SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 20, 1999
IMPERIAL PETROLEUM, INC.
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(Exact name of registrant as specified in its charter)
NEVADA 0-9923 95-3386019
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(State of incorporation) (Commission File No.) (I.R.S.Employer I.D. No.)
100 NW Second Street, Suite 312, Evansville, Indiana 47708
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (812) - 424-7948
N/A__________________________
(Former name or former address, if changed since last report. )
ITEM 1. Changes in Control:
N/A
ITEM 2. Acquisition or Disposition of Assets:
Under the terms of that certain Agreement to Exchange Stock dated August
31, 1998 by and between Oil City Petroleum, Inc. and certain control
shareholders of Oil City, as Sellers and Imperial Petroleum, Inc., as
Buyer, Imperial purchased a total of 17,345,906 million shares of Oil City
common stock representing an interest of approximately 90% of Oil City in
exchange for the issuance of 1,950,000 shares of its restricted common
stock. Under the terms of the Agreement, Imperial is obligated to provide
working capital loans in the total amount of $900,000 to Oil City in equal
monthly payments over a period of 36 months and agreed to guarantee the
existing bank debt of Oil City of approximately $1.1 million with BankOne
Texas. The Board of Directors and the Management of Oil City and Imperial
remained unchanged and continue to manage the affairs of their respective
company. The oil and natural gas interests and subsidiaries of Oil City
remained in tact and approval of Oil City's primary lender, BankOne Texas,
was obtained prior to consummation of the exchange.
Imperial and Oil City's management entered into the acquisition agreement
with the intent to stabilize Oil City during the period of low oil prices
in the industry and attempt to consolidate other interests and companies
through the use of Oil City stock, thereby increasing the size and
financial strength of the company. Prior to closing the acquisition,
Imperial and Oil City entered into negotiations with the owners of
additional oil and natural gas interests and received tentative
commitments from owners agreeing to accept newly issued Oil City shares
representing approximately 30% of the outstanding Oil City shares in
exchange for their oil and natural gas interests. Oil City and Imperial
expect to close those acquisitions during June 1999. As such Imperial's
interest in Oil City will be diluted to approximately 60%.
The preceding statements with respect to the Oil City Acquisition are a
brief summary thereof. A copy of the Oil City Acquisition Agreement is
filed as an exhibit to this Current Report on Form 8-K and is incorporated
by reference.
ITEM 7. Financial Statements and Exhibits:
The Company is preparing the necessary financial statements in U.S GAAP
format to accurately reflect the transactions described above, however,
the required financial statements are not completed at this time. The
Company intends to file the required financial statements under cover of
Form 8 not later than 60 days after the date this Current Report on Form
8-K is filed. Pending such filing, the Company is filing the following
financial statements:
(a.) Oil City Petroleum, Inc. Consolidated (unaudited) Balance Sheets as of
January 31,1999 and Statement of Income (unaudited)dated January 31, 1999.
It is impractical for the Company to provide the pro forma financial
statements required with the initial filing of this Form 8-K. The Company
is preparing these statements in US GAAP form and intends to file the
required statements under cover of Form 8 not later than 60 days after the
filing of this Current Report on Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Imperial Petroleum, Inc.
By: ___________________
Jeffrey T. Wilson,
President
Dated: June 3, 1999
OIL CITY PETROLEUM, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
January 31, 1999
ASSETS
Current Assets:
Cash $ 28,543.72
Accounts Receivable 68,529.14
Revenue Receivable 20,725.53
Accounts Receivable-Other 70,395.51
Shop and Yard Inventory 1,466.26
Other Current Assets 10,721.54
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Total Current Asset 200,381.70
Property and Equipment
Oil and Gas Properties 2,759,214.12
Building, Land & Office Equipment 304,112,39
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Total Property and Equipment 3,063,326.51
Less Depreciation, Depletion and Amortization (678,236.10)
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Net Property and Equipment 2,385,090.41
Other Assets
Deferred Loan Cost 46,489.89
Organization Cost 902.33
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TOTAL ASSETS $ 2,632,864.33
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LIABILITIES & EQUITY Current Liabilities:
Accounts Payable-Trade 325,900.58
Revenue Payable 90,502.82
Accounts Payable-Other 112,362.44
Current Portion of Long Term Debt 199,327.10
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Total Current Liabilities 728,092.94
Long Term Debt 1,021,899.91
Subordinated Debt - Imperial Petroleum, Inc. 145,000.00
Shareholders Equity
Common Stock 29,300.00
Treasury Stock (14,317.70)
Additional Paid in Capital 9,890,774.29
Retained Earnings (9,421,131.89)
Net Income (Loss) 253,246.78
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Total Shareholder's Equity 737,871.48
TOTAL LIABILITIES & EQUITY $ 2,632,864.33
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OIL CITY PETROLEUM, INC.
CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
January 31, 1999
Revenues
Oil and Gas Sales $ 189,107.00
Costs and Expenses
Lease Operating Expenses 105,080.41
Depreciation, Depletion, & Amortization 67,352.26
Administrative and General 91,398.82
Interest 67,486.11
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Net Operating Income or (Loss) (142,210.60)
Other Income (Expenses)
Other Income 44,885.98
Gain (Loss) on Sale of Assets 350,635.05
Gain (Loss) on Write Down (63.65)
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Total Other Income (Expenses) 395,457.38
Net Income (Loss) $ 253,246.78
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AGREEMENT TO EXCHANGE STOCK
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THIS AGREEMENT TO EXCHANGE STOCK (the "Agreement"), dated as of the 31st
day of August 1998, by and between Imperial Petroleum, Inc., a Nevada
corporation ("Imperial")and Oil City Petroleum, Inc., a Texas corporation ("OIL
CITY"), and those persons listed on Exhibit "A" attached hereto (such persons
listed on Exhibit "A" attached hereto are sometimes collectively referred to
herein as the "OIL CITY Stockholders."
W I T N E S S E T H
--------------------
WHEREAS, the OIL CITY Stockholders and the Board of Directors of Imperial
deem it advisable and in the best interests of OIL CITY, the OIL CITY
Stockholders and Imperial that Imperial acquire 90% of the issued and
outstanding capital stock of OIL CITY, in exchange for (1.) 2,350,000
newly-issued shares of Imperial common stock, referred herein as the "Imperial
Shares"; and (2.) the availability of a subordinated loan from Imperial to OIL
CITY in an amount of $900,000 available in equal monthly installments for a term
of 36 months pursuant to this Agreement and applicable provisions of law (such
transaction being hereinafter referred to as the "Oil City Acquisition"); and
WHEREAS, the Board of Directors of Imperial has approved and adopted this
Agreement; and
WHEREAS, the OIL CITY Stockholders and OIL CITY own and have the right to
sell, transfer and exchange 90% of the issued and outstanding capital stock of
OIL CITY to Imperial in accordance with the terms of this Agreement and
applicable provisions of law.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, provisions and covenants herein contained, the parties hereto hereby
agree as follows.
