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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 10, 1997
ROSELAND OIL AND GAS INC.
(Exact name of registrant as specified in its charter)
Oklahoma
(State or other jurisdiction of incorporation)
0-9355 87-0352095
(Commission File Number) (IRS Employer Identification No.)
1724 East 15th Street, Tulsa, Oklahoma 74104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 742-0028
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Item 1. Change in Control of Registrant.
Item 2. Acquisition or Disposition of Assets.
A change in control of Roseland Oil and Gas Inc., an Oklahoma corporation
(the "Registrant"), occurred on December 10, 1997. On that date, the
Registrant entered into a Stock Purchase Agreement (the "Agreement") with
Calvin Wallen III or his designees, William Bruggeman and Ruth Bruggeman, and
Diversified Dynamics, Inc. (together, the "Buyers"). Pursuant to the
Agreement, the Registrant issued (i) 7,000,000 shares of its common stock to
Calvin Wallen III; (ii) 2,500,000 shares of common stock to Earthstock
Resources, Inc., all of the shares of which are owned by Mr. Wallen; (iii)
2,500,000 shares of common stock to William Bruggeman and Ruth Bruggeman as
joint tenants with rights of survivorship; and (iv) 500,000 shares of common
stock to Diversified Dynamics, which is controlled by the Bruggemans. Based
on information set forth in the Registrant's Annual Report on Form 10-K for
the fiscal year ended June 30, 1997 (the "Form 10-K"), the 12,500,000 shares
(the "Shares") issued represent approximately 71.3% of the issued and
outstanding shares of common stock of the Registrant, with the shares issued
to Mr. Wallen and his affiliates representing approximately 54.2% of the
issued and outstanding shares of common stock of the Registrant. In addition,
Mr. Bruggeman and his affiliates previously owned an additional 749,694
shares of the Registrant's common stock, or 4.3% of the issued and
outstanding shares of common stock of the Registrant. In exchange for the
issuance of the Shares, the Buyers conveyed to the Registrant the interests
in the oil and gas properties owned by the Buyers and listed on Annex D to
the Agreement, as well as the Buyers' entire interest in any contracts,
leases, records and insurance policies affecting such interests (the
"Consideration").
The amount of the Consideration was the result of an agreed negotiation
between the Buyers and the Registrant. Prior to the negotiation and
execution of the Agreement, there were no material relationships between the
Registrant or any affiliates, officers or directors of the Registrant, on the
one hand, and any of the Buyers, or any affiliates, officers or directors of
any of the Buyers, on the other hand.
In connection with the Agreement, as of December 10, 1997, Joseph T. Howard,
Robert Anderson and John W. Peterson resigned as directors and/or executive
officers of the Registrant. On such date, Calvin Wallen III, Rob Lindermanis
and Stacey Hacker were appointed to serve as additional directors of the
Registrant (together with William G. Vandever and Gene C. Howard, each of
whom continue to serve as directors), and Calvin Wallen III was elected to
serve as the Registrant's President, Vice President and Treasurer, and Rob
Lindermanis was elected to serve as Secretary of the Registrant.
The Registrant's Board of Directors is divided into three classes, with each
class as nearly equal in number to all other classes as the then total number
of directors constituting the entire board permits. The term of each class
is three years, and expires on a staggered three-year basis. The first class
("Class I") consists of two directors who were nominated
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for election to a three year term at the 1995 Annual Meeting of Shareholders
expiring in 1998. The second class ("Class II") consists of one director and
the term of office of each director in such class expires in 1997. Gene C.
Howard is a Class I director and William G. Vandever is a Class II director.
Calvin Wallen III, Rob Lindermanis and Stacey Hacker were appointed to serve
as additional directors of the Registrant, with their class membership to be
detemined.
As of the date of the Form 10-K, 5,030,847 shares of common stock of the
Registrant were issued and outstanding. The Registrant also has outstanding
Class A Warrants to purchase 5,333,204 shares of Common Stock at an exercise
price of $5.00 per share and expiring April 1998, Class B Warrants to
purchase 470,000 shares of Common Stock at an exercise price of $.50 per
share and expiring December 1998, and conversion rights granted to holders of
$116,000 of promissory notes issued by the Registrant to certain shareholders
pursuant to which the holders of such notes may require the Registrant to
convert their indebtedness into shares of common stock of the Registrant at a
conversion price equal to $.50 per share until April 2002.
The names of the current directors and executive officers of the Registrant
and holders of more than 5% of the outstanding shares of common stock and the
number of shares held and the percentage of the total issued and
outstanding Common Stock (the only voting security) of the Registrant owned
by each of them are as follows.
<TABLE>
- --------------------------------------------------------------------------------------------
Percentage of
Number of outstanding
Name Title shares shares (1)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Calvin Wallen III President, Vice 9,500,000 (2) 54.2%
President, Treasurer and
Director
- --------------------------------------------------------------------------------------------
William Vandever Director 1,251,533 (3) 7.1%
- --------------------------------------------------------------------------------------------
Gene Howard Director 322,245 (4) 1.8%
- --------------------------------------------------------------------------------------------
Rob Lindermanis Director and Secretary 0 *
- --------------------------------------------------------------------------------------------
Stacey Hacker Director 0 *
- --------------------------------------------------------------------------------------------
William Bruggeman 3,749,694 (5) 21.4%
- --------------------------------------------------------------------------------------------
Ruth Bruggeman 3,749,694 (5) 21.4%
- --------------------------------------------------------------------------------------------
Diversified Dynamics, Inc. 500,000 2.9%
- --------------------------------------------------------------------------------------------
Earthstock Resources, Inc. 2,500,000 14.3%
- --------------------------------------------------------------------------------------------
All officers and directors 11,823,472 67.4%
as a group (5 persons)
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Based on 17,530,847 shares outstanding at December 1, 1997.
(2) Includes 2,500,000 shares of common stock owned by Earthstock Resources,
Inc., which is 100% owned by Mr. Wallen.
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(3) Includes 1,041,533 shares of common stock owned by Mr. Vandever's wife,
of which Mr. Vandever disclaims beneficial ownership.
(4) Includes 322,245 shares of common stock owned by Mr. Howard's wife, of
which Mr. Howard disclaims beneficial ownership.
(5) Includes 2,500,000 shares of common stock owned by William Bruggeman and
Ruth Bruggeman as joint tenants with rights of survivorship and 500,000
shares owned by Diversified Dynamics, Inc., which is controlled by the
Bruggemans, and 749,694 owned by the Bruggemans and their relatives.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a)(b) The required financial statements and pro forma financial
information, if any, are unavailable as of the date hereof and will be filed
by the Registrant pursuant to the requirements of the Securities Exchange Act
and the rules and regulations promulgated thereunder within 60 days of the
date of the event reported herein.
(c) Exhibits
2. Plan of acquisition, reorganization, arrangement, liquidation or
succession.
2.1. Stock Purchase Agreement, dated December 1, 1997, between the
Registrant and Calvin Wallen III or his designees, William Bruggeman and Ruth
Bruggeman, and Diversified Dynamics, Inc..
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 thereunto duly authorized.
Dated: December 22, 1997
ROSELAND OIL AND GAS INC.
