Exhibit 10.18
THIS AGREEMENT and PLAN OF EXCHANGE of Shares of Stock ("the Agreement"), dated
as of April 1, 1996, between PETROLEUM DEVELOPMENT CORPORATION, a Nevada
corporation, with its principal corporate office at 000 X. Xxxx Xxxxxx,
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000, party of the first part, herein called "PDC,"
and RNG HOLDING COMPANY, a West Virginia corporation, with its corporate office
at Xxxxx 0, Xxx 000, Xxxx Xxxxx, Xxxx Xxxxxxxx 00000, hereinafter called "RNG",
and XXXXXX X. XXXXX and XXXXX X. XXXXX, both having a mailing address of X.X.
Xxx 000, Xxxx Xxxxxxx, Xxxx Xxxxxxxx 00000, hereinafter called by their full
names or sometimes referred to as the "RILEYS", parties of the second part.
1. RECITALS. (a) WHEREAS, PDC is a public corporation, duly organized and
--------
existing under the laws of the State of Nevada, and licensed in West Virginia
as a foreign corporation; and (b) WHEREAS, RNG is duly organized and existing
under the laws of the State of West Virginia; and (c) WHEREAS, at the date of
this Agreement RNG has authorized capital consisting of Ten Thousand and 00/100
Dollars ($10,000.00) which capital stock is divided into One Thousand (1,000)
shares each share having a par value of Ten Dollars ($10.00) per share; and
(d) WHEREAS, as of the date of this Agreement there are Five Hundred (500)
shares issued and outstanding in the name of Xxxxxx X. Xxxxx; and (e) WHEREAS,
the parties have agreed and do herein agree to exchange all of the issued and
outstanding shares of RNG for shares of PDC on the terms and conditions herein
set out.
NOW, THEREFORE, in consideration of the premises, (which are incorporated
herein by reference) the sum of One Dollar ($1.00), cash in hand paid each to
the other and the parties intending to be bound agree as follows:
2. EXCHANGE OF SHARES. On the date of the completion of the RNG audit
------------------
described in Paragraph 4 hereof, PDC will issue or cause to be issued to Xxxxxx
X. Xxxxx shares of the common capital stock of PDC having a par value of $0.01
each, the number of shares determined by or equal to the total value of
shareholders equity in RNG, determined as hereinafter provided,
divided by the average daily closing price of PDC common stock as quoted daily
in the Wall Street Journal during the month of March, 1996.
3. ADJUSTMENTS TO THE EXCHANGE VALUATIONS. In the event the average daily
--------------------------------------
closing price of the PDC stock on March 31, 1998 is less than One Dollar Ninety
and 22/1000 cents ($1.9022), PDC will deliver to Xxxxxx X. Xxxxx additional
shares of PDC stock. The number of shares to be delivered shall be determined by
subtracting the average daily closing price of PDC stock for the month of March,
1998 from $1.9022, multiplying that difference by the number of shares initially
issued, and dividing that product by the average daily closing price per share
for the month of March, 1998, provided, however, that the total number of shares
delivered under this adjustment shall not exceed the total number of shares
originally delivered under this exchange agreement.
This calculation is expressed as follows:
(1.9022 - March, 1998 Price)
X Original shares issued / March 1998 Price
4. DETERMINATION OF RNG'S SHAREHOLDER EQUITY. The Shareholder Equity
-----------------------------------------
referred to in paragraph 2 above shall be determined and fixed as of March 31
1996, by an audit of the books, records and accounts of RNG by Xxxxxx Xxxxxxx,
CPA, X.X. Xxx 0000, Xxxxxxxx, Xxxx Xxxxxxxx 00000-0000. The PDC shares to be
exchanged shall be determined and the shares delivered at the conclusion of the
RNG audit.
5. EMPLOYMENT AGREEMENTS. With the execution of this Agreement, PDC shall
---------------------
enter into separate employment agreements with said Xxxxxx X. Xxxxx and Xxxxx X.
Xxxxx, which agreements are incorporated by reference.
-2-
6. OPERATION OF RNG. RNG will become a wholly owned subsidiary of PDC and
----------------
will keep or continue its same officers at least through the current corporate
year. On the date of the exchange of stock (as provided by Paragraphs 3 and 4
above) the Rileys shall deliver the outstanding certificate for shares of RNG
and shall each resign as Directors of RNG. On or prior to the exchange date of
April 1, 1996, RNG Service Company will be spun off as an independent entity
with all stock in RNG Service Company being issued to and held by Xxxxxx X.
Xxxxx. Xxxxxx X. Xxxxx may continue to operate RNG Service Company for a period
of time in order to effect an orderly conclusion of its operations and to assist
its employees in obtaining employment. It is anticipated that this operation
will not exceed Twelve (12) months. Employees of Xxxxx Natural Gas Company shall
be retained in their current capacities. For retained employees prior service
with RNG shall be applied when determining eligibility for vacations and other
employee benefits. Such employees are to have continued health, retirement and
sick leave coverages with PDC. RNG shall maintain communication capabilities at
or near their present offices after their work location has moved to Bridgeport.
