EXHIBIT 10.2
AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS AMENDMENT is executed this 23RD day of September 2000.
BETWEEN:
XXXXX X. XXXXXX, XXX AND XXXXXX XXXXX, XXXXX X. XXXXXX,
XXXXXXX X. AND XXXXXX X'XXXXXX, XXXXX X. AND XXXXXX XXXXX
LIVING TRUST, XXXX AND XXXXX XXXXXXX, AND XXXX X. XXX
(individually referred to as "Seller" and collectively called
the "Sellers")
AND:
ENERGAS RESOURCES INC., a British Columbia, Canada corporation
("Energas")
WHEREAS:
(A) Under the date of August 26, 2000, Sellers and Energas executed
a Stock Purchase Agreement (the "Agreement") under the terms of which
Sellers agreed to sell and Energas agreed to buy all of the outstanding and
issued shares ("Seller's Stock") of First Natural Gas, Inc. (the "Company");
(B) The Agreement, which is incorporated herein and made a part
hereof by reference, is in full force and effect; and
(C) Subsequent to the execution of the Agreement, Sellers and
Energas have discovered that for regulatory compliance and/or to express the
true intent of the Agreement, the amendments to the Agreement, as set forth
herein are necessary. Accordingly, the Sellers and Energas amend the
Agreement as follows:
AMENDMENT
1. Paragraph 2 ("Consideration") of the Agreement is changed to read as follows:
"CONSIDERATION. The total consideration for the sale by Seller to Energas
of Seller's Stock is the following:
1
(a) Six hundred thousand dollars (U.S. $600,000) (subject to being
reduced as set forth in paragraph 6) to be paid by Energas to Sellers pursuant
to individual convertible promissory notes to be signed by Energas in favor of
each Seller (the "Convertible Note"). The Convertible Note shall be in the
principal amount (subject to being reduced as set forth in paragraph 6) in
favor of each Seller as follows:
SELLER AMOUNT OF NOTE
$388,554
Xxxxx X. Xxxxxx
Xxx and Xxxxxx Xxxxx 37,950
Xxxxx X. Xxxxxx 25,302
Xxxxxxx X. and Xxxxxx X'Xxxxxx 50,604
Xxxxx X. and XxXxxx Xxxxx Living Trust 81,324
Xxxx and Xxxxx Xxxxxxx 12,648
Xxxx X. Xxx 3,618
Each note shall be payable twelve months from the date it is delivered to
Seller and it shall provide for interest on the principal amount of 10% per
annum. The promissory note shall also provide that the net income of the
Company, calculated at the end of each calendar month shall be applied on the
then interest due on the note with the balance of said monthly net income to
be deposited in a special bank account to be opened with the escrow bank. The
net income after deducting the interest payments shall be held by the escrow
bank and paid over either to Energas with Seller's Stock pursuant to
Paragraph 9(a) or to Seller pursuant to Paragraph 9(b). The monthly interest
payment out of net income shall be applied to each Seller's note in the
following proportions:
SELLER SHARE OF NET
INCOME
Xxxxx X. Xxxxxx 64.759%
Xxx and Xxxxxx Xxxxx 6.324%
Xxxxx X. Xxxxxx 4.217%
2
Xxxxxxx X. and Xxxxxx X'Xxxxxx 8.434%
Xxxxx X. and XxXxxx Xxxxx Living Trust 13.554%
Xxxx and Xxxxx Xxxxxxx 2.108%
Xxxx X. Xxx 0.603%
The net income shall be calculated according to reasonable and ordinary
accounting principles as applied by corporations in the same business.
Seller shall be responsible for furnishing Energas a written accounting
each month showing the manner in which the month's net income was
calculated and the manner in which said net income was applied to the
interest due on the note. The Convertible Note also shall provide that
at any time after the expiration of 45 days from the issuance of the
note up to its due date. Seller shall have the option to convert the
note as follows: (a) All principal then due on the note may be converted
into shares of Energas at an agreed value of U.S. $2.00 per share and
(b) all interest then due on the note may be converted into shares of
Energas at the greater of either: $2.00 per share or the then per share
value of Energas in the open market (calculated in accordance with the
policies of the CDNX (hereinafter defined)). For example if the unpaid
principal then due to a Seller on his note is $10,000 and the unpaid
interest then due to such Seller is $1,000, and the then market value of
Energas stock is $3.00 per share, that Seller may convert the principal
to 5,000 shares of Energas stock and may convert the interest to 333
shares of Energas stock. (All stock conversion shall be to the nearest
whole number of shares.) The amount of principal and interest then due
on the note is subject to being reduced pursuant to paragraph 6 below.
