STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is executed this 2nd day of
July 1997, by and among ROAD RUNNER OIL, INC., a Utah corporation ("Buyer")
and CROWN ENERGY CORPORATION, a Utah corporation ("Seller") which is the sole
shareholder of GAVILAN PETROLEUM, INCORPORATED, a Utah corporation
("Company").
WHEREAS, the Company is a privately-held Utah corporation which is in
the business of oil and gas leasing and management and which owns oil and gas
interests and operating rights in the Roosevelt Unit; and
WHEREAS, Seller is the owner of all of the issued and outstanding shares
of the capital stock of the Company and its operating rights in and to the
Roosevelt Unit which is currently operated by the Company, and
WHEREAS, Buyer is interested in acquiring the Company; and
WHEREAS, the parties intend by this Agreement to provide for the
acquisition by Buyer of all the issued and outstanding capital stock of the
Company, and all other rights relating to the capital stock of the Company,
owned legally or beneficially by Seller (the "Shares"), through the cash
purchase of said stock by Buyer.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth herein, it is agreed as follows:
1. Purchase and Delivery of Company Shares. Subject to the terms and
conditions contained herein, at the Closing (as hereinafter defined), Buyer
agrees to purchase and Seller agrees to sell, transfer, convey, assign and
deliver of all the issued and outstanding capital stock of the Company, and
all other rights relating to the capital stock of the Company, owned legally
or beneficially by Seller (the "Shares") to Buyer, for the consideration
described in Section 2 below.
2. Consideration.
(a) Purchase Price. The purchase price for the Shares shall be
ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00) (the
"Purchase Price").
(b) Payment Terms. The Purchase Price for the Shares shall be
paid by Buyer to Seller as follows:
(i) TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($25,000.00)
payable at Closing in cash or by certified or bank cashier's
check; and
(ii) The balance of ONE HUNDRED TWENTY-FIVE THOUSAND AND
NO/100 DOLLARS ($125,000.00) to be paid or satisfied as follows:
(A) $50,000.00 within 30 days of Closing; an
additional $25,000.00 within 120 days of Closing; and the
remaining $50,000.00 within 180 days of Closing; or
(B) $100,000.00 on or before 5:00 p.m. on June 3,
1997 at 5:00 p.m., in which case, upon receipt by Seller of
cash or certified or bank cashier s check in such amount,
Buyer shall be deemed to have satisfied the deferred Purchse
Price.
Buyer s obligation to pay the deferred purchase price is subject to the
right of set-off as provided in the Promissory Note (described below in
Section 2(c)).
(c) Evidence and Security for Deferred Purchase Price. Buyer s
obligation to pay the deferred purchase price shall be evidenced by a
non-negotiable, non-interest bearing Promissory Note in the form
attached hereto as Exhibit A and shall be secured by the Stock Pledge
Agreement attached hereto as Exhibit B.
3. Representations and Warranties of the Seller and the Company. To
induce Buyer to enter into this Agreement, Seller and the Company represent
and warrant to Buyer that the following statements are true, correct and
complete as of the date hereof, and will be true, correct and complete as of
Closing:
(a) Organization and Authority. Seller and Company are
corporations duly organized, validly existing, and in good standing
under the laws of the State of Utah, and each has all requisite
corporate power to enter into and perform this Agreement and the
transactions contemplated hereby in the manner provided herein. The
execution, delivery, and performance of this Agreement by Seller and
Company has been duly authorized by all requisite corporate action and
no further action is necessary on the part of Seller or the Company to
make this Agreement valid and binding upon Seller in accordance with its
terms.
(b) Ownership of Shares. The authorized capital stock of the
Company consists of 50,000 shares of common stock, no par value, of
which 1,102 shares are issued and outstanding and which are owned
beneficially and of record by Seller free and clear of any lien,
security interest, pledge, claim, demand or encumbrance or restriction
of any kind or character whatsoever. The Company has no other
outstanding securities. All such Shares are duly authorized, validly
issued, fully paid and nonassessable. Except for this Agreement, there
are no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments (contingent or otherwise)
obligating the Seller to sell or transfer any of the Shares or
obligating the Company to issue or to transfer from treasury any
additional shares of, or any securities convertible into, the capital
stock of the Company.
(c) Compliance with Law. The consummation of the transactions
contemplated by this Agreement will be in compliance with all applicable
laws, rules, regulations and requirements of all federal, state, tribal
and local governmental authorities without the necessity for any license
or permit or other action or permission in the nature thereof, or any
registration with, or consent of, any such governmental authority.
(d) Assets. Seller has provided to Buyer a complete listing of
the Company s assets on Schedule 3(d). Such assets constitute all of the
material assets of the Company and Company owns all right, title and
interest in and to such assets as listed on Schedule 3(d).
(e) Indebtedness. Attached hereto as Schedule 3(e) is a list of
all liabilities, obligations, and indebtedness of the Company relating
to trade payables, taxes of any kind or nature, and other corporate
liabilities, except royalties, to third parties which arose prior to
June 1, 1997, and which exceed, individually or in the aggregate, the
sum of $200.00 to any particular creditor (the Indebtedness ). Seller
hereby agrees to pay such amounts in full and Buyer does not assume any
liability for such obligations or any other obligation, except
royalties, incurred prior to June 1, 1997. To the best of Seller s
knowledge, after due inquiry, the Indebtedness described on Schedule
3(e) includes all liabilities, obligations and indebtedness, except
royalties, of the Company in excess of, individually or in the
aggregate, the sum of $200.00 to any particular creditor. However, with
the exception of the Indebtedness described on Schedule 3(e), neither
Seller nor the Company makes any representation regarding the absence of
other liabilities, obligations and indebtedness which are not known to
the Company or Seller. Liability for royalties, whether accruing prior
to or after Closing shall be determined in accordance with Section 9
hereof.
