<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ROSELAND OIL AND GAS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] NO FEE REQUIRED.
[ ] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14a-6(i)(1) AND 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
1
<PAGE>
ROSELAND OIL AND GAS, INC.
1720 Northwest Highway, Suite 320
Garland, Texas 75041
972/681-8047
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
The Annual Meeting of Shareholders of Roseland Oil and Gas, Inc. (the
"Company") will be held August 16, 1999 at 10 a.m., at the Diversified
Dynamics Training Center, 1681 94th Ln. N.E., Minneapolis, Minnesota. At the
meeting, shareholders will be asked to vote on the following proposals:
Proposal 1 - To elect four directors, each with a term of one year.
Proposal 2 - To ratify the selection of Weaver & Tidwell LLP as the
Company's independent auditors for the fiscal year ending June 30, 1999; and
Proposal 3 - To change the state of incorporation of the Company from
Oklahoma to Texas (the "Reincorporation") and to approve a related Agreement
and Plan of Merger pursuant to which the Company will be merged into a
wholly-owned Texas subsidiary, Cubic Energy, Inc. ("Cubic").
Shareholders will also transact any other business that may properly
come before the meeting.
The close of business on July 30, 1999 has been fixed by the Board of
Directors as the record date for the Annual Meeting. Only shareholders of
record on that date will be entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof, notwithstanding transfer of any stock on
the books of the Company after such record date. The stock transfer books
will not be closed.
A Proxy Statement, form of Proxy, and copy of the Annual Report on the
Company's operations during the fiscal year ended June 30, 1998, accompany
this notice.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. IF
YOU DO NOT EXPECT TO ATTEND IN PERSON, PLEASE SIGN AND DATE THE FORM OF PROXY
AND RETURN IT IN THE ENCLOSED ENVELOPE. THE FORM OF PROXY IS ENCLOSED IN THE
MAILING ENVELOPE IN WHICH THIS PROXY STATEMENT IS CONTAINED. SHAREHOLDERS WHO
ATTEND THE ANNUAL MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY
DESIRE.
AS A ROSELAND SHAREHOLDER, YOU HAVE DISSENTERS' RIGHTS OF APPRAISAL IN
CONNECTION WITH THE PROPOSED REINCORPORATION MERGER, AS SET FORTH IN APPENDIX
1 TO THIS PROXY STATEMENT. YOU MUST FOLLOW THE PROCEDURES SET FORTH IN
APPENDIX 1 TO EXERCISE YOUR APPRAISAL RIGHTS IN CONNECTION WITH THE
REINCORPORATION PROPOSAL OR YOU WILL LOSE THESE RIGHTS.
By Order of the Board of Directors
/s/ Jon S. Ross
Jon S. Ross
Secretary
Dallas, Texas
July 16, 1999
2
<PAGE>
ROSELAND OIL AND GAS, INC.
1720 Northwest Highway, Suite 320
Garland, Texas 75041
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
FRIDAY, AUGUST 16, 1999
10:00 A.M.
DIVERSIFIED DYNAMICS TRAINING CENTER
1681 94TH LN. N.E.
MINNEAPOLIS, MINNESOTA
The accompanying proxy is being solicited on behalf of the Company's
Board of Directors for use at the Company's Annual Meeting of Shareholders,
the time and place of which are noted above. At the meeting, shareholders
will be asked to vote on three proposals, which are listed in the
accompanying Notice of Annual Meeting of Shareholders and described in more
detail below. Shareholders will also consider any other proposals or business
that may properly come before the meeting, although the Board of Directors
knows of no other proposals or business to be presented.
The following proposals will be submitted to a vote of the Shareholders
at the Meeting:
Proposal 1 - To elect four directors, each with a term of one year.
Proposal 2 - To ratify the selection of Weaver & Tidwell LLP as the
Company's independent auditors for the fiscal year ending June 30, 1999.
Proposal 3 - To approve the reincorporation of the Company as a Texas
corporation and a related Agreement and Plan of Merger pursuant to which the
Company will be merged into a wholly-owned Texas subsidiary, Cubic Energy,
Inc. ("Cubic").
By submitting your proxy (by executing and returning the paper proxy
card), you authorize Calvin A. Wallen III and Jon S. Ross to represent you
and vote your shares at the meeting in accordance with your instructions.
Those persons may also vote your shares to adjourn the meeting from time to
time and will be authorized to vote your shares at any adjournments or
postponements of the meeting.
If you attend the meeting, you may vote in person, regardless of whether
you have submitted a proxy. In addition, you may revoke your proxy at any
time before its exercise at the meeting by delivering a written notice of
revocation to the Company's Secretary or by submitting a later-dated proxy.
IT IS IMPORTANT THAT PROXIES BE SUBMITTED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SUBMIT YOUR PROXY,
IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE.
This Proxy Statement and the accompanying materials are being mailed to
shareholders on or about August 1, 1999.
3
<PAGE>
QUORUM AND VOTING
RECORD DATE. The record date for the meeting is July 30, 1999. Only
shareholders of record at the close of business on that date are entitled to
notice of and to vote at the meeting.
VOTING STOCK. The only class of stock entitled to be voted at the
meeting is our Common Stock, par value $.05 per share. At the close of
business on the record date, there were [*] shares of Common Stock
outstanding and entitled to be voted at the meeting, and the holders of those
shares will be entitled to one vote per share.
QUORUM. In order for any business to be conducted, holders of more than
50% of the shares entitled to vote must be represented at the meeting, either
in person or by proxy.
ADJOURNED MEETING. If a quorum is not present at the scheduled time of
the meeting, the shareholders who are represented may adjourn the meeting
until a quorum is present. The time and place of the adjourned meeting will
be announced at the time the adjournment is taken, and no other notice will
be given. An adjournment will have no effect on the business that may be
conducted at the meeting.
TABULATION OF VOTES. The votes will be tabulated and certified by the
Company's transfer agent or authorized representative of the Company.
VOTING BY STREET NAME HOLDERS. If you are the beneficial owner of shares
held in "street name" by a broker, the broker, as the record holder of the
shares, is required to vote those shares in accordance with your
instructions. If you do not give instructions to the broker, the broker will
nevertheless be entitled to vote the shares with respect to "discretionary"
items but will not be permitted to vote the shares with respect to
"non-discretionary" items (in which case, the shares will be treated as
"broker non-votes").
ABSTENTIONS AND BROKER NON-VOTES. If you ABSTAIN from voting on one or
more proposals, your shares will nevertheless be included in the number of
shares represented for purposes of determining whether a quorum is present.
If you ABSTAIN from voting on Proposal 2 or 3 (Ratification of Auditors, and
Reincorporation merger), your shares will also be included in the number of
shares voting on the proposal, and consequently, your abstention will have
the same practical effect as a vote AGAINST the proposal. Because directors
are elected by a plurality of the votes (see "Proposal 1 - Election of
Directors"), an abstention will have no effect on the outcome of the vote on
Proposal 1 and, thus, is not offered as a voting option for that proposal.
If your shares are treated as broker non-votes on one or more proposals,
they will nevertheless be included in the number of shares represented for
purposes of determining whether a quorum is present. Otherwise, however,
those shares will be treated as shares not entitled to be voted on the
proposal. Consequently, a broker non-vote with respect to Proposal 1
(Election of Directors) will have no effect on the outcome of the vote on
that proposal. Because the approval of auditors and a reincorporation merger
requires the affirmative vote of a majority of the shares outstanding (see
Proposals 2 and 3), a broker non-vote with respect to Proposal 2 or 3 will
have the same practical effect as a vote AGAINST that proposal.
DEFAULT VOTING. If you submit a proxy but do not indicate any voting
instructions, your shares will be voted as follows:
- Proposal 1 (Election of Directors) -- FOR all nominees
- Proposal 2 (Ratification of Auditors) -- FOR
- Proposal 3 (Reincorporation Merger) -- FOR
If any other business properly comes before the shareholders for a
vote at the meeting, the shares will be voted in accordance with the
discretion of the holders of the proxy.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information about the beneficial ownership
of Common Stock (the only class of voting securities of the Company
outstanding) by the persons known to the Company to be beneficial owners of
more than 5% of the outstanding Common Stock, by each of the Company's
directors, each executive officer named in the Summary Compensation Table
included in this proxy statement and all of the Company's directors and
executive officers as a group. To the best of the Company's knowledge, each
person holds sole investment and voting power over the shares shown, except
as indicated. Unless otherwise indicated, (i) the number of shares and
percentage of ownership of Common Stock for each of the shareholders set
forth below assumes that shares of Common Stock that the shareholder may
acquire within sixty days of the record date are outstanding, and (ii) the
holder's address is 1720 Northwest Highway, Suite 320, Dallas, Texas 75041.
<TABLE>
<CAPTION>
NUMBER APPROXIMATE
NAME AND ADDRESS OF SHARES PERCENT OF CLASS
- ------------------ --------- ----------------
<S> <C> <C>
Calvin Wallen III 9,515,000 /1/ 52.5%
Earthstock Resources, Inc. 3,500,000 19.3%
William G. Vandever 1,137,433 /2/ 6.2%
1724 East 15th St.
Tulsa, OK 74104
Margaret Vandever 927,433 5.0%
1724 East 15th St.
Tulsa, OK 74104
William and Ruth Bruggeman 3,489,694 /3/ 19.2%
20 Anemone Circle
North Oaks, MN 55127
Gene Howard 322,245 /4/ 1.7%
2402 East 29th St.
Tulsa, OK 74114
Jon S. Ross 0 *
All officers and directors
as a group (4 persons): 14,464,372 /5/ 79.3%
</TABLE>
*Less than one percent.
/1/ Includes 3,500,000 shares held by Earthstock Resources, Inc., a company
controlled by Mr. Wallen
/2/ Includes 927,433 shares presently held by Mr. Vandever's wife, Margaret,
of which Mr. Vandever claims no beneficial ownership
/3/ Includes 500,000 shares held by Diversified Dynamics Corp., a company
controlled by the Bruggemans, 60,000 shares owned by Consumer Products Corp.
in which Mr. Bruggeman's wife Ruth is a joint owner and 2,500,000 shares held
jointly by William Bruggeman & Ruth Bruggeman JTWROS
/4/ All 322,245 shares are held by Mr. Howard's wife, Belva, of which Mr.
Howard claims no beneficial ownership
/5/ Includes 3,500,000 shares held by Earthstock Resources, Inc., a company
controlled by Mr. Wallen, 927,433 shares owned by Mr. Vandever's wife, as to
which Mr. Vandever disclaims beneficial ownership, and includes 322,245 shares
held by Mr. Howard's wife, as to which Mr. Howard disclaims beneficial
ownership, and 500,000 shares held by Diversified Dynamics Corp., a company
controlled by the Bruggemans, 60,000 shares owned by Consumer Products Corp. in
which Mr.
5
<PAGE>
Bruggeman's wife Ruth is a joint owner and 2,500,000 shares held
jointly by William Bruggeman & Ruth Bruggeman JTWROS
PROPOSAL 1
ELECTION OF DIRECTORS
CURRENT NOMINEES. The term of the Company's directors will expire at the
upcoming annual meeting. The Board of Directors has nominated Calvin A.
Wallen, III, Gene Howard and Jon S. Ross for reelection as directors and has
nominated William Bruggeman to be elected as a director. If they are
reelected, they will continue to serve as directors with terms to expire at
the next annual meeting of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
THESE FOUR NOMINEES.
The following is biographical information about each of the nominees.
CALVIN A. WALLEN III has served as the President and Chief Executive
Officer of the Company since December 1997, and as Chairman of the Board of
Directors since June 1998. Mr. Wallen has over 20 years of experience in the
oil and gas industry working as a drilling and petroleum engineer. He was
employed by Superior Oil and various other drilling contractors including
Resource, Tom Brown and Rowan International. He assisted in the design and
construction of several land rigs with advanced drilling systems and has
domestic and international experience in drilling engineering. While employed
by Rowan International, Mr. Wallen gained experience in drilling high angle
directional wells at Prudhoe Bay on contract to Arco. In 1982 Mr. Wallen
began acquiring and developing oil and gas properties, forming a production
company that has evolved into Tauren Exploration, Inc. Mr. Wallen did his
undergraduate studies at Texas A&M University in College Station, Texas.
JON S. ROSS has served as a director of the Company since April 1998
and as Secretary since November 1998. Since 1989, Mr. Ross has been a
practicing attorney in Dallas, Texas specializing in the representation of
over fifty corporate entities within the past eight years. He has served on
several community and not-for-profit committees and Boards and has been asked
to speak to corporate and civic leaders on a variety of corporate law topics.
Mr. Ross graduated from St. Mark's School of Texas with honors in 1982 and
graduated from the University of Texas at Austin in 1986 with a B.B.A. in
Accounting. He then graduated from the University of Texas School of Law in
1989 attaining a Juris Doctorate degree.
GENE C. HOWARD is the Senior Partner of the law firm of Howard, Widdows,
Bufogle and Vaughn, P.C. of Tulsa, Oklahoma and has been engaged primarily in
the private practice of law over the past thirty-five years. Mr. Howard
served in the Oklahoma State Senate from 1964 through 1982 and was President
Pro Tem from 1975 through 1981. In addition, he served as the Chairman of the
Board of Farmers and Exchange Bank from 1972 through 1991 and on the Board of
Directors of Local Federal Bank of Oklahoma. Mr. Howard is a Director of the
Oklahoma State Education and Employment Group Insurance Board and presently
acts as Chairman. Mr. Howard served as Director of EntreCap and Hinderliter
corporations from 1991 to August of 1992. He is also Chairman of the Board of
Philadelphia Mortgage Trust ("PMT").