7. REPRESENTATIONS AND WARRANTIES OF RNG AND THE RILEYS.
----------------------------------------------------
7.1 General. The Rileys are actively involved in the day-to-day financial
-------
and operational aspects of the RNG business and knowledgeably make the
covenants, representations and warranties set forth herein.
7.2 Ownership of Stock. Xxxxxx X. Xxxxx is the owner of record and in fact
------------------
of Five Hundred (500) shares of the common capital stock of RNG, that being the
only shares of every kind of stock issued by RNG. RNG is the holder and owner of
all of the issued stock of its wholly owned
-3-
subsidiary, Xxxxx National Gas Company, a West Virginia corporation. No
resolutions relating to dissolution or notices of dissolution have been enacted
for or on behalf of any corporations.
7.3 Due incorporation, good standing and qualification. RNG is a
--------------------------------------------------
corporation, duly incorporated, in good standing with all requisite corporate
powers of authority to own and operate its properties and to carry on its
business as presently conducted. RNG has issued and outstanding the Five Hundred
(500) shares of common capital stock, which is validly issued, fully paid and
non assessable. There is no other class of stock. There are no outstanding
subscriptions, options, warrants, convertible securities, costs, commitments or
agreements to which RNG is a party calling for or requiring the issuance,
transfer, sale or other disposition of shares of stock of RNG or its subsidiary
or related company, either in all events or upon the occurrence of any
contingency calling for or requiring the issuance of any securities or rights
convertible into or exchangeable into shares of RNG or any of its subsidiaries
or related companies.
7.4 Financial Statements. The balance sheet and related financial
--------------------
statements of RNG as of March 31, 1996, will be, to the knowledge of the second
party and the Rileys as prepared by Xxxxxx Xxxxxxx, CPA, true and accurate and
fairly represent the financial position and shareholder equity for the period
audited, as well as the results of operations and changes in financial position
reported in conformity with generally accepted accounting principles applied on
a consistent basis. RNG has no other material liabilities or obligations of a
type which would be included on a balance sheet prepared in accordance with
generally accepted accounting policies.
7.5 Material Changes. Since January 1, 1996, there has not been (i) any
----------------
adverse material change in the financial condition, business, properties or
assets of RNG; (ii) any event or condition which has materially and adversely
affected the business of RNG or (iii) any mortgage,
-4-
security interest or pledge of any material amount of the properties or assets
of RNG, except in each case as is disclosed in the financial statements and
footnotes related thereto.
7.6 Tax matters: Litigation. RNG has filed with the appropriate state,
-----------------------
federal and local governmental agencies all income tax returns and reports which
are required to be filed and has paid in full, all taxes, interest, penalties,
assessments or deficiencies shown to be due on such returns and reports.
Provisions for taxes reflected in the tax returns are adequate. RNG is not a
party to any pending action or proceeding nor, to the best of RNG or the Xxxxx'x
knowledge, is any action or proceeding threatened by either any governmental
agency or any other person, firm or corporation for taxes or claims of any kind
whatsoever.
7.7 Title to Properties. RNG has generally satisfactory title to all of its
-------------------
significant properties and assets, real and personal, which it owns, free and
clear of all security interests, liens, encumbrances and charges except for (i)
liens for current taxes not yet due nor payable; (ii) liens, encumbrances
disclosed in the financial statements and related notes; (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character amount or extent and do not materially interfere with the use of
such property or the business operations being conducted thereon or used
therewith. Leases of RNG are valid and enforceable according to their terms.
7.8 Authority and Compliance. RNG has the full corporate power and lawful
------------------------
authority to execute and deliver this Agreement and has the approval and
authority to consummate the transactions contemplated hereby and this Agreement
will constitute the valid, legally binding obligation of RNG according to its
terms. No approval or consent of any federal, state or other governmental agency
or body is required in connection with this transaction.
-5-
7.9 Environmental. To the best of their knowledge RNG and Rileys have
-------------
obtained all licenses, permits and other authorizations connected with the
conduct of the business under all applicable federal, state and local laws,
rules and regulations relating to pollution or protection of the environment.
RNG and the Rileys know of no violations of environmental rules or regulations
or such violations being under investigation.
7.10 No Contract. To the best of the Rileys knowledge, there are no
-----------
employment contracts except those contemplated by this Agreement, no consulting
contracts, pension, disability, profit sharing, defined contributions, severance
pay, retirement or other employee benefit plans not disclosed on the RNG
financials except for existing agreements with Xxxxxxx Xxxxxx and Xxxxx
Xxxxxxxxx. Nor is there any other contract or agreement obligating RNG to expend
money or be obligated to do anything not shown by the financials and the notes
related thereto.
8. PDC REPRESENTS AND WARRANTS AS FOLLOWS:
--------------------------------------
8.1 General. PDC is a Nevada Corporation, licensed to do business in the
-------
State of West Virginia and elsewhere, is duly organized with all requisite power
and authority to own property and conduct its business as it is being conducted.
