Lothian Oil Inc. New York, New York 10110
Exhibit
10.1
Lothian
Oil Inc.
000
Xxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx, Xxx Xxxx 00000
| September 15, 2006 |
United Heritage Corporation
000
Xxxxx
Xxxxxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Ladies
and Gentlemen:
Reference
is made to that certain Merger Agreement and Plan of Reorganization (as amended,
the “Agreement”)
made
and entered into as of February 22, 2006, by and among United Heritage
Corporation, a Utah corporation (“United”)
and
Lothian Oil Inc., a Delaware corporation (“Lothian”).
Capitalized terms used but not defined herein have the respective meanings
ascribed to them in the Agreement.
Lothian
and United hereby agree that the Agreement is hereby amended as
follows:
1. Section
1.6(e) of the Agreement is deleted in its entirety and replaced with the
following:
“(e)
Exchange
Ratio. The
“Exchange
Ratio”
shall
be .80. The Exchange Ratio shall be equitably adjusted to reflect fully the
effect of any stock split, reverse split, stock combination, stock dividend
(including any dividend or distribution of securities convertible into United
Common Stock or Lothian Capital Stock), reorganization, reclassification,
recapitalization or other like change with respect to United Common Stock or
Lothian Capital Stock occurring after the date hereof and prior to the Effective
Time. No adjustment shall be made to the Exchange Ratio as a result of any
cancellation of any Lothian Equity Security or any consideration (in any form
whatsoever) received by Lothian as a result of any exercise, conversion or
exchange of Lothian Equity Securities, after the Effective Time.”
2. Section
1.6(g) of the Agreement is deleted in its entirety and replaced with the
following:
“(g)
United
Warrants. At the Effective Time, each holder of United Common Stock as of April
26, 2006 (with the exception of Lothian) will receive a stock purchase warrant
to purchase one share of United Common Stock for each share of United Common
Stock held by such United shareholder. Each such warrant issued pursuant to
this
Section 1.6(g) will have a term of five years and an exercise price of $3.00
per
share, and will provide for early termination on 30 days written notice if
the
Market Price of United’s Common Stock closes above $4.50 per share for ten
consecutive trading days. The exercise price and number of shares obtainable
upon exercise of each such warrant shall be equitably adjusted to reflect fully
the effect of any stock split, reverse split, stock combination, stock dividend
(including any dividend or distribution of securities convertible into United
Common Stock or Lothian Capital Stock), reorganization, reclassification,
recapitalization or other like change with respect to United Common Stock
occurring after the date hereof.”
3. Section
8.1(b)(vi) of the Agreement is deleted in its entirety and replaced with the
following:
“(vi)
the
Effective Time has not occurred before 5 p.m. (Eastern Time) on April 30, 2007,
provided, however, that the right to terminate this Agreement under this Section
8.1(b)(vi) shall not be available to any party whose willful failure to fulfill
any obligation hereunder has been the cause of, or resulted in, the failure
of
the Effective Time to occur on or before such date.”
4. Exhibit
D
to the Agreement, consisting of the Form of Certificate of Designation of
Preferences and Rights of Series A Convertible Preferred Stock of United
Heritage Corporation is amended as follows:
(a) The
second introductory paragraph thereof is deleted in its entirety and replaced
with the following:
“RESOLVED,
that, pursuant to authority vested in the Board of Directors of the Corporation
by Article IV of the Corporation’s amended Articles of Incorporation, of the
total authorized number of 5,000,000 shares of Preferred Stock of the
Corporation, there shall be designated a series of 176,000 shares which shall
be
issued in and constitute a single series to be known as “Series A Convertible
Preferred Stock”, par value $0.0001 per share (hereinafter called the “Series A
Preferred”). The shares of Series A Preferred shall have the voting powers,
designations, preferences and other special rights, and qualifications,
limitations and restrictions thereof set forth below:”
(b) The
first
sentence of Section 1(a) thereof is deleted in its entirely and replaced with
the following:
“The
holders of Series A Preferred shall be entitled to receive dividends at a rate
of eight percent (8%) of the liquidation preference of $125.00 per share per
annum, which shall be fully cumulative, prior and in preference to any
declaration or payment of any dividend (payable other than in shares of common
stock, $0.001 par value per share, of the Corporation (the “Common Stock”) or
other distribution on the Common Stock of the Corporation.”
