EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
THIS ASSET
PURCHASE AGREEMENT dated as of May 23, 2005, among XDOGS, INC.,
a Nevada Corporation ("Buyer") and
Mid-Continents Investments, Inc. ("Seller"),
an Oklahoma Corporation.
W I T N E S S E T H:
- - - - - - - - - -
A. Seller owns
an undivided eighty percent (80%) Net Revenue Interest in
certain oil and gas leasehold interests
described with particularity in Exhibit
"A" (the "Leasehold"); and,
B. Buyer desires
to acquire from Seller the Leasehold for which Buyer will
issue 85,000,000 common shares of stock of
Buyer ("Acquired Common Shares") to
Seller; and,
NOW, THEREFORE,
in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree
as follows:
ARTICLE I
REPRESENTATION AND WARRANTIES OF SELLER
Seller represents and warrant to Buyer
that:
1.1 Seller's Organization, Good
Standing and Authority. Seller is a corporation
duly organized
and validly existing and in good standing under the laws of
the State of
Oklahoma and is duly registered and authorized to conduct
business in the
State of Kansas and has all necessary power to own all of
its properties
and assets and to carry on its business as now being
conducted. At
the Closing, Seller shall be in good standing as an Oklahoma
corporation, and
shall deliver to Seller at the Closing a true and correct
copy of its
Articles, certified by the Secretary of State of Oklahoma, and
its Bylaws,
certified as a true and correct copy of same by the Secretary
of Seller.
1.2 Leasehold. At the date of this
Agreement, except as described on Exhibit
"1.2" attached
hereto, Seller owns the Leasehold subject to no security
interests,
mortgage, pledge, lien, encumbrance, or charge, except for
minor
imperfections of
title and encumbrances, if any, which are not substantial
in amount, which
do not materially detract from the marketability or the
value of the
properties subject thereto, or which do not materially impair
the utilization
thereof.
1.3 Leasehold Equipment. At the date
of this Agreement, Seller owns all of the
personal
property as described in Exhibit "1.3" (the "Leasehold
Equipment")
subject to no
security interests, mortgage, pledge, lien, encumbrance, or
charge, except
for minor imperfections of title and encumbrances, if any,
which are not
substantial in amount, which do not materially detract from
the
marketability or the value of the properties subject thereto, or
which
do not
materially impair the utilization thereof.
<PAGE>
1.4 Tax Matters. Except as disclosed
on Exhibit "1.4" attached hereto, Seller
has filed all
required tax returns. Seller has paid or set up an adequate
reserve in
respect of all taxes for the periods covered by such returns.
1.5 No Conflict. To Seller's best
knowledge and except as disclosed on Exhibit
"1.5" attached
hereto, neither the execution by Seller of this Agreement,
the consummation
by Seller of the transactions contemplated herein nor the
compliance by
Seller with the provisions of this Agreement conflicts with
or results in a
breach of any provisions of any applicable law, judgment,
order, writ,
injunction, decree, rule, regulation or agreement to which
Seller is a
party or by which Seller is bound, or constitutes a default
under any
thereof.
1.6 Litigation and Proceedings. Except
as disclosed on Exhibit "1.6" attached
hereto, there
are no legal, administrative, arbitration, governmental, or
other
proceedings, actions, suits, claims or investigations instituted
or
pending or
threatened to which Seller, or any of its directors, officers
or
employees, is a
party which relates to Seller or its properties and which
would have a
material adverse effect upon the business, financial
condition,
properties or prospects of the Seller.
1.7 Authorized and Effective
Agreement. Seller has all requisite corporate
power and
authority to enter into and to perform this Agreement. The
execution and
delivery of this Agreement and the consummation of the
transactions
contemplated by this Agreement have been duly and validly
authorized by
all necessary corporate action in respect thereof on the part
of Seller and
its shareholders. This Agreement has been duly and validly
executed and
delivered by Seller, but is subject to proxy and shareholder
approval.
1.8 No Breach. Neither the execution
and delivery of this Agreement, nor
consummation of
the transactions contemplated by this Agreement, nor
Seller's
compliance herewith (i) does or will conflict with or result in
a
breach of any
provisions of the Articles or Bylaws of Seller, (ii) violate,
conflict with or
result in a breach of any term, condition or provision of,
or constitute a
default (or an event which, with notice or lapse of time,
or both, would
constitute a default) under, or give rise to any right of
termination,
cancellation or acceleration with respect to, or result in the
creation of any
lien, charge or encumbrance upon any property or asset of
Seller pursuant
to, any material note, bond, mortgage, indenture, deed of
trust, license,
lease, agreement or other instrument or obligation to which
Seller is a
party, or by which any of its properties or assets may be bound
or affected, or
(iii) subject to receipt of all required governmental
approvals,
violate any order, writ, injunction, decree, statute, rule or
regulation
applicable to Seller.
