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SCHEDULE 14C INFORMATION STATEMENT
Information Statement Pursuant To Section 14(C)
Of The Securities Exchange Act Of 1934
(Amendment No. 1)
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for use of the Commission Only (as permitted by rule
14c-5(d) (2))
[ ] Definitive Information Statement
Future Petroleum Corporation
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(Name of Registrant as Specified in Its Charter)
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-
11.
(1) Title of each class of securities to which transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per Unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule of Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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FUTURE PETROLEUM CORPORATION
700 Louisiana, Suite 3700
Houston, TX 77002
INFORMATION STATEMENT
This Information Statement is being furnished to the stockholders of
Future Petroleum Corporation, a Utah corporation (the "Company" or "Future"),
in connection with certain actions (the "Consent Actions") to be taken by the
written consent of the holders of a majority of the voting power of the
Company's issued and outstanding equity securities ("Written Consent"). This
Information Statement is first being mailed to stockholders of the Company on
or about February __, 1999. The Written Consent approved the three Consent
Actions: (i) the change in the Company's state of incorporation from Utah to
Texas; (ii) the change of the Company's name from Future Petroleum Corporation
to Bargo Energy Company; and (iii) an increase in the number of shares of
Common Stock and Preferred Stock which the Company may issue.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
The approval of the holders of shares of Common Stock and Preferred
Stock representing a majority of the voting power of the Company approved the
Consent Actions. At the close of business on January 31, 1999 (the "Record
Date"), the Company had issued and outstanding 22,320,066 shares of its common
stock, par value $.01 per share ("Common Stock"), and 100,000 shares of its
convertible preferred stock, series A, par value $.01 per share ("Preferred
Stock"). Holders of Preferred Stock have the right to vote on all matters
submitted to a vote of the holders of the Common Stock on an as converted
basis. Each share of Common Stock is entitled to one vote and each share of
Preferred Stock is entitled to vote the equivalent of 260 shares of Common
Stock on each of the proposed actions.
Members of the Board of Directors and their affiliates
(collectively, the "Consenting Stockholders") own or are entitled to vote
shares of Common Stock and Preferred Stock representing more than a majority of
the voting power of the Company and have executed a written consent dated as of
_____________, 1999 (the "Written Consent") adopting and approving the Consent
Actions. As of the date of the Written Consent, there were 22,320,066 shares of
Common Stock outstanding and 100,000 shares of Preferred Stock outstanding.
Together, the Consenting Stockholders own or are entitled to vote 45,565,562
shares of Common Stock (including shares of Common Stock the Consenting
Stockholders are entitled to vote as a result of ownership of Preferred Stock)
out of 48,320,066 shares of Common Stock outstanding and entitled to vote
(including shares of Common Stock the Consenting Stockholders are entitled to
vote as a result of ownership of Preferred Stock) as of the Record Date,
representing 94.3% of the voting power of the Company as of the Record Date. No
vote or further action of the stockholders of the Company is required in order
to approve, adopt or implement the Consent Actions. No appraisal or other
similar rights are available to dissenters of the Consent Actions except as
described under "Dissenters' Right of Appraisal" and "Consent Action No.
1--Approval of a Change in the Company's State of Incorporation from Utah to
Texas--Rights of Stockholders to Dissent" and no approvals are required from
any state or federal agencies. The actions to be effectuated by the Consent
will become effective (the "Consent Effective Date") on or about _________,
1999.
Pursuant to Section 16-10a-704 of the Utah Revised Business
Corporation Act (the "Utah Act"), any action permitted to be taken at an annual
or special meeting of stockholders of a Utah corporation may be taken without a
meeting and without prior notice if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Pursuant to Section 16-10a-704 of the Utah Act, prompt
notice of any such action by written consent must be given to those
stockholders entitled to vote who have not consented in writing and those
stockholders not entitled to vote to whom the Utah Act requires that notice be
given. This Information Statement constitutes such required notice. Only
stockholders of record at the close of business on the Record Date are entitled
to notice of the Consent Actions.
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DISSENTERS' RIGHT OF APPRAISAL
The change of the Company's state of incorporation from Utah to
Texas is done by merging the Company with a subsidiary of the Company formed in
Texas. The Utah Act provides that, in connection with such a merger, a
stockholder may elect to receive a cash payment of the fair value of his
shares, rather than receiving stock in the Merger. A copy of the relevant parts
of the Utah Act are attached hereto as Exhibit I. This Information Statement is
accompanied by the Company's written dissenters' notice (the "Dissenters'
Notice") pursuant to Section 16-10a-1322 of the Utah Act to all stockholders
who have not executed a written consent to the reincorporation of the Company
as a Texas corporation. Stockholders who wish to dissent must demand payment
from the Company by ____________, 1999. See "Consent Action No. 1--Approval of
a Change in the Company's State of Incorporation from Utah to Texas--Rights of
Stockholders to Dissent" and the Dissenters' Notice.
SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth information with respect to the
ownership of shares of Common Stock and Preferred Stock as of the Record Date,
by (i) each director and executive officer of the Company, (ii) all executive
officers and directors of the Company as a group and (iii) each person known by
the Company to own beneficially more than 5% of the outstanding shares of
Common Stock or Preferred Stock. To the Company's knowledge, the persons
indicated below have sole voting and investment power with respect to the
shares indicated as owned by them, except as otherwise stated. The address for
each director and beneficial owner of more than 5% of the outstanding shares of
Common Stock is 700 Louisiana, Suite 3700, Houston, Texas 77002, unless
otherwise indicated.
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK(1)
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PERCENT OF CLASS PERCENT OF CLASS
NAME OF BENEFICIAL OWNER AMOUNT AMOUNT
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DIRECTORS AND EXECUTIVE OFFICERS:
Thomas D. Barrow.................... 8,666,666.658(2) 28.0% 33,333.33 33.3%
Tim J. Goff......................... 21,944,858.658(3) 70.3% 33,333.33(4) 33.3%
Gary R. Petersen (5)................ -- -- --
D. Martin Phillips (5).............. -- -- --
B. Carl Price....................... 1,740,000(6) 7.6% -- --
Kimberly G. Seekely................. -- -- --
Mary Elizabeth Vanderhider.......... -- -- --
Common Stock owned by
all directors and executive
officers as a group (7 persons).. 32,351,525.306 79.77% 66,666.66 66.7%
5% STOCKHOLDERS:
Energy Capital Investments
Co. PLC(7)....................... 2,269,886 10.2% -- --
EnCap Equity 1994, L.P.(7).......... 2,424,973 10.9% -- --
TJG Investments, Inc................ 1,255,000(8) 5.6% -- --
Bargo Energy Company................ 7,078,333(9) 31.7% -- --
James E. Sowell..................... 8,666,666.684(10) 28.0% 33,333.33 33.33%
Bargo Operating Company,
Inc............................... 5,204,859(11) 22.8% 1,000(12) 1%
Bargo Energy Resources,
Inc. ............................ 4,944,859(13) 21.9% -- --
Don Wm. Reynolds.................... 753,362 3.4%(14) -- --
</TABLE>
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(1) As of January 31, 1999 there were 100,000 shares of Preferred Stock
outstanding. All shares of Preferred Stock are convertible within 60
days from the Record Date.
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(2) All of the shares of Common Stock beneficially owned by Mr. Barrow
represent shares that may be acquired within 60 days from the Record
Date upon the conversion of the Preferred Stock owned by Mr. Barrow.
Mr. Barrow's address is P.O. Box 2588, Longview, Texas 75606.
(3) Mr. Goff shares voting and investment power with TJG Investments,
Inc. ("TJG") with respect to 1,255,000 shares, with Bargo Energy
Company ("Bargo Energy") with respect to 7,078,333 shares, and
jointly with Bargo Operating Company, Inc. ("Bargo Operating") and
Bargo Energy Resources, Ltd. ("Resources") with respect to 4,694,859
shares. In addition Mr. Goff shares voting and investment power
jointly with Bargo Operating and Resources with respect to a warrant
to purchase 250,000 shares of Common Stock which may be exercised
within 60 days from the Record Date. The remaining shares represent
shares which may be acquired upon conversion of outstanding
Preferred Stock within 60 days from the Record Date. Mr. Goff has
sole voting and investment power with respect to 8,406,666.67 shares
of Common Stock which may be acquired upon conversion of Preferred
Stock and shares voting and investment power with Bargo Operating
with respect to 260,000 shares of Common Stock which may be acquired
upon conversion of Preferred Stock.
(4) Includes 1,000 shares of Preferred Stock for which Mr. Goff shares
voting and investment power with Bargo Operating and 32,333.33
shares of Preferred Stock over which Mr. Goff has sole voting and
investment power.
(5) According to a Schedule 13D/A filed by Energy Capital Investment Co.
PLC ("Energy PLC"), EnCap Equity 1994, L.P., ("EnCap") and certain
of their affiliates on September 4, 1998, Messrs. Petersen and
Philips are not deemed to have beneficial ownership of any of the
shares of Common Stock held by Energy PLC and EnCap.
(6) Includes 587,720 shares of Common Stock that may be acquired
pursuant to employee stock options which may be exercised
immediately. Also includes 63,131 shares of Common Stock, the
maximum number of shares which Mr. Price has the right to acquire
during the 60 days following the Record Date under an employment
agreement with Future. Under this agreement, Mr. Price may elect to
receive all or a portion of his salary in shares of Common Stock at
a price per share of $0.33 per share until December 31, 1999. From
January 1, 1999 and until the employment agreement terminates, the
purchase price per share is the average midpoint between the bid and
asked price of the Common Stock on the OTC Bulletin Board for the
last five days of the calendar year prior to the year the
compensation is earned. The 63,131 shares included in the foregoing
table represents the maximum number of shares which Mr. Price could
acquire during the 60-day period following January 31, 1999 if he
converted all of his salary into shares of Common Stock.
(7) The address of Energy Capital Investments Co. PLC and EnCap Equity
1994, L.P. is 1100 Louisiana, Suite 3150, Houston, Texas 77002.
(8) TJG shares voting and investment power with respect to these shares
with Tim J. Goff.
(9) Bargo Energy shares voting and investment power with respect to
these shares with Tim J. Goff.
(10) All of the shares of Common Stock beneficially owned by Mr. Sowell
represent shares that may be acquired within 60 days from the Record
Date upon the conversion of the Preferred Stock owned by Mr. Sowell.
Mr. Sowell's address is 3131 McKinney Avenue, Suite 200, Dallas,
Texas 75204.
(11) Bargo Operating shares voting and investment power with respect to
4,694,859 shares jointly with Tim J. Goff and Resources. In
addition, Bargo Operating shares voting and investment power jointly
with Tim J. Goff and Resources with respect to a warrant to purchase
250,000 shares of Common Stock which may be exercised within 60 days
from the Record Date. Bargo Operating also shares voting and
investment power with Tim J. Goff with respect to 260,000 shares of
Common Stock which may be acquired upon conversion of Preferred
Stock within 60 days from the Record Date.
(12) Bargo Operating shares voting and investment power with respect to
these shares with Tim J. Goff.
(13) Resources shares voting and investment power jointly with Tim J.
Goff and Bargo Operating with respect to 4,694,859 shares and a
warrant to purchase 250,000 shares of Common Stock which may be
exercised within 60 days from the Record Date.
(14) Mr. Reynolds is party to an Amended and Restated Stockholders
Agreement between the Company, Resources, Energy PLC, EnCap and
certain other stockholders, by virtue of which Mr. Reynolds may be
deemed to beneficially own over 5% of the outstanding Common Stock.
Mr. Reynolds disclaims such beneficial ownership.
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CHANGE OF CONTROL
AUGUST TRANSACTION
On August 14, 1998, Future closed an acquisition, effected by
merger, of oil and gas properties from Resources for a purchase price of $5.8
million, 4.7 million shares of Common Stock and a warrant to purchase an
additional 250,000 shares of Common Stock ("August Transaction").
In connection with the August Transaction, Energy Capital Investment
Company PLC and EnCap Equity 1994, L.P. (Energy PLC and EnCap together are the
"EnCap Entities") agreed to modify and extend their outstanding loans to Future
in the amount of approximately $7.3 million in exchange for 2.8 million shares
of Common Stock.
Also in connection with the August Transaction, Resources, the
EnCap Entities, Mr. B. Carl Price, Mr. Don Wm. Reynolds (Mr. Price and Mr.
Reynolds together are the "Price Group") and Future entered into a
Stockholders' Agreement whereby they agreed to cause the Board of Directors of
Future to be composed of seven persons. Each party further agreed to vote their
shares of Common Stock in connection with the election of directors of the
Company for two nominees of Resources, two nominees of the EnCap Entities and
three nominees of the Price Group. In addition, the parties to the
Stockholders' Agreement agreed that one of the nominees of Resources would be
the Chairman of the Board of Directors of the Company. Accordingly, Mr. Robert
D. Price and Mr. D. William Reynolds, Jr. agreed to resign from Future's Board
of Directors. Mr. Tim J. Goff, who was also appointed Chairman of the Board of
Future, and Mr. Thomas D. Barrow were appointed to serve as Resources'
nominees, and Mr. Gary R. Petersen and Mr. D. Martin Philips were appointed to
serve as the EnCap Entities' nominees. The effective date of such resignations
and appointments was August 21, 1998.
Also pursuant to the August Transaction, the Company granted
registration rights to Resources, the EnCap Entities, and the Price Group with
respect to shares of Common Stock owned by them. In addition, the By-Laws of
the Company were amended to provide that, for so long as Resources is entitled
to nominate one or more persons to the Board of Directors of the Company as
provided in the Stockholders' Agreement, the Company cannot take certain
actions without the approval of one of the directors nominated by Resources,
including, without limitation, (i) incur or be liable for indebtedness other
than indebtedness under the Company's credit facility with a commercial bank,
obligations under operating leases entered into in the ordinary course of the
Company's business, and purchase money indebtedness in an aggregate principal
amount not to exceed $200,000 at any time; (ii) merge or consolidate with or
into any other business entity; (iii) sell, transfer, lease, exchange, alienate
or dispose of certain assets; (iv) make any expenditure or commitment or incur
any obligation or enter into or engage in any transaction except in the
ordinary course of business (which ordinary course of business includes the
acquisition, directly or indirectly, of oil and gas properties); or (v) engage
in any material transaction with any of its affiliates on terms which are less
favorable to it than those which would have been obtainable at the time in
arms-length dealing with persons other than such affiliates.
In connection with the August Transaction, Future entered into a $20
million credit agreement with Bank of America National Trust and Savings
Association ("Bank of America") with a borrowing base initially set at $10.5
million. Pursuant to pledge agreements dated August 14, 1998 ("August Pledge
Agreements"), Resources, the EnCap Entities and the Price Group pledged their
shares of Common Stock to secure Future's borrowings under the credit
agreement. If an event of default occurs under the credit agreement, the bank
will have the right to vote all of the shares of Future subject to the August
Pledge Agreements and, following foreclosure on the shares, will have the right
to sell the shares as provided in the August Pledge Agreements and applicable
law.
DECEMBER TRANSACTION
The Company acquired as of December 15, 1998 substantially all of
the assets and liabilities of Resources, including Resources' trained staff of
professional geologists, landmen, accountants and other employees, for $2
million and 100,000 shares of Preferred Stock. Resources immediately distributed
the shares of Preferred Stock to its partners. In addition, Future issued an
aggregate of 8,333,333 shares of Common Stock to Bargo Energy and TJG in
exchange for the cancellation of outstanding debt aggregating $4 million. Bargo
Energy and TJG are affiliates of Resources.
In connection with the December transaction, the Company, Resources,
Bargo Energy, Bargo Operating, TJG, the Price Group and the EnCap Entities
entered into an Amended and Restated Stockholders' Agreement whereby Resource's
board representation was increased from two director
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nominees to four director nominees and the Price Group's board representation
was decreased from three director nominees to one director nominee.
All of the shares of Common Stock and Preferred Stock issued
pursuant to the December Transaction as well as the shares of Common Stock
issuable upon conversion of the Preferred Stock are subject to pledge
agreements, each of which is dated December 15, 1998 ("December Pledge
Agreements") between the stockholders and Bank of America. The December Pledge
Agreements secure Future's borrowings under its credit agreement with Bank of
America. If an event of default occurs under the credit agreement, the bank
will have the right to vote all of the shares of Future subject to the December
Pledge Agreements and, following foreclosure on the shares, will have the right
to sell the shares as provided in the December Pledge Agreements and applicable
law.
Also, in connection with the December transaction, the Company
agreed to file a proxy statement or information statement with the Securities
and Exchange Commission to change its name to Bargo Energy Company,
reincorporate the Company in Texas and increase the number of shares of Common
Stock Future is authorized to issue.
As of the Record Date, Resources and its affiliates owned
approximately 80.8% of the outstanding voting power of the Company, the Encap
Entities owned approximately 9.7% of the outstanding voting power of the
Company and the Price Group owned approximately 3.8% of the outstanding voting
power of the Company. The parties to the Amended and Restated Stockholders'
Agreement, voting together, have the ability to elect the entire board of
directors of Future. The provisions of the Amended and Restated Stockholders'
Agreement relating to voting and transfer of Common Stock may be deemed to form
a group composed of the parties to such Agreement. If such parties were deemed
to be a group, it would beneficially own more than 94.3% of the outstanding
voting power of the Company.
