outstanding
as of December 31, 1996.
USE OF ESTIMATES: The preparation of the Company's consolidated
financial statements in conformity with generally accepted accounting principles
requires the Company's management to make estimates and assumptions that affect
the amounts reported in these financial statements and accompanying notes.
Actual amounts could differ from those estimates.
RECLASSIFICATIONS: Certain reclassifications have been made to prior
year amounts to conform to the current year's presentation.
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NOTE 2 - DEBT
ING CREDIT AGREEMENT
On March 30, 1995 Saratoga-Texas executed a Credit Agreement ("Credit
Agreement") with ING which refinanced the existing debt to ING. The cash portion
of the purchase price for the acquisition of Lobo Energy Inc., a Texas
corporation ("LEI") was paid out of the proceeds of the loan evidenced by the
Credit Agreement. In the Credit Agreement, ING established two credit facilities
in favor of Saratoga-Texas in the combined maximum principal amount of
$19,000,000 subject to the borrowing base limitations set forth therein. At
December 31, 1995 an aggregate of $15,500,000 was available under these
facilities; $13,765,721 was advanced; and $13,397,410 was outstanding, net of
unamortized loan commitment fees of $368,311. all oil and gas properties owned
by the Company were pledged as collateral under the Credit Agreement and all
obligations to ING were also guaranteed by the Company and all of its
subsidiaries.
As discussed in Note 4, on May 7, 1996, in connection with a
Foreclosure Sale and Compromise and Settlement Agreement, a majority of the
assets (the "Interests") of Saratoga-Texas, Lobo Operating Inc., a Texas
corporation ("LOI") and LEI were sold to ING in exchange for ING's forgiveness
of all debt owned by the Company to ING.
NOTE 3 - LITIGATION
The Company has previously reported certain information regarding its
involvement in certain litigation (the "Company Federal Lawsuit" and the
"Kaminski Lawsuit") with Joseph T. Kaminski, a former director of the Company,
in the following reports and matters filed with the Securities and Exchange
Commission: (i) Form 8-K (filed July 16, 1996), (ii) Form 10-KSB (filed July 31,
1996, (iii) Form 10QSB (filed August 1, 1996), (iv) Form 10-QSB (filed August
26, 1996), (v) Proxy Statement (filed August 30, 1996), (vi) Form 10-QSB (filed
November 13, 1996), (vii) Form 8-K (filed March 14, 1997), and (viii) Form
10-KSB (filed March 26, 1997).
On January 6, 1997, the "Company Federal Lawsuit" proceeded to trial,
whereupon the Company, Thomas F. Cooke ("Cooke"), Randall F. Dryer ("Dryer"),
and Dryer, Ltd. received favorable outcome on all consested issues as set forth
in the "Settlement Agreement", a copy of which is attached hereto as Exhibit
"10.1". Cooke and Dryer are two of the three current directors of the Company.
Prior to the final judgment being entered, Kaminski indicated his intention to
appeal any final judgment which may be entered. The Board of Directors, being
aware of the risks, uncertainties, and costs of continued litigation determined
that it would be in the best interest of the Company and its shareholders to
attempt to compromise and settle all matters in dispute of whatever kind or
character concerning both the "Company Federal Lawsuit" and the "Kaminski
Lawsuit". Accordingly, on March 10, 1997, the Company, Cooke, Dryer, Dryer, Ltd.
and Kaminski entered into a Settlement Agreement and Full and Final Release (the
"Settlement Agreement").
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Pursuant to the terms of the Settlement Agreement, Kaminski
transferred all of his equity interests in the Company, consisting of 2,465,371
shares of common stock and 100,000 stock warrants, to the Company, and forgave
debt owned him by the Company of $50,000 plus interest. Kaminski also agreed to
sell to the Company 8,000 shares of the Company's common stock held in trust.
Both the Company and Kaminski agreed to release and discharge any and all claims
or causes of action of every nature existing between the parties.
Accordingly, all claims and counterclaims by and against the Company
and its two directors (Cooke and Dryer) have been dismissed, and there is no
other pending litigation against the Company or its directors.
Additionally, and as a result of the Settlement Agreement the total
number of shares of common stock of the Company issued and outstanding has been
reduced from 6,809,400 to 4,336,029.
NOTE 4 - FORECLOSURE SALE
As of May 7, 1996, the Company owed $13,765,721 plus accrued interest
to ING under the Credit Agreement described in Note 2. The Company was in
default under the Credit Agreement and all obligations were due and payable in
full.
In connection with a Foreclosure Sale and pursuant to the terms and
provisions of a Compromise and Settlement Agreement dated May 7, 1996, a
majority of the assets (the "Interests") of Saratoga-Texas, LOI and LEI were
sold to ING in exchange for ING's forgiveness of all amounts owed under the
Credit Agreement.
Upon completion of the Foreclosure Sale on May 7, 1996, at which ING
was the highest bidder, ING concurrently sold the Interests to PrimeEnergy for
cash consideration in the amount of $7,180,000 less an adjustment for net
revenue due the purchaser from the effective date of the purchase (January 1,
1996) through May 7, 1996, not to exceed $372,000, plus additional consideration
as provided in the Purchase and Sale Agreement dated May 7, 1996, by and between
ING and PrimeEnergy.
Upon receipt of the cash proceeds from the sale of the Interests by
ING to PrimeEnergy, ING deposited approximately $5,500,000 with the Trustee, of
which approximately $4,000,000 was set aside under that certain Disbursement
Agreement dated May 7, 1996, for the settlement of outstanding vendor claims and
other related liabilities of the "Saratoga Companies" (the Company,
Saratoga-Texas, LEI and LOI). The remaining $1,500,000 was paid to the Company
and has been available for the Company to pursue other business opportunities.
