<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
-----------------
Date of Report (Date of earliest event reported): January 15, 1996
AMERAC ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-9933 75-2181442
(Commission File Number) (IRS Employer Identification No.)
700 Louisiana, Suite 3300, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (713) 223-1833
<PAGE>
Item 2. Acquisition or Disposition of Assets
On January 15, 1996, Amerac Energy Corporation ("Amerac") purchased all of
the issued and outstanding common stock of Fremont Energy Corporation
and Ridgepointe Resources, Inc. Amerac estimates the proved oil and gas reserves
to be approximately 14.1 BCFE at November 1, 1995 and such reserves are located
in the States of Kansas, New Mexico and Oklahoma. The purchased reserves are
approximately 52% of Amerac's reserves at January 1, 1995.
As consideration for the acquisition, Amerac issued and paid to the Selling
Shareholders an aggregate of (i) 3,293,310 shares of Amerac Common Stock par
value $.05 per share, and (ii) $7,067,648 in cash, of which $250,330 has been
deposited in escrow pending resolution of certain title and environmental
matters. The 3,293,310 shares of Amerac Common Stock represents approximately
13.9% of the outstanding shares as of January 15, 1996.
In connection with the transaction, Amerac and the Selling Shareholders
entered into an agreement pursuant to which the Selling Shareholders were
granted certain registration rights under the securities laws with respect to
the share of Amerac Common Stock.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
It is impracticable for Amerac to provide the required financial
statements at the date hereof. Amerac will file the required financial
statements as soon as practicable, but no later than 60 days after
January 30, 1996.
(b) Pro Forma Financial Information
It is impracticable for Amerac to provide the required pro forma
information at the date hereof. Amerac will file the required financial
statements as soon as practicable, but no later than 60 days after
January 30, 1996.
(c) Exhibits
Exhibit No. Description Page
- ----------- ----------- ----
Exhibit 1 Acquisition Agreement dated as of January 5,
1996 by and among Amerac, the Selling
Shareholders, Ridgepointe, Fremont and
Fremont Petroleum Corporation, together
with Amendment No. 1 to Acquisition
Agreement
Exhibit 2 Registration Rights Agreement dated as of
January 15, 1996 between Amerac and the
Selling Shareholders
Exhibit 3 Press Release of Amerac dated January 17, 1996
Exhibit 4 First Amendment to Amended and Restated
Credit Agreement dated January 16, 1996
by and between Amerac and Bank One, Texas
National Association
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
AMERAC ENERGY CORPORATION
Date: January 25, 1996 By: /s/ Jeffrey L. Stevens
------------------------------------
Jeffrey L. Stevens
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 1
ACQUISITION AGREEMENT
among
AMERAC ENERGY CORPORATION,
AS BUYER,
POWELL RESOURCES, INC.,
and
THE OTHER
SHAREHOLDERS NAMED HEREIN,
AS SELLERS
and
RIDGEPOINTE RESOURCES, INC.,
FREMONT ENERGY CORPORATION.,
and
FREMONT PETROLEUM CORPORATION
January 5, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
ARTICLE I PURCHASE AND SALE................................... 1
1.1 The Purchase and Sale............................... 1
1.2 Purchase Consideration.............................. 2
1.3 Deposit............................................. 2
1.4 Intercompany Transactions........................... 2
1.5 Adjustments to Initial Purchase Consideration....... 3
1.6 Preliminary Settlement Statement.................... 5
1.7 Final Accounting.................................... 5
1.8 No Registration; Legends............................ 6
1.9 Power of Attorney and Custody Agreement............. 6
1.10 Closing............................................. 6
1.11 Certification Under Treasury Regulations............ 7
1.12 Allocated Values.................................... 7
ARTICLE II DUE DILIGENCE EXAMINATION;
TITLE AND ENVIRONMENTAL MATTERS..................... 7
2.1 Principal Definitions............................... 7
2.2 Access.............................................. 11
2.3 Environmental Assessments and Defects............... 11
2.4 Defects and Related Adjustments..................... 14
2.5 Preferential Purchase Rights and Consents to Assign. 16
2.6 Interest Additions.................................. 17
2.7 Casualty Loss....................................... 18
2.8 Arbitration......................................... 18
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF SELLING SHAREHOLDERS............................. 19
3.1 Existence and Power................................. 19
3.2 Authorization....................................... 20
3.3 Governmental Authorization.......................... 20
3.4 Subsidiaries........................................ 20
3.5 Non-Contravention................................... 20
3.6 Binding Effect...................................... 21
3.7 Ownership of Fremont Common Stock and Ridgepointe
Common Stock........................................ 21
3.8 Accredited Investor................................. 22
3.9 Capitalization of Fremont and Ridgepointe........... 22
3.10 Financial Statements................................ 22
3.11 No Material Adverse Change.......................... 23
3.12 No Undisclosed Liabilities.......................... 23
3.13 Legal Compliance.................................... 23
3.14 Tax Returns and Taxes............................... 24
3.15 Financial Advisor Fees.............................. 25
3.16 Litigation.......................................... 25
3.17 Insurance........................................... 25
3.18 Employee Liabilities................................ 25
</TABLE>
i
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PAGE
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<C> <S> <C>
3.19 Books and Records................................... 25
3.20 Assets.............................................. 25
3.21 Intellectual Property Rights........................ 26
3.22 Leases and Wells.................................... 26
3.23 Marketing........................................... 27
3.24 Applicable Contracts................................ 27
3.25 Pooling, Unitization, and Communitization Agreements 27
3.26 Operating Agreements................................ 28
3.27 Environmental Matters............................... 28
3.28 Plugging and Abandonment............................ 29
3.29 Disbursement of Proceeds............................ 29
3.30 Certain Agreements; Payouts......................... 29
3.31 Information......................................... 29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AMERAC............ 29
4.1 Corporate Existence and Power....................... 29
4.2 Corporate Authorization............................. 30
4.3 Governmental Authorization.......................... 30
4.4 Subsidiaries........................................ 30
4.5 Non-Contravention................................... 30
4.6 Binding Effect...................................... 30
4.7 Capitalization...................................... 30
4.8 SEC Filings......................................... 31
4.9 Legal Compliance.................................... 31
4.10 Litigation.......................................... 31
ARTICLE V GENERAL COVENANTS................................... 31
5.1 Access to Information............................... 31
5.2 Reasonable Best Efforts............................. 31
5.3 Public Announcements................................ 32
5.4 Notification of Certain Matters..................... 32
5.5 Confidential Information............................ 32
5.6 Certain Tax Matters................................. 33
ARTICLE VI COVENANTS OF SELLING SHAREHOLDERS................... 34
6.1 Conduct of Business of Fremont and Ridgepointe...... 34
6.2 Oil and Gas Operations.............................. 36
6.3 Other Offers........................................ 37
6.4 Imbalances.......................................... 37
6.5 Employee Matters.................................... 38
6.6 Office Lease........................................ 38
</TABLE>
ii
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<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
6.7 Expenses............................................ 38
6.8 Records............................................. 38
6.9 Contract Operations Service Agreement; Ancillary
Agreements.......................................... 38
ARTICLE VII COVENANTS OF AMERAC................................. 38
7.1 Contract Operations Service Agreement; Ancillary
Agreements.......................................... 38
7.2 Federal Income Tax Refund........................... 39
7.3 Bonding Requirements................................ 39
ARTICLE VIII INDEMNIFICATION..................................... 39
8.1 Indemnities of Selling Shareholders................. 39
8.2 Indemnities of Amerac............................... 40
8.3 Notice of Claims; Defense; Settlement............... 40
ARTICLE IX CONDITIONS TO THE OBLIGATIONS TO CLOSE.............. 41
9.1 Conditions to Amerac Obligations.................... 41
9.2 Conditions to the Selling Shareholders' Obligations. 43
ARTICLE X TERMINATION......................................... 44
10.1 Termination......................................... 44
10.2 Effect of Termination............................... 44
ARTICLE XI MISCELLANEOUS....................................... 45
11.1 Notices............................................. 45
11.2 Survival............................................ 46
11.3 Amendments; No Waivers.............................. 46
11.4 Successors and Assigns.............................. 47
11.5 Entire Agreement.................................... 47
11.6 Governing Law....................................... 47
11.7 Execution by Fremont and Ridgepointe................ 47
11.8 Counterparts........................................ 47
Schedule 1.01 - Ownership of Purchased Stock;
Allocation of Adjusted Purchase Consideration
Schedule 2.3(a) - Environmental Claims
Schedule 3.17 - Fremont/Ridgepointe Insurance
Schedule 3.23 - Matters Relating to Hydrocarbon Marketing
Schedule 3.26 - Matters Relating to Operating Agreements
Schedule 3.27 - Environmental Matters
Schedule 3.30 - Certain Agreements; Payout
Schedule 4.7 - Amerac Capitalization Matters
</TABLE>
iii
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<TABLE>
<CAPTION>
PAGE
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EXHIBITS
Title Exhibit
- ----- -------
<S> <C>
Evaluated Interests (Including Material Evaluated Interests).... A
Form of Escrow Agreement........................................ B
Form of Legend.................................................. C
Form of Custody Agreement....................................... D
Form of Amended and Restated Power of Attorney.................. E
Form of Accredited Investor Certificate......................... F
Matters to be Covered by Opinions of Kirk & Chaney.............. G
Matters to be Covered by Opinion of Jackson & Walker, L.L.P..... H
Form of Contract Operations Services Agreement.................. I
Form of Registration Rights Agreement........................... J
Form of Area of Interest Agreement.............................. K
</TABLE>
iv
<PAGE>
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT ("Agreement") is dated as of January 5,
1996, and is among AMERAC ENERGY CORPORATION, a Delaware corporation ("Amerac"),
POWELL RESOURCES, INC., an Oklahoma corporation ("Powell"), THE LANGSTROTH
FAMILY LIMITED I, a Florida limited partnership (the "Partnership"), and the
persons who have executed and delivered this Agreement and who are designated as
"Other Selling Shareholders" on the signature pages hereto (the "Other Selling
Shareholders"; together with Powell and the Partnership, the "Selling
Shareholders"). This Agreement has also been executed by RIDGEPOINTE RESOURCES,
INC., an Oklahoma corporation ("Ridgepointe"), FREMONT ENERGY CORPORATION, an
Oklahoma corporation ("Fremont"), and FREMONT PETROLEUM CORPORATION, an Oklahoma
corporation ("FPC") for the limited purposes set forth hereinafter.
W I T N E S S E T H :
--------------------
WHEREAS, Powell and Ridgepointe each owns the number of issued and
outstanding shares of common stock, par value $.01 per share, of Fremont
("Fremont Common Stock") set forth opposite such party's name in Section I of
Schedule 1.01 hereto; and
WHEREAS, each of Fremont and the Selling Shareholders currently owns
the number of issued and outstanding shares of common stock, par value $.50 per
share, of Ridgepointe ("Ridgepointe Common Stock") set forth opposite such
Selling Shareholder's name in Section II of Schedule 1.01 hereto under the
caption "Current Ownership"; and
WHEREAS, the Selling Shareholders desire to sell, and Amerac desires
to purchase from the Selling Shareholders, all of the shares of Fremont Common
Stock not owned by Ridgepointe and all of the shares of Ridgepointe Common Stock
owned, or to be owned at Closing (as defined in Section 1.10), by the Selling
Shareholders for the consideration and on the terms set forth herein.
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
-----------------
1.1 The Purchase and Sale. Upon the terms and subject to the conditions
of this Agreement, at the Closing, each Selling Shareholder shall sell, assign,
transfer, and deliver to Amerac, and Amerac shall purchase and acquire from each
Selling Shareholder, that number of shares of Fremont Common Stock and
Ridgepointe Common Stock owned by such Selling Shareholder and set forth
opposite such Selling Shareholder's name in Sections I and II of Schedule 1.01
hereto.
<PAGE>
1.2 Purchase Consideration. The consideration (the "Initial Purchase
Consideration") to be paid by Amerac for all of the issued and outstanding
Ridgepointe Common Stock and all of the issued and outstanding Fremont Common
Stock not owned by Ridgepointe (collectively, the "Purchased Stock") shall be
$7,640,000.00, consisting of an aggregate of (a) that number of shares of common
stock, par value $.05 per share, of Amerac ("Amerac Common Stock") with a value
equal to $640,000.00 based upon the average of the closing prices in the over-
the-counter market as reported by the National Quotation Bureau, Incorporated,
for Amerac Common Stock during the thirty (30) Business Days (as defined
hereinafter) immediately preceding the fifth (5th) Business Day prior to the
Closing Date (as defined in Section 1.10) (the "Amerac Shares"), and (b)
$7,000,000.00 in cash (the "Initial Cash Amount"). The Initial Purchase
Consideration shall be subject to adjustment in accordance with the provisions
of Section 1.5, and as so adjusted, shall be referred to hereinafter as the
"Adjusted Purchase Consideration." For purposes of this Agreement, the term
"Business Days" means any day on which the New York Stock Exchange is open for
trading.
1.3 Deposit. Concurrently with the execution of this Agreement, Amerac
has deposited in escrow with Bank One, Texas, National Association ("Bank"), as
escrow agent, pursuant to an Escrow Agreement in the form attached hereto as
Exhibit B, the sum of $350,000.00, such sum representing five percent (5%) of
the Initial Cash Amount (the "Deposit"). Subject to the provisions of this
Section 1.3, following the Closing, all or a portion of the Deposit may be
retained in escrow and applied and disbursed in accordance with the provisions
of Sections 2.3, 2.4, and/or 2.7, as applicable. To the extent that any portion
of the Deposit is not thus retained in escrow at the Closing, such portion of
the Deposit shall be applied to the payment of the Adjusted Purchase
Consideration at the Closing. If this Agreement is terminated, other than by
reason of a breach of this Agreement by Amerac, Amerac and the Selling
Shareholders shall deliver to Bank a written notice instructing Bank to pay to
Amerac the Deposit, plus all accrued interest thereon. If the Selling
Shareholders believe that Amerac has breached this Agreement, and such breach is
grounds for termination in accordance with the provisions hereof, the Selling
Shareholders shall provide to Amerac written notice setting forth the
particulars of the alleged breach. If Amerac is unable to remedy the alleged
breach, and the Selling Shareholders elect to terminate this Agreement as the
result thereof, Amerac and the Selling Shareholders shall deliver to Bank a
joint notice instructing Bank to pay to the Selling Shareholders the Deposit,
plus all accrued interest thereon; provided, however, that if Amerac disputes
the alleged breach, the Selling Shareholders and Amerac shall submit such
dispute to arbitration in accordance with the procedures set forth in Section
2.8. If such a dispute is submitted to arbitration, Amerac and the Selling
Shareholders, or either of them, shall provide to Bank written notice of such
fact that identifies the nature of the dispute and the arbitrator selected and
that instructs Bank to disburse the Deposit and all accrued interest thereon in
accordance with instructions to be delivered to Bank by the arbitrator following
the issuance of the arbitrator's decision. Any such notice delivered
unilaterally by Amerac or the Selling Shareholders shall also be delivered to
the other party, and proof of the delivery of such notice shall be provided to
Bank.
1.4 Intercompany Transactions. The Selling Shareholders shall cause all
intercompany loan accounts and accounts receivable between the Selling
Shareholders and any of their respective parents, subsidiaries, or other
affiliates, on the one hand, and Fremont and
2
<PAGE>
Ridgepointe, on the other hand (including, without limitation, all accounts
receivable owed to Fremont as to which Fremont Exploration, Inc. ("FEI"), is the
account debtor), to be settled immediately prior to the Closing. In addition,
immediately prior to the Closing, the Selling Shareholders shall cause: (a)
Fremont to sell all of the Ridgepointe Common Stock owned by Fremont, as
reflected in Section II of Schedule 1.01 under the caption "Current Ownership,"
to Powell and Thomas O. Goldsworthy, in the proportions of fifty percent (50%)
to each party; (b) Fremont and Ridgepointe to pay all contingent compensation,
severance, and other distributions that Fremont and/or Ridgepointe are obligated
to pay to their respective officers and employees as the result of the
transactions contemplated in this Agreement; and (c) Fremont to sell to FPC all
of the issued and outstanding shares of common stock, par value $.01 per share,
of Fremont Resources, Inc. ("FRI"), a wholly owned subsidiary of Fremont. No
later than three (3) Business Days prior to the Closing, the Selling
Shareholders shall provide to Amerac documentation reflecting the full payment
and/or cancellation of all such intercompany accounts and the consummation of
all such transactions.
1.5 Adjustments to Initial Purchase Consideration. The Initial Purchase
Consideration shall be adjusted pursuant to the following adjustments to the
Initial Cash Amount:
(a) The Initial Cash Amount shall be adjusted upward by the following:
(i) the amount of the value of all merchantable oil and liquid
hydrocarbons attributable to the Oil and Gas Properties (as defined in
Section 2.1(g)) in storage or existing in stock tanks above the pipeline
connection on or before November 1, 1995, at 7:00 a.m., Central Standard
Time (the "Engineering Date"), the value to be based upon the contract
price in effect as of the Engineering Date (or the market value, if there
is no contract price, determined as of the Engineering Date), less amounts
payable as royalties, overriding royalties, and other burdens upon such
production and severance taxes deducted by the purchaser of such
production;
(ii) the amount of all direct expenditures and costs and prepaid
costs and expenses attributable to the Oil and Gas Properties and other
assets of Fremont and Ridgepointe incurred and actually paid by or on
behalf of Fremont and/or Ridgepointe in the ordinary course of owning and
operating the Oil and Gas Properties and such other assets and that are
attributable to the period of time from the Engineering Date through the
Closing Date, including, without limitation, (A) costs and expenses
incurred and paid by Fremont during such period in connection with the
drilling and completion of the Lady Jon No. 2 Well, to the extent such
costs and expenses are attributable to the undivided five percent (5%)
working interest of Fremont therein, (B) royalties, overriding royalties,
and other similar burdens on production, (C) rentals, shut-in well
payments, and other lease maintenance payments, (D) ad valorem, property,
excise, severance, production taxes, and any other taxes (exclusive of
income taxes) based upon or measured by the ownership of the Oil and Gas
Properties or other assets of Fremont and Ridgepointe, the production of
hydrocarbons, or the receipt of proceeds therefrom, and (E) overhead and
other charges and
3
<PAGE>
expenses billed by or to Fremont under applicable operating agreements,
including operating agreements under which Fremont serves as Operator,
relating to the Oil and Gas Properties, including, without limitation,
expenses paid by Fremont on behalf of third parties and to which Fremont is
entitled to reimbursement under such operating agreements, but exclusive of
(X) the general administrative and office overhead expenses of Fremont,
FRI, and Ridgepointe, (Y) expenses incurred by Fremont, Ridgepointe, or the
Selling Shareholders relating to the evaluation of Fremont, Ridgepointe,
and their assets for sale, the solicitation of buyers therefor, and the
negotiation and consummation of the transactions contemplated in this
Agreement, and (Z) expenses incurred by the Selling Shareholders in
connection with the remediation of Environmental Claims (as defined in
Section 2.1(c)) pursuant to Section 2.3, the acquisition of curative with
respect to Defects (as defined in Section 2.4) pursuant to Section 2.4, and
the repair of any Casualty (as defined in Section 2.7) pursuant to Section
2.7;
(iii) the amount of all accounts receivable (A) as to which
neither FEI, FPC, FRI, any Selling Shareholder, nor any other parent,
subsidiary, or other affiliate of Fremont, Ridgepointe, or any Selling
Shareholder is the account debtor, (B) that, as of October 31, 1995, were
not outstanding more than ninety (90) days past the due date expressed in
the related invoice; (C) that are bona fide, valid, and legally enforceable
obligations of the parties thereto or the account debtor in respect
thereof; and (D) that are reflected as current assets on the Interim
Fremont Financial Statements (as defined in Section 3.10(a)), net of the
related reserves for doubtful accounts;
(iv) the amount of any increases provided for in Section 2.6;
(v) the amount of the cash bond posted and maintained by Fremont
with the City of Stockton, Kansas; and
(vi) any other amounts provided for elsewhere in this Agreement
or otherwise agreed upon by the Selling Shareholders and Amerac.
(b) The Initial Cash Amount shall be adjusted downward by the
following:
(i) the gross proceeds received by Fremont from the sale of
hydrocarbons produced from or allocable to the Oil and Gas Properties
between the Engineering Date and the Closing Date, plus the gross proceeds
received by Fremont and Ridgepointe with respect to any other assets of
either of such parties between the Engineering Date and the Closing Date,
including, without limitation, proceeds received from the sale or
disposition of any of the Oil and Gas Properties, but exclusive of (A) the
proceeds to be received by Fremont from the sale prior to the Closing of
all of its shares of Ridgepointe Common Stock to Powell and Thomas O.