(f) Tax Matters. All federal, state, county, local, and other
taxes, including without limitation, income taxes, corporate franchise
taxes, sales and ad valorem taxes, assessments, penalties, and interest
due and payable by the Company on or before the date of this Agreement
have been paid, and the Company has filed all tax returns and reports
required to be filed by it with all applicable taxing authorities,
within the time and in the manner prescribed by law. No assessments or
deficiencies have been made against the Company and no extensions of
time have been applied for, or are in effect for, the assessment of
deficiencies. Seller and Buyer will cooperate fully with each other in
connection with any audit examination of the Company by any taxing
authority by furnishing or making available records, books of account,
and other materials in their possession relating to the Company to the
extent such materials are necessary or helpful for the defense against
assertions of such taxing authorities, and otherwise by providing such
assistance as may be reasonably requested from time to time.
(g) Environmental Matters. Seller has received no written or
oral notice from any federal, state or local governmental agency to the
effect that any real property or real property interest leased or owned
by the Company is in violation of any applicable environmental law,
regulation, ordinance, or order of any federal, state, or local
government entity, dealing with water pollution, air pollution, solid
and hazardous waste, Hazardous Substances, underground storage tanks,
sanitary landfills and open dumps, injection and drywells, or any other
federal, state, or local laws relating to contamination of or adverse
effects on the environment, and neither the Property or any underlying
groundwater contains any concentrations of regulated substances,
hazardous substances, hazardous materials, toxic substances, or similar
substances, residues, and wastes. For these purposes, the term
"Hazardous Substance" shall mean all of the following:
(i) Any substance, material, or waste that is included
within the definitions of "hazardous substances," "hazardous
materials," "hazardous waste," "toxic substances," "toxic
materials," "toxic waste," or words of similar import in any
Environmental Law;
(ii) Those substances listed as hazardous substances by the
United States Department of Transportation (or any successor
agency) (49 C.F.R. 172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) (40
C.F.R. Part 302 and amendments thereto); and
(iii) Any substance, material, or waste that is petroleum,
petroleum-related, or a petroleum by-product, asbestos or asbestos-
containing material, polychlorinated biphenyls, flammable,
explosive, radioactive, freon gas, radon, or a pesticide,
herbicide, or any other agricultural chemical.
(h) No Litigation. Except as otherwise disclosed on Schedule
3(h), there are no suits or proceedings against or by the Company at law
or in equity, or before or by any governmental agency or arbitrator,
pending, or to Seller s or Company s knowledge threatened against the
Company which materially affects the Company or its assets, the
consummation of the transaction contemplated by this Agreement or, if
valid, would constitute or result in a breach of any representation,
warranty or agreement set forth herein.
(i) Solvency. Neither Seller nor the Company is bankrupt or
insolvent or has assigned its estate for the benefit of creditors,
entered into any scheme or arrangement with creditors, or has any
present intention to file a petition in bankruptcy, assign its estate
for the benefit of creditors, or enter into any scheme or arrangement
with creditors. Seller has no knowledge of any basis for the filing by
any other person of an involuntary petition in bankruptcy with respect
to either Seller or the Company.
(j) No Material Misstatements. No representation, warranty, or
other statement of Seller or the Company contained in this Agreement
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein
or therein not misleading. Except as expressly provided herein, neither
the Seller nor the Company makes any other representation or warranty of
any kind or nature whatsoever.
4. Representations, Warranties and Agreements of Buyer. Buyer
represents and warrants to and agrees with the Seller that:
(a) Organization and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Utah, and has all requisite corporate power to enter into and
perform this Agreement and the transactions contemplated hereby in the
manner provided herein. This Agreement constitutes a binding obligation
of Buyer, enforceable in accordance with its terms.
(b) Compliance with Law. Neither the execution and delivery of
this Agreement nor consummation of the transactions contemplated by this
Agreement, the Stock Pledge Agreement or the Note will conflict with or
result in a breach of or constitute a default under any provision of any
indenture, loan agreement or other material obligation or liability to
which Buyer or either of them are a party or by which they are bound.
From and after the Closing and until all amounts owing to Seller under
this Agreement or the Note are paid or otherwise satisfied in full, the
Company and the Buyer with respect to the Company will at all times
comply with all applicable laws, rules, regulations and requirements of
all federal, state and local governmental authorities in any way
relating to the Company's business.
(c) Due Diligence. Buyer has had complete access to all of the
Company s properties, facilities, and records and has conducted a due
diligence review and investigation of the Company to Buyer s
satisfaction. Subject to the representations and warranties contained
in Section 3 hereof, Buyer accepts the Company in its conditions as is
at the date of execution of this Agreement. Without limiting the
generality of the foregoing, Buyer acknowledges the existence of a
dispute reagrding the validity of the Company s operating rights in and
to the Roosevelt Unit and accepts such operating rights as is without
any representation or warranty of the Compnay pertaining thereto.
(d) Conduct of Business. After the Closing and until Buyer has
paid in full or otherwise satisfied the amounts owing under the
Promissory Note, the Buyer shall cause the Company to conduct its
business as follows:
(i) The Company will not encumber the assets of the
Company except in the ordinary course of business.
(ii) The Company will cause all expenses incurred by the
Company to be paid in a timely manner in accordance with the
payment terms of the applicable vendor or supplier.
(iii) The Company will cause the Company s assets and all
other properties in the Roosevelt Unit to be operated in a prudent
and workmanlike manner.
(iv) The Company shall not amend or repeal any provision of
the Company s Articles of Incorporation or Bylaws or increase or
decrease the number of authorized shares of capital stock of the
Company.
(v) The Company shall not be a party to or effect a
merger, share exchange, reorganization or other business
combination transaction.