1. Exchange of Common Stock.
-----------------------------
1.01 Exchange. Subject to the terms and conditions herein set forth, at the
time of closing set forth in Section 1.02 hereof, Imperial will issue and
deliver or cause to be issued and delivered to the OIL CITY Stockholders the
following: (1.) a total of 2,350,000 shares of Imperial's authorized and
unissued common stock, par value $0.006 per share (the "Imperial Shares"), in
exchange for the conveyance by the OIL CITY Stockholders and OIL CITY to
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Imperial of a total of 13,655,700 shares of OIL CITY capital stock (the "OIL
CITY Shares"), representing 90% of the issued and outstanding capital stock of
OIL CITY.
1.02 Closing. Subject to the terms and provisions of this Agreement, the
closing of the Oil City Acquisition will be at 10:00 a.m. at the offices of
Imperial Petroleum, Inc., 100 NW Second Street, Suite 312, Evansville, IN 47708
on or before September 1, 1998, or at such earlier or later date or such other
place as shall be mutually agreed upon by Imperial, OIL CITY and the OIL CITY
Stockholders, such date and time sometimes being referred to herein as the
"Closing" or "Closing Date."
1.03 Terms of Loan. Subject to completion of the Oil City Acquisition as
provided in this Agreement and the exchange of shares as outlined in Section
1.01 above, Imperial will provide a subordinate loan facility to OIL CITY in the
amount of $900,000 for its use as provided in the attached Exhibit "B" - "Use of
Loan Proceeds". OIL CITY will sign a note payable to Imperial, substantially in
the form of the note attached as Exhibit "C", to be paid in full with principal
and accrued interest thereon (annual rate of 9%). Payment of principal and
accrued interest on the note shall begin upon the expiration of thirty six (36)
months from the date of execution of the note and paid in equal monthly
installments during the next sixty (60) months. Security for the note will be a
second mortgage against 100% of the assets of OIL CITY.
2. Representations and Warranties of the
OIL CITY Stockholders.
----------------------
Each of the OIL CITY Stockholders severally, and not jointly, represents
and warrants to Imperial that, with respect to the OIL CITY shares owned by such
OIL CITY Stockholder as set forth on Exhibit "A" attached hereto, the statements
contained in this Section 2 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date as through
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 2.
2.01 Authorization. The OIL CITY Stockholder has full power and authority
to execute and deliver this Agreement and to perform his obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of the OIL
CITY Stockholder, enforceable in accordance with its terms and conditions. The
OIL CITY Stockholder need not give any notice to, make any filing with, or
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obtain any authorization, consent or approval of any government, governmental
agency, or other person in order to consummate the transactions contemplated by
this Agreement.
2.02 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental agency
or court to which the OIL CITY Stockholder is subject or conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest, or other arrangement to which the
OIL CITY Stockholder is a party or by which he is bound or to which any of his
assets are subject.
2.03 Ownership. The OIL CITY Stockholder holds of record and owns
beneficially the number of OIL CITY Shares set forth opposite his name as set
forth on Exhibit "A" attached hereto. The OIL CITY Stockholder holds his OIL
CITY Shares free and clear of any restrictions on transfer (other than
restrictions under federal and state securities laws), claims, taxes, security
interests, options, warrants, rights, contracts, calls, commitments, equities
and demands. The OIL CITY Stockholder is not a party to any option, warrant,
contract, call, put or other agreement or commitment providing for the
disposition or acquisition of any capital stock of OIL CITY (other than this
Agreement). The OIL CITY Stockholder is not a party to any voting trust, proxy
or other agreement or understanding with respect to the voting of any capital
stock of OIL CITY.
2.04 Speculative Nature and Risk. The OIL CITY Stockholders each
understand and acknowledge the speculative nature of and substantial risk of
loss associated with an investment in the Imperial Shares which may be subject
to substantial dilution. The OIL CITY Stockholders each represent and warrant
that the Imperial Shares constitute an investment which is suitable and
consistent with their respective financial conditions and that they are each
able to bear the risks of this investment for an indefinite period of time,
which may include the total loss of their investment in Imperial. The OIL CITY
Stockholders each further represent that they have adequate means of providing
for their respective current financial needs and corporate and personal
contingencies and no need for liquidity in their investment in Imperial and that
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they each have sufficient financial and business experience to evaluate the
merits and risks of an investment in Imperial.
2.05 Federal or State Securities Laws. The OIL CITY Stockholders each
understand and acknowledge that the Imperial Shares have not been, and will not
be, registered under the Securities Act of 1933, as amended (the "1933 Act"), or
applicable state securities laws and the OIL CITY Stockholders are each aware
that no federal or state agency has made any review, finding or determination
regarding the terms of their acquisition of the Imperial Shares nor any
recommendation or endorsement of the Imperial Shares as an investment, and the
OIL CITY Stockholders must each forego the security, if any, that such a review
would provide.
2.06 Acquisition for Own Account. The OIL CITY Stockholders each
understand and acknowledge that the Imperial Shares are being offered and sold
under exemptions from registration provided by the Act and exemptions provided
by applicable state securities laws and the OIL CITY Stockholders each warrant
and represent that the Imperial Shares are being acquired by them solely for
their own account, for investment purposes only, and not with a view to or for
the resale, distribution, subdivision or fractionalization thereof. The OIL CITY
Stockholders each represent and warrant that they have no agreement or other
arrangement, formal or informal, with any person to sell, transfer or pledge any
part of the Imperial Shares or which would guarantee them any profit or protect
them against any loss with respect to the Imperial Shares. Further, the OIL CITY
Stockholders have no plans to enter into any such agreement or arrangement, and,
consequently, they must each bear the economic risk of an investment in the
Imperial Shares for an indefinite period of time.
2.07 Limitations on Resale or Transfer. The OIL CITY Stockholders each
understand and acknowledge that the Imperial Shares will be "restricted" as
defined in Rule 144 under the Act and that therefore they cannot offer to sell,
sell or otherwise transfer or distribute the Imperial Shares without
registration thereof, which Imperial is not obligated to do, under both the Act
and any applicable state securities laws, or unless an exemption is, in the
opinion of Imperial's counsel, available to them under the Act and any
applicable state securities laws. Such exemption is not now available and it is
not anticipated that any such exemption will become available in the future. The
OIL CITY Stockholders each further understand and acknowledge that the
restrictions on the transfer of the Imperial Shares will be noted on the books
of Imperial and that the stock certificate representing the Imperial Shares will
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bear a written legend setting forth the restriction on the transferability of
the Imperial Shares in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933,OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE ACT.
3. Representations and Warranties
Concerning OIL CITY.
--------------------
OIL CITY represents and warrants to Imperial that the statements contained
in this Section 3 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date except as set forth in the
disclosure schedule delivered by OIL CITY to Imperial on the date hereof and
initialed by the parties (the "OIL CITY Disclosure Schedule"). Nothing in the
OIL CITY Disclosure Schedule shall be deemed adequate to disclose an exception
to a representation or warranty made herein, however, unless the OIL CITY
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other items itself). The OIL
CITY Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 3.
3.01 Good Standing. OIL CITY is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas with full
corporate power to own and operate its properties and to carry on its business
as and in places where such properties are owned, operated and conducted.