Goldsworthy, and (B) the proceeds to be received by Fremont from the sale
prior to the Closing of all of the issued and outstanding shares of common
stock of FRI to FPC;
4
<PAGE>
(ii) an amount equal to all unpaid ad valorem, property,
production, severance, and similar taxes and assessments (exclusive of
income taxes) based upon or measured by the ownership of the Oil and Gas
Properties and the other assets of Fremont and Ridgepointe, the production
of hydrocarbons, or the receipt of proceeds therefrom, which taxes and
assessments became due and payable or accrued prior to the Engineering Date
and that are unpaid as of the Closing Date;
(iii) all undischarged liabilities and debt of Fremont and
Ridgepointe in existence as of the Closing Date;
(iv) all amounts paid by Amerac to discharge any liability or
debt of Fremont and/or Ridgepointe on or prior to the Closing Date;
(v) the amounts of all contingent compensation, severance, and
other distributions paid to the officers and employees of Fremont and
Ridgepointe as the result of the transactions contemplated in this
Agreement for which Fremont and/or Ridgepointe are responsible under
applicable agreements and that are not discharged in full prior to the
Closing;
(vi) reductions provided for in Sections 2.3, 2.4, 2.7, and 6.4;
and
(vii) any other amount provided for elsewhere in this Agreement
or otherwise agreed upon by the Selling Shareholders and Amerac.
(c) All adjustments to the Initial Cash Amount provided for in this
Agreement shall be calculated in accordance with generally accepted accounting
principles, consistently applied ("GAAP").
1.6 Preliminary Settlement Statement. Not less than three (3) Business
Days prior to the Closing, the Selling Shareholders shall prepare and submit to
Amerac for review a draft settlement statement (the "Preliminary Settlement
Statement") that shall set forth each estimated adjustment to be made to the
Initial Cash Amount in accordance with Section 1.5 based upon information
available as of the date of preparation of such Preliminary Settlement
Statement, and calculate the preliminary Adjusted Purchase Consideration to be
paid at Closing. In addition, the Preliminary Settlement Statement shall also
set forth the amounts to be placed in escrow as the result of the existence of
any uncured Defects pursuant to Section 2.4, any unremediated Environmental
Claims pursuant to Section 2.3, and any unrepaired Casualty pursuant to Section
2.7, and the Evaluated Interests (as defined in Section 2.1(b)) affected thereby
(if any). The Preliminary Settlement Statement shall also contain a written
designation of the accounts into which the wire transfers of funds to each
Selling Shareholder provided for below in Section 1.10 are to be made.
1.7 Final Accounting. As soon as practicable following the Closing, but
no later than ninety (90) days thereafter, Amerac shall prepare and deliver to
the Selling Shareholders a final
5
<PAGE>
settlement statement which takes into account all final adjustments made to the
Initial Cash Amount and which calculates the final Adjusted Purchase
Consideration (the "Final Settlement Statement"). After taking into account
disbursements of any funds held in escrow pursuant to Sections 2.3, 2.4, or 2.7,
(a) if the final Adjusted Purchase Consideration reflected in the Final
Settlement Statement exceeds the preliminary Adjusted Purchase Consideration
reflected in the Preliminary Settlement Statement, Amerac shall pay any such
difference to the Selling Shareholders; and (b) if the final Adjusted Purchase
Consideration reflected on the Final Settlement Statement is less than the
preliminary Adjusted Purchase Consideration reflected in the Preliminary
Settlement Statement, the Selling Shareholders shall pay any such difference to
Amerac. All disbursements to and payments by the Selling Shareholders pursuant
to this Section 1.7 shall be made on the same proportionate basis as the amounts
paid under Section 1.10 below. If the Selling Shareholders and Amerac are
unable to agree on the Final Settlement Statement on or before thirty (30) days
after the receipt thereof by the Selling Shareholders, Amerac and the Selling
Shareholders shall submit all unresolved claims and amounts to arbitration in
accordance with the provisions of Section 2.8. Following the issuance of the
arbitrator's decision, Amerac and the Selling Shareholders shall pay each to the
other such amounts as are required to be paid, respectively, by such parties
under the terms of such arbitrator's decision.
1.8 No Registration; Legends. The issuance of the Amerac Shares in
connection with the Purchase will not be registered under the Securities Act of
1933, as amended (the "1933 Act"), and thus such shares will be "restricted
securities" as such term is defined under Rule 144 under the 1933 Act. Each
certificate representing the Amerac Shares shall bear the legend set forth in
Exhibit C hereto with respect to such matters. In addition, at the Closing,
Amerac and the Selling Shareholders shall execute a Registration Rights
Agreement in the form attached hereto as Exhibit J.
1.9 Power of Attorney and Custody Agreement. Concurrently with the
execution of this Agreement, each Other Selling Shareholder and the Partnership
has placed certificates representing the shares of Ridgepointe Common Stock to
be sold by such Other Selling Shareholder and the Partnership pursuant to this
Agreement in custody, for delivery under this Agreement, under a Custody
Agreement made with Thomas O. Goldsworthy substantially in the form of Exhibit D
hereto, and an Amended and Restated Power of Attorney appointing Thomas O.
Goldsworthy and V. Lee Powell as agents and attorneys-in-fact for such Other
Selling Shareholder and the Partnership. The form of the Amended and Restated
Power of Attorney is set forth in Exhibit E hereto.
1.10 Closing. The closing of the Purchase contemplated hereby (the
"Closing") shall be held at the offices of Jackson & Walker, L.L.P., 1100
Louisiana, Suite 4200, Houston, Texas 77002 at 10:00 a.m., Houston time, on
January 15, 1995, or at such other place or time as Amerac and the Selling
Shareholders may mutually agree. The date of the Closing is referred to herein
as the "Closing Date." Upon the terms and subject to the conditions of this
Agreement, at the Closing, each Selling Shareholder will deliver to Amerac
certificates representing the number of shares of the Purchased Stock set forth
opposite each such Selling Shareholder's name in Sections I and II of Schedule
1.01, together with stock powers executed in blank, and Amerac shall pay to the
Selling Shareholders, in the proportions set out in Section
6
<PAGE>
III of Schedule 1.01, the preliminary Adjusted Purchase Consideration as
reflected in the Preliminary Settlement Statement. Amerac shall pay the cash
portion of such preliminary Adjusted Purchase Consideration to the Selling
Shareholders by bank wire transfer of immediately available funds from, first,
the funds constituting the Deposit that are not being held in escrow following
the Closing in accordance with Sections 2.3, 2.4, and 2.7, and, second, Amerac's
designated account at Bank. Each of the Selling Shareholders and Amerac shall
deliver such other documents and instruments, and shall take such other and
further actions, as are required under the terms of this Agreement in connection
with the consummation of the transactions contemplated herein.
1.11 Certification Under Treasury Regulations. At the Closing, each
Selling Shareholder will provide to Amerac a statement which satisfies the
requirements of Treas. Reg. (S) 1.1445-2(b)(2) certifying that such Selling
Shareholder is not a "foreign person."
1.12 Allocated Values. For purposes of this Agreement, with respect to
each Evaluated Interest, the term "Allocated Value" means the amount set forth
on Exhibit A under the column "Allocated Value" for such Evaluated Interest.
The Selling Shareholders and Amerac agree and stipulate that the Allocated
Values set forth for the Evaluated Interests in Exhibit A have been established
solely for use in calculating adjustments to the Initial Purchase Consideration
as provided herein, such schedule of Allocated Values being solely for the
convenience of the parties. The Selling Shareholders and Amerac do not intend
that such schedule of Allocated Values be treated or interpreted to constitute
an allocation of the Purchase Consideration among the Evaluated Interests for
federal or state income tax purposes.
ARTICLE II
DUE DILIGENCE EXAMINATION;
--------------------------
TITLE AND ENVIRONMENTAL MATTERS
-------------------------------
2.1 Principal Definitions. For purposes of this Agreement, the following
expressions and terms shall have the indicated meanings, unless expressly
indicated otherwise herein:
(a) "Applicable Contracts" means all of the assignments or other
instruments or agreements that pertain to the Oil and Gas Properties and all
contractually binding arrangements to which the Oil and Gas Properties may be
subject and which will be binding on the Oil and Gas Properties or Amerac after
the Closing, including, without limitation: production payment assignments; net
profits interest assignments; farmin and farmout agreements; bottom-hole
agreements; crude oil, condensate, and natural gas purchase and sale, exchange,
gathering, transportation, and marketing agreements; hydrocarbon storage
agreements; acreage contribution agreements; operating agreements; hydrocarbon
balancing agreements; pooling agreements; unitization agreements; processing
agreements; saltwater disposal agreements; options; permits; licenses,
servitudes; easements; rights-of-way; orders; facilities or equipment leases;
and other contracts, agreements, and rights owned by Fremont, in whole or in
part, to the extent that they are (i) appurtenant to or affect the Oil and Gas
Properties or (ii) used or held for use in connection with the ownership or
operation of the Oil and Gas Properties or the production or
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treatment of hydrocarbons on or produced therefrom, or the sale or disposal of
water, hydrocarbons, or associated substances.
(b) "Evaluated Interests" means those oil and/or gas wells, oil and
gas leases, units, or other property interests included in the Oil and Gas
Properties which are separately identified in Exhibit A hereto and each of which
is associated with a separate Allocated Value thereon.
(c) "Environmental Claim" means (i) any event or condition with
respect to air, land, soil, surface, subsurface strata, surface water, ground
water, or sediments which causes an Oil and Gas Property to become subject to
remediation under, or not be in compliance with, any Environmental Law,
Environmental Permit (as defined below in Section 3.27(a)), oil and gas lease,
or Applicable Contract, (ii) any spilling, leaking, pouring, emitting, emptying,
discharging, injection, escaping, transmission, leaching, or dumping
("Release"), or threat of a Release, of Environmental Contaminants on, to, or
from an Oil and Gas Property that results, or may result, in liability to any
third party for injury to or death of any person, persons, or other living
thing, or damage, loss, or destruction of property, (iii) any event or condition
described in the preceding clauses (i) and (ii) of this Section 2.1(c) that
otherwise results in a breach by any Selling Shareholder of any of the
warranties contained in Section 3.27, and (iv) any written or oral complaint,
notice, citation, claim, demand, action, suit, administrative proceeding, order,
judgment, liability, or obligation of any kind or character, whether putative,
threatened, or actual, asserted or assertable by, issued by, or running in favor
of any third party or governmental body caused by, arising out of, resulting
from, or related in any way to any event or conditions described in the
preceding clauses (i), (ii), or (iii) of this Section 2.1(c).
(d) "Environmental Contaminants" means "hazardous substances,"
"pollutants or contaminants," and "petroleum, including any fraction thereof,
and natural gas, liquid natural gas, or synthetic gas of pipeline quality" as
those terms are defined or used in Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act. The term also includes
naturally occurring radioactive material ("NORM") concentrated or disposed of in
association with oil and gas activities.
(e) "Environmental Laws" means all applicable federal, state, and
local laws, including statutes, regulations, orders, ordinances, and common law,
relating to the protection of the public health, welfare, and the environment,
including, without limitation, those laws relating to the storage, handling, and
use of chemicals and other hazardous materials, those relating to the
generation, processing, treatment, storage, transportation, disposal, or other
management of waste materials of any kind, and those relating to the protection
of environmentally sensitive areas.
(f) "Good and Marketable Title" means, with respect to each Evaluated
Interest, that title of Fremont which:
(i) entitles Fremont, throughout the duration of the relevant
Evaluated Interest, to receive from such Evaluated Interest not less than the
interest shown on Exhibit A as the "Net Revenue Interest" of all hydrocarbons
produced, saved, and marketed from the
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relevant Evaluated Interest, all without reduction, suspension, or termination
of such Evaluated Interest;
(ii) obligates Fremont to bear the percentage of the costs and
expenses relating to the maintenance and development of, and operations relating
to, the relevant Evaluated Interest not greater than the "Working Interest"
shown on Exhibit A without increase throughout the duration of such Evaluated
Interest; and
(iii) except for Permitted Encumbrances, is free and clear of Liens
(as defined in Section 3.5(b)).
(g) "Oil and Gas Properties" means (a) all of the interests in and to
the oil, gas, and mineral leases, properties, rights, and interests that are
owned by Fremont and entitle Fremont to the undivided interests identified in
Exhibit A hereto as "Working Interests" and "Net Revenue Interests" in and to
the Evaluated Interests and all oil, gas, and other hydrocarbons produced
therefrom or allocated thereto, as well as all other fee interests, leasehold
interests, royalty interests, overriding royalty interests, production payments,
net profits interests, carried interests, reversionary interests, possibilities
of reverter, conversion rights and options, contractual rights to production,
contractual rights providing for the acquisition or earning of any such
interests, and all other interests of any kind or character; (b) all of
Fremont's rights, titles, and interests in, to, and under the Applicable
Contracts; and (c) all of Fremont's rights, titles, and interests in and to all
equipment, machinery, fixtures, and other real, personal, and mixed property
located on such oil and gas leases, properties, and wells, or appurtenant
thereto, or used or obtained in connection therewith or with the production,
storage, treatment, transportation, processing, sale, or disposal of
hydrocarbons or other substances produced from or attributable to such oil and
gas leases, properties, and wells.
(h) "Permitted Encumbrances" means:
(i) lessor's royalties, non-participating royalties, overriding
royalties, and division orders and sales contracts containing customary terms
and provisions covering oil, gas or associated liquified or gaseous
hydrocarbons, reversionary interests, and similar burdens if the net cumulative
effect of such burdens does not operate to reduce the net revenue interest of
Fremont in any Evaluated Interest to an amount less than the "Net Revenue
Interest" set forth on Exhibit A;
(ii) preferential rights to purchase and required third party consents
to assignments and similar agreements with respect to which, prior to Closing,
(A) waivers or consents are obtained from the appropriate parties, (B) the
appropriate time period for asserting such rights has expired without an
exercise of such rights, or (C) arrangements can be made by Amerac and Fremont
to allow Amerac to receive substantially the same economic benefits as if all
such waivers and consents to assign had been obtained;
(iii) liens for taxes or assessments not yet due or delinquent or, if
delinquent, that are being contested in good faith in the normal course of
business;
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(iv) all rights to consent by, required notices to, filings with, or
other actions by governmental entities in connection with the sale or conveyance
of oil and gas leases or interests therein, if the same are customarily obtained
subsequent to such sale or conveyance and Amerac has no reason to believe they
cannot be obtained;
(v) conventional rights of reassignment requiring less than
ninety (90) days notice to the holders of such rights;
(vi) such Defects as Amerac may have waived;
(vii) rights reserved to or vested in any municipality or
governmental, statutory, or public authority (A) to contract or regulate any
Evaluated Interest in any manner, and all applicable laws, rules, and orders of
governmental authority; (B) by the terms of any right, power, franchise, grant,
license, or permit, or by any provision of law, to terminate such right, power,
franchise grant, license, or permit or to purchase, condemn, expropriate, or
recapture or to designate a purchaser of any of the Evaluated Interests; (C) to
control or regulate any of the Evaluated Interests (or material portions
thereof) or to use such property in a manner which does not materially impair
the use of such property for the purposes for which it will be held by Amerac;
and (iv) any obligations or duties affecting the Evaluated Interests (or
material portions thereof) to any municipality or governmental, statutory, or
public authority with respect to any franchise, grant, license, or permit;
(viii) rights of a common owner of any interest in rights-of-way or
easements currently held by Fremont and such common owner as tenants in common
or through common ownership;
(ix) easements, conditions, covenants, restrictions, servitudes,
permits, rights-of-way, surface leases and other rights in the Evaluated
Interests for the purpose of surface operations, roads, alleys, highways,
railways, pipelines, transmission lines, transportation lines, distribution
lines, power lines, telephone lines, and removal of timber, grazing, logging
operations, canals, ditches, reservoirs, and other like purposes, or for the
joint or common use of real estate, rights-of-way, facilities, and equipment
which do not materially impair the rights held by Amerac;
(x) zoning, planning and environmental laws and ordinances and
municipal regulations;
(xi) vendors, carriers, warehousemen's, repairmen's, mechanics',
workmen's, materialmen's, construction, or other like liens arising by operation
of law in the ordinary course of business or incident to the construction or
improvement of any property in respect of obligations which are not yet due or
which are being contested in good faith by appropriate proceedings by or on
behalf of Fremont;
(xii) Liens created under operating agreements in respect of
obligations that are not yet due or that are being contested in good faith by
appropriate proceedings by or on behalf of Fremont; and
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(xiii) all other Liens, charges, encumbrances, contracts, agreements,
instruments, obligations, defects, and irregularities affecting the Evaluated
Interests relating to obligations not yet in default, which individually or in
the aggregate are not such as to interfere materially with the operation, value,
or use of any Evaluated Interest, do not materially prevent Amerac from
receiving the proceeds of production from any Evaluated Interest, do not reduce
the net revenue interest of Fremont in any Evaluated Interest to less than the
"Net Revenue Interest" set forth for such Evaluated Interest on Exhibit A and do
not obligate Fremont to bear costs and expenses relating to the maintenance,
development, and operation of any Evaluated Interest in any amount greater than
the "Working Interest" set forth for such Evaluated Interest on Exhibit A
(unless the actual net revenue interest of Fremont in such Evaluated Interest is
greater than the "Net Revenue Interest" set forth therefor on Exhibit A in the
same proportion as any increase in such "Working Interest").
2.2 Access. Through the Closing Date, the Selling Shareholders shall
cause Fremont and Ridgepointe to give Amerac and its representatives (including
Amerac's employees, consultants, independent contractors, attorneys,
accountants, and other advisors) full access during normal business hours to all
of the offices, personnel, books, files, records, contracts, correspondence,
computer output, data files (to the extent Fremont and/or Ridgepointe have the
right to make the same available), maps, reports, plats, and other documents of
Fremont and Ridgepointe, or to which Fremont or Ridgepointe have access,
pertaining to any of their respective properties and assets, including, without
limitation, all abstracts of title, title opinions, title curative materials,
lease files, contract files, division order files, operations records,
environmental records, production records, facility and well files and records,
regulatory agency files, hydrocarbon marketing files, accounting records
(including, without limitation, records relating to gas imbalances and suspense
items), geological, geophysical, and other scientific and technical data and
information, and other information, data, records, and files which Fremont
and/or Ridgepointe may have (or have access to) relating in any way to the Oil
and Gas Properties and the other properties and assets of such parties, the past
or present operation thereof, and the marketing of hydrocarbon production
therefrom. Amerac shall have the right to photocopy such materials at Amerac's
expense. If Amerac requests information not in the possession of Fremont and/or
Ridgepointe, the Selling Shareholders shall cause Fremont or Ridgepointe, as
applicable, to use all reasonable efforts to obtain the requested information
from the applicable operators and other third parties. Through the Closing
Date, the Selling Shareholders shall also cause Fremont and Ridgepointe to
afford Amerac and its authorized representatives reasonable access to and entry
upon all of the Oil and Gas Properties and all of such parties' other properties
and assets for the purposes of operational inspections and reasonable access to
any employees or contract personnel that have been involved with the operation,
maintenance, or development of the Oil and Gas Properties and other properties
and assets and the accounting or supervision thereof.
2.3 Environmental Assessments and Defects.
(a) Through the Closing Date, Amerac shall have the right to enter
upon and make environmental assessments of the Oil and Gas Properties, including
the performance of soil and water tests and such other tests, examinations,
investigations, and studies as may be necessary or appropriate for the
preparation of engineering and other reports relating to the Oil
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and Gas Properties, their condition, and the presence of Environmental
Contaminants thereon. As of the date of this Agreement, Amerac represents that
it is not aware of any Environmental Claims except as set forth in Schedule
2.3(a). In addition, the Selling Shareholders and Amerac agree promptly to
notify each other, as applicable, of any Environmental Claim arising after the
date of this Agreement and discovered by Amerac, Fremont, Ridgepointe, or the
Selling Shareholders, as applicable, prior to Closing. The Selling Shareholders
and Amerac shall attempt, in good faith, to agree upon the methods of
remediating all such Environmental Claims and the estimates of the costs of such
remediations; provided, however, that except as otherwise indicated on Schedule
2.3(a), Amerac and the Selling Shareholders have agreed upon the estimate of the
Environmental Claims reflected on Schedule 2.3(a), the methods of remediating
such Environmental Claims, and the estimates of the total costs of such
remediations also set forth on Schedule 2.3(a).