By: /s/ Calvin Wallen III
-------------------------
Calvin Wallen III,
President
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of the ____ day of December, 1997 by and among Calvin Wallen or his
designees, Diversified Dynamics Inc., William Bruggeman, and Ruth Bruggeman
(together the "Buyer"), and Roseland Oil and Gas, Inc., an Oklahoma
corporation (the "Company").
WHEREAS, the Company desires to sell and convey to the Buyer, and the
Buyer desires to purchase from the Company, an aggregate of 12,500,000 newly
issued restricted shares of capital stock of the Company (the "Shares") in
exchange for the interest in the properties and other consideration and on
the terms and conditions set forth herein; and
WHEREAS, in connection with the purchase by the Buyer from the Company
of the Shares, the Company and William G. Vandever ("Vandever") will (i)
enter into a consulting agreement in the form attached hereto as Annex A,
(ii) enter into a termination agreement with respect to the Employment
Agreement, dated November 30, 1991, between the Company and Vandever, as
amended, in the form attached hereto as Annex B, and (iii) enter into an
agreement in the form attached hereto as Annex C pursuant to which the
Company will transfer certain property in which the Company owns an interest
to Vandever in exchange for the forgiveness by Vandever of certain deferred
compensation owed to Vandever by the Company.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, warranties and agreements contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase of Stock. The Buyer hereby purchases from the Company,
and the Company hereby sells to the Buyer, an aggregate of 12,500,000 shares
of common stock of the Company to be issued in the amounts and names set
forth on Exhibit A hereto (the "Shares"), free and clear of all liens,
security interests, pledges, charges, claims, options, encumbrances of every
kind, escrows, rights of first refusal, mortgages, indentures, security
agreements or other agreements, arrangements, contracts, commitments,
understandings, adverse claims, and obligations, whether written or oral and
whether or not relating in any way to credit or borrowing of money, for a
total consideration consisting of the interests in the properties owned by
Buyer and listed on Annex D to this Agreement, as well as the Buyer's entire
interest in any contracts, leases, records and insurance policies affecting
such interests (the "Total Consideration"). The Shares shall be restricted
securities within the meaning of Rule 144 under the Securities Act of 1933,
as amended.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to the Buyer as follows:
2.1 Authorization. The Company has full corporate power, capacity and
authority to execute this Agreement and all other agreements and documents
contemplated hereby and to issue the Shares to the Buyer. The execution and
delivery of this Agreement and such other agreements and documents by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by the Company and no other corporate or
shareholder action on the part of the Company is necessary to authorize the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of
the Company, enforceable in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, (ii) the
remedy of specific performance and injunctive relief are subject to certain
equitable defenses and the discretion of the court before which any
proceedings may be brought and (iii) rights to indemnification hereunder may
be limited under applicable securities laws.
2.2 Existence and Good Standing of the Company. The Company 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 own, lease and operate its properties and to carry on its
business as now being conducted. The Company does not have any subsidiaries.
The Company is duly qualified or licensed as a foreign corporation and in
good standing in each jurisdiction in which the character or location of the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure
to be so duly qualified or licensed would not have a material adverse effect
on the business, financial condition, results of operations or prospects of
the Company.
2.3 Capital Stock of the Company. The Company's authorized capital
stock consists of 50,000,000 shares of common stock ("Common Stock"), of
which 5,030,847 shares are issued and outstanding, and 10,000,000 shares of
Preferred Stock, of which no shares are issued or outstanding. No other
shares of capital stock are issued or outstanding. The shares of capital
stock of the Company are held by fewer than 1,000 beneficial owners. Upon
issuance and payment as set forth in this Agreement, all of the Shares will
be validly issued and fully paid and nonassessable, and no other stockholder
of the Company is entitled to any preemptive rights, as a result of such
issuance or otherwise. There are no outstanding conversion or exchange
rights, subscriptions, options, warrants or other arrangements or commitments
obligating the Company to issue any shares of capital stock or other
securities, except for (i) the Class A Warrants to purchase 5,333,204 shares
of Common Stock at an exercise price of $5.00 per share and expiring April
1998, (ii) the Class B Warrants to purchase 470,000 shares of Common Stock at
an exercise price
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of $.50 per share and expiring December 1998, and (iii) the conversion rights
granted to holders of $116,000 of promissory notes issued by the Company to
certain shareholders of the Company pursuant to which the holders of such
notes may require the Company to convert their indebtedness into shares of
Company common stock at a conversion price equal to $.50 per share until
April 2002. The terms of such warrants and convertible indebtedness have not
been modified or amended since April 29, 1997.
2.4 Financial Statements. The Company has previously furnished to
Buyer the audited balance sheet of the Company as of June 30, 1997 and the
related statements of operations, shareholders' equity and cash flows for the
three fiscal years then ended, together with the report thereon by Wm.
Matthews, C.P.A., S.C., independent public accountants, and the footnotes
thereto (collectively, the "Prior Years Financials"). The Prior Years
Financials present fairly the financial position and results of operations of
the Company as of the indicated dates and for the indicated periods and have
been prepared in accordance with GAAP consistently applied. The Company
shall permit Buyer full access to the work papers pertaining to the Prior
Years Financials, including those work papers in the possession of or
prepared by Wm. Matthews, C.P.A., S.C. Except to the extent (and not in
excess of the amounts) reflected in the June 30, 1997 balance sheet included
in the Prior Years Financials, the Company has no liabilities or obligations
(including, without limitation, taxes payable and deferred taxes and interest
accrued since June 30, 1997) required to be reflected in the Prior Years
Financials (or the notes thereto) in accordance with GAAP other than current
liabilities incurred in the ordinary course of business, consistent with past
practice, subsequent to June 30, 1997.
2.5 Tax Matters. The Company has filed all income tax returns required
to be filed by it and all returns of other Taxes (as defined below) required
to be filed by it and has paid or provided for all Taxes shown to be due on
such returns. No action or proceeding for the assessment or collection of
any Taxes is pending against the Company; no deficiency, assessment or other
formal claim for any Taxes has been asserted or made against the Company that
has not been fully paid or finally settled; and no issue has been formally
raised by any taxing authority in connection with an audit or examination of
any return of Taxes. No federal or state income tax returns of the Company
have been examined, and there are no outstanding agreements or waivers
extending the applicable statutory periods of limitation for such Taxes for
any period. All Taxes that the Company has been required to collect or
withhold have been duly withheld or collected and, to the extent required,
have been paid to the proper taxing authority. "Taxes" shall mean all taxes,
charges, fees, levies or other assessments including, without limitation,
income, excise, property, withholding, sales and franchise taxes, imposed by
the United States, or any state, county, local or foreign government or
subdivision or agency thereof, and including any interest, penalties or
additions attributable thereto.