3.02 Capitalization. The entire authorized capital stock of OIL CITY
consists of 30,000,000 shares of common stock, no par value, of which 29,300,000
shares are issued and outstanding, including 14,317,700 shares held in treasury.
All of the issued and outstanding shares of OIL CITY common stock have been
duly authorized, are validly issued, fully paid, and non-assessable.
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3.03 Financial Statements. Attached as Section 3.03 of the OIL CITY
Disclosure Schedule are the following financial statements (collectively, the
"OIL CITY Financial Statements"): (i) audited balance sheets of OIL CITY as of
August 31, 1995, 1996 and 1997 and compiled (unaudited) balance sheet as of May
31, 1998 ("Most Recent OIL CITY Balance sheet"); and (iii) audited statements of
operations, retained earnings and cash flows for the years ended August 31,
1995, 1996 and 1997 and unaudited statements of operations for the nine months
ended May 31, 1997. The OIL CITY Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered thereby, are correct and complete and are
consistent with the books and records of OIL CITY which books and records are
correct and complete.
3.04 Undisclosed Liabilities. Except to the extent reflected or reserved
against in the Most Recent OIL CITY Balance Sheet on the dates shown, or as set
forth in Section 3.04 of the OIL CITY Disclosure Schedule, as of those dates,
OIL CITY had no liabilities or obligations of any material nature, whether
accrued, absolute, contingent or otherwise and, as of such dates, knows nor has
reasonable grounds to know any basis for the assertion against OIL CITY of any
liability of any nature or in any amount not fully reflected or reserved against
in the Most Recent OIL CITY Balance Sheet.
3.05 Events Subsequent. Subsequent to the Most Recent OIL CITY Balance
Sheet and except as set forth in Section 3.05 of the OIL CITY Disclosure
Schedule, OIL CITY has not (i) incurred any material liabilities or obligations,
absolute or contingent, except current liabilities and obligations under
contracts entered into in the ordinary course of business; (ii) declared or made
any payment or distribution to stockholders or purchased or redeemed any of its
capital stock; (iii) mortgaged or pledged or subjected to lien, charge
or any other encumbrance, any of its assets, tangible or intangible, excepting
extensions or renewals of liens for liabilities set forth on the Most Recent
OIL CITY Balance Sheet; (iv) sold or transferred any of its tangible assets
or cancelled any debts or claims except in each case in the ordinary course of
business; (v) made any capital expenditures other than in the ordinary course of
business; or (vi) incurred any material or adverse losses or damages, to be
involved in strikes, or other labor disputes.
3.06 Litigation. Except as set forth in Section 3.06 of the OIL CITY
Disclosure Schedule, there are no actions, suits or proceedings at law or in
equity pending or, to the knowledge of OIL CITY, threatened against OIL CITY
seeking damages nor are there any suits threatened or pending before any
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federal, state or municipal government or any board, department or agency
thereof involving OIL CITY. To the best of OIL CITY's knowledge, OIL CITY has no
pending violation proceedings relating to state or federal environmental
regulations.
3.07 Employment Matters. OIL CITY is not a party to any employment
contract with any officer, director or other employee. OIL CITY is not
bound by a contract with a labor union, pension or profit share plan or employee
benefit plan, other than as listed in Section 3.07 of the OIL CITY Disclosure
Schedule.
3.08 Subsidiaries. Section 3.08 of the OIL CITY Disclosure Schedule
summarizes each of the subsidiaries of OIL CITY and its ownership therein.
3.09 Tax Matters. OIL CITY has no knowledge or any reasonable grounds to
know of any tax deficiencies which might be asserted against OIL CITY. Since the
date of the OIL CITY Financial Statements, OIL CITY has paid or has provided
for payment of all federal and state withholding and unemployment insurance
taxes and has filed all federal, state and local tax returns and reports when
due.
3.10 Properties. Section 3.10 of the OIL CITY Disclosure Schedule sets
forth a true and complete list of all material leases, contracts, understandings
commitments, plans or mortgages now in effect, to which OIL CITY is a party, or
under which it is obligated, or which materially affect its properties. OIL CITY
has complied with all material provisions of such leases, contracts,
understandings, commitments, plans and mortgages and is not in material default
with respect to any thereof.
3.11 Adverse Changes. There has been no material adverse change in the
condition, financial or otherwise, of OIL CITY from that set forth in the Most
Recent OIL CITY Balance Sheet. To the best of OIL CITY's knowledge, OIL CITY is
not aware of any facts that might result in any actions, suit or other
proceeding that would result in any adverse change in the financial condition of
OIL CITY. The business, properties and assets reflected in the OIL CITY
Financial Statements have not been materially and adversely affected as a result
of any fire, explosion, earthquake, accident, strike, lockout, requisition or
taking of property by any government or agency thereof, flood, drought, embargo,
riot, activities of armed forces or acts of God or the public.
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3.12 Books and Records. All of the minute books, stock certificate books
and stock transfer ledgers of OIL CITY are complete and accurate in all material
respects.
3.13 Independent Investigation of Imperial. OIL CITY confirms that it has
received, reviewed, understands and has fully considered (including, without
limitation, the financial statements contained therein) for purposes of its
acquisition of the Imperial Shares, the business prospects and leases of
Imperial. OIL CITY acknowledges that (i) Imperial has limited financial
resources and will need additional sources of capital to implement its current
business plan, the availability of which is uncertain and cannot be assured, and
(ii) the Imperial Shares are a highly speculative investment with a high degree
of risk of loss by OIL CITY of its investment therein. OIL CITY represents and
warrants that in making the decision to acquire the Imperial Shares, it has
relied upon its own independent investigation of Imperial and the independent
investigations by its representatives, including its own professional legal, tax
and business advisors, and that OIL CITY and its representatives have been given
the opportunity to examine all relevant documents and to ask questions of and to
receive answers from Imperial, or person(s) acting on its behalf, concerning the
terms and conditions of acquisition by OIL CITY of the Imperial Shares and any
other matters concerning an investment in Imperial, and to obtain any additional
information OIL CITY deems necessary to verify the accuracy of the information
provided.
3.14 Disclosure. The representations and warranties contained in this
Section 3 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 3 not misleading.
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4. Representations and Warranties of Imperial
----------------------------------------------
Imperial represents and warrants to the OIL CITY Stockholders and OIL CITY
that the statements contained in this Section 4 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date except as set forth in the disclosure schedule delivered by Imperial to the
OIL CITY Stockholders and OIL CITY on the date hereof and initialed by the
parties (the "Imperial Disclosure Schedule"). Nothing in the Imperial Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Imperial Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other items itself). The Imperial Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4.