(b) If the Selling Shareholders and Amerac agree upon the existence of
an Environmental Claim, the method of remediating the same, and the estimate of
the cost of such remediation, then subject to the succeeding provisions of this
Section 2.3, Amerac shall be entitled to receive a reduction in the Initial
Purchase Consideration equal to the lesser of (i) the agreed upon estimate of
the cost of remediating such Environmental Claim, net to the interest of Fremont
in the Evaluated Interests affected by such Environmental Claim, or (ii) ten
percent (10%) of the aggregate Allocated Values of the Evaluated Interests
affected thereby; provided, however, that if the agreed upon estimate of the
cost to remediate the relevant Environmental Claim (net to the interest of
Fremont in the affected Evaluated Interest) is, in the aggregate, greater than
the aggregate Allocated Values of the Evaluated Interests affected thereby, and
the Selling Shareholders elect not to remediate such Environmental Claim as
provided hereinafter, Amerac shall be entitled to cause Fremont to convey to
FPC, prior to the Closing, the Evaluated Interests affected by such
Environmental Claim and to receive a reduction in the Initial Purchase
Consideration equal to the aggregate Allocated Values of the Evaluated Interests
thus conveyed. Notwithstanding the provisions of the immediately preceding
sentence of this Section 2.3(b) to the contrary, however, the Selling
Shareholders shall, in all events, also have the right, but in no event shall
the Selling Shareholders be obligated, to remediate such an Environmental Claim
at their sole cost, risk, liability, and expense in accordance with applicable
Environmental Laws. If the Selling Shareholders elect to remediate an
Environmental Claim, the Selling Shareholders shall promptly notify Amerac of
that fact. If the Selling Shareholders complete such remediation prior to the
Closing Date, the Selling Shareholders shall have no further liability to Amerac
with respect to such Environmental Claim. If the Selling Shareholders do not
complete the remediation of the relevant Environmental Claim on or prior to the
Closing Date, Amerac shall instruct Bank to retain in escrow, in accordance with
the provisions of the Escrow Agreement, a portion of the Deposit equal to the
lesser of (A) the agreed upon estimate of the cost (net to the interest of
Fremont in the affected Evaluated Interest) of remediating such Environmental
Claim, or (B) ten percent (10%) of the aggregate Allocated Values of the
Evaluated Interests affected thereby; and the amount thus retained in escrow
shall be deducted from the preliminary Adjusted Purchase Consideration paid at
the Closing. The Selling Shareholders shall have sixty (60) days after the
Closing Date within which to complete the remediation of such Environmental
Claim in accordance with applicable Environmental Laws. If the Selling
Shareholders do not complete the remediation of the relevant Environmental Claim
on or before the expiration of such sixty-day period, Amerac may elect: (i) to
offer the Selling Shareholders
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an extension of time within which to complete such remediation; or (ii) to
receive a reduction in the final Adjusted Purchase Consideration equal to the
lesser of (A) the estimated cost (net to the interest of Fremont in the affected
Evaluated Interest) to remediate such Environmental Claim originally agreed upon
by the Selling Shareholders and Amerac, or (B) ten percent (10%) of the
aggregate Allocated Values of the Evaluated Interests affected thereby;
provided, however, that if the agreed upon estimate of the cost (net to the
interest of Fremont in the affected Evaluated Interest) to remediate the
relevant Environmental Claim is, in the aggregate, greater than the aggregate
Allocated Values of the Evaluated Interests affected thereby, Amerac shall be
entitled to cause Fremont to convey to FPC all of the right, title, and interest
of Fremont in and to the affected Evaluated Interests, and to receive a
reduction in the Initial Purchase Consideration equal to the aggregate Allocated
Values of the Evaluated Interests thus conveyed. In the latter event, the
Selling Shareholders and Amerac shall cause Bank to distribute to Amerac all
amounts held in escrow with respect to such Environmental Claim, together with
all interest earned thereon.
(c) If the Selling Shareholders and Amerac are unable to agree, after
meeting in good faith, on either the existence of an Environmental Claim, the
method of remediating the same, or an estimate of the cost of such remediation,
Amerac may elect to waive such asserted Environmental Claim. If Amerac does not
waive the asserted Environmental Claim, the Selling Shareholders and Amerac
shall submit such disagreement to arbitration in accordance with the procedures
set forth in Section 2.8. If the decision of the arbitrator is not rendered
prior to the Closing Date, Amerac shall instruct the escrow agent to retain in
escrow, in accordance with the provisions of the Escrow Agreement, a portion of
the Deposit equal to the Allocated Value of each Evaluated Interest affected by
such Environmental Claim, and the amount thus retained in escrow shall be
deducted from the preliminary Adjusted Purchase Consideration paid at the
Closing. If such a dispute is submitted to arbitration, Amerac and the Selling
Shareholders, or either of them, shall provide to Bank written notice of such
fact that identifies the nature of the dispute and the arbitrator selected and
that instructs Bank to disburse the funds held in escrow with respect to the
relevant Environmental Claim, and all accrued interest thereon, in accordance
with instructions to be delivered to Bank by the arbitrator following the
issuance of the arbitrator's decision. Any such notice delivered unilaterally
by Amerac or the Selling Shareholders shall also be delivered to the other
party, and proof of the delivery of such notice shall be provided to Bank. If
the arbitrator determines that the Environmental Claim asserted by Amerac does,
in fact, exist, and that the estimate of the costs to remediate such
Environmental Claim submitted by Amerac is appropriate with respect thereto, the
arbitrator shall resolve such Environmental Claim and cause the funds held in
escrow in connection therewith to be disbursed in accordance with the provisions
of Section 2.3(b). If the arbitrator renders a decision that is adverse, in
whole or in part, to Amerac with respect to an asserted Environmental Claim, the
funds held in escrow in connection with such asserted Environmental Claim shall
be disbursed in accordance with the decision of the arbitrator. All amounts
distributed from the escrow account pursuant to this Section 2.3(c) will include
a pro rata share of the interest earned on such amounts. In all events, if the
arbitrator determines that the estimated cost (net to the interest of Fremont in
the affected Evaluated Interest) to remediate an asserted Environmental Claim is
greater than the aggregate Allocated Values of the Evaluated Interests affected
thereby, Amerac shall also be entitled to cause Fremont to convey to FPC all of
the right, title, and interest of Fremont in and to the affected Evaluated
Interests, and to
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receive a reduction in the Adjusted Purchase Consideration equal to the
aggregate Allocated Values of the Evaluated Interests thus conveyed.
2.4 Defects and Related Adjustments.
(a) From time to time on or before the Closing Date, but in no event
later than 5:00 p.m., Central Standard Time, on the seventh (7th) day prior to
the Closing Date, Amerac may give the Selling Shareholders written notice of any
claimed Defect ("Defect Notice"). Each such Defect Notice shall set forth (i) a
brief description of the matter constituting the claimed Defect and, if
applicable, the Evaluated Interest affected thereby, and (ii) the estimated
Defect Amount calculated in good faith by Amerac in accordance with Section
2.4(e) and attributable to the claimed Defect. For purposes of this Agreement,
the term "Defect" means (i) any Lien, contract, agreement, obligation, or defect
of title that would cause title to a material Evaluated Interest identified with
an asterisk on Exhibit A not to be Good and Marketable Title, and (ii) any
defect or matter that would cause a breach of a representation or warranty of
the Selling Shareholders hereunder, other than the warranties contained in
Sections 3.20(a) and 3.27; provided, however, that Amerac shall not be entitled
to assert Defects pertaining to title if the relevant Defect (x) constitutes an
objection to title for which a curative requirement is inappropriate under the
standards applicable to title examiners prescribed by the State Bars of Oklahoma
or Kansas, as applicable, (y) does not relate directly to the interest of
Fremont in the relevant Evaluated Interest, or (z) otherwise relates to a matter
as to which curative requirements are routinely made by experienced oil and gas
title examiners (i.e., the acquisition of affidavits of use, possession, and
non-production) but as to which no putative or actual controversy or claim is
reflected in the public record or the books and records of Fremont or the
Selling Shareholders.
(b) The Selling Shareholders and Amerac shall endeavor in good faith
to agree upon the existence of the Defects claimed by Amerac and the Defect
Amounts applicable thereto. To the extent that the Selling Shareholders and
Amerac agree upon the existence of a Defect and the applicable Defect Amount,
the Selling Shareholders shall have the right, but in no event shall the Selling
Shareholders be obligated, to cure or remove to the reasonable satisfaction of
Amerac all such Defects at their sole cost, risk, and expense. If the Selling
Shareholders elect to cure or remove a Defect, the Selling Shareholders shall
promptly notify Amerac of such fact. If any such Defect is cured or removed to
the reasonable satisfaction of Amerac or a mutually agreeable reduction of the
Initial Purchase Consideration has been made for such Defect prior to the
Closing, the Selling Shareholders shall have no further liability to Amerac with
respect thereto.
(c) If the Selling Shareholders and Amerac do not agree upon the
existence of a Defect and/or the Defect Amount applicable thereto prior to the
Closing, the Selling Shareholders and Amerac shall submit such disputes to
arbitration in accordance with the procedures set forth below in Section 2.8.
To facilitate the resolution of any such dispute, Amerac will instruct Bank to
retain in escrow, in accordance with the provisions of the Escrow Agreement, a
portion of the Deposit equal to the Defect Amount calculated by Amerac with
respect to the relevant Defect, and the amount thus retained in escrow shall be
deducted from the Adjusted Purchase Consideration paid at the Closing. If such
a dispute is submitted to
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arbitration, Amerac and the Selling Shareholders, or either of them, shall
provide to Bank written notice of such fact that identifies the nature of the
dispute and the arbitrator selected and that instructs Bank to disburse the
funds held in escrow with respect to the asserted Defect in accordance with
instructions to be delivered to Bank by the arbitrator following the issuance of
the arbitrator's decision. Any such notice delivered unilaterally by Amerac or
the Selling Shareholders shall also be delivered to the other party, and proof
of the delivery of such notice shall be provided to Bank. If the arbitrator
determines that the Defect asserted by Amerac does, in fact, exist, and that the
Defect Amount calculated by Amerac is appropriate with respect thereto, the
arbitrator shall resolve the asserted Defect and cause the funds held in escrow
in connection therewith to be disbursed in accordance with the provisions of
Section 2.4(d). If the arbitrator renders a decision that is adverse, in whole
or in part, to Amerac with respect to a Defect, the disputed Defect Amount shall
be disbursed in each case in accordance with the decision of the arbitrator.
All amounts distributed from the escrow account pursuant to this Section 2.4(c)
shall include a pro rata share of the interest earned on such amounts.
(d) If the Selling Shareholders and Amerac agree upon the existence of
a Defect and the Defect Amount applicable thereto prior to the Closing, and
either the Selling Shareholders elect not to attempt to cure or remove the
relevant Defect or the Selling Shareholders and Amerac agree that such Defect
cannot or should not be cured, Amerac shall receive a reduction in the Adjusted
Purchase Consideration paid at the Closing equal to the Defect Amount agreed
upon by the Selling Shareholders and Amerac. If the Selling Shareholders and
Amerac agree upon the existence of a Defect and the Defect Amount applicable
thereto prior to the Closing, and the Selling Shareholders elect to attempt to
cure such Defect, but the Selling Shareholders are unable to cure such Defect
prior to the Closing, the Selling Shareholders shall provide to Amerac prompt
written notice of such fact. At the Closing, Amerac shall instruct Bank to
retain in escrow, in accordance with the provisions of the Escrow Agreement, a
portion of the Deposit equal to the aggregate estimated Defect Amounts for all
such Defects that have not been cured or otherwise agreed upon by Amerac and the
Selling Shareholders, and such amount retained in escrow shall be deducted from
the preliminary Adjusted Purchase Consideration paid at the Closing. The
Selling Shareholders shall have sixty (60) days after the Closing Date within
which to cure or remove to the reasonable satisfaction of Amerac all such
Defects not cured or removed to the reasonable satisfaction of Amerac prior to
the Closing. With respect to those Defects cured or removed to the reasonable
satisfaction of Amerac or as to which the Selling Shareholders and Amerac
otherwise agree on or before the expiration of such sixty-day period, the
Selling Shareholders and Amerac shall deliver to Bank written notice instructing
Bank promptly to disburse to the Selling Shareholders the relevant Defect
Amounts, or portions thereof, attributable to the Defects so cured or removed,
and the Selling Shareholders shall have no further liability to Amerac with
respect thereto. If, at the expiration of such sixty-day period, there remain
any Defects that have not been cured or removed to the reasonable satisfaction
of Amerac or otherwise agreed upon by the Selling Shareholders and Amerac,
Amerac may elect: (i) to offer the Selling Shareholders an extension of time
within which to complete such curative or remedial actions; or (ii) to receive a
reduction in the final Adjusted Purchase Consideration equal to the Defect
Amounts applicable to the relevant Defects. In that event, the Selling
Shareholders and Amerac shall deliver to Bank written notice instructing Bank to
disburse to Amerac the Defect Amounts applicable to such
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Defects. All amounts distributed from the escrow account pursuant to this
Section 2.4(d) will include a pro rata share of the interest earned on such
amounts.
(e) "Defect Amount" shall be determined as follows: (i) if the Defect
affects all of Fremont's interest in an Evaluated Interest, such that the Defect
results in a complete failure of title with respect thereto, the Defect Amount
shall be the full Allocated Value for the relevant Evaluated Interest; (ii) if
the Defect is a Lien that is uncontested and liquidated in amount, then the
Defect Amount shall be an amount equal to the sum necessary to be paid to the
obligee to remove the Lien; (iii) if the Defect results from a deficiency in
Fremont's actual net revenue interest in an Evaluated Interest relative to that
shown for the affected Evaluated Interest on Exhibit A and on which the
Allocated Value of such Evaluated Interest is based, the Defect Amount will be
the difference between the Allocated Value for the affected Evaluated Interest
and an amount determined by multiplying such Allocated Value by the ratio of the
actual net revenue interest of Fremont to the Net Revenue Interest set forth for
such Evaluated Interest on Exhibit A; (iv) if the Defect results from Fremont's
actual working interest in an Evaluated Interest being greater than that shown
for the affected Evaluated Interest on Exhibit A and on which the Allocated
Value of such Evaluated Interest is based, and such larger working interest is
not accompanied by a corresponding proportionate increase in Fremont's net
revenue interest in such Evaluated Interest, the Defect Amount will be the
difference between the Allocated Value for the affected Evaluated Interest set
forth on Exhibit A and a recalculated Allocated Value for such Evaluated
Interest using the same production rates, price forecasts, and discount factors
used by Amerac to calculate the original Allocated Value, adjusted to account
for the diminution in the net present value of the future cash flows that
results from the higher working interest; and (v) if the Defect is one other
than the Defects described above in clauses (i), (ii), (iii), and (iv) of this
Section 2.4(e), the Defect Amount shall be an amount determined in good faith by
the mutual agreement of Amerac and the Selling Shareholders, taking into
account, as applicable, the Allocated Value of the relevant Evaluated Interest,
the legal effect of the Defect, and the potential economic effect of the Defect
over the life of the relevant Evaluated Interest or otherwise with respect to
the transactions contemplated herein. In no event shall the Defect Amount
established under this Agreement for a Defect pertaining to an Evaluated
Interest exceed the Allocated Value for such Evaluated Interest.
2.5 Preferential Purchase Rights and Consents to Assign.
(a) With respect to each preferential purchase right pertaining to an
Evaluated Interest that is triggered by the transactions contemplated in this
Agreement, the Selling Shareholders shall cause Fremont, prior to the Closing,
to send to the holder of each such right a notice offering to sell to such
holder, in accordance with the contractual provisions applicable to such right,
the Evaluated Interest covered by such right on substantially the same terms as
are set forth herein and for the Allocated Value of such Evaluated Interest set
forth on Exhibit A, subject to adjustments and all other terms and provisions of
this Agreement. In addition, prior to the Closing, the Selling Shareholders
shall cause Fremont to send to each holder of a right to consent to assignment
pertaining to an Evaluated Interest which is triggered by the transactions
contemplated in this Agreement a notice seeking such party's consent to such
transactions. Simultaneously therewith, the Selling Shareholders shall cause
Fremont to deliver a copy of such notices to Amerac.
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(b) If, prior to the Closing, any holder of such a preferential
purchase right notifies Fremont or the Selling Shareholders that it intends to
consummate the purchase of the Evaluated Interest to which its preferential
purchase right applies, the exercise of such preferential purchase right shall
constitute a Defect, and the Initial Purchase Consideration shall be reduced by
the Allocated Value of the relevant Evaluated Interest. The Selling
Shareholders shall be entitled to all proceeds paid by a party exercising such a
preferential purchase right prior to the Closing. If the holder of such a
preferential purchase right fails to consummate the purchase of the Evaluated
Interest affected by such right on or prior to the Closing Date, then the
Selling Shareholders shall so notify Amerac and, subject to Amerac's
satisfaction that such preferential right has been waived, the Defect resulting
from the proposed exercise of such preferential right shall be deemed to have
been cured. If a preferential purchase right burdening an Evaluated Interest is
exercised after the Closing Date, such exercise shall not constitute a Defect,
and Amerac shall be entitled to all proceeds paid for the affected Evaluated
Interest by the party exercising the preferential purchase right.
(c) There shall be no reduction in the Initial Purchase Consideration
with respect to Evaluated Interests for which preferential purchase rights have
been waived, or as to which the period to exercise such right has expired prior
to the Closing.
(d) With respect to any portion of an Evaluated Interest as to which a
required consent has not been obtained prior to the Closing, such failure shall
constitute a Defect affecting the relevant Evaluated Interest, and the Selling
Shareholders and Amerac shall have the rights and remedies provided herein with
respect thereto.
2.6 Interest Additions. The Selling Shareholders shall be entitled to an
increase in the Initial Purchase Consideration with respect to any additional
interest in or with respect to any material Evaluated Interest identified with
an asterisk on Exhibit A that is reflected of record and as to which Fremont has
Good and Marketable Title, the net effect of which is either (a) to increase
permanently Fremont's net revenue interest in the affected Evaluated Interest
above that shown for such Evaluated Interest on Exhibit A, or (b) to decrease
Fremont's working interest for the relevant Evaluated Interest below that shown
for such Evaluated Interest on Exhibit A without a corresponding decrease in the
"Net Revenue Interest" shown for such Evaluated Interest on Exhibit A; provided,
however, that the Selling Shareholders shall not be entitled to such an increase
in the Initial Purchase Consideration in the case of additional interests
resulting from Fremont's failure to execute and deliver to FEI or other
affiliates of the Selling Shareholders recorded assignments of overriding
royalty interests in production from one (1) or more of such material Evaluated
Interests owed to such parties under existing intercompany arrangements between
Fremont and such parties. To be entitled to such an adjustment in the Initial
Purchase Consideration, the Selling Shareholders shall furnish to Amerac written
notice of any such additional interests no later than 5:00 p.m., Central
Standard Time, on the seventh (7th) day prior to the Closing Date. Such notice
shall set forth the increase in interest asserted by the Selling Shareholders
and the Evaluated Interest affected thereby. If Amerac is able to verify to its
reasonable satisfaction the existence of any such additional interest based upon
record title examinations or other title-related due diligence conducted by
Amerac in connection with this Agreement, the Initial Purchase Consideration
shall be adjusted by increasing the Initial Cash Amount by an amount equal to
the value of such additional interest. Such value shall be
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determined consistently with the manner in which reductions to the Initial
Purchase Consideration are determined under Section 2.4. If the Selling
Shareholders and Amerac are unable to agree on the existence or value of such an
additional interest, the Selling Shareholders and Amerac shall submit such
dispute to arbitration in accordance with the procedures set forth in Section
2.8. Upon the arbitrator's determination of the existence of the asserted
additional interest and its value, the value of such additional interest as
determined by the arbitrator shall be credited to the Selling Shareholders and
taken into account in the calculation of the final Adjusted Purchase
consideration reflected in the Final Settlement Statement.
2.7 Casualty Loss. The Selling Shareholders shall give Amerac prompt
written notice of any fire, explosion, accident, blowout, earthquake, act of the
public enemy, act of God, or other similar casualty event ("Casualty") that
occurs with respect to any Evaluated Interest prior to the Closing Date,
together with a description of the applicable insurance coverage and the extent
of Fremont's exposure as the result of such Casualty. For purposes of this
Agreement, any such Casualty shall be treated in the same manner as an
Environmental Claim, with the result that the rights and obligations of the
Selling Shareholders and Amerac shall be governed by the provisions of Section
2.3(b) and Section 2.3(c).
2.8 Arbitration.
(a) Any disagreement, difference, or dispute among the parties that is
provided in this Agreement to be resolved pursuant to arbitration shall be
resolved according to the procedures set forth in this Section 2.8. ALL OTHER
DISAGREEMENTS, DIFFERENCES, OR DISPUTES ARISING BETWEEN THE SELLING SHAREHOLDERS
AND AMERAC UNDER THE TERMS OF THIS AGREEMENT SHALL NOT BE SUBJECT TO ARBITRATION
AND SHALL BE DETERMINED BY A COURT OF COMPETENT JURISDICTION, UNLESS THE SELLING
SHAREHOLDERS AND AMERAC OTHERWISE MUTUALLY AGREE. For purposes of this
Agreement, the term "court of competent jurisdiction" shall not include justice
of the peace courts in the State of Texas. If the parties determine that
arbitration is necessary under any provision hereof that calls for the
arbitration of disputes, then no later than five (5) days after the Selling
Shareholders and Amerac have confirmed to each other in writing their intentions
to arbitrate the relevant dispute, the Selling Shareholders shall select an
arbitrator, and Amerac shall select an arbitrator. Promptly following their
selection, the arbitrators selected by, respectively, the Selling Shareholders
and Amerac jointly shall select a third arbitrator, who shall hear and decide
all matters relating to the dispute that is subject to arbitration under this
Agreement. All arbitrators selected under this Agreement shall be experts with
respect to oil and gas, environmental, operations, land, legal, or accounting
issues, as applicable, and in each case shall have at least ten (10) years
experience in the oil and gas industry. If any arbitrator selected under this
Section 2.8 (a) should die, resign, or otherwise be unable to perform his duties
hereunder, a successor arbitrator shall be selected pursuant to the procedures
set forth in this Section 2.8(a).