As a result of the forgiveness of debt, the Company recorded an
extraordinary gain of $12,066,000 with no attendant tax liability.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
On March 30, 1995, the Company, Saratoga-Texas, LEI and ING entered
into the Credit Agreement to facilitate the settlement of a lawsuit brought by
Peter P. Pickup ("Pickup") against the Company and ING, and fund the acquisition
by Saratoga-Texas of the LEI assets previously owned by Pickup. Under the terms
of the Credit Agreement, ING established two credit facilities in favor of
Saratoga-Texas in the combined maximum principal amount of $19,000,000, subject
to the borrowing base limitations set forth therein. All of the Properties owned
by the "Saratoga Entities" were pledged as collateral under the Credit Agreement
and all obligations to ING were also guaranteed by the Company and all of its
subsidiaries. Funds obtained from these credit facilities were anticipated to be
used for the development of the Properties by the Company. Saratoga-Texas, LOI
and LEI are sometimes collectively referred to herein as the "Saratoga
Entities".
Subsequent to entering into the Credit Agreement, the Company engaged
ING Securities, a subsidiary of ING, to assist the Company in a private
placement of Company stock. It was anticipated that funds raised from such
private placement would enable the Company to meet its financial obligations
under the Credit Agreement. The private placement efforts were not successful.
Additionally, funds necessary for the development of the Properties were not
provided by ING under the Credit Agreement.
The failure of the private placement efforts combined with the lack
of availability of funds necessary for the development of its Properties placed
the Company in a severe financial crisis. In an attempt to salvage the maximum
value of the Saratoga Companies for the benefit of the other creditors (the
"Other Creditors") and the Company and its shareholders, the Saratoga Companies
spent several months examining and pursuing various alternatives with respect to
(i) the possible refinancing and/or restructuring of the debt of the Saratoga
Companies, (ii) the sale of the Saratoga Companies or their underlying assets,
and (iii) the prosecution or settlement of certain potential claims against ING
and ING Securities.
Unable to meet its financial obligations under the Credit Agreement,
the Company received notices of default from ING, whereupon ING threatened to
foreclose its perfected first lien security interests in the Properties and
Interests. At the same time the Company was receiving notices of default from
ING, the Company was attempting to negotiate a transaction with PrimeEnergy
involving either a merger of the two entities or a sale of the assets of the
Saratoga Entities to PrimeEnergy. The situation with ING obviously complicated
the Company's efforts with PrimeEnergy, as it had with other companies with
which the Company had been involved in similar negotiations.
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Facing what the Company believed to be an eminent foreclosure action
by ING which would restrict the Company's objectives and its ability to
consummate negotiations with PrimeEnergy, in April of 1996, the Saratoga
Companies filed an Original Petition and Application for Injunctive Relief
against ING and ING Securities, C96-399-D3 in the 341st Judicial District Court
of Webb County, Texas. Subsequently, the Company and ING entered into
discussions in an attempt to reach a final resolution of ING's rights under the
Credit Agreement and the Company's asserted claims.
In reviewing its options, the Company believed that the proceeds from
a contested foreclosure by ING would be substantially less than the debt owed
ING under the Credit Agreement, and that the Saratoga Companies would have no,
or virtually no, assets, the Other Creditors of the Saratoga Companies would not
be paid, and the stock of the Company would be worthless. Accordingly,
exercising its best business judgment, the Company determined that the best (and
in all probability the only) alternative available to the Saratoga Companies to
preserve value for the Other Creditors, the Company and its shareholders was to
consent, on its own behalf and as sole shareholder (directly or indirectly) of
the Saratoga Entities, to the compromise and settlement of the claims against
ING and ING Securities, and in connection therewith, the foreclosure by ING with
respect to all of the assets of the Saratoga Entities, all in accordance with
the terms and provisions of the Agreement dated May 7, 1996.
The Agreement provided for a Foreclosure Sale of a majority of the
assets (the "Interests") of the Saratoga Entities to ING pursuant to ING's
rights under the Credit Agreement. Upon completion of the Foreclosure Sale on
May 7, 1996, at which ING was the highest bidder, ING concurrently sold the
Interests to PrimeEnergy for $7,180,000 in cash and additional consideration as
provided in that certain Purchase and Sale Agreement dated May 7, 1996, by and
between ING and PrimeEnergy.
Upon receipt of the cash proceeds from the sale of the Interests by
ING to PrimeEnergy, ING deposited approximately $5,500,000 with the Trustee, of
which approximately $4,000,000 was set aside under the Disbursement Agreement
for the settlement of outstanding vendor debt and other related liabilities of
the Saratoga Companies. Upon the settlement of all such debt and liabilities,
the Company anticipates that there will be no material debt or liabilities going
forward, other than those incurred since May 7, 1996, in the ordinary course of
business and certain liabilities with respect to prior matters which the Company
does not believe are material (See "Note 4 to Consolidated Financial
Statements"). The Company was paid the remaining $1,500,000 by ING, which amount
became available to pursue new business opportunities and for other proper
corporate purposes.
Since May 7, 1996, the Company has not been conducting historical oil
and gas operations. The Board of Directors of the Company has been, however, in
the process of reevaluating its business plan going forward.
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RESULTS OF OPERATIONS
REVENUES. As a result of the Foreclosure Sale of the Interests,
revenues historically obtained from oil and gas operations declined in 1996.