4.01 Organization, Qualification and Corporate Power. Imperial is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. Imperial is duly authorized to conduct business and is
in good standing under the laws of each jurisdiction in which the nature of its
business or the ownership or leasing of its properties requires such
qualification. Imperial has full corporate power and authority to carry on the
business in which it is engaged and to own and use the properties owned and used
by it. Section 4.01 of the Imperial Disclosure Schedule lists the directors and
officers of Imperial. Imperial has made available for inspection by the OIL CITY
Stockholders correct and complete copies of the Certificate of Incorporation and
Bylaws of Imperial (as amended to date). The minute books containing the records
of meetings of the stockholders, the Board of Directors and any committees of
the Board of Directors, the stock certificate books and the stock record books
of Imperial are correct and complete. Imperial is not in default under or in
violation of any provision of its Certificate of Incorporation or Bylaws.
4.02 Capitalization. The entire authorized capital stock of Imperial
consists of (i) 50,000,000 shares of common stock, par value $0.006 per share,
of which 6,469,801 shares are issued and outstanding. All of the issued and
outstanding shares have been duly authorized, are validly issued, fully
paid, and non-assessable and are held of record by the respective Imperial
shareholders as
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set forth in Imperial's stock record books. There are no outstanding or
authorized options, warrants, rights, contracts, calls, puts, rights to
subscribe, conversion rights or other agreements or commitments to which
Imperial is a party or which are binding upon Imperial providing for the
issuance, disposition or acquisition of any of its capital stock, except as
disclosed in Section 4.02 of the Imperial Disclosure Schedule. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to Imperial. There are no voting trusts, proxies or any other
agreements or understandings with respect to the voting of the capital stock of
Imperial. Upon issuance, the Imperial Shares to be issued to the OIL CITY
Stockholders pursuant to this Agreement will be duly authorized, validly issued,
fully paid and non-assessable.
4.03 Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental agency
or court to which the Imperial is subject or any provision of its Certificate of
Incorporation or Bylaws of Imperial or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel or require any
notice under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, security interest or other arrangement to which Imperial is a
party or by which it is bound or to which any of its assets is subject or result
in the imposition of any security interest upon any of its assets. Imperial is
not required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government, governmental agency or
other person in order for Imperial to consummate the transactions contemplated
by this Agreement.
4.04 Subsidiaries. The subsidiaries owned by Imperial are disclosed in
Section 4.04 of the Imperial Disclosure Schedule and, except as set forth in
Section 4.04 of the Imperial Disclosure Schedule, Imperial does not own,
directly or indirectly, any capital stock, security, partnership interest or
other interest of any kind in any corporation, partnership, joint venture,
association or other entity.
4.05 Common Stock Trading Market. The common stock of Imperial is
eligible for quotation and is quoted on the National Association of Securities
Dealers ("NASD") OTC Bulletin Board in accordance with the applicable rules of
the NASD
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and Securities and Exchange Commission ("SEC") and is in compliance with
applicable NASD and SEC rules for continuing quotation on the NASD Bulletin
Board. The broker-dealers which are market-makers in the common stock of
Imperial are Paragon Capital ("Market-Makers"). Imperial has furnished each
Market-Maker and each other broker-dealer effecting transactions in the
Company's common stock with all information required by SEC Rule 15c2-11.
Imperial, its officers, directors and affiliates have fully complied with any
and all requests for information by the Market-Makers and all other
broker-dealers, whether or not acting in the capacity of a market- maker,
pursuant to SEC Rule 15c2-11. Any and all information provided by Imperial to
the Market-Makers and all other broker-dealers, whether or not acting in the
capacity of a market-maker, was, at the time if was furnished, accurate in all
material respects.
4.06 Financial Statements. Attached as Section 4.06 of the Imperial
Disclosure Schedule are the following Imperial financial statements
(collectively, the "Imperial Financial Statements"): (i) audited consolidated
balance sheets as of the fiscal years ended July 31, 1995, 1996 and 1997 and
unaudited consolidated balance sheets as of April 30, 1998 and audited
consolidated statements of income, changes in stockholders' equity and cash flow
as of and for the fiscal years ended July 31, 1995, 1996 and 1997, and the
unaudited statements of operations for the nine months ending April 30, 1998
(the "Most Recent Imperial Fiscal Quarter ") for Imperial. The Imperial
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered thereby, are correct and complete and are consistent with the books and
records of Imperial which books and records are correct and complete; provided,
however, that the Interim Imperial Financial Statements are subject to normal
year-end adjustments (which will not be material) and lack complete footnotes
and other presentation items.
4.07 Events Subsequent. Subsequent to the Most Recent Imperial Balance Sheet
and except as set forth in Section 4.07 of the Imperial Disclosure Schedule,
Imperial has not (i) incurred any material liabilities or obligations, absolute
or contingent, except current liabilities and obligations under contracts
entered into in the ordinary course of business; (ii) declared or made any
payment or distribution to stockholders or purchased or redeemed any of its
capital stock; (iii) mortgaged or pledged or subjected to lien, charge or any
other encumbrance, any of its assets, tangible or intangible, excepting
extensions or renewals of liens for liabilities set forth on the Most Recent
Imperial Balance Sheet; (iv) sold or transferred any of its tangible assets or
cancelled any debts or claims except in each case in the ordinary course of
11
business; (v) made any capital expenditures other than in the ordinary course of
business; or (vi) incurred any material or adverse losses or damages, to be
involved in strikes, or other labor disputes.
4.08 Undisclosed Liabilities. Imperial has no liability (and there is no
basis for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim or demand against it giving rise to any
liability), except for (i) liabilities set forth on the face of the Imperial
Financial Statements (rather than in any notes thereto) and (ii) liabilities
which have arisen after the Most Recent Imperial Fiscal Year End in the ordinary
course of business, none of which relates to any breach of contract, breach of
warranty, tort, infringement or violation of law or arose out of any charge,
complaint, action, suit, proceeding, hearing, investigation, claim or demand.
4.09 Tax Matters. Imperial has no knowledge or any reasonable grounds to know
of any tax deficiencies which might be asserted against Imperial. Since the date
of the Imperial Financial Statements, Imperial has paid or has provided for
payment of all federal and state withholding and unemployment insurance taxes
and has filed all federal, state and local tax returns and reports when due.
4.10 Title to Properties. Imperial has good and marketable title to, or valid
leasehold interests in, all its properties and assets, real, personal and
intangible, including without limitation, the assets reflected in the Imperial
Financial Statements (except as since sold or otherwise disposed of in the
ordinary course of business) free and clear of all mortgages, pledges,
conditional sales agreements, claims, liens, security interests and
encumbrances, except (i) as referred to or reflected in the Interim Imperial
Financial Statements or in the notes thereto, and (ii) statutory liens for taxes
not yet due and payable. Imperial has not received notice of violation of any
applicable law, ordinance, regulation, order or requirement relating to such
properties or assets. All leases pursuant to which Imperial leases any real or
personal property are valid and effective in accordance with their respective
terms and there is not, under any of such leases, any existing default or event
of default or event which, with notice or lapse of time, or both, would
constitute a default which has been noticed to Imperial or of which Imperial is
aware.
12
4.11 Real Property Leases. Imperial is not a party to any lease or sub-
lease of real property.