2
(c) The
last
sentence of Section 3 thereof is deleted in its entirety and replaced with
the
following:
“For
the
purposes hereof, the term “Liquidation Preference(s)” shall mean $125.00 per
share with respect to each of the Series A Preferred, plus any and all accrued
unpaid dividends thereon.”
(d) Section
4(a) thereof is deleted in its entirety and replaced with the
following:
“All,
but
not less than all, of the Series A Preferred may be redeemed upon payment of
$125.00 per Series A Share, plus accrued and unpaid dividends thereon (the
“Redemption Price”), at any time by the Corporation at its sole discretion upon
thirty (30) days’ written notice to the holders of the Series A Preferred;
provided,
however,
the
Company shall not redeem the Series A Preferred unless, at the time of such
redemption, (i) the Company is a reporting company under Section 12 of the
Securities Exchange Act of 1934, as amended, and (ii) the Common Stock is traded
on the NASDAQ System or in the domestic over-the-counter market as reported
by
the National Quotation Bureau, Incorporated, or the American Stock Exchange,
(iii) a registration statement under the Securities Act of 1933, as amended
has
been filed and is effective and covers the Common Stock issuable upon conversion
of the Series A Preferred; and (iv) the Market Price as of the date of any
Redemption Notice hereunder is no less than two hundred percent (200%) of the
Conversion Ratio.”
(e)
Section
5(a) thereof is deleted in its entirety and replaced with the
following:
“Right
to Convert:
Subject
to the provisions for adjustment hereinafter set forth, each share of Series
A
Preferred shall be convertible in the manner hereinafter set forth into fully
paid and nonassessable shares of Common Stock. Commencing upon issuance, the
Liquidation Preference of each share of Series A Preferred (a “Series A
Share”) may, at the option of the holder thereof, be converted into such number
of fully paid and nonassessable whole shares of Common Stock as determined
by
dividing the Liquidation Preference by $1.25 (the “Conversion Ratio”). Such
rights of conversion shall be exercised by the holder thereof by giving written
notice that the holder elects to convert a stated number of shares of Series
A
Preferred into Common Stock and by surrender of a certificate or certificates
for the shares to be so converted to the Corporation at its principal office
(or
such other office or agency of the Corporation as the Corporation may designate
by notice in writing to the holder or holders of the Series A Preferred) at
any
time during its usual business hours on the date set forth in such notice,
together with a statement of the name or names (with address), subject to
compliance with applicable laws to the extent such designation shall involve
a
transfer, in which the certificate or certificates for shares of Common
Stock.”
3
5. Exhibit
E
to the Agreement, consisting of the Form of Certificate of Designation of
Preferences and Rights of Series B Convertible Preferred Stock of United
Heritage Corporation is amended as follows:
(a) The
second and third introductory paragraphs thereof are deleted in their entirety
and replaced with the following:
“RESOLVED,
that, it is in the best interest of this Corporation, that in addition to the
176,000 shares of Series A Convertible Preferred Stock, par value $0.0001 per
share (hereinafter call the “Series A Preferred”), to create a new series of its
Preferred Stock.
RESOLVED
FURTHER, that, pursuant to authority vested in the Board of Directors of the
Corporation by Article IV of the Corporation’s amended Articles of
Incorporation, of the total authorized number of 5,000,000 shares of Preferred
Stock of the Corporation, there shall be designated a series of 40,000 shares
which shall be issued in and constitute a single series to be known as “Series
B-1 Convertible Preferred Stock”, par value $0.0001 per share (hereinafter
called the “Series B-1 Preferred”) and there shall be designated a series of
60,000 shares which shall be issued in and constitute a single series to be
known as “Series B-2 Convertible Preferred Stock”, par value $0.0001 per share
(hereinafter called the “Series B-2 Preferred, and collectively with the Series
B-1 Preferred, the “Series B Preferred”). The shares of Series B Preferred shall
have the voting powers, designations, preferences and other special rights,
and
qualifications, limitations and restrictions thereof set forth
below:”
(b) The
penultimate sentence of Section 3 thereof is deleted in its entirely and
replaced with the following:
“For
the
purposes hereof, the term “Liquidation Preference(s)” for the Series A Preferred
shall have the meaning provided in the Certificate of Designation, Preferences
and Rights of Series A Preferred Stock filed by the Corporation with the Utah
Secretary of State simultaneously with the filing of this Certificate of
Designation, and for the Series B Preferred shall mean $125.00 per share with
respect to each of the Series B-1 Preferred, and $156.25 per share with respect
to each of the Series B-2 Preferred, in all cases plus any and all accrued
unpaid dividends thereon.”
