U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-9800
LYRIC INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 75-1711324
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
16775 Addison Road, Suite 300, Dallas, Texas 75248
(Address of principal executive offices)
(972) 713-6050
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Securities Exchange Act during the past 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...X... No.......
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: 1,041,969 shares of common
stock as of December 18, 1998.
Transitional Small Business Disclosure Format (check one);
Yes....... No...X....
Index to Quarterly Report on Form 10Q-SB
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Report on Review by Independent Certified
Public Accountants
Consolidated Balance Sheets as of October 31, 1998
and April 30, 1998
Consolidated Statements of Operations for the Three
and Six Months Ended October 31, 1998 and 1997 and
Cumulative Period During the Development Stage
Consolidated Statement of Changes in Stockholders'
Equity/(Deficiency)
Consolidated Statements of Cash Flows for the Six
Months Ended October 31, 1998 and 1997 and
Cumulative Period During the Development Stage
Selected Information for Consolidated Financial Statements
Item 2. Plan of Operation.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission Of Matters To A Vote Of Security Holders.
Item 5. Other Information.
Item 6. Exhibits And Reports on Form 8-K.
SIGNATURES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Lyric International, Inc.
Dallas, Texas
We have reviewed the accompanying consolidated balance sheet of Lyric
International, Inc. (formerly Lyric Energy, Inc.) as of October 31, 1998, and
the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for three and six months ended October 31, 1998 and
1997. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of April 30, 1998, and the related statements
of operations, changes in stockholders' equity, and cash flows for the year
then ended (not presented herein); and in our report dated June 19, 1997, we
expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of April 30, 1998 is fairly stated in all material respects
in relation to the consolidated balance sheet from which it has been derived.
/s/ Robert Early & Company, P.C.
Robert Early & Company, P.C.
Abilene, Texas
December 14, 1998
<TABLE>
<CAPTION>
LYRIC INTERNATIONAL, INC.
(A Development Stage Enterprise)
Consolidated Balance Sheets
October 31, April 30,
1998 1998
(Unaudited)
Assets
<S> <C> <C>
Current Assets:
Cash $ 516,365 $ -
Accounts receivable-related parties 111,510 -
Notes receivable 103,205
Prepaid expenses 8,140 -
____________ _________
Total Current Assets 739,220 -
____________ _________
Fixed Assets:
Equipment 364,706 -
Oil and gas properties 1,794,735 -
Accumulated depreciation and
depletion (32,203) -
____________ _________
Total Fixed Assets 2,127,238 -
____________ _________
Other assets 4,370 -
____________ _________
TOTAL ASSETS $ 2,870,828 $ -
============ =========
Liabilities and Stockholders' Equity/(Deficiency)
Current Liabilities:
Accounts payable $ 167,376 $ -
Accrued expenses 29,962 -
Accrued interest 9,919 -
Advance from related parties 292,876 15,117
Advances from stockholders 292,488 -
__________ __________
Total Current Liabilities 792,621 15,117
__________ __________
Stockholders' Equity/(Deficiency):
Preferred stock:
Series B, $100 stated value
(10,000,000 shares authorized,
19,532 shares outstanding) 1,953,200 -
Common stock, $.01 stated value
(250,000,000 shares authorized,
1,767,366 and 1,041,366 outstanding) 17,674 10,414
Additional paid-in capital 2,966,627 2,713,808
Retained (deficit) (2,687,204) (2,687,204)
(Deficit) accumulated during the
Development Stage (172,090) (52,135)
______________ _____________
Total Stockholders' Equity 2,078,207 (15,117)
______________ _____________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,870,828 $ -
============== =============
</TABLE>
See accompanying selected information and accountant's report.
<TABLE>
<CAPTION>
LYRIC INTERNATIONAL, INC.
(A Development Stage Enterprise)
Consolidated Statements of Operations
For Three and Six Months Ended October 31, 1998 and 1997
(Unaudited)
Cumulative
During the
Development Three Months Six Months
Stage 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C>
Revenues:
Oil production $41,696 $41,696 $ - $41,696 $ -
Oilfield services 51,015 51,015 - 51,015 -
__________ _______ ______ ________ _______
Total Revenues 92,711 92,711 - 92,711 -
__________ _______ _______ _______ _______
Costs of Revenues:
Production Taxes 1,936 1,936 - 1,936 -
Lease Operating 25,273 15,792 - 25,273 -
Rig expenses 26,511 26,511 - 26,511 -
Rig personnel costs 37,882 37,882 - 37,882 -
Depletion and
depreciation 24,616 24,616 - 24,616 -
___________ _________ _______ ________ ______
Total Costs of
Revenues 116,218 106,737 - 116,218 -
___________ _________ _______ ________ ______
Gross Profit (23,507) (14,026) - (23,507) -
___________ _________ _______ _________ ______
General and
administrative expenses:
Personnel costs 33,208 33,208 - 33,208 -
Legal & professional 24,432 21,716 - 24,432 -
Other 79,542 20,487 - 28,889 -
__________ ________ _____ _______ ______
Total G& A
expenses 137,182 75,411 - 86,529 -
__________ ________ _____ ________ ______
Loss from
Operations (160,689) (89,437) - (110,036) -
Interest expense
(primarily to
related parties) (11,401) (9,919) - (9,919) -
__________ __________ ______ ________ ________
NET (LOSS) $ (172,090) $ (99,356) $ - $(119,955) $ -
=========== ========== ====== ========= ========
Basic loss per
weighted average
share $(0.19) $(0.06) $(0.00) $(0.11) $(0.00)
Weighted average
shares outstanding 903,088 1,767,366 1,041,366 1,133,192 1,041,366
</TABLE>
See accompanying selected information and accountant's report.
<TABLE>
<CAPTION>
LYRIC INTERNATIONAL, INC.
(A Development Stage Enterprise)
Consolidated Statement of Changes in Stockholders' Equity/(Deficiency)
Deficit
Addi- Accumulated
Date of Preferred Common tional Accum- During the
Tran- Stock Stock Paid-In lated Development
saction Shares Amount Shares Amount Capital (Deficit) Stage
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES,
November
30, 1996 - $ - 195,114 $1,952 $2,158,177 $(2,682,701) $ -
Contributed
by related
parties
through
cancellation
of debts 01/15/97 - - - - 464,093 - -
Issued
for Cash 04/10/97 846,252 8,462 91,538 - -
Net (loss) - - - - - (4,503)(37,018)
___________________________________________________________
BALANCES,
April
30, 1997 - - 1,041,366 10,414 2,713,808 (2,687,204) -
Net (loss) - - - - - - (15,117)
____________________________________________________________
BALANCES,
April 30,
1998 1,041,366 10,414 2,713,808 (2,687,204)(52,135)
Issued for
oil & gas
property
07/27/98 13,500 1,350,000 66,000 660 49,340 - -
Adjustment
for cost
in excess
of reserve
value - - - - (174,184) - -
Issued for
note
receivable
08/20/98 1,032 103,200 - - 5 - -
Issued for
Woodman
Enterprises
09/01/98 5,000 500,000 - - - - -
Adjustment
for cost
in excess
of related
party basis - - - - (115,592) - -
Private
placement
10/15/98 - - 660,000 6,600 493,250 - -
Net(loss) - - - - - - (119,955)
______________________________________________________________
BALANCES,
October
31, 1998 19,532$1,953,200 1,767,366$17,674 $2,966,627$(2,687,204)$(172,090)
==================================================================
</TABLE>
See accompanying selected information and accountant's report.
<TABLE>
<CAPTION>
LYRIC INTERNATIONAL, INC.
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
For Six Months Ended October 31, 1998 and 1997
(Unaudited)
Cumulative
During the
Development
Stage 1998 1997
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (172,090) $ (119,955) $ -
Adjustments to reconcile
net income/(loss) to
net cash provided by
operations:
Depreciation and
depletion 24,997 24,997 -
Decrease/(increase) in:
Accounts receivable-
related parties (47,759) (47,759) -
Prepaid expenses 80 80 -
Increase/(decrease) in:
Accounts payable 104,798 154,168 -
Accrued expenses 20,597 19,115 -
____________ __________ _________
Net Cash Provided/(Used)
by Operating Activities (69,377) 30,646 -
_____________ __________ _________
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of oil
properties (240,002) (240,002) -
Development of oil
properties (118,917) (118,917) -
Purchase of
equipment (27,495) (27,495) -
Cash from Woodman
Enterprises, Inc.
acquisition 12,036 12,036 -
_____________ ____________ ___________
Net Cash (Used) in
Investing Activities (374,378) (374,378) -
_____________ ____________ ___________
CASH FLOWS FROM
FINANCING ACTIVITIES:
Advances from
related parties 277,371 277,371 -
Advances from
stockholders 82,876 82,876 -
Proceeds from
issuing stock 599,850 499,850 -
____________ ___________ _________
Net Cash Provided by
Investing Activities 960,097 860,097 -
____________ ____________ _________
Increase in cash
for period 516,342 516,365 -
Cash, Beginning
of period 23 - -
____________ ____________ _________
Cash, End of period $516,365 $516,365 $ -
============ ============ ==========
Supplemental Disclosures:
Cash payments for:
Interest $ - $ - $ -
Income taxes - - -
Cancellation of related
party and other
indebtedness $458,166 $ - $ -
Acquisition of oil property:
Note payable 210,000 - -
Common & preferred
stock 1,225,816 - -
Acquisition of
Woodman Enterprises, Inc.:
Current assets 88,377 88,377 -
Fixed assets (net) 330,004 330,004 -
Liabilities (33,974) (33,974) -
Preferred B shares
issued (384,407) (384,407) -
</TABLE>
See accompanying selected information and accountant's report.