4.12 Intellectual Property.
(a) Except as disclosed in Section 4.12 of the Imperial Disclosure
Schedule, Imperial does not own any Intellectual Property and is not a
party to any license, sublicense, agreement, or permission with respect to
any Intellectual Property (as defined below) necessary for the operation
of its business as presently conducted and as presently proposed to be
conducted. Imperial has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and none of the directors and officers
(and employees with responsibility for Intellectual Property matters) of
Imperial have ever received any charge, complaint, claim, or notice
alleging any such interference, infringement, misappropriation, or
violation.
(b) As used herein, "Intellectual Property" means all (i) patents,
patent applications, patent disclosures, and improvements thereto, (ii)
trademarks, service marks, trade dress, logos, trade names, and corporate
names and registrations and applications for registration thereof, (iii)
copyrights and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration
thereof, (v) computer software, data, and documentation, (vi) trade
secrets and confidential business information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether
or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable
works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists
and information), (vii) other proprietary rights, and (viii) copies and
tangible embodiments thereof (in whatever form or medium).
4.13 Tangible Assets. Except as set forth on the Imperial Financial
Statements, Imperial does not own or lease any tangible assets of any kind or
nature.
4.14 Inventory. Imperial has no inventory of products, raw materials
or other supplies.
13
4.15 Litigation. Imperial (i) is not subject to any unsatisfied judgment,
order, decree, stipulation, injunction or charge, and (ii) is a not party and,
to the knowledge of any of the directors and officers (and employees with
responsibility for litigation matters) of Imperial, is not threatened to be made
a party to any charge, complaint, action, suit, proceeding, hearing, or
investigation of or in any court or quasi-judicial or administrative agency of
any federal, state, local or foreign jurisdiction or before any arbitrator.
4.16 Adverse Changes. There has been no material adverse change in the
condition, financial or otherwise, of IMPERIAL from that set forth in the Most
Recent IMPERIAL Balance Sheet. To the best of IMPERIAL's knowledge, IMPERIAL is
not aware of any facts that might result in any actions, suit or other
proceeding that would result in any adverse change in the financial condition of
IMPERIAL. The business, properties and assets reflected in the IMPERIAL
Financial Statements have not been materially and adversely affected as a result
of any fire, explosion, earthquake, accident, strike, lockout, requisition or
taking of property by any government or agency thereof, flood, drought, embargo,
riot, activities of armed forces or acts of God or the public.
4.17 Books and Records. All of the minute books, stock certificate books and
stock transfer ledgers of Imperial are complete and accurate in all material
respects.
4.18 Certain Business Relationships with Imperial. Except as disclosed in the
Imperial Disclosure Schedule, none of the OIL CITY shareholders and their
affiliates has been involved in any business arrangement or relationship with
Imperial within the past 36 months, and none of the OIL CITY shareholders and
their affiliates owns any property or right, tangible or intangible, which is
used in the business of Imperial.
4.19 Independent Investigation of OIL CITY. Imperial confirms that it has
received, reviewed, understands and has fully considered (including, without
limitation, the financial statements contained therein) for purposes of its
acquisition of the OIL CITY Shares, the business prospects and leases of OIL
CITY. Imperial acknowledges that (i) OIL CITY has limited financial resources
and will need additional sources of capital to implement its current business
plan, the availability of which is uncertain and cannot be assured, and (ii) the
OIL CITY Shares are a highly speculative investment with a high degree of risk
of loss by Imperial of its investment therein. Imperial represents and warrants
that in making the decision to acquire the OIL CITY Shares, it has relied upon
its own independent investigation of OIL CITY and the independent investigations
14
by its representatives, including its own professional legal, tax and business
advisors, and that Imperial and its representatives have been given the
opportunity to examine all relevant documents and to ask questions of and to
receive answers from OIL CITY, or person(s) acting on its behalf, concerning the
terms and conditions of acquisition by Imperial of the OIL CITY shares and any
other matters concerning an investment in OIL CITY, and to obtain any additional
information Imperial deems necessary to verify the accuracy of the information
provided.
4.20 Disclosure. The representations and warranties contained in this Section
4 do not contain any untrue statement of a fact or omit to state any fact
necessary in order to make the statements and information contained in this
Section 4 not misleading.
5. Survival and Indemnity.
---------------------------
5.01 Survival. All of the representations and warranties of the parties
contained in this Agreement shall survive the Closing Date, even if the damaged
party knew or had reason to know of any misrepresentation or breach of warranty
at the time of the Closing Date, and shall continue in full force and effect for
a period of five years thereafter.
5.02 Indemnification for Benefit of the OIL CITY Stockholders. In the
event Imperial breaches any of its representations, warranties and covenants
contained herein, and provided that any OIL CITY Stockholder or OIL CITY makes a
written claim for indemnification against Imperial pursuant to Section 10.05,
then Imperial agrees to and does hereby indemnify OIL CITY and the OIL CITY
Stockholders from and against the entirety of any Adverse Consequences it may
suffer through and after the date of the claim for indemnification (including
any Adverse Consequences that OIL CITY or the OIL CITY Stockholders may suffer
after the end of the applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach.
5.03 Indemnification for Benefit of Imperial. In the event any of the OIL
CITY Stockholders breach any of their respective representations, warranties and
covenants contained herein, and provided that Imperial makes a written claim for
indemnification against the OIL CITY Stockholder in breach pursuant to Section
10.05, then the OIL CITY Stockholders severally, and not jointly, agree to
indemnify Imperial from and against the entirety of any Adverse Consequences
Imperial may suffer through and after the date of the claim for indemnification
resulting from, arising out of, relating to, in the nature of, or caused by the
breach.
15
5.04 Matters Involving Third Parties. If any third party shall notify any
party to this Agreement (the "Indemnified Party") with respect to any matter
which may give rise to a claim for indemnification against any other party (the
"Indemnifying Party") under this Section 5, then the Indemnified Party shall
notify each Indemnifying Party thereof promptly; provided however, that no delay
on the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any liability or obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is damaged. In
the event any Indemnifying Party notifies the Indemnified Party within 10 days
after the Indemnified party has given notice of the matter that the Indemnifying
Party is assuming the defense thereof, (i) the Indemnifying Party will defend
the Indemnified Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party, (ii) the Indemnified Party may retain
separate co-counsel at its sole cost and expense (except that the Indemnifying
Party will be responsible for the fees and expenses of the separate co-counsel
to the extent the Indemnified Party concludes reasonably that the counsel the
Indemnifying Party has selected has a conflict of interest), (iii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the matter without the written consent of the
Indemnifying Party not to be withheld unreasonably, and (iv) the Indemnifying
Party will not consent to the entry of any judgment with respect to the matter,
or enter into any settlement which does not include a provisions whereby the
plaintiff or claimant in the matter releases the Indemnified Party for all
liability with respect thereto, without the written consent of the Indemnified
Party not to be withheld unreasonably. In the event no Indemnifying Party
notifies the Indemnified Party with 10 days after the Indemnified Party has
given notice of the matter that the Indemnifying Party is assuming the defense
thereof, however, the Indemnified Party may defend against, or enter into any
settlement with respect to, the matter in any manner it reasonably may deem
appropriate.
