SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934
For the fiscal year ended April 30, 1996
Commission File No. 0-9800
LYRIC ENERGY INC.
(Exact Name of Registrant as specified in its charter)
COLORADO 75-1711324
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
Incorporation or organization)
1013 West 8th Ave., Amarillo, Texas 79101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(806) 376-5088
Securities registered pursuant to Section 12 (b) of the Act: N/A
Securities registered pursuant to Section 12 (g) of the Act:
$0.01 Par Value Common Stock
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(Or for such shorter period that the Registrant was required to
file such reports), and (2) Has been subject to such filing
requirements for the past 90 days: Yes ____ No X
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and
no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB: Yes X No _____
State Issuer's Revenues for the most recent fiscal year: $-0-
State the aggregate market value of Registrant's voting $0.01 par
value common stock held by non-affiliates computed by reference
to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within the
past 60 days. (See definition of affiliate in Rule 12b-2 of the
Exchange Act). There is no bid or asked price quoted.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS)
Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court. Yes _____ No ______
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date. As
of December 31, 1996, there were 46,958,483 shares of the
Registrant's $.01 par value common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
No documents are incorporated herein by reference.
Transitional Small Business Format (check one): Yes ___ No X
PART 1
ITEM 1. BUSINESS
(a) General Development of Business.
Lyric Energy, Inc. ("Registrant") was incorporated in the
State of Colorado on April 25, 1980, and was organized on May 1,
1980.
On February 3, 1981, Registrant completed a registered
public offering of 20,000,000 shares of its $0.01 par value
common stock, and received gross proceeds of $2,000,000
therefrom.
Registrant was an active oil and gas producing company from
its inception until July 31, 1991. All requisite 10-K's were
filed with the Securities and Exchange Commission through April
30, 1991. 10-Q's were filed through the Quarter ending January
31, 1992.
For the fiscal year ending April 30, 1991 the net loss was
$360,791 and for 1990 and 1989 was $290,561 and $266,799. The
principal cause of the losses was the interest being accrued but
not paid on the bank note with the Amarillo National Bank. The
original principal of the Bank note was $1,815,869. By the end of
fiscal year 1991 (April 30) principal and unpaid interest had
grown to $3,209,761. Registrant was unable to pay the interest.
Effective July 31, 1991 Registrant entered into an agreement
with the Amarillo National Bank wherein Registrant assigned
Registrant's interest in certain oil and gas producing properties
having a present worth discounted at 10% of $297,600 to the
Amarillo National Bank and the issuance by Registrant to the
Amarillo National Bank of 3,800,000 shares of Registrant's
authorized but unissued Common Stock which Common Stock bore a
Restrictive 144 Legend at the time the stock was issued all in
consideration of cancellation of Registrant's past due notes
including accrued interest thru July 31, 1991. In addition
Registrant agreed to assign the Amarillo National Bank small
overriding royalty interests in any wells Registrant subsequently
drilled on one proved undeveloped oil property in Moore County,
Texas and on any oil and gas subsequently drilled by Registrant
in the Thalia area of Foard County, Texas. Such overriding
royalty interests applied only to wells which Registrant drilled
subsequent to July 31, 1991 in these specifically designated
areas. Registrant did not drill any of such wells on either the
undeveloped oil property in Moore County, Texas, or on any oil
and gas wells subsequently drilled in the Thalia area in Foard
County, Texas. Other Oil and Gas Leases owned by Registrant on
July 31, 1991, were assigned to other operators or expired by
their own terms for failure to develop or failure to produce.
Registrant agreed to continue to operate the Okmulgee oil and
casinghead gas producing properties consisting of the properties
in the Creek Indian designated unit as designated by the Oklahoma
Corporation Commission for a six month period. At the end of that
six month period Registrant agreed with the bank that Registrant
would, if the production warranted, effectuate a production
payment with the bank providing that the bank would receive 75%
of Registrant's revenue after expenses from the Creek Indian Unit
until the bank receives $100,000 or alternately Registrant would
sell the properties in the unit and give to the bank the proceeds
of such sale. Registrant subsequently sold the Okmulgee oil and
casinghead gas producing properties to an unrelated third party
and paid the proceeds to the Amarillo National Bank in accordance
with this agreement.
After assigning to the Amarillo National Bank the oil and
gas producing properties described above, Registrant still had an
interest in some oil and gas properties. All of those oil and gas
properties subsequently were either plugged and abandoned or
ceased producing and expired by their own terms for failure to
develop or failure to produce. With the exception of one property
in Moore County, Texas, which was sold to an unrelated third
party in exchange for an obligation by that unrelated third party
to plug and abandon the wells at the appropriate time and relieve
Registrant of that obligation, and a modest amount of cash which
was not sufficient to completely pay the outstanding obligations
of that property at the time of sale. The amount of such unpaid
invoices were owed to Stahl Petroleum Company which waived the
payment of the balance due.
As a consequence, the Registrant had no source of cash flow
or income and no properties with any appreciable value. The
Registrant ceased filing 10-K's and 10-Q's after the quarter
ended January 31, 1992.
The oil and gas properties remaining which were basically
worthless were written off. Most were no longer valid for
failure to produce and were lost as a result of the terms of the
Oil and Gas Leases which provide if there is no production in
paying quantities for a period of time the Oil and Gas Lease
terminates by its own terms.
Registrant filed a 10-Q for the quarter ended January 31,
1992 which summarized the effect of the financial transactions
from April 30, 1991 (date of last 10-K) and January 31, 1992. The
significant transaction was the elimination and cancellation by
the Bank of the note and accrued interest in exchange for
Registrant's issuance of stock to the Bank and the transfer of
Registrants viable oil and gas property interests. The effect was
to reduce the net property and equipment amount from $829,171 to
$563,419. Registrant used full cost accounting in calculating
the net property and equipment amount. The estimated value of the
property transferred was the difference of $265,752.
Registrant assigned to the Bank all of Registrants viable
oil and gas property interest, but retained those properties with
no value. Registrant has eliminated those items from Registrants
books of account to the end that Registrant has no oil and gas
properties as either assets or liabilities.
Registrant also issued a total of 4,000,000 shares to the
officers of the Registrant as well as employees of Stahl
Petroleum who had assisted in operating Registrant without
compensation.
Registrant's management did not believe it was prudent to
recommend dissolution of the Corporation to the shareholders.
Consequently Registrant has been dormant. Registrant now desires
to again become a full reporting company to the Securities and
Exchange Commission by filing this 10-KSB.
(b) Financial Information About Industry Segments.
N/A
(c) Narrative Description of Business.
Registrant is currently engaged in the business of searching
for an acquisition of an operating company in order to carry on
the business of the acquired company. The Registrant has only
engaged in preliminary efforts intended to identify possible
merger or acquisition "targets."
Plan of Operation
The Registrant has insufficient capital with which to
provide merger or acquisition candidates with substantial cash or
other assets. However, Management believes the Registrant will
offer owners of potential merger or acquisition candidates the
opportunity to acquire a controlling ownership interest in a
public company at substantially less cost than is required to
conduct an initial public offering. The target company will,
however, incur significant post-merger or acquisition
registration costs in the event target company shareholders wish
to offer a portion of their shares for subsequent sale. Further,
while target company shareholders will receive "restricted
securities" in any merger or acquisition transaction, those
restricted securities will represent, if a trading market
develops for the Registrant's common stock, ownership in a
"publicly-traded" as opposed to a "privately-held" company.
Management also believes target company shareholders may benefit
in obtaining a greater ownership percentage in the Registrant
remaining after a merger or acquisition that may be the case in
the event a target company offered its shares directly for sale
to the public. Nevertheless, the Officers and Directors of the
Registrant have not conducted market research and are not aware
of statistical data which would support the perceived benefits of
a merger or acquisition transaction for target company
shareholders.
The Registrant expects to concentrate primarily on the
identification and evaluation of prospective merger or
acquisition "target" entities including private companies,
partnerships or sole proprietorships. The Registrant does not
intend to act as a general or limited partner in connection with
partnerships it may merge with or acquire. Management has not
identified any particular area of interest within which the
Registrant will concentrate its efforts.
Management contemplates that the Registrant will seek to
merge with or acquire a target company with either assets or
earnings, or both, and that preliminary evaluations undertaken by
the Registrant will assist in identifying possible target
companies. The Registrant has not established a specific level
of earnings or assets below which the Registrant would not
consider a merger or acquisition with a target company.
Moreover, management may identify a target company which is
generating losses which it will seek to acquire or merge with the
Registrant. The merger with or acquisition of a target company
which is generating losses or which has negative shareholders'
equity may have a material adverse effect on the price of the
Registrant's Common Shares.
Plan of Acquisition
The Registrant intends to follow a systematic approach to
identify its most suitable acquisition candidates.
First, management intends to concentrate on identifying any
number of preliminary prospects which may be brought to the
attention of management through present associations or by virtue
of the very limited advertising campaign the Registrant will
conduct. Management will then apply certain of its broad
criteria to the preliminary prospects. Essentially, this will
entail a determination by management as to whether or not the
prospects are in an industry which appears promising and whether
or not the prospects themselves have potential within their own
industries. During this initial screening process, management
will ask and receive answers to questions framed to provide
appropriate threshold information, depending upon the nature of
the prospect's business. Such evaluation is not expected to be
an in-depth analysis of the target company's operations although
it will encompass a look at most, if not all, of the same areas
to be examined once one or more target companies are selected for
an in-depth review. For instance, at this stage, management may
look at a prospect's unaudited balance sheet. Once a prospect is
selected for an in-depth review, management will review the
prospect's audited financial statements. Management anticipates
this evaluation will provide a broad overview of the business of
the target company and should allow a large percentage of
preliminary prospects to be eliminated from further
consideration.
Management considers it unlikely that it will evaluate more
than two or three firms on this basis in view of capital and
managerial time constraints. Following the identification of at
most one or two target companies which appear to be suitable
merger or acquisition candidates, the Registrant expects to
commission appraisals, professional studies of reserves and asset
reports to be conducted by outside consultants. The Registrant
has limited funds with which to engage consultants and,
accordingly, management intends to conserve such funds pending
management's evaluation.
Management expects to enter into further negotiations with
target company management following successful conclusion of
financial and evaluation studies. Negotiations with target
company management will be expected to focus on the percentage of
the Registrant which target company shareholders would acquire in
exchange for their shareholdings in the target company.
Depending upon, among other things, the target company's assets
and liabilities, the Registrant's shareholders will in all
likelihood hold a lesser percentage ownership interest in the
Registrant following any merger or acquisition. The percentage
ownership may be subject to significant reduction in the event
the Registrant acquires a target company with substantial assets.
Any merger or acquisition effected by the Registrant can be
expected to have a significant dilutive effect on the percentage
of shares held by the Registrant's then-shareholders including
purchasers in this offering.
Letter of Intent and Promissory Note
On January 2, 1997, the Registrant entered into a Letter of
Intent with Natural Gas Technologies, Inc. ("NGT"), a Texas
corporation engaged in the exploration, development and
production of oil and gas properties. The Letter of Intent was
amended March 17, 1997. Pursuant to the Letter of Intent, NGT
loaned the Registrant $100,000 pursuant to a non-interest bearing
Convertible Promissory Note (the "Note"). The Note automatically
converts into 203,041,517 shares of the Registrant upon the later
to occur of (i) the Registrant becoming current on all reports
required under Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and (ii) the Registrant
obtaining a waiver from Amarillo National Bank of the Bank's
non-dilution rights contained in the July 31, 1991 agreement with
the Bank. If the Note does not convert prior to December 31,
1997, the funds in escrow will be repaid to NGT. Upon conversion
of the Note, the Registrant has agreed to fill two vacancies on
the Board of Directors with two directors nominated by NGT.
The Letter of Intent further provides for a special meeting
of the shareholders of the Registrant to approve the following
matters: (i) a 268.3342 shares for one share reverse split of the
Registrant's common stock; (ii) a name change of the Registrant
to Natural Gas Technologies, Inc.; (iii) amendments to the
Registrant's articles of incorporation to eliminate the liability
of officers and directors in certain circumstances and to reduce
the shareholder voting requirements for certain significant
corporate actions; and (iv) the authorization of 10,000,000
shares of no par value preferred stock which will be reserved for
future issuance in the discretion of the Board of Directors.
Assuming approval of the foregoing matters, the current
shareholders of the Registrant will upon conversion of the Note
hold 175,000 shares and NGT will hold 756,674 shares on a
post-reverse split basis. The special meeting will be held as
soon as practicable after the conversion of the Note, and all
costs associated with the meeting, including the preparation and
mailing of the information statements and notices will be borne
by NGT.
The Letter of Intent further contemplates a share exchange
between NGT and Lyric. The share exchange is intended to take
place in two stages. The first stage will occur immediately
after shareholder approval of the matters specified above and
will consist of the exchange of approximately 2,055,000 shares of
the authorized but unissued post-reverse split shares of the
Registrant for approximately eighty percent of the equity
interests in NGT, which interests are held by certain officers,
directors and their family members and affiliates. The
Registrant will therefore control NGT upon completion of the
first stage. The second stage will occur upon the effective date
of a registration statement on Form S-4 which registers the
exchange of all of the remaining equity interests in NGT into
approximately 513,000 shares of the authorized but unissued
post-reverse split shares of the Registrant and further providing
for the distribution of the 756,674 post-reverse split shares of
the Registrant issued to NGT upon conversion of the Note to the
shareholders of NGT immediately prior to the share exchange. The
foregoing terms are subject to adjustment based upon the
anticipated conversion of certain preferred stock of NGT into
common stock and based upon certain anticipated oil and gas
property acquisitions by NGT prior to the share exchange. It is
anticipated that upon completion of the share exchange, the
current shareholders of the Registrant will hold five percent of
the total outstanding shares of Lyric and the shareholders of NGT
will hold the remaining 95 percent.