Revenues for fiscal 1996 were $705,000 as compared to $2,878,000 for fiscal
1995. Revenues for the first quarter of 1997 were $75,000 as compared to
$685,000 for the same period in 1996 prior to the Foreclosure Sale.
COSTS AND EXPENSES. Cost and expenses were significantly reduced in
1996. Costs and expenses for fiscal 1996 totaled $2,174,000 as compared to
$14,252,000 in costs and expenses for fiscal 1995. Costs and expenses for the
first quarter of 1997 were $152,000 as compared to $1,378,000 for the same
period in 1996 prior to the Foreclosure Sale.
NET INCOME. Net income saw a significant increase in 1996. As a
result of the Foreclosure Sale and the forgiveness of debt by ING, net income
for fiscal 1996 was $10,622,000 as compared to a net loss of ($11,175,000) for
fiscal 1995. Net income per share for fiscal 1996 was $1.57 per share as
compared to a net loss per share of ($1.67) for fiscal 1995. The first quarter
of 1997 reflects a net loss of ($77,000) as compared to a net loss of ($693,000)
for the same period in 1996 prior to the Foreclosure Sale. Net income (loss) per
share for the respective periods are ($0.01) as compared to ($0.10)
TAXES. As a result of the Foreclosure Sale and the forgiveness of
debt by ING, the Company recorded an extraordinary gain of $12,066,000 with no
attendant tax liability in 1996 (See Note 4, SUPRA).
LIQUIDITY AND CAPITAL RESOURCES
The Company's assets at December 31, 1996 consist almost entirely of
cash in the amount of $1,350,000, and $1,167,000 in cash at March 31, 1997. The
Company believes that its current cash balance will be sufficient to conduct its
business for the foreseeable future.
CURRENT OPERATIONS
While the Company has received some preliminary proposals regarding
potential business opportunities, the pending litigation involving the Company
and its then current directors (see Note 3, SUPRA) has made it difficult to
pursue any of the proposals until resolution of such litigation. Now that such
litigation has been successfully resolved, the Board is reviewing and attempting
to determine whether the pursuit of any of such proposals is in the best
interest of the Company and its shareholders. At such time as the Board has
completed its evaluation process and has made a determination on a business plan
going forward, it is likely that any material transaction will require the
approval by the shareholders pursuant to Delaware law and, in such event
(shareholder approval is necessary), the Board will call for a Special Meeting
of the shareholders to obtain such approval.
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PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 3 to Condensed Consolidated Financial Statements.
ITEM 2. CHANGES IN SECURITIES
See Notes 2, 3 and 4 to Condensed Consolidated Financial Statements.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
ITEM 5. OTHER INFORMATION - None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS.
NO. EXHIBIT DESCRIPTION
(3) ARTICLES OF INCORPORATION AND BY-LAWS:
3.1 Certificate of Incorporation of Registrant,
Saratoga Resources, Inc., filed with the Office
of the Secretary of the State of Delaware on
January 19, 1994. Incorporated by reference to
the Form 10-KSB filed February 3, 1995 and filed
as Exhibit 3.1 thereto.
3.2 By-Laws of Registrant, Saratoga Resources, Inc.,
a Delaware Corporation, adopted January 20, 1994,
as amended September 14, 1996. Incorporated by
reference to the Form 10-QSB filed November 13,
1996 and filed as Exhibit 3.2 thereto.
(10) MATERIAL CONTRACTS
10.1 Settlement Agreement and Full and Final Release
dated March 10, 1997, by and between Saratoga
Resources, Inc., a Delaware corporation, Thomas
F. Cooke, Randall F. Dryer, Dryer, Ltd., a Texas
Family Partnership and Joseph T. Kaminski, filed
as Exhibit 1 to the Company's Report on Form 8-K
dated March 12, 1997.
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Page 14 of 14
(27) FINANCIAL DATA SCHEDULE
(B) REPORTS ON FORM 8-K
(1) A Form 8-K dated March 12, 1997 was filed with the
Securities and Exchange Commission on March 14, 1997,
reporting Item 5 - Other Events - Legal
Proceedings.
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 hereunto duly authorized.
SARATOGA RESOURCES, INC.
By: /s/ THOMAS F. COOKE
Thomas F. Cooke
Chairman of the Board
Chief Executive Officer and
Principal Accounting and Financial Officer
Date: May 14, 1997
EXHIBIT 10.1
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
SARATOGA RESOURCES, INC., --------
THOMAS F. COOKE, and |
RANDALL F. DRYER, |
|
Plaintiffs, |
|
v. | CAUSE NO. H 96-CA-2839 MAG NJ
|------
JOSEPH KAMINSKI, | JURY
|
Defendant and |
Counter-Plaintiff, |
|
v. |
|
THOMAS F. COOKE and |
RANDALL F. DRYER, |
|
Counter-Defendants, |
|
and |
|
DRYER, LTD., |
|
Third-Party Defendant. ------
SETTLEMENT AGREEMENT
AND FULL AND FINAL RELEASE
I.
RECITALS AND BACKGROUND
WHEREAS, there now exist disputes and litigation between Saratoga
Resources, Inc., Thomas F. Cooke, Randall F. Dryer, Dryer, Ltd., and Joseph T.
Kaminski (hereinafter referred
<PAGE>
to jointly as the "Parties" or individually as a "Party"), including, but
not limited to, all matters set out in the above-referenced cause number filed
in the United States District Court for the Southern District of Texas
(hereinafter "Federal Court Claims") and the state court proceeding pending in
Harris County, Texas, in a case styled JOSEPH T. KAMINSKI V. THOMAS F. COOKE,
RANDALL F. DRYER, SARATOGA RESOURCES, INC., AND DRYER, LTD., Cause No. 96-24469
(hereinafter "State Court Claims").