Lyric International, Inc.
(A Development Stage Enterprise)
Selected Information for Consolidated Financial Statements
October 31, 1998
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions of Regulation S-B.
They do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements. However,
except as disclosed herein, there has been no material change in the
information included in the Company's Annual Report on Form 10-KSB for the
year ended April 30, 1998. In the opinion of Management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The report of Robert Early & Company, P.C.
commenting on their review accompanies the condensed financial statements
included in Item 1 of Part 1. Operating results for the six-month period
ended October 31, 1998, are not necessarily indicative of the results that may
be expected for the year ending April 30, 1999.
Development Stage Enterprise -- The Company returned to the development stage
in November 1996 with the transfer of its final operating responsibility to
others and thereby reducing its activities to the sole pursuit of identifying,
evaluating, structuring, and completing a merger with or acquisition of a
privately owned entity. During the six months ended October 1998 and
subsequent to that date, the Company has acquired oil interests in Mitchell
County, Texas, an oil field service Company, and a 50% interest in an entity
which has contracts to develop maps indicating subterranean fresh water supply
sources in Mexico using a new mapping technology. The Company is also
reviewing the possibility of acquiring real estate in Florida. Management
anticipates exiting the development stage during the current fiscal year.
Going Concern Issues The Company has been relatively inactive during the
past three years due to a shortage of operating assets and working capital.
The Company's activities (described below) have not generated sufficient
revenues to cover operating expenses. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The Company
signed a Letter of Intent to merge with Natural Gas Technologies, Inc. (NGT)
in January 1997. In January 1998, the merger agreement with NGT was
terminated by NGT. During July 1998, the Company acquired a producing oil and
gas lease in Mitchell County, Texas with limited production and significant
development potential. Work over and rework efforts were begun to bring
existing wells back into production.
The ability of the Company to continue as a going concern is dependent on its
ability to acquire the additional funds to bring its property and investments
into profitable production or for its stockholders to continue to fund its
activities. There have been no adjustments to financial statement information
which might be required should the Company be unable to continue as a going
concern.
NOTE 2: STOCK TRANSACTIONS
During July, the Company held a special stockholder meeting at which the
following was approved: a reverse split of common shares of 1 for 240.597, the
authorization of 10,000,000 shares of preferred stock, and a name change for
the Company from Lyric Energy, Inc. to its current name. All share amounts
presented have been restated as though the reverse split had occurred at the
earliest date presented.
The directors established a Series B Preferred Stock with par value set at
$100 per share and which is entitled to cumulative dividends at 8% of par
value. These Series B shares are also convertible, at the option of the
holder, into the Company's common stock during calendar 1999. The conversion
will be based on the 10-day average closing price of the Company's common
stock immediately prior to the conversion effective date. Additionally, all
Series B preferred shares convert to common shares on January 1, 2000 based on
the average of the last 10 days' closing prices in 1999.
The shares issued as described below and in Note 4 had not been issued by the
Company's stock transfer agent at October 31, 1998. However, they have been
presented as issued in these financial statements due to contract
requirements.
During August 1998, the Company agreed to issue 1,032 shares of Series B
preferred stock to its majority shareholder in exchange for the transfer of a
$103,250 note receivable from Trans Energy, Inc. which is due upon demand and
bears interest at 8% per annum.
During October 1998, the Company placed 660,000 units as the result of a
private placement effort that yielded the Company $499,850. The units
consisted of one common share, one Class A warrant to purchase one common
share, and one Class B warrant to purchase one common share. The Class A
warrants may be exercised at $1 per share while the Class B warrants may be
exercised at $2 per share. Both classes of warrants expire five years after
the underlying common shares have been registered. The Company has the option
of calling the Class A warrants after the Company's stock has closed at a
price above $1 for 20 consecutive trading days. The Class B warrants may be
called after the stock has closed above $2 for 20 consecutive trading days.
NOTE 3: ACQUISITION OF OIL AND GAS ASSETS
During July 1998, the Company purchased an oil and gas lease in Mitchell
County, Texas covering approximately 560 acres. This property has 56 existing
wells which had limited production but needed work. The Company plans to
convert a number of wells to water injection wells to enhance oil recovery.
Some existing wells will have to be plugged.
The Company paid a total of $1,850,000 for this property. The purchase price
consisted of $240,000 cash, a note for $210,000, 66,000 units identical to the
units sold in the private placement discussed in Note 2, and 13,500 shares of
Series B preferred stock. The note bears interest at 8% and is due July 27,
1999. The stock has been valued at $0.375 per share for the common and $100
per share for the preferred. However, due to a discounted present value
calculation by a petroleum engineer using a 20% discount factor, the property
was recorded at the lower estimated fair value of $1,675,816 with the balance
being an adjustment of additional paid in capital.
NOTE 4: ACQUISITION OF WOODMAN ENTERPRISES, INC.
Effective September 1, 1998, the Company entered into an agreement to acquire
Woodman Enterprises, Inc. from Redbank Petroleum, Inc. in exchange for 5,000
shares of Series B preferred stock. Woodman is an entity created in February
1998 to obtain the necessary equipment to be able to provide a broad range of
well work over services. Woodman purchased a work over rig, a reverse
drilling unit, a cement truck, and other pertinent equipment. The Company
acquired this entity for work on its own properties as well as to be able to
offer services to other oil and gas producers. The following tables present a
condensed balance sheet for Woodman at September 1, 1998 and the related
condensed statement of operations for the period from inception to August 31,
1998.
<TABLE>
Condensed Balance Sheet
<S> <C>
Cash $ 12,036
Accounts receivable 63,751
Other current assets 12,590
______________
Total current assets 88,377
Fixed assets (net of depreciation) 330,004
______________
Total Assets $ 418,381
==============
Accounts payable & accrued expenses $ 33,974
Total stockholder's equity 384,407
______________
Total Liabilities and
Stockholder's Equity $ 418,381
==============
Condensed Statement of Operations
Total revenues $ 78,492
Costs of revenues 62,035
_____________
Gross profit 16,457
Other operating expenses 29,514
_____________
Net Loss $ (13,057)
=============
</TABLE>
NOTE 5: EARNINGS PER SHARE
Basic earnings per share have been presented on the statement of operations.
All of the outstanding Series B preferred shares (19,532 shares) are
convertible into common shares based on their $100 par value and the average
market price for common shares for the 10 days prior to conversion. Based on
the stock price at November 30, 1998, the preferred would convert into 488,300
common shares. All of these shares are deemed to be common stock equivalents.
However, they have not been included in a calculation of diluted earnings per
share because they would be antidilutive due to the losses reported.
NOTE 6: SUBSEQUENT EVENTS
In November 1998, the Company signed an agreement to purchase Redbank
Petroleum's 50% interest in Seismic International, Inc. for 50,000 shares of
its Series B preferred stock with a par value of $100 per share plus 10%
percent of the first $50,000,000 in future gross revenues. Seismic recently
executed its first contract to produce subsurface mapping in Mexico to locate
municipal and commercial grade water deposits. Seismic's partners have
expanded on new technologies which enables them to produce subsurface maps
detailed enough to distinguish the difference between fresh water, salt water,
sand, limestones, clays, and shales. This new technology has exciting
possibilities in all areas of mining and exploration by pinpointing not only
the structures, as with traditional seismic, but also the contents of the
structure. Seismic is currently negotiating additional contracts ranging
upwards from $5,000,000.
The Company is also pursuing the acquisition of a small fisherman's hotel in
southern Florida.
On November 16, 1998, the Company initiated an additional private placement
program under Fortress Financial. This program is to place 150,000 units at
$5 per unit. Units consist of one share of common stock and one Class C
warrant to purchase one common share. These Class C warrants are exercisable
at $6 per share and expire three years after the closing of the private
placement.
Item 2. Plan of Operation
Cautionary Statement with Regard to Forward Looking Information
This report may include certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included in this report that address
activities, events or developments that Lyric International, Inc. (the
"Company" or "Lyric") expects, believes or anticipates will or may occur in
the future, including such matters as costs and expenses of the acquisition of
producing, developmental or exploratory properties, oil and gas reserve data
and information, costs of capital, projected margins, business strategies,
expansion and growth of the Company's operations, Year 2000 issues and other
such matters are forward-looking statements. These statements are based on
certain assumptions and analyses made by the Company in light of its
experience and its perception of historical trends, current conditions,
expected future developments and other factors it believes are appropriate in
the circumstances. Such statements are subject to a number of assumptions,
risks and uncertainties, including general economic and business conditions,
oil and gas pricing issues, the availability of certain business opportunities
(or lack thereof) that may be presented to and pursued by the Company, changes
in laws or regulations and other factors, many of which are beyond the control
of the Company. You are cautioned that any such statements are not guarantees
of future performance and that actual results or developments may differ
materially from those projected in the forward-looking statements.