Immediately following either the full payment of the note or the
conversion of the note to stock, as authorized herein, the then members
of the Board of Directors of the Company and all officers of the Company
shall resign and the stockholders shall elect a new Board of Directors
who shall elect new officers of the Company."
2. Paragraph 3 ("Regulatory Approval") of the Agreement is changed to read as
follows:
"REGULATORY APPROVAL. It is understood that this Agreement and, particularly,
the issuance of the Convertible Note is subject to obtaining written acceptance
from the Canadian Venture Exchange ("CDNX") of the transactions contemplated
herein and an exemption order from the British Columbia Securities Commission
(the "Commission") to permit the distribution of each CONVERTIBLE Note to each
Seller. The Agreement may also be subject to approval by the OKLAHOMA
CORPORATION COMMISSION. If any such acceptance, permission or approval has not
been issued prior to October 29, 2000, this Agreement, without the written
consent of Seller and Energas, shall be void. Seller agrees to use his or her
best efforts to assist Energas to procure all required regulatory acceptance,
permissions or approvals."
3. Paragraph 4 ("Representatives, Warranties and Covenants by Seller"),
sub-paragraph (c) is changed to read as follows:
3
"True and complete copies of the Articles of Incorporation and all
amendments thereto, bylaws (certified by the secretary of the Company),
and the minute book and stock record of the Company will be delivered by
Seller to Energas on or before September 25,2000, for its review. The
minute book of the Company reflects minutes and records maintained by
the Company regarding meetings heretofore held and consents heretofore
granted by the directors and shareholders of the Company."
4. Paragraph 4 ("Representatives, Warranties and Covenants by Seller"),
sub-paragraph (0) is deleted and the following is inserted thereto;
"Seller agrees to cause the Company to maintain payments on all
liabilities as they become due and to keep the Company in good standing
with all of this creditors."
5. Paragraph 4, ("Representatives, Warranties and Covenants by Seller") is
amended such that the following is inserted as sub-paragraph (p):
"After the closing, Seller agrees to cause the Company to enter into an
employment agreement Xx. Xxxxx X. Xxxxxx for a minimum term of one (1)
year (or such longer term as may be specified by Energas) but not
exceeding two years at a salary of US $5,000 per month. Seller agrees
that all monies payable to Xx. Xxxxx X. Xxxxxx and to other employees of
the Company will be the sole responsibility of the Company and all such
monies will not be paid until there is sufficient cash flow of the
Company to meet and pay all of the other liabilities of the Company as
they become due."
6. Paragraph 4 ("Representatives, Warranties and Covenants by Seller") is
amended such that the following is inserted as sub-paragraph (q):
"Financial Statements for the eight month period ended August 31, 2000
and the year ended December 31, 1999 of the Company (the "Financial
Statements") shall be delivered by Seller to Energas on or before
September 30, 2000. Seller agrees to have the Financial Statements
reviewed by a certified public accountant or, if required by the CDNX
(as hereinafter defined), audited by a certified public accountant. The
Financial Statements will be prepared in accordance with generally
accepted accounting principles in compliance with all applicable laws
and will be consistently applied, and will be complete and accurate in
al1 material respects, and give a true and fair view of the affairs and
financial position of the Company, including without limitation of the
order of the Oklahoma Corporation Commission authorizing First Natural
Gas, Inc. to operate as a Utility, (the "Order"). All communications
from the certified public accountant shall be addressed to Energas and
to the: Company,"
7. Paragraph 4 ("Representatives, Warranties and Covenant by Seller") is amended
such that the following is inserted as sub-paragraph (r):
4
"Seller agrees that the execution and delivery of this Agreement, and
the performance of the covenants and agreements herein contained, are
not limited or restricted by or in conflict with, nor will they breach,
infringe, contravene or interfere with, any contractual, intellectual
property, privacy, common law, statutory, equitable, confidentiality or
other rights or obligations of the Company nor will such create any
obligations for the Company or Energas, including any obligation to post
a bond in support of the Order."