WHEREAS, on or about October 1, 1996, the Court in the State Court Claims
entered an Agreed Order where Joseph Kaminski was ordered to dismiss the
derivative action against Thomas Cooke, Randall Dryer, and Dryer, Ltd. on or
before December 6, 1996, unless a shareholder of Saratoga Resources, Inc. other
than Joseph Kaminski was allowed to appear with the Court's permission as a
proper derivative plaintiff by December 6, 1996. After notice, no other
shareholder timely appeared.
WHEREAS, on January 6, 1997, the Federal Court Claims proceeded to trial.
Following the close of all the evidence, on January 10, 1997, the Court granted
judgment as a matter of law in favor of Saratoga Resources, Inc., Thomas F.
Cooke, Randall F. Dryer, and Dryer, Ltd., as to each and every of the following
counterclaims and causes of action asserted against them by Joseph Kaminski:
breach of fiduciary duty; negligent misrepresentation; fraud; breach of
contract; violation of the securities laws of the United States; violation of
the securities laws of the State of Texas; fraud in the inducement; interference
with contract; and shareholder oppression. Further, Saratoga Resources, Inc. did
not contest as a factual matter that the company
2
<PAGE>
owed Joseph Kaminski $52,000.00 plus interest for back salary, but instead
claimed that the amount was offset by greater amounts owed to Saratoga
Resources, Inc. by Kaminski 90-1. The Court decided to reserve this issue, as
well as all claims for attorney's fees and interest, until after the jury
verdict. The Court then submitted the remaining claims to the jury.
WHEREAS, on January 15, 1997, a duly-empaneled jury returned its verdict in
favor of Saratoga Resources, Inc., Thomas F. Cooke, and Randall F. Dryer, and
against Kaminski. Specifically, the jury found Joseph Kaminski liable to
Saratoga Resources, Inc. for breach of fiduciary duty, breach of contract,
fraud, statutory fraud, negligent misrepresentation, Texas securities
violations, Federal securities violations. The jury awarded Saratoga Resources,
Inc. compensatory damages in the amount of $370,000.00 for the breach of
fiduciary claim, $370,000.00 for the negligent misrepresentation claim, and no
damages for the remaining claims. The jury also awarded Saratoga Resources, Inc.
punitive damages in the amount of $250,000.00 relative to the breach of
fiduciary claim. Saratoga Resources, Inc. has elected to proceed with its claims
for damages against Kaminski and not rescission. The jury also found Joseph
Kaminski liable to Thomas Cooke and Randall Dryer for fraud and negligent
misrepresentation. The jury did not award Thomas F. Cooke or Randall F. Dryer
any damages. A final judgment has not yet been entered in the case and Joseph
Kaminski has expressed an intention to appeal any final judgment.
WHEREAS, the parties are aware of the risks, uncertainties, and costs of
continued litigation and now desire to compromise and settle ALL matters in
dispute between them of whatever
3
<PAGE>
kind or character concerning the Federal Court Claims and the State Court
Claims.
II.
SETTLEMENT TERMS
The terms of the Settlement Agreement and Full and Final Release are set
out below:
1. All parties to this Settlement Agreement and Full and Final Release
(this "Agreement") have agreed that this Agreement shall neither constitute nor
be construed as an adjudication or finding on the merits of the Federal Court
Claims or State Court Claims and shall neither constitute nor be construed as an
admission by any party of liability.
2. The parties to this Agreement desire to dispose between them all claims
and causes of action that relate to the Federal Court Claims and the State Court
Claims.
3. Upon signing of this Agreement, Joseph Kaminski agrees to convey and
assign all of the stock, warrants, stock options, or other rights to purchase
any debt or equity interest, under his actual or constructive control, now or in
the future, in Saratoga Resources, Inc. or its affiliates to Saratoga Resources,
Inc. This conveyance and/or assignment applies to all such stock, warrants,
stock options, debt instruments, or other rights which Joseph Kaminski may
obtain or acquire, by whatever means, during the next three years from the date
of this Agreement; however, this conveyance and/or assignment does not affect or
apply to any stock Joseph Kaminski may obtain in Saratoga Resources, Inc. by
reason of his guarantee of the so-called "First Interstate loan." Joseph
Kaminski represents that as of the date of this Agreement such debt or equity
interest in Saratoga Resources, Inc. or its subsidiaries or affiliates is in the
aggregate
4
<PAGE>
amount of 2,465,371 shares, 100,000 warrants and no stock options, and no debt.
As part of this Agreement, Joseph Kaminski shall sign and execute the documents
attached as Exhibit A which are necessary to effectuate this conveyance and
assignment.
4. Further, upon signing of this Agreement, Joseph Kaminski, as trustee for
the Kristen Marie Kaminski and Joseph J. Kaminski Trustee, agrees to sell to
Saratoga Resources, Inc. the 8,000 shares of Saratoga Resources, Inc., for
$1,411.76. Such sale shall take place within seven days from the execution of
this Agreement. Joseph Kaminski represents to Saratoga Resources, Inc. that he
has obtained the consent of Kristen Marie Kaminski and Joseph J. Kaminski or his
legal representative to this transaction and that under Joseph Kaminski's belief
and advice from counsel this is a lawful transaction.