General
Lyric currently is focusing on three areas in which it conducts business:
(i) natural resources, (ii) subsurface mapping technology, and (iii) real
estate.
Natural Resources
The Company primarily plans to build shareholder value through consistent
growth in per share reserves, production and the resulting cash flow in
earnings of the Company. To accomplish this, the Company plans to acquire
working interests in properties which are expected to produce secondary
recoveries of oil and gas through the use of new technologies, water floods or
additional drilling. These types of properties can usually be acquired on
more favorable terms than properties in primary production, although lease
operating costs for these properties are higher upon acquisition than
properties in primary production.
In July 1998, the Company completed an acquisition of oil and gas
properties from West Texas Recovery, Inc. in exchange for 13,500 shares of the
Company's Series B Preferred Stock, a $210,000 promissory note, $240,000 cash
and 66,000 units consisting of one share of the Company's $.01 par value
common stock (the "Common Stock"), one Class A Warrant and one Class B
Warrant. A Class A Warrant may be exercised to purchase one share of Common
Stock at $1 per share and a Class B Warrant may be exercised to purchase one
share of Common Stock at $2 per share. The property covers 600 acres in
Mitchell County, Texas, all of which are developed. At the time the Company
acquired the property it contained a total of 56 wells which had limited
production and needed reconditioning. The Company has reconditioned a number
of the wells and has converted a number of the wells into water injection
wells to enhance the oil recovery from those wells. Some of the wells on the
property are required to be plugged.
As of December 21, 1998, the Company had 22 producing wells, 5 operating
injection wells and 29 shut-in wells on the property in Mitchell County. The
Company is currently producing and selling approximately 60 to 80 barrels of
oil per day under one lease on the property that includes 6 producing wells.
The remainder of the producing wells are being operated under two other leases
on the property. The approximately 100 barrels of oil per day being produced
from those wells currently is being stored in tanks on the property. Lyric
plans to recondition the remaining shut-in wells on the oil and gas properties
acquired from West Texas Recovery, Inc. and increase revenues from those
properties. There is not however any assurance that the Company will be
successful in reconditioning the remaining shut-in wells on a profitable
basis.
All of the Company's properties in Mitchell County are operated by West
Texas Recovery, Inc. The Company pays West Texas Recovery, Inc. $2,000 per
month for overhead expenses for operating those wells and reimburses West
Texas Recovery, Inc. for all well operating costs. Michael G. Maguire, the
President and Chairman of the Board of the Company, is the President, Chief
Executive Officer and Chief Financial Officer of West Texas Recovery, Inc.
On September 1, 1998, the Company acquired all of the outstanding shares
of common stock of Woodman Enterprises, Inc. in exchange for 5,000 shares of
Lyric's $100 par value Series B Preferred Stock. Woodman Enterprises, Inc. is
a company primarily engaged in the business of subcontracting equipment used
to service and maintain oil and gas wells up to 12,000 feet in depth. Woodman
Enterprises, Inc. also has cement and water trucks and subcontracts equipment
used for the re-entry of oil and gas wells. The Company intends to use the
that equipment to rework properties which it has acquired and other properties
which it intends to acquire. Woodman Enterprises, Inc. was a wholly owned
subsidiary of Redbank Petroleum, Inc., a corporation which is owned 50 percent
by Warren Donohue, a director and officer of Lyric, and 50 percent by Brent
Wagman, the majority shareholder of Lyric.
All services of Woodman Enterprises, Inc. through October 31, 1998 had
been provided to West Texas Recovery, Inc. and Wagman Petroleum, Inc. Brent
Wagman beneficially owns approximately 45 percent of the outstanding common
stock, and is an officer and director, of Wagman Petroleum, Inc. All of the
services provided to West Texas Recovery, Inc. were on the previously
described properties owned by the Company in Mitchell County. Although no
work had been performed for entities unrelated to the Company through October
31, 1998, prices charged to related parties have been the same prices as have
been quoted to unrelated entities for similar work and are believed to be in
line with prices generally charged by the industry. During November 1998, the
Company pursued and accepted engagements for future work for several unrelated
entities.
Subsurface Mapping Technology
On November 30, 1998, Lyric acquired 50 percent of the outstanding common
stock of Seismic International, Inc. from Redbank Petroleum, Inc. in exchange
for 50,000 shares of the Company's Series B Preferred Stock. The Company also
agreed with Redbank Petroleum, Inc. that Redbank Petroleum, Inc. is entitled
to receive 10 percent of the first $50,000,000 of gross revenue generated by
Seismic International, Inc.
Seismic International, Inc. is a company that currently negotiates and
obtains contracts to produce subsurface maps. Seismic International, Inc.
currently plans to subcontract the work to be performed under those contracts
to North American Geophysical and North Trend Geophysical, the owners of the
subsurface mapping technology which includes the equipment that obtains the
subsurface data and the software that analyzes that data. Redbank Petroleum,
Inc. has agreed with the Company that Redbank Petroleum, Inc. will attempt to
obtain a licensing agreement with the owners of the subsurface mapping
technology, pursuant to which Seismic International, Inc. will be able to
produce the subsurface maps without subcontracting that work to the owners of
the technology.
The subsurface mapping technology is a type of electronic mapping that
produces detailed maps of subsurface structures and geology similar to a
magnetic resonance imaging system used to diagnose humans in hospitals. It
can determine the difference between various liquids located underground such
as fresh water and salt water as well as the difference between various types
of rocks (limestone, sandstone, clay, shale and other ore bearing rocks). The
Company believes this technology will lend itself to locating various minerals
and should lower exploration costs in mining, oil and gas exploration,
locating municipal water supplies, and many other types of mining by mapping
subsurface structures.
On October 23, 1998, Seismic International, Inc. executed its first
contract with Geophysical de Mexico to perform subsurface mapping in central
Mexico to locate municipal and commercial grade water deposits. That contract
is for $7,500,000 and requires Seismic International, Inc. to complete the
subsurface mapping work prior to January 6, 1999. If the subsurface mapping
work is not completed prior to that date, Geophysical de Mexico is not
required to pay Seismic International, Inc. any amounts required under the
contract. Seismic International, Inc. plans to subcontract all of the mapping
work to North American Geophysical and North Trend Geophysical. Seismic
International, Inc. however has not entered into any definitive agreements
with those entities to perform the subcontract work. Seismic International,
Inc. also is currently negotiating additional contracts with Geophysical de
Mexico in excess of $5,000,000 each. There is not however any assurance that
such contracts will be consummated.
Real Estate
The Company currently is negotiating with certain parties to acquire a
beach front hotel near Key Largo, Florida. The parties however have not
entered into any definitive agreements. The Company has not determined the
manner in which the possible purchase of the hotel may be financed.
Liquidity and Capital Resources
As of October 31, 1998, Lyric had a cash balance of $516,365. The
Company's capital requirements to conduct its plan of operation is significant
and there is not any assurance that the Company will be able to obtain such
funds or obtain the required capital on terms favorable to the Company. The
Company plans to satisfy its capital requirements for the next twelve months
by selling the Company's securities and obtaining financing from related
parties. If Lyric is unable to obtain financing from related parties, the
sale of its securities or some other source, it is unlikely that Lyric will
continue as a going concern.
Year 2000 Issues
Year 2000 issues may arise if computer programs have been written using
two digits (rather than four) to define the applicable year. In such case,
programs that have time-sensitive logic may recognize a date using "00" as the
year 1900 rather than the year 2000, which could result in miscalculations or
system failures.
The Company has not completed its assessment of the Year 2000 issue, but
currently believes that costs of addressing the issue will not have a material
adverse impact on the Company's financial position. The Company has not
automated many of its operations with information technology ("IT") systems
and non-IT systems because of the size of the Company, and presently believes
that the Company's existing computer systems and software will not need to be
upgraded to mitigate the Year 2000 issues. The Company has not incurred any
costs associated with its assessment of the Year 2000 problem. In the event
that Year 2000 issues impact the Company's accounting operations and other
operations aided by its computer system, the Company believes, as part of a
contingency plan, that it has adequate personnel to perform those functions
manually until such time that any Year 2000 issues are resolved.
The Company believes that the third parties with whom the Company has
material relationships will not materially be affected by the Year 2000 issues
as those third parties are relatively small entities which do not rely heavily
on IT and non-IT systems for their operations. However, if the Company and
third parties upon which it relies are unable to address any Year 2000 issues
in a timely manner, it could result in a material financial risk to the
Company, including loss of revenue and substantial unanticipated costs.