POSSIBLE ISSUANCE OF ADDITIONAL EQUITY
In December 1998, the Company entered into a term sheet with
entities affiliated with the EnCap Entities and other institutional investors
not affiliated with the EnCap Entities or the Company pursuant to which the
investors would purchase $50 million of a new class of cumulative redeemable
preferred stock of the Company, and would receive warrants to purchase 40% of
the outstanding Common Stock on a fully diluted basis. The term sheet is a
non-binding expression of interest, and is not a commitment on the part of the
investors or the Company. Among other things, the investment pursuant to the
term sheet is subject to completion of due diligence by the investors and
satisfactory documentation. The parties are in the very preliminary stages of
due diligence and consummation of the transaction is subject to material
contingencies beyond the control of the Company. As a result, no assurances can
be made as to the terms of any such investment or that the investors will
purchase preferred stock or any other security of the Company.
THE CONSENT ACTIONS
By this Information Statement, the Company is providing the
stockholders with the required notice of the following corporate actions that
were approved and adopted by the Consenting Stockholders in the Written
Consent:
1. The reincorporation of the Company as a Texas corporation.
2. A change to the Company's Articles of Incorporation
increasing the number of authorized capital stock to 125
million shares, of which 120 million shares will be Common
Stock and 5 million will be preferred stock.
3. The change of the Company's name to Bargo Energy Company.
The reincorporation, increase in number of authorized shares of
capital stock and name change are collectively referred to herein as the
"Consent Actions."
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CONSENT ACTION NO. 1
APPROVAL OF A CHANGE IN THE COMPANY'S
STATE OF INCORPORATION FROM UTAH TO TEXAS
GENERAL
The Consenting Stockholders, pursuant to the Written Consent, and
the Board of Directors of the Company have approved a proposal to change the
Company's state of incorporation from Utah to Texas. This reincorporation will
be accomplished by the merger (the "Merger") of the Company into a wholly-owned
Texas subsidiary of the Company ("Future-Texas"). The Texas subsidiary,
Future-Texas, will have the name Bargo Energy Company. See "Consent Action No.
3 - Change of the Company's Name to Bargo Energy Company." Future-Texas was
recently formed to effect the Merger and has no other business or assets. The
principal executive offices of Future-Texas are located at 700 Louisiana, Suite
3700, Houston, Texas 77002.
The Merger will be effected pursuant to a merger agreement entered
into among the Company and Future-Texas (the "Merger Agreement") a form of
which is attached hereto as Exhibit II. The Merger Agreement provides that,
when the Merger becomes effective, the Company will be merged with Future-Texas
and Future-Texas will be the surviving corporation. The principal effect of the
Merger will be to change the law applicable to the Company's corporate affairs
from the Utah Act to the Texas Business Corporations Act ("TBCA"). The Merger
will become effective upon the filing of the requisite merger documents in Utah
and Texas (the "Effective Time"), which filings are expected to be on the
Consent Effective Date. Each share of Common Stock outstanding at the Effective
Time will be converted into one share of common stock, $.01 par value, of
Future-Texas ("New Common Stock") and each share of Preferred Stock outstanding
at the Effective Time will be converted into one share of preferred stock, $.01
par value, of Future-Texas ("New Preferred Stock"). The description of the
Merger contained herein is qualified in its entirety by reference to the Merger
Agreement.
The same persons who are directors and officers of the Company are
the directors and officers of Future-Texas. No change in the present business
of the Company is contemplated, except as new developments and opportunities
may occur. By operation of law, at the Effective Time, all assets, property,
rights, liabilities and obligations of the Company will be transferred to and
assumed by Future-Texas. Management believes that there will be no adverse tax
consequences to stockholders of the Company as a result of the Merger. The New
Common Stock will be traded on the OTC Bulletin Board, and Future-Texas will
change the symbol under which it will be traded to reflect its new name.
The consent of holders of at least a majority of all outstanding
shares of the Company's Common Stock entitled to vote as of the Record Date was
required for the adoption of the Merger. The Merger Agreement provides that the
Board of Directors has the right to terminate the Merger Agreement and abandon
the Merger for any reason, notwithstanding stockholder approval. The Company
intends to proceed with the Merger and the authorized capital of Future-Texas
will consist of 120,000,000 shares of New Common Stock and 5,000,000 shares of
New Preferred Stock.
There are certain differences between the Articles of Incorporation
and the By-Laws of the Company and the Articles of Incorporation and By-Laws of
Future-Texas, as well as differences in the corporate law of the states of Utah
and Texas, which will affect the Company and its stockholders. See
"--Significant Differences in Corporate Law of Utah and Texas" and "--Certain
Differences Between the Articles of Incorporation and Bylaws of the Company and
Future-Texas."
Stockholders of the Company shall, subject to and by complying with
Part 13 of the Utah Act, have the right to object to the Merger, which will
result in the right to receive payment for the fair value of their shares and
the other rights and benefits provided by the Utah Act. See "--Rights of
Stockholders to Dissent."
ACCOUNTING TREATMENT
The Merger will be accounted for at historical costs as a
reorganization of entities under common control.
REASONS FOR THE MERGER
The Board of Directors of the Company believes that the best
interest of the Company and its stockholders will be served by reincorporating
in Texas. Over the last six months, the Company has become more active in the
acquisition of oil and gas properties. Many of the Company's acquisition
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agreements are governed by Texas law and many of its oil and gas properties are
located in Texas. Consequently, the Company generally retains Texas counsel to
represent it in connection with these acquisitions reflecting such counsel's
proximity to the Company's headquarters and familiarity with Texas oil and gas
law. In many cases, Utah counsel must also be retained by the Company to
provide opinions regarding Utah's corporate law. The Company believes that
re-incorporation in Texas will enable the Company to eliminate the costs
associated with being incorporated in Utah.
SIGNIFICANT DIFFERENCES IN CORPORATE LAW OF UTAH AND TEXAS
There are a number of differences between the Utah Act and the TBCA.
Although no attempt has been made to summarize all differences in the corporate
laws of such states, the following is a summary of the material differences in
the corporate laws of Utah and Texas which could affect stockholders.
<TABLE>
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APPRAISAL RIGHTS (UTAH) APPRAISAL RIGHTS (TEXAS)
Under Utah law, stockholders are entitled to Under Texas law, stockholders are also
appraisal rights in the event of a merger or a sale, entitled to appraisal rights in the event of a merger
lease, exchange or other disposition of all or or a sale, lease, exchange or other disposition of all
substantially all of the property and assets of the or substantially all of the property and assets of the
corporation requiring stockholder approval or in the corporation requiring stockholder approval or in the
event of a share exchange in which the corporation's event of a share exchange in which the corporation's
shares are acquired. Utah law also grants appraisal shares are acquired.
rights if the corporation is entitled to vote with
respect to a sale, lease, exchange or other
disposition of all, or substantially all of the assets of
an entity controlled by the corporation if the shares
or other interests the corporation holds in the
controlled entity constitute all or substantially all of
the property of the corporation. Utah law denies
stockholders appraisal rights in the event of a sale
of all or substantially all of the assets of a
corporation if it is for cash and pursuant to a plan
by which all or substantially all of the net proceeds
of the sale will be distributed to the stockholders
within one year after the date of sale.
Utah law denies stockholder appraisal rights Texas law also denies stockholder appraisal
if the corporation's shares are listed on a national rights if the corporation's shares are listed on a
securities exchange or held of record by 2,000 national securities exchange or held of record by
stockholders and the stockholder will receive shares 2,000 stockholders and the stockholder will receive
that meet similar requirements. Under Utah law, shares that meet similar requirements. Under Texas
appraisal rights are also denied if the stockholder's law, appraisal rights are also denied if the
stock and the stock to be received is listed on the stockholder's stock and the stock to be received is
National Market System of the National Association listed on the Nasdaq Stock Market or designated as
of Securities Dealers Automated Quotation System a national market security on an interdealer
Nasdaq Stock Market. quotation system by the National Association of
Securities Dealers, Inc.
</TABLE>
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<TABLE>
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DIVIDENDS (UTAH) DIVIDENDS (TEXAS)
Utah law prohibits the distribution of Under Texas law, a corporation may make a
dividends if, after a distribution is given effect, (i) distribution, subject to restrictions in its charter, if
the corporation would not be able to pay its debts as it does not render the corporation unable to pay its
they become due in the usual course of business or debts as they become due in the course of its
(ii) if the corporation's total assets would be less business, and if it does not exceed the corporation's
than the sum of its total liabilities plus the amount surplus. Surplus is defined under Texas law as the
that would be needed, if the corporation were to be excess of net assets (essentially, the amount by
dissolved at the time of the distribution, to satisfy which total assets exceed total debts) over stated
the preferential rights upon dissolution of capital (essentially, the aggregate par value of the
stockholders whose preferential rights are superior issued shares having a par value plus consideration
to those receiving the distribution. paid for shares without par value that have been
issued), as such stated capital may be adjusted by
the board. This limitation does not apply to
distributions involving a purchase or redemption of
shares to eliminate fractional shares, collect
indebtedness, pay dissenting stockholders or redeem
shares if net assets equal or exceed the proposed
distribution.
RESTRICTIONS ON CONTROLLING STOCKHOLDERS (UTAH) RESTRICTIONS ON CONTROLLING STOCKHOLDERS (TEXAS)
The Utah Control Share Acquisitions Act The Texas Business Combination Law (the
(the "Acquisitions Act") requires persons who "Combination Law") prevents the beneficial owner
acquire more than 20% of the voting power of a of 20% or more of the voting shares of a
public corporation to obtain the approval of a corporation from engaging in certain business
majority of all stockholders who do not hold combinations for a period of three years after
interested shares in order to retain the voting rights becoming a 20% beneficial owner unless the
of their control shares unless the control shares were transaction is approved by the board of directors or
acquired in a transaction that does not constitute a shareholders as provided in the Combination Law.
control share acquisition. The Company has elected In its initial Articles of Incorporation, Future-Texas
in its Articles of Incorporation not to be subject to elects not to be subject to the Combination law.
the Acquisitions Act.
RIGHT TO VOTE ON CERTAIN MERGERS AND OTHER RIGHT TO VOTE ON CERTAIN MERGERS AND OTHER
CORPORATE MATTERS (UTAH) CORPORATE MATTERS (TEXAS)
Under Utah law approval by the holders of Unless the articles of incorporation provide
a majority of all votes entitled to be cast is required otherwise, approval of the holders of at least two-
to approve a merger, unless the certificate of thirds of all outstanding shares entitled to vote is
incorporation provides otherwise. required by Texas law to approve a merger. The
Articles of Incorporation of Future-Texas provide
that approval of only a majority of the shares
entitled to vote is necessary to approve a merger.
The sale, lease, exchange or other Under Texas law, the sale, lease, exchange
disposition of all, or substantially all, of the or other disposition of all, or substantially all, of the
property and assets of a Utah corporation, if not property and assets of a corporation, if not made in
made in the usual and regular course of its business, the usual and regular course of its business, requires
requires the approval of at least a majority of the the approval of the holders of at least two-thirds of
votes entitled to be cast. the outstanding shares of the corporation, unless the
articles of incorporation provide otherwise. The
Articles of Incorporation of Future-Texas provide
that the approval of only a majority the shares
entitled to vote is necessary to approve a sale, lease,
exchange or other disposition of all or substantially
all of the property and assets of the corporation
when not made in the usual and regular course of
business.
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Under Utah law, an amendment to a Under Texas law, an amendment to the
corporation's articles of incorporation requires the articles of incorporation requires the approval of the
approval of a majority of the votes entitled to be holders of at least two-thirds of the outstanding
cast on the amendment. In addition, Utah law shares of the corporation and any class entitled to
requires the approval of a majority of the votes vote thereon, unless a different amount, which may
entitled to be cast on the amendment by certain not be less than a majority, is specified in the
affected voting groups. articles of incorporation. The Articles of
Incorporation of Future-Texas provide that the
approval of only a majority of the shares entitled to
vote is necessary to amend its Articles of
Incorporation.
Under Utah law, the approval of a majority Texas law requires the approval of the
of the votes entitled to be cast is necessary to holders of at least two-thirds of the outstanding
dissolve a corporation. shares to approve a dissolution, unless a different
amount is specified in the articles of incorporation.
The Articles of Incorporation of Future-Texas
provide that the approval of only a majority of the
shares entitled to vote is necessary to dissolve the
corporation.
QUORUM AND VOTING REQUIREMENTS (UTAH) QUORUM AND VOTING REQUIREMENTS (TEXAS)
Under Utah law, stockholders do not have Under Texas law, stockholders have the
the right to cumulate their votes in the election of right to cumulate their votes in the election of
directors unless the articles of incorporation grant directors unless the articles of incorporation provide
this right. otherwise. The Company's Articles of
Incorporation do not grant and Future-Texas'
Articles of Incorporation will deny stockholders the
right to cumulate their votes in the election of
directors.
Utah law does not contain a provision Under Texas law, a majority of the shares
allowing a meeting to be adjourned when a quorum present at a meeting of stockholders at which a
is not present. quorum is not present may adjourn the meeting until
such time and to such places as determined by a
majority of the shares present at the meeting.
Under Utah law, notice of the adjourned Consistent with Texas law, the Bylaws of
meeting must be given if the meeting is adjourned Future-Texas state that no further notice of the
for more than 30 days or a new record date is fixed. adjourned meeting need be given.
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INSPECTION OF RECORDS (UTAH) INSPECTION OF RECORDS (TEXAS)
Under Utah law, upon providing the Texas law allows a corporation's directors
corporation with at least five business days notice, to inspect any of the corporation's books and
stockholders and directors are entitled to inspect records for any purpose reasonably related to the
and copy the corporation's articles, bylaws, all director's service as a director. A stockholder may,
minutes of stockholder meetings and records of under Texas law, inspect the corporation's books
stockholder action taken without a meeting for the and records upon a written demand if he has been a
past three years, all written communications with stockholder for at least six months or is the holder
stockholders for the past three years, a list of the of at least five per cent of all of the corporation's
names and business addresses of the corporation's outstanding shares. Upon a written request, a Texas
officers and directors, the corporation's most recent corporation must provide any stockholder its annual
annual report delivered to the Utah Division of statements for its last fiscal year and most recent
Corporations and Commercial Code, and all interim statements, if any, which have been filed in
financial statements for periods ending during the a public record or otherwise published.
last three years. In addition, stockholders and
directors may, upon the making of a demand that is
given with at least five business days notice, is
made in good faith and for a proper purpose,
describes the purpose of the inspection and the
records to be inspected and is for records directly
connected with the purpose, inspect the following
books and records: minutes of any meeting or
records of any action taken by the stockholders (for
a meeting or action not occurring within the past
three years), the board of directors or a committee
of the board of directors, waiver of notices of any
meeting of the stockholders, board of directors or
committee of the board of directors, accounting
records of the corporation and a list of the
corporations stockholders.
SPECIAL MEETINGS (UTAH) SPECIAL MEETINGS (TEXAS)
Utah law authorizes the board of directors, Texas law also authorizes the board of
holders of at least 10% of the shares entitled to vote directors, holders of at least 10% of the shares
and other persons authorized by the bylaws to call a entitled to vote and other persons authorized by the
special meeting of shareholders. bylaws to call a special meeting of shareholders.
Under Texas law the president of the corporation is
also given the right to call a special meeting of
shareholders.
INDEMNIFICATION OF DIRECTORS AND OFFICERS (UTAH) INDEMNIFICATION OF DIRECTORS AND OFFICERS (TEXAS)
After the Merger, the indemnification After the Merger, the indemnification
provisions of Utah law will apply to any act or provisions of Texas law will apply to any act or
omission that occurs before the Effective Date. omission that occurs after the Effective Date.
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SCOPE. Under Utah law, a corporation is SCOPE. Under Texas law, a corporation is
permitted to provide indemnification or also permitted to provide indemnification or
advancement of expenses against judgments, advancement of expenses against judgments,
penalties, fines, settlements and reasonable penalties, fines, settlements and reasonable
expenses if the person acted in good faith, with the expenses if the person acted in good faith, with the
reasonable belief that his conduct was at least not reasonable belief that his conduct was at least not
opposed to the best interests of the corporation, and opposed to the best interests of the corporation, and
in the case of a criminal proceeding, had no in the case of a criminal proceeding, had no
reasonable cause to believe his conduct was reasonable cause to believe his conduct was
unlawful. If the person is found liable to the unlawful. In addition, Texas law requires a person
corporation, or if the person is found liable on the acting in his official capacity to have reasonably
basis that he received an improper personal benefit, believed his conduct was in the corporation's best
no indemnification is available under Utah law. interests in order for him to be eligible for
indemnification. If the person is found liable to the
corporation, or if the person is found liable on the
basis that he received an improper personal benefit,
indemnification under Texas law is limited to the
reimbursement of reasonable expenses. No
indemnification is available under Texas law if the
person is found liable for willful or intentional
misconduct.