(b) The arbitrator shall settle all disputes in accordance with the
Federal Arbitration Act and the Rules of the American Arbitration Association,
to the extent that such Rules do not conflict with the terms of such Act or the
provisions of this Agreement. The decision of the arbitrator shall be binding
on the parties and, if necessary, may be enforced in
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any court of competent jurisdiction. The law governing all such disputes shall
be the laws of the State of Texas without regard to conflicts of laws
principles; provided, however, that with respect to disputes relating to Defects
as to title or Environmental Claims relating to alleged violations of local
Environmental Laws, the law governing such dispute shall be the laws of the
state in which the affected Evaluated Interest is located, without regard to
conflicts of laws principles. The charges and expenses of the arbitrator shall
be shared equally by the Selling Shareholders and Amerac.
(c) Any arbitration hearing shall be held in Houston, Harris County,
Texas. The arbitration hearing shall commence as soon as is practical, but in
no event more than thirty (30) days, after the selection of the arbitrator. At
such a hearing, the Selling Shareholders and Amerac shall each have up to five
(5) days within which to present their respective positions on the issues being
arbitrated. In fulfilling his duties, the arbitrator shall be bound by the
terms and provisions of this Agreement, but may also consider such other matters
as, in the opinion of the arbitrator, are necessary or helpful to make a proper
determination. In addition, the arbitrator may consult with and engage, with
the approval and at the joint expense of the Selling Shareholders and Amerac,
disinterested third parties (including, without limitation, petroleum engineers
and consultants) to advise the arbitrator. The arbitrator shall issue his final
determination of all issues no later than ten (10) days after the conclusion of
the arbitration hearing. If the matter in dispute relates to whether one (1) or
more of the conditions to the obligation of either the Selling Shareholders or
Amerac, as applicable, to close the transactions contemplated herein has been
satisfied, the relevant condition shall be suspended, and the party entitled to
enforce such condition shall not be entitled to terminate this Agreement
pursuant to Section 10.1 solely because such condition remains unsatisfied. In
that event, the Closing Date shall be extended to the next Business Day
following the issuance by the arbitrator of his final determination, at which
time the suspension of such condition shall cease, and the Closing shall take
place unless this Agreement is terminated at that time by either party having a
right to do so pursuant to Article X.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
OF SELLING SHAREHOLDERS
-----------------------
Each Selling Shareholder (or, when indicated, one or more individual
Selling Shareholders) represents and warrants, severally only and not jointly,
with respect to itself, its own acts or omissions, and its ownership interest in
Fremont and Ridgepointe, and not with respect to the acts, omissions, or
ownership interests of any other Selling Shareholder, to Amerac as follows:
3.1 Existence and Power.
(a) Each of Fremont and Ridgepointe is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
organization, and has all corporate power and authority to own, lease, and
operate its properties and to carry on its business as now conducted. Each of
Fremont and Ridgepointe is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property
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owned or leased by it or the nature of its activities makes such qualification
necessary. The Selling Shareholders have heretofore made available to Amerac
true and complete copies of the articles of incorporation and bylaws of Fremont
and Ridgepointe as currently in effect.
(b) Powell represents and warrants that it is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
organization and has all corporate power and authority to own, lease, and
operate its properties and to carry on its business as now conducted. Powell
has heretofore made available to Amerac true and complete copies of Powell's
articles of incorporation and bylaws as currently in effect.
(c) The Partnership is a limited partnership duly formed and validly
existing under the laws of the State of Florida.
3.2 Authorization. Powell represents and warrants that the execution,
delivery, and performance by Powell of this Agreement, and the consummation by
Powell of the transactions contemplated herein, are within Powell's corporate
powers and have been duly authorized by all necessary corporate action. The
Partnership represents and warrants that the execution, delivery, and
performance by the Partnership of this Agreement, and the consummation by the
Partnership of the transactions contemplated herein, are within the
Partnership's powers and have been duly authorized by all necessary partnership
action. Each Other Selling Shareholder represents and warrants that it has the
right, power, and authority to enter into this Agreement and to consummate the
transactions contemplated in this Agreement.
3.3 Governmental Authorization. The execution, delivery, and performance
by the Selling Shareholders of this Agreement and the consummation by the
Selling Shareholders of the transactions contemplated herein require no action
by or in respect of, or filing with, any governmental body, agency, official, or
authority.
3.4 Subsidiaries. (a) For purposes of this Agreement, as of the date of
this Agreement, FRI is the only corporation, partnership, joint venture,
business trust, or other legal entity in which Fremont directly or indirectly
beneficially owns fifty percent (50%) or more of the voting stock or equivalent
interest. As of the Closing Date, Fremont will not directly or indirectly
beneficially own fifty percent (50%) or more of the voting stock or equivalent
interest of any corporation, partnership, joint venture, business trust, or
other legal entity, and it will not be a general partner of any partnership.
(b) Except for its interest in Fremont, Ridgepointe does not directly
or indirectly beneficially own fifty percent (50%) or more of the voting stock
or equivalent interest of any corporation, partnership, joint venture, business
trust, or other legal entity, and is not a general partner of any partnership.
3.5 Non-Contravention.
(a) Powell represents and warrants that the execution, delivery, and
performance by Powell of this Agreement and the consummation by Powell of the
transactions contemplated herein will not conflict with or result in a breach of
any provisions of the articles
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of incorporation or bylaws of Powell. The Partnership represents and warrants
that the execution, delivery, and performance by the Partnership of this
Agreement and the consummation by the Partnership of the transactions
contemplated herein will not conflict with or result in a breach of any
provisions of the agreement of limited partnership or other governing documents
of the Partnership. Each Selling Shareholder represents and warrants that the
execution, delivery, and performance by the Selling Shareholders of this
Agreement and the consummation by the Selling Shareholders of the transactions
contemplated hereby do not and will not (i) contravene or constitute a default
under or give rise to (or give rise after the giving of notice, the passage of
time, or both) a right of termination, cancellation, or acceleration of any
obligation of such Selling Shareholder or to a loss of any benefit to which such
Selling Shareholder is entitled under any provision of (A) any law, regulation,
judgment, injunction, order, or decree binding upon such Selling Shareholder, or
(B) any agreement, contract, or other instrument binding upon such Selling
Shareholder or any license, franchise, permit, or other similar authorization
held by such Selling Shareholder, or (ii) result in the creation or imposition
of any Lien on any asset of such Selling Shareholder.
(b) The execution, delivery and performance by the Selling
Shareholders, Fremont, and Ridgepointe of this Agreement and the consummation by
the Selling Shareholders of the transactions contemplated hereby do not and will
not (i) contravene or constitute a default under or give rise to (or give rise
after the giving of notice, the passage of time or both) a right of termination,
cancellation, or acceleration of any obligation of Fremont or Ridgepointe, or to
a loss of any benefit to which Fremont or Ridgepointe is entitled under any
provision of (A) the articles of incorporation or bylaws or other governing
documents of, respectively, Fremont or Ridgepointe, (B) any law, regulation,
judgment, injunction, order, or decree binding upon Fremont or Ridgepointe, or
(C) any agreement, contract or other instrument binding upon Fremont or
Ridgepointe, or any license, franchise, permit or other similar authorization
held by Fremont or Ridgepointe, or (ii) result in the creation or imposition of
any Lien on any asset of Fremont or Ridgepointe.
(c) For purposes of this Agreement, "Lien" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest, sale/leaseback or
similar arrangement, restriction on transfer, or other encumbrance of any kind
in respect of such asset.
3.6 Binding Effect. This Agreement has been duly authorized, executed and
delivered by the Selling Shareholders and constitutes the valid and binding
agreement of each Selling Shareholder enforceable in accordance with its terms,
subject to the effects of bankruptcy, insolvency, reorganization, moratorium,
and similar laws, as well as to principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.7 Ownership of Fremont Common Stock and Ridgepointe Common Stock.
Powell represents and warrants that it owns, beneficially and of record, the
number of shares of Fremont Common Stock and Ridgepointe Common Stock set forth
opposite its name in Sections I and II of Schedule 1.01, free and clear of all
Liens, and is not subject to any agreements or understandings with respect to
the voting or transfer of such shares. Each Other Selling Shareholder
represents and warrants that it owns, beneficially and of record, the number of
shares of Ridgepointe Common Stock set forth opposite such Other Selling
Shareholder's name
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in Section II of Schedule 1.01, free and clear of all Liens, and is not subject
to any agreements or understandings with respect to the voting or transfer of
such shares. Such shares of Ridgepointe Common Stock constitute all of the
issued and outstanding shares of capital stock of Ridgepointe, and such shares
of Fremont Common Stock constitute all of the issued and outstanding capital
stock of Fremont except for the capital stock of Fremont owned by Ridgepointe.
3.8 Accredited Investor. Each Other Selling Shareholder and the
Partnership is an "Accredited Investor" as such term is defined under Regulation
D of the of 1933 Act and warrants that it has accurately completed and delivered
an Accredited Investor Certificate in the form of Exhibit F hereto. Powell
represents and warrants that, with the exception of Michael L. Powell, each of
its equity owners is an Accredited Investor.
3.9 Capitalization of Fremont and Ridgepointe.
(a) The authorized capital stock of Fremont consists of 50,000 shares
of Fremont Common Stock. As of October 31, 1995, there were outstanding 800
shares of Fremont Common Stock. All outstanding shares of capital stock of
Fremont have been duly authorized and validly issued and are fully paid and
nonassessable and were issued free of preemptive rights. Except as set forth in
this Section 3.9(a), there are outstanding (i) no shares of capital stock or
other voting securities of Fremont, (ii) no securities of Fremont convertible
into or exchangeable for shares of capital stock or voting securities of
Fremont, (iii) no options or other rights to acquire from Fremont, and no
obligation of Fremont to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of Fremont, and (iv) no equity equivalents, interests in the
ownership or earnings of Fremont or other similar rights (collectively, "Fremont
Securities"). There are no outstanding obligations of Fremont to repurchase,
redeem or otherwise acquire any Fremont Securities.
(b) The authorized capital stock of Ridgepointe consists of 12,500
shares of Ridgepointe Common Stock. As of October 31, 1995, there were
outstanding 10,000 shares of Ridgepointe Common Stock. All outstanding shares
of capital stock of Ridgepointe have been duly authorized and validly issued and
are fully paid and nonassessable and were issued free of preemptive rights.
Except as set forth in this Section 3.9(b), there are outstanding (i) no shares
of capital stock or other voting securities of Ridgepointe, (ii) no securities
of Ridgepointe convertible into or exchangeable for shares of capital stock or
voting securities of Ridgepointe, (iii) no options or other rights to acquire
from Ridgepointe, and no obligation of Ridgepointe to issue, any capital stock,
voting securities, or securities convertible into or exchangeable for capital
stock or voting securities of Ridgepointe, and (iv) no equity equivalents,
interests in the ownership, or earnings of Ridgepointe or other similar rights
(collectively, "Ridgepointe Securities"). There are no outstanding obligations
of Ridgepointe to repurchase, redeem, or otherwise acquire any Ridgepointe
Securities.
3.10 Financial Statements.
(a) The consolidated financial statements of Fremont dated and for the
periods ended March 31, 1993, March 31, 1994, and March 31, 1995, and the
consolidated interim
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financial statements of Fremont dated and for the period ended October 31, 1995
(the "Interim Fremont Financial Statements"), fairly present in all material
respects, in conformity with GAAP (except that transactions are reflected
therein on a cash basis rather than on an accrual basis), the consolidated
financial position of Fremont and the Fremont Subsidiaries as of the dates
thereof and the consolidated results of operations and cash flows or changes in
financial position for the periods then ended (subject to normal year-end
adjustments in the case of the Interim Fremont Financial Statements).
(b) The consolidated financial statements of Ridgepointe dated and for
the periods ended February 28, 1993, February 28, 1994, and February 28, 1995,
and the consolidated interim financial statements of Ridgepointe dated and for
the period ended October 31, 1995 (the "Interim Ridgepointe Financial
Statements"), fairly present in all material respects, in conformity with GAAP
(except that transactions are reflected therein on a cash basis rather than on
an accrual basis), the consolidated financial position of Ridgepointe as of the
dates thereof and the consolidated results of operations and cash flows or
changes in financial position for the periods then ended (subject to normal
year-end adjustments in the case of the Interim Ridgepointe Financial
Statements).
(c) For purposes of this Agreement, "Fremont Financial Statements"
means the consolidated financial statements of Fremont as of and for the years
ended March 31, 1993, March 31, 1994, and March 31, 1995, and the Interim
Fremont Financial Statements; "Ridgepointe Financial Statements" means the
consolidated financial statements of Ridgepointe as of and for the years ended
February 28, 1993, February 28, 1994, and February 28, 1995, and the Interim
Ridgepointe Financial Statements; and "Financial Statement Date" means October
31, 1995.
3.11 No Material Adverse Change. Since the Financial Statement Date, there
has not been any material adverse change in the business or condition of Fremont
or Ridgepointe. Since the Financial Statement Date, neither Fremont nor
Ridgepointe has taken any action that would be prohibited by Section 6.1 if such
section had been in effect.
3.12 No Undisclosed Liabilities. Except as shown in the Interim Fremont
Financial Statements and the Interim Ridgepointe Financial Statements, neither
Fremont nor Ridgepointe had, as of the Financial Statement Date, any liabilities
or obligations of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable, or otherwise. Since the Financial Statement Date,
neither Fremont nor Ridgepointe has incurred any such liabilities or obligations
(other than liabilities or obligations incurred in the ordinary course of
business consistent with past practices or pursuant to or as contemplated
hereby).
3.13 Legal Compliance. To the best knowledge of each Selling Shareholder
after due inquiry, Fremont and Ridgepointe have complied with all applicable
rules, regulations, and ordinances of any governmental authority having
jurisdiction over Fremont and Ridgepointe as to which non-compliance would have
a material adverse effect on Fremont or Ridgepointe, as applicable, or any of
their respective properties and assets, and have all governmental licenses,
authorizations, consents and approvals required. Fremont is in compliance with
all covenants, provisions, and requirements of its Credit Agreement ("Credit
Agreement") dated as of July 1,
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1991, as amended, with various banks and Union Bank & Trust Company of Oklahoma
City, as Agent.
3.14 Tax Returns and Taxes.
(a) Each of Fremont and Ridgepointe have duly and timely filed with
the appropriate governmental authorities all tax returns (including returns of
estimated taxes), statements and reports required to be filed by them and have
paid all taxes (including any interest, penalties and additions thereto)
required to have been paid by them. All such tax returns, statements, and
reports are complete and accurate in all respects and properly reflect the
relevant taxes for the periods covered thereby. Each of Fremont and Ridgepointe
have withheld and paid all taxes required by law to have been withheld and paid
by them. The liability of Fremont and Ridgepointe for taxes not yet due and
payable does not, as of the Financial Statement Date, exceed the reserve for
taxes (rather than any reserve for deferred taxes established to reflect timing
differences between book and income tax income) set forth on the faces of,
respectively, the Interim Fremont Financial Statements and the Interim
Ridgepointe Financial Statements (rather than in any notes thereto), as adjusted
in accordance with GAAP for the period of time through the Closing Date.
(b) There is no pending or, to the best knowledge of any Selling
Shareholder after due inquiry, threatened action, proceeding, investigation,
examination, assessment, or claim for any deficiency by any governmental
authority for or relating to taxes of Fremont and Ridgepointe. Neither Fremont
nor Ridgepointe is currently the beneficiary of any waiver of any statute of
limitations in respect of taxes or of any extension of time within which to file
any tax return, statement, or report or to pay any tax assessment or deficiency.
There are no Liens relating to taxes on or, to the best knowledge of any Selling
Shareholder after due inquiry, threatened against any of the assets of Fremont
or Ridgepointe. Neither Fremont, Ridgepointe, nor any predecessor thereof is or
has been a party to any tax allocation or sharing agreement or a member of an
affiliated group of corporations filing a consolidated federal income tax
return. Each of Fremont and Ridgepointe has delivered to Amerac correct and
complete copies of their respective local, state, federal, and foreign income
tax returns filed or required to have been filed by them during the five (5)
calendar years preceding the date of this Agreement, together with all
amendments thereto and all examination reports and statements of deficiencies
assessed against or agreed to by them with respect to any taxes required to be
shown thereon.
(c) Neither Fremont nor Ridgepointe (i) has made any payments, is
obligated to make any payments, or is a party to any agreement that under any
circumstance could obligate it or any assignee thereof to make any payments that
in each case, will not be deductible under Section 280G of the Internal Revenue
Code of 1986 (the "Code"); (ii) has made any election under Treasury Regulation
Section 1.1502-20(g)(1); (iii) has made any election to have the provisions of
Code Section 341(f)(2) apply to it; (iv) has any liability for taxes of any
other person under Treasury Regulation Section 1.1502-6 (or any similar
provision of local, state, or foreign law); (v) has been a United States real
property holding corporation within the meaning of Code Section 897(c)(2) during
the period specified in Code Section 897(c)(1)(A)(ii); (vi) has sustained an
"overall foreign loss" within the meaning of Code Section 904(f); (vii) has
participated or cooperated with any "international boycott" within the meaning
of Code Section
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999; (viii) has made any election under or with respect to the application of
Code Section 197; (ix) owns any assets which are or will be subject to a lease
to a "tax exempt entity" as defined in Code Section 168(h)(2); or (x) owns any
assets which Amerac or any affiliate of Amerac will be required to treat as
being owned by another person pursuant to the " Safe Harbor Lease" provisions of
Code Section 168(f)(8) prior to repeal by the Tax Equity and Fiscal
Responsibility Act of 1982.
3.15 Financial Advisor Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of the Selling Shareholders, Fremont, or Ridgepointe who might be
entitled to any fee or commission from Amerac or any of its affiliates upon the
consummation of the transactions contemplated in this Agreement.
3.16 Litigation. There are no actions, suits or proceedings to which
Fremont or Ridgepointe is a party pending or, to the best knowledge of any
Selling Shareholder after due inquiry, threatened in any court or before or by
any federal, state, or other governmental department, commission, agency, or
other instrumentality, or before any arbitrator.
3.17 Insurance. Schedule 3.17 hereto lists all insurance policies owned by
Fremont and Ridgepointe by which Fremont and Ridgepointe and their respective
properties or assets are covered against present losses, all of which are now in
full force and effect.
3.18 Employee Liabilities. Neither Fremont nor Ridgepointe will have, as
of the Closing Date, any employment or personnel-related liabilities whatsoever,
including, but not limited to, any liability under any employment contract,
liability for wages or salary, liability for contemplated bonuses or
commissions, liability for severance (including, without limitation, as a result
of the transactions contemplated in this Agreement), COBRA liability, OSHA
liability, liability for disabled individuals, workers' compensation liability,
ERISA obligations or liability, WARN Act liability, sick pay, vacation accruals,
or similar matters, liability under any profit sharing plan, liability under any
pension plan, liability under any welfare benefit plan, or liability for any
claims alleging illegal discrimination of any type.
3.19 Books and Records. The minute books of Fremont and Ridgepointe
contain a record of the corporate actions of the shareholders and directors (and
any committees thereof) of each corporation. Each of Fremont and Ridgepointe
maintains such business records required by applicable law or necessary to
conduct the businesses of Fremont and Ridgepointe, except where the failure to
do so would not, individually or in the aggregate, have a material adverse
effect on the business or condition of Fremont or Ridgepointe. All tax returns
and records that relate to the business of Fremont are located in the offices of
Fremont, and all tax returns and records that relate to the business of
Ridgepointe are located in the offices of Ridgepointe.
3.20 Assets.
(a) Solely for purposes of computing adjustments to the Initial
Purchase Consideration as provided in this Agreement, the Selling Shareholders
warrant that Fremont's title to the Evaluated Interests is, as of the
Engineering Date or will be as of the Closing Date,
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Good and Marketable Title. Amerac's sole and exclusive remedy for any
inaccuracy in or breach of the foregoing warranty shall be limited to the
provisions of Article II.
(b) With respect to all other assets of Fremont, Fremont has such
title as grants to Fremont the benefits and burdens of ownership thereof to the
full extent described in the conveyances, leases, agreements, instruments, and
other documents currently in effect that define Fremont's ownership thereof, and
subject only to the obligations set forth in such agreements, free and clear of
all Liens.