Accordingly, the Company plans to devote all resources required to resolve any
significant Year 2000 issues in a timely manner.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See the Company's Annual Report on Form 10-KSB for the fiscal year ended
April 30, 1998.
Item 2. Changes in Securities
During August 1998, the Company agreed to issue 1,032 shares of Series B
Preferred Stock to its majority shareholder in exchange for the transfer of a
$103,250 note receivable from Trans Energy, Inc. which is due upon demand and
bears interest at 8% per annum. The issuance of the securities in that
transaction was made pursuant to Section 4(2) under the Securities Act as an
offering not involving a public offering.
On September 1, 1998, the Company acquired all of the outstanding shares
of common stock of Woodman Enterprises, Inc. in exchange for 5,000 shares of
the Company's Series B Preferred Stock. The issuance of the securities in
that transaction was made pursuant to Section 4(2) under the Securities Act as
an offering not involving a public offering.
During October 1998, the Company sold 660,000 units to investors in
exchange for $499,850. The units consisted of one share of Common Stock, one
Class A Warrant to purchase one share of Common Stock, and one Class B Warrant
to purchase one share of Common Stock. The issuance of the securities in that
transaction was made pursuant to Rule 506 under the Regulation D of the
Securities Act.
Holders of the Company's Series B Preferred Stock are entitled to
cumulative dividends at the rate of 8% of the par value of the Series B
Preferred Stock. Each share of Series B Preferred Stock is convertible, at
the option of the holder thereof, into the Company's Common Stock during the
period commencing on January 1, 1999 until December 31, 1999. The number of
shares of Common Stock into which one share of Series B Preferred Stock will
be converted will be equal to $100 divided by the average closing price of the
Company's Common Stock traded over the counter, or on Nasdaq or any national
exchange (the "Average Closing Price") for the ten trading days immediately
prior to the conversion effective date. All shares of Series B Preferred
Stock automatically convert to shares of the Company's Common Stock on January
1, 2000 based on the Average Closing Price for the ten trading days
immediately prior to January 1, 2000.
The Class A Warrants may be exercised at $1 per share and the Class B
Warrants may be exercised at $2 per share. Both classes of warrants expire
five years after the underlying shares of Common Stock have been registered
under the Securities Act. The Company has the option of calling the Class A
Warrants after the Company's Common Stock has closed at a price above $1 for
20 consecutive trading days. The Class B Warrants may be called after the
Common Stock has closed above $2 for 20 consecutive trading days.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits And Reports On Form 8-K
(a) Exhibits
3.1 Articles of Amendment to the Articles of Incorporation of
Lyric International, Inc. as filed with the Colorado
Secretary of State on September 22, 1998. Filed herewith.
10.1 Purchase and Sale Agreement between the Company and West
Texas Recovery, Inc. dated July 27, 1998. Filed herewith.
10.2 Contract for Sale and Purchase of Business between the
Company and Redbank Petroleum, Inc. dated September 1, 1998.
(Incorporated by reference from Exhibit 10.1 to the Company's
Current Report on Form 8-K as filed on December 9, 1998).
10.3 Agreement dated October 23, 1998 between Seismic
International, Inc. and Geophysical de Mexico. (Incorporated
by reference from Exhibit 10.1 to the Company's Current
Report on Form 8-K as filed on December 15, 1998).
27.1 Financial Data Schedule
(b) Reports On Form 8-K
The Company filed three Current Reports on Form 8-K during the quarter
ended October 31, 1998. The Company's Form 8-Ks filed on August 11, 1998 and
September 3, 1998 reported the Company's acquisition of certain oil and gas
properties from West Texas Recovery, Inc. on July 27, 1998. The Company's
Form 8-K filed on September 15, 1998 reported the Company's acquisition of
Woodman Enterprises, Inc. on September 1, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
LYRIC INTERNATIONAL, INC.
Date: December 21, 1998 By: /s/ Michael G. Maguire
________________________________
Michael G. Maguire, President
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> OCT-31-1998
<CASH> 516,365
<SECURITIES> 0
<RECEIVABLES> 214,715
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 739,220
<PP&E> 2,159,441
<DEPRECIATION> (32,203)
<TOTAL-ASSETS> 2,870,828
<CURRENT-LIABILITIES> 792,621
<BONDS> 0
0
1,953,200
<COMMON> 17,674
<OTHER-SE> 107,333
<TOTAL-LIABILITY-AND-EQUITY> 2,870,828
<SALES> 92,711
<TOTAL-REVENUES> 92,711
<CGS> 116,218
<TOTAL-COSTS> 116,218
<OTHER-EXPENSES> 86,529
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,919
<INCOME-PRETAX> (119,955)
<INCOME-TAX> 0
<INCOME-CONTINUING> (119,955)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (119,955)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
EXHIBIT 3.1
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF LYRIC INTERNATIONAL, INC.
Article IV shall be amended to include a new Section 3 to read in its entirety
as follows:
3. Series B Convertible Preferred Stock
(a) Designation of Series B Convertible Preferred Stock. 100,000
shares of the Preferred Stock of the corporation shall be designated as Series
B Convertible Preferred Stock, par value $100 (hereinafter referred to as
"Series B Preferred Stock").
(b) Dividends. The holders of the Series B Preferred Stock shall be
entitled to cumulative dividends at the rate of 8% of the par value of the
Series B Preferred Stock for each fiscal year of the corporation 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.
(c) Liquidation Preference.
(i) In the event of any liquidation, dissolution or winding up
of the corporation, either voluntary or involuntary, the holders of Series B
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the corporation to the
holders of the corporation's Common Stock by reason of their ownership
thereof, all accrued but unpaid dividends on their respective shares of Series
B Preferred Stock then held by them and no more (the "Series B Preferred
Liquidation Preference"). If upon the occurrence of such event, the assets
and funds thus distributed among the holders of the Series B Preferred Stock
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then the entire assets and funds of the
corporation legally available for distribution shall be distributed ratably
among the holders of the Series B Preferred Stock in proportion to the shares
then held by them.
(ii) A consolidation or merger of the corporation with or into
any other corporation or corporations or a sale of all or substantially all of
the assets of the corporation shall be deemed a liquidation, dissolution or
winding up within the meaning of this Section if more than fifty percent (50%)
of the surviving entity is not owned by persons who were holders of capital
stock or securities convertible into capital stock of the corporation
immediately prior to such merger, consolidation or sale. In such event, the
Series B Preferred Liquidation Preference may be paid in cash or securities of
any entity surviving such liquidation event.
(d) No Voting Rights. The holder of each share of the Series B
Preferred Stock shall not be entitled to vote for any matter brought before
the holders of the corporation's Common Stock.
(e) Conversion. The holders of the Series B Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(i) Right to Convert.
(1) Conversion. Each share of Series B Preferred Stock
shall be convertible, at the option of the holder thereof, at the office of
the corporation or any transfer agent for the Series B Preferred Stock, into
the corporation's Common Stock during the period commencing on January 1, 1999
until December 31, 1999 (the "Expiration Date"). The number of shares of
Common Stock into which one share of Series B Preferred Stock will be
converted will be equal to $100 divided by the Series B Conversion Price (as
hereinafter defined) then in effect, such conversion ratio being referred to
as the "Series B Conversion Rate." The Series B Conversion Price will be
equal to the average closing price of the corporation's Common Stock traded
over the counter, or on Nasdaq or any national exchange (the "Average Closing
Price") for the ten trading days immediately prior to the Conversion Effective
Date (as hereinafter defined). All shares of Series B Preferred Stock shall
automatically be converted to shares of the corporation's Common Stock on
January 1, 2000 at the Series B Conversion Rate based on the Average Closing
Price for the ten trading days immediately prior to January 1, 2000.
(2) Fractional Shares Upon Conversion. No fractional
shares of Common Stock will be issued upon conversion of Series B Preferred
Stock, and any fractional share that otherwise would result from conversion by
a holder of all of such holder's shares of Series B Preferred Stock (in the
aggregate) will be redeemed by payment in an amount equal to such fraction of
the then effective Series B Conversion Price as promptly as funds legally are
available therefor.
(ii) Mechanics of Conversion. Any holder of Series B Preferred
Stock wishing to convert shares of Series B Preferred Stock into Common Stock
pursuant to Section 3(e)(i) shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the corporation or any transfer
agent for the Series B Preferred Stock and will give the corporation written
notice stating the name or names in which the holder wishes the certificate or
certificates for shares of Common Stock to be issued. Any conversion pursuant
to Section 3(e)(i) shall be deemed to be effective for all purposes upon
receipt by the corporation or a transfer agent for the Series B Preferred
Stock of such certificates, duly endorsed, and such written notice and shall
be deemed to have been made immediately prior to the close of business on the
date thereof (the "Conversion Effective Date"). As soon as practicable after
the effectiveness of any conversion of Series B Preferred Stock and receipt by
the corporation or the appropriate transfer agent of certificates representing
such Series B Preferred Stock, duly endorsed, together with written notice
stating the name or names in which the holder wishes the certificate or
certificates for shares of Common Stock to be issued, the corporation shall
cause to be issued and delivered pursuant to the written instructions of the
holder of the converted Series B Preferred Stock certificates representing the
Common Stock into which such Series B Preferred Stock has been converted;
provided, however, that the corporation shall not be required to issue
certificates for Common Stock in any name other than that of the holder in the
absence of assurances reasonably satisfactory to the corporation that all
stamp and other transfer taxes relating to the transfer of such securities
have been or will be paid. Notwithstanding any issuance or lack thereof of
certificates representing Common Stock, from and after the effectiveness of
any conversion of Series B Preferred Stock, the person or persons entitled to
receive the shares of Common Stock issuable upon conversion shall be treated
by the corporation for all purposes as the record holders of the Common Stock
obtainable upon such conversion and shall cease to have any other rights of
holders of Series B Preferred Stock.