WILLIAM BRUGGEMAN is the Chief Executive Officer and Chairman of the
Board of Diversified Dynamics Corporation. Mr. Bruggeman is an engineer and
entrepreneur. Among his accomplishments, he was responsible for the
development of a high pressure pump that formed the basis for the building of
Cat Pumps, a company established to manufacture and distribute the pump. In
addition to Cat Pumps, Mr. Bruggeman also was instrumental in developing the
"Paint Stick" and other home improvement products giving rise to a second
company, HomeRight, which together with Cat Pump, are subsidiaries of
Diversified Dynamics Corporation. Mr. Bruggeman served in the U.S. Navy as a
pilot and later served in Korea. Upon return to the U.S., he held engineering
and management positions with Scott Atwater, Minneapolis Moline and L & A
Products. Mr. Bruggeman has extensive experience developing and growing
start-up companies such as IDI, Spearhead Marketing, Cat Pumps, HomeRight,
North American Diesel and VEG. Mr. Bruggeman graduated from the University of
Minnesota.
6
<PAGE>
Should any nominee become unable or unwilling to accept nomination or
election, the Board of Directors will either select a substitute nominee or
will reduce the size of the Board. If you have submitted a proxy and a
substitute nominee is selected, the holders of the proxy will vote your
shares FOR the election of the substitute nominee. The Board of Directors has
no reason to believe that any nominee will be unable or unwilling to serve if
elected.
In accordance with the Company's Bylaws, directors are elected by a
plurality of the votes of shares represented and entitled to vote at the
meeting. That means the three nominees will be elected if they receive more
affirmative votes than any other nominees.
During fiscal 1998, the Board of Directors held six meetings and took
one action by unanimous consent. No director attended fewer than 75% of the
aggregate of the total number of meetings of the Board of Directors. The
Board does not currently contain any committees.
7
<PAGE>
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has selected Weaver & Tidwell LLP as the Company's
independent auditors for the fiscal year ending June 30, 1999, and recommends
that the shareholders ratify this selection. The Board of Directors has been
advised that Weaver & Tidwell LLP has no relationship with the Company or its
subsidiaries.
While shareholder ratification is not required for selection of Weaver &
Tidwell LLP because the Board of Directors has the responsibility for
selection of the Company's independent auditors, the selection is being
submitted for ratification at the Meeting with a view toward soliciting the
shareholders' opinion thereon, which opinion will be taken into consideration
in future deliberations.
Representatives of Weaver & Tidwell LLP are expected to attend the
Meeting, will be afforded an opportunity to make a statement if they desire
to do so, and will be available to respond to appropriate questions by
shareholders.
Approval of the ratification of Weaver & Tidwell LLP as independent
auditors for the fiscal year ending June 30, 1999 will require the
affirmative vote of a majority of the shares represented and voting at the
Meeting. Abstentions will not be treated as either a vote for or against the
proposal, but will have the same effect as a vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF WEAVER & TIDWELL, LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
8
<PAGE>
PROPOSAL 3
REINCORPORATION OF THE COMPANY IN TEXAS AND RELATED MERGER
SUMMARY DESCRIPTION OF THE PROPOSAL
The Board of Directors of the Company has approved a proposal to
change the state of incorporation of the Company from Oklahoma to Texas,
subject to approval by the shareholders (the "Reincorporation"). The proposal
was adopted by a unanimous vote of the directors in attendance at the meeting
at which it was formally considered. The reincorporation will be effected by
merging the Company into a newly organized, wholly-owned Texas subsidiary
that will be the surviving corporation (herein referred to as "Cubic"). Cubic
currently has no operations but, after the Reincorporation, it will undertake
the same business as is currently undertaken by the Company. The addresses of
the principal executive offices of each of the Company and Cubic are 1720
Northwest Highway, Suite 320, Garland, Texas 75041, telephone number
972/681-8047.
If the Merger Agreement is duly authorized and adopted by the
requisite votes of shareholders and is not terminated or abandoned pursuant
to the provisions the Merger Agreement, a Certificate of Merger shall be
filed with the Secretary of State of Texas, and Articles of Merger shall be
filed with the Secretary of the State of Oklahoma. The merger and
Reincorporation shall be effective immediately upon these filings. If
approved and if there are not substantial numbers of dissenting shareholders,
the Company currently expects that the merger and Reincorporation will become
effective on a date as soon as practicable after August 21, 1999 (upon the
expiration of the 20 day waiting period for exercise of dissenter's rights
following our mailing of this proxy statement to our shareholders).
The Reincorporation will not result in any material change in the
business, assets or financial position of the Company or in the persons who
constitute the Board of Directors or management, with the exceptions of the
change of the Company's name to Cubic and Mr. Vandever's absence from the
board of directors of Cubic.
Upon the effective date of the merger (the "Effective Date"),
(i) the legal existence of the Company as a separate corporation
will cease,
(ii) Cubic, as the surviving corporation, will succeed to the assets
and assume the liabilities of the Company, and
(iii) each outstanding share of the Company's Common Stock will
automatically be converted into one share of Common Stock, $.05 par value, of
Cubic, except for those shares with respect to which the holders thereof duly
exercise their dissenters' rights under Oklahoma law. See "Rights of
Dissenting Shareholders" below and Appendix 1.
The terms of the Reincorporation are more particularly described in
the Agreement and Plan of Merger (the "Plan of Merger") attached to this
Proxy Statement as Appendix 3 and the following summary and all other
references to the Reincorporation are qualified by and subject to the more
complete information set forth therein. In summary, the Plan of Merger
provides:
- for the conversion of each outstanding share of the Common Stock
of the Company into one share of the Common Stock of Cubic,
- for the conversion of all warrants and rights to acquire shares of
Common Stock of the Company into a like number of warrants and
rights to acquire shares of Common Stock of Cubic,
- for the substitution of the charter and bylaws of Cubic for those
of the Company (with certain differences conforming the charter
and bylaws to Texas law as described herein); and
- for Cubic to have the same number of shares of authorized capital
stock as the Company shall have on the effective date of the
Reincorporation.
9
<PAGE>
Following the Effective Date, certificates representing shares of
the Company's Common Stock will be deemed to represent an equal number of
shares of Cubic Common Stock. IT WILL NOT BE NECESSARY FOR THE HOLDERS OF THE
COMPANY'S COMMON STOCK TO SURRENDER THEIR CERTIFICATES FOR NEW CERTIFICATES
REPRESENTING CUBIC COMMON STOCK. However, if shareholders desire to obtain
new certificates, letters of transmittal will be available from the Company
upon request and new certificates may be obtained at the expense of the
shareholder upon surrender of the old certificates. The Common Stock of the
Company will continue to be traded on the Over the Counter Market, and the
Company's market makers will consider the existing stock certificates as
constituting "good delivery" in transactions subsequent to the
Reincorporation.
The Reincorporation will become effective upon the filing of the
requisite merger documents in Oklahoma and Texas, which filings are expected
to be made as soon as practicable following shareholder approval and
expiration of the periods during which shareholders may exercise dissenters'
rights. Pursuant to the terms of the Plan of Merger, the merger may be
abandoned by the Board of Directors of the Company and Cubic any time prior
to the Effective Date (whether before or after shareholder approval). In
addition, the Board of Directors of the Company may amend the Plan of Merger
at any time prior to the Effective Date, provided that any amendment made
subsequent to shareholder approval may not alter or change the amount or kind
of shares to be received in exchange for or on conversion of all or any of
the shares of the Company, alter or change any term of the Articles of
Incorporation of Cubic or alter or change any of the terms and conditions of
the Plan of Merger if such alteration or change would adversely affect the
holders of the Company's Common Stock.
After the Effective Date, the Articles of Incorporation of Cubic,
the form of which is attached to this Proxy Statement as Appendix 2 (the
"Articles of Incorporation"), and Bylaws of Cubic will govern the surviving
corporation. Certain changes in the rights of the shareholders of the Company
will result under Texas law and the new Articles of Incorporation and Bylaws.
See "Certain Changes in the Rights of Shareholders."
In considering the Reincorporation, shareholders should give
attention to the matters set forth under the caption "Certain Considerations
- - Comparison of Oklahoma to Texas Laws" and "Dissenter's Rights" included as
Appendix 1 of this Proxy Statement.
BACKGROUND OF THE NAME CUBIC.
The name "Cubic" represents the Company's focus on the integration
of earth sciences, engineering, and financial management in oil and gas
exploration and development. In scientific terms, "cubic" is one of the seven
crystal systems and the one with the highest number of symmetry elements
present. The cubic form is characterized by four triad axes of symmetry, and
requires three crystallographic axes of equal lengths intersecting at right
angles. When analyzing and technically pursuing the scientific aspects of oil
and gas exploration, the basic interpretation is in that of a three
dimensional format that identifies a subsurface anomaly that may be the
trapping mechanism for hydrocarbons. This has caused the evolution of
seismic, for instance, to produce data sophisticated enough to render a three
dimensional representation of such structures or trapping mechanisms to more
effectively develop reservoirs. So with the understanding then that all
technical pursuits for the oil and gas industry evolve around three
dimensional analysis, the Company seeks to implement its philosophy with the
name Cubic that represents the integration of earth sciences, engineering,
and financial management in oil and gas exploration and development.
In addition, the prior name "Roseland" was derived from the location of
the Company's former offices in Tyler, Texas in the 1970's and no longer
reflects the Company's business or vision. The Board believes that changing
the Company's name to Cubic Energy, Inc. will enhance the Company's business
and prospects.
SECURITIES ACT CONSEQUENCES
10
<PAGE>
After the Reincorporation, Cubic will continue to be a publicly held
company, its Common Stock is expected to continue to be quoted on the Over
the Counter Market, and Cubic will continue to have the same periodic
reporting obligations and make the same information available to its
shareholders as the Company has in the past. The shares of Cubic to be issued
in exchange for shares of the Company are not being registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon
an exemption with respect to a merger which has as its sole purpose a change
in the domicile of the corporation. Shareholders whose stock in the Company
is freely tradable before the Reincorporation will continue to own freely
tradable shares of Cubic. Shareholders holding restricted securities of Cubic
will continue to be subject to the same restrictions on transfer as those to
which their present shares of stock in the Company are subject. For purposes
of computing compliance with the holding period of Rule 144 under the
Securities Act, the shareholders will be deemed to have acquired their shares
in Cubic on the date they originally acquired their shares in the Company as
determined in accordance with Rule 144. In summary, Cubic and its
shareholders will be in the same respective position under the federal
securities laws after the Reincorporation as were the Company and its
shareholders prior to the Reincorporation.
FEDERAL INCOME TAX CONSEQUENCES
The Company believes that for federal income tax purposes no gain or
loss will be recognized by the Company, Cubic or the shareholders of the
Company who receive Cubic Common Stock for their Company Common Stock in
connection with the Reincorporation. The adjusted tax basis of Cubic Common
Stock received by a shareholder of the Company as a result of the
Reincorporation will be the same as the adjusted tax basis of the Company
Common Stock converted into such Cubic Common Stock. Shareholders who hold
Company Common Stock will include in their holding period for the Cubic
Common Stock which they receives as a result of the Reincorporation their
holding period for the Company Common Stock converted into such Cubic Common
Stock.
The receipt of cash, pursuant to the exercise of dissenters' rights,
as the fair value for shares of the Company's Common Stock will be a taxable
transaction for federal income tax purposes to shareholders receiving such
cash. A dissenting shareholder who owns no shares of Cubic Common Stock after
the consummation of the Reincorporation (either directly or constructively
pursuant to certain rules of constructive ownership under the Internal
Revenue Code) will recognize gain or loss measured by the difference between
the cash so received and such shareholder's adjusted tax basis in the shares
of the Company's Common Stock exchanged therefor. Such gain or loss will be
treated as a capital gain or loss if the shares of the Company's Common Stock
are capital assets in the hands of such shareholder, and will be long-term
capital gain or loss if such shareholder has held such shares for more than
one year.
STATE, LOCAL OR FOREIGN INCOME TAX CONSEQUENCES TO SHAREHOLDERS MAY
VARY FROM THE FEDERAL INCOME TAX CONSEQUENCES DESCRIBED ABOVE, AND
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
CONSEQUENCES TO THEM OF THE REINCORPORATION UNDER ALL APPLICABLE TAX LAWS.
VOTE REQUIRED FOR REINCORPORATION
Approval of the Reincorporation, including the Plan of Merger, will
require the affirmative vote of the holders of at least a majority of the
issued and outstanding shares of the Company's Common Stock. Therefore,
abstentions and broker non-votes effectively count as votes against the
proposal.
THE BOARD OF DIRECTORS BELIEVES THAT THE REINCORPORATION AND THE
MERGER ARE IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND HAS
RECOMMENDED A VOTE FOR THEIR APPROVAL.
EFFECT ON CURRENT MARKET VALUE OF COMPANY'S COMMON STOCK
The Company does not know of any reason why implementation of the
Reincorporation and the conversion of shares of Common Stock of the Company
into shares of Cubic Common Stock would cause the market value of
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the Common Stock of Cubic following the Reincorporation to be different from
the present market value of the outstanding shares of the Common Stock of the
Company.