2.6 Assets and Properties. SCHEDULE 2.6 contains a list of all real
properties owned by the Company (the "Real Property"). The Company has good
and marketable fee simple title to all Real Property and none of the Real
Property is subject to any Lien, except for (i) zoning or planning
restrictions, easements, permits, Liens arising by
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operation of law, and other restrictions or limitations on the use of real
property that do not materially detract from the value as presently used, or
impair the use, of such property by the Company in the operation of its
business, (ii) statutory Liens for current taxes, assessments or governmental
charges or levies on property not yet due and payable, and (iii) mechanics',
carriers', workers', repairers' and other similar liens imposed by law
arising or incurred in the ordinary course of business for obligations not
yet due and payable. The Company does not lease any real property (other
than oil and gas leases). Except for inventory and supplies disposed of or
consumed, and accounts receivable collected or written off, and cash
utilized, all in the ordinary course of business consistent with past
practice, the Company owns all of its inventory, equipment and other personal
property (both tangible and intangible) reflected on the latest balance sheet
included in the Prior Years Financials or acquired since June 30, 1997, free
and clear of any Liens, except for statutory Liens for current taxes,
assessments or governmental charges or levies on property not yet due and
payable, except as set forth on Schedule 2.6. The tangible personal property
owned or leased by the Company are in good operating condition and repair,
ordinary wear and tear excepted; and the Company has no knowledge of any
condition or defect, of the personal property that would materially affect
the fair market value, use or operation of the property, or otherwise have a
material adverse effect on the Company or its business or operations.
2.7 Environmental Laws and Regulations. (a)(i) The ownership and
operations of the "Subject Property," as defined below, and any use, storage,
treatment, disposal, or transportation of "Hazardous Substances," as defined
below, that has occurred in or on the Subject Property prior to the date of
this Agreement have been in compliance with "Environmental Requirements," as
defined below; (ii) during the ownership, occupancy and operation of the
Subject Property by the Company, or, to the best knowledge of the Company,
prior to its ownership, occupancy or operation, no release, leak, discharge,
spill, disposal or emission of Hazardous Substances has occurred in, on or
under the Subject Property in a quantity or manner that violates or requires
further investigation or remediation under Environmental Requirements; (iii)
the Subject Property is free of Hazardous Substances as of the date of this
Agreement; (iv) there is no pending or threatened litigation or
administrative investigation or proceeding concerning the Subject Property
involving Hazardous Substances or Environmental Requirements; (v) there is no
ACM (as defined below), within the Subject Property, whether friable or
non-friable, and there are no above-ground or underground storage tank
systems located at the Subject Property; and (vi) the Company has never
owned, operated, or leased any real property other than the Subject Property.
(b) Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Environmental Requirements" means all laws, statutes, rules,
regulations, ordinances, guidance documents, judgments, decrees, orders,
agreements and other restrictions and requirements (whether now or hereafter
in effect) of any governmental authority, including, without limitation,
federal, state and local authorities, relating to the
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regulation or protection of human health and safety, natural resources,
conservation, the environment, or the storage, treatment, disposal,
transportation, handling or other management of industrial or solid waste,
hazardous waste, hazardous or toxic substances or chemicals, or pollutants.
"Hazardous Substance" means (i) any "hazardous substance" as defined in
Section101(14) of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended from time to time (42 U.S.C.
SectionSection9601 et seq.)("CERCLA") or any regulations promulgated
thereunder; (ii) petroleum and petroleum by-products; (iii) asbestos or
asbestos-containing material ("ACM"); or (iv) any additional substances or
materials that have been or are currently classified or considered to be
pollutants, hazardous or toxic under Environmental Requirements.
"Subject Property" means all property subject to Leases or owned by the
Company.
2.8 Contracts. Set forth on Schedule 2.8 is a list of all material
contracts, arrangements and commitments (whether oral or written) to which
the Company is a party or by which the Company's assets or business are bound
including, without limitation, contracts, arrangements or commitments that
relate to (i) the sale, lease or other disposition by the Company of all or
any substantial part of the business or assets of the Company (otherwise than
in the ordinary course of business), (ii) the purchase or lease by the
Company of a substantial amount of assets (otherwise than in the ordinary
course of business), (iii) the supply by the Company of any customer's
requirements for any item or the purchase by the Company of its requirements
for any item or of a vendor's output of any item, (iv) lending or advancing
funds by the Company, (v) borrowing of funds or guarantying the borrowing of
funds by any other person, whether under an indenture, note, loan agreement
or otherwise, (vi) any transaction or matter with any Affiliate of the
Company, (vii) noncompetition or employment, (viii) licenses and grants to or
from the Company relating to any intangible property, (ix) the acquisition by
the Company of any operating business or the capital stock of any person
since June 30, 1997, or (x) any other matter that is material to the
business, assets or operations of the Company ("Contracts"). Each Contract
is in full force and effect on the date hereof, the Company is not in default
under any Contract, the Company has not given or received notice of any
default under any Contract, and, to the knowledge of the Company, no other
party to any Contract is in default thereunder, except as set forth on
Schedule 2.8.
2.9 No Violations. The execution, delivery and performance of this
Agreement and the other agreements and documents contemplated hereby by the
Company and Vandever and the consummation of the transactions contemplated
hereby will not (i) violate any provision of the Articles of Incorporation
or Bylaws of the Company, (ii) violate any statute, rule, regulation, order
or decree of any public body or authority by which the Company or its
properties or assets are bound, or (iii) result in a violation or breach of,
or constitute a default under, or result in the creation of any encumbrance
upon, or create any rights of termination, cancellation or acceleration in
any person with respect to any Contract or any material license, franchise or
permit of the Company or any other
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agreement, contract, indenture, mortgage or instrument to which the Company
is a party or by which any of its properties or assets is bound.
2.10 Consents. No consent, approval or other authorization of any
governmental authority or under any Contract or other material agreement or
commitment to which the Company is a party or by which its assets are bound
is required as a result of or in connection with the execution or delivery of
this Agreement and the other agreements and documents to be executed by the
Company or the consummation by the Company of the transactions contemplated
hereby.
2.11 Litigation and Related Matters. Set forth on Schedule 2.11 is a
list of all actions, suits, proceedings, investigations or grievances pending
against the Company or, to the best knowledge of the Company, threatened
against the Company, the Company's business or any property or rights of the
Company, at law or in equity, before or by any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign ("Agencies"). Except as set forth in
Schedule 2.11, none of the actions, suits, proceedings or investigations
listed on Schedule 2.11 either (i) would, if adversely determined, result in
any material adverse change in the business, operations or assets or the
condition, financial or otherwise, or results of operations or prospects of
the Company or (ii) affects or would, if adversely determined, affect the
right or ability of the Company to carry on its business substantially as now
conducted. The Company is not subject to any continuing court or Agency
order, writ, injunction or decree applicable specifically to the business,
operations or assets of the Company or employees of the Company, nor in
default with respect to any order, writ, injunction or decree of any court or
Agency with respect to its assets, business, operations or employees. There
are no worker's compensation claims outstanding against the Company as of the
date hereof.
2.12 Product Liability and Warranty Proceedings. No product liability
or warranty actions, suits or proceedings arising from the manufacture or
sale of goods by the Company have been asserted against the Company since
June 30, 1997.