INSURANCE. Utah law allows a corporation INSURANCE. Texas law also allows a
to purchase and maintain insurance on behalf of any corporation to purchase and maintain insurance on
person who is or was a director, officer, employee behalf of any person who is or was a director,
or agent of the corporation or any person who is or officer, employee or agent of the corporation or any
was serving at the request of the corporation as a person who is or was serving at the request of the
director, officer, employee or agent of another corporation as a director, officer, employee or agent
corporation or enterprise against any liability of another corporation or enterprise against any
asserted against such person and incurred by such liability asserted against such person and incurred
person in such a capacity or arising out of his status by such person in such a capacity or arising out of
as such a person, whether or not the corporation his status as such a person, whether or not the
would otherwise have the power to indemnify him corporation would otherwise have the power to
against that liability. indemnify him against that liability. Under Texas
law, a corporation may also establish and maintain
arrangements, other than insurance, to protect these
individuals, including a trust fund or surety
arrangement.
STOCKHOLDER REPORT. Utah does not require STOCKHOLDER REPORT. Texas law requires a
a stockholder report. written report to the stockholders upon
indemnification or advancement of expense.
LIMITED LIABILITY OF DIRECTORS (UTAH) LIMITED LIABILITY OF DIRECTORS (TEXAS)
Utah law permits a corporation to eliminate Texas law also permits a corporation to
in its charter all monetary liability of a director to eliminate in its charter all monetary liability of a
the corporation or its stockholders for conduct in director to the corporation or its stockholders for
the performance of such director's duties. However, conduct in the performance of such director's
Utah law does not permit the limitation of liability duties. Texas law does not permit any limitation of
for: (i) the amount of financial benefit received by a the liability of a director for: (i) breaching the duty
director to which he is not entitled; (ii) an of loyalty to the corporation or its stockholders; (ii)
intentional infliction of harm on the corporation or failing to act in good faith; (iii) engaging in
the stockholders; (iii) an unlawful distribution; or intentional misconduct or a known violation of law;
(iv) an intentional violation of criminal law. (iv) engaging in a transaction from which the
director obtains an improper benefit; or (v)
violating applicable statutes which expressly
provide for the liability of a director. Accordingly,
certain actions of a director could result in monetary
liability of a director to the corporation in Utah but
not in Texas and vice-versa.
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PROCEDURES FOR FILLING VACANT DIRECTORSHIPS (UTAH) PROCEDURES FOR FILLING VACANT DIRECTORSHIPS
(TEXAS)
Under Utah law, any vacancy occurring in
the board of directors may be filled by the Texas law also provides that any vacancy
stockholders or by the affirmative vote of a majority occurring in the board of directors may be filled by
of the remaining directors, although less than a the stockholders or by the affirmative vote of a
quorum, and a directorship to be filled by reason of majority of the remaining directors, although less
an increase in the number of directors that is filled than a quorum and that a directorship to be filled by
by the board of directors is for a term of office reason of an increase in the number of directors that
continuing only until the next election of one or is filled by the board of directors is for a term of
more directors by the stockholders. office continuing only until the next election of one
or more directors by the stockholders. However,
under Texas law, the board of directors may not fill
more than two such directorships caused by an
increase in the number of directors during the
period between any two successive annual meetings
of stockholders.
BYLAW AMENDMENTS (UTAH) BYLAW AMENDMENTS (TEXAS)
Under Utah law, the board of directors may Texas law also provides that the board of
amend, repeal or adopt a corporation's bylaws directors may amend, repeal or adopt a
unless the articles of incorporation reserve this corporation's bylaws unless the articles of
power exclusively to the stockholders. Under Utah incorporation reserve this power exclusively to the
law, if stockholders fix a greater quorum or voting stockholders. Under Texas law, in amending,
requirement for a bylaw provision, the bylaw repealing or adopting a particular bylaw, the
provision fixing the greater quorum or voting stockholders may expressly provide that the board
requirement may not be amended or repealed by the of directors will not amend or repeal that bylaw.
board of directors. The Articles of Incorporation of The Articles of Incorporation of Future-Texas do
the Company do not restrict the ability of the Board not restrict the ability of the Board of Directors to
of Directors to amend, repeal or adopt bylaws. amend, repeal or adopt bylaws.
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CERTAIN DIFFERENCES BETWEEN THE ARTICLES OF INCORPORATION AND BYLAWS OF THE
COMPANY AND FUTURE-TEXAS
The internal affairs of Future-Texas will be governed by its
Articles of Incorporation and By-Laws. While the Articles of Incorporation and
the Bylaws of Future-Texas are substantially identical to the Articles of
Incorporation and Bylaws of Future, they differ in certain respects from the
Company's Articles of Incorporation and Bylaws. These differences are primarily
attributable to the differences in the Utah Act and the TBCA. See
"--Significant Differences in Corporate Law of Utah and Texas." The Articles of
Incorporation and Bylaws of Future-Texas are attached hereto as Exhibit III and
IV, respectively. The provisions of the Articles of Incorporation of
Future-Texas relating to the authorized number and classes of stock and the
characteristics thereof and the management of the affairs of Future-Texas,
however, are substantially identical to the corresponding provisions currently
contained in the Articles of Incorporation of the Company. The Articles of
Incorporation and Bylaws of Future-Texas are attached hereto as Exhibits III
and IV, respectively. All descriptions herein concerning such documents are
qualified in their entirety by reference to such documents.
PROCEDURE TO EXCHANGE CERTIFICATES
At the Effective Time, each outstanding share of the Company's
Common Stock, other than Common Stock as to which dissenter's rights have been
properly asserted, will be converted into one share of New Common Stock and
each share of the Company's Preferred Stock will be converted into one share of
New Preferred Stock. Such conversion of shares will not result in any change in
the present ownership of shares of stock of the Company. Outstanding stock
certificates of Future will automatically be deemed to represent the same
number of shares of Future-Texas as represented by the Future certificates
prior to the Merger. All certificates of such Future shares, by virtue of the
Merger and without any action on the part of the holders thereof, shall be
deemed to represent a number of Future-Texas shares in an amount equal to the
number of Future shares represented by the certificate immediately prior to the
Effective Time, and each holder of a certificate representing any such Future
shares shall thereafter have all of the rights and privileges of a holder of
Future-Texas shares.
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STOCKHOLDERS OF FUTURE-TEXAS WILL NOT BE REQUIRED TO EXCHANGE THEIR
FUTURE STOCK CERTIFICATES FOR FUTURE-TEXAS STOCK CERTIFICATES.
Following the Merger, previously outstanding Future stock
certificates may be delivered, in effecting sales, through a broker or
otherwise, of shares of Future-Texas.
RIGHTS OF STOCKHOLDERS TO DISSENT
Since the proposed reincorporation will be conducted through a
merger, under Utah law, stockholders of the Company will have the right under
Part 13 of the Utah Act to dissent from the Merger and receive the fair market
value of their shares in cash. In the event that a significant number of
stockholders dissent or if the Company is required to commence a judicial or
other proceeding to determine the fair value of a dissenter's shares, the Board
of Directors may exercise its right in the Merger Agreement to terminate the
Merger Agreement and abandon the Merger.
Under Utah law, a holder of the Company's Common Stock or Preferred
Stock who desires to dissent from the proposed Merger must not consent to the
Merger. This Information Statement is accompanied by the Dissenters' Notice
required by Section 16-10a-1322 of the Utah Act that must be sent to those
stockholders who did not consent to the Merger. The Merger was authorized on
_____________, 1999, by the Written Consent which will become effective on the
Consent Effective Date.
Stockholders who are given the Dissenter's Notice, who have not
consented to the Merger and who wish to assert dissenters' rights must, by
_________, 1999, and in accordance with the terms of the Dissenters' Notice,
cause the Company to receive a payment demand and submit the certificates
representing their shares to the Company's transfer agent (the "Transfer
Agent"), as directed in the Dissenters' Notice. A stockholder giving such
demand, who did not consent to the Merger, shall be entitled, if and when the
Merger is effected, to be paid by the Company the fair value of his or her
shares.
Upon the later of the Effective Time and receipt by the Company of
each payment demand, the Company shall pay the fair value (as determined by the
Company) of the dissenter's shares, plus interest, to each dissenter who has
timely deposited his or her certificates. If the dissenter is dissatisfied with
the payment, the dissenter may, within 30 days after the Company made payment
for his or her shares, notify the Company in writing of his or her own estimate
of the fair value of his or her shares and demand payment of the estimated
amount, plus interest, less the payment already made (a "Second Demand"). The
dissenter may also deliver such notice to the Company if the Company fails to
make payment within 60 days after the deadline to receive payment demands or if
the Merger is not consummated by the Company and the Company fails to return
the dissenter's deposited certificates. If a Second Demand for payment remains
unresolved, the Company must commence a proceeding within 60 days after
receiving the dissenter's Second Demand to petition the district court in the
county where the Company's registered office in Utah is located to determine
the fair value of the shares, including interest. If the Company does not
commence such a proceeding within the 60-day period, it must pay each dissenter
whose Second Demand remains unresolved the amount demanded.
The above summary with respect to the rights of the Company and the
stockholders to object and demand payment for their shares does not purport to
be complete and is qualified in its entirety by reference to the provisions of
Part 13 of the Utah Act, a copy of which is attached hereto as Exhibit 1.
FAILURE TO COMPLY WITH ANY OF THE PROCEDURAL REQUIREMENTS OF PART 13 OF THE
UTAH ACT MAY RESULT IN A TERMINATION OR WAIVER OF DISSENTERS' RIGHTS UNDER PART
13.
FEDERAL INCOME TAX CONSEQUENCES
The Company believes the Merger will be a non-taxable transaction
for federal income tax purposes. This means, among other things that:
(i) Holders of the Company's Common Stock and Preferred Stock will
not recognize any gain or loss on the conversion of their shares of
Company Common Stock into shares of Future-Texas Common Stock and
Future-Texas Preferred Stock, respectively.
(ii) A stockholder's tax basis in the shares of Future-Texas Common
Stock and Future-Texas Preferred Stock received in the Merger will be
the same as the stockholder's tax basis in his shares of the Company's
Common Stock and Preferred Stock, respectively.
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(iii) A stockholder's holding period for shares of Future-Texas
Common Stock and Future-Texas Preferred Stock received in the Merger
will include the holding period for his shares of the Company's Common
Stock and Preferred Stock, respectively, provided such Company Common
Stock and Preferred Stock was held as a capital asset on the effective
date of the Merger.
(iv) Future-Texas will not recognize gain or loss from the issuance
of its stock pursuant to the Merger.
The above summary of the tax effects of the Merger relates only to
federal income tax consequences. Stockholders are advised to consult their own
tax advisors with regard to tax consequences of the Merger under other
jurisdictions.
CONSENT ACTION NO. 2
INCREASE THE NUMBER OF AUTHORIZED SHARES OF CAPITAL STOCK
Article III of the Company's Articles of Incorporation currently
authorizes the Company to issue up to 30,000,000 shares of Common Stock and
200,000 shares of preferred stock. The Articles of Incorporation of
Future-Texas provide for 125 million shares of capital stock, of which 120
million are common stock and 5 million are preferred stock. All newly
authorized shares will have the same rights as the presently authorized shares,
including the right to cast one vote for each share held of record on all
matters submitted to a vote of stockholders and, subject to the rights of the
holders of preferred stock, to participate in dividends when and to the extent
declared and paid. Holders of Common Stock do not have preemptive rights and
are not entitled to cumulate votes for the election of directors.
Adoption of the increase in authorized Common Stock will be effected
automatically as part of the reincorporation Merger. Under Utah law, the
amendment to the articles of incorporation required the consent of at least a
majority of the issued and outstanding shares of Common Stock and, on an as
converted basis, the Preferred Stock, voting together as a single class. The
Articles of Incorporation of Future-Texas, attached hereto as Exhibit III,
provide that Future-Texas shall be authorized to issue 120 million shares of
common stock and 5 million shares of preferred stock. Accordingly, the increase
in authorized capital stock will become effective at the Effective Time of the
Merger. See "Consent Action No. 1--Approval of Change in the Company's State of
Incorporation from Utah to Texas."
At the close of business on the Record Date, the Company had
22,326,066 shares of Common Stock outstanding, 26,000,000 shares reserved for
issuance upon conversion of the Preferred Stock and approximately 1,012,844
shares reserved for issuance pursuant to stock options granted to employees and
warrants. Accordingly, the Company currently does not have a sufficient number
of shares of Common Stock authorized for conversion or exercise of currently
outstanding derivative securities, including the Preferred Stock. The holders
of the outstanding Preferred Stock have agreed not to convert the outstanding
Preferred Stock into Common Stock owned by them until the Company causes the
increase in the number of authorized shares.
In the event that the Board of Directors elects to exercise its
right in the Merger Agreement to terminate the Merger Agreement and abandon the
Merger, the authorized capital of the Company will be increased by filing an
Article of Amendment to the Company's Articles of Incorporation with the Utah
Division of Corporations and Commercial Code. If the Merger is abandoned, the
first sentence of Article III of the Articles of Incorporation of the Company,
will be amended to read as follows:
"The Corporation shall have the authority to issue
125,000,000 shares, of which 5,000,000 shares shall be preferred
stock, $.01 par value ("Preferred Stock"), and 120,000,000 shares
shall be common stock, $.01 par value ("Common Stock")."
The Board of Directors of the Company believes the increase in the
authorized shares of capital stock is in the best interests of the Company and
its stockholders. In addition to providing the requisite number of shares of
Common Stock for issuance upon conversion or exercise of currently outstanding
derivative securities, the increase will provide the Company with needed
flexibility to act with respect to possible future financings, investment
opportunities, acquisitions, stock dividends, stock issuances under employee
stock option grants and for other corporate purposes without the delay and
expense involved in obtaining stockholder approval each time an event requiring
the issuance of shares may arise.
Other than fulfilling the Company's obligations to issue stock
pursuant to the conversion of the Preferred Stock and exercise of outstanding
options and warrants, the Company is not currently obligated to issue any
additional shares of Common Stock. As described under "Security
Ownership--Possible Issuance of Additional Equity," the Company is currently
negotiating to issue additional equity to a group
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of institutional investors. The Company's issuance of additional shares of
Common Stock may dilute the equity ownership position of current holders of
Common Stock. The Company's Board of Directors generally may issue the
additional authorized shares of Common Stock without further stockholder
approval. In some instances, stockholder approval for the issuance of
additional shares may be required by law or by any exchange on which the
Company's securities may be listed.
The availability of authorized but unissued shares of Common Stock
might be deemed to have the effect of preventing or discouraging an attempt by
another person to obtain control of the Company, because the additional shares
could be issued by the Board of Directors, which could dilute the stock
ownership of such person. Other than as described herein, the Company has no
plans for such issuances and the increase in authorized Common Stock is not
being made in response to any known effort to acquire control of the Company.
CONSENT ACTION NO. 3
CHANGE OF THE COMPANY'S NAME TO BARGO ENERGY COMPANY
The Board of Directors of Future believes that changing the
Company's name to Bargo Energy Company is in the best interest of the Company
and its stockholders. The name "Bargo Energy Company" has name recognition more
associated with the Company's current management, most of whom are former
employees of Bargo Energy Resources, Ltd. and its affiliates.
Adoption of the name change required the consent of at least a
majority of the issued and outstanding shares of Common Stock and, on an as
converted basis, the Preferred Stock, voting together as a single class. The
Articles of Incorporation of Future-Texas, attached hereto as Exhibit III, will
provide that the name of the surviving corporation in the Merger shall be
"Bargo Energy Company." Accordingly, the name change will become effective at
the Effective Time of the Merger. See "Consent Action No. 1--Approval of a
Change in the Company's State of Incorporation from Utah to Texas."
In the event that the Board of Directors elects to exercise its
right in the Merger Agreement to terminate the Merger Agreement and abandon the
Merger, the name of the Company will be changed to Bargo Energy Company by
filing an Article of Amendment to the Company's Articles of Incorporation with
the Utah Division of Corporations and Commercial Code. In the event that an
Article of Amendment is filed to change the Company's name, the symbol under
which the Company's Common Stock is traded on the OTC Bulletin Board will be
changed to reflect the Company's new name. If the Merger is abandoned, the text
of Article I of the Articles of Incorporation of the Company, will be amended
to read as follows:
"The name of the Corporation is Bargo Energy Company."
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LIST OF EXHIBITS
Exhibit I Utah Revised Business Corporation Act, Part 13
Exhibit II Merger Agreement
Exhibit III Articles of Incorporation of Future-Texas
Exhibit IV Bylaws of Future-Texas
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EXHIBIT I
UTAH REVISED BUSINESS CORPORATION ACT
PART 13. DISSENTERS' RIGHTS
16-10a-1301 DEFINITIONS. -- For purposes of Part 13:
(1) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(2) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent
from corporate action under Section 16-10a-1302 and who exercises that
right when and in the manner required by Sections 16-10a-1320 through
16-10a-1328.
(4) "Fair value" with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action.
(5) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the statutory rate set
forth in Section 15-1-1, compounded annually.