(iii) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, payable in
additional shares of Common Stock or other securities or rights or any right
to subscribe for or otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right, the corporation
will deliver to each holder of Series B Preferred Stock at least thirty days'
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution or
rights, and the amount and character of such dividend, distribution or right.
Any notices required by the provisions of this subsection will be deemed given
when deposited in the United States mail, postage prepaid, directed to the
address of a holder of shares of Series B Preferred Stock as it appears on the
records of the corporation. Without limiting the obligation of the
corporation to provide notice to the holders of shares of Series B Preferred
Stock under this subsection, the failure of the corporation to give such
notice shall not invalidate the corporate action.
(iv) Reservation of Stock Issuable Upon Conversion. The
corporation at all times will reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of Series B Preferred Stock such number of its shares
of Common Stock as from time to time will be sufficient to effect the
conversion of all then outstanding shares of Series B Preferred Stock; and if
at any time the number of authorized but unissued shares of Common Stock is
not sufficient to effect the conversion of all then outstanding shares of
Series B Preferred Stock, in addition to such other remedies as may be
available to the holders of Series B Preferred Stock for such failure, the
corporation will take such corporate action as, in the opinion of its counsel,
may be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as will be sufficient for such purpose.
(v) Denial of Preemptive Rights. No holder of any shares of
Series B Preferred Stock 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.
EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement") dated as of July 27,
1998, is between West Texas Recovery, Inc., a Texas corporation ("Seller"),
and Lyric International, Inc., a Colorado corporation ("Buyer"), duly
authorized to transact business in the state of Texas.
In consideration of the mutual promises contained herein, the benefits to
be derived by each party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 Purchase and Sale. Seller agrees to sell and convey and Buyer
agrees to purchase and pay for the Interests (as defined in Section 1.02
below), subject to the terms and conditions of this Agreement.
1.02 Interests. All of the following shall be referred to as the
"Interests":
(a) The undivided interests described in Exhibit A hereto in and
to the entire estates created by the leases, licenses, permits and other
agreements described in Exhibit A (the "Leases"), insofar as the Leases cover
and relate to the land described in Exhibit A (the "Land"), together with
identical undivided interests in and to all the property and rights incident
thereto, including all rights in, to and under all agreements, product
purchase and sale contracts, leases, permits, rights-of-way, easements,
licenses, farmouts, options and orders in any way relating thereto;
(b) Identical undivided interests in and to all of the personal
property, fixtures and improvements now or as of the Effective Time (as
defined in Section 1.03 below) on the Land, appurtenant thereto or used or
obtained in connection therewith or with the production, treatment, sale or
disposal of hydrocarbons or water produced therefrom or attributable thereto
and all other appurtenances there unto belonging:
(c) All other leasehold interests, overriding royalty interests,
mineral interests and other interests, if any, whether now owned or hereafter
acquired by Seller, in and to the Land and the Leases and in or attributable
to production therefrom.
1.03 Effective Time. The purchase and sale of the Interests shall be
effective for all purposes as of July 1, 1998, at 7:00 A.M., local time (the
"Effective Time"), said time to be determined for each locality described in
Exhibit A in accordance with the time generally observed in said locality.
ARTICLE II
PURCHASE PRICE
2.01 Purchase Price. The purchase price for the Interests shall be
$1.8 Million Dollars (U.S.) (the "Purchase Price"), which shall be adjusted as
set forth in Section 2.02 below.
2.02 Adjustments to Purchase Price, The Purchase Price shall be
adjusted as follows and the resulting amount shall be referred to as the
"Adjusted Purchase Price":
(a) The Purchase Price shall be adjusted upward by the following:
(1) The value of all merchantable, allowable oil in storage
above the pipeline connection at the Effective Time that
is credited to the Interests, the value to be the market
price in effect as of the Effective Time less applicable
taxes; and
(2) The amount of all actual direct operating expenditures
(including royalties and production taxes paid with
respect to the Interests, but excluding any of Seller's
overhead or administrative expenses), paid by Seller that
are attributable to the Interests during the period of
time between the Effective Time and the Closing Date (as
defined in Section 7.01 below).
(b) The Purchase Price shall be adjusted downward by the
following:
(1) The proceeds (other than those referred to in Section
2.02(b)(2) below) received by Seller that are
attributable to the Interests during the period of time
between the Effective Time and the Closing Date;
(2) The amount of the proceeds received by Seller from the
disposition (with the prior written consent of Buyer as
provided in Section 4.01(e) below) of all or any portion
of the Interests; and
(3) An amount equal to all unpaid ad valorem, property,
production, severance and similar taxes and assessments
based upon or measured by the ownership of property or
the production of hydrocarbons or the receipt of proceeds
therefrom accruing to the Interests prior to the
Effective Time, which amount shall be based upon such
taxes assessed against the applicable portion of the
Interests for the preceding calendar year or, in the
cases where such taxes are assessed on other than a
calendar year basis, for the tax related year last ended.
(c) The purchase price shall be paid as follows:
(1) $450,000.00 in cash, U.S., including Note as described in
the attached Exhibit.
(2) $50,000.00 of Buyer's stock paid to the designated
Assignee of Seller.
(3) Balance of purchase price to be paid in the form of
Preferred "B" Stock of Buyer, said stock to have a par
value of not less than $100.00 per share and said stock
to be fully convertible during a one year period from
January 1, 1999, to December 31, 1999, to common stock of
said Buyer for equal dollar value of preferred stock. At
the end of said one year option period all of said
Preferred stock that has not been converted shall be
automatically converted to said common stock. During the
one year option period said Preferred stock shall pay a
dividend rate of 9.5 cumulative.
(4) Terms of stock transfer, and manner of conversion may be
modified by mutual consent of the parties hereto in
writing only.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of Seller. Seller represents and
warrants to Buyer as follows:
(a) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas, and Seller is duly
qualified to carry on its business in each of the states identified in Exhibit
A.
(b) Seller has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement, and to perform
its obligations under this Agreement, and to perform its obligations under
this Agreement. The consummation of the transactions contemplated by this
Agreement will not violate, nor be in conflict with, any provision of Seller's
charter, bylaws or governing documents, or any agreement or instrument to
which Seller is a party or is bound, or any judgment, decree, order, statute,
rule or regulation applicable to Seller.
(c) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly authorized by
all requisite action, corporate and otherwise, on the part of the Seller.
(d) This Agreement has been duly executed and delivered on behalf
of Seller, and at the Closing all documents and instruments required hereunder
to be executed and delivered by Seller shall have been duly executed and
delivered. This Agreement does, and such documents and instruments shall,
constitute legal and valid obligations of Seller.
(e) Except as specifically set forth in Exhibit A, Seller has fee
simple title to the Interests, free and clear of all liens, encumbrances,
burdens, claims and defects of title of any kind, and Seller has provided
Buyer with complete and accurate information relating to the Interests.
(f) The Leases are in full force and effect, are valid and
subsisting, cover the entire estates they purport to cover.
(g) Seller is not in default under any contract or agreement
pertaining to the Interests and, except as specifically indicated in Exhibit
A.
(h) All royalties, rentals and other payments due under the Leases
have been properly and timely paid, and all conditions necessary to keep the
Leases in force have been fully performed.
(i) Seller is not obligated, by virtue of a prepayment
arrangement, a "take or pay" arrangement, a production payment or any other
arrangement, to deliver hydrocarbons produced from the interests at some
future time without then or thereafter receiving full payment therefor.
(j) Except as specifically indicated in Exhibit A, no hydrocarbons
produced from the Interests are subject to a sales contract or other agreement
relating to the production, gathering, transporting, processing, treating or
marketing of hydrocarbons, and no person has any call upon, option to purchase
or similar rights with respect to the Interests or to the production
therefrom.
(k) All ad valorem, property, production, severance, excise and
similar taxes and assessments based on or measured by the ownership of
property or the production of hydrocarbons or the receipt of proceeds
therefrom on the Interests that have become due and payable have been properly
and timely paid.
(l) Seller has incurred no liability, contingent or otherwise,
for brokers' or finders' fees relating to the transactions contemplated by
this Agreement for which Buyer shall have any responsibility whatsoever.
