AGREEMENT IN PRINCIPLE
THIS AGREEMENT IN PRINCIPLE (this "Agreement") is made and entered into
this day of June, 1996, by and between EUROGAS, INC., a Utah corporation
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("EuroGas") and CHEMILABCO, B.V., a company registered in the Netherlands
("Chemilabco"), based on the following:
Premises
A. EuroGas is a publicly-held corporation engaged in the exploration and
development of methane gas reserves located in Poland.
B. Concurrently with the execution of this Agreement, EuroGas has entered
into an agreement in principle with Danube International Petroleum Company
("Danube") whereby EuroGas would acquire all of Danube. A copy of the agreement
in principle between EuroGas and Danube has been circulated to the parties and
is incorporated herein by reference.
C. Danube is a privately-held corporation engaged in the exploration and
development of oil and gas reserves located in the Czech Republic and Slovakia.
Attached hereto as Schedule 1 is a description of the rights held by Danube.
D. Chemilabco holds, by way of assignment, the right to acquire 51% of
Danube's interests as described in Schedule 1 and has provided $2,500,000 [U.S.]
of interim financing to EuroGas and Danube.
E. The parties have held discussions about Chemilabco exchanging its
interests and provide additional financing in exchange for EuroGas stock.
F. The parties wish to enter into this Agreement to set forth the
principal terms and conditions of the transaction.
G. The execution and delivery of this Agreement has been approved by the
Boards of Directors of EuroGas and Chemilabco.
H. The parties intend to enter into a definitive agreement with respect
to this transaction to close concurrently or simultaneously with EuroGas'
acquisition of Danube.
Agreement in Principle
1. Incorporation of Premises. The foregoing premises are incorporated by
this reference.
2. The Transaction. On the terms and subject to the conditions set forth
in the Definitive Agreement to be executed between EuroGas and Chemilabco,
Cemilabco will deliver to EuroGas $2,500,000 [U.S.] in additional financing and
assign all of its interests in the Danube project. In exchange therefore,
EuroGas shall deliver to Chemilabco:
(a) 5,000,000 shares of EuroGas restricted common stock with
registration rights as set forth below; and
(b) 1,000,000 shares of EuroGas restricted common stock for each
commercial well put into production by EuroGas in the areas described in
Schedule 1, not to exceed 16,000,000 shares in the aggregate. A commercial
well shall be defined as any oil or gas well producing revenue equal to or
in excess of the costs of operating the well, the taxes and royalties
payable thereon, and an amount reasonably necessary to amortize the cost of
drilling over the expected life of the well.
3. Restricted Nature of Securities. Chemilabco acknowledges that the
completion of the Transaction and the issuance of the consideration constitute
the offer and sale of securities as those terms are defined under the Securities
Act of 1933, as amended (the "Securities Act"), and applicable state statutes.
The Transaction shall be consummated in reliance on certain exemptions from the
registration requirements of federal and state securities laws, which depend,
among other items, on the circumstances under which such securities are
acquired. at the time of execution and delivery of the Definitive Agreement,
Chemilabco will arrange for each of its stockholders to execute and deliver a
letter acceptable to EuroGas containing reasonable and customary representations
upon which EuroGas shall be entitled to rely as a basis for its determination
that the issuance of the EuroGas Common Stock is exempt from the registration
requirements of the Securities Act and similar state laws. Until such time as
such securities shall have been registered under the Securities Act as
contemplated by this Agreement, each of the certificates representing the
EuroGas Common Stock shall bear a legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS
OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS
OF THE APPLICABLE STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER AND ITS COUNSEL TO THE EFFECT
THAT THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT AND SUCH STATE STATUTES.
4. Registration Rights. At the time of the consummation of the
Transaction, EuroGas will enter into an agreement with Chemilabco which will
provide as follows:
(a) On or before the later of September 30, 1996 or thirty (30) days
after receipt by EuroGas of audited and stub period financial statements of
EuroGas and Chemilabco necessary to file a registration statement, but no
later than December 31, 1996, EuroGas will file with the SEC a "shelf"
registration statement (the "Shelf Registration Statement") on an
appropriate form pursuant to Rule 415 under the Securities Act will respect
to the shares of EuroGas Common Stock issued in connection with the
Transaction (sometimes referred to as the "Registrable Securities").
EuroGas will use its best efforts to cause the Shelf Registration Statement
to be declared effective under the Securities Act as promptly as
practicable after the filing thereof until all the Registrable Securities
are sold.