(6) "Record shareholder" means the person in whose name shares
are registered in the records of a corporation or the beneficial owner
of shares that are registered in the name of a nominee to the extent the
beneficial owner is recognized by the corporation as the shareholder as
provided in Section 16-10a-723.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
16-10a-1302 RIGHT TO DISSENT. -- (1) A shareholder, whether or not
entitled to vote, is entitled to dissent from, and obtain payment of the
fair value of shares held by him in the event of, any of the following
corporate actions:
(a) consummation of a plan of merger to which the
corporation is a party if:
(i) shareholder approval is required for the merger by
Section 16-10a-1103 or the articles of incorporation; or
(ii) the corporation is a subsidiary that is merged with its
parent under Section 16-10a-1104;
(b) consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired;
(c) consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property of the
corporation for which a shareholder vote is required under
Subsection 16-10a-1202(1), but not including a sale for cash
pursuant to a plan by which all or substantially all of the net
proceeds of the sale will be distributed to the shareholders
within one year after the date of sale; and
(d) consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property of an
entity controlled by the corporation if the shareholders of the
corporation were entitled to vote upon the consent of the
corporation to the disposition pursuant to Subsection 16-10a-
1202(2).
(2) A shareholder is entitled to dissent and obtain payment of
the fair value of his shares in the event of any other corporate action
to the extent the articles of incorporation, bylaws, or a resolution of
the board of directors so provides.
(3) Notwithstanding the other provisions of this part, except to
the extent otherwise provided in the articles of incorporation, bylaws,
or a resolution of the board of directors, and subject to the
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limitations set forth in Subsection (4), a shareholder is not entitled
to dissent and obtain payment under Subsection (1) of the fair value of
the shares of any class or series of shares which either were listed on
a national securities exchange registered under the federal Securities
Exchange Act of 1934, as amended, or on the National Market System of
the National Association of Securities Dealers Automated Quotation
System, or were held of record by more than 2,000 shareholders, at the
time of:
(a) the record date fixed under Section 16-10a-707 to
determine the shareholders entitled to receive notice of the
shareholders' meeting at which the corporate action is submitted
to a vote;
(b) the record date fixed under Section 16-10a-704 to
determine shareholders entitled to sign writings consenting to the
proposed corporate action; or
(c) the effective date of the corporate action if the
corporate action is authorized other than by a vote of
shareholders.
(4) The limitation set forth in Subsection (3) does not apply if
the shareholder will receive for his shares, pursuant to the corporate
action, anything except:
(a) shares of the corporation surviving the consummation of
the plan of merger or share exchange;
(b) shares of a corporation which at the effective date of
the plan of merger or share exchange either will be listed on a
national securities exchange registered under the federal
Securities Exchange Act of 1934, as amended, or on the National
Market System of the National Association of Securities Dealers
Automated Quotation System, or will be held of record by more than
2,000 shareholders;
(c) cash in lieu of fractional shares; or
(d) any combination of the shares described in Subsection
(4), or cash in lieu of fractional shares.
(5) A shareholder entitled to dissent and obtain payment for his
shares under this part may not challenge the corporate action creating
the entitlement unless the action is unlawful or fraudulent with respect
to him or to the corporation.
16-10a-1303 DISSENT BY NOMINEES AND BENEFICIAL OWNERS. --(1) A record
shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if the shareholder dissents with
respect to all shares beneficially owned by any one person and causes
the corporation to receive written notice which states the dissent and
the name and address of each person on whose behalf dissenters' rights
are being asserted. The rights of a partial dissenter under this
subsection are determined as if the shares as to which the shareholder
dissents and the other shares held of record by him were registered in
the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to
shares held on his behalf only if:
(a) the beneficial shareholder causes the corporation to
receive the record shareholder's written consent to the dissent
not later than the time the beneficial shareholder asserts
dissenters' rights; and
(b) the beneficial shareholder dissents with respect to all
shares of which he is the beneficial shareholder.
(3) The corporation may require that, when a record shareholder
dissents with respect to the shares held by any one or more beneficial
shareholders, each beneficial shareholder must certify to the
corporation that both he and the record shareholders of all shares owned
beneficially by him have asserted, or will timely assert, dissenters'
rights as to all the shares unlimited on the ability to exercise
dissenters' rights. The certification requirement must be stated in the
-2-
<PAGE> 20
dissenters' notice given pursuant to Section 16-10a-1322.
16-10a-1320 NOTICE OF DISSENTERS' RIGHTS. -- (1) If a proposed corporate
action creating dissenters' rights under Section 16-10a-1302 is
submitted to a vote at a shareholders' meeting, the meeting notice must
be sent to all shareholders of the corporation as of the applicable
record date, whether or not they are entitled to vote at the meeting.
The notice shall state that shareholders are or may be entitled to
assert dissenters' rights under this part. The notice must be
accompanied by a copy of this part and the materials, if any, that under
this chapter are required to be given the shareholders entitled to vote
on the proposed action at the meeting. Failure to give notice as
required by this subsection does not affect any action taken at the
shareholders' meeting for which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights
under Section 16-10a-1302 is authorized without a meeting of
shareholders pursuant to Section 16-10a-704, any written or oral
solicitation of a shareholder to execute a written consent to the action
contemplated by Section 16-10a-704 must be accompanied or preceded by a
written notice stating that shareholders are or may be entitled to
assert dissenters' rights under this part, by a copy of this part, and
by the materials, if any, that under this chapter would have been
required to be given to shareholders entitled to vote on the proposed
action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give written notice as provided by
this subsection does not affect any action taken pursuant to Section 16-
10a-704 for which the notice was to have been given.
16-10a-1321 DEMAND FOR PAYMENT-ELIGIBILITY AND NOTICE OF INTENT. -- (1)
If a proposed corporate action creating dissenters' rights under Section
16-10a-1302 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(a) must cause the corporation to receive, before the vote
is taken, written notice of his intent to demand payment for
shares if the proposed action is effectuated; and
(b) may not vote any of his shares in favor of the proposed
action.
(2) If a proposed corporate action creating dissenters' rights
under Section 16-10a-1302 is authorized without a meeting of
shareholders pursuant to Section 16-10a-704, a shareholder who wishes to
assert dissenters' rights may not execute a writing consenting to the
proposed corporate action.
(3) In order to be entitled to payment for shares under this
part, unless otherwise provided in the articles of incorporation,
bylaws, or a resolution adopted by the board of directors, a shareholder
must have been a shareholder with respect to the shares for which
payment is demanded as of the date the proposed corporate action
creating dissenters' rights under Section 16-10a-1302 is approved by the
shareholders, if shareholder approval is required, or as of the
effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(4) A shareholder who does not satisfy the requirements of
Subsections (1) through (3) is not entitled to payment for shares under
this part.
16-10a-1322 DISSENTERS' NOTICE. -- (1) If a proposed corporate action
creating dissenters' rights under Section 16-10a- 1302 is authorized,
the corporation shall give a written dissenters' notice to all
shareholders who are entitled to demand payment for their shares under
this part.
(2) The dissenters' notice required by Subsection (1) must be
sent no later than ten days after the effective date of the corporate
action creating dissenters' rights under Section 16-10a-1302, and shall:
-3-
<PAGE> 21
(a) state that the corporate action was authorized and the
effective date or proposed effective date of the corporate action;
(b) state an address at which the corporation will receive
payment demands and an address at which certificates for
certificated shares must be deposited;
(c) inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand
is received;
(d) supply a form for demanding payment, which form
requests a dissenter to state an address to which payment is to be
made;
(e) set a date by which the corporation must receive the
payment demand and by which certificates for certificated shares
must be deposited at the address indicated in the dissenters'
notice, which dates may not be fewer than 30 nor more than 70 days
after the date the dissenters' notice required by Subsection (1)
is given;
(f) state the requirement contemplated by Subsection 16-
10a-1303(3), if the requirement is imposed; and
(g) be accompanied by a copy of this part.
16-10a-1323 PROCEDURE TO DEMAND PAYMENT. --(1) A shareholder who is
given a dissenters' notice described in Section 16-10a-1322, who meets
the requirements of Section 16-10a-1321, and wishes to assert
dissenters' rights must, in accordance with the terms of the dissenters'
notice:
(a) cause the corporation to receive a payment demand,
which may be the payment demand form contemplated in Subsection
16-10a-1322(2)(d), duly completed, or may be stated in another
writing;
(b) deposit certificates for his certificated shares in
accordance with the terms of the dissenters' notice; and
(c) if required by the corporation in the dissenters'
notice described in Section 16-10a-1322, as contemplated by
Section 16-10a-1327, certify in writing, in or with the payment
demand, whether or not he or the person on whose behalf he asserts
dissenters' rights acquired beneficial ownership of the shares
before the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action
creating dissenters' rights under Section 16-10a-1302.
(2) A shareholder who demands payment in accordance with
Subsection (1) retains all rights of a shareholder except the right to
transfer the shares until the effective date of the proposed corporate
action giving rise to the exercise of dissenters' rights and has only
the right to receive payment for the shares after the effective date of
the corporate action.
(3) A shareholder who does not demand payment and deposit share
certificates as required, by the date or dates set in the dissenters'
notice, is not entitled to payment for shares under this part.
16-10a-1324 UNCERTIFICATED SHARES. -- (1) Upon receipt of a demand for
payment under Section 16-10a-1323 from a shareholder holding
uncertificated shares, and in lieu of the deposit of certificates
representing the shares, the corporation may restrict the transfer of
the shares until the proposed corporate action is taken or the
restrictions are released under Section 16-10a-1326.
(2) In all other respects, the provisions of Section 16-10a-1323
apply to shareholders who own uncertificated shares.
16-10a-1325 PAYMENT. -- (1) Except as provided in Section 16-10a-1327,
upon the later of the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302, and receipt by the
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<PAGE> 22
corporation of each payment demand pursuant to Section 16-10a-1323, the
corporation shall pay the amount the corporation estimates to be the
fair value of the dissenters' shares, plus interest to each dissenter
who has complied with Section 16-10a-1323, and who meets the
requirements of Section 16-10a-1321, and who has not yet received
payment.
(2) Each payment made pursuant to Subsection (1) must be
accompanied by:
(a) (i) (A) the corporation's balance sheet as of the end of
its most recent fiscal year, or if not available, a fiscal year
ending not more than 16 months before the date of payment;
(B) an income statement for that year;
(C) a statement of changes in shareholders' equity for that
year and a statement of cash flow for that year, if the
corporation customarily provides such statements to shareholders;
and
(D) the latest available interim financial statements, if
any;
(ii) the balance sheet and statements referred to in
Subsection (i) must be audited if the corporation customarily
provides audited financial statements to shareholders;
(b) a statement of the corporation's estimate of the fair
value of the shares and the amount of interest payable with
respect to the shares;
(c) a statement of the dissenter's right to demand payment
under Section 16-10a-1328; and
(d) a copy of this part.
16-10a-1326 FAILURE TO TAKE ACTION. -- (1) If the effective date of the
corporate action creating dissenters' rights under Section 16-10a-1302
does not occur within 60 days after the date set by the corporation as
the date by which the corporation must receive payment demands as
provided in Section 16-10a-1322, the corporation shall return all
deposited certificates and release the transfer restrictions imposed on
uncertificated shares, and all shareholders who submitted a demand for
payment pursuant to Section 116-10a-1323 shall thereafter have all
rights of a shareholder as if no demand for payment had been made.
(2) If the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302 occurs more than 60 days
after the date set by the corporation as the date by which the
corporation must receive payment demands as provided in Section 16-10a-
1322, then the corporation shall send a new dissenters' notice, as
provided in Section 16-10a-1322 and the provisions of Sections 16-10a-
1323 through 16-10a-1328 shall again be applicable.
16-10a-1327 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER
ANNOUNCEMENT OF PROPOSED CORPORATE ACTION. -- (1) A corporation may,
with the dissenters' notice given pursuant to Section 16-10a-1302, state
the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action creating dissenters' rights
under Section 16-10a-1302 and state that a shareholder who asserts
dissenters' rights must certify in writing, in or with the payment
demand, whether or not he or the person on whose behalf he asserts
dissenters' rights acquired beneficial ownership of the shares before
that date. With respect to any dissenter who does not certify in
writing, in or with the payment demand that he or the person on whose
behalf the dissenters' rights are being asserted, acquired beneficial
ownership of the shares before that date, the corporation may, in lieu
of making the payment provided in Section 16-10a-1325, offer to make
payment if the dissenter agrees to accept it in full satisfaction of the
demand.
(2) An offer to make payment under Subsection (1) shall include
or be accompanied by the information required by
Subsection 16-10a-1325(2).
-5-
<PAGE> 23
16-10a-1328 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
- - -- (1) A dissenter who has not accepted an offer made by a corporation
under Section 16-10a-1327 may notify the corporation in writing of his
own estimate of the fair value of his shares and demand payment of the
estimated amount, plus interest, less any payment made under Section 16-
10a-1325, if:
(a) the dissenter believes that the amount paid under
Section 16-10a-1325 or offered under Section 16-10a-1327 is less
than the fair value of the shares;
(b) the corporation fails to make payment under Section 16-
10a-1325 within 60 days after the date set by the corporation as
the date by which it must receive the payment demand; or
(c) the corporation, having failed to take the proposed
corporate action creating dissenters' rights, does not return the
deposited certificates or release the transfer restrictions
imposed on uncertificated shares as required by Section 16-10a-
1326.
(2) A dissenter waives the right to demand payment under this
section unless he causes the corporation to receive the notice required
by Subsection (1) within 30 days after the corporation made or offered
payment for his shares.
16-10a-1330 JUDICIAL APPRAISAL OF SHARES -COURT ACTION. -- (1) If a
demand for payment under Section 16-10a-1328 remains unresolved, the
corporation shall commence a proceeding within 60 days after receiving
the payment demand contemplated by Section 16-10a-1328, and petition the
court to determine the fair value of the shares and the amount of
interest. If the corporation does not commence the proceeding within
the 60-day period, it shall pay each dissenter whose demand remains
unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in
Subsection (1) in the district court of the county in this state where
the corporation's principal office, or if it has no principal office in
this state, the county where its registered office is located. If the
corporation is a foreign corporation without a registered office in this
state, it shall commence the proceeding in the county in this state
where the registered office of the domestic corporation merged with, or
whose shares were acquired by, the foreign corporation was located.
(3) The corporation shall make all dissenters who have satisfied
the requirements of Sections 16-10a-1321, 16-10a-1323, and 16-10a-1328,
whether or not they are residents of this state whose demands remain
unresolved, parties to the proceeding commenced under Subsection (2) as
an action against their shares. All such dissenters who are named as
parties must be served with a copy of the petition. Service on each
dissenter may be by registered or certified mail to the address stated
in his payment demand made pursuant to Section 16-10a-1328. If no
address is stated in the payment demand, service may be made at the
address stated in the payment demand given pursuant to Section
16-10a-1323. If no address is stated in the payment demand, service may
be made at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares.
Service may also be made otherwise as provided by law.
(4) The jurisdiction of the court in which the proceeding is
commenced under Subsection (2) is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and
recommend decision on the question of fair value. The appraisers have
the powers described in the order appointing them, or in any amendment
to it. The dissenters are entitled to the same discovery rights as
parties in other civil proceedings.
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<PAGE> 24
(5) Each dissenter made a party to the proceeding commenced under
Subsection (2) is entitled to judgment:
(a) for the amount, if any, by which the court finds that
the fair value of his shares, plus interest, exceeds the amount
paid by the corporation pursuant to Section 16-10a-1325; or
(b) for the fair value, plus interest, of the dissenter's
after-acquired shares for which the corporation elected to
withhold payment under Section 16-10a-1327.
16-10a-1331 COURT COSTS AND COUNSEL FEES. -- (1) The court in an
appraisal proceeding commenced under Section 16-10a-1330 shall determine
all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court. The court shall assess
the costs against the corporation, except that the court may assess
costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds that the dissenters acted
arbitrarily, vexatiously, or not in good faith in demanding payment
under Section 16-10a-1328.
(2) The court may also assess the fees and expenses of counsel
and experts for the respective parties, in amounts the court finds
equitable:
(a) against the corporation and in favor of any or all
dissenters if the court finds the corporation did not
substantially comply with the requirements of Sections 16-10a-1320
through 16-10a-1328; or
(b) against either the corporation or one or more
dissenters, in favor of any other party if the court finds that
the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to the
rights provided by this part.
(3) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly
situated, and that the fees for those services should not be assessed
against the corporation, the court may award to those counsel reasonable
fees to be paid out of the amounts awarded the dissenters who were
benefited.
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<PAGE> 25
EXHIBIT II
=======================================================================
AGREEMENT AND PLAN OF MERGER
between
Future Petroleum Corporation
(a Utah corporation),
and
FPT Corporation
(a Texas corporation),
___________, 1999
=======================================================================
<PAGE> 26
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made and
entered into as of this _____ day of ___________, 1999, between Future
Petroleum Corporation, a Utah corporation (the "Company") and FPT
Corporation, a Texas corporation and a wholly owned subsidiary of the
Company ("Merger-Sub").