CHANGE OF TRADING SYMBOL OF COMMON STOCK
The trading symbol of the ROGI Common Stock was "RGAS" until January
1999, when the Company changed its trading symbol to "QBIC" to reflect the
proposed Reincorporation or name change of the Company. "QBIC" will remain
the trading symbol for the Cubic Common Stock upon effectiveness of the
Reincorporation. The Company believes that this trading symbol more
accurately reflects the Company's name after the Reincorporation or the name
change.
PRINCIPAL REASONS FOR AND EFFECTS OF THE REINCORPORATION
Since December 1997, the Company's headquarters and most of its
operations, management and employees have been located in Texas following the
acquisition of a majority of the Company's stock by Calvin A. Wallen III and
his affiliates. In addition, management of the Company has had greater
experience in operating Texas corporations and believes that this familiarity
with the Texas corporation form will be advantageous to the Company in the
operations and management of the Company. The Company also believes that the
State of Texas has become a leader in adopting, construing and implementing
comprehensive, flexible corporation laws which are conducive to the
operational needs and independence of corporations domiciled in that state.
The corporation law of Texas is believed by the Company and its counsel to be
one of the more extensive and well-defined bodies of corporate law in the
United States. Both the legislature and the courts in Texas have demonstrated
an ability and a willingness to act quickly and effectively to meet changing
business needs. In addition, because the Company's executive offices are in
Texas, the Company's status as an Oklahoma corporation doing business in
Texas requires the Company to comply with reporting and tax obligations with
two jurisdictions, while the Company will likely not be required to qualify
to do business in Oklahoma if it reincorporates in Texas. The Company does
not conduct any material operations in Oklahoma currently.
In addition, the Company's primary counsel are located in Texas and
licensed to practice in the State of Texas and not in the State of Oklahoma.
The Company believes that the familiarity of the Texas Business Corporation
Act to its counsel would be advantageous to the Company.
For a discussion of certain differences in shareholder rights and
the powers of management under Texas and Oklahoma law, see "Certain Changes
in the Rights of Shareholders" below.
CERTAIN CHANGES IN THE RIGHTS OF SHAREHOLDERS
After the Reincorporation, the shareholders of the Company, an
Oklahoma corporation, will become shareholders of Cubic, a Texas corporation.
Some of the differences between the Oklahoma and Texas corporation laws, as
well as differences between the charter and bylaws of the Company and of
Cubic are set forth below. This description of differences is a summary only
and does not purport to be a complete description of all differences.
BUSINESS COMBINATIONS STATUTES. As an Oklahoma corporation, the
Company could under certain circumstances be subject to the provisions of
Section 18-1090.3 of the Oklahoma General Corporation Act (the "Oklahoma
Business Combinations Statute"), which regulates certain business
combinations between a corporation and an "interested shareholder" of the
corporation. The Company believes that the Company is not currently subject
to the Oklahoma Business Combinations Statute because the Company has fewer
than 1000 shareholders of record. However, the Company could become subject
to the statute in the future. While the Reincorporation proposal is not being
recommended in response to any specific effort of which the Company is aware
to accumulate the Company's shares or to obtain control of the Company, the
Board believes that the provisions of the Texas Business Corporation Act and,
more specifically, the provisions of Article 13.03 of the Texas Business
Corporation Act (the "Texas Business Combinations Statute"), will enhance the
Board's ability to pursue the best interests of the Company and its
shareholders in the event of a possible takeover attempt. The Board believes
that the
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Oklahoma Business Combinations Statute is more likely to have the result of
discouraging a takeover attempt with the result that shareholders could fail
to receive an acquisition premium in connection with a takeover.
The Oklahoma Business Combinations Statute prohibits certain
transactions between certain Oklahoma corporations and an "interested
shareholder," which is broadly defined as a person (including the affiliates
and associates of such person) that is directly or indirectly a beneficial
owner of 15% or more of the voting power of the outstanding voting stock of
an Oklahoma corporation. This provision prohibits certain business
combinations (defined broadly to include mergers, consolidations, sales or
other dispositions of assets having an aggregate market value of 10% or more
of either the consolidated assets of a company or the aggregate market value
of the company's outstanding stock, and certain transactions that would
increase the interested shareholder's proportionate share of ownership in a
company or grant the interested shareholder disproportionate financial
benefits) between an interested shareholder and a company for a period of
three years after the date the interested shareholder acquired its stock,
unless (i) the business combination or the transaction in which the
shareholder became an interested shareholder is approved by such company's
board of directors prior to the date the interested shareholder becomes an
interested shareholder, (ii) the interested shareholder acquired at least 85%
of the voting stock of such company in the transaction in which it became an
interested shareholder, or (iii) the business combination is approved by a
majority of the board of directors AND the affirmative vote of two-thirds of
the votes entitled to be cast by disinterested shareholders at an annual or
special meeting, and not by written consent.
The Texas Business Combinations Statute ("TBCS") differs from the
Oklahoma Business Combinations Statute ("OBCS") in one important area. The
TBCS restricts the same type of transactions between an affiliated
shareholder and a Texas corporation that the OBCS restricts between an
interested shareholder and an Oklahoma corporation, for the same period of
restriction. However, under the TBCS, either the board of directors OR a
two-thirds vote of disinterested shareholders at a meeting can exempt
transactions from the prohibited transactions definition. The board of
directors of a Texas corporation can thus preempt the application of the
TBCS. The Company believes that the TBCS is thus preferable to the OBCS for
two reasons. In Texas, a block of minority disinterested shareholders can not
block a transaction deemed in the best interests of the corporation by the
board of directors and a majority of the disinterested shareholders. Second,
the additional obstacles in the OBCS may deter legitimate business
opportunities for the Company.
If the Reincorporation is consummated, the Texas Business
Corporation Act and the TBCS will apply to Cubic. The application of either
the OBCS or TBCS could make more difficult or discourage a tender offer for
the Common Stock or the completion of a "second step" merger by a holder of a
substantial block of the Common Stock, irrespective of whether such action
might be perceived by shareholders holding a majority of the Common Stock to
be beneficial to Roseland or Cubic and its shareholders. The application of
the OBCS or the TBCS could adversely affect the ability of shareholders to
benefit from certain transactions which are opposed by the Board of Directors
or by shareholders owning a minority of the Common Stock, even if the price
offered in such transactions represents a premium over the then-current
market price of the Common Stock. To the extent that the Board of Directors'
disapproval of a proposed transaction discourages establishment of a
controlling stock interest, the position of the Board of Directors and
current management may be strengthened, thereby assisting those persons in
retaining their positions.
The Board of Directors believes on balance that no longer being
subject to the provisions of the OBCS will be in the best interests of the
Company and its shareholders. The Board of Directors believes that it is in a
better position than the individual shareholders of the Cubic to negotiate
effectively for an adequate price for all the shareholders, since the Board
of Directors is likely to be more knowledgeable than any individual
shareholder in assessing the business and prospects of Cubic.
The Board of Directors has carefully considered the potential
adverse effects of being subject to the Texas Business Combination Statute
described above and has concluded that the adverse effects are substantially
outweighed by the increased protection which the statute will afford the
Company and its shareholders.
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RIGHT OF SHAREHOLDERS TO VOTE ON CERTAIN MERGERS. Under Texas law,
shareholders have the right to vote on all mergers to which the corporation
is a party (except for mergers between parent or subsidiary entities with 90%
or greater ownership, for which a shareholder vote is also not required under
Oklahoma law). In certain circumstances, different classes of securities may
be entitled to vote separately as classes with respect to such transactions.
Unless the articles of incorporation provide otherwise, approval of the
holders of at least two-thirds of all outstanding shares entitled to vote is
required by Texas law to approve a merger, while under Oklahoma law approval
by the holders of a majority of all outstanding shares is required to approve
a merger, unless the certificate of incorporation provides otherwise.
The Company's current Certificate of Incorporation does not alter
Oklahoma's statutory rules described above; however, Cubic's Articles of
Incorporation provide that the holders of a majority of the outstanding
shares of Cubic's common stock may approve mergers.
SALES, LEASES, EXCHANGES, OTHER DISPOSITIONS OR DISSOLUTION. The
sale, lease, exchange or other disposition (not including any pledge,
mortgage, deed of trust or trust indenture, unless otherwise provided in the
articles of incorporation) of all, or substantially all, of the property and
assets of a Texas corporation, if not made in the usual and regular course of
its business, or the dissolution of the company requires the approval of the
holders of at least two-thirds of the outstanding shares of the corporation.
Under Texas law, the transfer of substantially all of a corporation's assets
to wholly-owned subsidiaries in such a manner that the corporation continues
to indirectly engage in its business is deemed to be in the usual and regular
course of its business. The Cubic Articles of Incorporation provide that the
holders of a majority of the outstanding shares of Cubic's common stock may
approve such transactions described above.
An Oklahoma corporation may sell, lease or exchange all or
substantially all of its property and assets or dissolve when and as
authorized by a majority of the outstanding stock of the corporation entitled
to vote thereon, unless the certificate of incorporation provides to the
contrary. The Company's Certificate of Incorporation does not so provide.
APPRAISAL RIGHTS. Except for the limited classes of mergers,
consolidations, sales and asset dispositions for which no shareholder
approval is required under Texas law, shareholders of Texas corporations have
appraisal rights in the event of a merger, consolidation, sale, lease,
exchange or other disposition of all, or substantially all, the property and
assets of the corporation. Notwithstanding the foregoing, a shareholder of a
Texas corporation has no appraisal rights with respect to any plan of merger
in which there is a single surviving or new domestic or foreign corporation,
or with respect to any plan of exchange, if (1) the shares held by the
shareholder are part of a class of shares of which are listed, or authorized
for listing upon official notice of issuance, on a national securities
exchange, or are held of record by not less than 2,000 holders, on the record
date for the plan of merger or the plan of exchange, and (2) the shareholder
is not required by the terms of the plan of merger or exchange to accept for
his shares any consideration other than (a) shares of a corporation that,
immediately after the merger or exchange, will be part of a class or series
of shares which are (i) listed, or authorized for listing upon official
notice of issuance, on a national securities exchange, or (ii) held of record
by not less than 2,000 holders, and (b) cash in lieu of fractional shares
otherwise entitled to be received. The appraisal rights of a shareholder of
an Oklahoma corporation, including the appraisal rights of Roseland
shareholders resulting from the proposed Reincorporation merger with Cubic,
are summarized under "Rights of Dissenting Shareholders" below and are
included as Appendix 1 attached to this Proxy Statement.
SHAREHOLDER CONSENT TO ACTION WITHOUT A MEETING. Under Texas law,
any action that may be taken at a meeting of the shareholders may be taken
without a meeting if written consent thereto is signed by all the holders of
shares entitled to vote thereon. The Texas Business Corporation Act also
provides that the Articles of Incorporation of a Texas corporation may
provide that action by written consent in lieu of a meeting may be taken by
the holders of at least that number of shares which would be required to take
the action which is the subject of the consent at a meeting at which the
holders of the shares entitled to vote thereon were present and voted. The
Cubic Articles of Incorporation provide for the use of written consents of
holders of the required percent of shares necessary to effect the action in
lieu of a meeting with respect to any action subject to shareholder approval.
As a result, the taking of
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any such action without a meeting may be accomplished by Cubic without a
unanimous written consent of all of the Company's shareholders entitled to
vote thereon, provided that the written consent of holders of the required
percent were obtained.
Under Oklahoma law, there are two provisions for written consents of
shareholders without meetings, which in certain circumstances may require
unanimous consent of shareholders to take actions without meetings. The
general rule for an Oklahoma corporation (except as provided below for
certain public corporations or as provided in a corporation's certificate of
incorporation) is that any action required or permitted to be taken at any
annual or special meeting of shareholders may be taken without a meeting,
without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take the action at a meeting at which all shares
entitled to vote thereon were present and voted.
However, for certain public corporations (which have a class of
voting stock listed or traded on a national securities exchange of registered
under Section 12(g) of the Securities Exchange Act of 1934, as amended, and
which has 1,000 or more shareholders of record), unless otherwise provided
for in the certificate of incorporation, any action required or permitted to
be taken at any annual or special meeting of shareholders may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action taken, shall be signed by the
holders of all outstanding stock entitled to vote thereon.
An amendment to ROGI's Certificate of Incorporation adopted in
December 1991 contains a provision purporting to require unanimous consent
for a written consent by Roseland's shareholders and refers to Roseland as a
company with a class of stock listed on a national securities exchange and
held by more than 10,000 shareholders. Because Roseland has never had a class
of stock listed on a national securities exchange nor a class of stock held
by more than 10,000 shareholders, the Board of Directors and management of
Roseland believe that this provision is not effective. In addition, Roseland
does not currently have 1,000 shareholders of record and Section 1073 is also
not applicable. Therefore, the shareholders of Roseland may take action by
written consent if shareholders holding at least the minimum number of shares
to take the action sign a written consent. However, under Oklahoma law, in
the event Roseland were to have more than 1,000 shareholders of record,
unanimous consent would be required unless the certificate of incorporation
is amended to remove this requirement.