The share exchange remains conditional upon the completion
of due diligence and final documentation therefor.
Competition
The Registrant will remain an insignificant participant
among the firms which engage in mergers with and acquisitions of
privately-financed entities. There are many established venture
capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than
the Registrant. In view of the Registrant's combined limited
financial resources and limited management availability, the
Registrant will continue to be at a significant competitive
disadvantage compared to the Registrant's competitors.
Regulation and Taxation
The Registrant could be subject to regulation under the
Investment Company Act of 1940 in the event the Registrant
obtains and continues to hold a minority interest in a number of
entities. However, management intends to seek at most one or two
mergers or acquisitions and management's plan of operation is
based upon the Registrant obtaining a controlling interest in any
merger or acquisition target company and, accordingly, the
Registrant does not believe that it will become subject to
regulation under the Investment Company Act of 1940. In order to
avoid such regulation, the Registrant may be required to
discontinue any prospective merger or acquisition of any company
in which a controlling interest will not be obtained.
Any securities which the Registrant acquires in exchange for
its Common Stock will be "restricted securities" within the
meaning of the Securities Act of 1933 (the "1933 Act"). If the
Registrant elected to resell such securities, such sale could not
proceed unless a registration statement had been declared
effective by the Securities and Exchange Commission or an
exemption from registration was available. Section 4(1) of the
1933 Act, which exempts sales of securities not involving a
distribution, would in all likelihood be available to permit a
private sale if various restrictions pertaining to such a sale
are complied with. Although management's plan of operation does
not contemplate resale of securities acquired, in the event such
a sale were necessary, the Registrant would be required to comply
with the provisions of the 1933 Act.
As a condition to any merger or acquisition, it is possible
target company management may request registration of the
Registrant's shares to be received by target company
shareholders. In such event, the Registrant could incur
registration costs, and management intends to require the target
company to bear most, if not all, of the cost of any such
registration. If the Registrant does contribute toward the cost
of such registration, its maximum contribution will be limited to
the extent that proceeds from this offering are available for
such contribution. Alternatively, the Registrant may issue
"restricted securities" to any prospective target company, which
securities may be subsequently registered for sale or sold in
accordance with Rule 144 of the Securities Act of 1933.
The Registrant intends to structure a merger or acquisition
in such a manner as to minimize federal and state tax
consequences to the Registrant and any target company.
(d) Employees.
Registrant has one part-time, non-compensated employee, its
President. Registrant's President devotes a modest amount of time
to the Registrant's business. The Registrant utilizes the
secretaries and bookkeepers employed by Stahl Petroleum Company.
Stahl Petroleum Company is wholly-owned and controlled by G. E.
Stahl, Registrant's President.
ITEM 2. PROPERTIES
(a) Office Facilities.
Registrant's offices are located at 1013 West 8th Avenue,
Amarillo, Texas 79101, in space which Registrant shares with
Stahl Petroleum Company. Stahl Petroleum Company is wholly-owned
and controlled by G.E. Stahl. Registrant does not pay Stahl
Petroleum Company for secretarial and accounting services, office
rent, miscellaneous expenses or any other services or material.
ITEM 3. LEGAL PROCEEDINGS
(a) Registrant knows of no pending or threatened legal
proceedings to which the Registrant is a party and no such
proceedings are known to the Registrant to be contemplated by
governmental authorities except the following:
(i) On August 25, 1989, the Registrant was sued
in United States District Court in Amarillo, Texas by an
interstate pipeline company covering one oil and casinghead gas
lease in Moore County, Texas in which Registrant had an interest,
and upon which Registrant had drilled, completed and produced oil
and casinghead gas from two oil wells. These two wells were
operated by Registrant and were owned by certain participants
together with Registrant. The interstate pipeline company
claimed that Registrant produced gas belonging to the interstate
pipeline company.
At that time Registrant together with the other
participants owned the oil and casinghead gas rights under the
lease in question, and the interstate pipeline company owned the
gas rights. Pursuant to the terms of the agreement concerning
the rights and obligations of the parties, the matter was
referred to binding arbitration. On June 16, 1993, the
arbitrators found against the Registrant and the other
owners who were participants in the project. Judgment was
entered in the United States District Court in Amarillo, Texas
and set forth the amount of damages for each of the participants
in the project, but also provided that the Registrant, G. E.
Stahl, President of Registrant, and L. K. Hayhurst,
Vice-President, of Registrant were jointly and severally liable
for the full amount of the judgment. The judgment was paid in
full, but some of the participants, including the Registrant, did
not pay their proportionate share, and as a consequence G. E.
Stahl, President of Registrant, paid those amounts. On December
31, 1996, Mr. Stahl released the Registrant of all liability for
contribution which Registrant might have had arising out of the
judgment.
(ii) On April 8, 1993, legal action was instituted in
District Court of Potter County, Texas, by Crouch Petroleum
Company against G. E. Stahl as an individual, Stahl Petroleum
Company and the Registrant in an attempt to obtain reimbursement
of legal expenditures incurred by Crouch Petroleum Company in an
unrelated case that was filed by a third party in the District
Court of Foard County, Texas. The Foard County litigation was
settled between Registrant and plaintiff in that case.
Registrant feels this current litigation is without merit and
plans to vigorously defend against the claim.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS,
During the period of time from the last filing made by
Registrant and including the period of time covered by this
annual report, the following matters were submitted to a vote of
Registrant's shareholders:
(a) None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS,
(a) Market Information.
On rare occasions the Registrant's common stock is traded on
the over-the-counter market and quotes for such common stock are
reported in the National Quotation Bureau's "Pink Sheets." There
is no established market for the Registrant's common stock.
The following table sets forth the range of high and low bid
quotations, as reported by National Quotation Bureau:
Quarter Ended High Low
July 31, 1994 None None
October 30, 1994 None None
January 31, 1995 None None
April 30, 1995 None None
July 31, 1995 None None
October 30, 1995 None None
January 31, 1996 None None
April 30, 1996 None None
July 31, 1996 None None
October 30, 1996 None None
January 31, 1997 $.035 $ 0
The foregoing bid quotations reflect inter-dealer prices,
without mark-up, mark-down or commissions, and may not
necessarily represent actual transactions.
(b) Holders.
The following table sets forth the approximate number of
security holders of record of Registrant's $0.01 par value common
stock as of December 31, 1996.
Number of
Title of Class Record Holders
$0.01 Par Value 4,155
Common stock
(c) Dividends.
No cash dividends have been declared with respect to
Registrant's $0.01 par value common stock since its inception,
and it has no present intention to pay such dividends in the
foreseeable future.
PART III
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
(a) Liquidity and Capital Resources.
On April 30, 1996, the Registrant had cash on hand of
$1,453. After the date of this report, the Registrant has
entered into a Convertible Promissory Note pursuant to which
$100,000 has been loaned to Registrant but is currently being
held in escrow. Such funds will be taken out of escrow and paid
to the Registrant upon the later to occur of (i) the Registrant
becoming current on all reports required under Section 13 or
15(d) of the Exchange Act and (ii) the Registrant obtaining a
waiver from Amarillo National Bank of the Bank's non-dilution
rights contained in a settlement agreement with the Bank. See
"Letter of Intent and Promissory Note" in Item 1(c). Pursuant to
a letter of intent between the Registrant and the lender, the
Registrant must use such funds for the payment of outstanding
obligations in preparation for a share exchange with the lender.
In the event the foregoing escrow release conditions do not occur
before December 31, 1997, the funds in escrow will be repaid to
the lender. Should this occur, the Registrant will have
inadequate liquidity on its own to carry out its business plan
and will have to rely on future advances from its President.
(b) Plan of Operation
See "Plan of Operation" in Item 1(c).
ITEM 7. FINANCIAL STATEMENTS AND SCHEDULES
See Financial Statements beginning at Page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
N/A
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Identification of Directors and Executive Officers.
The following table sets forth the names and ages of all
Directors and Executive Officers of the Registrant and all
persons nominated or chosen to become a Director, indicating
all positions and offices with the Registrant held by each such
person, and the periods during which he has served as such:
Position Held With Director
Name Age Registrant Since
G. E. Stahl 70 President, Chief May 1, 1980
Executive Officer
and Director
Mr. L.K. Hayhurst resigned as an officer and director December
15, 1996, and Mr. James Clements resigned as a director December
31, 1996. There was no disagreement with the Registrant over
operations or policies by either director who resigned.
Registrant's Directors hold office until the next annual
meting of Registrant's shareholders. There is no arrangement or
understanding between any Director or nominee for Director of the
Registrant and any other person or persons pursuant to which such
Director was or is to be selected as Director or nominee for
Director. Registrant's Executive Officers hold office until the
next annual meeting of Directors of the Registrant.
(b) Family Relationships.
There are no family relationships between any Director or
Executive Officer or person nominated or chosen by the Registrant
to become a Director or Executive Officer.
(c) Business Experience.
Following is a brief account of the business experience
during the past five years of the Executive Officer of the
Registrant:
G. E. "Skip" Stahl. Mr. Stahl has been the President, Chief
Executive Officer and a Director of the Registrant since its
organization. Mr. Stahl has been actively engaged as an
independent oil and gas operator since 1960. He has been the
President, a Director and controlling shareholder of Stahl
Petroleum Company, Amarillo, Texas, an independent oil and
gas operator, since 1960. Mr. Stahl previously was Chairman of
the Board of Directors, Chief Executive Officer and Secretary of
Advanced Monitoring Systems, Inc., a publicly held company
engaged in pipeline monitoring. Mr. Stahl resigned as an officer
and director of Advanced Monitoring Systems from September 10,
1992 to April 1, 1993, and then again on August 30, 1993. Since
August 30, 1993, Mr. Stahl has not been associated with Advanced
Monitoring Systems, Inc.
(d) Involvement in Certain Legal Proceedings.
N/A.
ITEM 10. MANAGEMENT'S COMPENSATION
(a) Current Remuneration.
The following table sets forth all remuneration to the
Registrant's Chief Executive Officer for services in all
capacities to the Registrant during the fiscal year ended April
30, 1996:
Long Term Compensation
Name
and Securities
Prin- Annual Compensation Rest- Under- All
cipal ricted lying Other
Posi- Bonus/ Compen- Stock Options Compen-
tion Year Salary Other sation Awards /SARs LTIP sation
(a) (b) (c) (d) (e) (f) (g) (h) (i)
G.E. 1996 $ 0 $ 0 $ 0 0 0 $ 0 $ 0
Stahl 1995 $ 0 $ 0 $ 0 0 0 $ 0 $ 0
1994 $ 0 $ 0 $ 0 0 0 $ 0 $ 0
(1) No Directors of the Registrant receive fees for their
attendance at meetings of the Registrant's Board of
Directors. There are no other arrangements pursuant to
which Registrant's Directors receive remuneration from
Registrant for services as a Director or arrangements for
remuneration upon termination of employment of Directors or
Executive Officers Registrant has no options, warrants or
any rights outstanding as of the date of this report.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the number of shares of the
Registrant's $0.01 par value common stock owned by each person
who, as of July 1, 1996, was known by the Registrant to own
beneficially more than 5% of its common stock:
Amount and(1)
Nature of
Name and Address of Beneficial Percent of(2)
Beneficial Owner Ownership Class
G. E. Stahl 3,577,402(3) 7.62%
Box 2231
Amarillo, TX 79105
Wesley W. Masters 4,179,562(4) 8.90%
Box 800
Amarillo, TX 79105
Amarillo National Bank 4,225,150 9.00%
Amarillo, TX
All officers and 3,577,402 7.62%
directors as a group
(4 persons)
(1) Named beneficial owners have sole voting and investment
power over shares indicated in table.
(2) Based on 46,958,483 shares outstanding as of February 11,
1997.
(3) Does not include 40,000 shares owned by Stahl Petroleum
Company employees.
(4) Includes 112,500 shares formerly owned by Centergas, Inc.,
Mr. Masters was sole owner.
(b) Changes in Control.
As of April 30, 1996, there were no arrangements known to
the Registrant, including any pledge by any person of securities
of the Registrant or any of its parents, the operation of which
may at a subsequent date result in a change in control of the
Registrant. As of March 10, 1997, the Registrant has entered
into a Convertible Promissory Note, which upon conversion would
result in a change of control. See "Letter of Intent and
Promissory Note" in Item 1(c).
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with Management and Others.
No Director, Executive Officer or principal security holder
of the Registrant, or any member of the immediate family of any
of the foregoing persons, had any transaction, or series of
similar transactions, since the beginning of the Registrant's
last fiscal year, or any currently proposed transaction, or
series of similar transactions, to which the Registrant or any of
its subsidiaries was, or is to be a party, in which the amount
involved exceeds $60,000 and in which any of such persons had, or
will have, a direct or indirect material interest except as
follows:
On December 1, 1982 the Registrant loaned Mr. Masters, a
former director, $7,551 pursuant to a note and bearing interest
at 10% per annum. As of April 30, 1996, $17,681 was due to the
Registrant under such note. Such amount was applied against an
obligation of the Registrant to a trust controlled by Mr.
Masters, which obligation was ultimately forgiven in January
1997.
In 1983, the Registrant loaned Mr. Hayhurst a total of
$8,874 pursuant to two notes bearing interest at 10% per annum.
As of April 30, 1996, $12,752 was due on such notes. The
Registrant forgave the obligations under those notes as of April
30, 1996 in consideration for Mr. Hayhurst's past services to the
Registrant.
As of April 30, 1996, Stahl Petroleum Company, over a period
of time had loaned to Registrant $43,692.34, for Registrant's
working capital and for Registrant to pay certain expenditures
incurred in the Natural Gas Pipeline Company of America
litigation described at Item 3(a)(i). That amount remains unpaid
as of January 31, 1997.
Registrant believes that the foregoing transactions were on
terms as favorable as those which it could have obtained from
unaffiliated parties.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) Documents Filed as Part of This Report.