(c) Ridgepointe has not engaged in any material business activity
prior to the date hereof since December 31, 1993, except in connection with its
ownership interest in Fremont, its organization, and this Agreement, and
Ridgepointe's sole assets consist of 400 shares of Fremont Common Stock, which
constitutes all of the issued and outstanding shares of Fremont Common Stock
that are not owned by the Selling Shareholders.
3.21 Intellectual Property Rights. Neither Fremont nor Ridgepointe holds
any material patents or copyrights. Fremont and Ridgepointe own or have rights
to use all trademarks, servicemarks, and trade names, free from burdensome
restrictions, that are necessary for the operation of their respective
businesses as presently conducted. Neither Fremont nor Ridgepointe have
received any written notice or claim of any infringement, violation, misuse or
misappropriation by Fremont or Ridgepointe of any patent, trademark, service
mark, trade dress, trade name, copyright, trade secret, confidential
information, proprietary information, or similar right owned by any third party.
3.22 Leases and Wells. To the best knowledge of each Selling Shareholder
after due inquiry, each of the oil and gas leases included in the Oil and Gas
Properties (the "Leases") is in full force and effect. To the best knowledge of
each Selling Shareholder after due inquiry, Fremont is not in material breach or
material default, nor has there occurred any event, fact, or circumstance that,
with the lapse of time or the giving of notice, or both, would constitute such a
breach or default by Fremont, with respect to any of its obligations under any
Lease. Fremont has correctly made, or caused to be correctly made, all
payments, including royalties, delay rentals, shut-in well payments, and other
lease maintenance payments, due in respect of the Leases thereunder. To the
best knowledge of each Selling Shareholder after due inquiry, no other party
owning an interest in any Lease is in material breach or material default with
respect to any of its obligations thereunder. No lessor under any Lease has
given or, to the best knowledge of each Selling Shareholder after due inquiry,
threatened to give notice of any action to terminate, cancel, rescind,
repudiate, or procure a judicial reformation of any Lease or any provisions
thereof. All of the wells included in the Evaluated Interests have been
drilled, completed, and operated within the boundaries of the Leases or within
the limits otherwise permitted by contract, pooling or unit agreement, and by
law and in compliance with the provisions of the relevant Applicable Contracts
and all applicable rules, regulations, permits, judgments, orders and decrees of
any court or federal and state regulatory authorities having jurisdiction
thereof; and the production of oil and gas therefrom has not been in excess of
the
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allowable production allocated to such well. The wells described on Exhibit A
are the only wells located on the Oil and Gas Properties.
3.23 Marketing. Except as disclosed on Schedule 3.23, no amounts of
hydrocarbons produced from the Evaluated Interests are subject to a sales
contract (except for contracts terminable without penalty on not more than
thirty (30) days notice), and except as may be contained in any document
described on Schedule 3.23, no person has any call upon, option to purchase, or
similar rights under any agreement with respect to the Evaluated Interests or to
the production therefrom. Fremont has not in any respect collected, nor will
Fremont in any respect collect, any proceeds from the sale of hydrocarbons
produced from the Evaluated Interests that are subject to refund except as
disclosed on Schedule 3.23. As of the Engineering Date, proceeds from the sale
of oil, condensate, and gas from the Evaluated Interests were being received in
all respects by Fremont in a timely manner and were not being held in suspense
for any reason, except as disclosed on Schedule 3.23. Fremont has not been, nor
will be, obligated by virtue of any prepayment made under any production sales
contract or any other contract containing a "take-or-pay" clause, or under any
production payment, forward sale, gas balancing, deferred production, or similar
arrangement to deliver oil, gas, or other minerals produced from or allocated to
any of the Evaluated Interests at some future time without receiving full
payment therefor at the time of delivery, except as disclosed on Schedule 3.23.
Except as disclosed on Schedule 3.23, there are no material gas imbalances as
between Fremont and any third party with respect to the Evaluated Interests.
3.24 Applicable Contracts. With respect to the Applicable Contracts: (a)
to the best knowledge of each Selling Shareholder after due inquiry, all
Applicable Contracts are in full force and effect and are the valid and legally
binding obligations of the parties thereto and are enforceable in accordance
with their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
(b) to the best knowledge of each Selling Shareholder after due inquiry, Fremont
is not in material breach or material default, nor has there occurred any event,
fact, or circumstance that, with the lapse of time or giving of notice, or both,
would constitute such a breach or default by Fremont, with respect to any of its
obligations under any Applicable Contract; and (c) neither Fremont nor, to the
best knowledge of each Selling Shareholder after due inquiry, any other party to
any Applicable Contract has given or threatened to give notice of any action to
terminate, cancel, rescind, or procure a judicial reformation of any Applicable
Contract or any provision thereof.
3.25 Pooling, Unitization, and Communitization Agreements. With respect to
any unit agreements, pooling agreements, and communitization agreements creating
interests constituting the Evaluated Interests: (a) Fremont has in all respects
fulfilled all requirements for filings, certificates, disclosures of parties in
interest, and other similar matters contained in (or otherwise applicable
thereto by law, rule or regulation) the Leases or other documents granting or
governing the operation or maintenance of the Evaluated Interests, and Fremont
is fully qualified to own, hold, and exercise such rights under such Leases or
other documents; and (b) there are no express contractual obligations to drill
additional wells or to engage in other express development operations, except
for obligations arising under offset well provisions and
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obligations arising under provisions of unit operating agreements that allow the
parties thereto to elect whether or not they will participate; however, there
are no current proposals to drill such wells.
3.26 Operating Agreements. With respect to the joint, unit, or other
operating agreements relating to the Evaluated Interests: (a) except as
disclosed on Schedule 3.26, there are no outstanding calls or payments due from
Fremont under authorities for expenditures ("AFE's"); (b) Fremont has listed on
Schedule 3.26 the status of all material operations by less than all parties
relating to the Evaluated Interests, including the status of recoupment by the
consenting parties of applicable non-consent penalties and Fremont's interests
therein before and after recoupment; and (iii) except as disclosed on Schedule
3.26, there are no operations under the operating agreements with respect to
which Fremont has become a non-consenting party.
3.27 Environmental Matters.
(a) Except as disclosed on Schedule 3.27: (i) Fremont has obtained or
caused to have been obtained all permits, licenses and other authorizations that
are required under all Environmental Laws ("Environmental Permits"), and, to the
best knowledge of each Selling Shareholder after due inquiry, all such
Environmental Permits are currently in full force and effect; (ii) to the best
knowledge of each Selling Shareholder after due inquiry, Fremont and the
Evaluated Interests are in compliance in all material respects with all
Environmental Laws and all terms and conditions of such Environmental Permits;
and (iii) there has been no Release, and, to the best knowledge of each Selling
Shareholder after due inquiry, no threat of a Release, of any Environmental
Contaminants arising from, based upon, associated with, or related to Fremont's
use, ownership, or operation of the Oil and Gas Properties, except for matters
that have been remedied and have no continuing material adverse effect upon
Fremont or the Oil and Gas Properties; and (iv) to the best knowledge of the
Selling Shareholders after due inquiry, there has been no Release, and no threat
of a Release, of any Environmental Contaminants arising from, based upon,
associated with, or related to the use, ownership, or operation of the Oil and
Gas Properties by Fremont's predecessors in title, except for matters that have
been remedied and have no continuing material adverse effect upon Fremont or the
Oil and Gas Properties.
(b) Except as disclosed on Schedule 3.27, Fremont has not received a
written notice of a claim that: (i) Fremont has violated, or is about to
violate, any Environmental Law; (ii) there has been a Release, or there is a
threat of a Release, of Environmental Contaminants on, to, or from the Oil and
Gas Properties for which Fremont is or may be liable to any third party for
injury to or death of any person, persons, or other living things, or damage to
or loss or destruction of property; (iii) Fremont may be or is liable, in whole
or in part, for the costs of cleaning up, remediating, removing, or responding
to a Release or a threat of a Release of Environmental Contaminants; or (iv) the
Oil and Gas Properties are subject to a Lien in favor of any governmental entity
for any liability, costs, or damages under any Environmental Laws arising from,
or any costs incurred by such governmental entity in response to, a Release of
Environmental Contaminants.
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3.28 Plugging and Abandonment. No well included in the Evaluated
Interests, as of the Engineering Date, had been permanently plugged and
abandoned or AFE'd for permanent plugging and abandonment.
3.29 Disbursement of Proceeds. Except proceeds from the sale of production
attributable to the Oil and Gas Properties being held in suspense in accordance
with prudent industry practice, all of such proceeds of production have been and
are being accounted for under appropriate division orders, transfer orders, or
similar documents signed by or otherwise binding on the parties receiving such
proceeds and reflecting as to each party the decimal interest of such party.
3.30 Certain Agreements; Payouts. Except as set forth in Schedule 3.30, no
Evaluated Interest is subject to any area of mutual interest agreement or any
farmout or farmin agreement pursuant to which Fremont or Amerac may be obligated
to make assignments after the Engineering Date. Except as set forth on Schedule
3.30, no Evaluated Interest is subject to any tax partnership. Where Exhibit A
shows an Evaluated Interest described therein to be subject to change "After
Reversion," or similar designations, such change will occur upon either the
recovery from the production from such Evaluated Interest of a volume of such
production, or the recovery from the proceeds of production from such Evaluated
Interest of a sum of money, in either case as set forth in Schedule 3.30 as the
"Reversion Amount".
3.31 Information. To the best knowledge of each Selling Shareholder after
due inquiry, all of the revenue and cost information, records, and data relating
to the Evaluated Interests furnished by the Selling Shareholders to Amerac,
either prior to the execution of this Agreement or to be furnished prior to
Closing, is not, and shall not be, incorrect or inaccurate in any material
respect when so furnished, and no documents relating thereto were removed, nor
were any information or documents relating thereto omitted, from the data or
documents relating thereto furnished by the Selling Shareholders to Amerac,
which are necessary to make the data furnished not misleading in any material
respect; provided, however, that this representation and warranty is limited
solely to matters of fact that are not otherwise publicly available or known to
Amerac.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AMERAC
----------------------------------------
Amerac represents and warrants to each of the Selling Shareholders that:
4.1 Corporate Existence and Power. Amerac is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has all corporate power and authority to own, lease, and
operate its properties and to carry on its business as now conducted. Amerac is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary. Amerac has
heretofore made available to the Selling Shareholders true and complete copies
of Amerac's certificate of incorporation and bylaws as currently in effect.
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4.2 Corporate Authorization. The execution, delivery, and performance by
Amerac of this Agreement and the consummation by Amerac of the transactions
contemplated hereby are within Amerac's corporate powers and have been duly
authorized by all necessary corporate action.
4.3 Governmental Authorization. The execution, delivery and performance
by Amerac of this Agreement and the consummation by Amerac of the transactions
contemplated herein require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than compliance with any
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (the "1934 Act").
4.4 Subsidiaries. Amerac does not directly or indirectly beneficially own
fifty percent (50%) or more of the voting stock or equivalent interest of any
corporation, partnership, joint venture, business trust, or other legal entity,
and is not a general partner of any partnership.
4.5 Non-Contravention. The execution, delivery and performance by Amerac
of this Agreement and the consummation by Amerac of the transactions
contemplated hereby do not and will not (i) contravene or constitute a default
under or give rise to (or give rise after the giving of notice, the passage of
time, or both) a right of termination, cancellation, or acceleration of any
obligation of Amerac or to a loss of any benefit to which Amerac is entitled
under any provision of (a) the certificate of incorporation or bylaws of Amerac,
(b) assuming compliance with the matter referred to in Section 4.3, any law,
regulation, judgment, injunction, order, or decree binding upon Amerac, or (c)
any agreement, contract or other instrument binding upon Amerac or any license,
franchise, permit or other similar authorization held by Amerac, or (ii) result
in the creation or imposition of any Lien on any asset of Amerac, except for
Liens granted in favor of Bank pursuant to Amerac's credit facility therewith to
secure Amerac's borrowings in connection with the transactions contemplated in
this Agreement.
4.6 Binding Effect. This Agreement has been duly authorized, executed,
and delivered by Amerac and constitutes a valid and binding agreement of Amerac
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, reorganization, moratorium, and similar laws, as well as to
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.7 Capitalization. As of November 30, 1995, there were (i) 50,000,000
authorized shares of Amerac Common Stock, of which 20,510,444 shares were issued
and outstanding; (ii) 10,000,000 authorized shares of Amerac preferred stock,
par value $1.00 per share, of which 1,747,058 shares of $4.00 Senior Preferred
Stock (the "$4.00 Preferred Stock") were issued and outstanding. All such
outstanding shares of Amerac Common Stock and $4.00 Preferred Stock have been,
and the Amerac Shares to be issued pursuant to this Agreement will be, duly
authorized, validly issued, fully paid and nonassessable and were, or will be,
issued free of preemptive rights. Except as set forth in this Section 4.7, or
as disclosed in Amerac's Annual Report on Form 10-K for the year ended December
31, 1994, its Quarterly Report on Form 10-Q for the periods ended September 30,
1995, and its Proxy Statement dated March 3, 1995, or as set forth in Schedule
4.7 hereto, there are outstanding (a) no shares of capital stock or
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other voting securities of Amerac, (b) no securities of Amerac convertible into
or exchangeable for shares of capital stock or voting securities of Amerac, (c)
no options or other rights to acquire from Amerac, and no obligation of Amerac
to issue, any capital stock, voting securities, or securities convertible into
or exchangeable for capital stock or voting securities of Amerac, and (d) no
equity equivalents, interests in the ownership or earnings of Amerac, or other
similar rights (collectively, "Amerac Securities"). There are no outstanding
obligations of Amerac to repurchase, redeem or otherwise acquire any Amerac
Securities.
4.8 SEC Filings. Amerac has made available to the Selling Shareholders
(a) its Annual Reports on Form 10-K for each of the three fiscal years ended
December 31, 1994, and (b) all of its other reports or registration statements
filed with the Securities and Exchange Commission (the "SEC") since January 1,
1992, through the date hereof (the "SEC Filings"). As of their respective
dates, the SEC Filings complied as to form in all material respects with the
applicable requirements of the 1934 Act and 1933 Act and the rules and
regulations promulgated thereunder, and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements contained therein, in the light of
circumstances under which they were made, not misleading.
4.9 Legal Compliance. Except as set forth in the SEC Filings, Amerac has
complied with all applicable rules, regulations, and ordinances of any
governmental authority having jurisdiction over Amerac and has all governmental
licenses, authorizations, consents and approvals required.
4.10 Litigation. Except as set forth in the SEC Filings, there are no
actions, suits or proceedings to which Amerac is a party pending or, to Amerac's
best knowledge after due inquiry, threatened in any court or before or by any
federal, state, or other governmental department, commission, agency, or other
instrumentality, or before any arbitrator.
ARTICLE V
GENERAL COVENANTS
-----------------
Amerac, Ridgepointe, Fremont, and the Selling Shareholders agree that:
5.1 Access to Information. Each party (a) shall afford to the other
parties and their respective counsel, financial advisors, and auditors and any
person providing or proposing to provide financing for the transactions
contemplated hereby and their respective authorized representatives and agents
reasonable access to all of its respective offices, properties, books and
records, (b) will furnish to such persons such financial and operating data and
other information as such persons may reasonably request, and (c) will instruct
its respective employees, counsel, and financial advisors to cooperate with such
persons in their investigation of the business of such party, provided that the
confidentiality of any data or information so acquired shall be maintained in
accordance with Section 5.5 of this Agreement.
5.2 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each party will use its reasonable best efforts to take, or to cause
to be taken, all action and to
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do, or cause to be done, all things necessary, proper, or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including (a) cooperation in
determining whether any action by or in respect of, or filing with, any
governmental body, agency, or official or authority is required, or any actions,
consents, approvals, or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement; (b) cooperation in seeking and obtaining any
such actions, consents, approvals or waivers; and (c) the execution of any
additional instruments necessary to consummate the transactions contemplated
hereby.
5.3 Public Announcements. The parties agree to consult with each other
before issuing any press release or making any public statement with respect to
this Agreement and the transactions contemplated hereby and, except as may be
required by applicable law, the parties hereto will not issue any such press
release or make any such public statement prior to such consultation. Amerac
will give all notices required under the 1933 Act, 1934 Act, and any other
applicable state or federal securities laws.
5.4 Notification of Certain Matters. Each party shall give prompt notice
to the others of (a) the occurrence or nonoccurrence of any event the occurrence
or nonoccurrence of which would be likely to cause any representation or
warranty of such party contained in this Agreement to be untrue or inaccurate in
any material respect at or prior to the Closing Date and (b) any material
failure of such party to comply with or satisfy any, covenant, condition, or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 5.4 shall not limit or
otherwise affect the remedies available hereunder to the parties receiving such
notice.
5.5 Confidential Information. Each party and its affiliates will hold,
and will use their best efforts to cause their respective accountants, counsel,
consultants, advisors, and agents to hold, in confidence all confidential
documents and information concerning the other parties and their respective
affiliates furnished to such party or its affiliates in connection with the
transactions contemplated in this Agreement, except to the extent that such
information can be shown to have been (a) previously known on a nonconfidential
basis by such party, (b) in the public domain through no fault of such party,
(c) later lawfully acquired by such party from sources other than the other
parties or their affiliates, (d) disclosed pursuant to the operation of
applicable law, regulation, or other governmental authority, or (e) disclosed
under compulsion of oral questions at trial, interrogatories, requests for
information or documents, subpoena, civil investigation demand, or similar
judicial or administrative process; provided that such party may disclose such
information to its officers, directors, employees, accountants, counsel,
consultants, advisors, and agents in connection with the transactions
contemplated by this Agreement and to its lenders in connection with obtaining
the financing for and consents to the transactions contemplated by this
Agreement so long as such persons are informed by such party of the confidential
nature of such information and are directed by such party to treat such
information confidentially. The obligation of such party and its affiliates to
hold any such information in confidence shall be satisfied if they exercise the
same care with respect to such information as they would take to preserve the
confidentiality of their own similar information. If this Agreement is
terminated, each party and its affiliates will, and will use their best efforts
to cause
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their respective accountants, counsel, consultants, advisors, and agents to,
destroy or deliver to any other party, upon request, all documents and other
materials, and all copies thereof, obtained by such party or its affiliates or
on their behalf from the other party and its affiliates in connection with this
Agreement that are subject to such confidence. This Section 5.5 supersedes any
prior confidentiality agreement among the parties.
5.6 Certain Tax Matters.
(a) Amerac shall cause to be prepared and filed any tax returns,
statements or reports ("Tax Returns") of Ridgepointe and Fremont covering
taxable periods ending on or before the Closing Date which were not required to
have been filed on or before the Closing Date; provided that Amerac must obtain
the consent of the Selling Shareholders to the form and content of any such Tax
Returns, prior to the filing thereof, which consent shall not be unreasonably
withheld. Such returns shall be prepared by Petroleum Financial, Inc. ("PFI"),
and the costs associated with the preparation of such returns shall be borne 5/6
by the Selling Shareholders and 1/6 by Amerac; provided, however, that in no
event shall the Selling Shareholders be obligated to bear any portion of any
such preparation costs in excess of $2,000.00. The Selling Shareholders shall,
jointly and severally, within fifteen (15) days after payment thereof and
receipt of notice of such payment, reimburse Amerac and its affiliates for all
taxes (including interest, penalties and additions to tax) ("Taxes") relating to
taxable periods of Fremont and Ridgepointe ending on or before the Closing Date.
(b) Amerac shall prepare and file, or cause to be prepared and filed,
any Tax Returns of Fremont and Ridgepointe covering taxable periods which begin
before the Closing Date and end after the Closing Date ("Straddle Periods"). The
Selling Shareholders shall, jointly and severally, within fifteen (15) days
after payment thereof and notice of such payment, reimburse Amerac for all Taxes
for any Straddle Period, to the extent related to the portion of the Straddle
Period ending on the Closing Date. For such purposes, the portion of any Tax
attributable to the portions of a Straddle Period ending on the Closing Date and
beginning after the Closing Date shall be determined by apportioning the Tax for
the entire Straddle Period among such periods based on the number of days in
each such period; provided that, in the case of Taxes based upon or related to
income or receipts, such portion shall be the amount of Tax which would have
been due if the relevant Straddle Period ended on the Closing Date. Any credits
relating to a Straddle Period shall be taken into account as though the relevant
Straddle Period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
prior practices of Fremont or Ridgepointe, as the case may be.
(c) The Selling Shareholders shall reasonably cooperate with Amerac in
connection with the filing of Tax Returns pursuant to this Section t.6 and any
audit, litigation, or other proceeding with respect to Taxes. Such cooperation
shall include the provision of copies, at the requesting party's expense, of
records and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The Selling
Shareholders shall cause Fremont and Ridgepointe duly, accurately, and timely
(with regard to
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any extensions of time) to file all Tax Returns and other documents required to
be filed by them, and to pay all taxes required to be paid by them, on or before
the Closing Date.