PROCEDURES FOR FILLING VACANT DIRECTORSHIPS. Under Texas law, any
vacancy occurring in the board of directors may be filled by the shareholders
or by the affirmative vote of a majority of the remaining directors, although
less than a quorum. A directorship to be filled by reason of an increase in
the number of directors may be filled by the shareholders or by the board of
directors for a term of office continuing only until the next election of one
or more directors by the shareholders, provided that the board of directors
may not fill more than two such directorships during the period between any
two successive annual meetings of shareholders.
Under Oklahoma law, unless otherwise provided in the certificate of
incorporation or bylaws, vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, although less than a quorum, or by
a sole remaining director. If, at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute
less than a majority of the whole board, as constituted immediately prior to
any such increase, the district court, upon application of any shareholder or
shareholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
may summarily order an election to be held to fill any such vacancies or
newly created directorships, or to replace the directors chosen by the
directors then in office. Shareholders may, unless the certificate of
incorporation otherwise provides, act by written consent to elect directors;
provided, however, that if the consent is less than unanimous, the action by
written consent may be in lieu of holding an annual meeting only if all of
the directorships to which directors could be elected at an annual meeting
held at the effective time of the action are vacant and are filled by the
action.
RIGHT TO CALL MEETINGS. Under Texas law, the president, board of
directors, or holders of not less than 10% of all of the shares entitled to
vote have the right to call a special shareholders' meeting, unless the
articles of
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incorporation provide for a number of shares greater than or less than 10%,
in which event, special meetings of the shareholders may be called by the
holders of at least the percentage of shares so specified in the articles of
incorporation, but in no event may the articles of incorporation provide for
a number of shares greater than 50% that would be required to call a special
meeting. Cubic's Articles of Incorporation do not alter the statutory rule
described herein.
Oklahoma law provides that special meetings may be called by the
board of directors or the persons authorized by the corporation's certificate
of incorporation or bylaws. The Certificate of Incorporation and by-laws of
the Company provide for the call for a special shareholders meeting by a
majority of the Board of Directors, the Chairman of the Board of Directors,
the President, or a majority of the outstanding shares.
CHARTER AMENDMENTS. Under Texas law, an amendment to the articles of
incorporation requires the approval of the holders of at least two-thirds of
the outstanding shares of the corporation, unless a different amount, not
less than a majority, is specified in the articles of incorporation. The
Articles of Incorporation of Cubic provide that a majority of the outstanding
shares of the corporation may act with respect to the approval of an
amendment to its Articles of Incorporation.
Oklahoma law provides that amendments to the certificate of
incorporation must be approved by the holders of a majority of the
corporation's stock entitled to vote thereon, unless the certificate of
incorporation provides for a greater number. The Certificate of Incorporation
of ROGI does not provide for any such greater number.
BYLAW AMENDMENTS. Under Texas law, the Board of Directors may amend,
repeal or adopt a corporation's bylaws unless the articles of incorporation
reserve this power exclusively to the shareholders, or the shareholders in
amending, repealing or adopting a particular bylaw expressly provide that the
Board of Directors may not amend or repeal that bylaw. Cubic's articles of
incorporation do not restrict the ability of the Board of Directors to amend,
repeal or adopt bylaws, and Cubic's shareholders have not to date amended,
repealed or adopted a particular bylaw restricting the ability of the Board
of Directors to amend or repeal such bylaw.
Similarly, under Oklahoma law, the right to amend, repeal or adopt
the bylaws is permitted to the shareholders of the corporation and the
corporation's Board of Directors, if the corporation's certificate of
incorporation so provides. The Company's Certificate of Incorporation
provides that its bylaws may be amended, repealed or adopted by the Board of
Directors. Under Oklahoma law, the power to amend, repeal or adopt the bylaws
so conferred upon the board of directors will not divest its shareholders of
the power, or limit their power, to amend, repeal or adopt such bylaws.
CLASS VOTING. Under Texas law, class voting is required in
connection with certain amendments of a corporation's articles of
incorporation, a merger or consolidation requiring shareholder approval if
the plan of merger or consolidation contains any provision which, if
contained in a proposed amendment to a corporation's articles of
incorporation, would require class voting or certain sales of all or
substantially all of the assets of a corporation.
Under Oklahoma law, class voting is not required in connection with
such matters, except in the case of an amendment of a corporation's
certificate of incorporation which adversely affects a class of shares.
REMOVAL OF DIRECTORS. A Texas corporation may provide for the
removal of a director with or without cause in its Articles of Incorporation
or bylaws. Cubic's Bylaws provide for such removal by Cubic's shareholders.
The Company's bylaws currently provide that directors may be removed, with or
without cause, by the vote of a majority of the shares entitled to vote
thereon.
Under Oklahoma law, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors, except, in the case
of a corporation whose board is classified, shareholders may effect such
removal only for cause, unless the certificate of
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incorporation otherwise provides. Prior to November 1998, Roseland had a
classified board of directors pursuant to its bylaws, which were amended in
November 1998 to remove the provisions regarding a classified board of
directors. Cubic's bylaws do not currently provide for a classified board of
directors.
DISTRIBUTIONS AND DIVIDENDS. Under Texas law, a distribution is
defined as a transfer of money or other property (except a corporation's
shares or rights to acquire its shares), or an issuance of indebtedness, by a
corporation to its shareholders in the form of (i) a dividend on any class or
series of the corporation's outstanding shares; (ii) a purchase, redemption
or other acquisition by the corporation, directly or indirectly, of its
shares; or (iii) a payment in liquidation of all or a portion of its assets.
Under Texas law, a corporation may make a distribution, subject to
restrictions in its charter, if it does not render the corporation unable to
pay its debts as they become due in the course of its business, and if it
does not exceed the corporation's surplus. Surplus is defined under Texas law
as the excess of net assets (essentially, the amount by which total assets
exceed total debts) over stated capital (essentially, the aggregate par value
of the issued shares having a par value plus consideration paid for shares
without par value that have been issued), as such stated capital may be
adjusted by the board. This limitation does not apply to distributions
involving a purchase or redemption of shares to eliminate fractional shares,
collect indebtedness, pay dissenting shareholders or redeem shares if net
assets equal or exceed the proposed distribution.
Under Oklahoma law, the board of directors, subject to any
restrictions contained in the certificate of incorporation, may declare and
pay dividends upon the shares of its capital stock either out of its surplus,
or in case there is no surplus, out of its net profits for the fiscal year in
which the dividend is declared or the preceding fiscal year. If the capital
of the corporation shall have been diminished by depreciation in the value of
its property, or by losses, or otherwise, to an amount less than the
aggregate amount of the capital represented by the issued and outstanding
stock having a preference upon the distribution of assets, the directors
shall not declare and pay out of the net profits any dividends upon any
shares of any classes of its capital stock until the deficiency in the amount
of capital represented by the issued and outstanding stock having a
preference upon the distribution of assets shall have been repaired. Subject
to any restrictions contained in its certificate of incorporation, the
directors of any corporation engaged in the exploitation of wasting assets
including, but not limited to, a corporation engaged in the exploitation of
natural resources or other wasting assets, including patents, or engaged
primarily in the liquidation of specific assets, may determine the net
profits derived from the exploitation of wasting assets or the net proceeds
derived from liquidation without taking into consideration the depletion of
such assets resulting from lapse of time, consumption, liquidation, or
exploitation.
STOCK REDEMPTION AND REPURCHASE. As noted above, under Texas law,
the purchase or redemption by a corporation of its shares constitutes a
distribution. Accordingly, the discussion above relating to distributions is
applicable to stock redemptions and repurchases. Under Oklahoma law, a
corporation may repurchase or redeem its shares; provided, however, that a
corporation may not repurchase or redeem its shares when the capital of the
corporation is impaired or when the purchase or redemption would cause any
impairment of the capital of the corporation, except in certain circumstances
related to preferred stock.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. Texas and Oklahoma law
have different provisions and limitations regarding indemnification by a
corporation of its officers, directors, employees and agents. The following
is a summary comparison of the indemnification provisions of Texas and
Oklahoma law:
SCOPE. Under Texas law, a corporation is permitted to provide
indemnification or advancement of expenses, by articles of incorporation or
bylaw provision, resolution of the shareholders or directors, agreement, or
otherwise, against judgments, penalties, fines, settlements and reasonable
expenses actually incurred by the person in connection with the proceeding.
However, if the person is found liable to the corporation, or if the person
is found liable on the basis he received an improper personal benefit,
indemnification under Texas law is limited to the reimbursement of reasonable
expenses and no indemnification will be available if the person is found
liable for willful or intentional misconduct.
Oklahoma law permits a corporation to indemnify the person against
expenses, including attorneys' fees, judgments, fines, and amounts paid in
settlement actually and reasonably incurred by the person in connection with
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the action, suit, or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the conduct was unlawful, but
no indemnification shall be made in respect of any claim, issue, or matter as
to which the person shall have been adjudged to be liable to the corporation,
unless and only to the extent that the court in which the action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for expenses which the court
shall deem proper. To the extent that a present or former director or officer
of a corporation has been successful on the merits or otherwise in defense of
any action, suit, or proceeding, or in defense of any claim, issue, or matter
therein, the person shall be indemnified against expenses, including
attorneys' fees, actually and reasonably incurred by the person in connection
therewith.
The Articles of Incorporation and Bylaws of Cubic provide for
mandatory indemnification of directors and officers to the fullest extent
permitted by Texas law, unless the corporation determines that the person
seeking indemnification did not meet the standards set forth above. The
Articles of Incorporation of Cubic permit indemnification of other persons to
the extent authorized from time to time by the Board of Directors. The right
to indemnification is a contract right and includes the right to be paid by
the corporation the expenses incurred in defending any such proceeding in
advance of its final disposition, provided that the indemnitee undertakes to
repay all amounts so advanced if it is ultimately determined that such
indemnitee is not entitled to be indemnified for such expenses. The Company's
current Certificate of Incorporation provides for certain rights to
indemnification on a permissive rather than mandatory basis, although the
Oklahoma statute would require indemnification in the event the director is
successful on the merits or otherwise. The Company is not a party to an
indemnification agreement with any of its directors, while it is expected
that Cubic will enter into such agreements with each of its directors and
certain of its key employees.
ADVANCEMENT OF EXPENSES. Under Texas law, expenses, including
reasonable court costs and attorneys' fees, incurred by a director who was,
is, or is threatened to be made a named defendant or respondent in a
proceeding because the person is or was a director of such corporation may be
paid or reimbursed by the corporation in advance of the final disposition of
the proceeding after the corporation receives (i) a written affirmation by
the director of his good faith belief that he has met the standard of conduct
necessary for indemnification under Texas law and (ii) a written undertaking
by or on behalf of the director to repay the amount paid or reimbursed if it
is ultimately determined that he has not met those requirements or if it is
ultimately determined that indemnification for such expenses is prohibited
under Texas law. The bylaws of Cubic provide for such reimbursement of
expenses on a mandatory basis.
Oklahoma law permits the advancement of expenses for such
proceedings in advance of the final disposition of the action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it shall ultimately be determined that the
person is not entitled to be indemnified by the corporation. Expenses
incurred by former directors or officers or other employees and agents may be
paid upon the terms and conditions, if any, as the corporation deems
appropriate. ROGI's Certificate and bylaws do not modify this statutory
framework.
PROCEDURE FOR INDEMNIFICATION. Texas law provides that a
determination that indemnification is appropriate shall be made (i) by a
majority vote of a quorum consisting of directors who, at the time of the
vote, are not party to the proceeding, (ii) if such a quorum cannot be
obtained, by a majority vote of a special committee of the board of directors
consisting solely of two or more directors, who at the time of the vote, are
not party to the proceeding, (iii) by a majority vote of special legal
counsel or (iv) by vote of all shareholders, but excluding from the vote
those shares held by directors who, at the time of the vote, are party to the
proceeding.
Oklahoma law provides that indemnification, unless ordered by a
court, shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the present or former
director or officer is proper in the circumstances because the person has met
the applicable standard of conduct. This determination shall be made, with
respect to a person who is a director or officer at the time of the
determination, (i) by a majority vote of the directors who are not parties to
the action, suit, or proceeding, even though less than a
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quorum; (ii) by a committee of directors designated by a majority vote of
directors, even though less than a quorum; (iii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion; or (iv) by the shareholders.
INSURANCE. Texas and Oklahoma law both allow a corporation to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or any person who is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or enterprise against any liability
asserted against such person and incurred by such person in such a capacity
or arising out of his status as such a person, whether or not the corporation
would otherwise have the power to indemnify him against that liability. Under
Texas law, a corporation may also establish and maintain arrangements, other
than insurance, to protect these individuals, including a trust fund or
surety arrangement.
PERSONS COVERED. Texas law expressly and separately addresses the
indemnification of officers, employees and agents. The protections afforded
to these persons under Texas law resemble those provided to directors.
Oklahoma law is similar to Texas law in this regard.
STANDARD OF CARE. The standard of care required under Texas and
Oklahoma law is substantially the same. In general, directors are charged
with the duty in their decision-making process and oversight responsibilities
to act in good faith and in the best interests of the corporation.
SHAREHOLDER REPORT. Texas law requires a written report to the
shareholders upon indemnification or advancement of expense. Oklahoma law
does not have a similar reporting requirement.
SPECIFIC INSTANCES OF DIRECTOR LIABILITY. Texas law holds the
directors of a corporation specifically liable for corporate distributions
that are not permitted by statute, unless the directors acted in good faith
and with ordinary care in determining that adequate provision existed to
permissibly make a distribution. Oklahoma law contains an analog to this
provision of Texas law.