(1) Financial Statements: (The following Financial
Statements and Schedules are included in Part 111, Item
8.)
Independent Auditor's Report
Balance Sheet - April 30, 1996
Statements of Operations - Years ended April 30,
1996 and 1995.
Statements of Changes in Deficiency in Assets - Years
ended April 30, 1996 and 1995.
Statements of Cash Flows - Years ended April 30, 1996
and 1995.
Notes to Financial Statements
(2) Financial Statement Schedules:
None
(3) Exhibits
3. Articles of Incorporation as amended and Bylaws.
10.1 Compromise and Settlement Agreement dated
July 31, 1991 between the Registrant and Amarillo
National Bank.
10.2 Letter of Intent dated January 2, 1997 with
Natural Gas Technologies, Inc., as amended by
letter dated March 17, 1997.
10.3 Restated Convertible Promissory Note dated
February 4, 1997.
10.4 Release of Judgment dated December 31, 1996.
10.5 Termination of Agreement and Cancellation of Loan
dated January 2, 1997.
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LYRIC ENERGY, INC.
Dated: April 8, 1997 By: /s/ G.E. Stahl
G. E. Stahl, President
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated:
Dated: April 8, 1997 By: /s/ G.E. Stahl
G. E. Stahl, President, Chief
Executive Officer and Director
LYRIC ENERGY, INC.
Financial Statements
April 30, 1996 and 1995
(with independent auditor's report thereon)
WILSON, HAAG & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
418 S. POLK, P.O. BOX 590, AMARILLO, TEXAS 79105
(806) 372-3331 FAX (806) 372-3355
Independent Auditor's Report
The Board of Directors and Stockholders
Lyric Energy, Inc.:
We have audited the accompanying balance sheet of Lyric Energy,
Inc. as of April 30, 1996, and the related statements of
operations, changes in deficiency in assets and cash flows for
the years ended April 30, 1996 and 1995. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Lyric Energy, Inc. as of April 30, 1996, and results of its
operations and its cash flows for the years ended April 30, 1996
and 1995, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in note 6 to the financial statements, the Company has been
relatively inactive during the past two years due to a lack of
operating assets and working capital and a significant deficiency
in assets. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
/S/ Wilson, Haag & Co., P.C.
WILSON, HAAG & CO., P.C.
January 10, 1997 (except for certain
information in note 5 as to which
the date is March 17, 1997)
Amarillo, Texas
LYRIC ENERGY, INC.
Balance Sheet
April 30, 1996
Assets
Current asset - cash in bank $ 1,453
Liabilities and Deficiency in Assets
Current liabilities:
Accounts payable, trade (including
$48,811 due to related parties) 65,860
Judgement payable to a related party
(note 2) 250,000
Accrued interest payable to a related
party (note 2) 119,258
Advance from a related party (note 2) 88,907
Total current liabilities 524,025
Deficiency in assets:
Common stock - par value $.01 per share;
authorized 250,000,000 shares; issued
and outstanding 46,958,483 shares (note 5) 469,584
Additional paid-in capital 1,690,545
Deficit (2,682,701)
(522,572)
Commitment and contingency (notes 4 and 6)
$ 1,453
See accompanying notes to financial statements.
LYRIC ENERGY, INC.
Statements of Operations
Years ended April 30, 1996 and 1995
1996 1995
General and administrative expenses $ (906) (2,684)
Interest expense to related party (8,891) (8,891)
Net loss before income taxes (9,797) (11,575)
Income taxes (note 3) - -
Net loss $ (9,797) (11,575)
Net loss per common share (note 1) $ (.0002) (.0002)
See accompanying notes to financial statements.
LYRIC ENERGY, INC.
Statements of Changes in Deficiency in Assets
Years ended April 30, 1996 and 1995
Common Stock
Number Additional
of Paid-In
Shares Amount Capital Deficit Total
Balances
April
30,1994 46,958,483 $469,584 1,690,545 (2,661,329) (501,200)
Net
loss - - - (11,575) (11,575)
Balances
April
30, 1995 46,958,483 $469,584 1,690,545 (2,672,904) (512,775)
Net loss - - - (9,797) (9,797)
Balances
April
30, 1996 46,958,483 $469,584 1,690,545 (2,682,701) (522,775)
See accompanying notes to financial statements.
LYRIC ENERGY, INC.
Statements of Cash Flows
Years ended April 30, 1996 and 1995
Increases (Decreases) in Cash
1996 1995
Cash flows from operating activities:
Cash paid to suppliers $ (67) (3,134)
Other 1,108 1,770
Net cash provided by (used in)
operating activities and net
increase (decrease) in cash 1,041 (1,364)
Cash at beginning of year 412 1,776
Cash at end of year $ 1,453 412
Reconciliation of Net Loss to
Net Cash Provided by (Used in) Operating Activities
1996 1995
Net loss $ (9,797) (11,575)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Net changes in the following:
Accounts payable, trade 1,947 1,320
Accrued interest 8,891 8,891
Net cash provided by (used in)
operating activities $ 1,041 (1,364)
See accompanying notes to financial statements.
LYRIC ENERGY, INC.
Notes to Financial Statements
April 30, 1996 and 1995
(1) General and Summary of Significant Accounting Policies
General
Lyric Energy, Inc. is a publicly registered company formerly
involved in the exploration and development of oil and gas
reserves. The Company currently has no interests in any oil
and gas properties and has been inactive during 1996 and
1995.
Pervasiveness of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Net Loss Per Common Share
Net loss per common share was calculated by applying the
treasury stock method using weighted average outstanding
shares of 46,958,483.
(2) Related Party Transactions
Advance from a related party (ML&C Trust) consists of an
unsecured 10% demand note payable of $88,907. ML&C Trust is
controlled by a significant shareholder of the Company.
Interest expense of $8,891 was incurred on this advance
during 1996 and 1995. In January 1997, the Company received
a release of its obligation to repay this advance including
any interest which was accrued under the terms of the note.
The Company had a $250,000 judgement payable to a related
party (Dynamic Investing, Inc.) at April 30, 1996. Dynamic
Investing, Inc is owned by the president of the Company. In
December 1996, the Company received a release of the
judgement from the related party at no cost to the Company.
(3) Income Taxes
Income tax credits differ from the amounts computed by
multiplying losses before income taxes by the applicable
Federal income tax rates. The reasons for these differences
and the tax effect of each are as follows:
1996 1995
"Expected" income tax credit $ (3,300) (3,900)
Limitation on recognition of
income tax benefits of current
operating loss and tax credits 3,300 3,900
$ - -
At April 30, 1996, the Company had investment tax credit
carryforwards of approximately $26,000 available to offset
current Federal income taxes in future years which, if
unused, expire as follows: $15,000 in 1997; $6,000 in 1998;
$4,000 in 1999; and $1,000 in 2001. The Company has a
statutory depletion carryforward of approximately $219,000
which can be carried forward indefinitely. The Company has
tax net operating loss carryforwards of approximately
$2,714,000 which expire as follows: $140,000 in 2001;
$201,000 in 2002; $239,000 in 2003; $257,000 in 2004;
$354,000 in 2005; $305,000 in 2006; $840,000 in 2007;
$220,000 in 2008; $79,000 in 2009 and $79,000 in 2010.
These depletion and net operating loss carryforwards are
available to offset future Federal taxable income. The
deferred tax asset related to the above carryforwards has
been reduced to zero by a valuation allowance of equal
amount so that no tax benefits of any of these
carry-forwards are reflected in the financial statements.
(4) Commitment
In connection with a compromise and settlement agreement
related to a bank debt forgiveness in July 1991, the Company
agreed to issue additional common stock in the future as may
be required to maintain the bank at an 8.9976% ownership
interest.
(5) Subsequent Event
On January 2, 1997, the Company entered into a Letter of
Intent("LOI"), which was amended by subsequent negotiations
and a supplemental letter dated March 17, 1997, with Natural
Gas Technologies, Inc., a Texas corporation "NGT").
Pursuant to the LOI, NGT loaned the Company $100,000
pursuant to a noninterest-bearing convertible note dated
February 4, 1997, ("Note") and the loaned funds were placed
in escrow. The loan will be converted into 203,041,517
common shares, which are all of the remaining authorized but
unissued common shares of the Company, after the Company has
filed all of the required reports pursuant to the Securities
Exchange Act of 1934, as amended, and after the Company
obtains a waiver from the bank of the non-dilution rights
described in note 4. Upon such conversion, the loaned funds
will be released from escrow and paid to the Company for use
in satisfying all existing debts and encumbrances and to
settle all claims against it. If the Note is not converted
by December 31, 1997, the funds in escrow will be returned
to NGT. The LOI further provides for a share exchange
transaction whereby the shareholders of NGT would be issued
additional shares in the Company such that these
shareholders would own a total of 95 percent of the total
issued and outstanding common shares of the Company and NGT
would become a wholly-owned subsidiary of the Company. The
share exchange will occur after the Company holds a
shareholder meeting for the purpose of (i) approving a
reverse split of the Company's common stock which will
result in additional common shares being made available for
issuance in the shares exchange; (ii) authorizing 10,000,000
shares of no par value preferred stock approximately 25,000
of which will designated for exchange with NGT preferred
shareholders in the share exchange and the remaining
9,975,000 of which will be reserved for future issuance at
the discretion of the Board of Directors; and (iii)
approving certain other amendments to the Company's Articles
of Incorporation. The share exchange remains conditional
upon the completion of due diligence and final
documentation.
(6) Going Concern
The Company has been relatively inactive during the past two
years due to a lack of operating assets and working capital
and a significant deficiency in assets. These factors raise
substantial doubt about the Company's ability to continue as
a going concern. The Company is currently searching for the
acquisition of or merger with an operating company in order
to carry on the business of the acquired company. The
Company has signed a Letter of Intent to make such an
acquisition (see note 5). The ability of the Company to
continue as a going concern is dependent on the completion
of such an acquisition. The financial statements do not
include any adjustments that might be necessary if the
Company is unable to continue as a going concern.
ARTICLES OF INCORPORATION
OF
LYRIC ENERGY, INC.
KNOW ALL MEN BY THESE PRESENTS: That the undersigned
incorporator being a natural person of the age of eighteen years
or more and desiring to form a body corporate under the laws of
the State of Colorado does hereby adopt and deliver in duplicate
to the Secretary of State of the State of Colorado, these
Articles of Incorporation:
ARTICLE I
Name
The name of the corporation shall be: Lyric Energy, Inc.
ARTICLE II
Period of Duration
The corporation shall exist in perpetuity, from and after
the date of filing these Articles of Incorporation with the
Secretary of State of the State of Colorado unless dissolved
according to law.
ARTICLE III
Purposes and Powers
1. Purposes. Except as restricted by the Articles of
Incorporation, the corporation is organized for the purpose of
transacting all lawful business for which corporations may be
incorporated pursuant to the Colorado Corporation Code.
2. General Powers. Except as restricted by the Articles
of Incorporation, the corporation may exercise all powers which a
corporation may exercise legally pursuant to the Colorado
Corporation Code.
3. Partial Liquidations. The board of directors of the
corporation may distribute, from time to time, to its
shareholders in partial liquidation, out of stated capital or
capital surplus of the corporation, a portion of its assets in
cash or property.
4. Issuance of Shares. The board of directors of the
corporation may divide and issue any class of stock of the
corporation in series pursuant to a resolution properly filed
with the Secretary of State of the State of Colorado.
ARTICLE IV
Capital Stock
The aggregate number of shares which this corporation shall
have authority to issue is fifty million (50,000,000) shares of a
par value of one cent ($0.01) each, which shares shall be
designated Common Stock .
1. Dividends. Dividends in cash, property or shares of
the corporation may be paid upon the Common Stock, as and when
declared by the board of directors, out of funds of the
corporation to the extent and in the manner permitted by law.
2. Distribution in Liquidation. Upon any liquidation,
dissolution or winding up of the corporation, and after paying or
adequately providing for the payment of all its obligations, the
remainder of the assets of the corporation shall be distributed,
either in cash or in kind, pro rata to the holders of the Common
Stock.
3. Voting Rights; Cumulative Voting. Each outstanding
share of Common Stock shall be entitled to one vote and each
fractional share of Common Stock shall be entitled to a
corresponding fractional vote on each matter submitted to a vote
of shareholders. Cumulative voting shall not be allowed in the
election of directors of the corporation.
4. Denial of Preemptive Rights. No holder of any shares
of the corporation, whether now or hereafter authorized, shall
have any preemptive or preferential right to acquire any shares
or securities of the corporation, including shares or securities
held in the treasury of the corporation.
ARTICLE V
Right of Directors to Contract with Corporation
No contract or other transaction between the corporation and
one or more of its directors or any other corporation, firm,
association, or entity in which one or more of its directors are
directors or officers or are financially interested shall be
either void or voidable solely because of such relationship or
interest or solely because such directors are present at the
meeting of the board of directors or a committee thereof which
authorizes, approves, or ratifies such contract or transaction or
solely because their votes are counted for such purpose if:
(a) The fact of such relationship or interest is
disclosed or known to the board of directors or committee which
authorizes, approves, or ratifies the contract or transaction by
a vote or consent sufficient for the purpose without counting the
votes or consents of such interested directors; or
(b) The fact of such relationship or interest is
disclosed or known to the shareholders entitled to vote and they
authorize, approve, or ratify such contract or transaction by
vote or written consent; or
(c) The contract or transaction is fair and
reasonable to the corporation. Common or interested directors
may be counted in determining the presence of a quorum at a
meeting of the board of directors or a committee thereof which
authorizes, approves, or ratifies such contract or transaction.