(m) No suit, action or other proceeding is pending or threatened
before any court or governmental agency and no cause of action exists that
relates to the Interests or that might result in impairment or loss of
Seller's title to any portion of the Interests or the value thereof or that
might hinder or impede the operation or enjoyment of the Leases.
(n) The Interests entitle Seller to receive not less than the
undivided interests set forth in Exhibit A as "Net Revenue Interests" of all
indicated hydrocarbons produced, saved and marketed from or attributable to
the Land and all wells located thereon or attributable to thereto through the
plugging, abandonment and salvage of such wells. Seller's obligation to bear
costs and expenses relating to the development of and operations on the
Leases, Land and wells thereon or attributable thereto is not, and, through
the plugging, abandonment and salvage of such wells, shall not be, greater
than the "Operating Interests" set forth in Exhibit A.
(o) Seller is currently receiving from all purchasers of
production from the Interests at least the "Net Revenue Interests" set forth
in Exhibit A without suspense or any indemnity other than standard division
order warranties. Seller is currently paying the operators of the Interests
for the development and operation thereof no more than the "Operating
Interests" set forth in Exhibit A, and Seller is current for all costs and
expenses pertaining to the development and operation of Interests.
(p) All laws, rules, regulations, ordinances and orders of all
local, tribal, state and federal governmental bodies, authorities and agencies
having jurisdiction over the Interests have been complied with.
(q) Applications for well determination under the Natural Gas
Policy Act of 1978, as amended (the "NGPA") and the rules and regulations of
the Federal Energy Regulatory Commission under such act (the "NGPA
Regulations") relating to the Interests have been filed as set forth in
Exhibit B hereto. Except as noted in Exhibit B, each such application has
been approved by the indicated state and federal agency and by the Federal
Energy Regulatory Commission and has been finally approved under the NGPA.
Such applications comply with the requirements of the NGPA and the NGPA
Regulations and do not (1) contain any untrue statement of material fact or
(2) omit any statement of material fact necessary to make the statements
therein not misleading, No further applications are required under the NGPA
and the NGPA Regulations to allow the legal sale of all gas produced from the
Interests at a price equal to the price for such gas currently being received.
(r) All necessary plans for development, applications,
inspection reports, certificates and other instruments pertaining to
environmental matters have been filed with the appropriate local, tribal,
state and federal governmental bodies, authorities and agencies and all
permits necessary for the legal operation of the Interests in full compliance
with all environmental laws, rules, regulations, ordinances and orders have
been obtained and Seller is in full compliance with all such laws, rules,
regulations, ordinances and orders. All applications, reports, certificates
and other instruments filed with or famished to any local, tribal, state or
federal governmental body, authority or agency do not (1) contain any untrue
statement of material fact or (2) omit any statement of material fact
necessary to make the statements therein not misleading.
(s) No portion of the Interests (1) has been contributed to and
is currently held by a tax partnership; (2) is subject to any form of
agreement (whether formal or informal, written or oral) deemed by any state or
federal tax statute, rule or regulation to be or to have created a tax
partnership; or (3) otherwise constitutes "partnership property" (as that term
is used throughout Subchapter K of Chapter I of Subtitle A of the Code) of a
tax partnership. For purposes of this Section 3.01(s) a "tax partnership" is
any entity, organization or group deemed to be a partnership within the
meaning of section 761 of the Code or any similar state or federal statute,
rule or regulation, and that is not excluded from the application of the
partnership provisions of Subchapter K of Chapter I of Subtitle A of the Code
and of all similar provisions of state tax statutes or regulations by reasons
of elections made, pursuant to section 761(a) of the Code and all such similar
state or federal statutes, rules and regulations, to be excluded from the
application of all such partnership provisions.
(t) Seller has provided Buyer with complete and accurate
information relating to the Interests, including without limitation,
production history and characteristics, NGPA classifications, operating and
net revenue interests and prices currently being received for production.
(u) Except as specifically set forth on Exhibit B, no portion of
the Interests is subject to any offer of Lake or pay credits for gas
transported pursuant to FERC Order No. 500 or (ii) has been the subject of a
request for good faith negotiations under FERC Order No. 451.
(v) No portion of the Interests is, or by this transaction shall
become, burdened by any liability or contingent liability under the Multi-
employer Pension Plan Amendments Act of 1980 and the purchase and sale
contemplated herein shall not cause any liability under such act for Seller or
Buyer.
(w) Except as set forth on Exhibit B, no portion of the Interests
is either overproduced or underproduced in natural gas under any gas balancing
agreement or gas storage agreement or in regard to any well, pooling unit or
unitized area without such an agreement.
3.02 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado and is duly authorized
to transact business in the state of Texas, and Buyer is duly qualified to
carry on its business in each of the states identified in Exhibit A.
(b) Buyer has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement, to purchase the
Interests on the terms described in this Agreement and to perform its other
obligations under this Agreement. The consummation of the transactions
contemplated by this Agreement will not violate, nor be in conflict with, any
provision of Buyer's charter, bylaws or governing documents, or any agreement
or instrument to which Buyer is a party or is bound, or any judgment, decree,
order, statute, rule or regulation applicable to Buyer.
(c) The execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and validly authorized by
all requisite action, corporate and otherwise, on the part of Buyer.
(d) This Agreement has been duly executed and delivered on behalf
of Buyer, and at the Closing all documents and instruments required hereunder
to be executed and delivered by Buyer shall have been duly executed and
delivered. This Agreement does, and such documents and instruments shall,
constitute legal and valid obligations of Buyer.
(e) Buyer has incur-red no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which Seller shall have any responsibility whatsoever.
ARTICLE IV
COVENANTS
4.01 Covenants of Seller. Seller covenants and agrees with Buyer as
follows:
(a) Within 15 days after the date of this Agreement, Seller, at
the expense of Seller, shall deliver to Buyer the following title information:
(1) [TITLE OPTIONS]
(2) [ABSTRACTS OF TITLE AND STATUS REPORTS]
(3) [OTHER LAND RECORDS]
(4) [RENTAL AND ROYALTY PAYMENT RECORDS]
(5) [TAX PAYMENT RECORDS]
(6) [MAPS AND SURVEYS]
(7) [PRODUCTION SALE, PROCESSING AND TRANSPORTATION
AGREEMENTS]
(8) [GENERAL PERMITS, EASEMENTS, LICENSES AND ORDERS]
All such information shall also be open to inspection and photocopying by
Buyer at any reasonable time during the term of this Agreement.
(b) Within 15 days after the date of this Agreement, Seller, at
the expense of Seller, shall obtain and deliver to Buyer the following
production and operation information:
(1) [PRODUCTION RECORDS AND VERIFICATION]
(2) [OPERATING EXPENSE RECORDS AND VERIFICATION]
(3) [INVENTORY]
(4) [BONDS AND INSURANCE POLICIES]
(5) [SALT WATER DISPOSAL AGREEMENTS AND OTHER OPERATION
AGREEMENTS]
(6) [ENGINEERING, GEOLOGICAL AND GEOPHYSICAL DATA]
(7) [NGPA DOCUMENTS]
(8) [DEVELOPMENT PLANS AND PERMITS)
All such information shall also be open to inspection and photocopying by
Buyer at any reasonable time during the term of this Agreement.
(c) Seller shall cause the Interests to be developed, maintained
and operated in a good and workmanlike manner, shall maintain insurance now in
force with respect to the Interests, shall pay or cause to be paid all costs
and expenses incurred in connection therewith, shall keep the Leases in full
force and effect and shall perform and comply with all of the covenants and
conditions contained in the Leases and all agreements relating to the
Interests; provided, however, that Seller shall not commence operations for
tile drilling of any new well or the redrilling of any existing well on the
Interests after the date of this Agreement without the prior written consent
of Buyer.
(d) Seller shall carry on the business of Seller with respect to
the Interests in substantially the same manner as Seller has heretofore and
shall not introduce any new method of management, operation or accounting with
respect to the Interests.
(e) Without the prior written consent of Buyer, Seller shall not
enter into any new agreements or commitments with respect to the Interests
which extend beyond the Closing, shall not make any expenditures on any
Interest in excess of $2500.00, shall not abandon any well located on the
Interests nor release or abandon all or any portion of any of the Leases,
shall not modify or terminate any of the agreements relating to the Interests
and shall not encumber, sell or otherwise dispose of any of the Interests
other than personal property that is replaced by equivalent property or
consumed in the normal operation of the Interests.
(f) Seller shall exercise good faith to cause Buyer or his
appointee to be duly designated Operator of all wells included in the
Interests and to allow Buyer to take over operations of the Interests as of
7:00 A.M. local time on the day after the Closing.
(g) Seller shall exercise good faith to maintain and preserve the
field organization of Seller for operating the Interests so that it will be
preserved for Buyer on and after the Closing.
(h) Seller shall exercise good faith in safeguarding and
maintaining secure all engineering, geological and geophysical data, reports
and maps, and all other confidential data in the possession of Seller,
relating to the Interests.