LIMITED LIABILITY OF DIRECTORS. Texas law permits a corporation to
eliminate in its charter all monetary liability of a director to the
corporation or its shareholders for acts or omissions in the performance of
such director's duties. However, Texas law does not permit any limitation of
the liability of a director for (i) breaching the duty of loyalty to the
corporation or its shareholders, (ii) acts or omissions not in good faith
that constitutes a breach of duty of the director to the corporation or
involves intentional misconduct or a knowing violation of the law, (iii)
engaging in a transaction from which the director obtains an improper benefit
or (iv) violating applicable statutes which expressly provide for the
liability of a director.
Oklahoma law contains a similar provision.
The Certificate of Incorporation of the Company and the Articles of
Incorporation of Cubic both eliminate the monetary liability of a director to
the fullest extent permitted by applicable law.
CUBIC'S ARTICLES OF INCORPORATION
Set forth below is a description of certain provisions of the Cubic
Articles of Incorporation. Such description is intended as a summary only and
is qualified in its entirety by reference to the Cubic Articles of
Incorporation, which is attached to this Proxy Statement as Appendix 2.
The number of shares of authorized capital stock of Cubic will be
the same as that of the Company on the Effective Date. Therefore, the number
of shares of authorized Common Stock of Cubic shall be 50,000,000. The number
of shares of authorized Preferred Stock of Cubic will remain 10,000,000. Each
share of Common Stock of Cubic will have a par value of $.05, and each share
of Cubic Preferred Stock will have a par value of $0.01.
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Holders of Cubic's Common Stock will be entitled to one vote per
share on matters voted upon by the shareholders. The holders of Cubic's
Common Stock will be entitled to receive dividends when and as declared by
the Board of Directors, in its discretion, from funds legally available
therefor.
Like the Company's Common Stock, the Common Stock of Cubic will have
no preemptive rights and no subscription, redemption, or conversion
privileges. The Common Stock of Cubic will also have no cumulative voting
rights, which means that holders of a majority of shares voting for the
election of directors can elect all members of the Board of Directors. A
majority vote of the shares present in person or represented by proxy is also
generally sufficient for actions that require the vote or concurrence of
shareholders, except as otherwise required by Texas law for certain
extraordinary transactions. Upon consummation of the Reincorporation, all of
the shares of Cubic Common Stock issued in exchange for the Company's Common
Stock will be fully paid and nonassessable. Such shares will not be
redeemable or subject to further calls or assessments.
The Preferred Stock of Cubic, like that of the Company, will be
issuable in series by action of the Board of Directors. The Board of
Directors will be authorized to fix the designations, powers, preferences and
other rights and the qualifications, limitations or restrictions thereof in
substantially the same manner as currently provided with respect to Preferred
Stock of the Company.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock of Cubic will
be Securities Transfer Corporation, the Company's transfer agent. Their
address is 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248, and their
telephone number is (972) 447-9890.
RIGHTS OF DISSENTING SHAREHOLDERS
With certain exceptions which are not applicable to the
Reincorporation, Section 18-1091 of the Oklahoma General Corporation Act
gives each shareholder of Roseland the right to object to the Merger and to
demand payment of the fair value of such shareholder's shares, excluding any
appreciation or depreciation in anticipation of the Merger. Inasmuch as the
Reincorporation contemplates such a merger of Roseland, the rights under
Section 18-1091 will apply to the Reincorporation. However, because the
Reincorporation is not intended to have any material effect upon Roseland's
business or financial condition, Roseland and Cubic reserve the right to
abandon the Reincorporation for any reason at any time before the merger
becomes effective, and would expect to do so if the holders of a substantial
number of shares of Roseland's Common Stock exercise such dissenter's rights.
Cubic and Roseland, either before the effective date of the merger
or within ten (10) days after the effective date, is required to notify each
of the shareholders entitled to appraisal rights of the effective date of the
merger and that appraisal rights are available for any or all of the shares
of Roseland (as the constituent corporation). This Proxy Statement
constitutes the required notice. Any shareholder entitled to appraisal rights
(and who has not voted in favor of, or consented to, the merger) may, within
twenty (20) days after the date of mailing of this Proxy Statement, demand in
writing from Cubic the appraisal of the shares of the shareholder. Such
demand will be sufficient if it reasonably informs Cubic of the identity of
the shareholder and that the shareholder intends to demand the appraisal of
the shares of the shareholder.
PURSUANT TO THE OKLAHOMA ACT, YOU MUST CAUSE THE CORPORATION TO
RECEIVE WRITTEN NOTICE, WITHIN 20 DAYS AFTER NOTICE OF THE PROPOSED
TRANSACTIONS IS GIVEN TO YOU BY MEANS OF THIS PROXY STATEMENT OF YOUR INTENT
TO DEMAND PAYMENT FOR YOUR SHARES IF THE PROPOSED ACTION IS TAKEN, AND YOU
MAY NOT VOTE YOUR SHARES IN FAVOR OF THE PROPOSAL IF YOU INTEND TO SEEK AN
APPRAISAL. FAILURE TO FOLLOW THIS PROCEDURE WILL RESULT IN THE FORFEITURE OF
YOUR DISSENTERS' RIGHTS. A copy of Section 18-1091 of the Oklahoma Act is
attached to this Proxy Statement as Appendix 1. This Proxy Statement
constitutes the Company's written dissenters' notice to all shareholders who
are entitled to demand payment for their shares. TO EXERCISE YOUR DISSENTER'S
RIGHTS, THE COMPANY MUST RECEIVE YOUR PAYMENT DEMAND BY AUGUST 21, 1999, NOT
FEWER THAN TWENTY DAYS AFTER THE DATE THE PROXY STATEMENT IS SENT. Failure to
give notice to the Company of your intent to demand payment, will
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constitute a waiver of your dissenters' rights. Shareholders do not have
dissenters' rights with respect to the matters set forth in Proposals 1 or 2.
Within one hundred twenty (120) days after the effective date of the
merger, Cubic or any shareholder who has complied with the above provisions
and who is otherwise entitled to appraisal rights, may file a petition in
district court demanding a determination of the value of the stock of all
such shareholders; provided, however, at any time within sixty (60) days
after the effective date of the merger, any shareholder shall have the right
to withdraw the demand appraisal and to accept the terms offered upon the
merger. Within one hundred twenty (120) days after the effective date of the
merger, any shareholder who has complied with the above requirements, upon
written request, shall be entitled to receive from Cubic a statement setting
forth the aggregate number of shares not voted in favor of the merger and
with respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. Such written statement shall be
mailed to the shareholder within ten (10) days after the shareholder's
written request for such a statement is received by Cubic or within ten (10)
days after expiration of the period for delivery of demands for appraisal set
forth above, whichever is later.
Upon filing any such petition by a shareholder, service of a copy
thereof shall be made upon Cubic, which, within twenty (20) days after such
service, shall file in the office of the court clerk of the district court in
which the petition was filed a list containing the names and addresses of all
shareholders who have demanded payment for their shares and with whom
agreements as to the value of their shares have not been reached. If the
petition shall be filed by Cubic, the petition shall be accompanied by the
list. The court clerk, if so ordered by the court, shall give notice of the
time and place fixed for the hearing of such petition by registered or
certified mail to Cubic and to the shareholders shown on the list. Such
notice shall also be given by one or more publications at least one week
before the day of the hearing, in a newspaper of general circulation
published in Oklahoma City, Oklahoma, or such publication as the court deems
advisable. The forms of the notices by mail and by publication shall be
approved by the court, and the costs thereof shall be borne by Cubic.
At the hearing on the petition, the court shall determine the
shareholders who have complied with the provisions of Section 18-1091 and who
are entitled to appraisal rights. The court may require the dissenting
shareholders who hold stock represented by certificates to submit their
certificates of stock to the court clerk for notation of the pendency of the
appraisal proceedings; and if any shareholder fails to comply with such
direction, the court may dismiss the proceedings as to such shareholder.
After determining the shareholders entitled to an appraisal, the
court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
In determining fair value, the court shall take into account all relevant
factors. In determining the rate of interest, the court may consider all
relevant factors, including the rate of interest which Cubic would have to
pay to borrow money during the pendency of the proceeding. Upon application
by Cubic or by any shareholder entitled to participate in the proceeding, the
court may, in its discretion, permit discovery or other pretrial proceedings
and may proceed to trial upon the appraisal prior to the final determination
of the shareholder entitled to an appraisal. Any shareholder whose name
appears on the list filed by Cubic pursuant to Section 18-1091 and who has
submitted stock certificates to the court clerk, if required, may participate
fully in all proceedings until it is finally determined that the shareholder
is not entitled to appraisal rights.
The court shall direct the payment of the fair value of the shares,
together with interest, if any, by Cubic to the shareholders entitled to
payment. Interest may be simple or compound, as the court may direct. Payment
shall be made to each such shareholder, in the case of holders of
uncertificated stock immediately, and in the case of holders of shares
represented by certificates upon the surrender to Cubic of the certificates
representing such stock. The court's decree may be enforced as other decrees
in the district court may be enforced, even though Cubic is domiciled in
Texas.
The costs of the proceeding may be determined by the court and taxed
upon the parties as the court deems equitable in the circumstances. Upon
application of a shareholder, the court may order all or a portion of the
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expenses incurred by any shareholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
of the shares entitled to an appraisal.
From and after the effective date of the merger, no shareholder who
has demanded appraisal rights shall be entitled to vote such stock for any
purpose or to receive payment of dividends or other distributions on the
stock, except dividends or other distributions payable to shareholders of
record at a date which is prior to the effective date of the merger;
provided, however, that if no petition for an appraisal shall be filed within
the time provided, or if such shareholder shall deliver to the surviving or
resulting corporation a written withdrawal of the shareholder's demand for an
appraisal and an acceptance of the merger, either within sixty (60) days
after the effective date of the merger or thereafter with the written
approval of Cubic, then the right of such shareholder to an appraisal shall
cease; provided, however, no appraisal proceeding in the district court shall
be dismissed as to any shareholder without the approval of the court, and
such approval may be conditioned upon such terms as the court deems just.
The shares of Cubic into which the shares of such objecting
shareholders would have been converted had they assented to the merger shall
have the status of authorized and unissued shares of Cubic.
THE FOREGOING SUMMARY DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF
THE RIGHTS OF DISSENTING SHAREHOLDERS, AND SUCH SUMMARY IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SECTION 18.1091 OF THE OKLAHOMA GENERAL CORPORATION
ACT, WHICH IS REPRODUCED IN FULL AS APPENDIX 1 HERETO.
CERTAIN DIFFERENCES BETWEEN ARTICLES AND BYLAWS OF ROSELAND AND CUBIC
Upon completion of the Reincorporation, the Cubic Articles of
Incorporation and Bylaws will become the charter and bylaws of the surviving
corporation. The Cubic Articles of Incorporation contain provisions relating
to indemnification of directors and limitation of liability that reflect
current Texas law, whereas the Company's Certificate of Incorporation
contains somewhat different provisions relating to Oklahoma law. The main
difference is that Cubic's bylaws contain mandatory indemnification
provisions and Roseland's bylaws contain permissive provisions. To act
without a meeting, the Company's Bylaws require the written consent of all of
the directors or the holders of at least the minimum number of shares as
would be required to approve the action at a meeting. In addition, as
discussed above, the Company's certificate of incorporation contains a
provision purporting to require the unanimous consent of shareholders to take
action without a shareholder meeting. The Board of Directors and management
of Roseland believe that this provision is not effective. However, under
Oklahoma law, in the event Roseland were to have more than 1,000 shareholders
of record, unanimous consent would be required unless the certificate of
incorporation is amended to remove this requirement. Cubic's Bylaws also
require the unanimous consent of the directors to act without a meeting of
the Board of Directors, but in the case of action by the shareholders without
a meeting, Cubic's Bylaws require only the written consent of the holders of
outstanding stock having not less than the number of votes that would have
been necessary to authorize such action at a meeting at which all shares
entitled to vote were present and voted.
Cubic's Articles of Incorporation are attached hereto as Appendix 2.
Copies of the Company's or Cubic's Certificate of Incorporation and Bylaws
are available for inspection by shareholders upon request to the Secretary of
the Company or Cubic, as appropriate.
ABANDONMENT OR AMENDMENT OF THE REINCORPORATION
The boards of directors of the Company and Cubic may terminate the
merger by mutual consent, whether before or after approval of the
Reincorporation by the Company's shareholders. In addition, the Company and
Cubic may by written agreement amend, modify or supplement any provision of
the Merger Agreement, provided that an amendment made subsequent to approval
of the Reincorporation by the Company's shareholders may not, without the
subsequent approval of the Company's shareholders,
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(a) alter or change the amount or kind of securities or rights to be
received for or on conversion of all or any of the shares of
capital stock of the Company or Cubic,
(b) alter or change any material term of the Articles of Incorporation of
Cubic, or
(c) alter or change any of the terms and conditions of the Merger
Agreement if such alteration or change would adversely affect the
shareholders of the Company or Cubic.
The only foreseeable event that the Company believes could cause the
Company or Cubic to abandon the proposed Reincorporation would be the
exercise by an unexpectedly large number of ROGI shareholders of dissenters'
rights of appraisal. The Company is not aware of, and does not contemplate,
any other circumstances that would cause the Company to abandon or amend the
terms of the proposed Reincorporation.