RECITALS
WHEREAS, the respective Boards of Directors of the Company and
Merger-Sub have determined that, subject to the terms and conditions
hereinafter set forth, it is advisable and to their respective
stockholders' mutual advantage and benefit to adopt a plan, whereby the
Company will merge with and into Merger-Sub (the "Merger") pursuant to
this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements, and conditions
herein contained, the parties hereto agree as follows:
ARTICLE I. THE MERGER; CLOSING; EFFECTIVE TIME
Section 1.1 THE MERGER. Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined in Section 1.3), the
Company shall be merged with and into Merger-Sub and the separate
corporate existence of the Company shall thereupon cease. Merger-Sub
shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue to be
governed by the laws of the State of Texas, and the separate corporate
existence of Merger-Sub, with all of its rights, privileges, immunities,
and franchises shall continue unaffected by the Merger. The Merger
shall have the effects specified in the Utah Revised Business
Corporations Act ("Utah Act") and in the Texas Business Corporations Act
("TBCA") with respect to the Company and Merger-Sub.
Section 1.2 EFFECTIVE TIME. The Company and Merger-Sub will cause
articles of merger ("Articles of Merger"), attached hereto as Exhibit A,
to be signed and then filed with the Utah Division of Corporations and
Commercial Code and the Secretary of State of Texas as provided in the
Utah Act and TBCA. The Merger shall become effective upon the later of
the filing of Articles of Merger with Utah Division of Corporations and
Commercial Code pursuant to Section 16-10a-1105 of the Utah Act and with
the Secretary of State of Texas pursuant to Article 5.04 of the TBCA or
at such other time as is specified in the Articles of Merger, and such
time is hereinafter referred to as the "Effective Time."
Section 1.3 SUBSEQUENT ACTIONS. Upon the Merger becoming
effective, all the property, rights, privileges, franchises, patents,
trademarks, licenses, registrations and other assets of every kind and
description of the Company shall be transferred to, vested in and
devolve upon the Surviving Corporation without further act or deed and
all property, rights and every other interest of the Surviving
Corporation and the Company shall be as effectively the property of the
Surviving Corporation as they were of the Surviving Corporation and the
Company, respectively. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills
of sale, assignments, assurances, or any other actions or things are
necessary or desirable to vest, perfect, or confirm of record or
otherwise in the Surviving Corporation its right, title, or interest in,
to, or under any of the rights, properties, or assets of the Company
<PAGE> 27
acquired or to be acquired by the Surviving Corporation as a result of
or in connection with the Merger, or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall
be authorized to execute and deliver, in the name and on behalf of the
Company or otherwise, all such deeds, bills of sale, assignments, and
assurances, and to take and do, in the name and on behalf of the Company
or otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect, or confirm any and all right, title, and
interest in, to, and under such rights, properties, or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II. ARTICLES OF INCORPORATION AND
BY-LAWS OF THE SURVIVING CORPORATION
Section 2.1 THE ARTICLES OF INCORPORATION.
(a) Merger-Sub's Articles of Incorporation. The Articles of
Incorporation of Merger-Sub, attached hereto as Exhibit B, in effect at
the Effective Time shall be the Articles of Incorporation of the
Surviving Corporation, until duly amended in accordance with the terms
thereof and the TBCA.
(b) Amendments to Articles of Incorporation of Merger-Sub. The
Articles of Merger shall amend Article One of the Articles of
Incorporation of Merger-Sub to change Merger-Sub's name to "Bargo Energy
Company."
Section 2.2 The By-Laws. The By-Laws of Merger-Sub, attached
hereto as Exhibit C, in effect at the Effective Time shall be the By-
Laws of the Surviving Corporation, until duly amended in accordance with
the terms thereof and the TBCA.
ARTICLE III. OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
Section 3.1 OFFICERS AND DIRECTORS. The directors of Merger-Sub at
the Effective Time, from and after the Effective Time, shall be the
directors of the Surviving Corporation until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation, or removal in accordance with the Surviving Corporation's
Articles of Incorporation and By-Laws. The officers of Merger-Sub at
the Effective Time shall, from and after the Effective Time, be the
officers of the Surviving Corporation until their successors have been
duly appointed or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Bylaws.
ARTICLE IV. CONVERSION OR CANCELLATION
OF SHARES IN THE MERGER
Section 4.1 CONVERSION OR CANCELLATION OF SHARES.
(a) Conversion of Shares of the Company. At the Effective Time,
each share of common stock, $.01 par value, of the Company ("Company
Common Stock") issued and outstanding immediately prior to the Effective
Time other than shares as to which appraisal rights shall have been
perfected and not withdrawn or otherwise forfeited under the Utah Act,
by virtue of the Merger and without any action on the part of the holder
thereof, shall be converted into the right to receive one share of
common stock, $.01 par value per share, of Merger-Sub ("New Common
Stock") and each share of preferred stock of the Company ("Company
Preferred Stock") issued and outstanding immediately prior to the
Effective Time (the Company Common Stock and Company Preferred Stock
2
<PAGE> 28
issued and outstanding immediately prior to the Effective Time are
herein referred to, as the context requires, as the "Canceled Shares"),
other than shares as to which appraisal rights shall have been perfected
and not withdrawn or otherwise forfeited under the Utah Act, by virtue
of the Merger and without any action on the part of the holder thereof,
shall be converted into the right to receive one share of preferred
stock, $.01 par value per share, of Merger-Sub ("New Preferred Stock")
(the New Common Stock and New Preferred Stock set forth in this
subsection are herein referred to, as the context requires, as the
"Merger Consideration"). All such Canceled Shares, by virtue of the
Merger and without any action on the part of the holders thereof, shall
be canceled and cease to be issued and outstanding. All certificates of
such Canceled Shares, by virtue of the Merger and without any action on
the part of the holders thereof, shall be deemed to represent a number
of shares of either New Common Stock or New Preferred Stock in an amount
equal to the number of shares of Company Common Stock or Company
Preferred Stock represented by the certificate immediately prior to the
Effective Time, and each holder of a certificate representing any such
Canceled Shares shall thereafter have all of the rights and privileges
of a holder of New Common Stock or New Preferred Stock and cease to have
any rights with respect to such Canceled Shares.
(b) Cancellation of Shares of Merger-Sub. At the Effective time,
each share of common stock of Merger-Sub issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, be canceled
and case to be issued and outstanding.
Section 4.2 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. Transfers
of Canceled Shares shall be made on the stock transfer books of the
Surviving Corporation at or after the Effective Time as if such
certificates represented shares of New Common Stock or New Preferred
Stock. However, upon presenting a certificate representing Canceled
Shares to Merger-Sub's transfer agent, such certificate shall be
canceled and a new certificate representing the number of shares of New
Common Stock or New Preferred Stock previously represented by the
certificate for the Canceled Shares shall be issued.
Section 4.3 DISSENTING STOCKHOLDERS. Each share of Company Common
Stock or Company Preferred Stock with respect to which the holder
thereof is entitled to an appraisal pursuant to Part 13 of the Utah Act
("Dissenting Shares") shall be converted into the right to receive such
consideration as may be determined to be due to such holder pursuant to
Sections 16-10a-1325 and 16-10a-1330 of the Utah Act unless such holder
shall have effectively withdrawn or forfeited such right to appraisal,
at which time such Company Common Stock or Company Preferred Stock shall
be converted into and represent a right to receive the Merger
Consideration in respect thereof in accordance with Section 4.1 hereof.
ARTICLE V. CONDITIONS TO THE CLOSING
Section 5.1 STOCKHOLDER APPROVAL. The consummation of the Merger
is subject to the approval, at or prior to the Effective Time, of the
holders of at least a majority of the outstanding voting power of the
Company and the sole stockholder of Merger-Sub in accordance with
applicable law and the governing documents of the Company and Merger-
Sub.
3
<PAGE> 29
ARTICLE VI. TERMINATION
Section 6.1 TERMINATION. Notwithstanding anything herein or
elsewhere to the contrary, this Agreement may be terminated by the
Company at any time prior to the Effective Time, regardless of whether
this Agreement has been approved by the stockholders of the Company.
ARTICLE VII. MISCELLANEOUS AND GENERAL
Section 7.1 HEADINGS. The Section headings herein are for
convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
Section 7.2 ENTIRE AGREEMENT. This Agreement (including exhibits
hereto) embodies the entire agreement and understanding of the parties
with respect to the transactions contemplated hereby and supersedes all
prior written or oral commitments, arrangements or understandings with
respect thereto. There are no restrictions, agreements, promises,
warranties, covenants or undertakings with respect to the transactions
contemplated hereby other than those expressly set forth herein or
therein.
Section 7.3 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement and each of which shall be deemed an original.
Section 7.4 SEVERABILITY. If any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable,
the validity, legality or enforceability of the remaining provisions of
this Agreement shall not be affected thereby. To the extent permitted
by applicable law, each party waives any provisions of law which renders
any provision of this Agreement invalid, illegal or unenforceable in any
respect.
Section 7.5 CONSTRUCTION. Whenever the context requires, the
gender of all words used herein shall include the masculine, feminine
and neuter, and the number of all words shall include the singular and
plural.
Section 7.6 REFERENCES. Unless otherwise specified, references in
this Agreement to "Sections", "Subsections" or Articles" refer to the
sections, subsections or articles in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
FPT CORPORATION,
a Texas corporation
By:
Name: Tim J. Goff
Title: President
FUTURE PETROLEUM CORPORATION,
a Utah corporation
By:
Name: Tim J. Goff
Title: President
4
<PAGE> 30
Exhibit A-1
ARTICLES OF MERGER
OF
FUTURE PETROLEUM CORPORATION
WITH AND INTO
FPT CORPORATION
Pursuant to the provisions of Article 5.04 of the Texas Business
Corporation Act, the undersigned corporations adopt the following
Articles of Merger for the purpose of merging Future Petroleum
Corporation into FPT Corporation and certify as follows:
4. The name and state of incorporation of each corporation that is a
party to the merger is:
NAME STATE
Future Petroleum Corporation Utah
FPT Corporation Texas
5. The surviving corporation of the merger is FPT Corporation.
6. A Plan of Merger has been approved by the directors and
shareholders of each such corporation.
7. Article One of the Articles of Incorporation of the surviving
corporation shall be amended to change the name of the surviving
corporation to Bargo Energy Company as follows:
"The name of the Corporation is Bargo Energy Company."
8. An executed Plan of Merger is on file at the principal place of
business of the surviving corporation, which place of business is
located at 700 Louisiana, Suite 3700, Houston, Texas 77002.
9. A copy of the Plan of Merger will be furnished by the surviving
corporation on written request and without cost to any shareholder
of each corporation that is a party to the merger.
10. As to FPT Corporation, the Texas corporation, the total number of
shares outstanding, voted for and against the Plan of Merger is as
set forth below. There were no classes of shares entitled to vote
thereon separately as a class.
TOTAL TOTAL TOTAL VOTED
NAME OF CORPORATION SHARES VOTED FOR AGAINST
FPT Corporation 1 1 0
11. As to Future Petroleum Corporation, the Utah corporation, the plan
of merger was duly authorized and approved by all action required
by the laws of the State of Utah, the state of incorporation, and
by its constituent documents. The total number of shares
outstanding, voted for and against the Plan of Merger is as set
forth below. There were no classes of shares entitled to vote
thereon separately as a class.
<PAGE> 31
TOTAL TOTAL TOTAL VOTED
NAME OF CORPORATION SHARES VOTED FOR AGAINST
Future Petroleum
Corporation 48,320,066 45,565,562 0
12. The surviving corporation will be responsible for the payment of
all fees and franchise taxes and will be obligated to pay such
fees and franchise taxes if the same are not timely paid.
13. The merger will become effective on __________, 1999, at ______
a.m. in accordance with the provisions of Article 10.03 of the
Texas Business Corporations Act.
Date: _____________, 1999
FUTURE PETROLEUM CORPORATION
By:
Tim J. Goff, President
FPT CORPORATION
By:
Tim J. Goff, President
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Exhibit A-2
ARTICLES OF MERGER
OF
FUTURE PETROLEUM CORPORATION
WITH AND INTO
FPT CORPORATION
Pursuant to the provisions of Section 16-10a-1107 of the Utah
Revised Business Corporation Act, the undersigned corporations adopt the
following Articles of Merger for the purpose of merging Future Petroleum
Corporation into FPT Corporation and certify as follows:
14. The name and state of incorporation of each corporation that is a
party to the merger is:
NAME STATE
Future Petroleum Corporation Utah
FPT Corporation Texas
15. The surviving corporation of the merger is FPT Corporation.
16. A Plan of Merger, attached hereto as Exhibit A, has been approved
by the directors and shareholders of each such corporation.
17. The principal place of business of the surviving corporation is
located at 700 Louisiana, Suite 3700, Houston, Texas 77002.
18. As to FPT Corporation, the Texas corporation, the merger is
permitted by and plan of merger was duly authorized and approved
by all action required by the laws of the State of Texas, the
state of incorporation, and by its constituent documents. The
total number of shares outstanding and entitled to vote, voted for
and against the Plan of Merger is as set forth below. There were
no classes of shares entitled to vote thereon separately as a
class.
TOTAL TOTAL TOTAL VOTED
NAME OF CORPORATION SHARES VOTED FOR AGAINST
FPT Corporation 1 1 0
19. As to Future Petroleum Corporation, the Utah corporation, the
total number of shares outstanding and entitled to vote, voted for
and against the Plan of Merger is as set forth below. There were
no voting groups entitled to vote thereon separately as a voting
group.
TOTAL TOTAL TOTAL VOTED
NAME OF CORPORATION SHARES VOTED FOR AGAINST
Future Petroleum
Corporation 48,320,066 45,565,562 0
20. The merger will become effective on __________, 1999, at ______
a.m.
Date: _____________, 1999
<PAGE> 33
FUTURE PETROLEUM CORPORATION
By:
Tim J. Goff, President
FPT CORPORATION
By:
Tim J. Goff, President
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<PAGE> 34
Exhibit III
ARTICLES OF INCORPORATION
OF
FPT CORPORATION
The undersigned, natural person of the age of eighteen years or
more, acting as incorporator of a corporation (the "Corporation") under
the Texas Business Corporation Act (the "Act"), hereby adopts the
following Articles of Incorporation for the Corporation.
ARTICLE ONE
NAME
The name of the Corporation is FTP Corporation.
ARTICLE TWO
DURATION
The period of the Corporation's duration is perpetual.
ARTICLE THREE
PURPOSE
The purpose for which the Corporation is organized is to engage in
the transaction of any lawful business for which a corporation may be
incorporated under the Act.
ARTICLE FOUR
AUTHORIZED SHARES
SECTION 1. The aggregate number of shares which the Corporation
will have authority to issue is 125,000,000 of which 120,000,000 will be
shares of common stock, par value $0.01 per share ("Common Stock"), and
5,000,000 will be shares of preferred stock, par value $0.01 per share
("Preferred Stock").
SECTION 2. The board of directors shall have authority to
establish series of Preferred Stock. Shares of Preferred Stock may be
issued from time to time in one or more series, each of which is to have
a distinctive serial designation as determined in the resolution or
resolutions of the board of directors providing for the issuance of such
Preferred Stock from time to time.
<PAGE> 35
SECTION 3. Each series of Preferred Stock:
(a) may have such number of shares;
(b) may have such voting powers, full or limited, or may be
without voting powers;
(c) may be subject to redemption at such time or times and
at such price;
(d) may be entitled to receive dividends (which may be
cumulative or noncumulative) at such rate or rates, on such conditions,
from such date or dates, and at such times, and payable in preference
to, or in such relation to, the dividends payable on any other class or
classes or series of stock;
(e) may have such rights upon the dissolution of, or upon
any distribution of the assets of, the Corporation;
(f) may be made convertible into, or exchangeable for,
shares of any other class or classes, or of any other series of the same
or any other class or classes, of stock of the Corporation at such price
or prices or at such rates of exchange, and with such adjustments;
(g) may be entitled to the benefit of a sinking fund or
purchase fund to be applied to the purchase or redemption of shares of
such series in such amount or amounts;
(h) may be entitled to the benefit of conditions and
restrictions upon the creation of indebtedness of the Corporation or any
subsidiary, upon the issuance of any additional stock (including
additional shares of such series or of any other series) and upon the
payment of dividends or the making of other distributions on, and the
purchase, redemption or other acquisition of any class of stock by the
Corporation; and
(i) may have such other relative, participating, optional
or other special rights, and qualifications, limitations or restrictions
thereof;
as in such instance is stated in the resolution or resolutions of the
board of directors providing for the issuance of such Preferred Stock.
Except where otherwise set forth in such resolution or resolutions, the
number of shares comprising such series may be increased or decreased
(but not below the number of shares then outstanding) from time to time
by like action of the board of directors.
SECTION 4. Shares of any series of Preferred Stock which have
been redeemed (whether through the operation of a sinking fund or
otherwise) or purchased by the Corporation, or which, if convertible or
exchangeable, have been converted into or exchanged for shares of stock
of any other class or classes will have the status of authorized and
unissued shares of Preferred Stock and may be reissued as a part of the
series of which they were originally a part or may be reclassified and
reissued as part of a new series of Preferred Stock created by
resolution or resolutions of the board of directors or as part of any
other series of Preferred Stock, all subject to the conditions or
restrictions on issuance set forth in the resolution or resolutions
adopted by the board of directors providing for the issuance of any
series of Preferred Stock and to any filing required by law.