2.13 Compliance with Laws. The Company (a) is in compliance with all
applicable laws, regulations (including federal, state and local procurement
regulations), orders, judgments and decrees except where the failure to so
comply would not have a material adverse effect on the business, prospects,
financial condition or results of operation or prospects of the Company and
(b) possesses all necessary licenses, franchises, permits and governmental
authorizations to conduct its business in the manner in which and in the
jurisdictions and places where such business is now conducted. Set forth on
Schedule 2.13 is a list of all material licenses, franchises, permits and
governmental authorizations and all applications pending before any agency or
authority for the issuance of any licenses, franchises, permits or
governmental authorizations or the renewal thereof.
2.14 Patents, Trademarks, Etc. Set forth on Schedule 2.14 is a list of
the intellectual property rights owned by the Company or used in the
operation of the business of the
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Company (collectively, the "Intellectual Property"), which Schedule indicates
(i) the term and exclusivity of its rights with respect to the Intellectual
Property and (ii) whether each item of Intellectual Property is owned or
licensed by the Company, and if licensed, the licensor and the license fees
therefor. The Company has the right to use and license the Intellectual
Property, and the consummation of the transactions set forth in this
Agreement will not result in the loss or material impairment of any rights of
the Company in the Intellectual Property. There are no pending proceedings
or adverse claims made or, to the best knowledge of the Company, threatened
against the Company with respect to the Intellectual Property; there has been
no litigation commenced or threatened in writing within the past five (5)
years with respect to the Intellectual Property or the rights of the Company
therein; and the Company has no knowledge that (i) the Intellectual Property
or the use thereof by the Company conflicts with any patents, patent
applications, patent licenses, trade names, trademarks, service marks,
trademark or service mark registrations or applications or copyright
registrations or applications of others ("Third Party Intellectual
Property"), or (ii) such Third Party Intellectual Property or its use by
others or any other conduct of a third party conflicts with or infringes upon
the Intellectual Property or its use by the Company.
2.15 Employee Benefit Plans. The Company has no employee benefit plan
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), maintained or contributed to by the
Company or any of its Group Members (as defined below in the Code)
(collectively, the "Plans"). Neither the execution and delivery of this
Agreement by the Company or the consummation of the transactions contemplated
hereby will (i) entitle any current or former employee of the Company to
severance pay, unemployment compensation or any similar payment, (ii)
accelerate the time of payment or vesting, or increase the amount of, any
compensation due to any such employee or former employee, or (iii) directly
or indirectly result in any payment made or to be made to or on behalf of any
person to constitute a "parachute payment" (within the meaning of Section
280G of the Code).
2.16 Employee Relations. The Company is not a party to, nor bound by,
the terms of any collective bargaining agreement, and the Company has not
experienced any material labor difficulties during the last five years.
There are no labor disputes existing, or to the best knowledge of the
Company, threatened involving, by way of example, strikes, work stoppages,
slowdowns, picketing, or any other interference with work or production, or
any other concerted action by employees. No charges or proceedings before
the National Labor Relations Board, or similar agency, exist, or to the best
knowledge of the Company, are threatened. The Company's relationship with
its employees is good and the Company has no knowledge of any facts that
would indicate that the Company's employees will not continue in its employ
following the Closing on a basis similar to that existing on the date of this
Agreement other than as set forth in this Agreement. The Company is not a
party to any employment contract with any individual or employee, either
express or implied other than the Employment Agreement with Vandever. No
legal proceedings, charges, complaints, or similar actions exist under any
federal, state or local laws affecting the employment relationship including,
but not limited to: (i) anti-discrimination statutes such
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as Title VII of the Civil Rights Act of 1964, as amended (or similar state or
local laws prohibiting discrimination because of race, sex, religion,
national origin, age and the like); (ii) the Fair Labor Standards Act or
other federal, state or local laws regulating hours of work, wages, overtime
and other working conditions; (iii) requirements imposed by federal, state or
local governmental contracts such as those imposed by Executive Order 11246;
(iv) state laws with respect to tortious employment conduct, such as slander,
false light, invasion of privacy, negligent hiring or retention, intentional
infliction of emotional distress, assault and battery, or loss of consortium;
or (v) the Occupational Safety and Health Act, as amended, as well as any
similar state laws, or other regulations respecting safety in the workplace;
and to the best knowledge of the Company, no proceedings, charges, or
complaints are threatened under any such laws or regulations and no facts or
circumstances exist that would give rise to any such proceedings, charges,
complaints, or claims, whether valid or not. The Company is not subject to
any settlement or consent decree with any present or former employee,
employee representative or any government or Agency relating to claims of
discrimination or other claims in respect to employment practices and
policies; and no government or Agency has issued a judgment, order, decree or
finding with respect to the labor and employment practices (including
practices relating to discrimination) of the Company.
2.17 Employee Liabilities. Since June 30, 1997 the Company has not
incurred any liability or obligation under the Worker Adjustment and
Retraining Notification Act or similar state laws. The Company has not laid
off more than ten percent (10%) of its employees at any single site of
employment in any ninety (90) day period during the twelve (12) month period
ending June 30, 1997. It shall be the obligation of the Company to provide
any notice required by said Act by reason of the provisions, execution or
operation of this Agreement. The Company is in full compliance with the
provisions of the Americans with Disabilities Act (the "ADA"). With respect
to its obligations under Title III of the ADA, the Company has conducted a
site survey of each of its facilities and buildings subject to the provisions
of the ADA and have made such modifications to such facilities as are
required by the ADA. In determining what modifications were not "readily
achievable" within the meaning of the ADA, the Company has not identified any
those modifications required by such standards as the Uniform Federal
Accessibility Standards with respect to new buildings and facilities and that
it did not consider readily achievable for any reason with respect to
existing buildings.
2.18 Employees. Schedule 2.18 sets forth (i) the name and current
annual salary (or rate of pay) and other compensation (including, without
limitation, normal bonus, profit-sharing and other compensation) now payable
by the Company to each employee, (ii) any increase to become effective after
the date of this Agreement in the total compensation or rate of total
compensation payable by the Company to each such person, (iii) any increase
to become payable after the date of this Agreement by the Company to
employees other than those specified in clause (i) of this Section 2.16(a),
(iv) all presently outstanding loans and advances (other than routine travel
advances to be repaid or formally accounted for within sixty (60) days) made
by the Company to, or made to the Company by, any director, officer or
employee, (v) all other transactions between the
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Company and any director, officer or employee of the Company since June 30,
1997, and (vi) all accrued but unpaid vacation pay owing to any officer or
employee that is not disclosed on the Prior Years Financials.
2.19 Insurance. Schedule 2.19 contains a list of the policies and
contracts (including insurer, named insured, type of coverage, limits of
insurance, required deductibles or co-payments, annual premiums and
expiration date) for fire, casualty, liability and other forms of insurance
maintained by, or for the benefit of, the Company. All such policies are in
full force and effect and are adequate for the business in which the Company
engages. The Company has not received any notice of cancellation or
non-renewal or of significant premium increases with respect to any such
policy. No pending claims made by or on behalf of the Company under such
policies have been denied or are being defended against third parties under a
reservation of rights by an insurer of the Company. All premiums due prior
to the date hereof for periods prior to the date hereof with respect to such
policies have been timely paid, and all premiums due before the Closing Date
for periods between the date hereof and the Closing Date will be timely paid.