8. Paragraph 4 ("Representatives, Warranties and Covenants by Seller") is
amended such that the following is inserted as sub-paragraph (s):
"FNG has all necessary licenses and permits to carry on its business."
9. Paragraph 4 ("Representatives, Warranties and Covenants by Seller") is
amended such that the following is inserted as sub-paragraph (t):
"All of the foregoing representations, warranties and covenants shall
survive closing and shall be binding upon Seller after closing."
10. Paragraph 6 ("Conditions Precedent to Obligations of Energas") of the
Agreement is changed to read as follows:
"CONDITIONS PRECEDENT TO OBLIGATIONS OF ENERGAS. All of the
obligations of Energas under this Agreement are, at its election,
subject to the satisfaction, prior to or at the closing, of the
following conditions:
(a) The representations and warranties of Seller contained in this
Agreement will have been true and correct in all material respects
and Seller will have performed or complied in all material respects
with all terms) agreements) and covenants required by this Agreement
to be performed by him on or prior to the closing date.
(b) Seller shall have delivered to Energas certificates of good standing
issued by the Secretary of State for the State of Oklahoma for the
Company dated no earlier than fifteen days prior to the closing date,
and reflecting that the Company is in existence and good standing,
has filed all required franchise tax returns and has paid all
required franchise taxes, and reflecting all instruments filed of
record with respect to the Company through the date of such
certificate in the Secretary's office.
(c) No action or proceeding shall be threatened or be pending against
Seller or the Company by a third party seeking to restrain or
prohibit the performance of, or to obtain damages or other relief in
conjunction with this Agreement or any of the transactions
contemplated hereby.
(d) Since the effective date hereof, no material adverse change shall
have occurred in the aggregate with respect to the financial
condition or operations of the Company as a whole.
5
(e) Energas is able to obtain acceptance from the CDNX and from the
Oklahoma Corporation Commission to this Agreement
(f) Energas is able to obtain an exemption order and approval from the
Commission to allow Energas to distribute the Convertible Note to
each Seller.
(g) Energas receives a favorable legal opinion from its counsel in
connection with the acquisition by Energas of the Seller's Stock to
the effect that:
(i) no bond must be posted by the Company or its Shareholders to
maintain the order in good standing; and
(ii) neither Energas nor its officers or directors will assume any
obligations or liabilities of the Company, nor will Energas or
its officers or directors be subject to any obligations or
liabilities in relation to the business of FNG, arising under
applicable law.
Prior to closing, Energas may give Seller written notice that Energas is
refusing to consummate the purchase of Seller's Stock because anyone or
more of the above conditions have not been met, in which case neither party
shall have any further obligation to the other in connection with this
Agreement. For greater certainty, Energas will not be obligated to
consummate the purchase of a particular Seller's Stock unless the above
conditions have been met in respect of all Sellers. If closing occurs and
at any time thereafter all or portions of Seller's Stock and/or the Assets
are burdened with liens, mortgages or other encumbrances, and/or if the
Company has unsecured debt of any nature (other than normal payables to
trade creditors in the ordinary course of doing business), the total amount
secured by liens, mortgages or other encumbrances plus the total amount of
unsecured debt not inclined in the ordinary course of business shall be
referred to herein as the "Company's Indebtedness". If any Seller timely
elects to convert his promissory note to Energas stock, on the date of the
conversion the total amount of principal and interest then payable to
Seller pursuant to Seller's note shall be automatically reduced by Seller's
pro rata share of the Company's Indebtedness, said pro rata share being the
percentage set out after Seller's name in Paragraph 2(a) above. The
automatic reduction of Seller's note by the amount of Seller's percentage
of the Company's Indebtedness shall be to the nearest whole dollar. As to
any seller who does not elect to convert his note to Energas stock, on the
due date of the note, it shall be automatically reduced by Seller's share
of the Company's Indebtedness as measured on the due date of the note, with
"Seller's share" being the percentage set out after Seller's name in
paragraph 2 of the Company's Indebtedness."