5.05 Determination of Loss. The parties shall make appropriate adjustment
for tax benefits and insurance proceeds (reasonably certain of receipt and
utility in each case) and for the time cost of money in determining the amount
of loss for purposes of this Section 5.
5.06 Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory or common
law remedy any party may have for breach of representation, warranty or
covenant.
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5.07 Definition of Adverse Consequences. As used in this Section 5,"Adverse
Consequences" means all charges, complaints, actions, suits, proceedings,
hearings, investigations, claims, demands, judgments, orders, decrees,
stipulations, injunctions, damages, dues, penalties, fines, costs, (including
costs incurred to comply with applicable rules and regulations of the National
Association of Securities Dealers and the Securities and Exchange Commission)
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses and fees, including all attorneys' fees, accountants' fees and court
costs.
6. Conduct and Transactions prior to Closing.
----------------------------------------------
6.01 Investigation; Operation of Business of OIL CITY. Between the date of
this Agreement and the Closing Date:
(a) OIL CITY agrees to give Imperial, its agents and
representatives, full access to all of OIL CITY's premises and books and
records, and to cause OIL CITY's officers to furnish Imperial with such
financial and operating data and other information with respect to its
business and properties as Imperial shall from time to time request.
Provided, however, that any such investigation shall not affect any of the
representations and warranties of OIL CITY hereunder and provided further,
that any such investigation shall be conducted in such manner as not to
interfere unreasonably with the operation of the business of OIL CITY. In
the event of termination of this Agreement, Imperial will return to OIL
CITY all documents, work papers, and other material obtained from OIL CITY
in connection with the transactions contemplated hereby and will keep
confidential any information obtained pursuant to this Agreement unless
such information is ascertainable from public or published information or
trade sources.
(b) Except as set forth in the OIL CITY Disclosure Schedule, OIL
CITY, to the extent required for continued operation of the business of
OIL CITY without impairment, will use reasonable efforts to preserve
substantially intact the business organization of OIL CITY, to keep
available the services of the present officers and employees of OIL CITY,
and to preserve the present relationships of OIL CITY with persons having
significant business relationships with OIL CITY.
(c) Except as set forth on the OIL CITY Disclosure Schedule, prior
to Closing, OIL CITY will conduct its business only in the ordinary course
17
and, by way of amplification and not limitation, OIL CITY will not,
without the prior written consent of Imperial (i) issue any capital stock,
or (ii) grant any stock options or warrants or other rights to purchase or
otherwise acquire any shares of OIL CITY capital stock or issue any
securities convertible into shares of OIL CITY capital stock, or (iii)
adopt any employee benefit plans or modify or alter any existing employee
benefit plan, or (iv) declare, set aside, or pay any dividend or
distribution with respect to the capital stock of OIL CITY, or (v)
directly or indirectly redeem, purchase or otherwise acquire any capital
stock of OIL CITY, or (vi) effect a split or reclassification of any
capital stock of OIL CITY or a recapitalization of OIL CITY, or (vii)
amend or change the Certificate of Incorporation or Bylaws of OIL CITY or,
(viii) grant any increase in the compensation payable or to become payable
by OIL CITY to officers or salaried employees of OIL CITY or any increase
regardless of amount, in any bonus, insurance, pension or other benefit
plan, program, payment or arrangement made to, for or with any officers or
employees, or (ix) borrow or agree to borrow any funds, or guarantee or
agree to guarantee the obligations of others except in the ordinary course
of business, or (x) waive any rights of substantial value, or (xi) except
in the ordinary course of business, enter into an agreement, contract or
commitment.
6.02 Investigation; Operation of Business of Imperial. Between the date
of this Agreement and the Closing Date:
(a) Imperial agrees to give to the OIL CITY Stockholders, their
agents and representatives, full access to all premises and books and
records, and to cause Imperial's officers to furnish the OIL CITY
Stockholders with such financial and operating data and other information
with respect to the business and properties of Imperial as the OIL CITY
Stockholders shall from time to time request. Provided, however, that any
such investigation shall not affect any of the representations and
warranties of Imperial hereunder; and provided further, that any such
investigation shall be conducted in such manner as not to interfere
unreasonably with the operation of the business of Imperial. In the event
of termination of this Agreement, the OIL CITY Stockholders will return to
Imperial all documents, work papers and other material obtained from
Imperial in connection with the transactions contemplated hereby and will
use all reasonable efforts to keep confidential any information obtained
pursuant to this Agreement unless such information is ascertainable from
public or published information or trade sources.
18
(b) Imperial, to the extent required for continued operation of the
business of Imperial without impairment, will use reasonable efforts to
preserve substantially intact the business organization of Imperial, to
keep available the services of the present officers and employees of
Imperial, and to preserve the present relationships of Imperial with
persons having significant business relationships to Imperial.
(c) Prior to Closing, Imperial will cause Imperial to, conduct its
business only in the ordinary course and, by way of amplification and not
limitation, Imperial will not, without the prior written consent of the
OIL CITY Stockholders, (i) issue any capital stock, or (ii) grant any
stock options or warrants or other rights to purchase or otherwise acquire
any shares of Imperial capital stock or issue any securities convertible
into shares of Imperial capital stock, or (iii) adopt any employee benefit
plans or modify or alter any existing employee benefit plan, or (iv)
declare, set aside, or pay any dividend or distribution with respect to
the capital stock of Imperial, or (v) directly or indirectly redeem,
purchase or otherwise acquire any capital stock of Imperial, or (vi)
effect a split or reclassification of any capital stock of Imperial or a
re-capitalization of Imperial, or (vii) amend or change the Certificate of
Incorporation or Bylaws of Imperial, or, (viii) grant any increase in the
compensation payable or to become payable by Imperial to officers or
salaried employees of Imperial or any increase regardless of amount, in
any bonus, insurance, pension or other benefit plan, program, payment or
arrangement made to, for or with any officers or employees, or (ix) borrow
or agree to borrow any funds, or guarantee or agree to guarantee the
obligations of others except in the ordinary course of business, or (x)
waive any rights of substantial value, or (xi) except in the ordinary
course of business, enter into an agreement, contract or commitment.
7. Consents.
-------------
Prior to Closing, the OIL CITY Stockholders and Imperial shall each use
his or its respective reasonable efforts to obtain the consent or approval of
each person whose consent or approval shall be required in order to permit the
OIL CITY Stockholders or Imperial, as the case may be, to consummate the
Imperial Acquisition.
19
8. Conditions to Closing.
--------------------------
8.1 General Conditions. The obligations of the parties to effect the
Imperial Acquisition shall be subject to the following conditions:
(a) The Board of Directors and, to the extent required by law, the
shareholders of Imperial, shall have approved this Agreement in accordance
with applicable provisions of state law.
(b) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, filing
or charge would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation,
(iii) affect adversely the right of Imperial to acquire and own the OIL
CITY Shares, (iv) affect adversely the right of the OIL CITY Stockholders
to acquire and own the Imperial Shares; or (v) affect adversely the right
of either Imperial or OIL CITY to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling or
charge shall be in effect).
(c) All governmental approvals, the absence of which would have a
materially adverse effect on Imperial or OIL CITY, respectively, on a
consolidated basis, after the Closing Date, shall have been received.
