-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NMAlcE9EP7HOoCWG4yRtcOSCBFxt1ZqVWRg2K8j2rnHVbn03FzDJUNdytpa6W6Yb J+2xfxQlh3iy34ySPvqmBQ== 0000932384-96-000147.txt : 19960711 0000932384-96-000147.hdr.sgml : 19960711 ACCESSION NUMBER: 0000932384-96-000147 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19960710 SROS: AMEX SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SHEFFIELD EXPLORATION CO INC CENTRAL INDEX KEY: 0000755199 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 061052062 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-36106 FILM NUMBER: 96592867 BUSINESS ADDRESS: STREET 1: 1801 BROADWAY STE 600 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032961908 MAIL ADDRESS: STREET 1: 1801 BROADWAY SUITE 600 CITY: DENVER STATE: CO ZIP: 80202 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BUTLER SAMUEL J CENTRAL INDEX KEY: 0000935789 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 1801 BROADWAY SUITE 600 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032961908 MAIL ADDRESS: STREET 1: 1801 BROADWAY SUITE 600 CITY: DENVER STATE: CO ZIP: 80202 SC 13D/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________ SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 1 )/1/ TRANSMONTAIGNE OIL COMPANY - ---------------------------------------------------------------------- (Name of issuer) Common Stock, Par Value $.01 per share - ---------------------------------------------------------------------- (Title of class of securities) 821181 10 4 - ---------------------------------------------------------------------- (CUSIP number) Frederick W. Boutin, 370 17th Street, #900, Denver, CO 80202 (303-605-1798)y - ---------------------------------------------------------------------- (Name, address and telephone number of person authorized to receive notices and communications) June 6, 1996 - ---------------------------------------------------------------------- (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) Note. Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 6 Pages) _______________ /1/ The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 821181 10 4 13D Page 2 of 6 Pages -------------- --- --- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON J. Samuel Butler 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] N/A 3 SEC USE ONLY 4 SOURCE OF FUNDS* 00 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER 128,482 8 SHARED VOTING POWER 0 9 SOLE DISPOSITIVE POWER 128,482 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 128,482 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) .6% 14 TYPE OF REPORTING PERSON* IN TRANSMONTAIGNE OIL COMPANY Page 3 of 6 Pages SCHEDULE 13D June 28, 1996 Item 1. Security and issuer. - ------ ------------------- Shares of Common Stock, par value $.01 per share (the "Shares") of: TransMontaigne Oil Company (formerly Sheffield Exploration Company, Inc.) Suite 900 370-Seventeenth Street Denver, Colorado 80202 The names and addresses of the principal executive officers of the Company are as follows:
Name Title Address - ---- ----- ------- Cortlandt S. Dietler Chairman, Chief Executive 370 17th Street, Suite 900 Officer, President Denver, CO 80202 Richard E. Gathright Executive Vice President 370 17th Street, Suite 900 Denver, CO 80202 Harold R. Logan, Jr. Executive Vice 370 17th Street, Suite 900 President/Finance, Treasurer Denver, CO 80202 Frederick W. Boutin Senior Vice President 370 17th Street, Suite 900 Denver, CO 80202
Item 2. Identity and Background. - ------ ----------------------- (a) J. Samuel Butler (b) 1801 Broadway, Suite 600, Denver, CO 80202 (c) Manager, President and Member of Trinity Petroleum Management LLC (d) Mr. Butler has not, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) Mr. Butler has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction which resulted in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. TRANSMONTAIGNE OIL COMPANY Page 4 of 6 Pages SCHEDULE 13D June 28, 1996 (f) United States citizenship. Item 3. Source and Amount of Funds or Other Consideration. - ------ ------------------------------------------------- This amendment to Schedule 13D is being filed to report a material decrease in J. Samuel Butler's equity position in the Company (formerly Sheffield Exploration Company, Inc. ("Sheffield")) as a result of a merger between Sheffield and TransMontaigne Oil Company ("TransMontaigne") effective June 6, 1996 (the "Merger"). Mr. Butler's percentage ownership decreased from 5.1% to less than 1% of the Company's common stock as a result of the share exchange ratio set forth in the Restated Agreement and Plan of Merger, dated as of February 6, 1996 (the "Merger Agreement"), between Sheffield and TransMontaigne. The Merger consideration consisted of the issuance of shares of the Company's common stock in exchange for shares of common stock held by stockholders