(c) Section
4(a) thereof is deleted in its entirety and replaced with the
following:
“All,
but
not less than all, of the Series B-1 Preferred may be redeemed upon payment
of
$125.00 per share of Series B-1 Preferred and all, but not less than all, of
the
Series B-2 Preferred may be redeemed upon payment of $156.25 per share, in
all
cases plus accrued and unpaid dividends thereon (the “Redemption Price”), at any
time by the Corporation at its sole discretion upon thirty (30) days’ written
notice to the holders of the applicable Series B Preferred; provided,
however,
the
Company shall not redeem any Series B Preferred unless, at the time of such
redemption, (i) the Company is a reporting company under Section 12 of the
Securities Exchange Act of 1934, as amended, and (ii) the Common Stock is traded
on the NASDAQ System or in the domestic over-the-counter market as reported
by
the National Quotation Bureau, Incorporated, or the American Stock Exchange,
and
(iii) a registration statement under the Securities Act of 1933, as amended
has
been filed and is effective and covers the Common Stock issuable upon conversion
of the Series B Preferred; and (iv) the Market Price as of the date of any
Redemption Notice hereunder is no less than two hundred percent (200%) of the
Conversion Ratio.”
4
(d) Section
5(a) thereof is deleted in its entirety and replaced with the
following:
“Right
to Convert:
Subject
to the provisions for adjustment hereinafter set forth, each share of Series
B
Preferred shall be convertible in the manner hereinafter set forth into fully
paid and nonassessable shares of Common Stock. Commencing upon issuance, each
share of Series B-1 Preferred may, at the option of the holder thereof, be
converted into such number of fully paid and nonassessable whole shares of
Common Stock as determined by dividing the Liquidation Preference by $1.25,
and
each share of Series B-2 Preferred may, at the option of the holder thereof,
be
converted into such number of fully paid and nonassessable whole shares of
Common Stock as determined by dividing the Liquidation Preference by $1.5625
(the “Conversion Ratio”). Such rights of conversion shall be exercised by the
holder thereof by giving written notice to the Corporation that the holder
elects to convert a stated number of shares of the applicable Series B Preferred
into Common Stock and by surrender of a certificate or certificates for the
shares to be so converted to the Corporation at its principal office (or such
other office or agency of the Corporation as the Corporation may designate
by
notice in writing to the holder or holders of the Series B Preferred) at any
time during its usual business hours on the date set forth in such notice,
together with a statement of the name or names, subject to compliance with
applicable laws to the extent such designation shall involve a transfer, in
which the certificate or certificates for shares of Common Stock are to be
issued. The Corporation shall, as soon as possible thereafter and in no case
more than three (3) business days, issue and deliver at such office to such
holder of Series B Preferred, or to the nominee or nominees of such holder,
a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed
to
have been made immediately prior to the close of business on the date of such
surrender of the shares of the applicable Series B Preferred to be converted,
and the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock as of such date.”
5
Except
as
specifically amended hereby, the terms of the Agreement shall remain in full
force and effect. This letter agreement shall be governed by and construed
in
accordance with the Laws of the State of Delaware, without giving effect to
any
choice of law or conflict of law provision or rule that would cause the
application of the Laws of any jurisdiction other than the State of Delaware.
Please
indicate your acceptance of and agreement to the foregoing by signing and
returning to me a copy of this letter, which may be signed in
counterparts.
| Very truly yours, | ||
| Lothian Oil Inc. | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxxx | |
|
Name: Xxxxx Xxxxxx |
||
| Title: Chief Executive Officer | ||
Accepted
and Agreed:
United
Heritage Corporation
By:
/s/
C.
Xxxxx Xxxxxx
Name: C.
Xxxxx
Xxxxxx
Title: Chief
Executive Officer
6