2.20 Accounts Receivable. The accounts receivable set forth in the
Prior Years Financials and those accounts receivable accruing through the
Closing Date represent valid and bona fide sales to third parties incurred in
the ordinary course of business, collectible in accordance with their terms,
subject to no defenses, set-offs or counterclaims, except to the extent of
any reserves for doubtful accounts reflected in the June 30, 1997 balance
sheet included in the Prior Years Financials.
2.21 Interests in Customers, Suppliers, Etc. Except as set forth on
Schedule 2.21, no shareholder, officer, director or Affiliate of the Company
possesses, directly or indirectly, any financial interest in, or is a
director, officer, employee or Affiliate of, any corporation, firm,
association or business organization that is a client, supplier, customer,
lessor, lessee or competitor of the Company. Ownership of securities of a
corporation whose securities are registered under the Securities Exchange Act
of 1934, as amended, not in excess of five percent (5%) of any class of such
securities shall not be deemed to be a financial interest for purposes of
this Section 2.21.
2.22 Business Relations. Schedule 2.22 contains an accurate list of all
significant customers of the Company (i.e., those customers representing 5%
or more of the Company's revenues for the 12 months ended June 30, 1997 or
who have paid to the Company $25,000 or more over any two consecutive fiscal
quarters in the three years ended June 30, 1997). Except as set forth in
Schedule 2.22, to the best knowledge of the Company, no customer or supplier
of the Company will cease to do business with the Company after the
consummation of the transactions contemplated hereby, which cessation would
have a material adverse effect on the business, operations or financial
condition of the Company. Since June 30, 1997, the Company has not
experienced any difficulties in obtaining any inventory items necessary to
the operation of its business, and, to the best knowledge of the Company, no
such shortage of supply of inventory items is threatened or pending. The
Company is not required to provide any bonding or other
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financial security arrangements in any material amount in connection with any
transactions with any of its customers or suppliers.
2.23 Officers and Directors. Set forth on Schedule 2.23 is a list of
the current officers and directors of the Company.
2.24 Bank Accounts and Powers of Attorney. Schedule 2.24 sets forth
each bank, savings institution and other financial institution with which the
Company has an account or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto. Each person holding a
power of attorney or similar grant of authority on behalf of the Company is
identified on Schedule 2.24. Except as disclosed on such Schedule, the
Company has not given any revocable or irrevocable powers of attorney to any
person, firm, corporation or organization relating to its business for any
purpose whatsoever.
2.25 Accuracy of Information Furnished. Any information furnished to
Buyer by the Company prior to, at or after the date of this Agreement, in the
Schedules hereto, or otherwise is, or when furnished will be, true and
correct in all material respects. Such information states, or when furnished
will state, all material facts required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which the
statements are made, not misleading.
2.26 Availability of Documents. The Company has made available for
inspection by Buyer and its representatives true, correct, and complete
copies of the articles of incorporation and bylaws of the Company, all
written agreements, arrangements, commitments, and documents referred to in
the Schedules attached hereto, and the corporate minute books of the Company.
Such corporate minute books contain the minutes of all of the meetings of
shareholders, board of directors, and any committees of the Company that have
been held preceding the date hereof and all written consents to action
executed in lieu thereof.
2.27 Brokerage, Financial Advisor or Finder Fees. No agent, advisor,
broker, person or firm acting on behalf of the Company is, or will be,
entitled to any commission or broker's, advisor's or finder's fees from any
of the parties hereto, or from any of its Affiliates in connection with any
of the transactions contemplated hereby.
2.28 Absence of Certain Changes or Events. Since June 30, 1997, there
has not been (a) any damage, destruction or casualty loss to the physical
properties of the Company (whether or not covered by insurance), materially
and adversely affecting the business, operations, prospects or financial
condition of the Company, (b) any material adverse change in the business,
operations, financial condition or results of operations or prospects of the
Company, (c) any entry into any transaction, commitment or agreement
(including, without limitation, any borrowing) material to the Company,
except transactions, commitments or agreements set forth herein or in the
ordinary course of business consistent with past practice, (d) any
declaration, setting aside or payment of any
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dividend or other distribution in cash, stock or property with respect to the
Company's capital stock or other securities, any repurchase, redemption or
other acquisition by the Company of any capital stock or other securities, or
any agreement, arrangement or commitment by the Company to do so, (e) any
increase that is material in the compensation payable or to become payable by
the Company to its directors, officers, employee or agents or any increase in
the rate or terms of any bonus, pension or other employee benefit plan,
payment or arrangement made to, for or with any such directors, officers,
employees or agents, (f) any sale, transfer or other disposition of, or the
creation of any Lien upon, any part of the Company's assets, tangible or
intangible, except for sales of inventory and use of supplies and collections
of accounts receivables in the ordinary course of business consistent with
past practice, or any cancellation or forgiveness of any debts or claims by
the Company, (g) any change in the relations of the Company with or loss of
its customers or suppliers, of any loss of business or increase in the cost
of inventory items or change in the terms offered to customers, which would
materially and adversely affect the business, operations or financial
condition of the Company, or (i) any capital expenditure (including any
capital leases) or commitment therefor by the Company in excess of $50,000.
2.29 Inventories. The inventories reflected in the Prior Years
Financials and inventories acquired since June 30, 1997, consist of items of
a quality and quantity that are useable or saleable in the ordinary course of
business of the Company, and inventories of below standard quality or not
useable in the business of the Company have been written down in value in
accordance with good business practices to estimated net realizable market
values or adequate reserves have been provided therefor in the Prior Years
Financials. Since June 30, 1997, all of the inventories have been maintained
at adequate levels for the business of the Company in its normal course
consistent with past practice and taking into account normal seasonality, no
change has occurred in such inventories that affects or will affect their
useability or saleability, no writedown of the value of such inventories has
occurred or is required under the Company's normal valuation policy or GAAP,
and no additional amounts have been reserved with respect to such inventories.
2.30 No Misstatements or Omissions. The Company has delivered to Buyer
copies of the Company's Annual Reports on Form 10-KSB for the fiscal years
ended June 30, 1996 and 1997, the Quarterly Reports on Form 10-QSB for the
fiscal quarters ended September 30, 1996, December 31, 1996 and March 31,
1997, and the Current Report on Form 8-K dated April 29, 1997 (the
"Information"). The Information and the representations and warranties of the
Company in this Agreement and related agreements do not contain any untrue
statement of a material fact or omit to state any material facts required to
be stated therein or herein or necessary to make the statements therein or
herein not misleading. Subsequent to October ___, 1997, the Company has not
filed or been required to file any other report with the Securities and
Exchange Commission.
2.31 Oklahoma Control Share Statute. The Oklahoma Control Share Statute
does not apply to this Agreement or the transactions contemplated hereby, and
upon the issuance by the Company of the Shares and the delivery of the
certificates representing the
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Shares in accordance with the terms of this Agreement, the Buyer will be
vested with good and marketable title to the Shares, free and clear of any
adverse claims.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer severally and not jointly represents and warrants to Company as
follows:
3.1 Organization and Authorization. Buyer has all requisite power,
capacity and authority to execute and deliver this Agreement and all other
agreements and documents contemplated hereby. The execution and delivery of
this Agreement and such other agreements and documents by Buyer and the
consummation by Buyer of the transactions contemplated hereby have been duly
authorized by Buyer and no other action on the part of Buyer is necessary to
authorize the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable in accordance with its terms except that (i)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, (ii) the
remedy of specific performance and injunctive relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceedings may be brought, and (iii) rights to indemnification hereunder may
be limited under applicable securities laws.