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<PAGE> 36
SECTION 5. (a) Except as otherwise provided by law or by the
resolutions of the board of directors providing for the issuance of any
series of Preferred Stock, Common Stock will have the exclusive right to
vote for the election of directors and for all other purposes. Each
holder of Common Stock will be entitled to one vote for each share held.
The right of cumulative voting is hereby specifically denied.
(b) Except as otherwise provided by law or by the
resolutions of the board of directors providing for the issuance of any
series of Preferred Stock, the right of class voting is denied.
(c) Subject to all of the rights of Preferred Stock or
any series thereof, the holders of Common Stock will be entitled to
receive, when, as and if declared by the board of directors, out of
funds legally available therefor, dividends payable in cash, in stock or
otherwise.
(d) Upon any liquidation, dissolution or winding-up of
the Corporation, whether voluntary or involuntary, and after the holders
of Preferred Stock of each series have been paid in full the amounts to
which they respectively are entitled or a sum sufficient for such
payment in full has been set aside, the remaining net assets of the
Corporation will be distributed pro rata to the holders of Common Stock
in accordance with their respective rights and interests to the
exclusion of the holders of Preferred Stock.
ARTICLE FIVE
RESTRICTION ON COMMENCEMENT OF BUSINESS
The Corporation will not commence business until it has received
for the issuance of its shares consideration of the value of a stated
sum which will be at least One Thousand Dollars ($1,000.00), consisting
of money, labor done or property actually received.
ARTICLE SIX
REGISTERED OFFICE AND REGISTERED AGENT
The street address of the initial registered office of the
Corporation is:
700 Louisiana, Suite 3700
Houston, Texas 77002
The name of the initial registered agent of the Corporation at
such address is:
Mary Elizabeth Vanderhider
ARTICLE SEVEN
BOARD OF DIRECTORS
SECTION 1. Initial Board of Directors. The initial Board of
Directors will consist of seven members. The Board of Directors will be
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divided into three classes, as nearly as equal in number as possible.
The entire board of directors shall be elected at the 1999 annual
meeting of shareholders, with the term of office of the first class to
expire at the 2000 annual meeting of shareholders, the term of the
second class to expire at the 2001 annual meeting of shareholders, and
the term of the third class to expire at the 2002 annual meeting of
shareholders, and with the members of each class to hold office until
their successors have been elected and qualified. At each annual
meeting of shareholders following such initial classification and
election at the 1999 annual meeting of shareholders, directors elected
to succeed those directors whose terms expire shall hold office until
the third succeeding annual meeting of shareholders after their election
and until their successor shall have been duly elected and qualified.
The names and addresses of the persons who will serve as directors of
the Corporation until the first annual meeting of shareholders, or until
their successors are elected and qualified, are:
NAME ADDRESS
CLASS I
Mary Elizabeth Vanderhider 700 Louisiana, Suite 3700
Houston, Texas 77002
Kimberly G. Seekely 700 Louisiana, Suite 3700
Houston, Texas 77002
CLASS II
Thomas Barrow Post Office Box 2588
Longview, Texas 75606
D. Martin Phillips 1100 Louisiana, Suite 3150
Houston, Texas 77002
CLASS III
Tim J. Goff 700 Louisiana, Suite 3700
Houston, Texas 77002
B. Carl Price 700 Louisiana, Suite 3700
Houston, Texas 77002
Gary R. Petersen 1100 Louisiana, Suite 3150
Houston, Texas 77002
SECTION 2. NUMBER AND QUALIFICATION. The number and
qualifications of directors constituting the Board of Directors of the
Corporation will be fixed or determined in the manner provided in the
Bylaws of the Corporation. The number of directors may be increased or
decreased from time to time in the manner set forth in the Bylaws of the
Corporation.
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<PAGE> 38
ARTICLE EIGHT
Provisions for Regulation of the
INTERNAL AFFAIRS OF THE CORPORATION
Provisions for the regulation of the internal affairs of the
Corporation will include the following, but such enumeration is not in
limitation of the power of the shareholders or the Board of Directors to
formulate in the Bylaws, by resolution, or any other proper manner any
other lawful provision not inconsistent with law or these articles:
SECTION 1. VOTING. Except as stated in the resolution or
resolutions of the board of directors establishing any series of
Preferred Stock, each outstanding share, regardless of class, will be
entitled to one vote on each matter submitted to a vote of shareholders.
At each election of directors every shareholder entitled to vote at such
election will be entitled to vote, in person or by proxy, the number of
shares owned by him for each director for whose election he has a right
to vote. The right of shareholders to cumulate votes in the election of
directors is expressly denied.
SECTION 2. BYLAWS. The Board of Directors will adopt the initial
Bylaws, and from time to time may alter, amend or repeal the Bylaws or
adopt new Bylaws; but the shareholders from time to time may alter,
amend or repeal any Bylaws adopted by the Board of Directors or may
adopt new Bylaws.
SECTION 3. DENIAL OF PREEMPTIVE RIGHTS. The shareholders of the
Corporation will not have the preemptive right to acquire additional,
unissued or treasury shares of the Corporation, or securities of the
Corporation convertible into or carrying a right to subscribe to or
acquire shares.
SECTION 4. VOTING REQUIREMENTS FOR CERTAIN CORPORATION ACTIONS.
With respect to any action which may be taken by the shareholders where
the Act requires greater than a majority vote, such action shall require
only the concurrence of a majority of the shares entitled to vote.
SECTION 5. CONSENTS IN LIEU OF MEETINGS. Any action required by
the Act to be taken or which may be taken at any annual or special
meeting of shareholders may be taken without a meeting, without prior
notice and without a vote, if a consent (or consents) in writing,
setting forth the action to be taken, is signed by the holders or holder
of shares having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which the holders of all
shares entitled to vote on the action were present and voted. In order
to be effective, such consent or consents shall comply with all
requirements of the Act.
SECTION 6. LIMITATION OF LIABILITY OF DIRECTORS. No director of
the Corporation shall be liable to the Corporation or its shareholders
for monetary damages for an act or omission in such director's capacity
as a director except for (i) a breach of the director's duty of loyalty
to the Corporation or its shareholders, (ii) an act or omission not in
good faith that constitutes a breach of duty to the Corporation or an
act or omission involving intentional misconduct or a knowing violation
of the law, (iii) a transaction from which the director received an
improper benefit (whether or not the benefit resulted from an action
taken within the scope of the director's office), or (iv) an act or
omission for which the liability of the director is expressly provided
by applicable statute.
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<PAGE> 39
ARTICLE NINE
BUSINESS COMBINATION LAW
The Corporation elects not to be governed by the Business
Combination Law, Part 13 of the Act, or any successor statute of like
tenor.
ARTICLE TEN
INCORPORATOR
The name and the address of the incorporator of the Corporation
is:
NAME ADDRESS
Daniel Lloyd Butler & Binion, L.L.P.
1000 Louisiana, Suite 1600
Houston, Texas 77002
In order to evidence the foregoing, I have signed these Articles
of Incorporation on this 26th day of January, 1999.
/s/ Daniel Lloyd
_____________________________
Daniel Lloyd
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<PAGE> 40
Exhibit IV
BYLAWS OF
FPT CORPORATION
(the "Company")
ARTICLE I.
OFFICES
SECTION 1.1 OFFICES. The principal business office of the Company
shall be in Houston, Texas. The Company may have such other business
offices within or without the State of Texas as the board of directors
may from time to time establish.
ARTICLE II
Capital Stock
SECTION 2.1 CERTIFICATE REPRESENTING SHARES. Shares of the capital
stock of the Company shall be represented by certificates in such form
or forms as the board of directors may approve, provided that such form
or forms shall comply with all applicable requirements of law or of the
articles of incorporation. Such certificates shall be signed by the
president or a vice president, and by the secretary or an assistant
secretary, of the Company and may be sealed with the seal of the Company
or imprinted or otherwise marked with a facsimile of such seal. The
signature of any or all of the foregoing officers of the Company may be
represented by a printed facsimile thereof. If any officer whose
signature, or a facsimile thereof, shall have been set upon any
certificate shall cease, prior to the issuance of such certificate, to
occupy the position in right of which his signature, or facsimile
thereof, was so set upon such certificate, the Company may nevertheless
adopt and issue such certificate with the same effect as if such officer
occupied such position as of such date of issuance; and issuance and
delivery of such certificate by the Company shall constitute adoption
thereof by the Company. The certificates shall be consecutively
numbered, and as they are issued, a record of such issuance shall be
entered in the books of the Company.
SECTION 2.2 STOCK CERTIFICATE BOOK AND SHAREHOLDERS OF RECORD. The
secretary of the Company shall maintain, among other records, a stock
certificate book, the stubs which shall set forth the names and
addresses of the holders of all issued shares of the Company, the number
of shares held by each, the number of certificates representing such
shares, the date of issue of such certificates, and whether or not such
shares originate from original issue or from transfer. The names and
addresses of shareholders as they appear on the stock certificate book
shall be the official list of shareholders of record of the Company for
all purposes. The Company shall be entitled to treat the holder of
record of any shares as the owner thereof for all purposes, and shall
not be bound to recognize any equitable or other claim to, or interest
in, such shares or any rights deriving from such shares on the part of
any other person, including, but without limitation, a purchaser,
assignee, or transferee, unless and until such other person becomes the
holder of record of such shares, whether or not the Company shall have
either actual or constructive notice of the interest of such other
person.
SECTION 2.3 SHAREHOLDER'S CHANGE OF NAME OR ADDRESS. Each
shareholder shall promptly notify the secretary of the Company, at its
principal business office, by written notice sent by certified mail,
<PAGE> 41
return receipt requested, of any change in name or address of the
shareholder from that as it appears upon the official list of
shareholders of record of the Company. The secretary of the Company
shall then enter such changes into all affected Company records,
including, but not limited to, the official list of shareholders of
record.
SECTION 2.4 TRANSFER OF STOCK. The shares represented by any
certificate of the Company are transferable only on the books of the
Company by the holder of record thereof or by his duly authorized
attorney or legal representative upon surrender of the certificate for
such shares, properly endorsed or assigned. The board of directors may
make such rules and regulations concerning the issue, transfer,
registration and replacement of certificates as they deem desirable or
necessary.
SECTION 2.5 TRANSFER AGENT AND REGISTRAR. The board of directors
may appoint one or more transfer agents or registrars of the shares, or
both, and may require all share certificates to bear the signature of a
transfer agent or registrar, or both.
SECTION 2.6 LOST, STOLEN OR DESTROYED CERTIFICATES. The Company
may issue a new certificate for shares of stock in the place of any
certificate theretofore issued and alleged to have been lost, stolen or
destroyed, but the board of directors may require the owner of such
lost, stolen or destroyed certificate, or his legal representative, to
furnish an affidavit as to such loss, theft, or destruction and to give
a bond in such form and substance, and with such surety or sureties,
with fixed or open penalty, as the board may direct, in order to
indemnify the Company and its transfer agents and registrars, if any,
against any claim that may be made on account of the alleged loss, theft
or destruction of such certificate.
SECTION 2.7 FRACTIONAL SHARES. Only whole shares of the stock of
the Company shall be issued. In case of any transaction by reason of
which a fractional share might otherwise be issued, the directors, or
the officers in the exercise of powers delegated by the directors, shall
take such measures consistent with the law, the articles of
incorporation and these bylaws, including (for example, and not by way
of limitation) the payment in cash of an amount equal to the fair value
of any fractional share, as they may deem proper to avoid the issuance
of any fractional share.
ARTICLE III
THE SHAREHOLDERS
SECTION 3.1 ANNUAL MEETING. Commencing in the calendar year 1999,
the annual meeting of the shareholders, for the election of directors
and for the transaction of such other business as may properly come
before the meeting, shall be held at the principal office of the
Company, at 9:00 a.m. local time, on April 15 of each year (unless such
day is a legal holiday, in which case such meeting shall be held at such
hour on the first day thereafter which is not a legal holiday); or at
such other place and time as may be designated by the board of
directors. Failure to hold any annual meeting or meetings shall not
work a forfeiture or dissolution of the Company.
SECTION 3.2 SPECIAL MEETINGS. Except as otherwise provided by law
or by the articles of incorporation, special meetings of the
shareholders may be called by the chairman of the board of directors,
the president, any one of the directors, or the holders of at least ten
percent of all the shares having voting power at such meeting, and shall
be held at the principal office of the Company or at such other place,
and at such time, as may be stated in the notice calling such meeting.
The record date for determining shareholders entitled to call a special
meeting is the date on which the first shareholder signs the notice of
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<PAGE> 42
that meeting. Business transacted at any special meeting of
shareholders shall be limited to the purpose stated in the notice of
such meeting given in accordance with the terms of Section 3.3.
SECTION 3.3 NOTICE OF MEETINGS-WAIVER. Written or printed notice
of each meeting of shareholders, stating the place, day and hour of any
meeting and, in case of a special shareholders' meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less
than ten nor more than sixty days before the date of such meeting,
either personally or by mail, by or at the direction of the president,
the secretary, or the persons calling the meeting, to each shareholder
of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the shareholder at his address as it appears on the stock
transfer books of the Company, with postage thereon prepaid. Such
further or earlier notice shall be given as may be required by law. The
signing by a shareholder of a written waiver of notice of any
shareholders' meeting, whether before or after the time stated in such
waiver, shall be equivalent to the receiving by him of all notice
required to be given with respect to such meeting. Attendance by a
shareholder, whether in person or by proxy, at a shareholders' meeting
shall constitute a waiver of notice of such meeting. No notice of any
adjournment of any meeting shall be required.
SECTION 3.4 DISCHARGE OF NOTICE REQUIREMENT. The notice provided
for in Section 3.3 of these bylaws is not required to be given to any
shareholder if either notice of two consecutive annual meetings and all
notices of meetings held during the period between such annual meetings
or all payments (but in no event less than two payments) of
distributions or interest on securities, during a 12-month period, have
been sent by first class mail, to such shareholder, addressed to the
address as shown on the records of the Company and have been returned
undeliverable. Any action or meeting taken or held without notice to
such a shareholder shall have the same force and effect as if the notice
had been duly given and any articles or document filed with the
Secretary of State pursuant to action taken may state that notice was
duly given to all persons to whom notice was required to be given. The
requirement that notice be given to such a shareholder shall be
reinstated if such shareholder delivers to the Company a written notice
setting forth his then current address.
SECTION 3.5. CLOSING OF TRANSFER BOOKS AND FIXING RECORD
DATE. For the purpose of determining shareholders entitled to notice
of, or to vote at, any meeting of shareholders or any adjournment
thereof, or shareholders entitled to receive a distribution by the
Company (other than a distribution involving a purchase or redemption by
the Company of any of its own shares) or a share dividend, or in order
to make a determination of shareholders for any other proper purpose,
the board of directors of the Company may provide that the stock
transfer books shall be closed for a stated period in no case to exceed
sixty days. If the stock transfer books shall be closed for the purpose
of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least the ten
days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the
record date for any such determination of shareholders, such date in no
case to be more than sixty days nor, in the case of a meeting of
shareholders, less than ten days prior to the date on which the
particular action requiring such determination of shareholders is to be
taken. If the stock transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to notice of or to
vote at a meeting of shareholders, or shareholders entitled to receive a
distribution (other than a distribution involving a purchase or
redemption by the corporation of any of its own shares) or a share
dividend, the date on which notice of the meeting is mailed or the date
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<PAGE> 43
on which the resolution of the board of directors declaring such
distribution or share dividend is adopted, as the case may be, shall be
the record date of such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made, as provided in this Section, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of stock transfer books
and the stated period of closing has expired.
SECTION 3.6 DISTRIBUTIONS AND SHARE OWNERSHIP AS OF RECORD
DATE. Distributions of cash, tangible property or intangible property
made or payable by the Company, whether in liquidation or from earnings,
profits, assets or capital, including all distributions that were
payable but not paid to the registered owner of the shares, his heirs,
successors or assigns but that are now being held in suspense by the
Company or that were paid or delivered by it into an escrow account or
to a trustee or custodian, shall be payable by the Company, escrow
agent, trustee or custodian to the person registered as owner of the
shares in the Company's stock transfer books as of the record date
determined for that distribution, as provided in Section 3.5 of these
bylaws, his heirs, successors or assigns. The person in whose name the
shares are or were registered in the stock transfer books of the Company
as of the record date shall be deemed to be the owner of the shares
registered in his name at that time.
SECTION 3.7 VOTING LIST. The officer or agent having charge of the
stock transfer books for shares of the Company shall make, at least ten
days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting or any adjournment
thereof, arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of ten days
prior to such meeting, shall be kept on file at the registered office of
the Company and shall be subject to lawful inspection by any shareholder
at any time during the usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of
the meeting. Failure to comply with this Section shall not affect the
validity of any action taken at such meeting.