ARTICLE VI
Corporate Opportunity
The officers, directors and other members of management of
this corporation shall be subject to the doctrine of corporate
opportunities only insofar as it applies to business
opportunities in which this corporation has expressed an interest
as determine from time to time by this corporation's board of
directors as evidenced by resolutions appearing in the
corporation s minutes. Once such areas of interest are
delineated, all such business opportunities within such areas of
interest which come to the attention of the officers, directors,
and other members of management of this corporation shall be
disclosed promptly to this corporation and made available to it.
The board of directors may reject any business opportunity
presented to it and thereafter any officer, director or other
member of management may avail himself of such opportunity.
Until such time as this corporation, through its board of
directors, has designated an area of interest, the officers,
directors and other members of management of this corporation
shall be free to engage in such areas of interest on their own
and this doctrine shall not limit the rights of any officer,
director or other member of management of this corporation to
continue a business existing prior to the time that such area of
interest is designated by the corporation. This provision shall
not be construed to release any employee of this corporation
(other than an officer, director or member of management) from
any duties which he may have to this corporation.
ARTICLE VII
Indemnification
Directors and Others
1. The corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (other than an action
by or in the right of the corporation), by reason of the fact
that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture trust, or other
enterprise, against expenses (including attorneys fees),
judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit,
or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in the best interests of the
corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
2. The corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other
enterprise against expenses (including attorneys fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in the best interests of
the corporation; but no indemnification shall be made in respect
of any claim, issue, or matter as to which such person has been
adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation unless and only to the
extent that the court in which such action or suit was brought
determines upon application that, despite the adjudication of
liability, but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnification for
such expenses which such court deems proper.
3. To the extent that a director, officer, employee, or
agent of the corporation has been successful on the merits in
defense of any action, suit, or proceeding referred to in this
article or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses (including attorneys fees)
actually and reasonably incurred by him in connection therewith.
4. Any indemnification under paragraph 1 or 2 of this
article (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee, or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in said
paragraphs 1 or 2. Such determination shall be made by the board
of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit, or
proceeding, or, if such a quorum is not obtainable or even if
obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or by the
shareholders.
5. Expenses (including attorneys fees) incurred in
defending a civil or criminal action, suit, or proceeding may be
paid by the corporation in advance of the final disposition of
such action, suit, or proceeding as authorized in paragraph 4 of
this article upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay such amount
unless it is ultimately determined that he is entitled to be
indemnified by the corporation as authorized in this article.
6. The indemnification provided by this article shall not
be deemed exclusive of any other rights to which those
indemnified may be entitled under the Articles of Incorporation,
any bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise, and any procedure provided for by any of
the foregoing, both as to action in his official capacity and as
to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of
heirs, executors, and administrators of such a person.
7. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee,
or agent of the corporation or who is or was serving at the
request of the corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust,
or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his
status as such, whether or not the corporation would have the
power to indemnify him against such liability under the
provisions of this article.
ARTICLE VIII
Shareholder Voting
A majority of the shares entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of
shareholders.
ARTICLE IX
Adoption and Amendment of Bylaws
The initial Bylaws of the corporation shall be adopted by
its board of directors. The power to alter or amend or repeal
the Bylaws of adopt new Bylaws shall be vested in the board of
directors, but the holders of common stock may also alter, amend
or repeal the Bylaws of adopt new Bylaws. The Bylaws may contain
any provisions for the regulation and management of the affairs
of the corporation not inconsistent with law or these Articles of
Incorporation.
ARTICLE X
Registered Office and Registered Agent
The address of the initial registered office of the
corporation is 717 Seventeenth Street, Suite 2600, Denver,
Colorado 80202, and the name of the initial registered agent at
such address is Douglas J. Reich. Either the registered office
or the registered agent may be changed in the manner permitted by
law.
ARTICLE XI
Initial Board of Directors
The number of directors of the corporation shall be fixed by
the Bylaws of the corporation, except the initial board of
directors of the corporation shall consist of three directors.
The names and addresses of the persons who shall serve as
directors until the first annual meeting of shareholders and
until their successor are elected and shall qualify are as
follows:
NAME ADDRESS
Wesley W. Masters P. O. Box 7988
Amarillo, Texas 79109
G. E. Stahl P. O. Box 2231
Amarillo, Texas 79105
L. K. Hayhurst P. O. Box 2231
Amarillo, Texas 79105
ARTICLE XII
Incorporator
The name and address of the incorporator is as follows:
NAME ADDRESS
Daniel B. Matter 2600 Energy Center
717 Seventeenth Street
Denver, Colorado 80202
IN WITNESS WHEREOF, the above-named incorporator has signed
these Articles of Incorporation this 24th day of April, 1980.
/s/Daniel B. Matter
Daniel B. Matter
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
I, the undersigned, a Notary Public, hereby certify that on
the 24th day of April, 1980, personally appeared before me,
Daniel B. Matter who being by me first duly swore, declared that
he is the person who signed the foregoing document as
incorporator, that it was his free and voluntary act and deed,
and that the statements therein contained are true.
WITNESS my hand and official seal.
My Commission expires: ______________________________
_________________________________
Notary Public
(N O T A R I A L S E A L)
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Act,
the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is Lyric Energy, Inc.
SECOND: The following amendment was adopted by the
shareholders of the corporation on the Ninth day of February,
1987, in the manner prescribed by the Colorado Corporation
Act:
The aggregate number of shares which the Corporation
shall have power to issue shall be two hundred fifty million
(250,000,000) shares of no par value common stock. Each share
shall have the same rights and privileges as every other share
and no distinction between them shall exist.
THIRD: The number of shares of the corporation outstanding
at time of such adoption was 38,433,000; and the number of shares
entitled to vote thereon was 38,433,000.
FOURTH: The designation and number of outstanding shares of
each class entitled to vote thereon as a class were as follows:
CLASS NUMBER OF SHARES
Common Stock, No Par Value 38,433,000
FIFTH: The number of shares voted for such amendment was
25,776,783; and the number of shares voted against such
amendment was 445,362.
SIXTH: The number of shares of each class entitled to
vote thereon as a class voted for and against such amendment,
respectively, was:
CLASS NUMBER OF SHARES VOTED
Common Stock For Against
25,776,783 445,362
SEVENTH: The manner, if not set forth in such amendment, in
which any exchange, reclassification, or cancellation of issued
shares provided for in the amendment shall be effected, is as
follows:
No Change
EIGHTH: The manner in which such amendment effects a
change in the amount of stated capital, and the amount of stated
capital as changed by such amendment, are as follows:
No Change
LYRIC ENERGY, INC.
By: /s/ G. E. Stahl
G.E. Stahl, President
And: /s/ John Dodson
John Dodson, Secretary
STATE OF TEXAS )
County of Potter )
Before me, Alberta M. Reinbold a Notary Public in and
for the said County and State personally appeared G. E. Stahl who
acknowledged before me that he is the President of Lyric Energy,
Inc., a Colorado corporation and that he signed the foregoing
Articles of Amendment as his free and voluntary act and deed for
the uses and purposes therein set forth, and that the facts
contained therein are true.
In witness whereof I have hereunto set my hand and seal
this 26th day of June, A.D. 1987.
My commission expires: 2-21-89
/s/ Alberta M. Reinbold
(Notary Public)
BYLAWS
OF
LYRIC ENERGY, INC.
ARTICLE I
Principal Office and Corporate Seal
Section 1. The principal office and place of business of
the corporation in the State of Texas shall be at 1013 West 8th
Avenue, Amarillo, Texas 79105. Other offices and places of
business may be established from time to time by resolution of
the board of directors or as the business of the corporation may
require.
Section 2. The seal of the corporation shall have
inscribed thereon the name of the corporation and shall be in
such form as may be approved by the board of directors, which
shall have power to alter the same at pleasure. The corporation
may use the seal by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced.
ARTICLE II
Shares and Transfer Thereof
Section 1 - Certificates. The shares of this corporation
shall be represented by certificates signed by the president or a
vice president and the secretary or an assistant secretary of the
corporation, and may be sealed with the seal of the corporation
or a facsimile thereof. The signatures of the president or vice
president and the secretary or assistant secretary upon a
certificate may be facsimiles if the certificate is countersigned
by a transfer agent, or registered by a registrar, other than the
corporation itself or an employee of the corporation. In case
any officer who has signed a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such
officer at the date of its issue.
Section 2 - New Certificates. No new certificates
evidencing shares shall be issued unless and until the old
certificate or certificates, in lieu of which the new certificate
is issued, shall be surrendered for cancellation, except as
provided in Section 3 of this Article II.
Section 3 - Loss or Destruction. In case of loss or
destruction of any certificate of shares, another certificate may
be issued in its place upon satisfactory proof of such loss or
destruction and, at the discretion of the corporation, upon
giving to the corporation a satisfactory bond of indemnity issued
by a corporate surety in an amount and for a period satisfactory
to the board of directors.
Section 4 - Transfer Agent. Unless otherwise specified
by the board of directors by resolution, the secretary of the
corporation shall act as transfer agent of the certificates
representing the shares of stock of the corporation. He shall
maintain a stock transfer book, the stubs in which shall set
forth among other things, the names and addresses of the holders
of all issued shares of the corporation, the number of shares
held by each, the certificate numbers representing such shares,
the date of issue of the certificates representing such shares,
and whether or not such shares originate from original issue or
from transfer. Subject to Section 5, the names and addresses of
the shareholders as they appear on the stubs of the stock
transfer book shall be conclusive evidence as to who are the
shareholders of record and as such entitled to receive notice of
the meetings of shareholders; to vote at such meetings; to
examine the list of the shareholders entitled to vote at
meetings; to receive dividends; and to own, enjoy and exercise
any other property or rights deriving from such shares against
the corporation. Each shareholder shall be responsible for
notifying the secretary in writing of any change in his name or
address and failure so to do will relieve the corporation, its
directors, officers and agents, from liability for failure to
direct notices or other documents, or pay over or transfer
dividends or other property or rights, to a name or address other
than the name and address appearing on the stub of the stock
transfer book.
Section 5 - Close of Transfer Book and Record Date. For
the purpose of determining shareholders entitled to notice of or
to vote at any meeting of shareholders, or any adjournment
thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other
proper purpose, the board of directors may provide that the stock
transfer books shall be closed for a stated period, but not to
exceed in any case fifty days. If the stock transfer books shall
be closed for the purpose of determining shareholders entitled to
notice of, or to vote at a meeting of shareholders, such books
shall be closed for at least ten days immediately preceding such
meeting. In lieu of closing the stock transfer books, the board
of directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be
not more than fifty days and, in case of a meeting of
shareholders, not less than ten days prior to the date on which
the particular action requiring such determination of
shareholders is to be taken. If the board of directors does not
order the stock transfer books closed, or fix in advance a record
date, as above provided, then the record date for the
determination of shareholders entitled to notice of, or to vote
at any meeting of shareholders, or any adjournment thereof, or
entitled to receive payment of any dividend, or for the
determination of shareholders for any proper purpose shall be
thirty days prior to the date on which the particular action
requiring such determination of shareholders is to be taken.
ARTICLE III
Shareholders and Meetings Thereof
Section 1 - Shareholders of Record. Only shareholders
of record on the books of the corporation shall be entitled to be
treated by the corporation as holders in fact of the shares
standing in their respective names, and the corporation shall not
be bound to recognize any equitable or other claim to, or
interest in, any shares on the part of any other person, firm or
corporation, whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of Colorado.
Section 2 - Meetings. Meetings of shareholders shall be
held at the principal office of the corporation, or at such other
place as specified from time to time by the board of directors.
If the board of directors shall specify another location such
change in location shall be recorded on the notice calling such
meeting.
Section 3 - Annual Meeting. In the absence of a
resolution of the board of directors providing otherwise, the
annual meting of shareholders of the corporation for the election
of directors, and for the transaction of such other business as
may properly come before the meeting, shall be held on the 1st
day of the fifth month in each fiscal year, if the same be not a
legal holiday, and if a legal holiday, then on the next
succeeding business day, at 9:00 o clock a.m.
Section 4 - Special Meetings. Special meetings of
shareholders may be called by the president, the board of
directors, the holders of not less than one-tenth of all the
shares entitled to vote at the meeting, or legal counsel of the
corporation as last designated by resolution of the board of
directors.
Section 5 - Notice. Written notice stating the place,
day and hour of the meeting and, in case of a special meeting,
the purpose or purposes for which the meeting is called, shall be
delivered not less than ten days nor more than fifty days before
the date of the meeting, either personally or by mail, by or at
the direction of the president, the secretary, or the officer or
person calling the meeting to each shareholder of record entitled
to vote at such meeting; except that, if the authorized shares
are to be increased, at least thirty days notice shall be given.
Notice to shareholders of record, if mailed, shall be deemed
given as to any shareholder of record, when deposited in the
United States mail, addressed to the shareholder at his address
as it appears on the stock transfer books of the corporation,
with postage thereon prepaid, but if three successive letters
mailed to the last-known address of any shareholder of record are
returned as deliverable, no further notices to such shareholder
shall be necessary, until another address for such shareholder is
made known to the corporation.
Section 6 - Shareholder Record. The officer or agent
having charge of the stock transfer books for shares of this
corporation shall make, at least ten days before each meeting of
shareholders, a complete record of the shareholders entitled to
vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares
held by each, which record, for a period of ten days before such
meeting, shall be kept on file at the principal office of the
corporation, whether within or outside Colorado, and shall be
subject to inspection by any shareholder for any purpose germane
to the meeting at any time during usual business hours. Such
record shall also be produced and kept open at the time and place
of the meeting and shall be subject to the inspection of any
shareholder for any purpose germane to the meeting during the
whole time of the meeting. The original stock transfer books
shall be prima facie evidence as to who are the shareholders
entitled to examine such record or transfer books or to vote at
any meeting of shareholders.
Section 7 - Quorum and Adjournment. At any meeting of the
shareholders the presence, in person or by proxy of the holders
of more than a majority of the shares outstanding and entitled to
vote shall constitute a quorum. In the absence of a quorum, the
meeting may be adjourned by any officer entitled to preside at,
or act as secretary of such meeting, or by a majority in interest
of those shareholders present in person or by proxy.