8.02 Conditions of Obligations of Imperial. The obligation of Imperial to
effect the Imperial Acquisition and to proceed with the Closing on the Closing
Date shall at all times be subject to the following conditions precedent, any of
which may be waived by Imperial in writing:
(a) (i) the representations and warranties of the OIL CITY
Stockholders and OIL CITY contained herein shall be true and correct in
all material respects at the Closing Date with the same effect as though
made at such time, and (ii) the OIL CITY Stockholders shall have each
performed all material obligations and complied with all material
covenants required by this Agreement to be performed or complied with by
him or it prior to the Closing Date.
20
(b) The OIL CITY Stockholders and OIL CITY shall have each obtained
and delivered to Imperial consents to the transactions contemplated by
this Agreement from the parties to all material contracts, referred to in
the OIL CITY Disclosure Schedule attached hereto in accordance with this
Agreement, which require such consent, and in particular, the consent of
Bank One Texas, N.A.
(c) There shall not have occurred (i) any material adverse change,
since the Most Recent OIL CITY Fiscal Year End, in the business,
properties, results of operations or financial condition of OIL CITY, or
(ii) any loss or damage to any of the properties or assets (whether or not
covered by insurance) of OIL CITY which will materially affect or impair
the ability of OIL CITY to conduct after the Imperial Acquisition the
business now being conducted by Imperial.
(d) All statutory requirements for the valid consummation by the OIL
CITY Stockholders and OIL CITY of the transactions contemplated by this
Agreement shall have been fulfilled and all authorizations, consents and
approvals of all federal, state or local governmental agencies and
authorities required to be obtained in order to permit consummation by the
OIL CITY Stockholders and OIL CITY of the transactions contemplated by
this Agreement and to permit the business presently carried on by OIL CITY
to continue unimpaired to any material degree immediately following the
Closing Date shall have been obtained. Between the date of this Agreement
and the Closing Date, no governmental agency, whether federal, state or
local, shall have instituted (or threatened to institute in a writing
directed to the OIL CITY Stockholders, OIL CITY, Imperial or any of their
subsidiaries or affiliates) an investigation which is pending at the
Closing Date relating to the Imperial Acquisition and between the date of
this Agreement and the Closing Date no action or proceeding shall have
been instituted or, to the knowledge of the OIL CITY Stockholders, shall
have been threatened by any party (public or private) before a court or
other governmental body to restrain or prohibit the transactions
contemplated by this Agreement or to obtain damages in respect thereof.
(e) The stockholders of OIL CITY shall have each acknowledged to
Imperial in writing (i) that the shares of Imperial common stock to be
issued to them pursuant to the Oil City Acquisition will be issued without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), or the securities laws of any state in reliance upon available
exemptions from the registration requirements thereof; (ii) that all such
21
shares of Imperial common stock will be subject to restrictions on
transferability and may not be offered for sale, sold or otherwise
transferred unless subsequently registered under the Securities Act and
all other applicable securities laws or unless exemptions from the
registration requirements of the Securities Act and all other applicable
securities laws are available, as established to the satisfaction of
Imperial, and (iii) the certificates evidencing such Imperial common stock
will bear an appropriate legend evidencing the above referenced
restrictions on transferability.
(f) OIL CITY shall have furnished Imperial with a certificate, dated
the Closing Date, stating that the respective representations and
warranties of OIL CITY contained in Section 3 are true and correct on the
Closing Date in all material respects as if then made.
(g) all papers, documents, agreements and other items required to be
delivered at Closing pursuant to Section 9.03 shall be delivered at
Closing.
(h) OIL CITY shall have cancelled the balance of its shares currently
held in treasury.
8.03 Conditions of Obligation of the OIL CITY Stockholders and OIL CITY.
The obligation of the OIL CITY Stockholders to effect the Imperial Acquisition
and to proceed with the Closing on the Closing Date shall at all times be
subject to the following conditions precedent, any of which may be waived by the
OIL CITY Stockholders in writing:
(a) Imperial shall have furnished the OIL CITY Stockholders and OIL
CITY with (i) certified copies of resolutions duly adopted by its Board of
Directors and, to the extent required by law, the shareholders of
Imperial, authorizing all necessary and proper corporate action to enable
Imperial to comply with terms of this Agreement and approving the
execution, delivery and performance of this Agreement, including the
issuance of the Imperial Shares, and (ii) an Incumbency Certificate for
the appropriate officers of Imperial.
(b) (i) the representations and warranties of Imperial herein shall
be true in all material respects at the Closing Date with the same effect
as though made at such time; and (ii) Imperial shall have performed all
material obligations and complied with all material covenants required by
this Agreement to be performed or complied with by it prior to the Closing
Date.
22
(c) Imperial shall have obtained and delivered to the OIL CITY
Stockholders consents to the transactions contemplated by this Agreement
from the parties to all material contracts, referred to in the Imperial
Disclosure Schedule attached hereto in accordance with this Agreement,
which require such consent.
(d) There shall not have occurred (i) any material adverse change
since the Most Recent Imperial Fiscal Quarter in the business, properties,
results of operations or financial condition of Imperial, or (ii) any loss
or damage to any of the properties or assets (whether or not covered by
insurance) of Imperial which will materially affect or impair the ability
of Imperial to conduct, after the Imperial Acquisition, the business now
being conducted by Imperial.
(e) All statutory requirements for the valid consummation by
Imperial of the transactions contemplated by this Agreement shall have
been fulfilled and all authorizations, consents and approvals of all
federal, state, local and foreign governmental agencies and authorities
required to be obtained in order to permit consummation by Imperial of the
transactions contemplated by this Agreement shall have been obtained.
Between the date of this Agreement and the Closing Date, no governmental
agency, whether federal, state or local, shall have instituted (or
threatened to institute in a writing directed to the OIL CITY
Stockholders, OIL CITY, Imperial or any of their subsidiaries or
affiliates) an investigation which is pending at the Closing Date relating
to the Imperial Acquisition and between the date of this Agreement and the
Closing Date no action or proceeding shall have been instituted or, to the
knowledge of Imperial shall have been threatened by any party (public or
private) before a court or other governmental body to restrain or prohibit
the transaction contemplated by this Agreement or to obtain the damages in
respect thereof.
(f) Imperial shall have furnished OIL CITY with a certificate, dated
the Closing Date, stating that the representations and warranties of
Imperial contained in Section 4 are true and correct on the Closing Date
in all material respects as if then made.
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(g) all papers, documents, agreements and other items required to be
delivered at Closing pursuant to Section 9.02 shall have been delivered at
Closing.
9. Actions at Closing.
-----------------------
9.01 Actions at the Closing. At the Closing, Imperial, OIL CITY and the OIL
CITY Stockholders will each deliver, or cause to be delivered to the other, the
securities to be exchanged in accordance with Section 1.01 of this Agreement,
and each party shall pay any and all federal and state taxes required to be paid
in connection with the issuance of delivery of their own securities.