5. Joseph Kaminski hereby releases, acquits, and discharges Saratoga
Resources, Inc., Thomas Cooke, Randall Dryer, and Dryer, Ltd., including their
officers, directors, agents, partners, attorneys, heirs, successors,
representatives, and assigns, from any and all claims or causes of action of
every nature, whether known or unknown, existing between the parties as of the
date of this Agreement including, but not limited to, any claims asserted or
which could have been asserted in the Federal Court Claims or the State Court
Claims. However, this release does not cover any possible claims by or against
the parties to this Agreement for breach of the terms of this Agreement or to
enforce any covenant in this Agreement.
6. Saratoga Resources, Inc., Thomas Cooke, Randall Dryer, and Dryer, Ltd.
hereby release, acquit and discharge Joseph Kaminski, including his agents,
attorneys, heirs, successors,
5
<PAGE>
representatives, and assigns, from any and all claims or causes of action of
every nature, whether known or unknown, existing between the parties as of the
date of this Agreement including, but not limited to, any claims asserted or
which could have been asserted in the Federal Court Claims or the State Court
Claims. However, this release does not cover any possible claims by or against
the parties to this Agreement for breach of the terms of this Agreement or to
enforce any covenant in this Agreement.
7. Joseph Kaminski hereby grants, sells, conveys and assigns to Saratoga
Resources, Inc. all right, title, and interest to any property or assets
(including, without limitation, all cash on hand and in banks; U.S. Governments
securities; accounts, loans, and notes receivables; cash or surrender value in
any life insurance; other stocks or bonds; real estate; and automobiles) owned
by Joseph Kaminski, directly or beneficially, or in the name of Joseph Kaminski,
which are not reflected on Joseph Kaminski's sworn financial statement dated
February 5, 1997, with the attached addendum, which is attached to this
Agreement as Exhibit B. The effective date of this conveyance is February 5,
1997. Joseph Kaminski claims that there are no such assets, and Saratoga
suspects that there are such assets. Within seven days after the final execution
of this Agreement, Saratoga Resources, Inc. will disclose in writing those
assets of Kaminski, if any, that it believes were conveyed and/or assigned by
Joseph Kaminski pursuant to this paragraph 7. Thereafter, either Kaminski or
Saratoga Resources, Inc. may within fourteen days from the final execution of
this Agreement notify the other party that it wishes and by this Agreement
Kaminski and Saratoga Resources, Inc. agree to arbitrate any claims or disputes
arising out of the title or
6
<PAGE>
interest to any property or asset that has been conveyed and/or assigned by
Joseph Kaminski to Saratoga Resources, Inc. under this paragraph 7. Kaminski and
Saratoga Resources, Inc. agree that the case will be arbitrated by Michael S.
Wilk who will convene such arbitration within fourteen days after such notice.
Any arbitration will be limited to a one day hearing. The arbitrator shall award
the fee and expenses of the arbitrator to the prevailing party. This arbitration
shall be governed by the General Arbitration Act of Texas, Chapter 171 of the
Texas Civil Practice and Remedies Code. Any assets not specifically identified
or disclosed upon completion of the arbitration hearing shall be forever
excluded from the conveyance and/or assignment under this paragraph 7.
8. In consideration of the terms of this Agreement, the parties to this
Agreement agree to file motions to dismiss with prejudice all Federal Court
Claims and the State Court Claims. In particular, but without limitation, Joseph
Kaminski agrees to dismiss the derivative claims against Thomas Cooke, Randall
Dryer, and Dryer, Ltd.. The parties to this Agreement agree to execute at the
signing of this Agreement the agreed motions to dismiss as reflected in Exhibits
C and D.
9. Joseph Kaminski acknowledges that by the terms of this Agreement
Saratoga Resources, Inc. has not rescinded any term of the agreements dated
September 30, 1993, including the Joint Venture Agreement, the Assignment of
License for Exploration Use of Seismic Data Agreement, the Seismic Data Purchase
and Loan Retirement Agreement, and the Stock Rights Agreement, and that whatever
rights Joseph Kaminski had to the Seismic Data or contract or other
7
<PAGE>
rights related to these referenced agreements have been conveyed to Saratoga
Resources, Inc. Joseph Kaminski acknowledges that Saratoga Resources, Inc. has
the sole and exclusive right to deal with whatever rights related to the Seismic
Data. Further, Saratoga Resources, Inc., Thomas Cooke, Joseph Kaminski, Randall
Dryer, and Dryer, Ltd. terminate and extinguish any rights or claims for
indemnity, if any, between themselves arising out of the agreements dated
September 30, 1993, including the Joint Venture Agreement, the Assignment of
License for Exploration Use of Seismic Data Agreement, the Seismic Data Purchase
and Loan Retirement Agreement, and the Stock Rights Agreement.
10. Joseph Kaminski acknowledges by signing this Agreement that the
consideration for this Agreement is adequate and all that Joseph Kaminski is
ever entitled to receive. Joseph Kaminski agrees that he will not request any
additional consideration from Saratoga Resources, Inc. or its subsidiaries or
affiliates or successors, or Thomas Cooke, Randall Dryer, and/or Dryer, Ltd. in
the future. Joseph Kaminski understands that Saratoga Resources, Inc. intends to
consummate an acquisition, enter into a merger or consolidation or otherwise
enter into a similar material transaction as soon as practicable (all of the
foregoing collectively "a Fundamental Corporate Transaction"). Although Saratoga
Resources, Inc. has been exploring a variety of Fundamental Corporate
Transactions, Saratoga Resources, Inc. has not entered into any definitive
agreement, letter of intent or otherwise entered into any formal or informal
commitment to pursue any particular Fundamental Corporate Transaction, but
intends to do so as soon as practicable. At such time as any Fundamental
Corporate Transaction is effected, it is likely that the value of
8
<PAGE>
Saratoga Resources, Inc.'s stock would be effected and that such effect may be
material. Kaminski will not be entitled to participate in any such material
change in value, if any, resulting from such Fundamental Corporate Transaction
by reason of entering into this Agreement and consummation of the transactions
set forth in this Agreement.