SECTION 3.8 QUORUM AND OFFICERS. Except as otherwise provided by
law, by the articles of incorporation or by these bylaws, the holders of
a majority of the shares of each class issued and outstanding and
entitled to vote and represented in person or by proxy shall constitute
a quorum at a meeting of shareholders, but the shareholders present at
any meeting, although representing less than a quorum, may from time to
time adjourn the meeting to some other day and hour, without notice
other than announcement at the meeting. The shareholders present at a
duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum. The vote of the holders of a majority of the
shares of each class entitled to vote and thus represented at a meeting
at which a quorum is present shall be the act of the shareholders'
meeting, unless the vote of a greater number is required by law. The
chairman of the board shall preside at, and the secretary shall keep the
records of, each meeting of shareholders, and in the absence of either
such officer, his duties shall be performed by any other officer
authorized by these bylaws or any person appointed by resolution duly
adopted at the meeting.
SECTION 3.9 PROXIES. A shareholder may vote either in person or by
proxy executed in writing by the shareholder, or by his duly authorized
attorney-in-fact. No proxy shall be valid after eleven (11) months from
the date of its execution unless otherwise provided in the proxy. A
proxy shall be revocable unless the proxy form conspicuously states that
the proxy is irrevocable and the proxy is coupled with an interest.
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SECTION 3.10 BALLOTING. Upon the demand of any shareholder,
the vote upon any question before the meeting shall be by ballot. At
each meeting inspectors of election may be appointed by the presiding
officer of the meeting, and at any meeting for the election of
directors, inspectors shall be so appointed on the demand of any
shareholder present or represented by proxy and entitled to vote in such
election of directors. No director or candidate for the office of
director shall be appointed as such inspector. The number of votes cast
by shares in the election of directors shall be recorded in the minutes.
SECTION 3.11 VOTING RIGHTS, PROHIBITION OF CUMULATIVE VOTING
FOR DIRECTORS. Except to the extent the articles of incorporation or
the laws of the State of Texas provide otherwise, each outstanding share
shall be entitled to one (1) vote upon each matter submitted to a vote
at a meeting of shareholders. No shareholder shall have the right to
cumulate his votes for the election of directors but each share shall be
entitled to one vote in the election of each director except to the
extent the articles of incorporation or the laws of the State of Texas
provide otherwise. In the case of any contested election for any
directorship, the candidate for such position receiving a plurality of
the votes cast in such election shall be elected to such position.
SECTION 3.12 RECORD OF SHAREHOLDERS. The Company shall keep at
its principal business office, or the office of its transfer agents or
registrars, a record of its shareholders, giving the names and addresses
of all shareholders and the number and class of the shares held by each.
SECTION 3.13 ACTION WITHOUT MEETING. Unless otherwise
permitted by the articles of incorporation of the Company, any action
required by statute to be taken at a meeting of the shareholders of the
Company, or any action which may be taken at a meeting of the
shareholders, may be taken without a meeting, without prior notice and
without a vote if a consent or consents in writing, setting forth the
action so taken, shall be signed by the holder or holders of shares
having not less than the minimum number of votes that would be necessary
to take such action at a meeting at which all shares entitled to vote on
the action were present and voted. Any such signed consent, or a signed
copy thereof, shall be placed in the minute book of the Company. All
notices with respect to such consent required by the applicable statute
shall be sent by the Company in a timely manner.
ARTICLE IV
The Board of Directors
SECTION 4.1 NUMBER, QUALIFICATIONS AND TERM. The business and
affairs of the Company shall be managed and controlled by the board of
directors; and, subject to any restrictions imposed by law, by the
articles of incorporation, or by these bylaws, the board of directors
may exercise all the powers of the Company. The number of directors
which shall constitute the whole board shall be not less than one (1)
and not more than nine (9). Within the foregoing limits, the number of
directors shall be determined from time to time by resolution of the
shareholders. The initial number of directors shall be seven (7), and
such number may be increased or decreased by a majority of the entire
board of directors, provided that no decrease shall effect a shortening
of the term of any incumbent director. The board of directors shall be
divided into three classes, as nearly as equal in number as possible.
At each annual meeting of shareholders following the initial
classification and election at the 1999 annual meeting of shareholders,
directors elected to succeed those directors whose terms expire shall
hold office, unless removed in accordance with Section 4.2 of these
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bylaws, until the third succeeding annual meeting of shareholders after
their election and until their successor shall have been duly elected
and qualified. Directors need not be residents of Texas or shareholders
of the Company absent provision to the contrary in the articles of
incorporation or laws of the State of Texas. Except as otherwise
provided in Section 4.3 of these bylaws, each position on the board of
directors shall be filled by election at the annual meeting of
shareholders as provided in this Section 4.1. Any such election shall
be conducted in accordance with Section 3.11 of these bylaws.
SECTION 4.2 REMOVAL. Any director or the entire board of directors
may be removed from office, with or without cause, at any special
meeting of shareholders by the affirmative vote of a majority of the
shares of the shareholders present in person or by proxy and entitled to
vote at such meeting, if notice of the intention to act upon such matter
shall have been given in the notice calling such meeting. If the notice
calling such meeting shall have so provided, the vacancy caused by such
removal may be filled at such meeting by the affirmative vote of a
majority in number of the shares of the shareholders present in person
or by proxy and entitled to vote.
SECTION 4.3 VACANCIES. Any vacancy occurring in the board of
directors may be filled by the vote of a majority of the remaining
directors, even if such remaining directors comprise less than a quorum
of the board of directors. A director elected to fill a vacancy shall
be elected for the unexpired term of his predecessor in office. Any
position on the board of directors to be filled by reason of an increase
in the number of directors shall be filled by the vote of a majority of
the directors, election at an annual meeting of the shareholders, or at
a special meeting of shareholders duly called for such purpose.
SECTION 4.4 REGULAR MEETINGS. Regular meetings of the board of
directors shall be held immediately following each annual meeting of
shareholders, at the place of such meeting, and at such other times and
places as the board of directors shall determine. No notice of any kind
of such regular meetings needs to be given to either old or new members
of the board of directors.
SECTION 4.5 SPECIAL MEETINGS. Special meetings of the board of
directors shall be held at any time by call of the chairman of the
board, the president, the secretary or any of the directors. The
secretary shall give notice of each special meeting to each director at
his usual business or residence address by mail at least three days
before the meeting or in person or by facsimile or telephone at least
one day before such meeting. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail with postage
thereon prepaid. Except as otherwise provided by law, by the articles
of incorporation, or by these bylaws, such notice need not specify the
business to be transacted at, or the purpose of, such meeting. No
notice shall be necessary for any adjournment of any meeting. The
signing of a written waiver of notice of any special meeting by the
person or persons entitled to such notice, whether before or after the
time stated therein, shall be equivalent to the receiving of such
notice. Attendance of a director at a meeting shall also constitute a
waiver of notice of such meeting, except where a director attends a
meeting for the express and announced purpose of objecting to the
transaction of any business on the ground that the meeting is not
lawfully called or convened.
SECTION 4.6 QUORUM. A majority of the number of directors fixed by
these bylaws shall constitute a quorum for the transaction of business
and the act of not less than a majority of such quorum of the directors
shall be required in order to constitute the act of the board of
directors, unless the act of a greater number shall be required by law,
by the articles of incorporation or by these bylaws.
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SECTION 4.7 PROCEDURE AT MEETINGS. In the event the board of
directors consist of more than one director, the board of directors, at
each regular meeting held immediately following the annual meeting of
shareholders, shall appoint one of their number as chairman of the board
of directors. Failure to designate a chairman of the board shall be
deemed a designation of the president to perform the functions of the
chairman of the board. The chairman of the board shall preside at
meetings of the board. In his absence at any meeting, any officer
authorized by these bylaws or any member of the board selected by the
members present shall preside. The secretary of the Company shall act
as secretary at all meetings of the board. In his absence, the
presiding officer of the meeting may designate any person to act as
secretary. At meetings of the board of directors, the business shall be
transacted in such order as the board may from time to time determine.
SECTION 4.8 PRESUMPTION OF ASSENT. Any director of the Company who
is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the
action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the
secretary of the Company immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted
in favor of such action.
SECTION 4.9 ACTION WITHOUT A MEETING. Any action required by
statute to be taken at a meeting of the directors of the Company, or
which may be taken at such meeting, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed
by each director entitled to vote at such meeting, and such consent
shall have the same force and effect as a unanimous vote of the
directors. Such signed consent, or a signed copy thereof, shall be
placed in the minute book of the Company.
SECTION 4.10 COMPENSATION. Directors as such shall not receive
any stated salary for their service, but by resolution of the board of
directors, a fixed sum and reimbursement for reasonable expenses of
attendance, if any, may be allowed for attendance at each regular or
special meeting of the board of directors or at any meeting of the
executive committee of directors, if any, to which such director may be
elected in accordance with the following Section 4.11; but nothing
herein shall preclude any director from serving the Company in any other
capacity or receiving compensation therefor.
SECTION 4.11 EXECUTIVE COMMITTEE. The board of directors, by
resolution adopted by a majority of the full board of directors, may
designate an executive committee, which committee shall consist of one
or more of the directors of the Company. Such executive committee may
exercise such authority of the board of directors in the business and
affairs of the Company as the board of directors may, by resolution duly
adopted, delegate to it except as prohibited by law. The designation of
such committee and the delegation thereto of authority shall not operate
to relieve the board of directors, or any member thereof, of any
responsibility imposed upon it or him by law. Any member of the
executive committee may be removed by the board of directors. The
executive committee shall keep regular minutes of its proceedings and
report the same to the board of directors when required. The minutes of
the proceedings of the executive committee shall be placed in the minute
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book of the Company. Members of the executive committee shall receive
such compensation as may be approved by the board of directors and will
be reimbursed for reasonable expenses actually incurred by reason of
membership on the executive committee.
SECTION 4.12 OTHER COMMITTEES. The board of directors, by
resolution adopted by a majority of the full board of directors, may
appoint one or more committees of one or more directors each. Such
committees may exercise such authority of the board of directors in the
business and affairs of the Company as the board of directors may, by
resolution duly adopted, delegate, except as prohibited by law. The
designation of any committee and the delegation thereto of authority
shall not operate to relieve the board of directors, or any member
thereof, of any responsibility imposed on it or him by law. Any member
of a committee may be removed at any time by the board of directors.
Members of any such committees shall receive such compensation as may be
approved by the board of directors and will be reimbursed for reasonable
expenses actually incurred by reason of membership on a committee.
SECTION 4.13 AMENDMENTS TO ARTICLE IV. Notwithstanding
anything to the contrary contained in these bylaws, no amendment, repeal
or provision inconsistent with the provisions of Sections 4.1, 4.2 or
4.3 shall be adopted unless it is approved by the vote of two-thirds of
the shares of the Company entitled to vote.
ARTICLE V
Officers
SECTION 5.1 NUMBER. The officers of the Company shall consist of a
president and a secretary; and, in addition, such other officers and
assistant officers and agents as may be deemed necessary or desirable.
Officers shall be elected or appointed by the board of directors. Any
two or more offices may be held by the same person. In its discretion,
the board of directors may leave unfilled any office except those of
president and secretary.
SECTION 5.2 ELECTION; TERM; QUALIFICATION. Officers shall be
chosen by the board of directors annually at the meeting of the board of
directors following the annual shareholders' meeting. Each officer
shall hold office until his successor has been chosen and qualified, or
until his death, resignation, or removal.
SECTION 5.3 REMOVAL. Any officer or agent elected or appointed by
the board of directors may be removed by the board of directors whenever
in its judgment the best interests of the Company will be served
thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an
officer or agent shall not of itself create any contract rights.
SECTION 5.4 VACANCIES. Any vacancy in any office for any cause may
be filled by the board of directors at any meeting.
SECTION 5.5 DUTIES. The officers of the Company shall have such
powers and duties, except as modified by the board of directors, as
generally pertain to their offices, respectively, as well as such powers
and duties as from time to time shall be conferred by the board of
directors and by these bylaws.
SECTION 5.6 THE PRESIDENT. The president shall have general
direction of the affairs of the Company and general supervision over its
several officers, subject however, to the control of the board of
directors. He shall at each annual meeting, and from time to time,
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report to the shareholders and to the board of directors all matters
within his knowledge which, in his opinion, the interest of the Company
may require to be brought to the notice of such persons. He may sign,
with the secretary or an assistant secretary, any or all certificates of
stock of the Company. He shall preside at all meetings of the
shareholders, shall sign and execute in the name of the Company (i) all
contracts or other instruments authorized by the board of directors, and
(ii) all contracts or instruments in the usual and regular course of
business, pursuant to Section 6.2 hereof, except in cases when the
signing and execution thereof shall be expressly delegated or permitted
by the board or by these bylaws to some other officer or agent of the
Company; and, in general, shall perform all duties incident to the
office of president, and such other duties as from time to time may be
assigned to him by the board of directors or as are prescribed by these
bylaws.
SECTION 5.7 THE VICE PRESIDENTS. At the request of the president,
or in his absence or disability, the vice presidents, in the order of
their election, shall perform the duties of the president, and, when so
acting, shall have all the powers of, and be subject to all restrictions
upon, the president. Any action taken by a vice president in the
performance of the duties of the president shall be conclusive evidence
of the absence or inability to act of the president at the time such
action was taken. The vice presidents shall perform such other duties
as may, from time to time, be assigned to them by the board of directors
or the president. A vice president may sign, with the secretary or an
assistant secretary, certificates of stock of the Company.
SECTION 5.8 SECRETARY. The secretary shall keep the minutes of all
meetings of the shareholders, of the board of directors, and of the
executive committee, if any, of the board of directors, in one or more
books provided for such purpose and shall see that all notices are duly
given in accordance with the provisions of these bylaws or as required
by law. He shall be custodian of the corporate records and of the seal
(if any) of the Company and see, if the Company has a seal, that the
seal of the Company is affixed to all documents the execution of which
on behalf of the Company under its seal is duly authorized; shall have
general charge of the stock certificate books, transfer books and stock
ledgers, and such other books and papers of the Company as the board of
directors may direct, all of which shall, at all reasonable times, be
open to the examination of any director, upon application at the office
of the Company during business hours; and in general shall perform all
duties and exercise all powers incident to the office of the secretary
and such other duties and powers as the board of directors or the
president from time to time may assign to or confer on him.
SECTION 5.9 TREASURER. The treasurer shall keep complete and
accurate records of account, showing at all times the financial
condition of the Company. He shall be the legal custodian of all money,
notes, securities and other valuables which may from time to time come
into the possession of the Company. He shall furnish at meetings of the
board of directors, or whenever requested, a statement of the financial
condition of the Company, and shall perform such other duties as these
bylaws may require or the board of directors may prescribe.
SECTION 5.10. ASSISTANT OFFICERS. Any assistant secretary or
assistant treasurer appointed by the board of directors shall have power
to perform, and shall perform, all duties incumbent upon the secretary
or treasurer of the Company, respectively, subject to the general
direction of such respective officers, and shall perform such other
duties as these bylaws may require or the board of directors may
prescribe.
SECTION 5.11 SALARIES. The salaries or other compensation of
the officers shall be fixed from time to time by the board of directors.
No officer shall be prevented from receiving such salary or other
compensation by reason of the fact that he is also a director of the
Company.
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SECTION 5.12 BONDS OF OFFICERS. The board of directors may
secure the fidelity of any officer of the Company by bond or otherwise,
on such terms and with such surety or sureties, conditions, penalties or
securities as shall be deemed proper by the board of directors.
SECTION 5.13 DELEGATION. The board of directors may delegate
temporarily the powers and duties of any officer of the Company, in case
of his absence or for any other reason, to any other officer, and may
authorize the delegation by any officer of the Company of any of his
powers and duties to any agent or employee, subject to the general
supervision of such officer.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 DISTRIBUTIONS. Distributions, subject to the
provisions of the articles of incorporation and to limitations set forth
by law, if any, may be declared by the board of directors at any regular
or special meeting. Distributions may be in the form of a dividend,
including a share dividend, a purchase or redemption by the Company,
directly or indirectly, of any of its own shares or a payment by the
Company in liquidation of all or a portion of its assets. A
distribution may not be made if it would render the Company insolvent or
if it exceeds the surplus of the Company, except as otherwise allowed by
law.
Subject to limitations upon the authority of the board of
directors imposed by law or by the articles of incorporation, the
declaration of and provision for payment of dividends shall be at the
discretion of the board of directors.
SECTION 6.2. CONTRACTS. The president shall have the power and
authority to execute, on behalf of the Company, contracts or instruments
in the usual and regular course of business, and in addition the board
of directors may authorize any officer or officers, agent or agents, of
the Company to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Company, and such
authority may be general or confined to specific instances. Unless so
authorized by the board of directors or by these bylaws, no officer,
agent or employee shall have any power or authority to bind the Company
by any contract or engagement, or to pledge its credit or to render it
pecuniarily liable for any purpose or in any amount.
SECTION 6.3 CHECKS, DRAFTS, ETC. All checks, drafts, or other
orders for the payment of money, notes, or other evidences of
indebtedness issued in the name of the Company shall be signed by such
officers or employees of the Company as shall from time to time be
authorized pursuant to these bylaws or by resolution of the board of
directors.