(vi) The Company shall not sell, lease, transfer, exchange
or otherwise dispose of all or substantially all of the Company s
assets.
(vii) The Company shall not commence any liquidation,
bankruptcy, insolvency or similar proceedings or otherwise make an
assignment for the benefit of creditors.
(viii) The Company shall not incur any indebtedness,
absolute or contingent, unless incurred in the ordinary course of
the Company s business and such indebtedness does not exceed,
individually, or in the aggregate, the sum of $10,000.
(ix) The Company shall not make any capital expenditures
for equipment or materials other than in the ordinary course of
the Company s business.
(x) The Company shall not enter into or discontinue any
line of business or otherwise materially change the Company s
business or operations.
(xi) The Company shall not offer, sell or otherwise issue
any shares of its capital stock.
(xii) The Company shall not enter into any employment or
consulting contracts without the prior written approval of Seller.
(xiii) The Company shall not pay any dividends or
otherwise make any distributions to stockholders of the Company
(whether in the form of cash, property or securities).
(xiv) The Company will continue in effect its present
insurance coverage on all its properties, assets and business.
(xv) The Company will not (so far as within its control)
subject any of its property or assets to any material lien, claim,
charge, option or lease, commitments or obligation to which it is
a party or by which it is bound.
(xvi) The Company will continue any bonds related to the
Company, or its business, subject to variations in amounts
required for the ordinary operations of its business.
5. The Closing. The closing of the purchase and sale of the Shares
shall take place at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇ July 1, 1997, or at such other time or
place as may be agreed to by the parties (the "Closing").
6. Conditions of Buyer's and Seller's Performance.
(a) Buyer's Conditions. The obligation of Buyer to consummate
this Agreement is subject to the satisfaction at the Closing, or waiver
by Buyer in writing, of each of the following conditions:
(i) The Seller shall have executed this Agreement;
(ii) Buyer shall acquire not less than one-hundred percent
(100.00%) of the Shares which shall constitute all of the issued
and outstanding shares of the Company;
(iii) All proceedings taken in connection with the
transactions contemplated herein and all instruments and documents
required in connection therewith or incident thereto shall be
satisfactory in form to ▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., legal counsel for
Buyer.
(b) Seller s Conditions. The obligation of Seller to consummate
this Agreement is subject to the satisfaction at the Closing, or waiver
by Seller in writing, of each of the following conditions:
(i) Buyer shall have executed this Agreement.
(ii) All proceedings taken in connection with the
transactions contemplated herein and all instruments and documents
required in connection therewith or incident thereto shall be
satisfactory in form to ▇▇▇▇▇▇▇ Axland, legal counsel for Seller.
7. Actions at Closing.
(a) Buyer shall execute and deliver the following documents at
Closing:
(i) This Stock Purchase Agreement;
(ii) The Stock Pledge Agreement;
(iii) The cash or check and Promissory Note contemplated by
Section 2 hereof;
(iv) Such other documents or agreements as may be
reasonably requested by Seller.
(b) Seller shall execute and deliver the following documents at
Closing:
(i) The stock certificates representing the Shares, along
with appropriate stock powers.
(ii) Resignations of the officers of the Company; and
(iii) Such other documents or agreements as may be
reasonably requested by Buyer.
(c) Upon receipt of the certificates representing the Shares,
Buyer shall endorse the same in blank (in form satisfactory for
transfer) and deliver the same to Seller in connection with the Stock
Pledge Agreement.
8. Voting Control After Closing; Observer Rights.
(a) Notwithstanding the purchase and sale of the Shares as
contemplated herein or any provision of this Agreement or the Stock
Pledge Agreement to the Contrary, until such time as Buyer shall have
paid to Seller the aggregate sum of ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00) of the Purchase Price, Buyer hereby irrevocably
grants to Seller the absolute right and proxy, coupled with an interest,
to vote the Shares on any and all corporate matters, including the
election of members of the Board of Directors in accordance, all in
accordance with this Section 8. Notwithstanding the foregoing, Buyer
and Seller agree that Buyer shall have the right to appoint the initial
Board of Directors and officers of the Company at or after Closing.
Such Board of Directors and officers shall run the day-to-day operations
of the Company in accordance with the conditions and limitations of this
Agreement and in a prudent business manner. For so long as the Board of
Directors and officers run the Company in accordance with this
Agreement, Seller agrees not to vote the Shares to remove the Board of
Directors or to otherwise vote the Shares in opposition to the decisions
of the Board of Directors and officers. In the event of any conflict
between the Board of Directors or officers and the Seller regarding
whether a business matter or decision complies with the conditions and
limitations of this Agreement, such dispute shall be resolved in
accordance with the expedited procedures of the commercial arbitration
rules of the American Arbitration Association. Each party hereto
consents to the appointment of a single arbitrator by the American
Arbitration Association in its sole discretion. Any such arbitration
shall be held in Salt Lake County, Utah and the order or decision of the
arbitrator shall be non-appealable by either party.
(b) For so long as Buyer has not paid the full amount of the
Purchase Price, the Company shall give notice of all meetings of the
Board of Directors to Seller and shall allow Seller s designee to attend
all meetings of the Company s Board of Directors in a nonvoting observer
capacity and , in this respect, shall give such designee, whether or not
present at such meetings, copies of all notices, minutes consents and
other materials that it provides to its directors; provided, however,
that such designee shall agree to hold in confidence and trust all
information or documents so provided. Such designee may be changed at
any time upon notice to the Company by Seller. The rights granted
pursuant to this Section 8 may not be assigned or otherwise conveyed by
Seller or any subsequent transferee of any such rights without the prior
written consent of Seller provided, however, the Seller may assign its
rights under this Section 8 to any affiliate of Seller upon notice to
the Company provided that such assignee agrees to be bound by such
duties of confidentiality and non-use as were applicable to the Seller.