Section 8 - Voting. A shareholder may vote either in
person or by proxy executed in writing by the shareholder or by
his duly authorized attorney in fact. No proxy shall be valid
after eleven months from the date of its execution, unless
otherwise provided in the proxy.
At all meetings of the shareholders, a quorum being present,
all matters shall be decided by a simple majority vote of the
then eligible share, except as otherwise provided by statute, by
the Articles of Incorporation of the corporation, or by these
Bylaws. The vote on any matter need not be by ballot unless
required by statute or requested by a shareholder, in person or
by proxy, who is entitled to vote at the meeting.
Section 9 - Conduct of Meetings. Each meeting of the
shareholders shall be presided over by the president, or if the
president shall not be present, by the vice president. If both
the president and vice president are absent, a chairman shall be
chosen by a majority in voting interest of those shareholders
present or represented by proxy. The secretary of the
corporation shall act as secretary of each meeting of the
shareholders. If he shall not be present the chairman of the
meeting shall appoint a secretary.
ARTICLE IV
Directors, Powers and Meetings
Section 1 - Board of Directors. The business and affairs
of the corporation shall be managed by a board of three directors
who need not be shareholders of the corporation or residents of
the State of Colorado and who shall be elected at the annual
meeting of shareholders or some adjournment thereof. Directors
shall hold office until the next succeeding annual meeting of
shareholders and until their successors shall have been elected
and shall qualify. The board of directors may increase of
decrease, to not less than three, the number of directors by
resolution.
Section 2 - Regular Meetings. The annual meeting of the
board of directors shall be held at the same place as, and
immediately after, the annual meeting of shareholders, and no
notice shall be required in connection therewith. The annual
meeting of the board of directors shall be for the purpose of
electing officers and the transaction of such other business as
may come before the meeting. Regular meetings of the board of
directors may be held without notice as determined by resolution
adopted by the board.
Section 3 - Special Meetings. Special meetings of the
board of directors or any committee designated by said board may
be called at any time by the president or by any director, and
may be held within or outside the State of Colorado at such time
and place as the notice or waiver thereof may specify. Notice of
such meetings shall be mailed or telegraphed to the last known
address of each director at least five days, or shall be given to
a director in person or by telephone at least forth-eight hours,
prior to the date or time fixed for the meeting. Special
meetings of the board of directors may be held at any time that
all directors are present in person, and presence of any director
at a meeting shall constitute waiver of notice of such meeting
except as otherwise provided by law. Unless specifically
required by law, the Articles of Incorporation or these Bylaws,
neither the business to be transacted at, nor the purpose of, any
meeting of the board of directors or any committee designated by
said board need be specified in the notice or waiver of notice of
such meeting.
Section 4 - Special Attendance. Except as may be
otherwise provided by the Articles of Incorporation or Bylaws,
members of the board of directors or any committee designated by
such board may participate in a meeting of the board or committee
by means of conference telephone or similar communications
equipment by which all persons participating in the meeting can
hear each other at the same time. Such participation shall
constitute presence in person at the meeting.
Attendance of a director at a meeting shall constitute a
waiver of notice of such meeting except where a director attends
a meeting for the express purpose of objecting to the transaction
of business because the meeting is not lawfully called or
convened.
Section 5 - Quorum and Voting. A quorum at all meetings
of the board of directors shall consist of a majority of the
number of directors then holding office, but a smaller number may
adjourn from time to time without further notice, until a quorum
is secured. The act of the majority of the directors present at
a meeting at which a quorum is present shall be the act of the
board of directors, unless the act of a greater number is
required by the laws of the State of Colorado or by the Articles
of Incorporation or these Bylaws.
Section 6 - Organization. The president of the
corporation, or in his absence, the vice president, shall preside
at each meeting of the board of directors. The secretary, or in
his absence, any person appointed by the chairman of the meeting,
shall act as secretary of the meeting.
Section 7 - Presumption of Assent. A director of the
corporation who is present at a meeting of the board of directors
at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as
the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the secretary of
the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 8 - Vacancies. Any vacancy occurring in the
board of directors may be filled by the affirmative vote of a
majority of the remaining directors though less than a quorum of
the board of directors. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in
office, and shall hold such office until his successor is duly
elected and shall qualify. Any directorship to be filled by
reason of an increase in the number of directors shall be filled
by the affirmative vote of a majority of the directors then in
office or by an election at an annual meeting, or at a special
meeting of shareholders called for that purpose. A director
chosen to fill a position resulting from an increase in the
number of directors shall hold office until the next annual
meeting of shareholders and until his successor shall have been
elected and shall qualify.
Section 9 - Compensation. Directors may receive such
compensation and reimbursement for expenses as may be established
by appropriate resolution of the board of directors and in
addition thereto, shall receive reasonable traveling expense, if
any is required, for attendance at such meetings. A director may
serve the corporation in a capacity other than that of a director
and receive compensation for the services rendered in that
capacity.
Section 10 - Executive Committees. The board of
directors, by resolution adopted by a majority of the number of
directors may designate from among its members an executive
committee, and one or more other committees each of which, to the
extent provided in the resolution shall have all of the authority
of the board of directors; but no such committee shall have the
authority of the board of directors in reference to amending the
Articles of Incorporation, adopting a plan of merger or
consolidation, recommending to the shareholders the sale, lease,
exchange or other disposition of all or substantially all of the
property and assets of the corporation otherwise than in the
usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a
revocation thereof, or amending the Bylaws of the corporation.
The designation of such committees and the delegation thereto of
authority shall not operate to relieve the board of directors, or
any member thereof, of any responsibility imposed by law.
Section 11 - Removal of Directors. The shareholders
may, at a meeting called for the express purpose of removing
directors, by a majority vote of the shares entitled to vote at
an election of directors, remove the entire board of directors or
any lesser number, with or without cause.
Section 12 - Resignations. A director of the corporation
may resign at any time by giving written notice to the board of
directors, president or secretary of the corporation. The
resignation shall take effect upon the date of receipt of such
notice, or at any later period of time specified therein. The
acceptance of such resignation shall not be necessary to make it
effective, unless the resignation requires it to be effective as
such.
Section 13 - General Powers. The business and affairs of
the corporation shall be managed by the board of directors which
may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the Articles
of Incorporation or by these Bylaws directed or required to be
exercised or done by the Shareholders. The directors shall pass
upon any and all bills or claims of officers for salaries or
other compensation and, if deemed advisable, shall contract with
officers, employees, directors, attorneys, accountants, and other
persons to render services to the corporation.
ARTICLE V
Waiver of Notice
Notwithstanding any notices required by law or these Bylaws
to be given to any shareholder or director of the corporation, a
waiver thereof in writing signed by the person entitled to such
notice, whether before, at, or after the time stated therein
shall be the equivalent to the giving of such notice.
ARTICLE VI
Action Without a Meeting
Any action required to be taken at a meeting of the
directors, executive committee, or other committee of the
directors, or shareholders of this corporation, or any action
which may be taken at a meeting of directors, executive
committee, or other committee of the directors, or shareholders,
may be taken without a meting if a consent in writing, setting
forth the action so taken shall be signed by all of the
directors, executive or other committee members or shareholders
entitled to vote with respect to the subject matter thereof.
Such consent shall have the same force and effect as a
unanimous vote of the directors, executive committee or other
committee members or shareholders, as the case may be and may be
stated as such in any articles or document filed with the
Secretary of State of Colorado.
ARTICLE VII
Officers
Section 1 - Term and Compensation. The elective officers
of the corporation shall consist of at least a president, a
secretary and a treasurer each of whom shall be eighteen years or
older and who shall be elected by the board of directors at its
annual meeting. Unless removed in accordance with procedures
established by law and these Bylaws, the said officers shall
serve until the next succeeding annual meeting of the board of
directors and until their respective successors are elected and
shall qualify. Any two offices, but not more than two, may be
held by the same person at the same time, except that one person
may not simultaneously hold the offices of president and
secretary. The board may elect or appoint such other officers
and agents as it may deem advisable, who shall hold office during
the pleasure of the board. All officers shall be paid such
compensation as may be directed by the board.
Section 2 - Powers. The officers of the corporation
shall exercise and perform the respective powers, duties and
functions as are stated below, and as may be assigned to them by
the board of directors.
(a) The president shall be the chief executive
officer of the corporation and shall, subject to the
control of the board of directors, have general
supervision, direction and control of the business and
officers of the corporation. He shall preside at all
meetings of the shareholders and of the board of
directors. The president or a vice president, unless
some other person is specifically authorized by the
board of directors, shall sign all stock certificates,
bonds, deeds, mortgages, leases and contracts of the
corporation. The president shall perform all the
duties commonly incident to his office and such other
duties as the board of directors shall designate.
(b) In the absence or disability of the president,
the vice president or vice presidents, if any, in order
of their rank as fixed by the board of directors, and
if not ranked, the vice presidents in the order
designated by the board of directors, shall perform all
the duties of the president, and when so acting shall
have all the powers of, and be subject to all the
restrictions on the president. Each vice president
shall have such other powers and perform such other
duties as may from time to time be assigned to him by
the president.
(c) The secretary shall keep accurate minutes of
all meetings of the shareholders and the board of
directors. He shall keep, or cause to be kept a record
of the shareholders of the corporation and shall be
responsible for the giving of notice of meetings of the
shareholders or the board of directors. The secretary
shall be custodian of the records and of the seal of
the corporation and shall attest the affixing of the
seal of the corporation when so authorized. The
secretary of assistant secretary shall sign all stock
certificates. The secretary shall perform all duties
commonly incident to his office and such other duties
as may from time to time be assigned to him by the
president.
(d) An assistant secretary may, at the request of
the secretary, or in the absence or disability of the
secretary, perform all of the duties of the secretary.
He shall perform such other duties as may be assigned
to him by the president or by the secretary.
(e) The treasurer, subject to the order of the
board of directors, shall have the care and custody of
the money, funds, valuable papers and documents of the
corporation. He shall keep accurate books of accounts
of the corporation s transactions, which shall e the
property of the corporation, and shall render financial
reports and statements of condition of the corporation
when so requested by the board of directors or
president. The treasurer shall perform all duties
commonly incident to his office and such other duties
as may from time to time be assigned to him by the
president. In the absence or disability of the
president and vice president or vice presidents, the
treasurer shall perform the duties of the president.
(f) An assistant treasurer may, at the request of
the treasurer, or in the absence or disability of the
treasurer, perform all of the duties of the treasurer.
He shall perform such other duties as may be assigned
to him by the president or by the treasurer.
Section 3 - Compensation. All officers of the
corporation may receive salaries or other compensation if so
ordered and fixed by the board of directors. The board shall
have authority to fix salaries in advance for stated periods or
render the same retroactive as the board may deem advisable.
Section 4 - Delegation of Duties. In the event of
absence or inability of any officer to act, the board of
directors may delegate the powers or duties of such officer to
any other officer, director or person whom it may select.
Section 5 - Removal. Any officer or agent may be removed
by the board of directors or by the executive committee, if any,
whenever in its judgment the best interest of the corporation
will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall
not, of itself, create contract rights.
ARTICLE VIII
Finance
Section 1 - Reserve Funds. The board of directors, in
its uncontrolled discretion, may set aside from time to time, out
of the net profits or earned surplus of the corporation, such sum
or sums as it deems expedient as a reserve fund to met
contingencies, for equalizing dividends, for maintaining any
property of the corporation, and for any other purpose.
Section 2 - Banking. The moneys of the corporation shall
be deposited in the name of the corporation in such bank or banks
or trust company or trust companies, as the board of directors
shall designate, and may be drawn out only on checks signed in
the name of the corporation by such person or persons as the
board of directors by appropriate resolution may direct. Notes
and commercial paper, when authorized by the board, shall be
signed in the name of the corporation by such officer or officers
or agent or agents as shall thereunto be authorized from time to
time.
Section 3 - Fiscal Year. The fiscal year of the
corporation shall be determined by resolution of the board of
directors.
ARTICLE IX
Dividends
Subject to the provisions of the Articles of Incorporation
and the laws of the State of Colorado, the board of directors may
declare dividends whenever, and in such amounts, as in the board
s opinion the condition of the affairs of the corporation shall
render such advisable.
ARTICLE X
Contracts, Loans and Checks
Section 1 - Execution of Contracts. Except as otherwise
provided by statute or by these Bylaws, the board of directors
may authorize any officer or agent of the corporation to enter
into any contract, or execute and deliver any instrument in the
name of, and on behalf of the corporation. Such authority may
be general or confined to specific instances and, unless so
authorized, no officer, agent or employee shall have any power to
bind the corporation for any purpose, except as may be necessary
to enable the corporation to carry on its normal and ordinary
course of business.
Section 2 - Loans. No loans shall be contracted on
behalf of the corporation and no negotiable paper shall be issued
in its name unless authorized by the board of directors. When so
authorized, any officer or agent of the corporation may effect
loans and advances at any time for the corporation from any bank,
trust company or institution, firm, corporation or individual.
An agent so authorized may make and deliver promissory notes or
other evidence of indebtedness of the corporation and may
mortgage, pledge, hypothecate or transfer any real or personal
property held by the corporation as security for the payment of
such loans. Such authority, in the board of directors
discretion, may be general or confined to specific instances.
Section 3 - Checks. Checks, notes, drafts and demands
for money issued in the name of the corporation shall be signed
by such person or persons as designated by the board of directors
and in the manner the board of directors prescribes.
ARTICLE XI
Amendments
Subject to repeal or change by action of the shareholders,
these Bylaws may be altered, amended or repealed at the annual
meeting of the board of directors or at any special meeting of
the board called for that purpose.