of TransMontaigne and Sheffield prior to the Merger. Item 4. Purpose of Transaction. - ------ ---------------------- Mr. Butler's equity ownership in the Company decreased to less than 1% due to the Merger of TransMontaigne into Sheffield, effective June 6, 1996. Pursuant to the terms of the Merger Agreement, Sheffield was the surviving corporation in the Merger, its name was changed to TransMontaigne Oil Company and the number of authorized shares of common stock was increased to 40,000,000. The Merger constituted a reverse acquisition of Sheffield by TransMontaigne in that Sheffield survived the Merger, but based upon the share exchange ratio, Sheffield stockholders now own 7% of the Company while TransMontaigne stockholders own 93% of the Company. According to the share exchange ratio in the Merger Agreement, (i) each share of common stock, $.10 par value per share, of TransMontaigne issued and outstanding immediately prior to the closing of the Merger was converted at the closing into the right to receive one share of common stock, $.01 par value per share, of the Company (formerly Sheffield); and (ii) each 2.432599 shares of Sheffield common stock issued and outstanding immediately prior to the closing of the Merger was converted at the closing into the right to receive one share of common stock of the Company. The Merger Agreement also provided that, at the closing of the Merger, the board of directors and officers of the Company would consist of the directors and officers of TransMontaigne immediately prior to the closing of the Merger, with the addition of Edwin Morgens (formerly a Sheffield director) as a director. TRANSMONTAIGNE OIL COMPANY Page 5 of 6 Pages SCHEDULE 13D June 28, 1996 Item 5. Interest in Securities of the Issuer. - ------ ------------------------------------ (a) - (b) Mr. Butler beneficially owns 128,482 Shares, representing less than 1% of the Company's Shares. Mr. Butler has sole voting and dispositive power over such Shares, but specifically disclaims beneficial ownership of 4,933 Shares held in trust for his grandchildren and of 10,072 Shares in Sheffield's 401(k) Plan, for which he serves as Trustee. (c) Other than the Merger, no transactions were effected by Mr. Butler during the past sixty (60) days. (d) A trust established for Mr. Butler's grandchildren, for which Mr. Butler serves as Trustee, has the right to receive the proceeds from a sale of the 4,933 Shares held in such trust. Certain former employees of Sheffield have the right to receive proceeds from a sale of the 10,072 Shares held in Sheffield's 401(k) Plan. (e) Mr. Butler ceased to be the beneficial owner of more than five percent of the Company's Shares on the effective date of the Merger, June 6, 1996. Item 6. Contracts, Arrangements, Understandings or Relationships - ------- -------------------------------------------------------- with Respect to Securities of the Issuer. ---------------------------------------- There are no contracts, arrangements, understandings or relationships between Mr. Butler and any other person with respect to any securities of the Company other than (i) an Incentive Stock Option Agreement, dated January 15, 1996, between the Company and Mr. Butler, for the purchase of 41,108 Shares at an option price of $3.64 per share. Item 7. Material to Be Filed as Exhibits. - ------- -------------------------------- Exhibit A - Option Agreement, dated January 15, 1996, between the Company and Mr. Butler. Exhibit B - Restated Agreement and Plan of Merger, dated as of February 6, 1996 between Sheffield Exploration Company, Inc. and TransMontaigne Oil Company (Incorporated by reference to the Registration Statement on Form S-4, as filed with the Securities and Exchange Commission on May 6, 1996 (SEC File No. 333- 3195). TRANSMONTAIGNE OIL COMPANY Page 6 of 6 Pages SCHEDULE 13D June 28, 1996 SIGNATURE --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 28, 1996 J. Samuel Butler --------------------------------- J. Samuel Butler EXHIBIT INDEX Exhibit Document - ------- -------- A Option Agreement, dated January 15, 1996, between the Company and Mr. Butler. THE FOLLOWING IS THE ORIGINAL SCHEDULE 13D AS FILED ON JANUARY 10, 1995 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________ SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. )* SHEFFIELD EXPLORATION COMPANY, INC. - ---------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $.01 per share - ---------------------------------------------------------------------- (Title of Class of Securities) 821181 10 4 --------------------------------------------- (CUSIP Number) J. Samuel Butler, 1801 Broadway, Suite 600, Denver, Colorado 80202 (303) 296-1908 - ---------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 3, 1995 ------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [X]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) NOTE. Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 6 SCHEDULE 13D CUSIP No. 821181 10 4 Page 2 of 6 Pages -------------- --- --- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON J. Samuel Butler 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] N/A 3 SEC USE ONLY 4 SOURCE OF FUNDS* 00 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER 174,810 8 SHARED VOTING POWER 0 9 SOLE DISPOSITIVE POWER 174,810 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 174,810 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1% 14 TYPE OF REPORTING PERSON* IN SHEFFIELD EXPLORATION COMPANY, INC. Page 3 of 6 Pages SCHEDULE 13D January 10, 1995 Item 1. Security and Issuer. - ------- ------------------- Shares of Common Stock, par value $.01 per share (the "Shares") of: Sheffield Exploration Company, Inc. Suite 600 1801 Broadway Denver, Colorado 80202 The names and addresses of the principal executive officers of the Company are as follows: Name Title Address ---- ----- ------- Edwin H. Morgens Chairman 10 East 50th Street New York, NY 10022 J. Samuel Butler President & 1801 Broadway Chief Executive Suite 600 Officer Denver, CO 80202 Jerry D. Smothermon Vice President 1801 Broadway Suite 600 Denver, CO 80202 David L. Milanesi Vice President, 1801 Broadway Chief Financial Suite 600 Officer and Denver, CO 80202 Secretary Item 2. Identity and Background. - ------- ----------------------- (a) J. Samuel Butler (b) 1801 Broadway, Suite 600, Denver, CO 80202 (c) President and Chief Executive Officer of the Company (d) Mr. Butler has not, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) Mr. Butler has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction which resulted in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. SHEFFIELD EXPLORATION COMPANY, INC. Page 4 of 6 Pages SCHEDULE 13D January 10, 1995 (f) United States citizenship. Item 3. Source and Amount of Funds or Other Consideration. - ------- ------------------------------------------------- This initial Schedule 13D is being filed to report the acquisition by J. Samuel Butler of 43,333 Shares at a price of $1.50 per share, on January 3, 1995. On December 8, 1994, the Board of Directors of the Company approved a bonus payment to Mr. Butler of $65,000 for the express purpose of exercising a Special Purchase Warrant for 43,333 Shares (attached hereto as Exhibit A). The purpose of the bonus payment tied to the warrant exercise was to increase Mr. Butler's equity position in the Company as an employment incentive. Mr. Butler's exercise of the Special Purchase Warrant on January 3, 1995 increased his holding of the Company's Shares to 5.1%. With respect to other Shares acquired by Mr. Butler prior to the exercise of the Special Purchase Warrant, Mr. Butler used personal funds for a majority of the acquisitions with the exception of 60,000 Shares he acquired in connection with the terms of an Agreement and Plan of Merger, dated as of December 31, 1994 (the "Merger Agreement"), attached hereto as Exhibit B. Pursuant to the terms of the Merger Agreement, Mr. Butler, the sole shareholder of Trinity Petroleum Management, Inc. ("TPM"), exchanged all of his TPM shares for 60,000 Shares and cash from the Company equal to the value of certain assets of TPM. Item 4. Purpose of Transaction. - ------- ---------------------- Mr. Butler exercised the Special Purchase Warrant to acquire 43,333 Shares in order to increase his equity position in the Company. Item 5. Interest in Securities of the Issuer. - ------- ------------------------------------ (a) - (b) Mr. Butler beneficially owns 174,810 Shares, representing 5.1% of the Company's Shares. Mr. Butler has sole voting and dispositive power over such Shares, but specifically disclaims beneficial ownership of 7,000 Shares held in trust for his grandchildren, for which he serves as Trustee. (c) On December 31, 1994, Mr. Butler received 60,000 Shares in consideration for the transfer of his shares of TPM common stock to the Company. Such transfer was in connection with the Company's acquisition (by merger) of TPM, which formerly provided administrative services to the Company. SHEFFIELD EXPLORATION COMPANY, INC. Page 5 of 6 Pages SCHEDULE 13D January 10, 1995 On December 22, 1994, Mr. Butler purchased 10,700 Shares in the open market for a price of $1.4375 per share. On December 16, 1994, Mr. Butler disposed of 1,200 Shares by gift. (d) A trust established for Mr. Butler's grandchildren, for which Mr. Butler serves as Trustee, has the right to receive any proceeds from a sale of the 7,000 Shares held in such trust. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships - ------- -------------------------------------------------------- with Respect to Securities of the Issuer. ----------------------------------------- There are no contracts, arrangements, understandings or relationships between Mr. Butler and any other person with respect to any securities of the Company other than (i) an Incentive Stock Option Agreement, dated January 14, 1993, between the Company and Mr. Butler, for the purchase of 50,000 Shares at an option price of $2.00 per share, attached hereto as Exhibit D; and (ii) an Incentive Stock Option Agreement, dated December 2, 1993, between the Company and Mr. Butler, for the purchase of 50,000 Shares at an option price of $3.00 per share, attached hereto as Exhibit E. Item 7. Material to Be Filed as Exhibits. - ------- -------------------------------- Exhibit A - Special Purchase Warrant Certificate. Exhibit B - Agreement and Plan of Merger, dated as of December 31, 1994. Exhibit C - The Company's 1990 Amended and Restated Stock Option Plan. Exhibit D - Option Agreement, dated January 14, 1993, between the Company and Mr. Butler. Exhibit E - Option Agreement, dated December 2, 1993, between the Company and Mr. Butler. SHEFFIELD EXPLORATION COMPANY, INC. Page 6 of 6 Pages SCHEDULE 13D January 10, 1995 SIGNATURE --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated January 10, 1995 /s/ J. Samuel Butler ----------------------------------- J. Samuel Butler President & CEO EX-99 2 OPTION AGREEMENT OPTION AGREEMENT (INCENTIVE STOCK OPTION) THIS AGREEMENT is made and entered into this 15th day of January, 1996, by and between SHEFFIELD EXPLORATION COMPANY, INC. (the "Company") and J. Samuel Butler, (the"Optionee") (together, the "Parties"). RECITALS: I. On November 15, 1990, the Board of Directors (the "Board") of the Company adopted the 1990 Stock Option Plan, which was approved by the shareholders of the Company on March 6, 1991, and amended by the Board on December 2, 1993, under which Employees of the Company and its subsidiaries may receive options to purchase common stock, $.01 par value ("Common Stock") of the Company. II. The Board intends that the Plan conform to the requirements of Section 422 of the United States Internal Revenue Code of 1986, as amended (the "Code"), in order that certain options granted under the Plan may be "incentive stock options" within the definition of that term in said Section 422. III. The Optionee has been selected to receive an incentive option pursuant to the Plan. IV. The Optionee is desirous of obtaining the incentive stock option on the terms and conditions herein contained. IT IS THEREFORE agreed by and between the Parties, for and in consideration of the premises and the mutual covenants herein contained and for other good and valuable consideration, as follows: A. The Company hereby confirms and acknowledges that it has granted to the Optionee, on December 5, 1995, an option to purchase 100,000 shares of Common Stock of the Company (the "Option") upon the terms and conditions herein set forth and subject to the terms and conditions of he Plan. The Option is granted as a matter of separate agreement, and not in lieu of salary or any other regular or special compensation for services. B. Mine purchase price of the shares which may be purchased pursuant to the Option is 31.50 per share, which is, in the opinion of the Company, not less than the fair market value of the shares on the date the Option was granted as specified in paragraph 1. C. The Option shall continue for five years after the date of grant set forth in paragraph 1 unless sooner terminated or modified under the provisions of this Agreement, and shall automatically expire at midnight on the fifth anniversary of such date of grant. D. The Option may be exercised by the Optionee to purchase the total number of shares specified in paragraph 1 as follows: 1. Thirty-three and one-third percent (33-1/3%) of the total number of shares shall become exercisable on the first anniversary of the date of grant; and 2. An additional thirty-three and one-third percent (33-1/3%) of the total number of shares shall become exercisable on each of the second and third anniversaries of the date of grant. E. If the Optionee's employment with the Company or a participating subsidiary of the Company shall terminate by reason of the Optionee's death, or for any reason other than the Optionee's disability, the Option, to the extent then exercisable as provided in paragraph 4, shall remain exercisable after the termination of his employment for a period of three months. If the Optionee's employment is terminated because the Optionee is disabled within the meaning of Section 22(e) (4) of the Code, the Option, to the extent then exercisable as provided in paragraph 4, shall remain exercisable after the termination of his employment for a period of twelve months. If the Option is not exercised during the applicable period, it shall be deemed to have been forfeited and of no further force or effect. F. The Option may not be exercised by anyone other than the Optionee during his lifetime. In the event