11. The parties to this Agreement do hereby represent and warrant that:
a. they thoroughly understand this Agreement as a complete Settlement
Agreement and Full and Final Release;
b. they are entering into this Agreement freely and voluntarily, after
receiving the advice of their respective attorneys; and
c. this Agreement constitutes the only agreement between the parties.
12. If any term or provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remainder of
the provisions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired, or invalidated.
13. The parties further agree to execute any and all documents necessary to
effectuate the terms of this Agreement.
9
<PAGE>
Executed this 10th day of March, 1997.
/s/
Robert Ketchand
Short & Ketchand, L.L.P.
ATTORNEY-IN-CHARGE FOR SARATOGA RESOURCES, INC.
/s/
Michael Burnett
Minton, Burton, Foster & Collins, P.C.
ATTORNEY-IN-CHARGE FOR THOMAS F. COOKE,
RANDALL F. DRYER, AND DRYER, LTD.
/s/
Thomas Sankey
Sankey & Luck, L.L.P.
ATTORNEY-IN-CHARGE FOR JOSEPH KAMINSKI
10
<PAGE>
/s/
Thomas F. Cooke
Before me, the undersigned Notary Public, on this day personally
appeared Thomas F. Cooke, who, after being duly sworn, stated under oath that:
I, Thomas F. Cooke, executed the foregoing Agreement for the purposes and
consideration expressed in the Agreement. I have read the entire Agreement and
thoroughly understand its contents. I have personal knowledge of the facts set
forth in the Agreement and they are true and correct.
SUBSCRIBED AND SWORN TO BEFORE ME on the 5th day of March, 1997.
/s/ JANICE TEAS
Notary Public in and for
the State of Texas
My commission expires 6/20/99
11
<PAGE>
/s/
Kevin Smith, as a duly authorized
representative of Saratoga
Resources, Inc.
Before me, the undersigned Notary Public, on this day personally
appeared Kevin Smith, who, after being duly sworn, stated under oath that: I,
Kevin Smith, executed the foregoing Agreement on behalf of Saratoga Resources,
Inc. for the purposes and consideration expressed in the Agreement. I have read
the entire Agreement and thoroughly understand its contents. I have personal
knowledge of the facts set forth in the Agreement and they are true and correct.
SUBSCRIBED AND SWORN TO BEFORE ME on the 6 day of March, 1997.
/s/ DEBBIE RAMBIN
Notary Public in and for
the State of Texas
My commission expires 7/9/98
12
<PAGE>
/s/
Joseph T. Kaminski, individually
and as trustee for the Kristen
Marie Kaminski and Joseph J.
Kaminski Trust.
Before me, the undersigned Notary Public, on this day personally
appeared Joseph T. Kaminski, who, after being duly sworn, stated under oath
that: I, Joseph T. Kaminski, executed the foregoing Agreement for the purposes
and consideration expressed in the Agreement. I have read the entire Agreement
and thoroughly understand its contents. I have personal knowledge of the facts
set forth in the Agreement and they are true and correct.
SUBSCRIBED AND SWORN TO BEFORE ME on the 7th day of March, 1997.
/s/ MARY E. RUIZ
Notary Public in and for
the State of Texas
My commission expires 8/13/98
13
<PAGE>
/s/
Randall F. Dryer, as a duly authorized
representative of Dryer, Ltd. and in his
individual capacity
Before me, the undersigned Notary Public, on this day personally
appeared Randall F. Dryer, who, after being duly sworn, stated under oath that:
I, Randall F. Dryer, executed the foregoing Agreement, individually and on
behalf of Dryer, Ltd., for the purposes and consideration expressed in the
Agreement. I have read the entire Agreement and thoroughly understand its
contents. I have personal knowledge of the facts set forth in the Agreement and
they are true and correct.
SUBSCRIBED AND SWORN TO BEFORE ME on the 5th day of March, 1997.
/s/ JANICE TEAS
Notary Public in and for
the State of Texas
My commission expires 6/20/99
14
<PAGE>
EXHIBIT A
STOCK TRANSFER AGREEMENT
This Stock Transfer Agreement dated effective as of March 6 1997, by and
between Saratoga Resources, Inc., a Delaware corporation (the "Company"), and
Joseph T. Kaminski ("Kaminski").
WITNESSETH
WHEREAS, the Company, Kaminski and certain other parties have entered
into a Settlement Agreement and Full and Final Release as of March 6, 1997 (the
"Settlement Agreement") pursuant to which Kaminski has agreed to convey and
assign to the Company his entire equity and debt interest in the Company; and
WHEREAS, the parties hereto desire to set forth their understanding and
representations in order to effect that transfer;
NOW THEREFORE, in consideration of the foregoing and of the terms and
conditions herein contained, the Company and Kaminski hereby agree as follows:
1. OWNERSHIP OF STOCK. Kaminski hereby represents and warrants that he
is the legal record and beneficial owner of 2,465,371 shares of Company common
stock, and warrants to purchase 100,000 shares of Company common stock, that
being all of the debt or equity interest owned or controlled, beneficially or of
record, by Kaminski, in the Company or any of its subsidiaries or affiliates
(hereinafter collectively referred to as the "Stock"). Kaminski represents and
warrants that he owns the Stock free and clear of all liens, claims or
encumbrances, and that he has full right, power and authority to transfer the
Stock hereunder and to make the representations, warranties and agreements
regarding the Stock contained herein.