1.9 Consents and Approvals. No
consents or approvals of or filings or
registrations
with any governmental entity or with any third party are
necessary on the
part of Seller in connection with the execution and
delivery of this
Agreement and the consummation by Seller of the
transactions
contemplated by this Agreement. Seller is not aware of any
reasons why all
consents and approvals shall not be procured from all
regulatory
agencies having jurisdiction over the transactions contemplated
by this Agreement as
shall be necessary for consummation of the
transactions
contemplated by this Agreement.
2
<PAGE>
1.10 Material Adverse Change. Except as
disclosed on Exhibit "1.10", since
February 17,
2005, Seller has conducted its business in the ordinary and
usual course
(excluding the incurring of expenses and the filing of
applications
with governmental and regulatory authorities in connection
with this
Agreement and the transactions contemplated by this Agreement),
and (ii) no
event has occurred or circumstance arisen that, individually or
in the
aggregate, is reasonably likely to have a material adverse effect
on
Seller.
1.11 Compliance with Laws. Except as
disclosed on Exhibit "1.11", Seller is not
in violation of
its Articles or Bylaws, or of any applicable foreign,
federal, state
or local law or ordinance or any order, rule or regulation
of any foreign,
federal, state, local or other governmental agency or body,
or in default
with respect to any order, writ, injunction or decree of any
court, or in
default under any order, license, regulation or demand of any
governmental
agency, any of which violations or defaults could reasonably
be expected to have a
material adverse effect on the properties or
operation of
Seller's business, and Seller has not received any notice or
communication
from any foreign, federal, state or local governmental
authority
asserting that Seller is in violation of any of the foregoing
which could
reasonably be expected to have a material adverse effect on
Seller. Seller
is not subject to any regulatory or supervisory cease and
desist order,
stop order, agreement, written directive, understanding or
written
commitment, and has not received any written communication
requesting that
it enter into any of the foregoing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants that:
2.1 Buyer's Organization, Good
Standing and Authority. As of the date of this
Agreement, Buyer
is a corporation, duly incorporated, validly existing and
in good standing
under the laws of the State of Nevada and is duly
registered and
authorized to conduct business in the State of Kansas. Buyer
has all
requisite and full corporate power and authority, and is duly
qualified,
authorized, approved and licensed to own, lease, and operate
its
properties and to
carry on its business as it is presently being in each
jurisdiction in
which its activities requires such licensing, approval or
qualification,
except where the failure to be so licensed, qualified,
approved or in
good standing would not have a material adverse effect on
Buyer. Buyer has
previously delivered to the Seller true and complete
copies of its
Articles of Incorporation ("Articles") and its Bylaws
together with
all amendments thereto to date. At the Closing, Buyer shall
be in good
standing as a Nevada corporation, and shall deliver to Seller
at
the Closing a
true and correct copy of its Articles, certified by the
Secretary of
State of Nevada, and its Bylaws, certified as a true and
correct copy of same
by the Secretary of Buyer.
3
<PAGE>
2.2 Buyer's Capital Structure. As of
the date of this Agreement, the authorized
capital of Buyer
consists of 200,000,000 shares of common stock, $0.01 par
value ("Buyer
Common Shares"), and one hundred (100) shares of Class A
Convertible
Preferred Stock, par value $0.01 per share ("Buyer Preferred
Shares"),
convertible into an undiluted forty percent (40%) interest of
Buyer Common
Shares. As of the date hereof, there are approximately
79,828,543
shares of Buyer Common Shares issued and outstanding together
with the one
hundred (100) shares of Buyer Preferred Shares issued and
outstanding
(collectively "Buyer Issued Equity"). All of the Buyer Issued
Equity is
validly issued, fully paid and nonassessable and has been
issued
in full
compliance with all applicable U.S. federal and U.S. state
securities laws.
The Buyer has no other securities of any kind, whether
debt, equity,
derivative or hybrid, issued or outstanding, other than Buyer
Common Shares
and the Buyer Preferred Shares as well as there are no
outstanding
subscriptions, rights, preemptive rights, options, warrants,
convertible
securities or other agreements or commitments which would
obligate the
Buyer to issue or to transfer any additional shares of Buyer
Common Shares
and Buyer Preferred Shares or any other securities of the
Buyer. Buyer
Common Shares are listed for trading in the Over-the-Counter
Bulletin Board
("OTCBB"). The outstanding shares of Buyer Common Shares
have been
registered under Section 12(g) of the Securities Exchange Act
of
1934, as amended
(the "1934 Act") and are listed for trading in the OTCBB.
2.3 Subsidiaries. Buyer does not own,
nor does it have any right or obligation
to acquire,
directly or indirectly, any interest or investment (whether
debt or equity)
in any corporation, limited liability company, partnership,
joint venture,
business or other entity of any kind whatsoever.
2.4 Financial Statements and
Regulatory Reports.
(a) Buyer has previously delivered or
made freely available to the Seller
the audited financial statements of Buyer (including statements
of
financial condition and the related statements of operations,
stockholders' equity and changes in financial position) for the
years
ended March 31, 2001, 2002 and 2003, (collectively, the
"Buyer's
Financial
Statements"). Buyer's Financial Statements have been
prepared in accordance with generally accepted accounting
principles
consistently applied throughout the periods involved, and
present
fairly the financial condition and results of operations of Buyer.