(i) All laws, rules, regulations, ordinances and orders of all
local, tribal, state and federal governmental bodies, authorities and agencies
having jurisdiction over the Interests shall be complied with.
(j) Buyer and the employees and agents of Buyer shall have access
to the Interests and shall have the right to witness and conduct well tests
thereon.
(k) Seller shall exercise good faith to take or cause to be taken
all such actions as may be necessary or advisable to consummate and make
effective the sale of the Interests and the transactions contemplated by this
Agreement and to assure that as of the Closing Date it will not be under any
material corporate, legal or contractual restriction that would prohibit or
delay the timely consummation of such transactions.
(l) Seller shall cause all the representations and warranties of
Seller contained in this Agreement to be true and correct on and as of the
Closing Date. To the extent the conditions precedent to the obligations of
Buyer are within the control of Seller, Seller shall cause such conditions to
be satisfied on or prior to the Closing Date and, to the extent the conditions
precedent to the obligations of Buyer are not within the control of Seller,
Seller shall exercise good faith to cause such conditions to be satisfied on
or prior to the Closing Date.
(m) Seller shall promptly notify Buyer (1) if any representation
or warranty of Seller contained in this Agreement is discovered to be or
becomes untrue, or (2) if Seller fails to perform or comply with any covenant
or agreement contained in this Agreement or it is reasonably anticipated that
Seller will be unable to perform or comply with any covenant or agreement
contained in this Agreement.
(n) Within 5 business days after the date hereof, Seller shall
prepare and submit all necessary filings for Seller in connection with the
transactions contemplated by this Agreement under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
of the Federal Trade Commission under such act.
4.02 Covenants of Buyer. Buyer covenants and agrees with Seller as
follows:
(a) Buyer shall exercise good faith to take or cause to be taken
all such actions as may be necessary or advisable to consummate and make
effective the purchase of the Interests and the transactions contemplated by
this Agreement and to assure that as of the Closing Date it will not be under
any material corporate, legal or contractual restriction that would prohibit
or delay the timely consummation of such transactions.
(b) Buyer shall cause all the representations and warranties of
Buyer contained in this Agreement to be true and correct on and as of the
Closing Date. To the extent the conditions precedent to the obligations of
Seller are within the control of Buyer, Buyer shall cause such conditions to
be satisfied on or prior to the Closing Date and, to the extent the conditions
precedent to the obligations of Seller are not within the control of Buyer,
Buyer shall exercise good faith to cause such conditions to be satisfied on or
prior to the Closing Date.
(c) Buyer shall promptly notify Seller (1) if any representation
or warranty of Buyer contained in this Agreement is discovered to be or
becomes untrue, or (2) if Buyer fails to perform or comply with any covenant
or agreement contained in this Agreement or it is reasonably anticipated that
Buyer will be unable to perform or comply with any covenant or agreement
contained in this Agreement.
(d) Buyer shall exercise good faith in safeguarding and
maintaining secure all engineering, geological and geophysical data, reports
and maps, and all other confidential data in the possession of Buyer, relating
to the Interests.
(e) Within 5 business days after the date hereof, Buyer shall
prepare and submit all necessary filings for Buyer in connection with the
transactions contemplated by this Agreement under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
of the Federal Trade Commission under such act.
ARTICLE V
TITLE PROCEDURE AND CASUALTY LOSS
5.01 Title Procedure, If any of the information or material supplied
by Seller pursuant to this Agreement or any other information or data reflects
the existence of any encumbrance, encroachment, defect in or objection to
title, other than those set forth in Exhibit A, that render title to the
Interests or any portion thereof then Seller shall notify Buyer in writing at
the address provided below of such encumbrance or defect and shall immediately
take steps to cure same. In the event such defects or encumbrances cannot be
so cured, then the purchase price described herein shall be reduced by the
amount necessary, including applicable attorneys fees, costs and expenses
incurred by Buyer to cure same which shall be deducted from any payments to be
made pursuant to this Agreement.
5.02 Casualty Loss. If, prior to the Closing, all or any portion of
the Interests shall be destroyed by fire or other casualty, or if any portion
of the Interests shall be taken in condemnation or under the right of eminent
domain or if proceedings for such purposes shall be pending or threatened,
Buyer may elect to terminate this Agreement. If Buyer shall so elect, neither
party shall have any further obligation to the other hereunder. If not so
terminated, this Agreement shall remain in full force and effect
notwithstanding any such destruction or taking, and Seller shall at the
Closing pay to Buyer all sums paid to Seller by reason of such destruction or
taking. In addition, Seller shall assign, transfer and set over unto Buyer
all of the fight, title and interest of Seller in and to any unpaid awards or
other payments arising out of such destruction or taking. Seller shall not
voluntarily compromise, settle or adjust any amounts payable by reason of such
destruction or taking without first obtaining the written consent of Buyer.
ARTICLE VI
CONDITIONS TO CLOSING
6.01 Conditions to Obligations of Seller. The obligations of Seller
to consummate the transactions contemplated by this Agreement are subject to
the satisfaction, or waiver by Seller, of the following conditions:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true in all material respects at and as of the Closing as
if such representations and warranties were made at and as of the Closing, and
Buyer shall have performed and satisfied all covenants and agreements required
by this Agreement to be performed and satisfied by Buyer at or prior to the
Closing.
(b) Seller shall have received an opinion dated as of the Closing
from Buyer's counsel, as set forth in Exhibit C hereto.
6.02 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject, to the
satisfaction, or waiver by Buyer, of the following conditions:
(a) All representations and warranties of Seller contained in this
Agreement shall be true in all material respects at and as of the Closing as
if such representations and warranties were made at and as of the Closing, and
Seller shall have performed and satisfied all agreements required by this
Agreement to be performed and satisfied by Seller at or prior to the Closing.
6.03 Conditions to Obligations of Both Parties. The obligations of
Seller and Buyer to consummate the transactions contemplated by this Agreement
are subject, to the satisfaction, or waiver by both parties, of the following
conditions:
(a) There shall not be pending or instituted, threatened or
proposed, any action or proceeding by or before any court or administrative
agency or arty other person challenging or complaining of, or seeking to
collect damages or other relief in connection with, the transactions
contemplated by this Agreement.
(b) Closing shall not be a violation of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
of the Federal Trade Commission under such act.
(c) No state or federal statute, rule, regulation or action shall
exist or shall have been adopted or taken and no judicial or administrative
decision shall have been entered (whether on a preliminary or final basis),
that would prohibit, restrict or delay the consummation of the transactions
contemplated by this Agreement or make the payments due hereunder illegal.
ARTICLE VII
CLOSING
7.01 Date of Closing. Subject to the conditions stated in this
Agreement, the consummation of the transactions contemplated by this Agreement
(the "Closing") shall be held on July 27, 1998, or such other date as the
parties shall agree in writing. Said date, as amended if amended, shall be
referred to as the "Closing Date."
7.02 Place of Closing. The Closing shall be held at the offices of
Lyric International, Inc., or at such other place as Buyer and Seller may
agree upon in writing.
7.03 Closing Obligations, At the Closing the following events shall
occur, each being a condition precedent to the others and each being deemed to
have occurred simultaneously with the others:
(a) Seller shall execute, acknowledge and deliver (in sufficient
counterparts to facilitate recording) the assignment, bill of sale and
conveyance attached hereto as Exhibit E conveying the Interests to Buyer. As
appropriate, Seller shall also execute, acknowledge and deliver separate
assignments of the Interests on officially approved forms in sufficient
counterparts to satisfy applicable statutory and regulatory requirements.
(b) Seller and Buyer shall execute and deliver a settlement
statement (the "Preliminary Settlement Statement") prepared by Buyer that
shall set forth the Preliminary Amount (as hereinafter defined) and each
adjustment and the calculation of such adjustments used to determine such
amount. The term "Preliminary Amount" shall mean the Purchase Price adjusted
as provided in Section 2.02 using for such adjustments the best information
then available.
(c) Buyer shall deliver to Seller or to Seller's account (at such
place as may be designated by Seller at least five days prior to the Closing
date) a certified or bank cashier's check or direct bank or wire transfer for
the Preliminary Amount,
(d) Seller shall deliver to Buyer exclusive possession of the
Interests.
(e) Seller and Buyer shall execute, acknowledge and deliver
transfer orders or letters in lieu thereof directing all purchasers of
production to make payment of proceeds attributable to production from the
Interests after the Effective Time to Buyer.
(f) Seller shall deliver to Buyer all files and records relating
to the Interests, including without limitation, all information and material
referred to in Sections 4.01(b) not previously delivered to Buyer.
ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.01 Post-Closing Adjustments. Within 60 days after the Closing,
Seller shall make available to Buyer all accounting records necessary for
Buyer to prepare, in accordance with this Agreement a statement (the "Final
Settlement Statement") setting forth each adjustment or payment which was not
finally determined as of the Closing and showing the calculation of such
adjustments. As soon as practicable after receipt of the Final Settlement
Statement, Seller shall deliver to Buyer a written report containing any
changes which Seller proposes be made to the Final Settlement Statement. The
parties shall undertake to agree with respect to the amounts due pursuant to
such post-closing adjustment no later than 60 days after the Closing date. If
such post-closing adjustment has not been agreed to within 90 days after the
Closing Date, either party may seek to enforce any rights it claims hereunder.