For these purposes, affiliate means each entity or person directly or
indirectly controlling, controlled by, or under direct or indirect
common control with the Seller. A person or entity shall be deemed to
control Seller if the person or entity possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of Seller, whether through the ownership of voting
securities, by contract or otherwise.
9. Indemnification.
(a) Seller Indemnity. Seller hereby agrees to indemnify and
hold harmless the Company and the Buyer at all times from and after the
Closing from and against any loss, liability, damage, judgment or
expense (including reasonable attorney fees) arising from or based upon:
(i) Any breach by the Seller of any of their obligations
or covenants set forth in this Agreement; or
(ii) Any material inaccuracy in any of the representations
or warranties made by the Seller herein which adversely affects
Buyer or the business of the Company; or
(iii) All claims, liabilities, and obligations with regard
to royalties except Tribal Warranties (as defined below), to the
extent that such royalties exceed $60,000.00 in the aggregate.
(b) Buyer s Indemnity. From and after the Closing date, Buyer
hereby agrees to indemnify and hold harmless the Company and Seller against
all loss, liability, damage, judgment or expense (including reasonable
attorney fees) arising from or based upon the operation of the Company or its
assets after such time and for any and all claims, liabilities and obligations
with regard to royalties payable pursuant to any tribal or allotted lease by
the Company to the Bureau of Indian Affairs, the Ute Indian Tribe and the Ute
Distribution Corporation whether accruing prior to or after Closing ( Tribal
Warranties ). Buyer further indemnifies Seller against all claims,
liabilities, and obligations with regard to all other royalties except Tribal
Warranties, but such indemnification shall not exceed $60,000.00 in the
aggregate.
10. Default and Waiver.
(a) Remedies. In the event of a breach of this Agreement, the
non-breaching party shall have the following alternative, but not
exclusive, remedies, after giving written notice to the breaching party
of such breach and breaching party s failure to cure such breach within
ten (10) days after such notice:
(i) Bring action against the breaching party for damages.
(ii) Bring action against the breaching party for
specific performance of this Agreement.
(iii) Pursue any other legal or equitable remedies that
may be available to the non-
(b) Waiver. Any representations, warranties, agreements or
conditions of this Agreement may be waived at any time by the party
entitled to the benefit thereof by action taken and evidenced by a
written waiver executed by any such party. Any such waiver shall not
constitute a waiver of any other or subsequent rights or remedies.
11. Miscellaneous.
(a) Further Actions. The Company and Seller warrant and agree
that all present and previous shareholders, directors and officers of
the Company will from time to time hereafter execute such documents,
minutes of meetings or other instruments and take whatever actions Buyer
may reasonably deem necessary or desirable to effect, perfect or confirm
of record in Buyer full right, title and interest in and to the Shares,
or to carry out the intent and purposes of the transactions contemplated
hereby.
(b) Records. Buyer hereby agrees to preserve and maintain all
existing business, tax or other Company records existing at Closing and
which are delivered to the possession of Buyer or the Company. Such
obligation to preserve and maintain records shall survive Closing and
shall continue even if all amounts owing to Seller under this Agreement
and the Note have been paid in full.
(c) Expenses. Seller and Buyer acknowledge that they have had
the right to, and to the extent that they deem appropriate, have
obtained legal, accounting and tax advice in connection with this
Agreement and the execution thereof. Each of the parties hereto will
bear its own legal fees and other expenses in connection with the
transactions contemplated by this Agreement, and none of such fees shall
be charged to the Company.
(d) Survival. All parties agree that the representations,
warranties and agreements contained in this Agreement shall survive the
Closing and shall thereafter remain in full force and effect.
(e) Severability. If any term or provision of this Agreement,
including the exhibits hereto, or the application thereof to any person,
property or circumstances, shall to any extent be invalid or
unenforceable, the remainder of this Agreement, including the exhibits
or the application of such term or provision to persons, property or
circumstances other than those as to which it is invalid and
unenforceable, shall not be affected thereby, and each term and
provision of this Agreement and the exhibits shall be valid and enforced
to the fullest extent permitted by law.
(f) Notices. Any notices, requests or consents hereunder shall
be in writing and shall be deemed given, and any instrument delivered,
two days after they have been mailed by first class mail, postage
prepaid, or upon receipt if delivered personally, as follows:
To Seller: ▇▇. ▇▇▇ ▇▇▇▇▇▇
Crown Energy Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
with simultaneous copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ , ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
To Buyer: ▇▇▇▇ ▇▇▇▇▇▇
Road Runner Oil, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ West Strawberry ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
with simultaneous copy to:
▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
except that any of the foregoing may from time to time by written notice
to the others designate another address which shall thereupon become its
effective address for the purposes of this Section 11(f).
(g) Entire Agreement. This Agreement, including the exhibits
and documents referred to herein which are a part hereof, contain the
entire understanding of the parties hereto with respect to the subject
matter contained therein and may be amended only by a written instrument
executed by the Buyer, the Company and the Seller or their respective
successors or assigns. There are no restrictions, promises, warranties,
covenants, or undertakings other than those expressly set forth or
referred to herein. Any section headings or table of contents contained
in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
(h) Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.
(i) Binding Affect. This Agreement shall inure to the benefit
of and be binding upon Seller and Buyer and the Company and their
respective successors, heirs or assigns but shall not inure to the
benefit of anyone other than the parties signing this Agreement and
their respective successors.