SECTION 6.4. DEPOSITORIES. All funds of the Company shall be
deposited from time to time to the credit of the Company in such banks
or other depositories as the board of directors may from time to time
designate, and upon such terms and conditions as shall be fixed by the
board of directors. The board of directors may from time to time
authorize the opening and maintaining within any such depository as it
may designate, of general and special accounts, and may make such
special rules and regulations with respect thereto as it may deem
expedient.
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SECTION 6.5 ENDORSEMENT OF STOCK CERTIFICATES. Subject to the
specific directions of the board of directors, any share or shares of
stock issued by any corporation and owned by the Company, including
reacquired shares of the Company's own stock, may, for sale or transfer,
be endorsed in the name of the Company by the president or any vice
president; and such endorsement may be attested or witnessed by the
secretary or any assistant secretary either with or without the affixing
thereto of the corporate seal.
SECTION 6.6 CORPORATE SEAL. The corporate seal, if any, shall be
in such form as the board of directors shall approve, and such seal, or
a facsimile thereof, may be impressed on, affixed to, or in any manner
reproduced upon, instruments of any nature required to be executed by
officers of the Company.
SECTION 6.7 FISCAL YEAR. The fiscal year of the Company shall
begin and end on such dates as the board of directors at any time shall
determine.
SECTION 6.8 BOOKS AND RECORDS. The Company shall keep correct and
complete books and records of account and shall keep minutes of the
proceedings of its shareholders and board of directors, and shall keep
at its registered office or principal place of business, or at the
office of its transfer agent or registrar, a record of its shareholders,
giving the names and addresses of all shareholders and the number and
class of the shares held by each.
SECTION 6.9 RESIGNATIONS. Any director or officer may resign at
any time. Such resignations shall be made in writing and shall take
effect at the time specified therein, or, if no time is specified, at
the time of its receipt by the president or secretary. The acceptance
of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.
SECTION 6.10 INDEMNIFICATION OF OFFICERS AND DIRECTORS. The
Company shall indemnify to the full extent allowed by law any person who
was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, arbitrative, or investigative, any appeal in
such an action, suit, or proceeding, and any inquiry or investigation
that could lead to such an action, suit or proceeding by reason of the
fact that he is or was a director, officer, employee, or agent of the
Company, or is or was serving at the request of the Company as a
director, officer, employee, partner, venturer, proprietor, trustee,
agent, or similar functionary of another corporation, partnership, joint
venture, trust, other enterprise, or employee benefit plan. This
indemnification shall, to the extent permitted by law, be against
judgments, penalties, fines, settlements and reasonable expenses
actually incurred in connection with such investigation, action, suit or
proceeding but if the person is found liable to the Company or is found
liable on the basis that personal benefit was improperly received by the
person, indemnification shall be limited to reasonable expenses actually
incurred by the person in connection with the proceeding and shall not
be made in respect of any proceedings in which the person shall have
been found liable for willful or intentional misconduct in the
performance of his duty to the Company. A person acting in his official
capacity as a director of the Company must have conducted himself in
good faith and reasonably believed his actions to have been in the
Company's best interests. A person acting in any other capacity must
have conducted himself in good faith and reasonably have believed his
actions were not opposed to the Company's best interests. In the case
of any criminal proceeding, indemnification requires that the person
indemnified have had no reasonable cause to believe his conduct was
unlawful.
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Any indemnification under this Section shall be made by the
Company only as authorized in the specific case upon a determination
that indemnification is proper because the director, officer, employee
or agent has met the applicable standard of conduct as set forth in the
laws of the State of Texas, and the amount of indemnification (before or
after termination of the proceedings) shall be made only as set forth in
the laws of the State of Texas. Such determinations shall be made as
set forth in the laws of the State of Texas.
Any indemnification of or advance of expenses to any officer,
director, employee, or agent of the Company shall be reported in writing
to the shareholders with or before the notice or waiver of notice of the
next shareholder's meeting or with or before the next submission to
shareholders of a consent to action without a meeting pursuant to
Section 3.13 hereof and, in any case, within the twelve-month period
immediately following the date of the indemnification or advance.
Any right of indemnification granted by this Section 6.10 shall be
in addition to and not in lieu of any other such right to which any
director or officer of the Company may at any time be entitled under the
law of the State of Texas; and if any indemnification which would
otherwise be granted by this Section 6.10 shall be disallowed by any
competent court or administrative body as illegal or against public
policy, then any director or officer with respect to whom such
adjudication was made, and any other officer or director, shall be
indemnified to the fullest extent permitted by law and public policy, it
being the express intent of the Company to indemnify its officers,
directors, employees and agents to the fullest extent possible in
conformity with these bylaws, all applicable laws, and public policy.
SECTION 6.11 INDEMNITY INSURANCE. The Company may purchase and
maintain insurance or another arrangement on behalf of a person who is
or was a director, officer, employee or agent of the Company or who is
or was serving at the request of the Company as a director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or
other enterprise, against any liability asserted against him and
incurred by him in such capacity or arising out of his status as such a
person, whether or not the Company would have the power to indemnify him
against that liability under these bylaws or the laws of the State of
Texas. If the insurance or other arrangement is with a person or entity
that is not regularly engaged in the business of providing insurance
coverage, the insurance or arrangement may provide for payment of a
liability with respect to which the Company would not have the power to
indemnify the person only if the shareholders of the Company approve the
inclusion of coverage for the additional liability.
SECTION 6.12 MEETINGS BY TELEPHONE. Subject to the provisions
required or permitted by these bylaws or the laws of the State of Texas
for notice of meetings, shareholders, members of the board of directors,
or members of any committee designated by the board of directors may
participate in and hold any meeting required or permitted under these
bylaws by telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section shall constitute
presence in person at such a meeting, except where a person participates
in the meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting is not lawfully called or
convened.
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ARTICLE VII
Amendments
SECTION 7.1 AMENDMENTS. These bylaws may be altered, amended, or
repealed, or new bylaws may be adopted, by a majority of the board of
directors at any duly held meeting of directors, (provided that notice
of such proposed action shall have been contained in the notice of any
such meeting,) unless the articles of incorporation or the laws of the
State of Texas reserve the power exclusively to the shareholders in
whole or in part, or the shareholders in amending, repealing or adopting
a particular bylaw expressly provide that the board of directors may not
amend or repeal that bylaw. Unless the articles of incorporation or a
bylaw adopted by the shareholders provides otherwise as to all or some
portion of the Company's bylaws, the holders of a majority of the shares
represented at any duly held meeting of the shareholders, provided that
notice of such proposed action shall have been contained in the notice
of any such meeting, may amend, repeal or adopt the Company's bylaws.
ARTICLE VIII
SHAREHOLDERS' AGREEMENT
SECTION 8.1 RESTRICTIONS ON CORPORATE ACTIONS. For so long as
the Bargo Group is entitled to nominate one or more persons to the Board
of Directors of the Company as provided in the Shareholders' Agreement,
dated August 14, 1998, among the Company, Bargo Energy Resources, Ltd.,
a Texas limited partnership ("Bargo"), and certain other shareholders of
the Company ("Shareholders' Agreement"), without the approval of one of
the directors nominated by the Bargo Group (which shall be in addition
to any other corporate action required by the Articles of Incorporation
of the Company, these Bylaws or by applicable law):
(a) The Company will not, and will not permit any Subsidiary
thereof, in any manner to owe or be liable for Indebtedness except:
(i) the Obligations;
(ii) the Senior Credit Facility;
(iii) obligations under operating leases entered into in the
ordinary course of the Company's or its Subsidiaries' business in arm's
length transactions at competitive market rates under competitive terms
and conditions in all respects;
(iv) Indebtedness owed by the Company or any Subsidiary
thereof which is subordinated to the Obligations upon terms and
conditions satisfactory to ECIC and EnCap LP in their sole and absolute
discretion;
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(v) purchase money Indebtedness in an aggregate principal
amount not to exceed $200,000 at any time, provided that the original
principal amount of any such Indebtedness shall not be in excess of the
purchase price of the asset acquired thereby and such Indebtedness shall
be secured only by the acquired asset;
(vi) Indebtedness in the principal amount of approximately
$20,000 owed to Bank One Texas on a workover rig; and
(vii) Indebtedness in the principal amount of approximately
$20,000 owed to Sam Henderson.
(b) The Company will not, and will not permit its Subsidiaries
to, merge or consolidate with or into any other business entity. Any
Subsidiary of the Company may, however, be merged into or consolidated
with either the Company or another Subsidiary which is wholly-owned by
the Company, so long as the Company or the Subsidiary wholly-owned by
the Company is the surviving business entity. The Company will not
issue any securities other than shares of its common stock or any
options or warrants giving the holders thereof only the right to acquire
such shares. No Subsidiary of the Company will issue any additional
shares of its capital stock or other securities or any options, warrants
or other rights to acquire such additional shares or other securities
except to the Company. No Subsidiary of the Company which is a
partnership will allow any diminution of the Company's interest (direct
or indirect) therein.
(c) The Company will not, and will not permit any Subsidiary to,
sell, transfer, lease, exchange, alienate or dispose of any Collateral
except:
(i) equipment which is worthless or obsolete or which is
replaced by equipment of equal suitability and value;
(ii) inventory (including oil and gas sold as produced and
seismic data) which is sold in the ordinary course of business on
ordinary trade terms; or
(iii) other property which is sold for fair consideration not
in the aggregate in excess of $500,000 in any Fiscal Year (commencing
with Fiscal Year 1998).
(d) The Company will not, and will not permit any Subsidiary to,
make any expenditure or commitment or incur any obligation or enter into
or engage in any transaction except in the ordinary course of business
(which ordinary course of business includes the acquisition, directly or
indirectly, of oil and gas properties), engage directly or indirectly in
any business or conduct any operations except in connection with or
incidental to its present businesses and operations, make any
acquisitions of or capital contributions to or other investments in any
person, other than Permitted Investments, or make any significant
acquisitions or investments in any properties other than oil and gas
properties.
(e) The Company will not, and will not permit any of its
Subsidiaries to, engage in any material transaction with any of its
Affiliates on terms which are less favorable to it than those which
would have been obtainable at the time in arms-length dealing with
persons other than such Affiliates, provided that such restriction shall
not apply to transactions among the Company and its wholly-owned
Subsidiaries.
(f) The Company will not, and will not permit any of its
Subsidiaries to, declare or make, or incur any liability to declare or
make, any Restricted Payment.
(g) The Company will not amend, whether by amendment, supplement
or renewal, the terms of the Note Documents as they relate to the
amortization of Indebtedness under such Note Documents, the principal
amount of Indebtedness under such Note Documents or the interest or
premium payable with respect to such Indebtedness.
SECTION 8.2 DEFINITIONS. As used in this Article VIII of the
Bylaws, the following terms shall have the meanings set forth below:
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"AFFILIATE" shall mean, when used with respect to another person,
any person directly or indirectly controlling, controlled by or under
common control with such other person.
"AMENDED SECURITY DOCUMENTS" has the meaning set forth in the
Renewal Note Agreement.
"BARGO GROUP" has the meaning set forth in the Shareholders'
Agreement.
"COLLATERAL" has the meaning set forth in the Renewal Note
Agreement.
"ECIC" means Energy Capital Investment Company PLC, an English
investment company.
"ENCAP LP" means EnCap Equity 1994 Limited Partnership, a Texas
limited partnership.
"FISCAL YEAR" means the 12 month period ending December 31 of any
year.
"FURTHER RENEWAL NOTES" shall have the meaning set forth in the
Renewal Note Agreement.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting
Standards Board (or generally recognized successor) and which, in the
case of the Company and its consolidated subsidiaries, are applied for
periods after the date hereof in a manner consistent with the manner in
which such principles were applied prior to the date hereof.
"INDEBTEDNESS" of any person means Liabilities in any of the
following categories: (a) Liabilities for borrowed money; (b)
Liabilities constituting an obligation to pay the deferred purchase
price of property or services; (c) Liabilities evidenced by a bond,
debenture, note or similar instrument; (d) Liabilities which would under
GAAP be shown on such person's balance sheet as a liability, and is
payable more than one year from the date of creation thereof (other than
reserves for taxes and reserves for contingent obligations); (e)
Liabilities arising under futures contracts, forward contracts, swap,
cap or collar contracts, option contracts, hedging contracts, other
derivative contracts, or similar agreements; (f) Liabilities
constituting principal under leases capitalized in accordance with GAAP;
(g) Liabilities arising under conditional sales or other title retention
agreements; (h) Liabilities owing under direct or indirect guaranties of
Liabilities of any other person or constituting obligations to purchase
or acquire or to otherwise protect or insure a creditor against loss in
respect of Liabilities of any other person (such as obligations under
working capital maintenance agreements, agreements to keep-well, or
agreements to purchase Liabilities, assets, goods, securities or
services), but excluding endorsements in the ordinary course of business
of negotiable instruments in the course of collection; (i) Liabilities
(for example, repurchase agreements) consisting of an obligation to
purchase securities or other property, if such Liabilities arise out of
or in connection with the sale of the same or similar securities or
property; (j) Liabilities with respect to letters of credit or
applications or reimbursement agreements therefor; (k) Liabilities with
respect to payments received in consideration of oil, gas, or other
minerals yet to be acquired or produced at the time of payment
(including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such person or for the creation of which
such person directly or indirectly received payment), or (l) Liabilities
with respect to other obligations to deliver goods or services in
consideration of advance payments therefor; provided, however, that the
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"Indebtedness" of any person shall not include Liabilities that were
incurred by such person on ordinary trade terms to vendors, suppliers,
or other persons providing goods and services for use by such person in
the ordinary course of its business, unless and until such Liabilities
are outstanding more than 90 days past the original invoice or billing
date therefor.
"LIABILITIES" shall mean, as to any person, all indebtedness,
liabilities and obligations of such person, whether mature or unmatured,
liquidated or unliquidated, primary or secondary, direct or absolute,
fixed or contingent, and whether or not required to be considered
pursuant to GAAP.
"NOTE DOCUMENTS" shall mean the Renewal Note Agreement, the
Further Renewal Notes and the Amended Security Documents as defined in
the Renewal Note Agreement, and all other agreements, certificates,
documents, commitments and writings at any time delivered in connection
herewith or therewith.
"OBLIGATIONS" shall mean all Liabilities owing ECIC and EnCap LP
under or pursuant to the Renewal Note Agreement, the Further Renewal
Notes or any of the other Note Documents.
"PERMITTED INVESTMENT" shall mean any investment, loan, advance,
guaranty or capital contribution by the Company or any Subsidiary in any
of the following: (a) properties or assets to be used in the ordinary
course of business of the Company and its Subsidiaries; (b) current
assets arising from the sale of goods and services in the ordinary
course of business of the Company and its Subsidiaries; (c) investments
in one or more of the Company's Subsidiaries or in any person that
concurrently with such investment becomes a Subsidiary; (d) any
marketable obligation maturing not later than one year after the date of
acquisition therefor, issued or guaranteed by the United States of
America or by any agency of the United States of America which has the
full faith and credit of the Untied States of America; (e) commercial
paper which is given the highest rating by a credit rating agency of
recognized national standing and maturing not more than 270 days from
the date of creation thereof; and (f) any demand deposit or time deposit
(including certificates of deposit and money market or sweep accounts)
with a commercial bank or trust company organized and doing business
under the laws of the United States of America or any state thereof
which has capital, surplus and undivided profits of at least
$250,000,000, provided that such deposit must be either payable on
demand or mature not more than twelve months from the date of investment
therein.
"RENEWAL NOTE AGREEMENT" shall mean that certain Note
Restructuring Agreement, dated August 14, 1998, among the Company, ECIC,
EnCap LP and Gecko Booty 1994 Limited Partnership, a Texas limited
partnership, as such agreement may be amended from time to time.
"RESTRICTED PAYMENT" shall mean any Distribution (as defined
below) in respect of the Company or any Subsidiary thereof (other than
on account of capital stock or other equity interests of a Subsidiary
owned legally or beneficially by the Company or another Subsidiary),
including any Distribution resulting in the acquisition by the Company
of securities that would constitute treasury stock. As used in this
definition, "Distribution" shall mean, in respect of any corporation,
partnership or other business entity (a) dividends or other
distributions or payments on capital stock or other equity interest of
such corporation, partnership or other business entity (except
distributions in such stock or other equity interest) and (b) the
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redemption or acquisition of such stock or other equity interests or of
warrants, rights or other options to purchase such stock or other equity
interests (except when solely in exchange for such stock or other equity
interests).
"SENIOR CREDIT FACILITY" has the meaning set forth in the Renewal
Note Agreement.
"SUBSIDIARY" shall mean with respect to any person, any
corporation, association, partnership, joint venture, or other business
or corporate entity, enterprise or organization which is directly or
indirectly (through one or more intermediaries) controlled by or owned
fifty percent or more by such person."
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CERTIFICATE BY SECRETARY
The undersigned, being the secretary of BARGO ENERGY COMPANY,
hereby certifies that the foregoing code of bylaws was duly adopted by
the unanimous written consent of the directors of said corporation
effective on _____________, 1999.
In Witness Whereof, I have signed this certification on this the
___ day of _________________, 1999.
__________________, Secretary