2. TRANSFER OF STOCK. Kaminski hereby assigns, transfers and conveys to
the Company, and the Company accepts from Kaminski, all right, title and
interest in and to the Stock. Kaminski contemporaneously herewith shall
surrender all certificates or other evidences of the Stock, duly endorsed for
transfer, and execute such stock powers or other instrument of transfer as may
be deemed necessary or advisable by the Company fully and effectively to
transfer the Stock to the Company under the terms and conditions hereof. This
transfer of Stock applies to any and all Stock or other securities in the
Company which Kaminski may acquire by whatever means during the next three years
from the execution of this agreement.
3. PAYMENT. The Company accepts the transfer of the Stock as partial
payment of the obligations of Kaminski to the Company as set forth in the
Settlement Agreement.
1
<PAGE>
4. ACCESS TO DOCUMENTS. Kaminski acknowledges and agrees that he has
been furnished a copy of and has thoroughly and carefully reviewed the following
documents with respect to the Company and its actual and proposed business and
affairs (such documents being collectively referred to as the "Company
documents"):
(a) Forms 10-K of the Company for the fiscal years ended October 31,
1994 and 1995, and any other 10-Ks, filed with the Securities and Exchange
Commission "SEC') under the Securities Exchange Act of 1934, as amended
(the "Exchange Act");
(b) Forms 10-Q of the Company for the fiscal quarters ended January
31, April 30, July 31, and September 30 1996;
(c) All Forms 8-K of the Company filed by it reporting certain
significant events in any of fiscal years 1994 through 1996, and since the
last fiscal year end to the date hereof; and
(d) any other filings of the Company with the SEC in the last three
years.
5. REPRESENTATIONS AND WARRANTIES. Kaminski hereby acknowledges, represents
and warrants to, and agrees with the Company as follows:
(a) He understands the information contained in the Company documents
and has had access to the same kind of information which would be available
in a registration statement filed by the Company under the Securities Act
of 1933, as amended (the "Securities Act"), and all other information
requested by him in order to make an informed decision with respect to the
transfer of the Stock to the Company;
(b) all documents, records and books pertaining to the transfer,
assignment and conveyance of the Stock hereby have been produced and made
available to his satisfaction for inspection by him, his attorney,
accountant or other representative advising him in this transaction
(hereinafter his "advisors");
(c) he and his advisors have had a reasonable opportunity to ask
questions of and receive answers from representatives of the Company
concerning the business and prospects of the Company, the Stock and the
transfer effected hereby, and all such questions have been answered to the
full satisfaction of Kaminski;
(d) no oral or written representations have been made other than as
stated in this Agreement, and no oral or written information furnished to
Kaminski or his advisors in connection with the transfer of the Stock
hereunder were in any way inconsistent with the information stated in this
Agreement or the Company documents;
(e) he has, or together with his advisors they have, such knowledge
and
2
<PAGE>
experience in financial, tax and business matters so as to enable Kaminski
to utilize the information made available to him in connection with the
transfer of the Stock hereby, to evaluate the merits and risks of a
disposition of the Stock and to make an informed decision with respect
thereto;
(f) he is not relying on the Company with respect to the tax and other
economic considerations of the transfer of the Stock, and Kaminski has
relied on the advice of and consulted with his own advisors with respect
thereto;
(g) the representations, warranties and agreements of Kaminski
contained herein shall survive the execution and delivery of this Agreement
and the Settlement Agreement, and the transfer of the Stock;
(h) the Company is relying on these representations and warranties of
Kaminski in its decision to enter into the Settlement Agreement and to
accept transfer of the Stock from Kaminski hereby, and that the Company
would not accept the transfer of the Stock from Kaminski but for the
representations and warranties of Kaminski made herein.
6. AUTHORITY. Kaminski represents and warrants that he has full right,
power and authority to convey, assign and transfer the Stock pursuant to the
terms of this Agreement, and that any execution of this Agreement by his wife,
if any, conveys the only other potential claim of ownership or control of the
Stock by any other party. The parties executing this Agreement on behalf of the
Company have full power and authority to bind the Company to this Agreement.
7. INDEMNIFICATION. Kaminski agrees to indemnify and hold harmless the
Company and its officers, directors, employees, agents, affiliates and counsel
against any and all loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all expenses reasonably incurred in
investigating, preparing, or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based upon any false
representation or warranty or breach or failure by Kaminski to comply with any
covenant or agreement made by him herein, in the Settlement Agreement or in any
other document furnished by him to the Company.
8. NON-WAIVER. Failure on the part of a party in any one or more instance
to enforce any of its rights which arise in connection with this Agreement, or
to insist upon the strict performance of any of the terms, conditions or
covenants of this Agreement, shall not be construed as a waiver or
relinquishment for the future of any such rights, terms, conditions or
covenants. No waiver of any condition of this Agreement shall be valid unless it
is in writing, and executed by the party against whom such waiver is sought to
be enforced.
9. NOTICES. All notices, requests, deliveries, payments, demands and other
communications which are required or permitted to be given under this Agreement
shall be in writing and shall be either delivered personally or sent by
registered or certified mail, return
3
<PAGE>
receipt requested, postage prepaid, to the parties at their respective addresses
as shall have been specified by notice in writing to the other.
10. SEVERABILITY. If any provision of this Agreement shall for any reason
be held to violate applicable law, and so much of said Agreement is held
unenforceable, then the invalidity of such specific provisions herein shall not
be held to invalidate any other provision of this Agreement, which shall remain
in full force and effect.
