Exhibit 10.2

 

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BILL OF SALE

 

Date:

March 18, 2005

 

 

Shareholders:

Collectively all of the following Shareholders of the Company on the Date, by
and through their duly authorized representative (“Shareholders’
Representative”), and their heirs, successors and assigns: KOVALSKY VLADIMIR
VASYLEVICH; VASILUK YURY NIKOLAEVICH; IVARS HOVALKO; and KRISHNA PEMSING.

 

 

Shareholders’ Representative:

VLADIMIR KOVALSKI

 

Baltoil-Group

 

130, Dzerginskogo str., Kaliningrad, Russia

 

 

Buyer:

APOLLO RESOURCES INTERNATIONAL, INC.

 

3001 Knox St., Suite 403, Dallas, TX 75205

 

 

The Parties:

Shareholders and Buyer

 

 

Company:

JSC KALININGRADNEFT

 

ul. Portovaya 32a, 236039, Kaliningrad, Russia

 

 

Ownership:

90% of the shares of the stock of Company, equal to

 

90% of the total equity ownership of Company.

 

 

Consideration:

The Convertible Debenture attached hereto as Exhibit “A”.

 

Recitals

 

WHEREAS:

A.           The Company owns oil production operations in the Kaliningrad
Oblast region of Russia.

B.             Buyer wishes to pay Shareholders the Consideration for the
purchase of the Ownership.

C.             Shareholders wish to sell the Ownership to Buyer upon the terms
and subject to the conditions set forth in this Bill of Sale.

 

Agreement

 

NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, and covenants hereinafter set forth, and for other
good and valuable consideration, including the Consideration as herein defined,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

 

1.                                       Stock Sale Agreement.  This Bill of
Sale is being executed and delivered pursuant to the transaction evidenced in
part by that certain Stock Sale Agreement, dated February 9, 2005, by and among
the Shareholders and Buyer.  Capitalized terms used in this Bill of Sale and not
otherwise defined shall have the meanings assigned in the Stock Sale Agreement. 
Furthermore, the parties do each hereby reaffirm, attest to, acknowledge, ratify
and fully incorporate the terms of the Stock Sale Agreement with their execution
of this Bill of Sale.

 

2.                                       Sale and Purchase.  The Shareholders
hereby assign, transfer, convey, and sell to Buyer, the Ownership, as defined
herein, together with the Company’s related capital accounts, all rights
represented by such shareholder interests, and all goodwill associated
therewith, according to and under the terms and conditions and representations
of the Stock Sale Agreement.

 

3.                                       Payment of Consideration.  Buyer hereby
pays, grants and transfers to the Shareholders the Consideration, and the
Shareholders hereby acknowledge receipt of the Consideration as full and

 

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complete consideration for the Ownership.

 

4.                                       Other Documents.  Each party shall
promptly execute and deliver to the other party all such further instruments,
assignments, assurances and other documents as such party may reasonably request
in connection with its performance under this Bill of Sale and the transactions
contemplated hereby and by the Stock Sale Agreement.

 

5.                                       Representations and Warranties of The
Shareholders.  The Shareholders hereby represent and warrant to Buyer the
following, both as of the date hereof and as of Closing, and acknowledge and
accept that any failure as to these representations and warranties shall be a
material breach of this Bill of Sale in which case Buyer shall be entitled, at
its sole discretion, to any or all of its remedies hereunder and under the
Convertible Debenture.

 

a.               The Shareholders own all of the Ownership free and clear of all
liens, debts, obligations or claims;

 

b.              Attached as Exhibits “B” and “C” hereto are the following two
reports:

i.                  Technical Opinion on Kaliningradneft Oil Fields: 
Novo-Serebrianskoye and Vesselovskoye (Kaliningrad Oblast), Prepared by CEP for
Kaliningradneft, September 2004, attached hereto as Exhibit “B”; and

ii.               Tengry Group, Report No. O60101SE, 15.05.2004, Market Value
Valuation of JSC “Kaliningradneft”, Portovaya St., 32A, Kaliningrad Region,
236039, Kaliningrad.  Valuation date is as of January 1, 2004.  Report Terms are
April 15 – May 15, 2004.  Customer:  JSC “Kaliningradneft”.  Consultant: 
“Tengry Group, Ltd.”, Moscow, 2004, attached hereto as Exhibit “C”.

The Shareholders attest that both of these reports, collectively, represent a
full, complete, accurate and comprehensive financial overview of the Company,
and that both Exhibits “B” and “C” are correct and complete copies of said
reports.