3.2 No Violations. The execution and delivery of this Agreement and
the other agreements and documents contemplated hereby by Buyer and the
consummation of the transactions contemplated hereby will not (a) violate any
statute, rule, regulation, order or decree of any public body or authority by
which Buyer or his properties or assets are bound, or (c) result in a
violation or breach of, or constitute a default under or result in the
creation of any encumbrance upon, or create any rights of termination,
cancellation or acceleration in any person with respect to any agreement,
contract, indenture, mortgage or instrument to which Buyer is a party or any
of his properties or assets is bound.
3.3 Consents. No consent, approval or other authorization of any
governmental authority or third party is required as a result of or in
connection with the execution and delivery by Buyer of this Agreement and the
other agreements and documents to be executed by Buyer or the consummation by
Buyer of the transactions contemplated hereby.
3.4 Title. The Buyer has good title to the interests in the properties
comprising part of the Total Consideration (the "Interests") and such
Interests are free and clear of all mortgages, pledges, liens, encumbrances
or security interests of any nature whatsoever and all material environmental
requirements have been met.
3.5 Compliance with Laws. To the Buyer's best knowledge and belief,
the current use of the Interests complies with all material federal, state
and local laws.
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3.6 Taxes. All taxes that could be the basis for a lien to be imposed
against the Interests have been paid in full through December 31, 1996 and
none will be due and owing as of the Closing Date. The Buyer has duly filed
all tax reports and returns related to the Interests and required to be filed
on or prior to the Closing Date with all federal, state and local taxing
authorities (including without limitation, those due in respect of its
properties, income, franchises, licenses, sales and payrolls) and has paid
all taxes shown as due on such returns in respect of the periods covered
thereby. The Buyer is not delinquent in the payment of any taxes with
respect to the Interests which have become due and payable on or prior to the
date of this Agreement, and no deficiencies have been assessed or asserted
with respect to taxes related to the Interests for periods ending prior to
the date of this Agreement which have not been paid or reserved.
3.7 Financial and Labor/Material Obligations. Any financial
obligations under any contracts or leases affecting the Interests are current
and there is no pending or, to the knowledge of the Buyer, threatened
litigation relating to the Interests. All bills for services, labor and
material relating to the Interests shall have been paid prior to the Closing
Date and at the Closing there will be no liens or lienable claims arising
from the labor performed or materials supplied, or both, affecting the
Interests except those created by or under the directions of the Company, if
any.
3.8 Assignment. The Buyer holds, and hereby assigns, delivers and
conveys to the Company by duly and validly executed Assignment of Oil and Gas
Leases in the form attached hereto as Annex E or any other instruments of
conveyance required to convey good and marketable fee simple title to the
Interests to the Company.
3.9 Brokerage, Financial Advisor or Finder Fees. No agent, advisor,
broker, person or firm acting on behalf of Buyer is, or will be, entitled to
any commission or broker's, advisor's or finder's fees from any of the
parties hereto, or from any of their respective Affiliates, in connection
with any of the transactions contemplated hereby.
3.10 Investment Representations. The Buyer is acquiring the Shares for
the Buyer's own account, for investment and not with a view to the
distribution thereof, nor with any present intention of distributing the same
other than in compliance with federal and state securities laws. The Buyer
understands that the Shares have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), by reason of their issuance in a
transaction intended to be exempt from the registration requirements of the
Securities Act and applicable state securities laws based, in part, upon the
representations, warranties and agreements contained herein. The Buyer
understands that neither the Securities and Exchange Commission nor any state
securities commission has approved any of the Shares offered or passed upon
or endorsed the merits of the offering or confirmed the accuracy or
determined the adequacy of any materials or information presented or made
available to the Buyer in connection with this transaction, none of which has
been reviewed by any federal, state or other regulatory authority. The Buyer
understands that the Buyer must bear the economic risk of the investment
indefinitely because none of the Shares may be sold, hypothecated or
otherwise disposed of unless
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subsequently registered under the Securities Act and applicable state
securities laws or unless an exemption from registration is available.
ARTICLE IV
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to purchase the Shares, and to cause the other
transactions contemplated hereby to occur at the Closing, shall be subject to
the satisfaction of each of the following conditions at or prior to the
Closing:
4.1 Representations and Warranties. Each representation and warranty
of the Company contained in this Agreement and in any Schedule or other
disclosure in writing from the Company shall be true and correct when made,
and shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representation and warranty
had been made on and as of the Closing Date.
4.2 Covenants of Company. All of the covenants and agreements herein
on the part of Vandever or the Company to be complied with or performed on or
before the Closing Date shall have been fully complied with and performed.
4.3 Certificate of the Company. There shall be delivered to Buyer a
certificate dated the Closing Date and signed by the President of the Company
to the effect set forth in Sections 4.1 and 4.2, which certificate shall have
the effect of a representation and warranty made by the Company on and as of
the Closing Date.
4.4 Resignations and Releases of Directors and Officers. Buyer shall
have received the resignations of and releases from each of the officers of
the Company and each of the directors of the Company except Vandever and Gene
Howard, effective as of the Closing.
ARTICLE V
CLOSING
5.1 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of the Buyer or such other
location as is agreed to by Buyer and the Company, concurrently with the
execution and delivery of this Agreement (the "Closing Date").
5.2 Delivery of the Shares. At the Closing, the Company shall issue to
Buyer the stock certificate(s) evidencing the Shares.
5.3 Payments to Company. At the Closing, Buyer shall deliver to the
Company the Total Consideration.
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ARTICLE VI
REGISTRATION RIGHTS.
6.1 Registration Rights. At any time after the Closing Date, Buyer may
make a written request to the Company requesting that the Company effect the
registration of all or a portion of the Shares (the "Registrable Securities")
by filing a registration statement under the Securities Act. After receipt
of such a request, the Company will, as soon as practicable, use its best
efforts to effect the registration of all Registrable Securities that the
Company has been so requested to register by the Buyer for offer or sale on
such appropriate registration form as will be selected by the Company and
will permit the disposition of such Registrable Securities in accordance with
the intended method of disposition thereof. If the Company at any time after
the Closing Date proposes to file on its behalf or on behalf of any of its
security holders a registration statement under the Securities Act on any
form (other than a registration statement on Form S-4 or any successor form
unless such form is being used in lieu of, or as the functional equivalent
of, registration rights) for any Common Stock, the Company will, at each such
time, give written notice setting forth the terms of the proposed offering
and such other information as the Buyer may reasonably request at least 30
days before the anticipated initial filing with the Securities and Exchange
Commission (the "Commission") of such registration statement, and offer to
include in such filing such Registrable Securities as Buyer may request. If
Buyer desires to have Registrable Securities registered under this Section,
he will advise the Company in writing within 15 days after the date of
receipt of such notice from the Company, setting forth the number of such
Registrable Securities for which registration is requested. The Company will
thereupon include in such filing the number of Registrable Securities for
which registration is so requested, and will use its best efforts to effect
registration under the Securities Act of such Registrable Securities.