(j) Governing Law; Venue. This Agreement shall be governed by
the laws of the State of Utah. For any dispute arising from or related
to this Agreement, venue shall lie exclusively in Salt Lake County,
Utah.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
ROAD RUNNER OIL, INC.
a Utah corporation
By: _________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
CROWN ENERGY CORPORATION
a Utah corporation
By: _________________________
Name: ▇▇▇ ▇▇▇▇▇▇
Title: President
ACKNOWLEDGED AND AGREED AS TO THE REPRESENTATIONS, WARRANTIES AND OBLIGATIONS
OF THE COMPANY:
GAVILAN PETROLEUM INCORPORATED
a Utah corporation
By: _________________________
Name: ▇▇▇ ▇▇▇▇▇▇
Title: President
EXHIBIT A
PROMISSORY NOTE
SECURED PROMISSORY NOTE
$125,000 Salt Lake City, Utah
July 2, 1997
FOR VALUE RECEIVED, the undersigned, ROAD RUNNER OIL, INC., a Utah
corporation ("Maker"), promises to pay to CROWN ENERGY CORPORATION, a Utah
corporation ("Holder"), or order, at such place as may be designated in
writing by Holder, the principal sum of ONE HUNDRED TWENTY-FIVE THOUSAND AND
NO/100 DOLLARS ($125,000.00) in lawful money of the United States, on the
following terms and conditions:
This Note shall not bear interest. Principal due under this Note shall
be paid or satisfied by Maker to Holder in either of the following manners:
(A) $50,000.00 within 30 days of the date of this Note; an
additional $25,000.00 within 120 days of the date of this Note; and the
remaining $50,000.00 within 180 days of the date of this Note; or
(B) $100,000.00 $100,000.00 on or before June 3, 1997 at 5:00
p.m. in cash or by certified or bank cashier s check..
The obligations of Maker under this Note shall be secured by the Stock
Pledge Agreement ( Pledge ) by and between Maker and Holder of even date
herewith.
Maker shall have the right to prepay all, or any portion, of the
indebtedness owing under this Note at any time without penalty.
In the event of a failure by Maker to fully satisfy any incremental
payment within five (5) days following its due date, the entire obligation of
Maker shall be in default, the unpaid balance shall be immediately due and
payable, and interest on the principal balance shall thereafter accrue at a
rate equal to twenty-one percent (21%) per annum.
Maker shall be entitled to offset and deduct from amounts due hereunder
to Holder any amounts for which Holder is obligated to indemnify Maker
pursuant to Section 9 of the Stock Purchase Agreement of even date herewith by
and between Maker and Holder; provided, however, that (a) the right of offset
shall be first applied to the last installment of $50,000 due hereunder and to
the extent that such payment is insufficient to satisfy the amount of such
offset, to other payments due hereunder in reverse order of their respective
due dates, (b) Maker shall not be entitled to offset against or deduct from
any amounts due under this Note if Maker has defaulted hereunder at any time
and (c) Maker must provide notice of offset to Holder on or prior to the due
date of the installment to which the offset is applied detailing the factual
basis for the claim and providing relevant documentation.
In the event Maker exercises its right of offset hereunder, Holder shall
have ten (10) days after receipt of Maker s notice of offset to dispute the
same by providing written notice of dispute to Maker, in which case Maker
shall deposit the amount of the offset within an additional ten (10) days with
the American Arbitration Association ( AAA ) for settlement by arbitration in
accordance with the commercial arbitration rules of the AAA. If Maker fails
to deposit the amount of the offset within the specified time frame, Maker
shall be deemed to have waived its right of offset with respect thereto and
shall be in default hereunder.
Any arbitration proceeding, including the rendering of an award, shall
take place in Salt Lake County, Utah and shall be administered by the AAA.
The arbitral tribunal shall consist of one arbitrator appointed by AAA. The
award of the arbitral tribunal shall be final and binding. Judgment upon the
award may be entered by the prevailing party in any state or federal court.
The non prevailing party shall pay to the prevailing party, immediately upon
demand, all attorneys fees and all other costs incurred by the prevailing
party related to the arbitration or the subject matter thereof.
If an attorney is engaged by Holder to enforce or construe any provision
of this Note, with or without the filing of any legal action or proceeding,
then Maker shall immediately pay, on demand, all attorneys' fees and all other
costs incurred by Holder.
No previous waiver and no failure or delay by Holder in acting with
respect to the terms of this Note shall constitute a waiver of any breach,
default, or failure of condition under this Note.
Maker hereby waives: presentment; demand; notice of dishonor; notice of
default or delinquency; notice of acceleration; notice of protest and
nonpayment; notice of cost; expenses or losses and interest therein and
diligence in taking any action to collect any sums owing under this Note.
Time is of the essence with respect to every provision hereof, except that
Maker expressly agrees that this Note or any payment hereunder may be extended
from time to time at Holder's sole option provided such extension is in
writing signed by a duly authorized officer of Holder.
This Note shall be construed and enforced in accordance with the laws of
the State of Utah.
All terms and conditions of this Note shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns.
If any provision of this Note is unenforceable, invalid, or violates
applicable law, such provision shall be deemed stricken and shall not affect
the enforceability of any other provisions of this Note.
MAKER:
ROAD RUNNER OIL, INC.
a Utah corporation
By: _________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
EXHIBIT B
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ("Pledge Agreement"), dated as of July 2,
1997, is made by ROAD RUNNER OIL, INC., a Utah corporation ("Pledgor") in
favor of CROWN ENERGY CORPORATION, a Utah corporation ("Pledgee").
RECITALS:
A. Pledgee has agreed to extend certain credit in the amount of
$125,000 (the "Loan") to Pledgor in the form of the deferred purchase price
for certain stock in GAVILAN PETROLEUM, INCORPORATED, a Utah corporation
("Company") pursuant to a Secured Promissory Note, of even date herewith (such
Promissory Note, together with all amendments, modifications, extensions, or
renewals, if any, from time to time hereafter made, the "Note").