Certificates representing the Imperial Shares shall be issued and delivered as
set forth on Exhibit "A" attached hereto. Certificates representing the OIL CITY
Shares shall be duly endorsed by each of the OIL CITY Stockholders for transfer
to Imperial or in blank, or have appropriately executed powers of attorney
attached, and signatures shall be witnesses.
9.02 Deliveries by Imperial. At Closing, Imperial will deliver to the OIL
CITY Stockholders:
(a) certificates for the Imperial Shares as provided by Section
9.01 hereof;
(b) certified copies of corporate resolutions and other corporate
proceedings taken by Imperial to authorize the execution, delivery and
performance of this Agreement and the appointment of Mr. James G. Borem to
the Board of Imperial;
(c) a certificate of Incumbency and signatures of officers of
Imperial dated as of the date of this Agreement;
(d) a bank draft or wire transfer of $25,000 to the account of OIL
CITY representing the initial installment on the loan amount.
9.03 Deliveries by the OIL CITY Stockholders and OIL CITY. At Closing, the
OIL CITY Stockholders and OIL CITY shall deliver to Imperial:
(a) certificates for the OIL CITY Shares as provided by Section
9.01 hereof;
(b) certified copies of corporate resolutions and other corporate
proceedings taken by OIL CITY to authorize the execution, delivery and
performance of this Agreement and the appointment of Mr. Jeffrey T. Wilson
on behalf of Imperial as a member of the Board of Directors of OIL CITY;
24
(c) a certificate of Incumbency and signatures of the officers of
OIL CITY dated as of the date of this Agreement and consenting to the sale
of the shares to Imperial;
(d) execution of the note payable to Imperial on behalf of OIL CITY.
10. Termination.
-----------------
10.01 Termination of the Agreement. The parties may terminate this
Agreement as provided below:
(a) Imperial, OIL CITY and the OIL CITY Stockholders may terminate
this Agreement by mutual written consent at any time prior to the Closing;
(b) Either party may terminate this Agreement by giving written
notice to other party on or before the Closing Date if either party is not
satisfied with the results of their continuing business, legal and
accounting due diligence regarding each other;
(c) OIL CITY and/or the OIL CITY Stockholders may terminate this
Agreement by giving written notice to Imperial at any time prior to the
Closing (i) in the event Imperial has breached any representation,
warranty or covenant contained in this Agreement in any material respect,
OIL CITY and/or the OIL CITY Stockholders has notified Imperial of the
breach and the breach has continued without cure for a period of 10 days
after the notice of breach, or (ii) if the Closing shall not have occurred
on or before September 11, 1998, or such later date as may be agreed to by
OIL CITY, the OIL CITY Stockholders and Imperial, in writing, by reason of
the failure of any condition precedent under Section 8.03 hereof (unless
the failure results primarily from OIL CITY or the OIL CITY Stockholders
themselves breaching any representation, warranty or covenant contained in
this Agreement); and
(d) Imperial may terminate this Agreement by giving written notice
to OIL CITY and the OIL CITY Stockholders at any time prior to the Closing
(i) in the event OIL CITY or any OIL CITY Stockholder has breached any
representation, warranty or covenant contained in this Agreement in any
material respect, Imperial has notified OIL CITY and the OIL CITY
25
Stockholders of the breach and the breach has continued without cure for a
period of 10 days after the notice of breach or (ii) if the Closing shall
not have occurred on or before September 11, 1998, or such later date as
may be agreed to by OIL CITY, the OIL CITY Stockholders and Imperial in
writing, by reason of the failure of any condition precedent under Section
8.02 hereof (unless the failure results primarily from Imperial itself
breaching any representation, warranty or covenant contained in this
Agreement).
10.02 Effect of Termination. If either OIL CITY and/or the OIL CITY
Stockholders or Imperial terminates this Agreement pursuant to Section 10.01
above, all rights and obligations of the parties hereunder shall terminate
without any liability of any party to any other party.
11. General.
-------------
11.1 Brokers and Finders. Each Party hereto represents that no broker, agent,
finder or other party has been retained by either Party, and no brokerage or
finder's fees or agent's commissions or other like payment has been agreed to be
paid by him or it in connection with this Agreement or on account of the
transactions contemplated by this Agreement. Each Party agrees to indemnify and
hold harmless the other parties from and against any and every claim arising by
breach of the aforesaid representation and warranty and all costs and expenses,
legal or otherwise, which any such party may incur as the result of any such
claim.
11.2 Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the other Parties. Provided
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable efforts to advise the other Party prior to making the disclosure.
11.03 Schedules. The OIL CITY and Imperial Disclosure Schedules delivered
pursuant to the terms of this Agreement shall be bound together, initialed by
Imperial and OIL CITY and deemed attached hereto and made a part hereof.
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11.04 Survival of Covenants, Representations and Warranties. Except as
otherwise specifically provided, the covenants, representations and warranties
contained herein shall expire and be terminated and extinguished at the Closing
Date.
11.05 Governing Law. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Nevada.
11.06 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if sent by registered mail or certified
mail, postage prepaid if addressed as follows:
If to Imperial:
Imperial Petroleum, Inc.
100 NW Second Street
Suite 312
Evansville, IN 47708
Attn: Mr. Jeffrey T. Wilson
President
If to OIL CITY and OIL CITY Stockholders:
Oil City Petroleum, Inc.
5577 South Lewis Avenue
Tulsa, OK 74105
Attn: Mr. James G. Borem
President
11.07 No Assignment. This Agreement may not be assigned by operation
of law or otherwise, without the express written consent of each party hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
IMPERIAL PETROLEUM, INC.
By:____________________________________
Jeffrey T. Wilson, President
OIL CITY PETROLEUM, INC.
By:____________________________________
James G. Borem, President
THE OIL CITY SHAREHOLDERS
By: ______________________________
By: ______________________________
By: ______________________________
By: ______________________________
By: ______________________________
By: ______________________________
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EXHIBIT "A"
OIL CITY SHAREHOLDERS
Oil City Shares Imperial Shares
Name To Be Exchanged Due Upon Exchange
- --------------------------------------------------------------------------------
R.A. Sellers 600,000 103,254
James G./Kathryn S. Borem 1,835,000 315,784
Iris R. Borem 500,000 86,045
Bradley J. Borem 500,000 86,045
Terri Peracca 100,000 17,210
L.C./Faye E. Cobb 650,000 111,858
Boone Petroleum, Inc. 554,890 95,490
Benz Properties, Ltd. 432,134 79,528
Hilton Petroleum, Inc. 86,816 14,940
Safari Petroleum, LLC 545,580 93,888
STB Energy, Inc. 545,580 93,888
Silver Petroleum Corporation 598,920 103,068
Silver Petroleum, Corporation 2,797,937 481,495
MoCo Resources, Inc. 1,001,457 172,340
Wm. Moser Marital Trust 1,416,163 243,707
Edna L. Moser 257,238 44,268
National Oil & Gas Inc. 743,285 127,911
Bill Carter 300,000 51,627
Total Shareholders 13,465,000 2,317,183
Treasury 190,700 32,817
Total Sharesto be Exchanged 13,655,700 2,350,000
29