11. ENTIRE AGREEMENT. This Agreement, together with the Settlement
Agreement and other documents contemplated hereby and thereby, collectively set
forth the entire agreement among the parties with respect to the subject matter
hereof.
12. MODIFICATION. Neither this Agreement nor any provisions hereof shall be
waived, modified, discharged or terminated except by an instrument in writing
signed by the party against whom any such waiver, modification, discharge or
termination is sought.
13. ASSIGNMENT. Neither party shall have the right to transfer or assign,
in whole or in part, its rights and obligations hereunder without the prior
written consent of the other party.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
15. HEADINGS. Headings in this Agreement are for convenience only and shall
not affect the interpretation of this Agreement.
16. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall have the force and effect of an original, and all of which
shall constituted one and the same agreement.
17. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors and assigns, but
this provision shall in no way alter the restrictions set forth herein relating
to assignment by the parties.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day and year first above written.
SARATOGA RESOURCES, INC.
By: /s/
Kevin Smith, Director
/s/
Joseph T. Kaminski
4
<PAGE>
EXHIBIT C
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
-------
SARATOGA RESOURCES, INC., |
THOMAS F. COOKE, and |
RANDALL F. DRYER, |
|
Plaintiffs, |
|
v. |
|
JOSEPH KAMINSKI, |
|
Defendant and |
Counter-Plaintiff, |
|--- CAUSE NO. H96-CA-2839 MAG NJ
v. |
| JURY
THOMAS F. COOKE and |
RANDALL F. DRYER, |
|
Counter-Defendants, |
|
and |
|
DRYER, LTD., |
|
Third-Party Defendant. |
-------
AGREED MOTION TO DISMISS WITH PREJUDICE
The parties to the above-numbered cause respectfully request that this
Court dismiss this action in its entirety with prejudice against all parties.
Each party shall be responsible for their own costs and attorney's fees.
WHEREFORE, the parties request that this Court grant their Agreed Motion to
Dismiss
<PAGE>
with Prejudice.
Respectfully submitted,
SANKEY & LUCK, L.L.P.
6500 Texas Commerce Tower
600 Travis
Houston, Texas 77002
(713) 224-1007
(713) 228-3919
/s/ THOMAS W. SANKEY
Thomas W. Sankey
State Bar No. 17635670
ATTORNEY-IN-CHARGE FOR KAMINSKI
SHORT & KETCHAND, L.L.P.
11 Greenway Plaza, Suite 1520
Houston, Texas 77046
(713) 960-1996
(713) 960-1517
/s/ ROBERT L. KETCHAND
Robert L. Ketchand
State Bar No. 11362500
ATTORNEY-IN-CHARGE FOR
SARATOGA RESOURCES, INC.
MINTON, BURTON, FOSTER & COLLINS
A Professional Corporation
1100 Guadalupe
Austin, Texas 78701
(512)476-4873
(512)479-9315(FAX)
/s/ MICHAEL BURNETT
Michael Burnett
State Bar No. 00790399
ATTORNEY-IN-CHARGE FOR COOKE,
DRYER & DRYER, LTD.
<PAGE>
EXHIBIT D
CAUSE NO. 96-24469
-------
JOSEPH T. KAMINSKI |
|
v. | IN THE DISTRICT COURT
|---
THOMAS F. COOKE, | OF HARRIS COURTY, TEXAS
RANDALL F. DRYER, |
SARATOGA RESOURCES, INC., A |
DELAWARE CORPORATION, AND | 113TH JUDICIAL DISTRICT
DRYER, LTD. |
|
-------
AGREED MOTION TO DISMISS WITH PREJUDICE
The parties to the above-numbered cause respectfully request that this
Court dismiss this action in its entirety with prejudice against all parties.
Each party shall be responsible for their own costs and attorney's fees.
WHEREFORE, the parties request that this Court grant their Agreed Motion to
Dismiss with Prejudice.
Respectfully submitted,
SANKEY & LUCK, L.L.P.
6500 Texas Commerce Tower
600 Travis
Houston, Texas 77002
(713) 224-1007
(713) 228-3919
/s/ THOMAS W. SANKEY
Thomas W. Sankey
State Bar No. 17635670
ATTORNEY-IN-CHARGE FOR KAMINSKI
SHORT & KETCHAND, L.L.P.
11 Greenway Plaza, Suite 1520
Houston, Texas 77046
(713) 960-1996
(713) 960-1517
/s/ ROBERT L. KETCHAND
Robert L. Ketchand
State Bar No. 11362500
ATTORNEY-IN-CHARGE FOR
SARATOGA RESOURCES, INC.
MINTON, BURTON, FOSTER & COLLINS
A Professional Corporation
1100 Guadalupe
Austin, Texas 78701
(512)476-4873
(512)479-8315(FAX)
/s/ MICHAEL BURNETT
Michael Burnett
State Bar No. 00790399
ATTORNEY-IN-CHARGE FOR COOKE,
DRYER & DRYER, LTD.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF SARATOGA RESOURSES, INC.
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 AS CONTAINED IN THE 10-QSB AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 1,167
<SECURITIES> 0
<RECEIVABLES> 71
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,238
<PP&E> 22
<DEPRECIATION> (2)
<TOTAL-ASSETS> 1,258
<CURRENT-LIABILITIES> 128
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 1,126
<TOTAL-LIABILITY-AND-EQUITY> 1,258
<SALES> 0
<TOTAL-REVENUES> 75
<CGS> 0
<TOTAL-COSTS> 152
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (77)
<INCOME-TAX> 0
<INCOME-CONTINUING> (77)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