B. Pledgor owns 1,102 shares of capital stock of the Company (the
"Pledged Shares"), which Pledged Shares constitute 100% of the issued and
outstanding capital stock of the Company. As a condition precedent to the
making of the Loan to Pledgor and as security for repayment of the Note,
Pledgor is executing and delivering this Pledge Agreement.
AGREEMENT:
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, Pledgor agrees, for the benefit
of Pledgee, as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Terms. The following terms when used in this Pledge
Agreement, including its Recitals, shall have the following meanings (such
definitions to be equally applicable to the singular and plural forms
thereof):
"Collateral" is defined in Section 2.1.
"Distributions" means all stock dividends, liquidating dividends, shares
of stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.
"Event of Default" means the occurrence of any Event of Default by
Pledgor as defined in the Loan Agreement or the breach by any Pledgor of any
of the terms and conditions of this Agreement or if any of the representations
and warranties of Pledgor are untrue in any material respect.
"Stock Purchase Agreement" means that certain Stock Purchase Agreement
by and between Pledgor and Pledgee, of even date herewith.
"Pledged Shares" means all shares of capital stock of the Company which
are delivered by Pledgor to Pledgee hereunder, as described in Recital B.
"Secured Obligations" is defined in Section 2.2.
"UCC" means the Uniform Commercial Code as in effect in the State of
Utah.
1.2 UCC Definitions. Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the UCC are used
in this Pledge Agreement, including its Recitals, with such meanings.
ARTICLE 2
PLEDGE
2.1 Grant of Security Interest. Pledgor hereby pledges, hypothecates,
assigns, delivers, and transfers to Pledgee, and hereby grants to Pledgee a
continuing security interest in, all of the following property (the
"Collateral"):
(a) The Pledged Shares;
(b) All Dividends, Distributions, interest, and other payments
and rights with respect to any Pledged Shares; and
(c) All proceeds of any of the foregoing.
2.2 Security for Obligations. This Pledge Agreement secures the
payment in full and performance of all obligations of Pledgor now or hereafter
existing under the Stock Purchase Agreement or the Note, whether for
principal, costs, fees, expenses, or otherwise, and all liabilities and
obligations of Pledgor now or hereafter existing under this Pledge Agreement
to which Pledgor is or may become a party (all such obligations and other
liabilities and obligations of Pledgor being the "Secured Obligations").
2.3 Continuing Security Interest; Transfer of Note. This Pledge
Agreement shall create a continuing security interest in the Collateral and
shall:
(a) Remain in full force and effect until payment in full of all
Secured Obligations,
(b) Be binding upon Pledgor and its successors, transferees and
assigns, and
(c) Inure to the benefit of Pledgee and its successors,
transferees, and assigns.
Upon the payment in full of all Secured Obligations, the security interest
granted herein shall terminate and all rights to the Collateral shall revert
to Pledgor. Upon any such termination, Pledgee will deliver to Pledgor all
certificates and instruments representing or evidencing all Pledged Shares,
together with all other Collateral held by Pledgee hereunder, and execute and
deliver to Pledgor such documents as Pledgor shall reasonably request to
evidence such termination.
2.4 Right of Setoff. Pledgor and Pledgee hereby acknowledge that the
obligations of Pledgor under the Note are subject to the right of offset
contained in the Note.
2.5 Waiver, Etc. Pledgor hereby waives promptness, diligence, notice
of acceptance and, to the extent permitted by applicable law, any other notice
with respect to any of the Secured Obligations, and Pledgor hereby waives any
requirement that Pledgee protect, secure, perfect or insure any lien, or any
property subject thereto, or exhaust any right or take any action against any
other obligor or any other person (including any guarantor) or any collateral
securing any of the Secured Obligations.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Warranties, Etc. Pledgor represents and warrants to Pledgee, as
of the date hereof, as set forth in this Article.
3.2 Non-Contravention, Etc. The execution, delivery and performance
by Pledgor of this Pledge Agreement does not:
(a) Contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting Pledgor or
its Articles of Incorporation, Bylaws or other contracts to which
Pledgor is subject; or
(b) Result in, or require the creation or imposition of any lien
or encumbrance on any of Pledgor's properties, other than as
contemplated by this Agreement.
3.3 Ownership, No Liens, Etc. Pledgor is the legal and beneficial
owner of, and has good and marketable title to (and has full right and
authority to pledge and assign) such Collateral, free and clear of all liens,
security interests, options, or other charges or encumbrances, except any lien
or security interest granted pursuant hereto in favor of Pledgee.
3.4 As to Pledged Shares. In the case of any Pledged Shares
constituting such Collateral, all of such Pledged Shares are duly authorized
and validly issued, fully paid, and non-assessable, and constitute, in the
aggregate, 100% of the issued and outstanding shares of capital stock of the
Company.
3.5 Authorization, Approval, Etc. No authorization, approval, or
other action by, and no notice to (other than notice to Pledgor to the extent
required hereunder) or filing with (other than filing the Financing
Statement), any governmental authority, regulatory body or any other Person is
required either:
(a) For the pledge by Pledgor of any Collateral pursuant to this
Pledge Agreement or for the execution, delivery, and performance of this
Pledge Agreement by Pledgor, or
(b) For the exercise by Pledgee of the voting or other rights
provided for in this Pledge Agreement, or, except with respect to any
Pledged Shares, as may be required in connection with a disposition of
such Pledged Shares by laws affecting the offering and sale of
securities generally, the remedies in respect of the Collateral pursuant
to this Pledge Agreement.