Notwithstanding anything to the contrary in the prior sentence, if the
managing underwriter or underwriters, if any, of such offering deliver a
written opinion to the Company, with a copy to the Buyer, that the success of
the offering would be materially and adversely affected by the inclusion of
the Registrable Securities requested to be included, then the amount of
securities to be offered for the account of the Buyer will be reduced to the
extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing underwriter or
underwriters; provided, however, that if securities are being offered for the
account of other persons as well as the Company and the Buyer, then, with
respect to the Registrable Securities intended to be offered for the account
of the Buyer, the proportion by which the amount of Common Stock intended to
be offered for the account of the Buyer is reduced will not exceed the
proportion by which the amount of Common Stock intended to be offered by such
other persons (other than the Company) is reduced. The Company shall bear
the costs and expenses of any such registrations, other than underwriting
commissions or broker's fees.
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ARTICLE VII
INDEMNIFICATION; RECISSION
7.1 Buyer's or Company's Losses.
(a) The Company agrees to indemnify and hold harmless the Buyer and his
directors, officers, employees, representatives, agents and attorneys from,
against and in respect of any and all Buyer's Losses (as defined below)
suffered, sustained, incurred or required to be paid by any of them by reason
of (i) any representation or warranty made the Company in or pursuant to this
Agreement being untrue or incorrect in any respect; or (ii) any liability for
warranty claims arising from the sale of goods or services by the Company
through the Closing Date, except in any instance (other than any instance
relating to matters described in Sections 2.1, 2.10 or 2.31 hereof) to the
extent the Buyer's Losses result from the Buyer's own gross negligence or
willful misconduct. This Section is intended to indemnify the Buyer and his
directors, officers, employees, representatives, agents and attorneys from
the results of their negligence.
(b) "Buyer's Losses" shall mean all damages (including, without
limitation, amounts paid in settlement with the Company's consent, which
consent may not be unreasonably withheld), losses, obligations, liabilities,
liens, deficiencies, costs (including, without limitation, reasonable
attorneys' fees), penalties, fines, interest, monetary sanctions and
expenses, including, without limitation, reasonable attorneys' fees and costs
incurred to comply with injunctions and other court and agency orders, and
other costs and expenses incident to any suit, action, investigation, claim
or proceeding or to establish or enforce the Buyer's or such other persons'
right to indemnification hereunder.
(c) The Buyer agrees to indemnify and hold harmless the Company and its
directors, officers, employees, representatives, agents and attorneys from,
against and in respect of any and all Company's Losses (as defined below)
suffered, sustained, incurred or required to be paid by any of them by reason
of any representation or warranty made the Buyer in or pursuant to this
Agreement being untrue or incorrect in any respect, except in any instance to
the extent the Company's Losses result from the Company's own gross
negligence or willful misconduct. This Section is intended to indemnify the
Company and its directors, officers, employees, representatives, agents and
attorneys from the results of their negligence.
(d) "Company's Losses" shall mean all damages (including, without
limitation, amounts paid in settlement with the Buyer's consent, which
consent may not be unreasonably withheld), losses, obligations, liabilities,
liens, deficiencies, costs (including, without limitation, reasonable
attorneys' fees), penalties, fines, interest, monetary sanctions and
expenses, including, without limitation, reasonable attorneys' fees and costs
incurred to comply with injunctions and other court and agency orders, and
other costs and expenses incident to any suit, action, investigation, claim
or proceeding or to establish or enforce the Company's or such other persons'
right to indemnification hereunder.
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7.2 Notice of Loss. Except to the extent set forth in the next
sentence, no party will have any liability under the indemnity provisions of
this Agreement with respect to a particular matter unless a notice setting
forth in reasonable detail the breach or other matter which is asserted has
been given to the Indemnifying Party (as defined below) and, in addition, if
such matter arises out of a suit, action, investigation, proceeding or claim,
such notice is given promptly, but in any event within thirty (30) days after
the Indemnified Party (as defined below) is given notice of the claim or the
commencement of the suit, action, investigation or proceeding. Notwithstanding
the preceding sentence, failure of the Indemnified Party to give notice
hereunder shall not release the Indemnifying Party from its obligations under
this Article, except to the extent the Indemnifying Party is actually
prejudiced by such failure to give notice. With respect to Buyer's Losses,
the Company shall be the Indemnifying Party and Buyer and his directors,
officers, employees, representatives, agents and attorneys shall be the
Indemnified Parties. With respect to Company's Losses, the Buyer shall be the
Indemnifying Party and the Company and its directors, officers, employees,
representatives, agents and attorneys shall be the Indemnified Parties.
7.3 Right to Defend. Upon receipt of notice of any suit, action,
investigation, claim or proceeding for which indemnification might be claimed
by an Indemnified Party, the Indemnifying Party shall be entitled to defend,
contest or otherwise protect against any such suit, action, investigation,
claim or proceeding at its own cost and expense, and the Indemnified Party must
cooperate in any such defense or other action. The Indemnified Party shall
have the right, but not the obligation, to participate at its own expense in
defense thereof by counsel of its own choosing, but the Indemnifying Party
shall be entitled to control the defense unless the Indemnified Party has
relieved the Indemnifying Party from liability with respect to the particular
matter or the Indemnifying Party fails to assume defense of the matter. In the
event the Indemnifying Party shall fail to defend, contest or otherwise protect
in a timely manner against any such suit, action, investigation, claim or
proceeding, the Indemnified Party shall have the right, but not the obligation,
thereafter to defend, contest or otherwise protect against the same and make
any compromise or settlement thereof and recover the entire cost thereof from
the Indemnifying Party including, without limitation, reasonable attorneys'
fees, disbursements and all amounts paid as a result of such suit, action,
investigation, claim or proceeding or the compromise or settlement thereof;
provided, however, that the Indemnified Party must send a written notice to the
Indemnifying Party of any such proposed settlement or compromise, which
settlement or compromise the Indemnifying Party may reject, in its reasonable
judgment, within thirty (30) days of receipt of such notice. Failure to reject
such notice within such thirty (30) day period shall be deemed an acceptance of
such settlement or compromise. The Indemnified Party shall have the right to
effect a settlement or compromise over the objection of the Indemnifying Party;
provided, that if (i) the Indemnifying Party is contesting such claim in good
faith or (ii) the Indemnifying Party has assumed the defense from the
Indemnified Party, the Indemnified Party waives any right to indemnity
therefor. If the Indemnifying Party undertakes the defense of such matters,
the Indemnified Party shall not, so long as the Indemnifying Party
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does not abandon the defense thereof, be entitled to recover from the
Indemnifying Party any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof other than the
reasonable costs of investigation undertaken by the Indemnified Party with
the prior written consent of the Indemnifying Party.