 

c.               The debts of the Company as of the Date equal approximately US$
2,000,000;

 

d.              The assets of the Company, being acquired through this Ownership
purchase include, but are not limited to all licenses, seismic data and field
equipment of the Company as of the Date;

 

e.               The Shareholders are not party to or bound by any law,
contract, promissory note, agreement, commitment, or obligation, creating or
securing indebtedness, obligations, or liabilities, a breach or default of which
would be triggered by the Shareholders’ execution and delivery of this Bill of
Sale;

 

f.                 Within 60 days of the date hereof, the Shareholders will
provide to Buyer complete financial statements of the Company for calendar years
2003 and 2004, prepared according to and in compliance with the American
Generally Accepted Accounting Principles (“GAAP”) and prepared by the firm of
Deloitte Touche Tohmatsu, accompanied by said firm’s signed statement of such
compliance, and said firm’s signed statement that the financial condition of the
Company reflected in such financial statements is not materially different in
substance than the Estimated Financial Condition of the Company as of
December 31, 2003 as reflected in Exhibit “A” to the Stock Sale Agreement;

 

g.              The Company is a lawful open joint stock company company, duly
organized, validly existing and in good standing under the laws of the
Kaliningrad Oblast, Russia, and the Russian Federation.  To the Shareholders’
knowledge, there are no pending actions or proceedings (i) to limit or impair
the Company’s power to engage in business or (ii) to

 

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dissolve the Company; and

 

h.              The Kaliningrad Oblast is a “Special Economic Zone” regulated by
special Russian Federal Laws, which includes the law that no import or export
duties or taxes will be assessed against any products or equipment imported or
exported to or from Kaliningrad.

 

i.                  The representations and warranties of the Shareholders of
the Company contained in Section 4 of the Stock Sale Agreement are accurate in
all respects.

 

j.                  The Shareholders anticipate that within twelve (12) months
of the date of this Agreement, the ten percent (10%) of the shares of the stock
of the Company which are not covered by this Agreement shall be returned to the
Company (for cancellation by the Company).

 

6.                                       Representations, Warranties and
Covenants of Buyer.  Buyer hereby represents and warrants to the Shareholders
the following, both as of the date hereof and as of Closing, and acknowledges
and accepts that any failure as to these representations and warranties shall be
a material breach of this Bill of Sale in which case the Shareholders shall be
entitled, at their sole discretion, to any or all of their remedies hereunder
and under the Convertible Debenture:

 

A.               BUYER IS A COMPANY DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF THE STATE OF UTAH AND THE UNITED STATES, AND HAS ALL
REQUISITE POWER AND AUTHORITY TO ENTER INTO, PERFORM AND CARRY OUT ALL OF ITS
DUTIES AND OBLIGATIONS IN THE TRANSACTION CONTEMPLATED BY THIS BILL OF SALE.

 

B.              THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS BILL OF SALE AND
THE CONSUMMATION OF THE TRANSACTION ON THE PART OF BUYER CONTEMPLATED HEREUNDER
HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION ON THE PART OF
BUYER.  THIS BILL OF SALE IS (OR WILL BE WHEN EXECUTED AND DELIVERED PURSUANT
HERETO) THE LEGAL, VALID AND BINDING OBLIGATION OF BUYER, ENFORCEABLE IN
ACCORDANCE WITH ITS TERMS.

 

C.               NEITHER THE EXECUTION AND DELIVERY OF THIS BILL OF SALE BY
BUYER, NOR BUYER’S COMPLIANCE WITH ANY OF THE TERMS AND PROVISIONS OF THIS BILL
OF SALE, NOR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, WILL
CONFLICT WITH OR RESULT IN A VIOLATION OF, OR CONSTITUTE A MATERIAL DEFAULT
UNDER ITS BYLAWS OR ANY OTHER AGREEMENT, CONTRACT OR COMMITMENT TO WHICH IT IS A
PARTY; NOR WILL THE PERFORMANCE BY BUYER OF ITS OBLIGATIONS HEREUNDER VIOLATE
ANY JUDGMENT, ORDER, INJUNCTION, DECREE, REGULATION OR RULING OF ANY COURT OR
GOVERNMENTAL AUTHORITY TO WHICH BUYER IS SUBJECT.

 

d.              Buyer will make available to the Company a credit to finance the
program of capital investment as contemplated by Section 12 of the Stock Sale
Agreement and, as of Closing, the Shareholders’ Representative has been
appointed to the Board of Directors of Buyer.

 

7.                                       Other Warranty.  The Shareholders, for
themselves and their personal representatives and assigns, covenant and agree to
warrant and defend the transfer, assignment and conveyance of the Ownership and
Buyer’s title thereto.

 

8.                                       Attorney Fees.  If any legal action or
other proceeding is brought for the enforcement of this Bill of Sale or any
other agreement, document, contract, instrument or other writing entered into in
connection herewith, because of an alleged dispute, breach, default, or
misrepresentation, in connection with any of the provisions of this Bill of Sale
or such other writing, the successful or prevailing party shall be entitled to
recover its reasonable attorney fees, and other costs and expenses, incurred in
such action or proceeding, in addition to any other relief to which it or they
may be entitled.