ARTICLE 4
COVENANTS
4.1 Protect Collateral; Further Assurances, Etc. Pledgor will not
sell, assign, transfer, pledge, or encumber in any other manner the Collateral
(except in favor of Pledgee hereunder); provided, however, that Pledgor may
agree to sell or otherwise dispose of the Pledged Shares, if after giving
effect to such sale or other disposition and as a condition precedent thereto,
all Secured Obligations shall have been paid in full. Pledgor will warrant
and defend the right and title herein granted unto Pledgee in and to the
Collateral (and all right, title, and interest represented by the Collateral)
against the claims and demands of all Persons whomsoever. Pledgor agrees that
at any time, and from time to time, at the expense of Pledgor, Pledgor will
promptly execute and deliver all further instruments, and take all further
action, that may be necessary or desirable, or that Pledgee may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Pledgee to exercise and enforce
its rights and remedies hereunder with respect to any Collateral.
4.2 Stock Powers, Etc. Pledgor will, from time to time upon request
of Pledgee, promptly deliver to Pledgee such stock powers, instruments, and
similar documents, satisfactory in form and substance to Pledgee, with respect
to the Collateral as Pledgee may reasonably request and will, from time to
time upon the request of Pledgee after the occurrence of any Event of Default,
promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by Pledgee.
4.3 Continuous Pledge. Pledgor will, at all times, keep pledged to
Pledgee pursuant hereto all Pledged Shares and all other shares of capital
stock constituting Collateral, all Dividends and Distributions with respect
thereto, and all other Collateral and other securities, instruments, proceeds,
and rights from time to time received by or distributable to Pledgor in
respect of any Collateral.
4.4 Voting Rights; Dividends etc. Pledgor agrees:
(a) After any Event of Default shall have occurred and during
the continuance thereof, promptly upon receipt thereof by Pledgor and
without any request therefor by Pledgee, to deliver (properly endorsed
where required hereby or requested by Pledgee) to Pledgee all Dividends,
all of which shall be held by Pledgee as additional Collateral for use
in accordance with Section 6.3; and
(b) Promptly upon receipt thereof by Pledgor and without any
request therefor by Pledgee, to deliver (accompanied by duly executed
undated blank stock powers, or other equivalent instruments of transfer
acceptable to Pledgee) to Pledgee all Distributions consisting of stock
dividends or shares of stock resulting from (or in connection with the
exercise of) any stock splits, reclassifications, warrants, options,
mergers, consolidations, and all other distributions on or with respect
to any Pledged Shares or other capital stock constituting Collateral.
(c) Until such time as ONE HUNDRED THOUSAND DOLLARS of the
Purchase Price (as such term is defined in the Stock Purchase Agreement)
is paid to Pledgor by Pledgee pursuant to the terms of the Stock
Purchase Agreement or the Note, but subject to the conditions and
limitations of Section 8 of the Stock Purchase Agreement:
(i) Pledgee may exercise (to the exclusion of Pledgor) the
voting power and all other incidental rights of ownership with
respect to any Pledged Shares or other shares of capital stock
constituting Collateral and Pledgor hereby grants Pledgee an
irrevocable proxy, coupled with an interest, exercisable under
such circumstances, to vote the Pledged Shares and such other
Collateral, and
(ii) Promptly to deliver to Pledgee such additional proxies
and other documents as may be necessary to allow Pledgee to
exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by Pledgor but which
Pledgor is then obligated to deliver to Pledgee, shall, until delivery to
Pledgee, be held by Pledgor separate and apart from its other property in
trust for Pledgee.
ARTICLE 5
REMEDIES
5.1 Certain Remedies. If any Event of Default shall have occurred and
be continuing:
(a) Pledgee may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a Pledgee on default
under the UCC (whether or not the UCC applies to the affected
Collateral) and also may, without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or
private sale, at any of Pledgee's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as may be
commercially reasonable. To the extent notice of sale shall be required
by law or hereunder, at least ten days' prior notice to Pledgor of the
time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. Pledgee
shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. Pledgee may adjourn any public or
private sale from time to time by announcement at the time and placed
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) Pledgee may, without notice except to the extent required by
applicable law:
(i) Transfer all or any part of the Collateral into the
name of Pledgee or its nominee, with or without disclosing that
such Collateral is subject to the lien and security interest
hereunder,
(ii) Notify the parties obligated on any of the Collateral
to make payment to Pledgee of any amount due or to become due
thereunder,
(iii) Enforce collection of any of the Collateral by suit
or otherwise, and surrender, release or exchange all or any part
thereof, or compromise or extend or renew for any period (whether
or not longer than the original period) any obligations of any
nature of any party with respect thereto,
(iv) Endorse any checks, drafts, or other writings in
Pledgor's name to allow collection of the Collateral,
(v) Take control of any proceeds of the Collateral, and
(vi) Execute (in the name, place and stead of Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
5.2 Compliance with Restrictions. Pledgor agrees that in any sale of
any of the Collateral whenever an Event of Default shall have occurred and be
continuing, Pledgee is hereby authorized to comply with any limitation or
restriction in connection with such sale as it may be advised by counsel is
necessary in order to avoid any violation of applicable law (including
compliance with such procedures as may restrict the number of prospective
bidders and purchasers, require that such prospective bidders and purchasers
have certain qualifications, and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution
or resale of such Collateral), or in order to obtain any required approval of
the sale or of the purchaser by any governmental regulatory authority or
official, and Pledgor further agrees that such compliance shall not result in
such sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall Pledgee be liable nor accountable to Pledgor for
any discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction so long as such discount is
commercially reasonable under the circumstances.
5.3 Application of Proceeds. All cash proceeds received by Pledgee in
respect of any sale of, collection from, or other realization upon, all or any
part of the Collateral may, in the discretion of Pledgee, be held by Pledgee
as additional collateral security for, or then or at any time thereafter be
applied (after payment of any amounts payable to Pledgee pursuant to Section
6.4) in whole or in part by Pledgee against, all or any part of the Secured
Obligations in such order as Pledgee shall elect. Any surplus of such cash or
cash proceeds held by Pledgee and remaining after payment in full of all the
Secured Obligations, shall be paid over to Pledgor or to whomsoever may be
lawfully entitled to receive such surplus.