The following restrictions will apply to the sales of the EuroGas
Common Stock by Chemilabco or its shareholders (the "Holders") pursuant to
the Shelf Registration Statement:
(i) During the first six months after the effective date of the
Shelf Registration Statement, the Holders will not sell an aggregate
of more than 1,000,000 EuroGas Common Shares;
(ii) During the first year after the effective date of the Shelf
Registration Statement, the Holders will not sell an aggregate of more
than 2,500,000 EuroGas Common Shares (including any securities sold in
the first six months after the consummation of such effective date);
and
(iii) During any calendar month within the first year after
the effective date of the Shelf Registration Statement, the Holder
will not sell an aggregate number of EuroGas Common Shares greater
than the higher of (A) 1% of the total number of shares of EuroGas
Common Stock outstanding at the beginning of such calendar month and
(B) the average daily trading volume of EuroGas Common Stock during
the preceding calendar month.
(b) If at any time prior to the date that is five years after the
consummation of the Transaction, EuroGas intends to file a registration
statement to register any of its securities under the Securities Act,
EuroGas will give the Holders written notice of its intention to do so.
The Holders will have 20 days subsequent to such notice to elect to have
the Registrable Securities then held by them included in such registration
statement. In the case of a proposed underwritten offering, if the
managing underwriter or underwriters determine in writing that, because of
the size of the offering intended to be made, the success of the offering
would be materially and adversely affected by inclusion of the Registrable
Securities, then the securities to be included in such offering will be
reduced to the amount recommended by such managing underwriter or
underwriters (provided, however, that the proportion by which the amount of
Registrable Securities intended to be offered by the Holders is reduced
shall not exceed the proportion by which the amount of securities intended
to be offered by EuroGas or any other person or entity is reduced). The
provisions of this paragraph shall not apply to registration statements
filed on forms X-0, X-0 or successor forms.
(c) The Holders, if requested by the managing underwriter or
underwriters for any underwritten, registered offering of the securities of
EuroGas, agree not to effect any public sale or distribution of the
Registrable Securities, including sales pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act, during the 15
days prior to, and during the 90-day period commencing on the effective
date of such registration statement (except as part of such registration).
(d) EuroGas will indemnify each Holder against all liabilities
arising from any misstatements or omissions in any registration statement
covering the Registrable Securities, other than liabilities arising from
information provided by such Holder expressly for inclusion therein.
(e) The Holders will agree to cooperate with EuroGas by providing in
writing such information as EuroGas shall reasonably request in order to
comply with the provisions of the Securities Act applicable in connection
with the disposition of the Registrable Securities, including information
regarding the identity of such Holders and the intended method of
disposition of the Registrable Securities.
(f) All costs and expenses of the registration will be borne by
EuroGas, including fees and expenses of counsel and accountants for EuroGas
and all other costs and expenses of EuroGas incident to the preparation,
printing, and filing under the Securities Act and furnishing copies thereof
and of the prospectus included therein; provided, however, that EuroGas
will not bear the costs and expenses of the Holders in connection with the
sale of the securities subject to the registration statement that are
underwriting commissions related to the Registrable Securities, brokerage
fees, transfer taxes, or the fees and expenses of any counsel, accountant,
or other representative retained by a Holder.
(g) At all times on or after December 31, 1996, EuroGas will file all
reports required to be filed by it under the Securities Exchange Act of
1934, as amended, in order to permit public sales of the Registrable
Securities to be made in reliance on Rule 144 thereunder.
(h) EuroGas may include other EuroGas shares in the Shelf
Registration Statement, however, the sale of any such included shares shall
not be counted as any sale by Chemilabco or its shareholders for purposes
of calculating the amount of permissible sales set forth above.
5. Conditions to Closing. The closing of the Transaction is subject to
the satisfaction of the following conditions precedent:
(a) EuroGas and Chemilabco shall have negotiated and entered into a
Definitive Agreement and plan of merger providing for the Transaction and
the other matters contemplated hereby, which agreement shall contain
appropriate representations, warranties, covenants, and other terms and
provisions;
(b) All legal matters, instruments, and documents necessary to
complete the Transaction have been approved by legal counsel for the
respective parties.
(c) The parties have obtained all necessary governmental, regulatory,
and other third party approvals required in connection with the
Transaction.
(d) EuroGas has completed its acquisition of Danube.
6. Costs. Each of the parties shall bear its respective costs associated
with the Transaction contemplated by this Agreement, including legal fees,
accounting fees, and other costs and expenses.