ARTICLE VI
COVENANTS OF SELLING SHAREHOLDERS
---------------------------------
6.1 Conduct of Business of Fremont and Ridgepointe. From the date hereof
until the Closing Date, except as otherwise consented to by Amerac in writing or
as provided in this Agreement, the Selling Shareholders shall cause each of
Fremont and Ridgepointe to conduct its respective business in the ordinary
course consistent with past practices and to use its reasonable best efforts to
preserve intact its respective business organization and relationships with
third parties and to keep available the services of its respective present
officers and employees. Without limiting the generality of the foregoing, from
the date hereof until the Closing Date, and except as otherwise expressly
provided in this Agreement or as otherwise consented to in writing by Amerac,
the Selling Shareholders shall not permit Fremont or Ridgepointe to:
(a) amend its articles of incorporation, bylaws, or other constituent
documents;
(b) authorize for issuance, issue, sell, deliver, or agree or commit
to issue, sell, or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents or amend any of the
term of any such securities or agreements, except for issuances upon exercise of
options, warrants, commitments, subscriptions, rights to purchase, or
convertible securities outstanding as of the date hereof and except as
specifically contemplated by this Agreement (other than the transfer by a
Selling Shareholder of some or all of its shares of the Purchased Stock to a
charitable remainder trust, subject to the conditions that (i) any such trust
shall expressly assume and agree to be bound by the terms and provisions of this
Agreement and (ii) the instrument creating such trust shall expressly authorize
the trustee thereof to convey to Amerac the shares of the Purchased Stock
transferred to such trust and otherwise to take all actions necessary to
consummate the transactions contemplated herein);
(c) split, combine, or reclassify any shares of its capital stock, or
declare, set aside, or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or, except pursuant to existing agreements, redeem or otherwise acquire any of
its securities;
(d) (i) incur or assume any debt or enter into any sale/leaseback or
similar transaction, except under Fremont's existing lines of credit and (A) in
amounts not material to Fremont's business or condition (in the case of Fremont)
and (B) in order to pay the contingent compensation, severance, and other
distributions referred to above in clause (b) of Section 1.04; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person (other than
wholly owned subsidiaries), except with respect to Fremont in the ordinary
course of business consistent with past practices and in amounts not material to
Fremont's business or condition (in the case of
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Fremont); (iii) make any loans, advances, or capital contributions to or
investments in any other person (other than wholly owned subsidiaries), other
than with respect to Fremont in the ordinary course of business consistent with
past practices and in amounts not material to Fremont's business or condition
(in the case of Fremont); (iv) create or permit to be created any Lien on any
shares of capital stock of Fremont or Ridgepointe; or (v) create or permit to be
created any Lien on any material assets;
(e) enter into, adopt, or amend, or terminate (except as may be
required by law or existing agreement) any bonus, profit-sharing, compensation,
stock option, pension, retirement, deferred compensation, employment, or other
plan, agreement, or arrangement for the benefit of employees or increase in any
manner the compensation or fringe benefits of any director, officer, or
employee, in any such case with respect to employees who are not directors or
officers other than in the ordinary course of business consistent with past
practices, or enter into any contract, agreement, commitment, or arrangement to
do any of the foregoing, except as otherwise provided in this Agreement and
except for the payment of the contingent compensation, severance, and other
distributions referred to above in clause (b) of Section 1.04;
(f) change any method of accounting or accounting practice used,
except for any change required by reason of a change in generally accepted
accounting principles;
(g) make any material tax election except in the ordinary course of
business consistent with past practice, change any material tax election already
made, adopt or change any tax accounting method except in the ordinary course of
business consistent with past practice, enter into any closing agreement, settle
any tax claim or assessment, or consent to any tax claim or assessment or any
waiver of the statute of limitations for any such claim or assessment.
(h) revalue in an amount in excess of $10,000.00 per item or
$10,000.00 in the aggregate any of its assets, including writing down the value
of inventory or writing off notes or accounts receivable;
(i) acquire, sell, lease, or dispose of, directly or indirectly, any
assets (other than in the ordinary course of business consistent with past
practices or in connection with the sale by Fremont of (i) all of the issued and
outstanding shares of common stock of FRI, (ii) all of Fremont's shares of
Ridgepointe Common Stock to Powell and Thomas O. Goldsworthy, (iii) any accounts
receivable reflected as current assets on the Interim Fremont Financial
Statements, to the extent only that such accounts receivable (A) do not fall
within the class of accounts receivable the existence of which results in an
increase in the Initial Cash Amount in accordance with the provisions of Section
1.5(a)(iii), and (B) do not relate to joint interest billings sent to non-
operators prior to the Engineering Date in connection with operations to be
conducted on the Oil and Gas Properties after the Closing Date, and (iv)
vehicles and other personal property and equipment of Fremont that do not
constitute a part of the Oil and Gas Properties) or enter into any commitment or
transaction (other than in the ordinary course of business consistent with past
practices);
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(j) authorize any new capital expenditure or expenditures other than
with respect to Amerac in the ordinary course of business consistent with past
practices;
(k) implement or adopt any change in its tax methods, principles, or
elections, or settle or compromise any material tax liability;
(l) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business
consistent with past practices; or
(m) take, or agree in writing or otherwise to take, any of the actions
described in this Section 6.1 or any action that would make any representation
or warranty inaccurate or untrue or that would result in any of the conditions
in Article IX not being satisfied.
6.2 Oil and Gas Operations. Without limiting the provisions of Section
6.1, except as otherwise consented to in writing by Amerac or provided in this
Agreement, from the date hereof until the Closing Date, the Selling Shareholders
shall, or shall cause Fremont (or, with respect to non-operated wells, shall use
their reasonable commercial efforts to cause the operator of such wells): (a) to
operate and maintain the Oil and Gas Properties in a good and workmanlike manner
consistent with prior operations and prudent oil and gas practices; (b) not to
abandon any well on any Lease, or release or abandon all or any part of any
Evaluated Interest, or release or abandon all or any portion of any Lease; (c)
not to commence any operation on any Evaluated Interest anticipated to cost in
excess of $10,000.00 per operation net to Fremont's interest (except emergency
operations and operations required under presently existing contractual
obligations); (d) not to create or suffer to exist any Lien with respect to any
Evaluated Interest (except for Permitted Encumbrances); (e) not to enter into
any agreement for the sale, disposition, or encumbrance of any Oil and Gas
Property; (f) not to dedicate, sell, encumber, or dispose of any oil and gas
production attributable to the Oil and Gas Properties except in the ordinary
course of business; (g) not to agree to any material alterations in the Leases
or the Applicable Contracts and not to enter into any new contracts relating to
the Oil and Gas Properties (except for contracts terminable without penalty to
Fremont on not more than thirty (30) days notice); (h) to maintain in force all
insurance policies covering the Oil and Gas Properties that are presently in
force; (i) to pay or cause to be paid all costs and expenses incurred in
connection with the Oil and Gas Properties before they become delinquent; (j) to
perform all material obligations of Fremont under the Leases and the Applicable
Contracts and to maintain in all material respects the Oil and Gas Properties in
a manner consistent with prior operations; (k) to exercise due diligence in
safeguarding and maintaining secure and confidential all geological and
geophysical maps, confidential reports and data, and all other confidential data
owned by Fremont or relating in any way to the Evaluated Interests; (l) to
furnish Amerac with copies of all AFE's on material operations commenced, but
not completed, prior to the Engineering Date; (m) not to relinquish voluntarily
Fremont's position as operator with respect to any of the Evaluated Interests;
(n) promptly to notify Amerac of any notice or threatened notice of which
Fremont or any Selling Shareholder actually becomes aware relating to any
default, inquiry into any possible default, or action to alter, terminate,
rescind, repudiate, or procure a judicial reformation of any Lease or other
Applicable Contract or any provision thereof; and (o) promptly to notify Amerac
of any new suits, actions, or other proceedings
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before any court, arbitrator, or governmental agency, and any causes of action
that relate to the Oil and Gas Properties and that may materially impair the
value thereof.
6.3 Other Offers. From the date hereof until the termination of this
Agreement, none of Fremont, Ridgepointe, or any Selling Shareholder, or any
officer, director, employee, representative or agent of Fremont, Ridgepointe, or
any Selling Shareholder will, directly or indirectly, (a) solicit, initiate, or
knowingly encourage any Acquisition Proposal (as hereinafter defined), or (b)
except to the extent that the Board of Directors of Fremont or Ridgepointe, as
applicable, determines, upon advice of outside counsel, that it is otherwise
required by its fiduciary duties to do so, engage in negotiations with, or
disclose any nonpublic information relating to Fremont or Ridgepointe, or afford
access to the properties, books, or records of Fremont or Ridgepointe, in each
case to any person that is considering making or has made an Acquisition
Proposal; provided that nothing contained in this Section 6.3 shall prohibit
Fremont or Ridgepointe or their respective Board of Directors from making such
disclosures to Fremont's or Ridgepointe's shareholders which, in the judgment of
the Board of Directors of Fremont or Ridgepointe, on the advice of outside
counsel, is required under applicable law. Fremont and Ridgepointe or the
Selling Shareholders shall promptly notify Amerac after receipt of any
Acquisition Proposal or any request for nonpublic information relating to
Fremont or Ridgepointe, or for access to the properties, books, or records of
Fremont or Ridgepointe by any person that is considering making or has made an
Acquisition Proposal, and will keep Amerac informed in all respects of the
status and details of any such Acquisition Proposal or request. The term
"Acquisition Proposal," as used herein, means any offer or proposal for, or any
indication of interest in, a merger or other business combination involving
Fremont or Ridgepointe, or the acquisition of any equity interest in, or a
substantial portion of the assets of, Fremont or Ridgepointe, other than the
transactions contemplated by this Agreement.
6.4 Imbalances. The Selling Shareholders understand that Amerac has not
included in its engineering pertaining to the Evaluated Interests the effect of
any imbalances with respect to production taken or marketed from or attributable
to the Oil and Gas Properties. If either the Selling Shareholders or Amerac
determines, on or prior to the expiration of forty-five (45) days after the
Closing Date, that imbalances exist that have not previously been disclosed with
respect to the Oil and Gas Properties, then, subject to verification by the
other party, the Adjusted Purchase Consideration shall be adjusted (a) upward by
an amount equal to (i) the current market value of any hydrocarbons that
Fremont, as an underproduced party, may be entitled to take in excess of its
undivided interests in the Oil and Gas Properties as the result of the existence
of an imbalance at the wellhead or (ii) the amount of any payments received by
any of the Selling Shareholders for any hydrocarbons that have not been
delivered to the relevant purchaser or transporter as a result of the existence
of a pipeline imbalance, and (b) downward by an amount equal to the current
market value of any hydrocarbons that other parties may be entitled to recover
from the Oil and Gas Properties in excess of such other parties' undivided
interests therein as the result of the existence of an imbalance at the wellhead
as to which Fremont is an overproduced party. Upon the payment of the imbalance
amount by the appropriate party, the Selling Shareholders and Amerac agree to
waive any and all claims or other rights relating to the relevant imbalance
under this Agreement against the other party.
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6.5 Employee Matters. The Selling Shareholders shall cause Fremont and
Ridgepointe to obtain from each of their respective employees, on or before the
Closing Date, a release of Amerac and its affiliates as to all debts,
liabilities, and obligations of Fremont or Ridgepointe (as the case may be) to
such employee in form and substance satisfactory to Amerac.
6.6 Office Lease. The Selling Shareholders shall cause Fremont to assign
that certain lease dated March 30, 1995 between Fremont and Union Plaza
Investors, L.L.C., to LTO Operating Company, which entity shall assume all
obligations of Fremont thereunder, and shall obtain from Union Plaza Investors,
L.L.C., a release of Fremont from all liability and obligation under such lease.
6.7 Expenses. If the transactions contemplated by this Agreement are
consummated, all legal fees and expenses incurred by or on behalf of any Selling
Shareholder, Fremont, or Ridgepointe in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party which incurred such
legal fees and expenses; provided, however, that Amerac shall have no obligation
or liability with respect to any such legal fees and expenses of Fremont or
Ridgepointe that are not paid prior to the Closing, and any such unpaid legal
fees and expenses shall be the responsibility of the Selling Shareholders.
Amerac shall pay all legal fees and expenses incurred by it in connection with
this Agreement and the transactions contemplated hereby.
6.8 Records. At any time after the Closing pursuant to Amerac's
reasonable instructions, the Selling Shareholders shall deliver, or cause to be
delivered, to Amerac possession and control of all of the books and records of
Fremont and Ridgepointe and all of their respective assets and properties,
including, without limitation, the Oil and Gas Properties. Amerac shall be
entitled to all original books and records of Fremont and Ridgepointe and shall
provide the Selling Shareholders with access to such books and records upon
reasonable notice.
6.9 Contract Operations Service Agreement; Ancillary Agreements. On the
Closing Date, the Selling Shareholders shall cause LTO Operating Company to
execute, and shall deliver to Amerac, the Contract Operations Service Agreement
in the form attached hereto as Exhibit I (the "Service Agreement") and the
letter agreement in the form attached to the Service Agreement as Exhibit V. In
addition, on the Closing Date, the Selling Shareholders shall execute, and shall
cause to be executed by all parties identified therein as the "Fremont Group,"
and shall deliver to Amerac, the Area of Interest Agreement in the form attached
hereto as Exhibit J (the "Area of Interest Agreement").
ARTICLE VII
COVENANTS OF AMERAC
-------------------
7.1 Contract Operations Service Agreement; Ancillary Agreements. On the
Closing Date, Amerac shall execute and deliver to LTO Operating Company the
Service Agreement and the letter agreement in the form attached to the Service
Agreement as Exhibit V. In addition, on the Closing Date, Amerac shall execute
and deliver the Area of Interest Agreement to the Selling Shareholders and the
other parties identified therein as the "Fremont Group."
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7.2 Federal Income Tax Refund. If Fremont receives a refund in connection
with its federal income tax returns for the fiscal years ended March 31, 1993,
1994, 1995, or 1996, Amerac agrees to pay any such refund to the Selling
Shareholders promptly after receipt.
7.3 Bonding Requirements. Promptly following the Closing, Amerac shall
post with the relevant governmental authorities in the States of Oklahoma and
Kansas such bonds or other permissible evidence of financial assurance necessary
to replace the existing bonds and/or other evidence of financial assurance
posted by Fremont with such governmental authorities and secured by the personal
guaranties of V. Lee Powell and Thomas O. Goldsworthy. To the extent that the
substitution of such replacement bonds or other evidence of financial assurance
by Amerac results in the disbursement to Amerac by the relevant surety or
governmental authority of funds associated with the bonds or other evidence of
financial assurance being replaced, Amerac agrees to pay to the Selling
Shareholders any such funds received promptly after receipt.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1 Indemnities of Selling Shareholders. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Amerac or
any information Amerac may have, each Selling Shareholder, severally in
accordance with its interests and not jointly, shall indemnify and hold harmless
Amerac and its affiliates, partners, officers, directors, shareholders,
employees, agents, and representatives, from and against any and all claims,
demands, actions, causes of action, suits, controversies, losses, judgments,
damages, liabilities, costs, expenses, obligations, and deficiencies (including,
without limitation, reasonable attorneys' fees and other costs and expenses
incident to the defense of any claim that results in litigation, or the
settlement of any claim, or the enforcement of this provision) (collectively,
"Claims"), caused by, arising out of, resulting from, or relating in any way to,
and to pay Amerac any sum that Amerac pays or becomes obligated to pay on
account of: (a) injury to or death of any person, persons, or other living
things, or loss or destruction of property, resulting directly or indirectly
from the Selling Shareholders' remediation of an Environmental Claim pursuant to
Section 2.3; (b) any liability or obligation (including, without limitation,
liabilities relating to Environmental Claims and well plugging, abandonment, and
site clearance) arising out of the ownership and operation by FPC of all
Evaluated Interests (if any) conveyed by Fremont to FPC pursuant to Section 2.3;
(c) any debts, liabilities, or obligations of Fremont, FRI, and Ridgepointe,
whether direct or indirect, fixed, contingent, or otherwise, that, as of the
Closing Date, are not expressly released by the party to whom the debt,
liability, or obligation is owed, or that are not satisfied or discharged by
Amerac (including, without limitation, any legal fees and expenses of Fremont
and Ridgepointe incurred in connection with this Agreement and the transactions
contemplated herein that, as of the Closing Date, have not been paid); (d) all
taxes (including interest, penalties, and additions to tax) arising from or as a
result of the transactions contemplated in this Agreement for which any Selling
Shareholder is responsible; (e) any breach or default in the performance by
Fremont, Ridgepointe, or any Selling Shareholder of any material covenant or
material agreement of such parties contained in this Agreement; and (f) any
breach of a material warranty (other than the warranty contained in Section
3.20(a), the remedy
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for which is set forth in Section 2.4, and the warranty contained in Section
3.27, to the extent of Environmental Claims pertaining to Evaluated Interests
other than those referred to above in clause (b) of this Section 8.1 as to which
Amerac receives a reduction in the Adjusted Purchase Consideration pursuant to
Section 2.3) or an inaccurate or erroneous material representation made by any
Selling Shareholder in this Agreement.
8.2 Indemnities of Amerac. Notwithstanding the Closing, and regardless of
any investigation made at any time by or on behalf of the Selling Shareholders
or any information the Selling Shareholders may have, Amerac shall indemnify and
hold harmless the Selling Shareholders and their affiliates, partners, officers,
directors, shareholders, employees, agents, and representatives from and against
any and all Claims caused by, arising out of, resulting from, or relating in any
way to, and to pay the Selling Shareholders any sum that the Selling
Shareholders pay or become obligated to pay on account of: (a) injury to or
death of any person, persons, or other living things, or loss or destruction of
property, resulting directly or indirectly from Amerac's performance of
environmental assessments and inspections on the Oil and Gas Properties pursuant
to Section 2.3(a); (b) any liability or obligation to third parties arising out
of the ownership and operation of the business and activities of Fremont and
Ridgepointe by Amerac after the Closing Date; (c) all taxes (including interest,
penalties, and additions to tax) arising from or as a result of the transactions
contemplated by this Agreement for which Amerac is responsible hereunder; (d)
any breach or default in the performance by Amerac of any material covenant or
material agreement of Amerac contained in this Agreement; or (e) any breach of a
material warranty or an inaccurate or erroneous material representation made by
Amerac in this Agreement.
8.3 Notice of Claims; Defense; Settlement. Except as provided
hereinafter, no Claim may be indemnified under this Agreement unless the party
requesting indemnification gives notice to the party from whom indemnification
is sought of the Claim for which indemnification is sought on or before the
expiration of two (2) years after the Closing Date; provided, however, that with
respect to claims for indemnification under Sections 8.1(b), 8.1(d), 8.1(e),
8.2(c), and 8.2(d), the party seeking indemnification must give notice to the
party from whom indemnification is sought of the Claim for which indemnification
is sought on or before the expiration of ten (10) days after the expiration of
the statute of limitations applicable to such Claim. Upon the discovery by any
party entitled to indemnification under any provision of this Agreement of facts
giving rise to a Claim for indemnification hereunder, including the receipt by
any such party of notice of any Claim by any third party, the party entitled to
indemnification shall give prompt written notice of any such Claim to the
Selling Shareholders or Amerac, as appropriate, depending upon which of such
parties is obligated to provide the requested indemnification. For purposes of
this Section 8.3, the party giving notice of a Claim and requesting
indemnification shall be referred to as the "indemnified party," and the party
receiving notice of a Claim and from which indemnification is sought shall be
referred to as the "indemnifying party." Each such notice shall set forth the
facts known to the indemnified party pertaining to the claim and shall specify
the manner in which the indemnified party proposes to respond to the claim.
Within ten (10) days of the receipt by the indemnifying party of such notice,
the indemnifying party shall state in writing to the indemnified party: (a)
whether the indemnified party may proceed to respond to the Claim in the manner
set forth in its notice, or (b) whether the indemnifying party shall assume
responsibility for and conduct the negotiation,
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defense, or settlement of the Claim, and if so, the specific manner in which the
indemnifying party proposes to proceed (which assumption of responsibility
shall, in no event, be an admission or recognition of the legitimacy of
truthfulness of such Claim). If the indemnifying party assumes control of the
Claim, the indemnified party shall at all times have the right to participate in
the defense thereof and to be represented, at its sole expense, by counsel
selected by it. If the indemnifying party disputes its potential liability to
the indemnified party within such ten-day period, the indemnified party shall be
entitled to assume responsibility for and conduct the negotiation, defense, or
settlement of the Claim. In addition, if the indemnifying party disputes its
potential liability to the indemnified party with respect to such a Claim, and
the parties are unable to resolve their differences, the parties agree to submit
their disagreement to arbitration in accordance with the provisions of Section
2.8. No Claim shall be compromised or settled by either the indemnifying party
or the indemnified party, as applicable, in any manner that might adversely
affect the interest of the other party without the prior written consent of such
other party. As a condition precedent to indemnification under this Agreement,
the indemnified party shall assign to the indemnifying party, and the
indemnifying party shall become subrogated to, all rights, claims, and causes of
action of the indemnified party against third persons arising out of or
pertaining to the matters for which the indemnifying party shall provide
indemnification. The amount of the indemnified party's claim for
indemnification shall be reduced by the amount of any insurance reimbursement
paid to the indemnified party pertaining to the claim.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS TO CLOSE
--------------------------------------
9.1 Conditions to Amerac Obligations. Notwithstanding any other
provisions of this Agreement, the obligations of Amerac to consummate the
transactions contemplated herein shall be subject to the fulfillment, prior to
or at the Closing Date, of each of the following conditions precedent, any of
which may be waived by Amerac:
(a) Accuracy of Selling Shareholders' Representations and Warranties.