ARTICLE XII
Gender
Whenever in these Bylaws the masculine gender is used, it
shall be deemed to include the feminine gender. The above Bylaws
approved and adopted by the Board of Directors on May 1, 1980.
/s/ Douglas J. Reich
Assistant Secretary
COMPROMISE AND SETTLEMENT AGREEMENT
This Agreement is made effective as of the 31st day of July,
1991, by and between Lyric Energy, Inc., a Colorado corporation
authorized to do business in Texas, and Amarillo National Bank, a
national banking corporation.
WHEREAS, Lyric Energy, Inc. ("Lyric#) is indebted to
Amarillo National Bank ("Bank") by virtue of those certain
promissory notes one dated December 17, 1990, in the original
principal amount of $1,815,868.78 due and payable on or before
120 days from the date thereof, which note is given in renewal
and extension of certain promissory notes set forth therein, one
dated December 17, 1990, in the original principal amount of
$967,368.85 due on demand, and one dated April 17, 1986, in the
original principal amount of $206,989.02 (the "Notes");
WHEREAS, the Notes are now in default;
WHEREAS, Lyric proposes to transfer and assign various
properties, both real and personal, to Bank in full and final
settlement of all amounts due under the Notes, both principal and
interest; and
WHEREAS, Bank is willing to accept the transfer and
assignment of such properties in satisfaction of all amounts due
under the Notes pursuant to the terms set forth in this
Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
do hereby agree as follows:
1. Lyric currently owes $2,990,226.50 to Bank, being
$1,815,868.78, $967,368.85, and $206,989.02 of principal on the
Notes, plus interest accrued on such Notes. In addition, various
fees, expenses and attorney's fees have been incurred by the
Bank. All sums due under the Notes are herein referred to as the
"Indebtedness."
2. The note in the original principal amount of
$1,815,868.78 is secured by various deeds of trust covering
properties located in Okmulgee, Oklahoma; Logan County, Oklahoma;
Foard County, Texas; Gray County, Texas; Moore County, Texas;
Nolan County, Texas; Sherman County, Texas; Wheeler County,
Texas; LaPlatta, Colorado; and Phillips County, Montana.
3. In consideration of the representations and agreements
contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Lyric agrees to convey to Bank the following
described property (the "Property"):
a. All of the property more particularly described on
Exhibit A attached hereto and made a part hereof for all
purposes, subject to the terms and conditions set forth herein;
b. An overriding royalty interest of 2.3% of 8/8ths
of all the oil, gas and liquid hydrocarbons that may be produced,
saved and marketed from the lands described as the Lyric/Anderson
Property located in Moore County, Texas, more particularly
described on Exhibit B attached hereto and made a part hereof for
all purposes, subject to the terms and conditions set forth
herein;
c. An overriding royalty interest of 3.0% of 8/8ths
of all of the oil, gas and liquid hydrocarbons that may be
produced, saved and marketed from any new wells, either oil or
gas, drilled on any of the acreage known as the Thalia Field
located in Foard County, Texas, whether such acreage is currently
leased to Lyric or is acquired hereafter, subject to the terms
and conditions set forth herein;
d. 3.8 million shares of the authorized and unissued
shares of the common stock of Lyric Energy, Inc. representing
8.9976% of all of the issued and outstanding common shares of
Lyric, subject to the terms and conditions set forth herein;
e. Proceeds from the sale of the properties known as
the Creek Indian, Oklahoma, Properties or, in the alternative, a
production payment covering the Creek Indian, Oklahoma,
Properties in the amount of $100,000.00 as more particularly set
forth herein.
The parties stipulate and agree that the present value
of the properties listed on Exhibit A, as determined by the
engineering firm of Grace, Shursen & Moore as of May 1, 1991,
total $302,440.00.
4. In consideration of the representations and agreements
contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, and effective upon the transfer and assignment of
all of the Property, Bank agrees to release Lyric from all
further liability or obligation on the Indebtedness and agrees to
execute such releases of the collateral currently securing the
Notes as Lyric may reasonably request, such releases to be in the
form authorized and approved by Bank.
5. Effective as of the 31st day of July, 1991, Lyric
hereby releases the Bank and the Bank's agents, employees,
successors and assigns, including its attorneys, from all claims
and liabilities of any kind associated with or in connection with
the Notes or the Indebtedness.
6. Lyric represents and warrants that it owns the Property
free and clear of any and all liens or encumbrances of any kind
whatsoever other than the liens and encumbrances in favor of Bank
and that the Property will be transferred and assigned to Bank at
Closing, as that term is defined herein, free and clear of all
liens and encumbrances. Lyric further represents and warrants
that, with respect to each property described, it owns not less
than the working interest, net revenue interest, or overriding
royalty interest set forth on Exhibit A, attached hereto and made
a part hereof for all purposes. At Closing, Lyric agrees to
provide to Bank such title opinions, title insurance policies,
and other records with respect to the Property as may then be
within the possession of Lyric. Prior to Closing, Lyric agrees
that Bank may have access to Lyric's files and books and records
during regular business hours for the purpose of conducting such
examination of the title to the Property as the Bank may, in its
sole discretion, deem necessary and for the purpose of inspecting
and copying (at Lyric's expense) such books and records of Lyric
with respect to such title as the Bank in its sole discretion
deems necessary. Following the Closing, Lyric agrees to cooperate
with Bank in the event additional information or copies of
additional documents are reasonably required.
7. The Closing of the transaction contemplated by this
Agreement shall occur on July 31, 1991, at the offices of
Amarillo National Bank, 5th and Taylor, Amarillo, Potter County,
Texas, at 10:00 a.m., or on such earlier date and at such time as
may be agreed upon between the parties. Time is of the essence in
this Agreement. At Closing, the properties shall be transferred
from Lyric to Bank by such Bills of Sale, Assignments, Deeds,
Endorsements, Stock Transfer Powers, and other documents in the
form and substance reasonably required by Bank. In addition, at
Closing Lyric shall provide to Bank such corporate resolutions
and other documents relating to corporate existence, good
standing, and authority as Bank may reasonably require including,
but not necessarily limited to, a certificate of existence and
certificate of good standing issued by the State of Colorado and
a certificate of authority to do business and certificate of good
standing in the State of Texas. Bank shall obtain such
certificates of existence and good standing as it deems
necessary. Taxes on the Property shall be prorated equally
between the parties.
8. In the event title to a significant portion of the
Property is found to be defective at any time prior to closing,
Bank may, at its sole option, declare this Agreement to be null
and void. What constitutes a significant portion of the property
shall be in the sole determination of Bank. Lyric agrees to cure
such title objections as Bank may reasonably require. In
addition, if Closing occurs prior to the time good title is
confirmed by Bank, Bank shall have a period of thirty days within
which to reject some or all of the title. At that time, Bank
shall reconvey such rejected properties to Lyric.
9. For a period of six months from and after the Closing,
Lyric shall have the option to repurchase the properties set
forth on Exhibit A attached hereto for a purchase price of
$302,440.00 cash. If that right to repurchase is not exercised
by giving written notice to Bank within such six month period, it
shall become null and void. The closing of such repurchase shall
occur not more than thirty days following the receipt of such
written notice. Failure to close timely shall cause the option
to repurchase to expire. In addition, for a period of one year
following the Closing, Lyric shall have a right of first refusal
to purchase the properties set forth on Exhibit A. Upon receipt
of an offer to purchase some or all of such properties that is
acceptable to Bank, Bank shall notify Lyric of the terms and
conditions of such sale. Lyric shall have a period of thirty days
following receipt of such notice to notify Bank of its intention
to exercise its right of first refusal. In the event Lyric fails
to notify Bank within such thirty day period, its right of first
refusal shall expire and Bank shall have the right to sell the
properties to a third party upon the terms and conditions set
forth in the notice. In the event Lyric exercises its right to
purchase the properties, the closing of such transaction shall
occur in accordance with the terms set forth in the notice.
10. With respect to the 3.8 million shares of Lyric Energy,
Inc. common stock to be transferred to Bank pursuant to paragraph
3 hereof (the "Shares"), the following terms shall apply:
a. The Shares shall be issued out of authorized but
unissued common stock, and after issuance will constitute 8.9976%
of the total issued and outstanding common stock of Lyric.
b. The shares shall be subject to adjustment on a
semiannual basis to ensure that the Shares continue to represent
8.9976% of all issued and outstanding shares of common stock of
Lyric. If Lyric shall at any time subdivide the outstanding
shares of common stock, or shall issue a stock dividend on its
outstanding common stock, the Shares shall be proportionately
increased, and if Lyric shall at any time combine the outstanding
shares of common stock, the Shares shall be proportionately
decreased, effective at the close of business on the date of such
subdivision, dividend or combination, as the case may be. In
either case, the adjustment shall be such that the Shares shall
continue to constitute 8.9976% of the issued and outstanding
shares of common stock of Lyric. The Shares shall be adjusted for
dividends or distributions on common stock payable in Lyric
stock; subdivisions, combinations or reclassifications of common
stock; distributions to all holders of common stock of rights to
purchase common stock at less that the current market price at
the time; distributions to such holders of assets or debt
securities of Lyric or rights to purchase securities of Lyric
(excluding cash dividends or distributions from current or
retained earnings). The required adjustment shall be such that
the holder of the Shares continues to hold 8.9976% of the
issued and outstanding common stock of Lyric and receives in such
distribution at least 8.9976% of the property or rights received
by all holders of common stock of Lyric.
If at any time Lyric offers to its shareholders the
right to subscribe for and purchase a proportionate number of
additional shares of the common stock of Lyric, which
subscription price shall be paid to Lyric in cash in full by each
such subscribing shareholder, and Bank declines to exercise its
right to purchase such shares, or elects to purchase less than
the number of shares attributable to its proportionate share of
the total number of shares being offered, then subsequent to the
exercise of such rights by the shareholders of Lyric, Bank's
percentage of the common stock of Lyric shall be determined by
dividing the number of shares then owned by Bank by the total
issued and outstanding shares of the corporation. From and after
the date of determining the new percentage owned by Bank, the
provisions of this paragraph 10 shall continue to apply with the
new percentage being inserted in place of the 8.9976% currently
reflected in the Agreement.
Subject to any required action by its shareholders, if
Lyric is the surviving corporation in any reorganization, merger
or consolidation, the aggregate number and class of shares with
respect to the Shares shall be proportionately adjusted so as to
reflect the securities to which the holder of the Shares would be
entitled in such a way as to assure that the holder of the Shares
receives at least 8.9976% of the consideration received by all
holders of common stock of Lyric. If Lyric is a party to a
consolidation or merger or a transfer or lease of all or
substantially all of its assets, and the security holders of
Lyric are to receive some consideration other than Lyric shares,
the holder of the Shares shall have a right, at its option, to
convert such consideration into securities of Lyric, property, or
other assets, including shares of another company, as may be
agreed between the holder of the Shares and Lyric or its
successor, or if no such agreement is reached, a right to receive
cash in an amount equal to the value of the consideration other
than Lyric shares which such holder would have otherwise
received.
c. Lyric represents and warrants to Bank that the
Shares are shares that are subject to Rule 144 of the Securities
and Exchange Commission (#SEC"). As such, Lyric is responsible
for complying with certain rules and regulations required under
the Securities Act and the Securities Exchange Act. Lyric
represents and warrants to Bank that at the time of Closing all
filings required to be made by Lyric with the SEC or with any
other governmental agency are current except as set forth below.
In addition, from and after the Closing, and so long as Bank owns
any of the shares of Lyric, Lyric agrees to:
(1) make and keep public information available,
as those terms are understood and defined in SEC Rule 144, at all
times;
(2) use its best efforts to file with the SEC in
a timely manner all reports and other documents required of the
corporation under the Securities Act and the Securities Exchange
Act;
(3) furnish to Bank upon its request a written
statement executed by the President of Lyric as to its compliance
with the reporting requirements of said Rule 144 and of the
Securities Act and the Securities Exchange Act of which Lyric is
aware, a copy of the most recent annual or quarterly report of
Lyric, and such other reports and documents so filed by Lyric as
Bank may reasonably request.
It is understood among the parties that the form 10K
covering the period ending April 30, 1991, which is due to be
filed with the Securities and Exchange Commission on or before
July 31, 1991, has not been made. Lyric represents and warrants
to Bank that the SEC has been notified that the filing of such
form 10K has been delayed, that the form 10K report is currently
being prepared, and that Lyric agrees to complete and file such
report as quickly as possible. In addition, Lyric agrees to
furnish to Bank a copy of the form 10K and the letter
transmitting same to the SEC.
d. For a period of six months following the Closing,
Lyric shall have the option to repurchase all of the Shares at a
price of $1.00 per share payable in cash by giving written notice
to Bank. The closing of such repurchase shall take place within
thirty days following the exercise of such option. Failure to
close timely shall cause the repurchase option to become null and
void. If the option is not exercised within such six month
period it shall become null and void. In addition, for a period
of one year following the Closing, Lyric shall have a right of
first refusal to purchase any or all of the Shares contemplated
to be sold by Bank. Following the receipt by Bank of an offer to
purchase some or all of the Shares that is acceptable to Bank,
Bank shall notify Lyric of the terms and conditions of such sale.
Lyric shall have a period of thirty days following receipt of
such notice to notify Bank of its intention to exercise its right
of first refusal. In the event Lyric fails to notify Bank within
such thirty day period, its right of first refusal shall expire
and Bank shall have the right to sell the Shares to a third party
upon the terms and conditions set forth in the notice. In the
event Lyric exercises its right to purchase the Shares, the
closing of such transaction shall occur in accordance with the
terms set forth in the notice.