7. Information. Each of the parties acknowledges that much of the
information to be furnished to it and to its representatives pursuant hereto may
consist of confidential and/or proprietary information of the furnishing party.
Accordingly, each party agrees to preserve and protect the confidentiality of
all information made available to such party or its representative hereunder,
regardless of whether such information is acquired before or after execution of
this Agreement, except to the extent that such information is available to the
public generally. Each of the parties shall ensure that all representatives,
advisors, and experts retained by such parties for the purpose of investigating
and reviewing the affairs of the other party shall agree to abide by the
foregoing confidentiality provisions.
8. Term. This Agreement will expire on September 30, 1996 if the
Definitive Agreement is not executed and delivered by such date.
9. Announcements. The parties agree that neither they nor their
respective employees, officers, directors, or agents will make any disclosure of
the existence or terms of this Agreement or any transactions contemplated
hereby, without the express written consent of the other party. Notwithstanding
the foregoing, Chemilabco acknowledges that EuroGas is subject to the disclosure
requirements of the Securities and Exchange Act of 1934, as amended, and agrees
that EuroGas can make a public announcement of the existence and terms of this
Agreement provided that it shall have delivered to Chemilabco a copy of any such
proposed announcement at least 24 hours in advance of its release to the public.
10. Definitive Agreement. This Agreement sets forth the principal terms
and conditions of the proposed Transaction between the parties as currently
contemplated. Consummation of this Transaction requires negotiation and
drafting of the Definitive Agreement setting forth terms and conditions not
inconsistent with the foregoing and other terms and conditions as are customary
and usual under the circumstances. The Definitive Agreement shall govern all
rights and obligations of the parties with respect to the completion of the
Transaction contemplated by this Agreement.
11. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EuroGas:
EUROGAS, INC.
By /s/ Xxxx Xxxxxxxxxxxx
Duly Authorized Officer
Chemilabco:
CHEMILABCO, B.V.
By /s/
Duly Authorized Officer
FIRST AMENDMENT TO
AGREEMENT IN PRINCIPLE
THIS FIRST AMENDMENT TO AGREEMENT IN PRINCIPLE (this "Amendment") is made
and entered into this day of November, 1996, by and between EUROGAS, INC.,
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a Utah corporation ("EuroGas"), and CHEMILABCO, B.V., a company registered in
the Netherlands ("Chemilabco"), based on the following:
Premises
A. The parties entered into an Agreement in Principle in June 1996
pursuant to which EuroGas agreed to issue shares of its stock to Chemilabco in
exchange for providing funding for projects of EuroGas and certain rights held
by Chemilabco (the "Agreement in Principle").
B. The parties wish to amend certain of the provisions of the Agreement
in Principle.
Agreement
Now, therefore, based on the foregoing premises and for and in
consideration of the mutual covenants of the parties and the benefits to be
derived therefrom, it is hereby agreed as follows:
1. The Transaction. Paragraph 2 of the Agreement in Principle is hereby
amended to read in its entirety as follows:
2. The Transaction. On the terms and subject to the conditions
set forth in this Agreement, Chemilabco will deliver to EuroGas
$2,500,000 (U. S.) in additional financing and assign all of its
interests in the Danube project to EuroGas. In exchange therefore,
EuroGas shall deliver to Chemilabco:
(a) 5,000,000 shares of EuroGas restricted common stock
with registration rights as forth below; and
(b) 6,000,000 shares of EuroGas restricted common stock.
2. Certificate of Contingent Interest. The Certificate of Contingent
Interest delivered to Chemilabco in connection with the closing of the
transaction contemplated by the Agreement In Principle shall be null and void,
and Chemilabco shall return the original of the Certificate of Contingent
Interest to EuroGas for cancellation. Chemilabco shall have no rights under the
Certificate of Contingent Interest whether or not the original is cancelled.
3. Effect of Amendment. The changes to the Agreement in Principle set
forth in this Amendment shall be given effect as if originally contained in
Agreement in Principle and treated as having occurred at the original closing of
the transaction described in the Agreement in Principal.
4. Ratification of Agreement in Principle. Except as specifically
amended by the terms of this Amendment, the parties hereby ratify and confirm
the provisions of the Agreement in Principle.
5. Execution in Counterparts. This Amendment may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
EuroGas:
EUROGAS, INC.
By /s/ Xxxx Xxxxxxxxxxxx
Duly Authorized Officer
Chemilabco:
CHEMILABCO, B.V.
By /s/
Duly Authorized Officer
