AGREEMENT FOR SALE OF LLC MEMBERSHIP UNITS

 

Exhibit 10.5  Agreement for Sale of LLC Membership Units

 

 

                          AGREEMENT FOR SALE OF

                           LLC MEMBERSHIP UNITS

                           --------------------

 

      MEMBERSHIP UNIT PURCHASE AGREEMENT made and entered into as of September

15, 2004, by and between SBI Oil and Gas Resource Exploration LLC, a Delaware

limited liability company (the "Seller") and Aztec Oil & Gas, Inc., a Nevada

corporation (the "Buyer").

 

      Whereas, the Seller desires to sell to the Buyer, and the Buyer desires

to purchase from the Seller, a 31.283% membership unit interest (the "Units")

in Z2, LLC, a Florida limited liability company ("Z2") on the terms and

conditions set forth herein;

 

      Now, therefore, in consideration of the mutual covenants, agreements,

undertakings, representations, and warranties contained herein, and for other

good and valuable consideration, the receipt and adequacy of which are hereby

acknowledged, the Seller and the Buyer agree as follows:

 

      1.  Sale and Purchase of Membership Units.  At the Closing provided for

in Paragraph 3, the Seller shall sell and transfer the Units to the Buyer

against payment by the Buyer of the Purchase Price provided for in Paragraph 2.

 

      2.  Purchase Price of Membership Units.  The Purchase Price for the Units

is:

 

     (a)  The assumption and agreement to pay the unpaid balance of the

Purchase Price Obligation in the amount of Two Hundred Sixty-Five Thousand

Dollars ($265,000) described in that certain agreement for sale of 8.083 LLC

Membership Units dated August 1, 2004 by and between Business and Financial

Consultants, LLC, a Florida limited liability company, as Seller, and SBI Oil

and Gas Resource Exploration, LLC, a Delaware limited liability company, as

Buyer.

 

     (b)  The execution and delivery by Buyer of a Promissory Note in the

original principal amount of Two Hundred Fifty Thousand Dollars ($250,000)

payable on or before the expiration of two years after date and convertible,

at the option of the holder, into Two Hundred Fifty Thousand (250,000) shares

of common stock of Buyer in the form and substance attached hereto as

Exhibit A.

 

     (c)  Four Hundred Thousand (400,000) shares of common stock of Buyer

bearing the following restrictive legend:

 

       THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN

       REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),

       OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,

       TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH

       REGISTRATION OR RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL IN

       THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE MAKER

       THAT THIS NOTE MAY BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF,

       UNDER AN EXEMPTION FROM  REGISTRATION UNDER THE ACT AND SUCH STATE

       SECURITIES LAWS.

 

      3.  Closing.  The Closing of the sale and purchase of the Units shall

take place in Houston, Texas on such date and at such time as the Parties shall

agree, with an effective date of September 15, 2004.  At the Closing, the

Seller shall deliver to the Buyer the original Membership Certificate, a copy

of which is attached as Exhibit B, representing the Units, duly endorsed to the

Buyer or as the Buyer may direct.  At the Closing, the Seller and the Buyer

shall execute and deliver an Assignment of Limited Liability Company Interest

with respect to the Units (the "Assignment Document"), and the Seller shall

obtain and deliver the signatures to such Assignment Document by all members

of Z2 indicating their consent to the transfer of the Units and the admission

of the Buyer as a member of Z2.

 

      4.  Representations and Warranties of the Seller.  The Seller represents

and warrants to the Buyer as follows:

 

      (a)  Organization and Qualification.  Z2 is a duly organized and

validly existing limited liability company under the laws of the State of

Florida.  Z2 has the power, authority and capacity to own, lease and operate

its properties, and to carry on its business, as the same is now being

conducted.  Z2 is duly qualified as a foreign corporation to do business and

is in good standing in every jurisdiction in which the nature of the business

conducted or property owned by it makes such qualification necessary, except

where the failure to do so would not have an adverse material effect on Z2. 

The total outstanding equity ownership of Z2 consists of 100 membership units.

 

      (b)  The Units.  The Seller is the lawful owner of the Units, and the

Seller has the full power and authority to sell such Units, free and clear of

any liens or encumbrances whatsoever.  All of the Units have been validly

issued and are fully paid and nonassessable and not subject to any capital call

or requirement to make any further capital contribution to Z2, except as

provided in the Z2, LLC Agreement Between Equity Holders among the members of

Z2 dated May 17, 2004 (the "Equity Holders' Agreement").  No person has any

present or future right (conditional, preemptive or otherwise) to acquire any

of the Units which has not been effectively waived with respect to the sale

and transfer contemplated hereby.

 

      (c)  Due Authorization; Enforceability.  The execution and delivery of

this Agreement and the consummation of the transactions contemplated hereby

(including, without limitation, the sale and transfer of the Units) has been

duly authorized by all requisite action on the part of the managers and

members of the Seller.  This Agreement constitutes the valid and binding

obligation of the Seller, enforceable in accordance with its terms.

 

      (d)  No Breach or Conflict.  The sale of the Units contemplated by this

Agreement does not conflict with, or result in a breach of, or a default

under, the Operating Agreement of Z2 or any agreement or instrument to which

Z2 or the Seller is a party or by which Z2 or the Seller or the Units are

bound.

 

      (e)  Access to Information and Full Disclosure.  The Seller has provided,

and until the Closing will continue to provide, to the Buyer the opportunity

to ask questions of and receive answers from representatives of Z2 concerning

the business and prospects of Z2 and to obtain any additional information

necessary to verify the information provided to the Buyer or otherwise relative

to the finances and business of Z2, to the extent that the Seller possesses

such information or can acquire it without unreasonable effort or expense. 