The
audits of the Buyer's Financial Statements have been conducted in
all
material respects in accordance with generally accepted
auditing
standards. The books and records of Buyer are being maintained
in
material compliance with applicable legal and accounting
requirements
and such books and records accurately reflect in all material
respects
all dealings and transactions in respect of the business,
assets,
liabilities and affairs of Buyer. Buyer has no material
indebtedness,
obligation, or liability, known, contingent or otherwise, except
those
reflected in Buyer's Financial Statements, and specifically listed
on
Buyer's December 31, 2004, Form 10-QSB/A-2 attached hereto as
Exhibit
"2.4" (listing of creditors' and amounts) and those
subsequently
incurred in the ordinary course of business and which are not in
the
aggregate material to the operations of Buyer.
4
<PAGE>
(b) Buyer shall deliver or make freely
available to Seller any and all
financial and other reports provided to and correspondence with
any
regulatory agency having jurisdiction over Buyer. The books of
account
of Buyer fully and fairly reflect all of the material assets,
liabilities and transactions of Buyer required to be set forth
therein
for regulatory purposes and under generally accepted accounting
principles and are correct and complete in all material respects.
All
reports filed with any of Buyer's regulators have been properly
prepared in accordance with applicable regulations and are
materially
correct and complete.
(c) Prior to this agreement Buyer made
available all requested financial
information and Seller has had ample opportunity to investigate
the
Buyer's financial affairs and has not relied on any statements made
by
Buyer or its principals or agents, and has not relied on any papers
or
documents furnished by Buyer, but has conducted its own
independent
investigation, or had amply opportunity to do so.
2.5 Tax Matters.
(a) Buyer has not timely filed all
foreign and provincial, U.S. federal,
state and local income, franchise, excise, real property,
personal
property and other tax returns required by applicable law to be
filed
by it (including without limitation, estimated tax returns, income
tax
returns, information returns and withholding and employment tax
returns) and has not made timely payment of or, where payment is
not
required to have been made, has not set up an adequate reserve
or
accrual for the payment of, all taxes shown to be due and
payable,
whether disputed or not, in respect of the periods covered by
such
returns.
(b) Buyer has filed, its 2001, 2002
and 2003 tax returns.
(c) Other than otherwise disclosed,
all foreign, federal, state and local
income, franchise, excise, real property, personal property and
other
tax returns filed by the Buyer are complete and accurate in all
material
respects. The foreign, federal, state and local income tax
returns of Buyer have been prepared substantially in compliance
with
applicable tax laws, regulations and policies, and Buyer has
not
received a notice of examination from the applicable tax
authorities
regarding those returns. Buyer has no agreements in effect to
extend
the period of limitations for the assessment or collection of any
tax.
2.6 Properties. Except as disclosed on
Exhibit "2.6" attached hereto, all
personal
property (less than $2,000.00 value) owned or used by Buyer in
its
business is in
an adequate condition (ordinary wear and tear excepted) and
sufficient to
carry on the Buyer's business consistent with its past
practice.
5
<PAGE>
2.7 Litigation and Proceedings. Except
as set forth in Buyer's December 31,
2004, 10-QSB/A-2
attached hereto as Exhibit "2.7", there are no legal,
administrative,
arbitration, governmental, or other proceedings, actions,
suits, claims or
investigations instituted or pending or threatened to
which Buyer, or
any of its directors, officers or employees, is a party
which relates to
Buyer or its properties and which would have a material
adverse effect
upon the business, financial condition, properties or
prospects of the
Buyer. Buyer is not a party to any judgment, order, writ,
injunction or
decree having a material adverse effect on Buyer, except as
disclosed in
Buyer's December 31, 2004, 10-QSB/A attached hereto as Exhibit
"2.7". Buyer has
not committed any act or omitted to perform any act
reasonably be
expected to give rise to any material legal action or other
material
proceeding before any court or administrative agency.
2.8 Authorized and Effective
Agreement. Buyer has all requisite corporate power
and authority to
enter into and to perform this Agreement. The execution
and delivery of
this Agreement and the consummation of the transactions
contemplated by
this Agreement have been duly and validly authorized by all
necessary
corporate action in respect thereof on the part of Buyer and
its
shareholders.
This Agreement has been duly and validly executed and
delivered by
Buyer, but is subject to proxy and shareholder approval.
2.9 No Breach. Neither the execution
and delivery of this Agreement, nor
consummation of
the transactions contemplated by this Agreement, nor
Buyer's
compliance herewith (i) does or will conflict with or result in
a
breach of any
provisions of the Articles or Bylaws of Buyer, (ii) violate,
conflict with or
result in a breach of any term, condition or provision of,
or constitute a
default (or an event which, with notice or lapse of time,
or both, would
constitute a default) under, or give rise to any right of
termination,
cancellation or acceleration with resp