The date upon which such agreement is reached or upon which the Adjusted
Purchase Price is established, shall be referred to as the "Final Settlement
Date." In the event that (1) the Adjusted Purchase Price is more than the
Preliminary Amount, Buyer shall deliver to Seller or to Seller's account the
amount of such difference in immediately available funds, or (2) the Adjusted
Purchase Price is less than the Preliminary Amount, Seller shall deliver to
Buyer or to Buyer's account the amount of such difference in immediately
available funds. Payment by Buyer or Seller shall be made within five days of
the Final Settlement Date. To the extent not accounted for in the computation
of the Adjusted Purchase Price, all uncollected accounts receivable
attributable to the Interests on or after the Effective Time shall be assigned
to Buyer.
8.02 Sales Taxes and Recording Fees. Seller shall pay all sales taxes
occasioned by the sale of the Interests. Buyer shall pay all documentary,
filing and recording fees required in connection with the filing and recording
of the assignments described in Section 7.03(a) above.
8.03 Indemnification. After the Closing, Buyer and Seller shall
indemnify each other as follows:
(a) Buyer shall defend, indemnify and save and hold harmless
Seller against all claims, costs, expenses and liabilities with respect to the
Interests, which accrue or relate to times after the Effective Time (excluding
those incurred by Seller with respect to the sale of the Interests to Buyer or
the negotiations leading to such sale and excluding those that result from or
are attributable to the negligence or willful misconduct of Seller, its
employees or agents with respect to the operation and maintenance of the
Interests, and excluding those that result from or are attributable to any
representation of Seller contained in this Agreement being untrue or a breach
of any warranty or covenant of Seller contained in this Agreement.)
(b) Seller shall defend, indemnify and save and hold harmless
Buyer against all claims, costs, expenses and liabilities with respect to the
Interests, which accrue or relate to times prior to the Effective Time
(excluding those incurred by Buyer with respect to the purchase of the
Interests by Buyer or the negotiations leading to such purchase, and excluding
those that result from or are attributable to any representation of Buyer
contained in this Agreement).
8.04 Proceeds of Production. Buyer shall be entitled to receive all
proceeds of production, attributable to the Interests after the Effective
Time. Seller shall be entitled to receive all proceeds of production,
attributable to the Interests prior the Effective Time.
8.05 Further Assurances. Seller and Buyer shall execute, acknowledge
and deliver or cause to be executed, acknowledged and delivered such
instruments and take such other action as may be necessary or advisable to
carry out their obligations under this Agreement and under any Exhibit,
document, certificate or other instrument delivered pursuant hereto.
8.06 Survival. All warranties and guarantees hereunder shall survive
the closing of this transaction.
ARTICLE IX
TERMINATION OF AGREEMENT
9.01 Termination. This Agreement and the transactions contemplated
hereby may be terminated in the following instances:
(a) By either Buyer or Seller if any condition set forth in
Section 6.03 above shall not be satisfied at the Closing.
(b) By Buyer if any condition set forth in Section 6.02 above
shall not be satisfied on or before August 1, 1998.
(c) By Seller if any condition set forth in Section 6.01 above
shall not be satisfied on or before August 1, 1998.
(d) By the mutual written agreement of Buyer and Seller.
This Agreement shall terminate without any further action by Seller or
Buyer if the Closing has not occurred on or before September 1, 1998.
9.02 Return of Information. If this Agreement is terminated Buyer
shall return to Seller all information and material delivered to Buyer by
Seller pursuant to the terms of this agreement.
9.03 Liabilities Upon Termination. If this Agreement is terminated
for any reason or is breached, nothing contained herein shall be construed to
limit Seller's or Buyer's legal or equitable remedies including, without
limitation, damages for the breach or failure of any representation, warranty,
covenant or agreement contained herein and the right to enforce specific
performance of this Agreement.
10.01 Expenses. Except as otherwise specifically provided in this
Agreement, all fees, costs and expenses incurred by Buyer or Seller in
negotiating this Agreement or in consummating the transactions contemplated by
this Agreement shall be paid by the party incurring the same, including
without limitation, legal and accounting fees, costs and expenses.
10.02 Notices. All notices and communications required or permitted
under this Agreement shall be in writing and shall be effective when delivered
addressed as follows:
If to Seller:
West Texas Recovery, Inc.
P.O. Box 178
Snyder, Texas 79550
Attention: Mike Maguire
If to Buyer:
Lyric International, Inc.
16775 Addison Rd., Ste. 300
Dallas, Texas 75248
Attention: Brent Wagman
Either party may, by written notice so delivered to the other, change the
address to which delivery shall thereafter be made.
10.03 Amendment. This Agreement may not be altered or amended, nor any
rights hereunder be waived, except by an instrument in writing executed by the
party or parties to be charged with such amendment or waiver. No waiver of
any term, provision or condition of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, provision or condition or as a waiver of any other
term, provision or condition of this Agreement.
10.04 Assignment. Neither Seller nor Buyer may assign any portion of
its rights or delegate any portion of its duties or obligations under this
Agreement without the prior written consent of the other party.
10.05 Announcements. Seller and Buyer shall consult with each other
with regard to all press releases and other announcements concerning this
Agreement or the transaction contemplated hereby and, except as may be
required by applicable laws or regulations of any governmental agency or stock
exchange, neither Buyer nor Seller shall issue any such press release or make
any other announcement without the prior written consent of the other party.
10.06 Generality of Provisions. The specificity of any representation,
warranty, covenant, agreement or indemnity included or provided in this
Agreement, or in any Exhibit, document, certificate or other instrument
delivered pursuant hereto, shall in no way limit the generality of any other
representation, warranty, covenant, agreement or indemnity included or
provided in this Agreement, or in any Exhibit, document, certificate or other
instrument delivered pursuant hereto.
10.07 Headings. The headings of the articles and sections of this
Agreement are for guidance and convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions of this Agreement.
10.08 Counterparts. This Agreement may be executed by Buyer and Seller
in any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute but one and the same
instrument. This Agreement shall become operative when each party has
executed at least one counterpart of this Agreement.
10.09 References. References made in this Agreement, including use of
a pronoun, shall be deemed to include where applicable, masculine, feminine,
singular or plural, individuals, partnerships or corporations. As used in
this Agreement, "person" shall mean any natural person, corporation,
partnership, trust, estate or other entity. As used in this Agreement,
"affiliate" of a person shall mean any partnership, joint venture, corporation
or other entity in which such person has an interest or which controls, is
controlled by or is under common control with such person.
10.10 Governing Law. This Agreement and the transactions contemplated
hereby shall be construed in accordance with, and governed by, the laws of the
State of Texas.
10.11 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the entire understanding between the parties with respect to the
subject matter hereof and supersedes all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter. No
material representation, warranty, covenant, agreement, promise, inducement or
statement, whether oral or written, has been made by Seller or Buyer and
relied upon by the other that is not set forth in this Agreement or in the
instruments referred to herein, and neither Seller no Buyer shall be bound by
or liable for any alleged representation, warranty, covenant, agreement,
promise, inducement or statement not so set forth.
10.12 Parties in Interest. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and, except as otherwise
prohibited, their respective successors and assigns. Nothing contained in
this Agreement, express or implied, is intended to confer upon any other
person or entity any benefits, rights or remedies.
10.13 FERC Duties. After Closing neither buyer not Seller nor any
successor or assign of either shall have any duty as a result of this
transaction to offer take or pay credits for gas transported pursuant to FERC
Order No. 500, to allow price renegotiation under FERC Order No. 451 or to
take or allow any other action pursuant to any similar FERC order or
regulation. Neither Buyer nor Seller nor any successor or assign of either
shall take any action or make any filing pursuant to any such FERC order or
regulation which purports to bind the other or any property owned by the
other. Regardless of any other provision hereof, the covenants of this
paragraph 10.13 shall survive Closing and shall survive so long as any FERC
regulation to which it might apply remains in effect.
Executed as of the date first above mentioned.
SELLER: West Texas Recovery, Inc.
By: /s/Mike Maguire
__________________________________
Mike Maguire, President
BUYER: Lyric International, Inc.
By: /s/Brent Wagman
___________________________________
Brent Wagman, Chairman
THE STATE OF TEXAS )
)
COUNTY OF TAYLOR )
SUBSCRIBED AND SWORN TO BEFORE ME by Brent Wagman, Chairman of Lyric
International, Inc. on the 27th day of July, 1998.
/s/Sheri L. Bates
Notary Public, State of Texas
THE STATE OF TEXAS )
)
COUNTY OF TAYLOR )
SUBSCRIBED AND SWORN TO BEFORE ME by Mike Maguire, President of West
Texas Recovery Inc. on the 27th day of July, 1998.
/s/Sheri L. Bates
Notary Public, State of Texas