REGULATORY REQUIREMENTS
To its best knowledge, the Company is not required to comply with
any federal or state regulatory requirements other than filing of Articles of
Merger and a Certificate of Merger with the Oklahoma Secretary of State and
the Texas Secretary of State, respectively, or to seek any federal or state
regulatory approvals in connection with the Merger.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED
REINCORPORATION AND THE MERGER.
VOTE NECESSARY TO APPROVE PROPOSAL. The affirmative vote of the holders
of a majority of the outstanding shares of Common Stock entitled to vote at
the meeting is necessary for approval of Proposal 3. Therefore, abstentions
and broker non-votes effectively count as votes against the proposal.
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EXECUTIVE COMPENSATION
The total compensation for the three fiscal years ended June 30, 1998, for
William Vandever, the Company's former Chief Executive Officer and Calvin
Wallen III, the Company's current Chief Executive Officer is set forth below
in the following Summary Compensation Table. No other person received cash
compensation in excess of $100,000 during the fiscal year ended June 30, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Fiscal Annual Other Annual
Name and Principal Position Year Salary Compensation
- --------------------------- ------ ------ ------------
<S> <C> <C> <C>
William G. Vandever, 1998 15,000 0
Former President and CEO 1997 40,500 0
1996 72,000 0
Calvin Wallen III, President and CEO 1998* 0 0
1997 0 0
1996 0 0
</TABLE>
- -------------------------
* Mr. Wallen was elected CEO, President and Director in December 1997 and as
of June 15, 1999, has not received any compensation from the Company for his
services as Chief Executive Officer.
There were no options granted or exercised by any of the Company's directors
or officers for the fiscal year ended June 30, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1997, the Company entered into a Stock Purchase
Agreement (the "Agreement") with Calvin Wallen III or his designees, William
Bruggeman and Ruth Bruggeman, and Diversified Dynamics Corporation (together,
the "Buyers"). Pursuant to the Agreement, the Company 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, representing an aggregate of approximately
71.3% of the issued and outstanding shares of common stock of the Company,
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 exchange for the issuance of the Shares, the Buyers
conveyed to the Company the interests in certain oil and gas properties owned
by the Buyers, 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 Company. Prior to the negotiation and
execution of the Agreement, there were no material relationships between the
Company or any affiliates, officers or directors of the Company, 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, three
directors and officers resigned from the Company. On such date, Calvin Wallen
III and two others were appointed to serve as additional directors of the
Company (together with William G. Vandever and Gene C. Howard, each of whom
continued to serve as directors), and Calvin Wallen III was elected to serve
as the Company's President, Vice President and Treasurer.
In December 1997, the Company also entered into a contract with an
affiliate controlled by Calvin A. Wallen III, the Company's President and
Chief Executive Officer, to provide certain technical, administrative and
management services needed to conduct its business. The terms of the contract
provided for personnel to be contracted at current market rates in effect at
the time the agreement was executed. In addition, the Company's
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offices are subleased from an affiliate controlled by Mr. Wallen through
November 30, 1999. The monthly amount charged to the Company is based on
actual costs of materials and man-hours of the affiliates that are used
pursuant to the terms of the agreement. As of June 30, 1998, the Company had
accumulated $196,628 in accounts payable due affiliates that includes the
amounts owed for personnel and leasing of office space.
On December 10, 1998, the Company entered into an agreement with
Tauren Exploration Inc. ("Tauren") that provides for Tauren to drill on the
Company's Section 11 in Palo Pinto County, Texas. The agreement grants Tauren
a farm-out retaining a 7.5% overriding royalty interest. The agreement also
grants the Company preferential rights in the event that Tauren, at some
later date, decides to divest part or all of their interests in the drilled
wells. Tauren is an affiliate of Calvin Wallen, III, an officer, director and
majority shareholder of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely on a review of copies of the
reports required pursuant to Section 16(a) of the Securities Exchange Act of
1934, as amended, that have been furnished to the Company and written
representations that no other reports were required, during the year ended
June 30, 1998 all Section 16(a) filing requirements applicable to its
directors, executive officers and greater than 10% beneficial owners have
been met.
ADDITIONAL INFORMATION
PROXY SOLICITATION EXPENSES. The Company will bear all costs of this
proxy solicitation. Proxies may be solicited by mail, in person or by
telephone or facsimile transmission by officers, directors and regular
employees of the Company. The Company may also reimburse brokerage firms,
custodians, nominees and fiduciaries for their expenses to forward proxy
materials to beneficial owners.
SHAREHOLDER PROPOSALS. Any shareholder of the Company who desires to
present a proposal for consideration at next year's annual meeting of
shareholders must deliver the proposal to the Company's principal executive
offices no later than January 1, 2000, unless the Company notifies the
shareholders otherwise. Only those proposals that are proper for shareholder
action may be included in the Company's proxy statement. Written requests for
inclusion should be addressed to Corporate Secretary, Roseland Oil and Gas,
Inc., 1720 Northwest Highway, Suite 320, Garland, Texas 75041.
SHAREHOLDER LIST. The Company will maintain at its corporate offices at
Roseland Oil and Gas, Inc., 1720 Northwest Highway, Suite 320, Garland,
Texas, a list of the shareholders entitled to vote at the annual meeting, and
the list will be open for examination by any shareholder, for purposes
germane to the meeting, during ordinary business hours for a period of 10
days prior the meeting. The list will also be available for examination at
the meeting itself.
ANNUAL REPORT ON FORM 10-KSB. A copy of the Company's Annual Report on
Form 10-KSB, without exhibits, for the fiscal year ended June 30, 1998, is
being provided to all shareholders with this Proxy Statement. In addition,
the EDGAR version of the Company's Annual Report on Form 10-KSB (with
exhibits) is available via the Internet at the World Wide Web site of the
Securities and Exchange Commission (www.sec.gov).
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Calvin A. Wallen III
Calvin A. Wallen III
President and Chairman
Garland, Texas
July 16, 1999
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LIST OF APPENDICES
Appendix 1 - Oklahoma General Corporation Act, Section 18-1091 - Dissenter's
Rights
Appendix 2 - Articles of Incorporation of Cubic Energy, Inc., a Texas
corporation
Appendix 3 -Agreement and Plan of Merger between Roseland Oil and Gas, Inc.,
an Oklahoma corporation, and Cubic Energy, Inc., a Texas corporation
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APPENDIX 1
OKLAHOMA GENERAL CORPORATION ACT Section 18-1091
APPRAISAL / DISSENTERS' RIGHTS
A. Any shareholder of a corporation of this state who holds shares
of stock on the date of the making of a demand pursuant to the provisions of
subsection D of this section with respect to the shares, who continuously
holds the shares through the effective date of the merger or consolidation,
who has otherwise complied with the provisions of subsection D of this
section and who has neither voted in favor of the merger or consolidation nor
consented thereto in writing pursuant to the provisions of Section 1073 of
this title shall be entitled to an appraisal by the district court of the
fair value of the shares of stock under the circumstances described in
subsections B and C of this section. As used in this section, the word
"shareholder" means a holder of record of stock in a stock corporation and
also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
"depository receipt" means an instrument issued by a depository representing
an interest in one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository. The provisions of
this subsection shall be effective only with respect to mergers or
consolidations consummated pursuant to an agreement of merger or
consolidation entered into after November 1, 1988.
B. 1. Except as otherwise provided for in this subsection, appraisal
rights shall be available for the shares of any class or series of stock of a
constituent corporation in a merger or consolidation, or of the acquired
corporation in a share acquisition, to be effected pursuant to the provisions
of Section 1081, other than a merger effected pursuant to subsection G of
Section 1081, and Sections 1082, 1086, 1087, 1090.1 or 1090.2 of this title.
2. a. No appraisal rights under this section shall be available for
the shares of any class or series of stock which stock, or depository
receipts in respect thereof, at the record date fixed to determine the
shareholders entitled to receive notice of and to vote at the meeting
of shareholders to act upon the agreement of merger or consolidation,
were either:
(1) listed on a national securities exchange or
designated as a national market system security on an
interdealer quotation system by the National Association of
Securities Dealers, Inc.; or
(2) held of record by more than two thousand holders.
No appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not
require for its approval the vote of the shareholders of the surviving
corporation as provided in subsection G of Section 1081 of this title.
b. In addition, no appraisal rights shall be available for any
shares of stock, or depository receipts in respect thereof, of the
constituent corporation surviving a merger if the merger did not
require for its approval the vote of the shareholders of the surviving
corporation as provided for in subsection F of Section 1081 of this
title.
3. Notwithstanding the provisions of paragraph 2 of this subsection,
appraisal rights provided for in this section shall be available for the
shares of any class or series of stock of a constituent corporation if the
holders thereof are required by the terms of an agreement of merger or
consolidation pursuant to the provisions of Sections 1081, 1082, 1086, 1087,
1090.1 or 1090.2 of this title to accept for the stock anything except:
a. shares of stock of the corporation surviving or
resulting from the merger or consolidation or depository receipts
thereof, or
27
<PAGE>
b. shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock or depository
receipts at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by
the National Association of Securities Dealers, Inc. or held of record
by more than two thousand holders, or
c. cash in lieu of fractional shares or fractional
depository receipts described in subparagraphs a and b of this
paragraph, or
d. any combination of the shares of stock, depository
receipts, and cash in lieu of the fractional shares or depository
receipts described in subparagraphs a, b, and c of this paragraph.
4. In the event all of the stock of a subsidiary Oklahoma
corporation party to a merger effected pursuant to the provisions of Section
1083 of this title is not owned by the parent corporation immediately prior
to the merger, appraisal rights shall be available for the shares of the
subsidiary Oklahoma corporation.
C. Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or substantially
all of the assets of the corporation. If the certificate of incorporation
contains such a provision, the procedures of this section, including those
set forth in subsections D and E of this section, shall apply as nearly as is
practicable.
D. Appraisal rights shall be perfected as follows:
1. If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a meeting
of shareholders, the corporation, not less than twenty (20) days prior to the
meeting, shall notify each of its shareholders entitled to appraisal rights
that appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in the notice a copy of this
section. Each shareholder electing to demand the appraisal of the shares of
the shareholder shall deliver to the corporation, before the taking of the
vote on the merger or consolidation, a written demand for appraisal of the
shares of the shareholder. The demand will be sufficient if it reasonably
informs the corporation of the identity of the shareholder and that the
shareholder intends thereby to demand the appraisal of the shares of the
shareholder. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A shareholder electing to take such action must do
so by a separate written demand as herein provided. Within ten (10) days
after the effective date of the merger or consolidation, the surviving or
resulting corporation shall notify each shareholder of each constituent
corporation who has complied with the provisions of this subsection and has
not voted in favor of or consented to the merger or consolidation as of the
date that the merger or consolidation has become effective; or
2. If the merger or consolidation is approved pursuant to the
provisions of Section 1073 or 1083 of this title, each constituent
corporation, either before the effective date of the merger or consolidation
or within ten (10) days thereafter, shall notify each of the holders of any
class or series of stock of such constituent corporation who are entitled to
appraisal rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the class or
series of stock of the constituent corporation, and shall include in such
notice a copy of this section; provided, if the notice is given on or after
the effective date of the merger or consolidation, the notice shall be given
by the surviving or resulting corporation to all the holders of any class or
series of stock of a constituent corporation that are entitled to appraisal
rights. The notice may, and, if given on or after the effective date of the
merger or consolidation, shall, also notify the shareholders of the effective
date of the merger or consolidation. Any shareholder entitled to appraisal
rights may, within twenty (20) days after the date of mailing of the notice,
demand in writing from the surviving or resulting corporation the appraisal
of the holder's shares. The demand will be sufficient if it reasonably
informs the corporation of the identity of the shareholder and that the
shareholder intends to demand the appraisal of the holder's shares. If the
notice does not notify shareholders of the effective date of the merger or
consolidation either:
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a. each constituent corporation shall send a second notice
before the effective date of the merger or consolidation notifying each
of the holders of any class or series of stock of the constituent
corporation that are entitled to appraisal rights of the effective date
of the merger or consolidation, or
b. the surviving or resulting corporation shall send a second
notice to all holders on or within ten (10) days after the effective
date of the merger or consolidation; provided, however, that if the
second notice is sent more than twenty (20) days following the mailing
of the first notice, the second notice need only be sent to each
shareholder who is entitled to appraisal rights and who has demanded
appraisal of the holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer
agent of the corporation that is required to give either notice that
the notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of determining
the shareholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more
than ten (10) days prior to the date the notice is given; provided, if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be the effective date. If no
record date is fixed and the notice is given prior to the effective
date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
E. Within one hundred twenty (120) days after the effective date of
the merger or consolidation, the surviving or resulting corporation or any
shareholder who has complied with the provisions of subsections A and D of
this section and who is otherwise entitled to appraisal rights, may file a
petition in district court demanding a determination of the value of the
stock of all such shareholders; provided, however, at any time within sixty
(60) days after the effective date of the merger or consolidation, any
shareholder shall have the right to withdraw the demand of the shareholder
for appraisal and to accept the terms offered upon the merger or
consolidation. Within one hundred twenty (120) days after the effective date
of the merger or consolidation, any shareholder who has complied with the
requirements of subsections A and D of this section, upon written request,
shall be entitled to receive from the corporation surviving the merger or
resulting from the consolidation a statement setting forth the aggregate
number of shares not voted in favor of the merger or consolidation and with
respect to which demands for appraisal have been received and the aggregate
number of holders of the shares. The written statement shall be mailed to the
shareholder within ten (10) days after the shareholder's written request for
a statement is received by the surviving or resulting corporation or within
ten (10) days after expiration of the period for delivery of demands for
appraisal pursuant to the provisions of subsection D of this section,
whichever is later.