The representations and warranties of the Selling Shareholders set forth in
Article III shall be true and correct in all material respects as of the Closing
Date, with the same effect as though such representations and warranties had
been made at and as of the Closing Date.
(b) Other Selling Shareholders' Execution of Agreement. At or prior
to the Closing Date, all persons designated as Other Selling Shareholders on the
signature pages hereto shall have executed and delivered this Agreement.
(c) Performance of Covenants, Agreements and Conditions. Fremont,
Ridgepointe, and the Selling Shareholders shall have duly performed, complied
with, and satisfied, in all material respects, all covenants, agreements, and
conditions required by this Agreement to be performed, complied with, or
satisfied by them at or prior to the Closing Date.
(d) Officers' Certificates. Amerac shall have received a (i)
certificate dated the Closing Date and signed by the President and the Chief
Financial Officer of Fremont, to the effects set forth in Sections 9.1(a) and
(c), (ii) a certificate dated the Closing Date and signed
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by the President of Powell, to the effects set forth in Sections 9.1(a) and (c),
(iii) a certificate dated the Closing Date and signed by the President of
Ridgepointe to the effects set forth in Sections 9.1(a) and (c), (iv) a
certificate dated the Closing Date and signed by the President of Kenton, Inc,,
the General Partner of the Partnership, to the effects set forth in Sections
9.1(a) and (c) as such provisions pertain to the Partnership, and (v)
certificates dated the Closing Date and signed by or on behalf of each Other
Selling Shareholder to the effects set forth in Sections 9.1(a) and (c).
(e) Opinion of Counsel for Selling Shareholders. Amerac shall have
received an opinion, dated the Closing Date, of Kirk & Chaney, counsel for the
Selling Shareholders, to the effects set forth in Exhibit G hereto.
(f) No Orders, Etc. There shall not be instituted, pending, or
threatened any action or proceeding (i) challenging the acquisition of Fremont
or Ridgepointe by Amerac or otherwise seeking to restrain or prohibit the
consummation of the transactions contemplated herein or those described in
Section 1.4, (ii) seeking to impose material damages on Amerac as a result of
such acquisition, or (iii) seeking to prohibit the direct or indirect ownership
or operation by Amerac of all or a material portion of the business or assets of
Fremont or Ridgepointe, or to compel Amerac, Fremont, or Ridgepointe or any of
their subsidiaries to dispose of or hold separate all or a material portion of
the business or assets of Amerac, Fremont, or Ridgepointe and their respective
subsidiaries, that in any such case is reasonably likely to have a material
adverse effect on the business or condition of Fremont, Ridgepointe, or Amerac.
The consummation of the transactions contemplated herein or in Section 1.4 shall
not have been restrained, enjoined, or prohibited by any court or governmental
authority of competent jurisdiction.
(g) Material Adverse Change. Since October 31, 1995, there shall not
have been any material adverse change in the business or condition of Fremont or
Ridgepointe.
(h) Release of Liens Under Credit Agreement. A release of all liens
under the Credit Agreement shall have been obtained on terms and conditions
reasonably acceptable to Amerac.
(i) Financing. Amerac shall have obtained, on or before December 22,
1995, a commitment for financing for the transactions contemplated herein on
terms and conditions reasonably acceptable to Amerac.
(j) Consents Under Other Agreements. All consents or approvals
necessary to permit consummation of the transactions contemplated herein under
any contract, agreement, note, mortgage, indenture, lease or other agreement of
Amerac, Fremont, or Ridgepointe shall have been obtained.
(k) Resignation of Officers and Directors. All members of the boards
of directors of, and each executive officer of, Fremont and Ridgepointe shall
have irrevocably tendered their resignations effective as of the Closing Date.
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(l) Releases. Amerac shall have received the releases contemplated by
Section 6.5 and Section 6.6 hereof.
(m) Intercompany Transactions. All of the transactions described in
Section 1.4 shall have been consummated.
(n) Initial Purchase Consideration Reductions. The aggregate amounts
on deposit in escrow at the Closing Date pursuant to Sections 2.3, 2.4, and 2.7
of this Agreement shall not exceed the sum of $350,000.00.
9.2 Conditions to the Selling Shareholders' Obligations. Notwithstanding
any other provisions of this Agreement, the obligation of the Selling
Shareholders to consummate the transactions contemplated herein shall be subject
to the fulfillment, prior to or at the Closing Date, of each of the following
conditions precedent, any of which may be waived by Powell on behalf of the
Selling Shareholders:
(a) Accuracy of Amerac's Representations and Warranties. The
representations and warranties of Amerac set forth in Article IV shall be true
and correct in all material respects as of the Closing Date with the same effect
as though such representations and warranties had been made at and as of the
Closing Date.
(b) Performance of Covenants, Agreements and Conditions. Amerac shall
have duly performed, complied with, and satisfied, in all material respects, all
covenants, agreements and conditions required by this Agreement to be performed,
complied with, or satisfied by them at or prior to the Closing Date.
(c) Officers' Certificate. The Selling Shareholders shall have
received a certificate dated the Closing Date and signed by the President and
the Chief Financial Officer of Amerac to the effects set forth in Sections
9.2(a) and (b).
(d) Opinion of Counsel for Amerac. The Selling Shareholders shall
have received an opinion, dated the Closing Date, of Jackson & Walker, L.L.P.,
counsel for Amerac, to the effects set forth in Exhibit H.
(e) No Orders, Etc. The consummation of the transactions contemplated
herein shall not have been restrained, enjoined, or prohibited by any court or
governmental authority of competent jurisdiction.
(f) Consent Under Credit Agreement. All consents necessary under the
Credit Agreement to permit consummation of the transactions contemplated by this
Agreement shall have been obtained.
(g) Master Operating Agreement. Amerac shall have executed and
delivered the Contract Operations Service Agreement as provided in Section 7.1
hereof.
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(h) Deposit. Amerac shall have made the Deposit in accordance with
Section 1.3.
(i) Initial Purchase Consideration Reductions. The aggregate amounts
on deposit in escrow at the Closing Date pursuant to Sections 2.3, 2.4, and 2.7
of this Agreement shall not exceed the sum of $350,000.00.
ARTICLE X
TERMINATION
-----------
10.1 Termination. This Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time at or prior to the Closing
Date:
(a) by mutual written consent of the Selling Shareholders and Amerac;
(b) by the Selling Shareholders, at their option, if any of the
conditions set forth in Section 9.2 have not been satisfied as provided therein;
(c) by Amerac, at Amerac's option, if any of the conditions set forth
in Section 9.1 have not been satisfied as provided therein; and
(d) by either the Selling Shareholders or Amerac, if
(i) the Closing shall not have occurred by February 15, 1996;
provided, however, that the right to terminate this Agreement under this
clause shall not be available to any party whose failure to fulfill any of
its obligations under this Agreement has been the cause of or resulted in
the failure to consummate the transactions contemplated herein by such
date; or
(ii) there shall be any statute, rule or regulation that makes
consummation of the transactions contemplated herein illegal or otherwise
prohibited or a court of competent jurisdiction or government or
governmental authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated herein, and such order,
decree, ruling, or other action shall have become final and nonappealable.
10.2 Effect of Termination. The terminating party shall be entitled to all
remedies available at law or in equity, including, without limitation, the
remedy of specific performance. If a party to this Agreement resorts to legal
proceedings to enforce this Agreement or any part thereof, the prevailing party
in such proceedings shall be entitled to recover all costs incurred by such
party, including reasonable attorneys' fees, in addition to any other relief to
which such party may be entitled. Upon the termination of this Agreement,
Amerac shall return to Fremont all title, engineering, geological, and
geophysical data, reports, maps, and other information furnished by the Selling
Shareholders, Fremont, or Ridgepointe to Amerac. Upon the
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termination of this Agreement, the provisions of Section 5.5 shall survive any
such termination and continue in full force and effect.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Notices. All notices and communications required or permitted to be
given hereunder shall be in writing and shall be delivered personally, or sent
by bonded overnight courier, or mailed by U.S. Express Mail or by certified or
registered United States Mail with all postage fully prepaid, or sent by prepaid
telegram, or by telex or facsimile transmission (provided any such telegram,
telex, or facsimile transmission is confirmed either orally or by written
confirmation), addressed to the appropriate party at the address for such party
shown below or at such other address as such party shall have theretofore
designated by written notice delivered to the party giving such notice:
(a) If to Powell:
Powell Resources, Inc.
3030 Northwest Expressway, Suite 1602
Oklahoma City, Oklahoma 73112
Attention: Mr. V. Lee Powell
Telephone No.: (405) 943-4581
Facsimile No.: (405) 943-4584
(b) If to the Other Selling Shareholders, Fremont, or Ridgepointe:
c/o Thomas O. Goldsworthy
Fremont Exploration, Inc.
3030 Northwest Expressway, Suite 1602
Oklahoma City, Oklahoma 73112
Telephone No.: (405) 943-4581
Facsimile No.: (405) 943-4584
(c) If to Amerac:
Amerac Energy Corporation
700 Louisiana, Suite 3330
Houston, Texas 77002-2730
Attention: Mr. Jeffrey B. Robinson
Telephone No.: (713) 223-1833
Facsimile No.: (713) 223-5110
Any notice given in accordance herewith shall be deemed to have been
given when delivered to the addressee in person, or delivered to the telegraph
company or transmitted by telex or facsimile transmission, or upon the earlier
of actual receipt of the notice by the
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addressee or five (5) days after such notice has either been delivered to a
bonded overnight courier or deposited in the United States Mail, as the case may
be. The parties hereto may change the address, telephone numbers, and facsimile
numbers to which such communications are to be addressed by giving written
notice to the other parties in the manner provided in this Section 11.1.
11.2 Survival. Except for the warranty contained in Section 3.20(a), which
shall not survive the Closing, all representations, warranties, covenants,
agreements, and indemnities of the Selling Shareholders and Amerac under this
Agreement shall survive the Closing and remain in force and effect as provided
in this Section 11.2 or Section 8.3, as applicable, regardless of any
investigation at any time made by or on behalf of the Selling Shareholders or
Amerac or of any information that the Selling Shareholders or Amerac may have
with respect thereto. Such survival does not obligate, however, any Selling
Shareholder or Amerac to make any further representations and warranties after
the Closing Date. Except as provided hereinafter, after the Closing Date, any
assertion by the Selling Shareholders or Amerac that the other party is liable
for the inaccuracy or breach of any representation or warranty, other than the
warranties contained in Sections 3.14 and 3.20(a), must be made in writing by
the party seeking enforcement and must be given to the party against whom
enforcement is sought no later than the expiration of two (2) years after the
Closing Date. Any assertion by Amerac that any Selling Shareholder is liable
for the inaccuracy or breach of the warranty contained in Section 3.14 must be
made by Amerac in writing and must be given to the Selling Shareholders on or
before the expiration of ten (10) days after the expiration of the applicable
statute of limitations on the assessment of the relevant tax. Amerac's sole and
exclusive remedy for any inaccuracy in or breach of the warranty contained in
Section 3.20(a) shall be limited to the provisions of Article II. After the
Closing Date, any assertion by the Selling Shareholders or Amerac that the other
party is liable for a breach or default in the performance by such party of any
material covenant or material agreement of that party contained in this
Agreement must be made in writing by the party seeking enforcement and must be
given to the party against whom enforcement is sought on or before the
expiration of ten (10) days after the expiration of the applicable statute of
limitations pertaining to the relevant breach or default. Notwithstanding the
provisions of this Section 11.2 to the contrary, all matters relating to the
assertion of rights to indemnification under this Agreement shall be governed by
Section 8.3.
11.3 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to
the Closing Date if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by all parties hereto, or in the case of a
waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power,
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
46
<PAGE>
11.4 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No party may assign, delegate, or otherwise transfer
any of its rights or obligations under this Agreement without the consent of the
other parties hereto. This Agreement shall be binding upon and is solely for
the benefit of each of the parties hereto and their respective successors and
assigns, and nothing in this Agreement is intended to confer upon any other
person any rights or remedies of any manner whatsoever under or by reason of
this Agreement.
11.5 Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
11.6 Governing Law. Except to the extent that the provisions of Section
2.8 call for the application of the laws of another state in an arbitration
conducted pursuant thereto, this Agreement shall be construed in accordance with
and governed by the internal laws of the State of Texas without giving effect to
the principles of conflicts of laws thereof.
11.7 Execution by Fremont and Ridgepointe. Fremont and Ridgepointe have
joined in the execution of this Agreement for the sole and limited purposes of
evidencing their agreement to perform the covenants contained in Sections 5.1,
5.2, 5.3, 5.4, 5.5, and 6.3. FPC joins in the execution of this Agreement for
the sole and limited purpose of agreeing to accept any assignments of Evaluated
Interests made by Fremont pursuant to Section 2.3.
11.8 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall be binding on each party who executes the same, notwithstanding that this
Agreement may not have been executed by all of the parties named herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
AMERAC ENERGY CORPORATION
By: /s/ JEFFREY B. ROBINSON
------------------------------
Jeffrey B. Robinson
President and Chief
Executive Officer
47
<PAGE>
POWELL RESOURCES, INC.
By: /s/ V. LEE POWELL
---------------------------
V. Lee Powell
President
OTHER SELLING SHAREHOLDERS
/s/ THOMAS O. GOLDSWORTHY
-------------------------------
THOMAS O. GOLDSWORTHY
THE LANGSTROTH FAMILY LIMITED I
By: /s/ THOMAS O. GOLDSWORTHY
----------------------------
Thomas O. Goldsworthy
Attorney-in-Fact
JAMES B. TOLLERTON
By: /s/ THOMAS O. GOLDSWORTHY
---------------------------
Thomas O. Goldsworthy
Attorney-in-Fact
FREMONT ENERGY CORPORATION
By: /s/ THOMAS O. GOLDSWORTHY
---------------------------
Thomas O. Goldsworthy
Vice President
RIDGEPOINTE RESOURCES, INC.
By: /s/ THOMAS O. GOLDSWORTHY
---------------------------
Thomas O. Goldsworthy
President
48
<PAGE>
FREMONT PETROLEUM CORPORATION
By: /s/ V. LEE POWELL
---------------------------
V. Lee Powell
Vice President
49
<PAGE>
Schedule 1.01
-------------
Attached to and made a part of Acquisition
Agreement among Amerac Energy Corporation
and Powell Resources, Inc., et al.
Ownership of Purchased Stock; Allocation
----------------------------------------
of Adjusted Purchase Consideration
----------------------------------
I. Ownership of Fremont Common Stock
<TABLE>
<CAPTION>
Number of
Owner Shares
----- ---------
<S> <C>
Powell Resources, Inc. 400
Ridgepointe Resources, Inc. 400
------
Total: 800
</TABLE>
II. Ownership of Ridgepointe Common Stock
<TABLE>
<CAPTION>
Owner Number of Shares
----- -----------------------
Current Ownership
Ownership at Closing
--------- ----------
<S> <C> <C>
Fremont Energy Corporation 4,500 -0-
Powell Resources, Inc. -0- 2,250
Thomas O. Goldsworthy 4,500 6,750
The Langstroth Family
Limited I 500 500
James B. Tollerton 500 500
------ ------
Total: 10,000 10,000
</TABLE>
III. Allocation of Adjusted Purchase Consideration
<TABLE>
<CAPTION>
Selling Shareholder % Share
------------------- -------
<S> <C>
Powell Resources, Inc. 61.25%
Thomas O. Goldsworthy 33.75%
The Langstroth Family Limited I 2.50%
James B. Tollerton 2.50%
-------
Total: 100.00%
</TABLE>
50
<PAGE>
AMENDMENT NO. 1 TO ACQUISITION AGREEMENT
----------------------------------------
This AMENDMENT NO. 1 TO ACQUISITION AGREEMENT ("Amendment No. 1") is
executed as of January 15, 1996, effective as of January 5, 1996, by AMERAC
ENERGY CORPORATION, a Delaware corporation ("Amerac"), POWELL RESOURCES, INC.,
an Oklahoma corporation ("Powell"), THE LANGSTROTH FAMILY LIMITED I, a Florida
limited partnership (the "Partnership"), THOMAS O. GOLDSWORTHY, and JAMES B.
TOLLERTON (collectively, the "Selling Shareholders"), RIDGEPOINTE RESOURCES,
INC. ("Ridgepointe"), FREMONT ENERGY CORPORATION ("Fremont"), and FREMONT
PETROLEUM CORPORATION ("FPC").
RECITALS:
---------
WHEREAS, pursuant to the Acquisition Agreement dated as of January 5,
1996, between Amerac, the Selling Shareholders, Ridgepointe, Fremont, and FPC
(the "Acquisition Agreement"), the Selling Shareholders agreed to sell to
Amerac, and Amerac agreed to purchase from the Selling Shareholders, all of the
shares of "Fremont Common Stock" not owned by Ridgepointe and all of the shares
of "Ridgepointe Common Stock" (as both of such terms are defined in the
Acquisition Agreement) owned by the Selling Shareholders for the consideration
and on the terms set forth therein (capitalized terms defined in the Acquisition
Agreement having the same meanings when used in this Amendment No. 1 unless
expressly stated otherwise); and
WHEREAS, the parties hereto desire to amend the Acquisition Agreement
in certain respects;
NOW, THEREFORE, for the consideration recited in the Acquisition
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Amerac, the Selling Shareholders, Ridgepointe,
Fremont, and FPC hereby agree that:
1. Section 1.4 of the Acquisition Agreement is amended by deleting
therefrom the last sentence thereof and by substituting therefor the following
provision:
At the Closing, the Selling Shareholders shall provide to Amerac
documentation reflecting the full payment and/or cancellation of all
such intercompany accounts and the consummation of all such
transactions.
2. The reference to "Section t.6" contained in Section 5.6(c) of the
Acquisition Agreement is corrected to read "Section 5.6".
3. Section 7.2 of the Acquisition Agreement is deleted in its
entirety, and the following provision is substituted therefor:
51
<PAGE>
7.2 Federal and State Income Tax Refunds. If Fremont receives a
refund in connection with its federal or state income tax returns for the
fiscal years ended March 31, 1993, 1994, 1995, or 1996, Amerac agrees to
pay the cash equivalent of any such refund, promptly after receipt, to the
Selling Shareholders as an additional upward adjustment to the Initial
Purchase Consideration.
4. Section 9.1(b) of the Acquisition Agreement is deleted in its
entirety. No renumbering or relettering with respect to any of the provisions
of Section 9.1 of the Acquisition Agreement shall result from the deletion of
this provision.
5. The signature blocks appearing on page 48 of the Acquisition
Agreement are amended as follows:
(a) the signature block for The Langstroth Family Limited I is
moved from its current position following the signature block for Thomas O.
Goldsworthy to the position immediately following the signature block for
Powell Resources, Inc., and preceding the caption "Other Selling
Shareholders"; and
(b) the phrase "Other Parties" is inserted between the signature
block for James B. Tollerton and the signature block for Fremont Energy
Corporation.
The purpose of the amendments contained in this Paragraph 5 is to clarify that,
for purposes of the Acquisition Agreement, the term "Other Selling Shareholders"
refers to Thomas O. Goldsworthy and James B. Tollerton only.
6. Amerac, the Selling Shareholders, Ridgepointe, Fremont, and FPC
do hereby adopt, ratify, and confirm the Acquisition Agreement as amended hereby
and declare the Acquisition Agreement, as so amended, to be in full force and
effect.
IN WITNESS WHEREOF, Amerac, the Selling Shareholders, Ridgepointe,
Fremont, and FPC have executed this Amendment No. 1 as of the date first above
written.
AMERAC ENERGY CORPORATION
By: /s/ JEFFREY B. ROBINSON
----------------------------
Jeffrey B. Robinson
President and Chief
Executive Officer
52
<PAGE>
POWELL RESOURCES, INC.