The Seller is not aware of any material fact regarding Z2, the business and

prospects of Z2, or the industry in which Z2 operates which has not been

disclosed to the Buyer.

 

      5.  Representations and Warranties of the Buyer.  The Buyer represents

and warrants to the Seller as follows:

 

     (a)  Organization and Qualification.  Buyer is a duly organized and

validly existing limited liability company under the laws of the State of

Nevada.  Buyer has the power, authority and capacity to own, lease and

operate its properties, and to carry on its business, as the same is now

being conducted.

 

     (b)  Due Authorization; Enforceability.  The execution and delivery of

this Agreement and the consummation of the transactions contemplated hereby

(including, without limitation, the sale and transfer of the Units) has been

duly authorized by all requisite action on the part of the board of directors

of the Buyer.  This Agreement constitutes the valid and binding obligation of

the Buyer, enforceable in accordance with its terms.

 

     (c)  No Breach or Conflict.  The sale of the Units contemplated by this

Agreement does not conflict with, or result in a breach of, or a default

under any agreement or instrument to which Buyer is a party or by which Buyer

is bound.

 

     (d)  Investment Intent.  The Buyer is purchasing the Units for investment

and has no present intent of engaging in a distribution (as such term is

defined in the Securities Act of 1933, as amended) of such Units.

 

     (e)  Knowledge and Experience.  The Buyer is an "accredited investor"

(as such term is defined in Registration D under the Securities Act of 1933,

as amended), is knowledgeable and experienced in businesses of the sort

conducted by Z2, and acknowledges that it has had the opportunity to make

inquiry of management of Z2 concerning the business and financial condition

of Z2 and has received answers to its inquiries that it considers fully

responsive and satisfactory.

 

     (f)  Investment Risk.  The Buyer understands that the Units have not

been registered under the Securities Act of 1933, as amended, were acquired

by the Seller in a transaction exempt from the provisions of such Act, and

are being sold and transferred to the Buyer in a transaction which the Seller

(in reliance on the representations and warranties made by the Buyer herein)

believes is exempt from such registration requirements; that there is no

public market for the Units; and that the Buyer may be required to hold the

Units indefinitely.  The Buyer is capable of evaluating the merits and risks

involved in the acquisition of the Units and is capable of bearing the

economic risk of such investment.

 

     (g)  Shares Duly Authorized.  The 400,000 shares of common stock of Buyer

described in paragraph 2(c) hereinabove, have been duly authorized and, when

delivered to Seller, will be validly issued, fully paid and non-assessable

shares of common stock of Buyer.

 

      6.  Corporate Governance.  The Seller and the Buyer agree that the Buyer

is acquiring the Units subject to the terms of the Equity Holders' Agreement

and of the Articles of Organization and Regulations of Z2.

 

      7.  Provisions to Survive Delivery.  The representations, warranties,

covenants, indemnities, understandings, agreements, and other statements of the

Seller and the Buyer set forth in, or made in connection with, this Agreement

and the sale of the Units contemplated hereby, shall survive transfer of, and

payment for, the Units.

 

      8  Governing Law.  This Agreement shall be construed in accordance with

the laws of the State of Texas.  All questions with respect to the

construction of this Agreement and the rights and liabilities of the parties

to this Agreement shall be governed by the laws of the State of Texas.  Any

action or proceeding arising out of or relating to this Agreement shall be

brought in the State of Texas.

 

      9.  Assignment.  Neither this Agreement nor any interest of any party

herein may be assigned, pledged or transferred without the prior written

consent of the parties hereto and subject to the provisions outlined in the

Equity Holders' Agreement.

 

      10.  Binding Effect.  This Agreement shall inure to the benefit of, and

is binding upon, the parties hereto, and their respective heirs,

representatives, successors, assigns, and controlling person, but nothing

herein shall be construed as an authorization or right of any party to

assign its rights and obligations under this Agreement.

 

      11.  Waiver.  No waiver of any provision hereof shall be valid unless

it is in writing and signed by the person against whom it is charged.

 

      12.  Notice.  Any notice or demand required or permitted to be given

pursuant hereto must be in writing delivered personally or mailed by certified

mail, postage prepaid, addressed to the person at the address specified below,

or at an address changed in this manner.

 

If to the Buyer:        L. Mychal Jefferson, II, CEO

                        Aztec Oil & Gas, Inc.

                        770 South Post Oak Lane, Suite 435

                        Houston, Texas 77056

 

With a copy to:

                        Robert L. Sonfield, Jr., Esq.

                        Sonfield & Sonfield

                        770 South Post Oak Lane, Suite 435

                        Houston, Texas 77056

 

If to the Seller:       Matthew McGovern

                        SBI-USA LLC

                        610 Newport Center Drive, Suite 1205

                        Newport Beach, California 92660

 

With a copy to:

                        Melissa A. Mahler, Esq.

                        Nixon Peabody LLP

                        Clinton Square

                        P.O. Box 31051

                        Rochester, New York 14603

 

      13.  Entire Agreement.  This Agreement constitutes the entire agreement

upon the parties hereto with respect to the subject matter hereof.

 

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement

effective as of the 15th day of September, 2004.

 

                                 SBI Oil and Gas Resource Exploration LLC

 

 

                                 By _______________________________

                                    Shelly Singhal

 

                                     Aztec Oil & Gas, Inc.

 

 

                                 By _______________________________

                                    L. Mychal Jefferson, II, CEO

 

                                 By _______________________________

                                    Robert L. Sonfield, Jr.

                                    Attorney-In-Fact

 

 

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Exhibit 10.6  -  Term Credit Agreement