F. Upon the filing of any such petition by a shareholder, service of
a copy thereof shall be made upon the surviving or resulting corporation,
which, within twenty (20) days after service, shall file, in the office of
the court clerk of the district court in which the petition was filed, a duly
verified list containing the names and addresses of all shareholders who have
demanded payment for their shares and with whom agreements regarding the
value of their shares have not been reached by the surviving or resulting
corporation. If the petition shall be filed by the surviving or resulting
corporation, the petition shall be accompanied by such duly verified list.
The court clerk, if so ordered by the court, shall give notice of the time
and place fixed for the hearing on the petition by registered or certified
mail to the surviving or resulting corporation and to the shareholders shown
on the list at the addresses therein stated. Notice shall also be given by
one or more publications at least one (1) week before the day of the hearing,
in a newspaper of general circulation published in the City of Oklahoma City,
Oklahoma, or other publication as the court deems advisable. The forms of the
notices by mail and by publication shall be approved by the court, and the
costs thereof shall be borne by the surviving or resulting corporation.
G. At the hearing on the petition, the court shall determine the
shareholders who have complied with the provisions of this section and who
have become entitled to appraisal rights. The court may require the
shareholders who have demanded an appraisal of their shares and who hold
stock represented by certificates to submit their certificates of stock to
the court clerk for notation thereon of the pendency of the appraisal
proceedings; and if any shareholder fails to comply with this direction, the
court may dismiss the proceedings as to that shareholder.
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H. After determining the shareholders entitled to an appraisal, the
court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. In determining the fair
value, the court shall take into account all relevant factors. In determining
the fair rate of interest, the court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have to pay to borrow money during the pendency of the proceeding. Upon
application by the surviving or resulting corporation or by any shareholder
entitled to participate in the appraisal proceeding, the court may, in its
discretion, permit discovery or other pretrial proceedings and may proceed to
trial upon the appraisal prior to the final determination of the shareholder
entitled to an appraisal. Any shareholder whose name appears on the list
filed by the surviving or resulting corporation pursuant to the provisions of
subsection F of this section and who has submitted the certificates of stock
of the shareholder to the court clerk, if required, may participate fully in
all proceedings until it is finally determined that the shareholder is not
entitled to appraisal rights pursuant to the provisions of this section.
I. The court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the shareholders entitled thereto. Interest may be simple or
compound, as the court may direct. Payment shall be made to each shareholder,
in the case of holders of uncertificated stock immediately, and in the case
of holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing the stock. The court's decree
may be enforced as other decrees in the district court may be enforced,
whether the surviving or resulting corporation be a corporation of this state
or of any other state.
J. The costs of the proceeding may be determined by the court and
taxed upon the parties as the court deems equitable in the circumstances.
Upon application of a shareholder, the court may order all or a portion of
the expenses incurred by any shareholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
of the shares entitled to an appraisal.
K. From and after the effective date of the merger or consolidation,
no shareholder who has demanded appraisal rights as provided for in
subsection D of this section shall be entitled to vote the stock for any
purpose or to receive payment of dividends or other distributions on the
stock, except dividends or other distributions payable to shareholders of
record at a date which is prior to the effective date of the merger or
consolidation; provided, however, that if no petition for an appraisal shall
be filed within the time provided for in subsection E of this section, or if
the shareholder shall deliver to the surviving or resulting corporation a
written withdrawal of the shareholder's demand for an appraisal and an
acceptance of the merger or consolidation, either within sixty (60) days
after the effective date of the merger or consolidation as provided for in
subsection E of this section or thereafter with the written approval of the
corporation, then the right of the shareholder to an appraisal shall cease;
provided further, no appraisal proceeding in the district court shall be
dismissed as to any shareholder without the approval of the court, and
approval may be conditioned upon terms as the court deems just.
L. The shares of the surviving or resulting corporation into which
the shares of any objecting shareholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized
and unissued shares of the surviving or resulting corporation.
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APPENDIX 2
ARTICLES OF INCORPORATION OF CUBIC ENERGY, INC.
ARTICLE ONE
The name of the Corporation is Cubic Energy, Inc.
ARTICLE TWO
The period of duration of the Corporation is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is to engage in
the transaction of any and all lawful business for which corporations may be
incorporated under the Texas Business Corporation Act.
ARTICLE FOUR
The total number of shares of all classes of capital stock which the
Corporation has authority to issue is sixty million (60,000,000), of which
(a) fifty million (50,000,000) shares are designated Common Stock, par value
$.05 per share, and (b) ten million (10,000,000) shares are designated
Preferred Stock, par value $.01 per share.
The following is a statement of the designations, preferences,
limitations, and relative rights, including voting rights, in respect of the
classes of stock of the Corporation and of the authority with respect thereto
expressly vested in the Board of Directors of the Corporation:
A. Common Stock
(1) Each share of Common Stock of the Corporation shall have
identical rights and privileges in every respect. The holders of shares of
Common Stock shall be entitled to vote upon all matters submitted to a vote
of the shareholders of the Corporation and shall be entitled to one vote for
each share of Common Stock held.
(2) Subject to the prior rights and preferences, if any, applicable
to shares of the Preferred Stock or any series thereof, the holders of shares
of the Common Stock shall be entitled to receive such dividends (payable in
cash, stock, or otherwise) as may be declared thereon by the Board of
Directors at any time and from time to time out of any funds of the
Corporation legally available therefor.
(3) In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation, after distribution in full of
the preferential amounts, if any, to be distributed to the holders of shares
of the Preferred Stock or any series thereof, the holders of shares of the
Common Stock shall be entitled to receive all of the remaining assets of the
Corporation available for distribution to its shareholders, ratably in
proportion to the number of shares of the Common Stock held by them. A
liquidation, dissolution, or winding-up of the Corporation, as such terms are
used in this Paragraph (3), shall not be deemed to be occasioned by or to
include any merger of the Corporation with or into one or more corporations
or other entities, any acquisition or exchange of the outstanding shares of
one or more classes or series of the Corporation, or any sale, lease,
exchange, or other disposition of all or a part of the assets of the
Corporation.
B. Preferred Stock
(4) Shares of the Preferred Stock may be issued from time to time in
one or more series, the shares of each series to have such designations,
preferences, limitations, and relative rights, including voting rights, as
shall be stated and expressed herein or in a resolution or resolutions
providing for the issue of such series adopted by the
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Board of Directors of the Corporation. Each such series of Preferred Stock
shall be designated so as to distinguish the shares thereof from the shares
of all other series and classes. The Board of Directors of the Corporation is
hereby expressly authorized, subject to the limitations provided by law, to
establish and designate series of the Preferred Stock, to fix the number of
shares constituting each series, and to fix the designations and the
preferences, limitations, and relative rights, including voting rights, of
the shares of each series and the variations of the relative rights and
preferences as between series, and to increase and to decrease the number of
shares constituting each series, provided that the Board of Directors may not
decrease the number of shares within a series to less than the number of
shares within such series that are then issued. The relative powers, rights,
preferences, and limitations may vary between and among series of Preferred
Stock in any and all respects so long as all shares of the same series are
identical in all respects, except that shares of any such series issued at
different times may have different dates from which dividends thereon
cumulate. The authority of the Board of Directors of the Corporation with
respect to each series shall include, but shall not be limited to, the
authority to determine the following:
(a) The designation of such series;
(b) The number of shares initially constituting such series;
(c) The rate or rates and the times at which dividends on the
shares of such series shall be paid, the periods in respect of which
dividends are payable, the conditions upon such dividends, the
relationship and preferences, if any, of such dividends to dividends
payable on any other class or series of shares, whether or not such
dividends shall be cumulative, partially cumulative, or noncumulative,
if such dividends shall be cumulative or partially cumulative, the date
or dates from and after which, and the amounts in which, they shall
accumulate, whether such dividends shall be share dividends, cash or
other dividends, or any combination thereof, and if such dividends
shall include share dividends, whether such share dividends shall be
payable in shares of the same or any other class or series of shares of
the Corporation (whether now or hereafter authorized), or any
combination thereof and the other terms and conditions, if any,
applicable to dividends on shares of such series. The Board of
Directors of the Corporation is hereby expressly empowered, subject to
the limitations provided by law, to authorize the Corporation to pay
share dividends on any class or series of capital stock of the
Corporation (whether now or hereafter authorized) payable in shares of
the same or any other class or series of capital stock of the
Corporation (whether now or hereafter authorized) or any combination
thereof;
(d) Whether or not the shares of such series shall be
redeemable or subject to repurchase at the option of the Corporation or
the holder thereof or upon the happening of a specified event, if such
shares shall be redeemable, the terms and conditions of such
redemption, including but not limited to the date or dates upon or
after which such shares shall be redeemable, the amount per share which
shall be payable upon such redemption, which amount may vary under
different conditions and at different redemption dates, and whether
such amount shall be payable in cash, property, or rights, including
securities of the Corporation or another corporation;
(e) The rights of the holders of shares of such series (which
may vary depending upon the circumstances or nature of such
liquidation, dissolution, or winding up) in the event of voluntary or
involuntary liquidation, dissolution, or winding up of the Corporation
and the relationship or preference, if any, of such rights to rights of
holders of stock of any other class or series. A liquidation,
dissolution, or winding up of the Corporation, as such terms are used
in this subparagraph (e), shall not be deemed to be occasioned by or to
include any merger of the Corporation with or into one or more
corporations or other entities, any acquisition or exchange of the
outstanding shares of one or more classes or series of the Corporation,
or any sale, lease, exchange, or other disposition of all or part of
the assets of the Corporation;
(f) Whether or not the shares of such series shall have voting
powers and, if such shares shall have such voting powers, the terms and
conditions thereof, including, but not limited to, the right of the
holders of such shares to vote as a separate class either alone or with
the holders of shares of one or more other
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classes or series of stock and the right to have more (or less) than
one vote per share; provided, however, that the right to cumulate votes
for the election of directors is expressly denied and prohibited;
(g) Whether or not a sinking fund shall be provided for the
redemption of the shares of such series and, if such a sinking fund
shall be provided, the terms and conditions thereof;
(h) Whether or not a purchase fund shall be provided for the
shares of such series and, if such a purchase fund shall be provided,
the terms and conditions thereof;
(i) Whether or not the shares of such series, at the option of
either the Corporation or the holder or upon the happening of a
specified event, shall be convertible into stock of any other class or
series and, if such shares shall be so convertible, the terms and
conditions of conversion, including, but not limited to, any provision
for the adjustment of the conversion rate or the conversion price;
(j) Whether or not the shares of such series, at the option of
either the Corporation or the holder or upon the happening of a
specified event, are exchangeable for securities, indebtedness, or
property of the Corporation and, if such shares shall be so
exchangeable, the terms and conditions of exchange, including, but not
limited to, any provision for the adjustment of the exchange rate or
the exchange price; and
(k) Any other preferences, limitations, and relative rights as
shall not be inconsistent with the provisions of this Article Four or
the limitations provided by law.
(5) Except as otherwise required by law or in any resolution of the
Board of Directors creating any series of Preferred Stock, the holders of
shares of Preferred Stock and all series thereof who are entitled to vote
shall vote together with the holders of shares of Common Stock, and not
separately by class.
ARTICLE FIVE
No holder of any shares of capital stock of the Corporation, whether
now or hereafter authorized, shall, as such holder, have any preemptive or
preferential right to receive, purchase, or subscribe to (a) any unissued or
treasury shares of any class of stock (whether now or hereafter authorized)
of the Corporation, (b) any obligations, evidences of indebtedness, or other
securities of the Corporation convertible into or exchangeable for, or
carrying or accompanied by any rights to receive, purchase, or subscribe to,
any such unissued or treasury shares, (c) any right of subscription to, any
right to receive, or any warrant or option for the purchase of, any of the
foregoing securities, or (d) any other securities that may he issued or sold
by the Corporation.
ARTICLE SIX
The Corporation will not commence business until it has received for
the issuance of its shares consideration of the value of $1,000.00,
consisting of money, labor done, or property actually received.
ARTICLE SEVEN
Cumulative voting for the election of directors is expressly denied
and prohibited.
ARTICLE EIGHT
The Corporation has power and authority to indemnify any person to
the fullest extent permitted by law.
ARTICLE NINE
Any action of the Corporation which, under the provisions of the
Texas Business Corporation Act or any other applicable law, is required to be
authorized or approved by the holders of any specified fraction which is in
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excess of one-half or any specified percentage which is in excess of fifty
percent of the outstanding shares (or of any class or series thereof) of the
Corporation shall, notwithstanding any law, be deemed effectively and
properly authorized or approved if authorized or approved by the vote of the
holders of more than fifty percent of the outstanding shares entitled to vote
thereon (or, if the holders of any class or series of the Corporation's
shares shall be entitled by the Texas Business Corporation Act or any other
applicable law to vote thereon separately as a class, by the vote of the
holders of more than fifty percent of the outstanding shares of each such
class or series). Without limiting the generality of the foregoing, the
foregoing provisions of this Article Nine shall be applicable to any required
shareholder authorization or approval of: (a) any amendment to these articles
of incorporation; (b) any plan of merger, share exchange, or reorganization
involving the Corporation; (c) any sale, lease, exchange, or other
disposition of all, or substantially all, the property and assets of the
Corporation; and (d) any voluntary dissolution of the Corporation.