11. If at any time or from time to time, Lyric shall
determine to register any of its securities, either for its own
account or the account of a security holder or holders, Lyric
will (a) promptly give Bank written notice thereof (which shall
include a list of the jurisdictions in which Lyric intends to
attempt to qualify such securities under the applicable blue sky
or other state securities laws); and (b) include in such
registration (and any related qualification under blue sky laws
or other compliance) and in any underwriting involved therein, at
Bank's option, all of the Shares specified by Bank in a written
request or requests made within thirty days after receipt of such
written notice from Lyric, except as set forth below. As used
herein, the terms "register" or "registration" shall mean
registration effected by preparing and filing a registration
statement in compliance with the Securities Act of 1933, and the
declaration or ordering of the effectiveness of such registration
statement.
The right of Bank to registration pursuant to this
paragraph shall be conditioned upon Bank's participation in the
underwriting and the inclusion of Bank's Shares in the
underwriting. If Bank proposes to distribute some or all of the
Shares through such underwriting, Bank shall (together with Lyric
and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such
underwriting by Lyric. If Bank disapproves of the terms of any
such underwriting, it may elect to withdraw therefrom by written
notice to Lyric and the underwriter. Any Shares excluded or
withdrawn from such underwriting shall, unless Bank requests
otherwise, be included in such registration but shall not be
transferred in a public distribution prior to ninety days after
the effective date of the registration statement relating
thereto.
All expenses incurred in connection with any
registration, qualification or compliance pursuant to this
Agreement, including, without limitation, all registration,
filing, and qualification fees, printing expenses, fees and
disbursements of counsel for Lyric and for Bank, and expenses of
any special audits incidental to or required by such
registration, shall be borne by Lyric. In the case of each
registration, qualification, or compliance effected by Lyric
pursuant to this Agreement, Lyric will keep Bank advised in
writing as to the initiation of each registration, qualification
and compliance and as to the completion thereof. At its expense
Lyric will use its best efforts to:
a. Keep such registration, qualification or
compliance pursuant to this paragraph effective for a period of
180 days or until Bank has completed the distribution described
in the registration statement relating thereto, whichever first
occurs; and
b. Furnish such number of prospectuses and other
documents incident thereto as Bank from time to time may
reasonably request.
Lyric will indemnify Bank, each of Bank's officers and
directors, and each person controlling Bank, and their assigns,
with respect to such registration, qualification, or compliance
effected pursuant to this Agreement, and each underwriter, if
any, and each person who controls any underwriter of the Shares
held by or issuable to Bank or its assignees, against all claims,
losses, damages, and liabilities (or actions in respect thereto)
arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related
registration statement, notification or the like) incident to any
such registration, qualification, or compliance, or based on any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by Lyric of any rule or
regulation promulgated under the Securities Act applicable to
Lyric and relating to action or inaction required of Lyric in
connection with any such registration, qualification, or
compliance, and will reimburse Bank, each of Bank's officers and
directors, and each person controlling Bank, and their assigns,
each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably
incurred in connection with investigation or defending any such
claim, loss, damage, liability or action, provided that Lyric
will not be liable in any such case to the extent that any such
claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon written information
furnished to Lyric by an instrument duly executed by Bank or
underwriter specifically for use therein.
12. With respect to the overriding royalties to be conveyed
to the Bank under Paragraphs 3.b. and 3.c. of this Agreement, the
following terms and conditions shall apply:
a. The overriding royalties shall be delivered or
paid free and clear of all costs and expenses of development or
operations, except that the overriding royalty interests shall
bear their proportionate part of any ad valorem, gross
production, severance and other taxes levied upon such overriding
royalties or measured by the production of oil or gas
attributable thereto and shall bear their proportionate part of
the costs of treating, compressing, gathering, transporting and
dehydrating such production or rendering the same merchantable.
b. If any of the leases which are to be burdened
with the overriding royalties covers less than the entire and
undivided mineral interest in the land described therein,
nevertheless, the overriding royalty interests to be conveyed to
the Bank shall not be proportionately reduced or diluted.
c. Oil or gas used in operations upon the leased
premises shall be deducted before computing the overriding
royalties.
d. Lyric, or its successors or assigns, is authorized
to pool or unitize the overriding royalties in the same manner
and to the same extent as provided in the leases with respect to
the royalty interest. In the event of such pooling or
unitization, in lieu of the overriding royalties to be conveyed
to the Bank, the Bank shall receive only such proportion of the
overriding royalties as the amount of the acreage covered by the
lease and placed in the unit bears to the total acreage in the
unit.
e. Any development of the leased premises and the
continuation of the leases shall be solely in the discretion of
Lyric and no obligation, other than to act as a reasonably
prudent operator, with regard thereto shall exist by reason of
the overriding royalties to be conveyed to the Bank.
f. The overriding royalties to be conveyed to the
Bank are in addition to and shall not be proportionately reduced
by any other overriding royalties or similar burdens on
production now or hereafter existing.
13. With respect to the Creek Indian, Oklahoma, Properties,
Lyric believes that additional production may be obtained by the
use of certain recovery procedures involving microbes. Bank wants
the property to be sold as quickly as possible with the proceeds
of sale being paid directly to Bank. As a compromise, the parties
agree that Lyric shall have the period of six months from the
date of this Agreement within which to determine if additional
production can be obtained. In the event that additional
production is not obtained within such six month period, Lyric
shall use its best efforts to sell the properties and the
proceeds of sale shall be paid directly to Bank. Bank shall have
the right to approve of any such sale; and shall be notified in
writing by Lyric of any proposed sale. Provided, however, the
Bank shall not unreasonably withhold its approval of any proposed
sale. Until such time as Lyric is able to sell such properties,
it may continue to operate the properties in a reasonably prudent
manner. In the event that it becomes uneconomic to continue to
operate such properties, Lyric, after first notifying Bank in
writing and receiving its approval, may shut-in one or more of
the wells located upon the property or may plug and abandon such
well or wells. In the event one or more of such wells are
plugged and abandoned, the equipment from such well or wells
shall be sold and the net proceeds of sale paid directly to Bank.
As used herein, the term "net proceeds" shall mean the gross
sales price from the sale of the equipment less the cost of
salvaging the equipment. In the event additional production is
acquired, Lyric shall grant, sell, and convey to Bank a
production payment of $100,000.00, which production payment shall
bear no interest. The assignment of this production payment shall
be in the form attached hereto as Exhibit C and expressly made a
part hereof.
14. All of the representations and warranties set forth in
this Agreement shall survive the Closing.
15. All notices, requests, demands, and other
communications required or permitted under this Agreement shall
be in writing and shall be deemed to have been delivered if in
person, to the party entitled thereto against receipt, or if
deposited in the United States Mail, postage prepaid, certified
mail, return receipt requested, addressed as follows:
a. If to Bank: Amarillo National Bank
Post Office Box 1611
Amarillo, Texas 79181
b. If to Lyric: Lyric Energy, Inc.
Post Office Box 2271
Amarillo, Texas 79105
16. The failure of either party to insist upon a strict
performance of any term or condition of this Agreement shall not
be deemed a waiver of any right or remedy that that party may
have, and shall not be deemed a waiver of any subsequent breach
of any such term or condition.
17. This Agreement is performable in the State of Texas and
shall be construed in accordance with the laws of the State of
Texas.
18. This Agreement shall inure to the benefit of the
parties hereto and to their respective heirs, personal
representatives, successors and assigns.
19. This Agreement is executed simultaneously in multiple
counterparts, each of which shall be deemed to be an original.
20. This Agreement contains the entire agreement of the
parties with respect to the matters covered hereby and supersedes
all prior and contemporaneous agreements by the parties. It may
not be amended or modified except in writing executed by both
parties.
21. The parties to this Agreement shall cooperate in
defending the validity of the transactions contemplated hereby in
any court, administrative or judicial action, subject to the
legal obligation of each party to cooperate fully with any
trustee duly appointed in a bankruptcy proceeding in which such
party is a debtor (a "Debtor#) under protection of the United
States Bankruptcy Code (a "Bankruptcy Case"). If a bankruptcy
court or other court of competent jurisdiction should enter an
order or judgment (in connection with a Bankruptcy Case) holding
or ordering that all or any part of the transfers of Property,
overriding royalty interests, production payments or any other
transfers to Bank contemplated by this Agreement are
preferential, illegal, unenforceable or voidable (any such order
or judgment being called an "Avoidance Order"), than all releases
granted in favor of Lyric in such Bankruptcy Case shall be
rescinded and of no further force and effect; provided, however,
that the resulting obligations of Lyric to the Bank shall be
reduced by the amount of the lawful payments or transfers that
were made to the Bank which have not been voided or required to
be refunded (such voiding of releases being a "Reinstatement of
Obligations"); and provided further that there shall be no
Reinstatement of Obligations if the Bank shall appeal from the
Avoidance Order and the Avoidance Order shall be reversed on
appeal which becomes final. The Bank shall be entitled (but not
required)to prosecute any appeal from an Avoidance Order.
EXECUTED and effective as of this 31st day of July, 1991.
LYRIC ENERGY, INC.
By: /s/ G.E. Stahl
G.E. Stahl, President
AMARILLO NATIONAL BANK
By: /s/ R. Wesley Savage
R. Wesley Savage
Executive Vice President
Natural Gas Technologies, Inc.
231 Pine Street
Suite 106A
Abilene, Texas 79601
March 17, 1997
Lyric Energy, Inc.
c/o Stahl Petroleum Company
1013 West Eighth Avenue
Amarillo, Texas 79101
Gentlemen:
This letter agreement supplements our earlier agreement
dated January 2, 1997 (the "January 2 Agreement"). All
capitalized terms not defined herein have the same meaning as in
the January 2 Agreement.
1. As a result of certain non-dilution rights granted to
Amarillo National Bank (the "Bank"), Lyric issued an additional
425,150 shares of Common Stock to the Bank in February 1997.
Accordingly, 46,958,483 shares of Common Stock are currently
outstanding and 203,041,517 shares of Common Stock are currently
authorized but unissued.
2. Lyric and NGT shall immediately commence the
preparation of an information statement at NGT's expense to be
used in connection with a special meeting of Lyric stockholders
to approve (i) a 268.3342 share for one share reverse stock
split; (ii) a name change to Natural Gas Technologies, Inc.;
(iii) amendments to Lyric's articles of incorporation to
eliminate the liability of officers and directors and to reduce
the voting requirements for certain significant corporate
actions; and (iv) the authorization of 10,000,000 shares of no
par value preferred stock which will be reserved for future
issuance in the discretion of the Board of Directors. Lyric and
NGT shall use their best efforts to complete the information
statement and obtain SEC approval of the same so as to allow the
special meeting of stockholders to occur in May 1997.
3. The Note, which was entered into on or about February
4, 1997, shall be amended and restated (i) to indicate that the
Note will be convertible into 203,041,517 shares; (ii) to provide
that conversion shall occur upon the later to occur of Lyric
becoming current on its periodic reports required under the
Securities Exchange Act of 1934, as amended (the "'34 Act"), and
the receipt by Lyric of a waiver by the Bank of its non-dilution
rights; and (iii) to delete the provisions of Section 9.6 and
provide instead that the vacancies created by the resignations of
L.K. Hayhurst and Jim Clements from Lyric's board of directors
shall be filled upon conversion of the Note by two directors
selected by NGT. NGT and Lyric shall use their best efforts to
complete and file as soon as practicable the periodic reports
required to bring Lyric current under the '34 Act and thereafter
Lyric shall use its best efforts to obtain the above-referenced
waiver from the Bank as soon as practicable.
4. The Share Exchange shall occur in two stages. The
first stage shall occur immediately after stockholder approval of
the matters set forth in paragraph 2 above and shall consist of
the exchange of approximately 2,055,000 shares of Lyric Common
Stock (post-reverse split) for approximately eighty percent of
the equity interests, which interests are held by certain NGT
officers, directors and their family members and affiliates.
Upon the completion of the first stage, Lyric will own
approximately eighty percent of all of the issued and outstanding
shares of NGT and shall thereafter consolidate the financial
statements of NGT with its own financial statements. The second
stage shall occur upon the effective date of an S-4 registration
statement registering the exchange of all of the remaining equity
interests of NGT into 513,000 shares of Lyric Common Stock
(post-reverse split) and providing for the distribution of the
756,674 post-reverse split shares issued to NGT upon conversion
of the Note to the shareholders of NGT immediately prior to the
Share Exchange. The foregoing terms are subject to adjustment
based upon the anticipated conversion of certain preferred stock
of NGT and based upon certain anticipated oil and gas property
acquisitions by NGT prior to the Share Exchange. Notwithstanding
the foregoing, the current Lyric shareholders shall hold five
percent of the Common Stock at the conclusion of the Share
Exchange.
5. The consummation of the Share Exchange shall be
conditioned upon the completion of due diligence and final
documentation therefor.
6. Except as modified hereby, the January 2 Agreement
shall remain in full force and effect.
If the foregoing terms are agreeable, please indicate your
acceptance by signing and returning to NGT the enclosed copy of
this letter agreement.
Very truly yours,
NATURAL GAS TECHNOLOGIES, INC.
By: /s/ Brent A. Wagman
Brent A. Wagman, President
Agreed and accepted this
18th day of March, 1997.
LYRIC ENERGY, INC.
By: /s/ G.E. Stahl
G.E. Stahl, President
LYRIC ENERGY, INC.
RESTATED CONVERTIBLE PROMISSORY NOTE
$100,000.00 As of February 4, 1997
Amarillo, Texas 79105
FOR VALUE RECEIVED, Lyric Energy, Inc., a Colorado
corporation (the "Payor"), having its executive office and
principal place of business at 1013 West 8th Avenue, Amarillo,
Texas 79105, hereby promises to pay to Natural Gas Technologies,
Inc., a Texas corporation (the "Payee"), having an address at 231
Pine Street, Suite 106A, Abilene, Texas 79601 on December 31,
1997 (the "Maturity Date") (unless sooner converted as provided
herein), at the Payee's address set forth above or at such other
place as the Payee shall hereafter specify in writing, the
principal sum of One Hundred Thousand Dollars ($100,000.00 U.S.).