5.4 Bonds. In the event that Pledgee exercises any of its rights and
remedies hereunder, Pledgee shall immediately cause the Company to release any
and all bonds provided by the Company after the date hereof with regard to the
Roosevelt Unit.
ARTICLE 6
MISCELLANEOUS PROVISIONS
6.1 Amendments, Etc. No amendment to or waiver of any provision of
this Pledge Agreement nor consent to any departure by Pledgor herefrom shall
in any event be effective unless the same shall be in writing and signed by
Pledgee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it is given.
6.2 Protection of Collateral. Pledgee may from time to time, at its
option, perform any act which Pledgor agrees hereunder to perform and which
Pledgor shall fail to perform after being requested in writing so to perform
(it being understood that no such request need be given after the occurrence
and during the continuance of an Event of Default) and Pledgee may from time
to time take any other action which Pledgee reasonably deems necessary for the
maintenance, preservation or protection of any of the Collateral or of its
security interest therein.
6.3 Addresses for Notices. Any notices, requests or consents hereunder
shall be in writing and shall be deemed given, and any instrument delivered,
two days after they have been mailed by first class mail, postage prepaid, or
upon receipt if delivered personally, as follows:
To Pledgee: ▇▇. ▇▇▇ ▇▇▇▇▇▇
Crown Energy Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
with simultaneous copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ , ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
To Pledgor: ▇▇▇▇ ▇▇▇▇▇▇
Road Runner Oil, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ West Strawberry ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
with simultaneous copy to:
▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
except that any of the foregoing may from time to time by written notice
to the others designate another address which shall thereupon become its
effective address for the purposes of this Section 6.3.
6.4 Section Captions. Section captions used in this Pledge Agreement
are for convenience of reference only, and shall not affect the construction
of this Pledge Agreement.
6.5 Severability. Wherever possible each provision of this Pledge
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Pledge Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge
Agreement.
6.6 Governing Law, Entire Agreement, Etc. THIS PLEDGE AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF UTAH, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
UTAH.
6.7 Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original, but all such
counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement
to be executed as of the date first written.
PLEDGOR:
ROAD RUNNER OIL, INC.
a Utah corporation
By: _________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
PLEDGEE:
CROWN ENERGY CORPORATION
a Utah corporation
By: _________________________
Name: ▇▇▇ ▇▇▇▇▇▇
Title: President
SCHEDULE 3(d)
ASSETS
I. All of Gavilan's right, title and interest, if any, in certain interests
in the following ▇▇▇▇▇ in the Roosevelt Unit which were acquired from Paiute
Oil and Mining Corporation and ▇▇▇▇▇▇ Energy Operating, Ltd.
Green River Participating Area Wasatch Participating Area
Roosevelt ▇▇▇▇ #▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇
Roosevelt ▇▇▇▇ #▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇
II. All of Gavilan's right, title and interest, if any, in recorded
interests or rights in the following described lands located in the
Roosevelt Unit which were acquired from Paiute Oil and Mining Corporation
and ▇▇▇▇▇▇ Energy Operating, Ltd.
Township 1 South, Range 1 East
Section 19: ▇▇▇▇ ▇/▇▇▇/▇, ▇/▇▇▇/▇, ▇▇/▇▇▇/▇
Section 20: E/2SW/4
Section 21: ▇▇/▇▇▇/▇, ▇/▇▇▇/▇, ▇▇/▇▇▇/▇
Section 27: W/2NW/4, NW/4SW/4
Section 28: N/2, N/2SE/4
Section 29: ▇▇/▇▇▇/▇
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇ 1 West
Section 13: NW/4NW/4
Section 24: N/2NW/4, NE/4
III. All of Gavilan's right, title and interest, if any, in the following
▇▇▇▇▇ and associated lands in the Roosevelt Unit related to the non-payment
of royalties, taxes and other payable by Caloco Energy Inc.
Green River Participating Area
Roosevelt ▇▇▇▇ #▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇ Roosevelt Unit #11
Roosevelt ▇▇▇▇ #▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇-▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇ Roosevelt ▇▇▇▇ #▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇ Roosevelt ▇▇▇▇ #▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇
Wasatch Participating Area
Roosevelt Unit #9W
IV. Approximately 600 barrels of oil in the tanks of the above described
▇▇▇▇▇.
SCHEDULE 3(e)
LIABILITIES
Accrued Taxes:
2nd Quarter Conservation Tax 51.11
2nd Quarter ▇▇▇ ▇▇▇▇▇▇▇▇▇ Tax 953.45
Total 1,004.56
Accounts Payable:
▇▇▇▇▇ Electric, Inc. 498.85
Breco Service 191.26
Central Hydrualic, Inc. 5,553.41
Delsco Northwest, Inc. 832.00
Dowell Schlumberger, Inc. 1,132.15
▇▇▇▇▇▇▇ Recycle & Storage 150.00
LCL Oil 3,242.09
Moon Lake Electric Assn., Inc. 611.64
▇▇▇▇▇▇'▇ Disposal Service 2,639.65
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 1,555.95
▇▇▇ ▇▇▇▇▇ Oilfield Service 253.70
Simpsoon & Company 870.00
W W Enterprises 385.00
Total Accounts Payable 17,915.70
SCHEDULE 3(h)
LITIGATION
I. Appeals with the BIA and Ute Indian Tribe relating to delinquent
royalties, lease cancellation and attachment of surety issues. These include
several ongoing appeals with the Interior Board of Indian Appeals.
II. Utah Division of Oil, Gas and Mining notice regarding the requirement
for surety on the Roosevelt Unit #15 well.
III. BLM and BIA notice that Gavilan is not recognized as operator of the
Roosevelt Unit or ▇▇▇▇▇ located within the unit.