Directors of the Corporation shall be elected by a plurality of the
votes cast by the holders of shares entitled to vote in the election of
directors of the Corporation at a meeting of shareholders at which a quorum
is present.
Except as otherwise provided in this Article Nine or as otherwise
required by the Texas Business Corporation Act or other applicable law, with
respect to any matter, the affirmative vote of the holders of a majority of
the Corporation's shares entitled to vote on, and voted for or against, that
matter at a meeting of shareholders at a meeting of shareholders at which a
quorum is present shall be the act of the shareholders.
Nothing contained in this Article Nine is intended to require
shareholder authorization or approval of any action of the Corporation
whatsoever unless such approval is specifically required by the other
provisions of these articles of incorporation, the bylaws of the Corporation,
or by the Texas Business Corporation Act or other applicable law.
ARTICLE TEN
The street address of the initial registered office of the
Corporation is 1720 Northwest Highway, Suite 320, Garland, Texas 75041, and
the name of its initial registered agent at such address is Calvin A. Wallen
III.
ARTICLE ELEVEN
The number of directors constituting the initial Board of Directors
is four (4) and the names and addresses of each person who is to serve as
director until the first annual meeting of shareholders and until such
director's successor is elected and qualified or, if earlier, until such
director's death, resignation, or removal as director, are as follows:
NAME ADDRESS
Calvin A. Wallen III 1720 Northwest Highway
Suite 320
Garland, Texas 75041
Jon S. Ross 1720 Northwest Highway
Suite 320
Garland, Texas 75041
Gene C. Howard 1720 Northwest Highway
Suite 320
Garland, Texas 75041
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William Bruggeman 1720 Northwest Highway
Suite 320
Garland, Texas 75041
ARTICLE TWELVE
To the fullest extent permitted by applicable law, a director of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for an act or omission in the director's capacity as a
director.
Any repeal or amendment of this Article Twelve by the shareholders
of the Corporation shall be prospective only and shall not adversely affect
any limitation on the personal liability of a director of the Corporation
arising from an act or omission occurring prior to the time of such repeal or
amendment. In addition to the circumstances in which a director of the
Corporation is not personally liable as set forth in the foregoing provisions
of this Article Twelve, a director shall not be liable to the Corporation or
its shareholders to such further extent as permitted by any law hereafter
enacted, including without limitation any subsequent amendment to the Texas
Miscellaneous Corporation Laws Act or the Texas Business Corporation Act.
ARTICLE THIRTEEN
Any action which may be taken, or which is required by law or the
Articles of Incorporation or bylaws of the Corporation to be taken, at any
annual or special meeting of shareholders may be taken without a meeting,
without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall have been signed by the
holder or holders of shares having not less than the minimum number of votes
that would be necessary to take such action at a meeting at which the holders
of all shares entitled to vote on the action were present and voted.
ARTICLE FOURTEEN
The name and address of the incorporator are as follows:
NAME ADDRESS
David A. Wood Wood, Exall & Bonnet, L.L.P.
714 Jackson Street, Suite 300
Dallas, Texas 75202
IN WITNESS WHEREOF, I have hereunto set my hand this ___th day of August,
1999.
- ------------------------------
David A. Wood, Incorporator
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APPENDIX 3
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of August __, 1999, by and among Cubic Energy, Inc., a Texas
corporation ("Cubic"), and Roseland Oil and Gas, Inc., an Oklahoma
corporation ("Roseland").
A. Roseland desires to merge with and into Cubic, and Cubic desires
to merge with Roseland (the "Merger").
B. The terms and conditions of Merger, the mode of carrying the
Merger into effect, the manner and basis of canceling the shares of $.05 par
value common stock of Roseland ("Roseland Common Stock"), the issuance of the
shares of $.05 par value common stock of Cubic ("Cubic Common Stock"), and
such other terms and provisions as the parties desire to be stated in this
Agreement are set forth below.
C. The current shareholders of Roseland shall be the only
shareholders of Cubic immediately upon the completion of the Merger, and each
such shareholder shall own the same percentage of Cubic Common Stock as such
shareholder owned of Roseland Common Stock prior to the Merger.
D. The Boards of Directors of Roseland and Cubic deem the Merger to
be desirable and in the best interests of their respective corporations and
shareholders, and a majority of the shareholders of each of Roseland and
Cubic have approved the Merger.
THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
ARTICLE I -- THE MERGER
1.1 Merger. At the Effective Time (as defined in Section 1.2),
Roseland shall be merged with and into Cubic, the separate existence of
Roseland shall cease, and Cubic, as the surviving corporation (the "Surviving
Corporation"), shall continue to exist by virtue of and shall be governed by
the laws of the State of Texas, and the name of the Surviving Corporation
shall be "Cubic Energy, Inc."
1.2 Effective Time of Merger. The Articles of Merger (the "Articles
of Merger") setting forth the information required by, and otherwise in
compliance with, the Texas Business Corporation Act with respect to the
Merger, shall be delivered for filing with the Secretary of State of the
State of Texas. The Certificate of Merger (the "Oklahoma Certificate")
setting forth the information required by, and otherwise in compliance with,
the Oklahoma General Corporation Act with respect to the Merger, shall be
delivered for filing with the Secretary of State of the State of Oklahoma.
The Merger shall become effective on the day and at the time the Secretary of
State of the State of Texas files such Articles of Merger (the time of such
effectiveness is herein called the "Effective Time") and upon the filing with
the Secretary of State of the State of Oklahoma of the Oklahoma Certificate.
Notwithstanding the foregoing, either Roseland or Cubic, by action of its
Board of Directors, may terminate this Agreement at any time prior to the
earlier of (i) the filing of the Articles of Merger with the Secretary of
State of the State of Texas or (ii) the filing of the Oklahoma Certificate
with the Oklahoma Secretary of State.
1.3 Effects of Merger. At the Effective Time, Cubic, without further
action, as provided by the laws of the State of Oklahoma and the laws of the
State of Texas, shall succeed to and possess all of the rights, privileges,
powers, and franchises, of a public as well as of a private nature, of
Roseland; and all property, real, personal and mixed, and all debts due on
whatsoever account, including subscriptions to shares, and all and every
other interest, of or belonging to or due to Roseland shall be deemed to be
vested in Cubic without further act or deed; and the title to any real
estate, or any interest therein, vested in Cubic or Roseland shall not revert
or be in any way impaired by reason of the Merger. Such transfer to and
vesting in Cubic shall be deemed to occur by operation of law, and no consent
or approval of any other person shall be required in connection with any such
transfer or
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vesting unless such consent or approval is specifically required in the event
of merger or consolidation by law or express provision in any contract,
agreement, decree, order, or other instrument to which Cubic or Roseland is a
party or by which either of them is bound. Cubic shall thenceforth be
responsible and liable for all debts, liabilities, and duties of Roseland
which may be enforced against Cubic to the same extent as if said debts,
liabilities, and duties had been incurred or contracted by it. Neither the
rights of creditors nor any liens upon the property of Roseland and Cubic
shall be impaired by the Merger.
1.4 Articles of Incorporation. The Articles of Incorporation of
Cubic before the merger shall be and remain the Articles of Incorporation of
Cubic after the Effective Time, until the same shall thereafter be altered,
amended, or repealed in accordance with law and Cubic's Articles of
Incorporation.
1.5 Bylaws. The Bylaws of Cubic as in effect at the Effective Time
shall be and remain the Bylaws of Cubic, as the Surviving Corporation, until
the same shall be altered, amended, or repealed in accordance with law,
Cubic's Articles of Incorporation, or such Bylaws.
ARTICLE II -- EFFECT ON OUTSTANDING STOCK
2.1 Cubic Common Stock. At the Effective Time, all of the shares of
Cubic Common Stock that were outstanding immediately before the Effective
Time shall, without any action on the part of the holder thereof, be canceled.
2.2 Roseland Common Stock. At the Effective Time, each outstanding
share of Roseland Common Stock shall, without any action on the part of the
holders thereof, be deemed converted into and represent the same number of
shares of Cubic Common Stock as each holder of Roseland Common Stock owned
prior to the Merger.
2.3 Surrender of Certificates of Roseland Common Stock. At the
Effective Time, the certificate(s) representing Roseland Common Stock shall
be deemed for all purposes to evidence shares of Cubic Common Stock.
ARTICLE III -- OFFICERS AND DIRECTORS
3.1 Directors. At the Effective Time, each of the persons who was
serving as a director of Cubic immediately prior to the Effective Time shall
continue to be a director of Cubic, and shall serve in such capacity until
the next annual meeting of shareholders of Cubic and until his successor is
duly elected and qualified or, if earlier, until his death, resignation, or
removal from office.
3.2 Officers. At the Effective Time, each of the persons who was
serving as an officer of Cubic immediately prior to the Effective Time shall
continue to be an officer of Cubic and shall continue to serve in such
capacity at the direction of the Board of Directors of Cubic or, if earlier,
until their respective death or resignation.
ARTICLE IV -- MISCELLANEOUS
4.1 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
4.2 Amendment. To the extent permitted by law, this Agreement may be
amended or supplemented at any time and in any respect, to the extent such
amendment or supplement relates to the Merger, by action taken by the Boards
of Directors of Roseland and Cubic, if prior to the Effective Time, or by the
Board of Directors of Cubic, if on or after the Effective Time.
4.3 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas with respect to all
matters, except to the extent the laws of the State of Oklahoma apply to
matters of corporate governance relating to Roseland.
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4.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
4.5 Service of Process. In accordance with Section 1082(D) of the
Oklahoma General Corporation Act, Cubic agrees that it may be served with
process in the State of Oklahoma in any proceeding for enforcement of any
obligation of Roseland, as well as for enforcement of any obligation of Cubic
arising from the merger or consolidation, including any suit or other
proceeding to enforce the right of any shareholders as determined in
appraisal proceedings pursuant to the provisions of Section 1091 of the
Oklahoma General Corporation Act, and Cubic irrevocably appoints the
Secretary of State as Cubic's agent to accept service of process in any suit
or other proceedings and specifies 1720 Northwest Highway, Suite 320,
Garland, Texas 75041 as the address to which a copy of process shall be
mailed by the Oklahoma Secretary of State.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first written above.
CUBIC ENERGY, INC.,
a Texas corporation
By: -------------------------------
Calvin A. Wallen III, President
ROSELAND OIL AND GAS, INC.,
an Oklahoma corporation
By: -------------------------------
Calvin A. Wallen III, President
The undersigned secretary of Roseland Oil and Gas, Inc. hereby certifies that
a majority of the outstanding stock of Roseland entitled to vote thereon has
been voted for the adoption of this Agreement and the Merger.
ROSELAND OIL AND GAS, INC.,
an Oklahoma corporation
By: -------------------------------
Jon S. Ross, Secretary
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<PAGE>
[FRONT]
ROSELAND OIL AND GAS, INC.
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 16, 1999
AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF ROSELAND OIL AND GAS, INC.
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of Roseland Oil And Gas, Inc. (the "Company") to be
held on August 16, 1999 and the related Proxy Statement; (b) appoints Calvin
A. Wallen III and Jon S. Ross, or either of them, as Proxies, each with the
power to appoint a substitute; (c) authorizes the Proxies to represent and
vote, as designated on the reverse, all the shares of the Company's common
stock, par value $.05 per share (the "Common Stock"), held of record by the
undersigned on July 30, 1999 at such Annual Meeting and any adjournments or
postponements thereof; and (d) revokes any proxies previously given.
(TO BE SIGNED ON REVERSE SIDE)
39
<PAGE>
[REVERSE]
1. Election of three directors
Nominees: Calvin A. Wallen III, Gene Howard, Jon S. Ross and William
Bruggeman
[ ] FOR all nominees [ ] AGAINST all nominees
To vote for fewer than all nominees, print the names of the nominees you wish
to vote FOR in the following space:
2. Ratification of the selection of Weaver & Tidwell LLP as the Company's
independent auditors for the fiscal year ending June 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the reincorporation of the Company as a Texas corporation and a
related Agreement and Plan of Merger pursuant to which the Company will be
merged into a wholly-owned Texas subsidiary, Cubic Energy, Inc. ("Cubic").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote on such other
business as may properly come before the meeting or any adjournment(s)
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS, FOR
RATIFICATION OF THE INDEPENDENT AUDITORS, AND FOR APPROVAL OF THE
REINCORPORATION.
Please sign, date and return this proxy as promptly as possible in the
envelope provided.
Dated: _____________________, 1999
-------------------------------------------------
Signature(s) of Shareholder(s)
EACH JOINT OWNER SHOULD SIGN. SIGNATURES SHOULD
CORRESPOND WITH THE NAMES PRINTED ON THIS PROXY.
ATTORNEYS, EXECUTORS, ADMINISTRATORS, GUARDIANS,
TRUSTEES, CORPORATE OFFICERS OR OTHERS SIGNING IN
A REPRESENTATIVE CAPACITY SHOULD GIVE FULL TITLE.
40