of his death, the Option may be exercised by the personal representative of the Optionee's estate or, if no personal representative has been appointed, by the successor or successors in interest determined under the Optionee's will or under the applicable laws of descent and distribution. The Option may not be transferred, assigned, encumbered or alienated in any way by the Optionee, and any attempt to do so shall render the Option and any unexercised portion thereof, at the discretion of the Company, null and void and unenforceable by the Optionee. G. The Option may be exercised in whole or in part by delivering to the Company written notice of exercise together with payment in full for the shares being purchased upon such exercise. H. The Company will, upon receipt of said notice and payment, issue or cause to be issued to the Optionee (or to his personal representative or other person entitled thereto) a certificate for the number of shares purchased thereby. The Optionee may designate a member or the Optionee's immediate family as a co-owner of the said shares. I. The company may, in its discretion, file effective with the Securities and Exchange Commission a Registration Statement on Form She under the Securities Act of 1933, as amended (the "Act"), covering the sale of the optioned shares to Optionee upon exercise of the Option. If, at the time of exercise, the Company does not have an effective Registration Statement on fife covering the sale of the optioned shares, the Optionee represents and agrees that: (i) the Option shall not be exercisable unless the purchase of optioned shares upon the exercise of the Option is pursuant to an applicable effective registration statement under the Act, or unless in the opinion of counsel for the Company, the proposed purchase of such, optioned shares would be exempt from the registration requirements of the Act, and from the qualification requirements of any state securities law; (ii) upon exercise of the Option, he will acquire the optioned shares for his own account for investment and not with any intent or view to any distribution, resale or other disposition of the optioned shares; (iii) he will not sell or transfer the optioned shares, unless they are registered under the Act, except in a transaction that is exempt from registration under the Act, and each certificate issued to represent any of the optioned shares shall bear a legend calling attention to the foregoing restrictions and agreements. The Company may require, as a condition of the exercise of the Option, that the Optionee sign such further representations and agreements as it reasonably determines to be necessary or appropriate to assure and to evidence compliance with the requirements of the Act. J. If the Company or its shareholders enter into an agreement to dispose of all, or substantially all, of the assets or outstanding capital stock of the Company by means of a sale or liquidation, or a merger or reorganization in which the Company is not the surviving corporation, any unexercised portion of the Option as of the day before the consummation of such sale, liquidation, merger or reorganization shall for all purposes under this Agreement become exercisable in full as of such date even though the anniversary dates, AS provided in paragraph 4, have not yet occurred, unless the Board shall have prescribed other terms and conditions to the exercise of the Option, or otherwise modified the Option. K. In consideration of the granting by the Company of the Option, the Optionee hereby affirms that he has a present intention to remain in the employ and service of the Company for the period that this Option continues. This affirmation, however, shall confer no right on the Optionee to continue in the employ of the Company, nor interfere in any way with the right of the Company to discharge the Optionee at any time for any reason whatsoever, with or without cause. L. The Optionee shall have no rights as a shareholder with respect to the shares of Common Stock which may be purchased pursuant to the Option until such shares are issued to the Optionee. M. THIS AGREEMENT IS ENTERED INTO AND SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO. N. The terms and conditions contained in the Plan, and as it may be amended from time to time hereafter, are incorporated into and made a part of this Agreement by reference, as if the same were set forth herein in full, and all provisions of the Option are made subject to any and all terms of the Plan. IN WITNESS WHEREOF, the parties have hereunto affixed their signatures in acknowledgment and acceptance of the above terms and conditions on the date first above mentioned. SHEFFIELD EXPLORATION COMPANY, INC. BY: /s/ David L. Milanesi VP --------------------------- OPTIONEE ------------------------------ J. Samuel Butler -----END PRIVACY-ENHANCED MESSAGE-----