7.4 Cooperation. The Company, Buyer, and each of their affiliates,
successors and assigns shall cooperate with each other in the defense of any
suit, action, investigation, proceeding or claim by a third party and, during
normal business hours, shall afford each other access to their books and
records and employees relating to such suit, action, investigation, proceeding
or claim and shall furnish each other all such further information that they
have the right and power to furnish as may reasonably be necessary to defend
such suit, action, investigation, proceeding or claim, including, without
limitation, reports, studies, correspondence and other documentation relating
to Environmental Protection Agency, Occupational Safety and Health
Administration, and Equal Employment Opportunity Commission matters.
7.5 Waiver of Contribution and Indemnification. Vandever hereby waives
and releases any rights of indemnification or contribution he may have against
the Company as a result of any payment made under this Article.
7.6 Rescission. In addition to the other remedies provided for under
this Agreement or any remedies available at law or in equity, in the event that
any of the representations or warranties made by the Company in Sections 2.10
or 2.31 of this Agreement are determined to be untrue or incorrect in any
respect pursuant to any suit, action or proceeding, Buyer shall have the right
to rescind the transactions contemplated by this Agreement and receive the
prompt return of the Total Consideration from the Company.
ARTICLE VIII
MISCELLANEOUS
8.1 Entire Agreement. This Agreement (including the exhibits and
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties
hereto with respect to the subject matter hereof, and no party shall be liable
or bound to the other in any manner by any representations or warranties not
set forth herein.
8.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests, or obligations hereunder may be assigned by any party hereto
without the prior written consent of all other parties hereto, and any
purported assignment in violation of this Section 8.2 shall be null and void.
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8.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
8.4 Headings. The headings of the articles and sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
8.5 Construction. As used in this Agreement, the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular article, section, paragraph or
other subdivision.
8.6 Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled
to the benefits thereof, and this Agreement may be modified or amended by a
written instrument executed by Buyer and the Company. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
8.7 Schedules, Etc. All exhibits and schedules annexed hereto are
expressly made a part of this Agreement as though fully set forth herein.
8.8 Notices. Any notice, request, instruction, document or other
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally, (ii)
sent by telecopy with electronic confirmation of receipt, (iii) delivered by
overnight express, or (iv) sent by registered or certified mail, postage
prepaid, as follows:
If to Buyer, to:
Calvin Wallen
P.O. Box 181688
Dallas, Texas 75218
Telecopy No. (972) 681-9687
If to the Company, to:
Roseland Oil and Gas, Inc.
1724 East 15th Street
Tulsa, Oklahoma 74104
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally, or sent by telecopy or overnight express
in the manner provided
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herein shall be deemed to have been duly given to the party to whom it is
directed upon actual receipt by such party. Any notice that is addressed and
mailed in the manner herein provided shall be conclusively presumed to have
been given to the party to whom it is addressed at the close of business,
local time of the recipient, on the fourth day after the day it is so placed
in the mail.
8.9 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED,
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES). VENUE SHALL LIE EXCLUSIVELY IN THE COURTS OF DALLAS
COUNTY, TEXAS.
8.10 Survival of Representations and Warranties. All representations and
warranties contained herein shall survive the Closing and shall continue in
full force and effect thereafter for a period of two years following the
Closing, except that (i) the representations and warranties contained in
Section 2.5 hereof shall survive until the earlier of (x) the expiration of the
applicable periods (including any extensions) of the respective statutes of
limitation applicable to the payment of the Taxes to which such representations
and warranties relate without an assertion of a deficiency in respect thereof
by the applicable taxing authority or (y) the completion of the final audit and
determinations by the applicable taxing authority and final disposition of any
deficiency resulting therefrom, (ii) the representations and warranties
contained in Section 2.15 shall survive until the expiration of the applicable
period of the statutes of limitation applicable to ERISA matters, and (iii) the
representations and warranties contained in Sections 2.1, 2.2, 2.3, 2.4 and 2.7
shall survive indefinitely.
8.11 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
8.12 Expenses. The Company, on the one hand, and Buyer, on the other
hand, shall be solely responsible for their respective costs and expenses
incurred in connection with the transactions contemplated hereby.
8.13 Third Party Beneficiaries. Except as otherwise specifically provided
in Article VI, no individual or firm, corporation, partnership or other entity
shall be a third-party beneficiary of the representations, warranties,
covenants and agreements made by any party hereto.
8.14 Number and Gender of Words. Whenever the singular number is used,
the same shall include the plural where appropriate, and words of any gender
shall include each other gender where appropriate.
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8.15 Further Assurances. From time to time after the Closing, at the
request of any other party but at the expense of the requesting party, the
Buyer or the Company, as the case may be, will execute and deliver any such
other instruments of conveyance, assignment and transfer, and take such other
action as the other party may reasonably request in order to consummate or
evidence the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
THE BUYER:
/s/ Calvin Wallen III
- ------------------------------
Calvin Wallen III
Diversified Dynamics Inc.
By: /s/ William Bruggeman
---------------------------
Name: William Bruggeman
Title: President
/s/ William Bruggeman
- ------------------------------
William Bruggeman
/s/ Ruth Bruggeman
- ------------------------------
Ruth Bruggeman
THE COMPANY:
Roseland Oil and Gas, Inc.
By: /s/ William G. Vandever
---------------------------
William G. Vandever
President
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List of Exhibits, Annexes and Schedules
Exhibit A List of Buyers and Shares
Annex A Consulting Agreement
Annex B Termination Agreement
Annex C Transfer Agreement
Annex D Description of the Interests
Annex E Assignment of Oil and Gas Leases
Schedule 2.6 Real Property
Schedule 2.8 Material Contracts
Schedule 2.11 Litigation
Schedule 2.13 Licenses and Permits
Schedule 2.14 Intellectual Property Rights
Schedule 2.18 Employees
Schedule 2.19 Insurance
Schedule 2.21 Interests in Customers, Suppliers, Etc.
Schedule 2.22 Customers
Schedule 2.23 Directors and Officers
Schedule 2.24 Bank Accounts
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Exhibit A
List of Buyers and Shares
Name of Buyer Shares
- ------------- ------
Calvin Wallen or designees 9,500,000
Diversified Dynamics Inc. 500,000
William Bruggeman and Ruth Bruggeman, as
Joint Tenants With Rights of Survivorship 2,500,000
----------
Total 12,500,000
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Annex A
Consulting Agreement
1
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Annex B
Termination Agreement
1
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Annex C
Transfer Agreement
1
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Annex D
Description of the Interests
1
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ANNEX D
RED ROCK PROSPECT
WEBSTER PARISH, LOUISIANA
TOWNSHIP 23, NORTH, RANGE 10 WEST
---------------------------------
SECTION: NE/4; S/2NW/4;
NE/4SW/4
INSOFAR AND ONLY INSOFAR as the Leased Premises covers the depth interval
from 9,900' below the surface to a depth of 12,500' below the surface,
containing 279 acres, more or less.
The interest being conveyed in this leasehold is limited to thirty percent
(30%) of one hundred percent (100%) of Working Interest of seventy-five
percent (75%) of one hundred percent (100%) Net Revenue Interest being
twenty-two and one-half percent (22.5%) Net Revenue Interest.
<PAGE>
Annex E
Assignment of Oil and Gas Leases
1