 

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9.                                       Buyer’s Responsibilities.  Attached as
Exhibit “D” is a proposed program of capital investment into the Company. 
Within thirty (30) days following Buyer’s approval of such program, Buyer shall
initiate and commence execution of such program.

 

10.                                 Property Leases and Acquisitions by the
Shareholders.  It is understood by the parties hereto that Buyer intends to
build a “Topper Plant” to produce diesel in Kaliningrad region.  The
Shareholders hereby agree to use all commercially reasonable efforts to assist
Buyer with either (a) the lease for the benefit of Buyer, for a period of no
less than 49 years, or (b) the purchase, of property currently owned by the
Russian Federation, for and upon which Buyer will construct and operate said
Topper Plant.  In addition, the Shareholders will immediately begin negotiations
with the appropriate third parties to lease or acquire for the benefit of Buyer
a terminal facility suitable for the use of Buyer.

 

11.                                 Default and Remedies.  Upon any default
under the terms of this Bill of Sale or the Stock Sale Agreement, the
non-defaulting party shall have such remedies as are expressly stated in the
Convertible Debenture.

 

12.                                 Notices.  In order to be effective all
notices, consents, approvals and disapprovals (“Notice”) required by this Bill
of Sale must be in writing, signed by an officer or lawful agent of the party
giving such Notice, and either (i) personally delivered; or (ii) deposited for
delivery by a recognized, private overnight courier for next business morning
delivery, properly addressed, and with the full waybill prepaid.  Notice shall
be deemed received and effective on the earlier of the date actually received,
or, if applicable, three (3) business days after being sent as specified in
clause (ii) of this paragraph.  Notices must be addressed to the parties hereto
at the addresses first stated above, or in the Exhibits hereto.

 

13.                                 Entire Agreement; Amendments.  Each of the
parties represents that no promise or agreement which is not expressed in this
Bill of Sale, the Stock Sale Agreement or the Convertible Debenture, has been
made to such party in executing this Bill of Sale, and neither of the parties is
relying upon any statement or representation not contained in or referenced by
this Bill of Sale.  This Bill of Sale, including the Exhibits hereto,
collectively with the Stock Sale Agreement and the Convertible Debenture,
constitutes the entire understanding between the parties hereto relative to the
subject matter hereof, superseding any and all prior agreements, arrangements,
and understandings, written or oral, between the parties.  This Bill of Sale may
be amended only by a written instrument signed by the parties.

 

14.                                 Binding Effect; Permissibility of
Assignment.  This Bill of Sale and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

 

15.                                 Governing Law and Jurisdiction.  This Bill
of Sale shall be governed by and construed in accordance with the laws of the
United States of America, and more specifically the laws of the state of Texas,
without reference to its conflict of laws rules.  Jurisdiction and venue shall
reside exclusively in the United States courts in Dallas County, Texas.

 

16.                                 Severability.  If any provision of this Bill
of Sale is held to be invalid or unenforceable by any court of competent
jurisdiction, it is the intent of all of the parties that all other provisions
of this Agreement be construed to remain fully valid, enforceable and binding on
the parties.

 

17.                                 Covenant of Good Faith and Fair Dealing. 
With regard to their respective obligations and commitments under this Bill of
Sale, each party covenants that it shall act in good faith and deal fairly with
any and all other parties hereto.

 

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18.                                 Reasonable Cooperation.  Each party hereto
agrees to execute and deliver such instruments and take such other action as the
other party may reasonably request in order to carry out the intent of this Bill
of Sale.

 

19.                                 Equitable Remedies.  In the event of any
breach of this Bill of Sale or the Stock Sale Agreement, the provisions of this
Bill of Sale may be enforceable in a court of equity by a decree of specific
performance.  Any equitable remedy shall not be exclusive and shall be in
addition to any other remedy available.

 

20.                                 Power to Bind.  Responsible officers of the
parties have read and understand the contents of this Bill of Sale and are
empowered and duly authorized on behalf of their respective party to execute it.

 

21.                                 Plurality  When the context requires,
singular nouns and pronouns include the plural.

 

22.                                 Counterparts.  This Bill of Sale may be
executed in multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

 

23.                                 Shareholders’ Representative.  The
Shareholders’ Representative attests, warrants and pledges that he is fully
authorized to execute this Bill of Sale of behalf of all of the Shareholders,
and that any failure as to this attestation and warranty will constitute a
Shareholders’ Breach under the terms of the Convertible Debenture.

 

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Bill of Sale effective on the Date first stated
herein.

 

BUYER:

 

 

/s/ Dennis G. McLaughlin, III

 

APOLLO RESOURCES INTERNATIONAL, INC.

Dennis G. McLaughlin, III, CEO

 

 

THE SHAREHOLDERS, BY AND THROUGH THEIR DULY AUTHORIZED REPRESENTATIVE:

 

 

/s/ Vladimir Kovalski

 

Vladimir Kovalski

SHAREHOLDERS’ REPRESENTATIVE

 

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