8.2 Due Incorporation, Good Standing, Authority to Issue Stock. PDC's
----------------------------------------------------------
capital consists of Twenty-Five Million (25,000,000) shares of common capital
stock of a par value of $0.01 cent each and as of March 15, 1996, had issued and
outstanding 10,018,790 shares. All of the outstanding shares of PDC have been
authorized, validly issued, fully paid and non assessable. PDC shares are traded
daily in the over the counter market of NASDAQ, under the symbol "PETD." PDC has
the authority to make the transaction contemplated and to issue the requisite
number of shares required by this Agreement. Such shares are not registered
under the Securities Act of 1933 or with the State of West Virginia. Prior to a
public sale or transfer such shares must first be registered with
-6-
the appropriate federal or state agency or sold or transferred pursuant to an
exemption from such registration.
8.3 Financial Statement. Financial Statements delivered to RNG and the
-------------------
Rileys in connection with this transaction are public and on file with the
S.E.C. and NASD and are available to and have been inspected and reviewed by RNG
and the Rileys. Said statements fairly present the financial position of PDC as
of the dates indicated and the results of operations and changes in financial
position for the period(s) then ending in conformity with generally accepted
accounting principles applied on a consistent basis and include all adjustments
consisting only of normal accruals necessary for the fair statement of the
operations for the period.
8.4 No Material Changes. There have been no material changes in the
-------------------
financial condition of PDC since its audit at December 31, 1995.
8.5 Tax Matters and Litigation. PDC has filed with the appropriate state,
--------------------------
federal and local governments, all income and other tax returns and reports as
are required to be filed and has paid in full all taxes, interest, penalties and
assessment as are required or claimed by such authority. To the best of PDC's
knowledge there is no claim, action or proceeding threatened by any governmental
agency or third party whatsoever which would in the aggregate have a material
adverse effect on the business, properties, operations, prospects or assets.
9. REPRESENTATIONS AND WARRANTIES. All representations and warranties of
------------------------------
both parties are intended to survive the execution of this Agreement.
10. CONFIDENTIALITY. The parties hereto agree that each party shall use its
---------------
best lawful effort to hold in strict confidence all data and information
obtained from the other party(ies) to this Agreement or otherwise, except to
the extent that such date and information is required to be included as
disclosure to shareholders, directors, officers and employees of each party.
-7-
11. COOPERATION. Subject to the terms and conditions herein provided, the
-----------
parties shall use their best efforts to take, or cause to be taken, such action,
to execute and deliver, or cause to be executed and delivered, such additional
documents and to do or cause to be done all things necessary or advisable under
the provisions of this Agreement and under applicable law to consummate and make
effective transactions contemplated by this Agreement.
12. COUNTERPARTS. This Agreement may be executed in a number of
------------
counterparts, each of which, when executed, shall constitute an original, but
all of which together shall constitute the same document.
13. ENTIRE AGREEMENT. This Agreement contains the entire agreement between
----------------
the parties and may not be amended or modified except in writing signed by the
parties to be charged.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement all as
of the day and year first hereinabove written.
PETROLEUM DEVELOPMENT CORPORATION,
a Nevada corporation
By /s/ Xxxxx X. Xxxx
---------------------------------------
Its CEO
----------------------------------
RNG HOLDING COMPANY,
a West Virginia corporation
By /s/ Xxxxxx X. Xxxxx
---------------------------------------
Its President
----------------------------------
/s/ Xxxxxx X. Xxxxx
---------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
---------------------------------------
Xxxxx X. Xxxxx
-8-
STATE OF WEST VIRGINIA
COUNTY OF XXXXXXXX, TO-WIT:
The foregoing instrument was acknowledged before me this 4th day of April, 1996,
---
by Xxxxx X. Xxxx, CEO of PETROLEUM DEVELOPMENT CORPORATION, a Nevada
------------- ---
corporation, on behalf of the corporation.
My commission expires July 31, 2001
-------------
Seal /s/ Xxxxxxxx Xxx Xxxxxxx
------------------------------------
Notary Public
STATE OF WEST VIRGINIA
RT 2. BOX 0000
XXXXXXXX XXX XXXXXXX
XXXXXXX, XX 00000
The foregoing instrument was acknowledged before me this 4th day of April,
---
1996, by Xxxxxx X. Xxxxx, President of RNG HOLDING COMPANY, a West Virginia
--------------- --------- ------------------------
corporation, on behalf of the corporation.
My Commission Expires July 31, 2001
-------------
/s/ Xxxxxxxx Xxx Xxxxxxx
------------------------------------
Notary Public
STATE OF WEST VIRGINIA
COUNTY OF XXXXXXXX, TO-WIT:
The foregoing instrument was acknowledged before me on this 4th day of April,
---
1996, by Xxxxxx X. Xxxxx and Xxxxx X. Xxxxx.
My commission expires July 31, 2001
-------------
(Notarial Seal)
/s/ Xxxxxxxx Xxx Xxxxxxx
------------------------------------
Notary Public
This instrument was prepared by:
Xxxxx X. Xxxxxx, Esquire
YOUNG, MORGAN & XXXX, Attorneys at Law
Xxxxx Xxx, Xxxxxxxx Xxxxxxxx, Xxxxxxxxxx, XX 00000
-9-