1. Conversion. Upon the latter to occur of (i) Lyric
becoming current on its periodic reports required under the
Securities Exchange Act of 1934, as amended (the "Act") and (ii)
the waiver by Amarillo National Bank (the "Bank") in a form
reasonably acceptable to NGT of the Bank's non-dilution rights
contained in that certain Compromise and Settlement Agreement
dated July 31, 1997 (the "Compromise and Settlement Agreement"),
this Note shall be converted into 203,041,517 shares of the
common stock, $.01 par value, of Payor ("Common Stock"). The
number of shares of Common Stock issuable upon conversion of this
Note may be adjusted in accordance with Section 8 hereof.
2. No Interest; No Prepayment.
2.1. The unpaid principal amount hereof shall not bear
interest.
2.2. In the event of conversion of this Note as
provided in Section 1, all principal otherwise due under this
Note shall be forgiven and this Note shall be cancelled. All
amounts deposited in escrow shall in such event be distributed in
accordance with Section 4 hereof.
2.3. This Note may not be prepaid in whole or in part
prior to the Maturity Date.
3. Representations and Warranties of Payor.
3.1 The Payor is a corporation duly organized and in
good standing in the State of Colorado. The Payor has the
corporate power and authority to enter into this Note and all
related agreements. The Payor does not own an equity interest in
any other companies and has no subsidiaries.
3.2 The authorized capital stock of the Payor consists
of 250,000,000 shares of Common Stock, of which 46,958,483 are
issued and outstanding. The remaining 203,041,517 authorized
shares are unissued as of the date of this Note. There are no
restrictions or limitations on the ability of the Payor to issue
such shares to the Payee upon conversion of this Note.
3.3 The Payor is a reporting company under the Act but
is delinquent in the filing of periodic reports required under
such Act.
3.4 G.E. Stahl is the sole director of the Payor. The
officers of the Payor are G.E. Stahl, President and Chief
Executive Officer and Kathy Plautz, Secretary.
3.5 There are no liabilities, either actual or
contingent, and no actions or claims which have been asserted
against the Payor or which the Payor reasonably believes may be
asserted against the Payor which have not been previously
disclosed to the Payee.
3.6 The Payor has had no significant business
activities other than the winding up of its affairs since it
transferred all of its operational assets to the Bank pursuant to
the Compromise and Settlement Agreement.
3.7 The Payor does not have any contract, arrangement
or understanding with any broker, finder or similar agent with
respect to the transaction described in this Note or contemplated
with respect to the Share Exchange.
4. Escrow Account. Pursuant to an Escrow Agreement of
even date herewith, $100,000 is to be deposited by the Payee in
an escrow account under the name of Ronald D. Nickum, Esq. Upon
maturity of this Note or upon notice from the Payee of any
default under this Note, such funds together with all interest
earned upon such funds shall be paid to the Payee and the parties
shall be relieved of further liability hereunder. Upon the
satisfaction of the conditions for conversion set forth in
Section 1 hereof, the $100,000 held in escrow shall be paid to
the Payor and all interest paid to the escrow account shall be
paid to the Payee. The Escrow Agreement sets forth further
provisions concerning the funds deposited in escrow.
5. Events of Default. If any of the following conditions,
events or acts shall occur, this Note shall become immediately
due and payable:
5.1. The dissolution of the Payor or any vote in favor
thereof by the Board of Directors and stockholders of the Payor;
or
5.2. The Payor's assignment for the benefit of
creditors, application for or appointment of a receiver, filing
of a voluntary or involuntary petition under any provision of the
Federal Bankruptcy Code or amendments thereto or any other
federal or state statute affording relief to debtors; or the
commencement against the Payor of any such proceeding or filing
against the Payor of any such application or petition, which
proceeding, application or petition is not dismissed or withdrawn
within thirty days of commencement or filing as the case may be;
or
5.3. The failure by the Payor to make any payment of
principal under this Note; or
5.4. The merger or consolidation by the Payor with or
into another corporation other than the Payee; or
5.5. The commencement of a proceeding to foreclose the
security interest or lien in any property or assets to satisfy
the security interest or lien therein of any secured creditor of
the Payor; or
5.6. The entry of a final judgment for the payment of
money in excess of $5,000 by a court of competent jurisdiction
against the Payor, which judgment the Payor shall not discharge
(or provide for such discharge) in accordance with its terms
within thirty days of the date of entry thereof, or procure a
stay of execution thereof within thirty days from the date of
entry thereof and, within such thirty day period, or such longer
period during which execution of such judgment shall have been
stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal; or
5.7. Any attachment or levy, or the issuance of any
note of eviction against the assets or properties of the Payor
involving an amount in excess of $5,000, which attachment, levy
or issuance is not dismissed, bonded or otherwise terminated
within thirty days of the effectiveness of such attachment, levy
or issuance; or
5.8. The default in the due observance or performance
of any material covenant, condition or agreement on the part of
the Payor to be observed or performed pursuant to the terms of
this Note, and the continuation of such default for thirty days
after written notice thereof, specifying such default, shall have
been given to the Payor by the holder of the Note; then, in any
such event and at any time thereafter while such event is
continuing, the Payee shall have the right to declare an event of
default hereunder ("Event of Default"), provided that upon the
occurrence of an event described in Subsections 5.1, 5.2 or 5.4,
such event shall be deemed to be an Event of Default hereunder
whether or not the Payee makes such a declaration (an "Automatic
Default"), and the indebtedness evidenced by this Note shall
immediately upon such declaration or Automatic Default become due
and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived,
notwithstanding anything contained herein to the contrary; or
5.9. Any breach of the representations and warranties
of the Payor set forth in this Note; or
5.10.
The failure of appointment and/or election of the two
directors nominated by the Payee in accordance with Section 9.6
hereof.
6. Unconditional Obligation; Fees; Waivers; Other.
6.1. The obligations to make the payments provided
for in this Note are absolute and unconditional and not subject
to any defense, set-off, counterclaim, rescission, recoupment or
adjustment whatsoever.
6.2. No forbearance, indulgence, delay or failure to
exercise any right or remedy with respect to this Note shall
operate as a waiver, nor as an acquiescence in any default, nor
shall any single or partial exercise of any right or remedy
preclude any other or further exercise thereof or the exercise of
any other right or remedy.
6.3. This Note may not be modified except by a writing
duly executed by the Payor and the Payee.
6.4. The Payor hereby expressly waives demand and
presentment for payment, notice of nonpayment, notice of dis-
honor, protest, notice of protest, bringing of suit and dili-
gence in taking any action to collect amounts called for here-
under, and shall be directly and primarily liable for the payment
of all sums owing and to be owing hereon, regardless of and
without any notice, diligence, act or omission with respect to
the collection of any amount called for hereunder or in
connection with any right, lien, interest or property at any and
all times which the Payee had or is existing as security for any
amount called for hereunder.
7. Restriction on Transfer. By its acceptance of this
Note, the Payee acknowledges that this Note has not been
registered under the securities laws of the United States of
America or any state thereof and represents that (i) this Note
has been acquired for investment, and (ii) no interest in this
Note may be offered for sale, sold, delivered after sale,
transferred, pledged or hypothecated in the absence of
registration and qualification of this Note under applicable
federal and state securities laws or an opinion of counsel
reasonably satisfactory to the Payor that such registration and
qualification are not required.
8. Standard Antidilution Provisions. If this Note is
converted pursuant to Section 1 hereof, the number of shares of
Common Stock to be received shall be subject to adjustment as
follows:
8.1. In the case the Payor shall at any time after the
date of this Note (i) pay a dividend of its capital stock, (ii)
subdivide its outstanding shares of Common Stock, or (iii)
combine its outstanding shares of Common Stock, the number of
shares issuable as a result of the Note conversion provisions in
effect immediately prior to such date shall be multiplied by a
fraction (the "Conversion Ratio"), the denominator of which shall
be the number of shares of Common Stock outstanding on such date
before giving effect to such stock dividend, subdivision or
combination and the numerator of which shall be the number of
shares of Common Stock outstanding after giving effect thereto.
8.2. If the shares of Common Stock issuable upon
conversion of this Note shall be changed into the same or a
different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination of shares or stock
dividend provided for in Section 8.1 above) then, and after such
event, this Note shall be convertible into the kind and amount,
as reasonably determined by the Payor's Board of Directors, of
shares of Common Stock and other securities and property
receivable upon such reorganization, reclassification or other
change in exchange for shares that would have been issued if the
Notes had been converted immediately prior to such
reorganization, reclassification or change, all subject to
further adjustment as provided herein.
8.3. The adjustments provided for in this Section 8 are
cumulative and shall apply to successive divisions, subdivisions,
combinations, reorganizations or other events contemplated herein
resulting in any adjustment under the provisions of this Section.
8.4. In the event of any question arising with respect
to the adjustments provided for in this Section 8, such question
shall be conclusively determined by an opinion of independent
certified public accountants appointed by the Payor (who may be
auditors of the Payor) and reasonably acceptable to the Payee.
Such accountants shall have access to all necessary records of
the Payor, and such determination shall be binding upon the Payor
and the Payee.
9. Miscellaneous.
9.1. The headings of the various paragraphs of this
Note are for convenience of reference only and shall in no way
modify any of the terms or provisions of this Note.
9.2. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been
duly given when personally delivered, delivered by Federal
Express or other national overnight courier, or sent by
registered or certified mail, return receipt requested, postage
prepaid, to the address of the intended recipient set forth in
the preamble to this Note or at such other address as the
intended recipient shall have hereafter given to the other party
hereto pursuant to the provisions hereof.
9.3. This Note and the obligations of the Payor and the
rights of the Payee shall be governed by and construed in
accordance with the laws of the State of Texas, including
conflicts of laws, with respect to contracts made and to be fully
performed therein.
9.4. Any legal suit, action or proceeding arising out
of or relating to this Note shall be instituted exclusively in
the United States District Court for the District of Northern
Texas, unless such court or a superior court rules that such
court lacks jurisdiction over the dispute, in which case action
shall thereafter be initiated in a District Court in Taylor
County, Texas. The parties hereby waive any objection which they
may have now or hereafter to the venue of any such suit, action
or proceeding and irrevocably consent to the jurisdiction of the
United States District Court for the Northern District of Texas
and the District Court of Taylor County, Texas, in any such suit,
action or proceeding.
9.5. This Note shall bind the Payor and its successors
and assigns.
9.6. Upon conversion of this Note, G.E. Stahl shall, as
sole director of the Payor, fill the vacancies created by the
resignations of two directors in December 1996 with two nominees
designated by the Payee. Unless otherwise notified by the Payee,
these nominees shall be Brent Wagman and Warren Donohue.
LYRIC ENERGY, INC.
By:___________________________
G.E. Stahl, President
RELEASE OF JUDGMENT
STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF POTTER )
WHEREAS, on the 16th day of June 1993 in the United States
District Court for the Northern District of Texas, Amarillo
Division, in a cause styled "Natural Gas Pipeline Company of
American vs. Lyric Energy, et al.," Civil Action No.
CA-2-89-0168, Plaintiff, Natural Gas Pipeline of America,
recovered a judgment against Defendant, Lyric Energy, Inc.,
together with costs of suit and post judgment interest based upon
28 USC, 1961; and
WHEREAS, such judgment was assigned by Natural Gas Pipeline
Company of America to Dynamic Investing, Inc., a Delaware
corporation; and
WHEREAS, such judgment against Defendant, Lyric Energy,
Inc., has been compromised and settled with Dynamic Investing,
Inc., the party entitled to payment thereof.
NOW, THEREFORE, the undersigned hereby acknowledges the
satisfaction of such judgment against Lyric Energy, Inc., and its
successors and assigns from (i) all liabilities and obligations
arising from and in connection with such judgment and (ii) all
liens existing by reason of such judgment upon any property of
Defendant, Lyric Energy, Inc., whatsoever.
WITNESS my hand this 31st day of December, 1996.
DYNAMIC INVESTING, INC.,
a Delaware corporation
By: /s/ G.E. Stahl
G.E. Stahl, President
This instrument was acknowledged before me on the 31st day
of December, 1996, by G.E. Stahl, President of Dynamic Investing,
Inc., a Delaware corporation, on behalf of said corporation.
/s/ Kathy Plautz
Notary Public, State of Texas
My commission expires: 3/21/2000
TERMINATION OF AGREEMENT AND CANCELLATION OF LOAN
THIS AGREEMENT dated this 2nd day of January, 1997, by and
between Lyric Energy, Inc., a Colorado corporation, herein
referred to as Lyric, and Center Plains Industries, a Texas
corporation, which has been succeeded to by ML & C Trust, Wes
Master, Jr., as Trustee.
In consideration of the mutual covenants and premises
contained herein, the parties do hereby agree as follows:
1. On December 1, 1982, Lyric Energy, Inc. and Center
Plains Industries entered into an Agreement wherein Center Plains
Industries loaned Lyric the sum of $92,500. In conformance with
the terms of the agreement that sum has now been reduced to
$88,907.40.
2. In consideration of such loan Lyric granted Center
Plains Industries the prior right of refusal to acquire any
ammonia which might have been made available from natural gas
underlying oil and gas leases which Lyric acquired utilizing the
funds loaned to Lyric by CPI.
3. That agreement also provided that the loan should bear
interest at the rate of 10% per annum on the unpaid balance.
4. The parties hereto desire to terminate the agreements
and ML & C Trust, Wes Master, Jr. as Trustee, hereby forgives the
unpaid principal balance of the loan and in addition forgives and
waives any interest which might have accrued or been due and
payable pursuant to the terms of the agreement.
IN WITNESS WHEREOF, this Agreement is executed this 2nd day
of January, 1997.
LYRIC ENERGY, INC.
By: /s/ G.E. Stahl
G.E. Stahl, President
ML & C TRUST
By: /s/ Wes Masters, Jr.
Wes Master, Jr., Trustee
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