12. Paragraph 7 ("Closing and Closing Date") of the Agreement IS changed such
that the first part of paragraph 7 reads as follows:
"CLOSING AND CLOSING DATE. If, prior to the closing date,
Energas fails to give written notice of the rejection of the
sale, as provided in paragraph 6 above, the closing of the
sale of Seller's Stock by Seller to Energas shall occur at a
mutually agreeable day and time on or before October 30, 2000
in the offices of Xxxxx & Xxxxxxx in Oklahoma City. At closing
the following shall be accomplished:
6
(a) Seller shall endorse his stock certificates, representing Seller's
Stock, over to Energas and entry shall be made in the stock record
book of the Company to show Energas as the record holder of Seller's
Stock, effective at 7:00 a.m. on the first day of the calendar month
when closing occurs,
(b) New stock certificates shall be issued in the name of Energas
showing it to be the owner of Seller's Stock.
(c) Energas, then, shall endorse it stock certificate, representing its
ownership of Seller's Stock, in blank and the endorsed stock
certificate shall be delivered to an authorized representative of a
state or federal banking institution, satisfactory to both Seller and
Energas, said banking institution to act as the escrow agent to hold
the endorsed stock certificate in escrow pursuant to the terms of this
Agreement.
(d) Seller and Energas, along with a representative of the escrow agent,
shall execute such escrow agreement as may be required by the escrow
agent to protect it and to set forth its obligations under the escrow
a1Tangement
(e) Energas shall deliver to Seller the Convertible Note described in
paragraph 2(a) above, as possibly modified pursuant to the final
sentence of paragraph 6 above,
(f) The original corporate minute books and stock transfer ledgers shall
be delivered to the escrow agent to be held in escrow with the stock
certificate.
(g) Energas the owner of Seller's Stock, shall, in writing, confirm that
the present Board of Directors of the Company and the present
officers of the Company shall continue in their present positions.
That is, until the convertible Note has either been paid in full or
converted to Energas stock, as provided for in paragraph 2(a) above,
the current management of the Company shall be retained. Provided,
however, Xxxxxx X. Xxxx the President of Energas, shall be elected to
the current Board of Directors."
13. This Amendment may be executed by the parties in individual counterpart
copies and if each party executes a counterpart copy, it shall have the
same effect as if all parties had executed the same copy. Provided,
however, until all parties have signed a counterpart copy, there shall be
no agreement.
14. Except for the foregoing amendments, the Agreement remains in full force as
originally written.
15. This Amendment shall be binding upon and shall ensure to the benefit of the
respective heirs, devisees, executors, administrators, successors and
assigns of the parties.
Dated and executed as of the day, month and year first shown above.
7
ENERGAS RESOURCES INC.
By: /s/ Xxxxxx Xxxx
----------------
------------------------------ Xxxxxx X. Xxxx, President
Xxx Xxxxx The Oil Center
0000 X.X. 000xx Xxxxxx 0000 X.X. Xxxxxxxxxx, Xxxxx 0000-X
Xxxxxxxx Xxxx, XX 00000-0000 Xxxxxxxx Xxxx, XX 00000
------------------------------ -------------------------------------
Xxxxxx Xxxxx Xxxxx X. Xxxxxx
0000 X.X. 000xx Xxxxxx 0000 X. Xxx, Xx. 000
Xxxxxxxx Xxxx, XX 00000-0000 Xxxxxxxx Xxxx, XX 00000
/s/ Xxxxxxx X. X'Xxxxxx /s/ Xxxxxx X'Xxxxxx
------------------------------ -------------------------------------
Xxxxxxx X. X'Xxxxxx Xxxxxx X'Xxxxxx
000 X. Xxxxxxx 000 X. Xxxxxxx
XxXxxxxxx, XX 00000 XxXxxxxxx, XX 00000
/s/ Xxxxx Xxxxxxx
------------------------------ -------------------------------------
Xxxx X. Xxx Xxxxx Xxxxxxx
5858 Xxxxxxxx 000 Xxxxxx
Xxxxxx, XX 00000 Xxxxxxx, XX 00000
Xxxxx X. and XxXxxx Xxxxx Living Trust
By: /s/ Xxxxx X. Xxxxx
------------------
Xxxxx X. Xxxxx, Trustee, and
By: /s/ Xxxxxx Xxxxx, Trustee
-------------------------
XxXxxx Xxxxx, Trustee
Xx. 0, Xxx 000X
Xxxxxxx, XX 00000
8