By: /s/ V. LEE POWELL
----------------------------
V. Lee Powell
President
THE LANGSTROTH FAMILY LIMITED I
By: /s/ THOMAS O. GOLDSWORTHY
----------------------------
Thomas O. Goldsworthy
Attorney-in-Fact
OTHER SELLING SHAREHOLDERS
/s/ THOMAS O. GOLDSWORTHY
--------------------------------
THOMAS O. GOLDSWORTHY
JAMES B. TOLLERTON
By: /s/ THOMAS O. GOLDSWORTHY
----------------------------
Thomas O. Goldsworthy
Attorney-in-Fact
OTHER PARTIES
FREMONT ENERGY CORPORATION
By: /s/ THOMAS O. GOLDSWORTHY
----------------------------
Thomas O. Goldsworthy
Vice President
53
<PAGE>
RIDGEPOINTE RESOURCES, INC.
By: /s/ THOMAS O. GOLDSWORTHY
----------------------------
Thomas O. Goldsworthy
President
FREMONT PETROLEUM CORPORATION
By: /s/ V. LEE POWELL
----------------------------
V. Lee Powell
Vice President
54
<PAGE>
EXHIBIT 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of the 16th day of
January, 1996 (this "Agreement"), is by and among Amerac Energy Corporation, a
Delaware corporation (the "Issuer"), and Powell Resources, Inc., an Oklahoma
corporation, The Langstroth Family Limited I, a Florida limited partnership,
Thomas O. Goldsworthy and James B. Tollerton (collectively the "Sellers" and
individually a "Seller").
WHEREAS, as an inducement to the Sellers to cause them to enter into
that certain Acquisition Agreement dated as of January 5, 1996 (the "Acquisition
Agreement"), Issuer agreed to enter into this Agreement; and
WHEREAS, under the Acquisition Agreement, Issuer is required to duly
execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Securities Subject
(a) Definitions.
Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Acquisition Agreement. As used herein, the following
terms have the indicated meanings, unless the context otherwise requires:
"Act" means the Securities Act of 1933, as amended.
"Commission" means the Securities and Exchange Commission.
"Holder" means any Seller, as the recipient of any Registrable
Security.
"Registrable Securities" means the Amerac Shares issued to the Sellers
pursuant to the Acquisition Agreement, and any securities issued as a
distribution with respect thereto or in exchange therefor.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement.
(b) Registrable Securities. Any Registrable Security will cease to be
a Registrable Security when (i) a registration statement covering such
Registrable Security has been declared effective by the Commission and it has
been disposed of pursuant to such effective registration statement, (ii) it is
distributed to the public pursuant to Rule 144 (or any similar or
<PAGE>
successor rule or provision then in force) under the Act, or (iii) it may be
otherwise transferred without restriction under Rule 144(k) (or any similar
successor rule or provision then in force.
2. Shelf Registration.
(a) At any time after the date one year after the date of this
Agreement and before the date three years after the date of this Agreement, one
or more of Holders of Registrable Securities holding an aggregate of a majority
of the Registrable Securities may request in writing that the Issuer file a
"shelf" registration statement on an appropriate form pursuant to Rule 415 (or
any successor provision that may be adopted by the Commission) under the Act
covering the registration of all, or any portion in excess of 50%, of the
Registrable Securities (the "Shelf Registration"). Such Holder or Holders shall
provide with such request an opinion of counsel that the amount of Registrable
Securities to be offered for public sale in the aggregate may not be sold within
a period of 90 days of the date of such request in accordance with the
provisions of Rule 144 promulgated under the Act. Within five business days of
receipt of such request, the Issuer shall give notice of such request to all of
the remaining Holders of Registrable Securities of its receipt of such request
from such Holder or Holders. Upon the written request of any such Holder
delivered to the Issuer within 10 days after receipt from the Issuer of such
notification (the "Determination Date"), the Issuer will use its best efforts to
cause such of the Registrable Securities as may be requested by any such Holder
(including the Holder or Holders of Registrable Securities giving the initial
request to register hereunder) to be registered under the Act in accordance with
the terms of this Section 2.
(b) Issuer agrees to use its best efforts to file with the Commission
within 30 days of the Determination Date the Shelf Registration, have the Shelf
Registration declared effective as soon as practicable after the filing thereof
and to keep the Shelf Registration continuously effective until three years
after the date of this Agreement or until there are no more Registrable
Securities, whichever shall occur first. Issuer further agrees to supplement or
amend the Shelf Registration, (i) if required by the Act or (ii) to update
information with respect to the Holders or the plan of distribution if requested
by the Holders of a majority of the Registrable Securities, and Issuer agrees to
furnish to the Holders copies of any such supplement or amendment promptly after
its being filed with the Commission. The Holders of Registrable Securities
registered in the Shelf Registration shall pay one-half of the Registration
Expenses (as hereinafter defined) in connection with the Shelf Registration,
whether or not it becomes effective. Issuer will make available to its
securityholders (i) as soon as reasonably practicable, from time to time, for
three years, statements of operations covering each successive three-month
period, commencing on the first day of the fiscal quarter next succeeding the
effective date of such Shelf Registration and (ii) as soon as reasonably
practicable after 12 months have elapsed from such date, a statement of
operations covering a period of 12 months, which earnings statements shall
satisfy the provisions of Section 11(a) of the Act.
(c) The Holders of a majority of the Registrable Securities, in their
sole discretion, shall determine whether to proceed with, withdraw from or
terminate the Shelf Registration. If the Shelf Registration is withdrawn or
terminated pursuant to the foregoing clause and the Holders pay all Registration
Expenses incurred by Issuer in connection with the
2
<PAGE>
terminated or withdrawn registration statement, such registration statement
shall not constitute the Shelf Registration pursuant to this Section 2.
(d) In the event Issuer grants piggy-back registration rights to other
securityholders and such securityholders elect to have shares of Amerac Common
Stock registered in the Shelf Registration, the amount of Registration Expenses
payable by the Holders pursuant to paragraph 2(b) shall be reduced to an amount
equal to the product of (i) one-half of the Registration Expenses and (ii) the
percentage of the total number shares of Amerac Common Stock being registered in
the Shelf Registration represented by the Registrable Securities being
registered on behalf of the Holders.
3. Piggy-Back Registration
(a) If at any time beginning on the date hereof and ending three years
after such date the Issuer proposes to file a registration statement under the
Act with respect to any offering of any securities of Issuer (other than a
registration statement on Form S-4 or S-8 (or any substitute form for comparable
purposes that may be adopted by the Commission) or a registration statement
filed in connection with an exchange offer or an offering of securities solely
to Issuer's existing securityholders), then Issuer shall in each such case give
written notice of such proposed filing to the Holders of Registrable Securities
as soon as practicable (but in no event less than 10 days before the anticipated
filing date), and such notice shall offer such Holders the opportunity to
register such number of shares of Registrable Securities for sale pursuant to
such offering as each such Holder may request.
(b) Issuer shall use its best efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit the
Registrable Securities requested to be included in the registration statement
for such offering to be included on the same terms and conditions as any similar
securities of Issuer or of any other selling securityholders included therein.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such offering determines that because of the size of the offering which the
Holders of such Registrable Securities, the Issuer, and such other persons
intend to make, the success of the offering of the Issuer's securities could
reasonably be expected to be materially and adversely affected by inclusion of
the Registrable Securities requested to be included, then the managing
underwriters shall provide written notice of such determination to the Holders
of the Registrable Securities, and the amount of securities to be offered for
the accounts of Holders shall be reduced pro rata among the Holders to the
extent necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing underwriter or underwriters;
provided that if securities are being offered for the account of other persons
or entities other than Issuer, then the proportion by which the amount of
securities intended to be offered by Holders is reduced shall not exceed the
proportion by which the amount of securities intended to be offered by such
other persons or entities other than Issuer is reduced. Issuer will bear all
Registration Expenses in connection with a piggy-back registration.
(c) As a condition to a Holder's participation in any underwriting
with respect to Issuer pursuant to this Section 3, the Holder shall be required
to enter into customary
3
<PAGE>
agreements (including an underwriting agreement in customary form) and take such
other actions as are reasonably required by the underwriters in order to include
the Registrable Securities for sale pursuant to such underwritten offering.
(d) Issuer represents and warrants that, as of the date hereof, no
other securityholder of Issuer has been granted "piggy-back" registration
rights.
4. Holdback Agreements
(a) Restrictions on Public Sale Holder of Registrable Securities. To
the extent not inconsistent with applicable law, each Holder whose securities
are included in a registration statement pursuant to Section 3 agrees not to
effect any public sale or distribution of the issue being registered or a
similar security of Issuer, or any securities convertible into or exchangeable
or exercisable for such securities, including a sale pursuant to Rule 144 under
the Act, during the fourteen (14) days prior to, and during the ninety-day
period beginning on, the effective date of such registration statement (except,
in each case, as part of such registration), if and to the extent requested by
the managing underwriter or underwriters.
(b) Postponement of Sale under Shelf Registration Statement. Each
Holder agrees not to effect any public sale or distribution pursuant to any
Shelf Registration pursuant to this Agreement at any time that Issuer shall have
advised the Holders in writing that the sale by such Holders pursuant to such
Shelf Registration could reasonably be expected to (i) adversely affect, or
require the premature disclosure of any proposed acquisition, disposition or
other transaction involving Issuer or (ii) materially and adversely affect any
proposed underwritten public offering of Amerac Common Stock if the managing
underwriter thereof shall have advised the Holders that any such sales could
reasonably be expected to jeopardize the success of the offering; provided,
however, in each such case Issuer may not restrict any such sales unless at
least five days prior written notice is provided to each Holder and provided
further Issuer may not restrict sales by Holders (x) for a total of more than 90
days during any one-year period or (y) for more than 60 consecutive days after
the date of the prospectus for any such underwritten public offering.
5. Registration Procedures
Whenever Registrable Securities are required to be registered pursuant
to Section 3 hereof, Issuer will use its best efforts to effect the registration
and the sale of such Registrable Securities in accordance with the intended
method of disposition thereof as quickly as practicable, and in connection with
any such request and with the Shelf Registration, Issuer will, as expeditiously
as possible:
(a) (i) prior to filing a registration statement or prospectus or any
amendments or supplements thereto, furnish to one counsel selected by the
Holders of a majority of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed, which documents
will be subject to the review of such counsel, (ii) as soon as reasonably
possible, furnish to each Selling Holder, prior to filing a registration
statement,
4
<PAGE>
copies of such registration statement as proposed to be filed, and thereafter
furnish to such Selling Holder such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such Selling
Holder may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Selling Holder, and (iii) after the filing
of the registration statement, promptly notify each Selling Holder of
Registrable Securities covered by such registration statement of any stop order
issued or threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered;
(b) prepare and file with the Commission such amendments and post-
effective amendments to the registration statement as may be necessary to keep
the registration statement effective for (i) a period of not less than nine (9)
months in the case of a registration statement on Forms S-1 or S-2, or (ii) an
indefinite period in the case of a registration statement on Form S-3 (or such
shorter period which will terminate when all Registrable Securities covered by
such registration statement have been sold or withdrawn, but not prior to the
expiration of the 25-day period referred to in Section 4(3) of the Act and Rule
174 thereunder, if applicable); cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Act; and comply with the provisions of the Act applicable to
it with regard to the disposition of all securities covered by such registration
statement during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in such registration statement
or supplement to the prospectus;
(c) if requested by the managing underwriter or underwriters or any
Holder of Registrable Securities covered by the registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters or such holder, as the
case may be, reasonably requested to be included therein, including, without
limitation, information with respect to the number of Registrable Securities
being sold by such holder to an underwriter or underwriters, the purchase price
being paid therefor by such underwriter or underwriters and with respect to any
other terms of the underwritten offering of the Registrable Securities to be
sold in such offering, and promptly make all required filings of such prospectus
supplement or post-effective amendment;
(d) enter into such customary agreements (including an underwritten
agreement in customary form with provisions as may be reasonably required by the
managing underwriter retained by the holder of Registrable Securities) and take
all such other actions as the holders of a majority of the Registrable
Securities being sold or the managing underwriter or underwriters retained by
holders participating in an underwritten public offering, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities in each case to the same extent as if all the securities then being
offered were for the account of the Company;
(e) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any Selling Holder reasonably requests and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Selling Holder to
consummate the disposition in such jurisdictions of the
5
<PAGE>
Registrable Securities owned by such Selling Holder; provided that Issuer will
not be required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this paragraph (b),
(ii) subject itself to taxation or qualification in any such jurisdiction or
(iii) consent to general service of process in any such jurisdiction;
(f) notify each Selling Holder of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Act, of the occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
promptly make available to each Selling Holder any such supplement or amendment;
(g) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities;
(h) make available for inspection on a confidential basis by any
Selling Holder of such Registrable Securities, any underwriter participating in
any disposition pursuant to such registration statement, and any attorney,
accountant or other professional retained by any such Selling Holder or
underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of Issuer and its subsidiaries
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause Issuer's and its
subsidiaries' officers, directors and employees to supply all information
reasonably requested by any such Inspector in connection with such registration
statement;
(i) in the event such sale is pursuant to an underwritten offering,
use its best efforts to obtain a comfort letter or comfort letters from Issuer's
independent public accountants in customary form and covering such matters of
the type customarily covered by comfort letters as the Selling Holders of a
majority in aggregate principal amount or number of shares, as the case may be,
of the Registrable Securities being sold or the managing underwriter reasonably
request and an opinion of outside counsel to Issuer covering such matters as are
customarily covered by such opinions;
(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its securityholders, as
soon as reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Act; and
(k) use its best efforts to cause all such Registrable Securities to
be listed on each securities exchange on which the Common Stock of Issuer is
then listed.
6
<PAGE>
Issuer may require each Selling Holder of Registrable Securities as to
which any registration is being effected to furnish to Issuer such information
regarding the distribution of such Registrable Securities as Issuer may from
time to time reasonably request in writing and such other information as may be
legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice from
Issuer of the happening of any event of the kind described in Section 5(c)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5(c) hereof, and, if
so directed by Issuer, such Selling Holder will deliver to Issuer (at Issuer's
expense) all copies, other than permanent file copies, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event Issuer shall give any such notice, Issuer shall extend the
period during which such registration statement shall be maintained effective
(including the period referred to in Section 2(b) hereof) by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 5(c) hereof to and including the date when each Selling
Holder of Registrable Securities covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated
by Section 5(c) hereof.
6. Registration Expenses
Except as provided in Section 2(b) hereof, all expenses incident to
Issuer's performance of or compliance with this Agreement, including without
limitation all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), printing expenses, messenger and delivery expenses, the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchanges and fees and disbursements of counsel for
Issuer and its independent certified public accountants (including the expenses
of any special audit or comfort letters required by or incident to such
performance), securities acts liability insurance (if Issuer elects to obtain
such insurance) and the reasonable fees and expenses of any special experts
retained by Issuer in connection with such registration, fees and expenses of
other persons retained by Issuer (all such expenses being herein called
"Registration Expenses"), will be borne by Issuer. Registration Expenses shall
not include the fees and expenses of any counsel for the Holders, any
underwriting discounts, commissions, or similar charges attributable to the sale
of Registrable Securities or any other expenses of the Holders, all of which
shall be paid by the Holders.
7. Indemnification; Contribution
(a) Indemnification by Issuer. Issuer agrees to indemnify and hold
harmless each Selling Holder, its officers, directors, partners and agents and
each person, if any, who controls such Selling Holder within the meaning of
Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as
amended, from and against any and all losses, claims, damages (whether in
contract, tort or otherwise), liabilities and expenses (including reasonable
7
<PAGE>
costs of investigation) whatsoever (as incurred or suffered) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Registrable Securities or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of, or are based
upon, any such untrue statement or omission or allegation thereof based upon
information furnished in writing to Issuer by such Selling Holder or on such
Selling Holder's behalf expressly for use therein. Issuer also agrees to
indemnify any underwriters of the Registrable Securities, their officers,
partners and directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of the Selling
Holders provided in this Section 7 or such other indemnification customarily
obtained by underwriters at the time of offering.
(b) Conduct of Indemnification Proceedings. If any action or
proceeding (including any governmental investigation) shall be brought or
asserted against any Selling Holder (or its officers, directors, partners or
agents) or any person controlling any such Selling Holder in respect of which
indemnity may be sought from Issuer, Issuer shall, at its expense, assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Selling Holder. Such Selling Holder or any controlling person of such
Selling Holder shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Selling Holder or such controlling
person unless (i) Issuer has agreed to pay such fees and expenses or (ii) the
named parties to any such action or proceeding (including any impleaded parties)
include both such Selling Holder or such controlling person and Issuer, and such
Selling Holder or such controlling person shall have been advised by counsel
that there may be one or more legal defenses available to such Selling Holder or
such controlling person which are different from or additional to those
available to Issuer (in which case, if such Selling Holder or such controlling
person notifies Issuer in writing that it elects to employ separate counsel at
the expense of Issuer, Issuer shall not have the right to assume the defense of
such action or proceeding on behalf of such Selling Holder or such controlling
person; it being understood, however, that Issuer shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for all the Selling Holders and such controlling persons,
which firm shall be designated in writing by a majority of the Selling Holders).
Issuer shall not be liable for any settlement of any such action or proceeding
effected without Issuer's written consent, but if settled with its written
consent, or if there be a final judgment no longer subject to appeal for the
plaintiff in any such action or proceeding, Issuer agrees to indemnify and hold
harmless such Selling Holder and such controlling person from and against any
loss or liability (to the extent stated above) by reason of such settlement or
judgment.
(c) Indemnification by Holders of Registrable Securities. Each
Selling Holder agrees, severally but not jointly, to indemnify and hold harmless
Issuer, its directors and officers and each person, if any, who controls Issuer
within the meaning of either Section 15 of the Act
8
<PAGE>
or Section 20 of the Securities Exchange Act of 1934, as amended, to the same
extent as the foregoing indemnity from Issuer to such Selling Holder, but only
with respect to information furnished in writing by such Selling Holder or on
such Selling Holder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus. In case any action or
proceeding shall be brought against Issuer or its directors or officers, or any
such controlling person, in respect of which indemnity may be sought against
such Selling Holder, such Selling Holder shall have the rights and duties given
to Issuer, and Issuer or its directors or officers or such controlling person
shall have the rights and duties given to such Selling Holder, by the preceding
paragraph. Each Selling Holder also agrees to indemnify and hold harmless
underwriters of the Registrable Securities, their officers and directors and
each person who controls such underwriters on substantially the same basis as
that of the indemnification of Issuer provided in this Section 7.
(d) Contribution. If the indemnification provided for in this Section
7 is unavailable to Issuer, the Selling Holders or the underwriters in respect
of any losses, claims, damages, liabilities or judgments referred to herein,
then each such indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities and judgments (i) as
between Issuer and the Selling Holders on the one hand and the underwriters on
the other, in such proportion as is appropriate to reflect the relative benefits
received by Issuer and the Selling Holders on the one hand and the underwriters
on the other from the offering of the Registrable Securities, or if such
allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of Issuer and the Selling Holders on the one hand and of the underwriters
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations and (ii) as between Issuer, on the one hand,
and each Selling Holder on the other, in such proportion as is appropriate to
reflect the relative fault of Issuer and of each Selling Holder in connection
with such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by Issuer and the Selling
Holders on the one hand and the underwriters on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by Issuer and the Selling Holders bear to the total underwriting discounts and
commissions received by the underwriters, in each case as set forth in the table
on the cover page of the prospectus. The relative fault of Issuer and the
Selling Holders on the one hand and of the underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by Issuer and the Selling
Holders or by the underwriters. The relative fault of Issuer on the one hand
and of each Selling Holder on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
9
<PAGE>
Issuer and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities, or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Each Selling Holder's obligation to contribute is
several in the proportion that the proceeds of the offering received by such
Selling Holder bears to the total proceeds of the offering, and not joint.
(e) Limitation of Liability. In no event shall any Selling Holder be
liable under this Section 7 or otherwise in respect of any offering for amounts
in excess of the net proceeds received by such Selling Holder from the sale of
Registrable Securities in such offering.
8. Participation in Underwritten Registrations
No person may participate in any underwritten registration hereunder
unless such person (a) agrees to sell such person's securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement.
9. Rule 144.
Issuer covenants that it will file any reports required to be filed by
it under the Act and the Securities Exchange Act of 1934, as amended, and that
it will take such further action as any Holder may reasonably request, all to
the extent required from time to time to (i) maintain its eligibility to use
Form S-3 under the Act to register the Registrable Securities and (ii) enable
Holders to sell Registrable Securities without registration under the Act within
the limitation of the exemptions provided by (a) Rule 144 under the Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the
10
<PAGE>
request of any Holder, Issuer will deliver to such Holder a written statement as
to whether it has complied with such requirements.
10. Transfer of Registration Rights
The registration rights provided to the Holders of the Registrable
Securities under Sections 2 and 3 hereof may be transferred in whole or in part
to any other person in connection with a transfer of all or any portion of
Registrable Securities that complies with the Act and any applicable state
securities or blue sky laws. Any such transferee of Registrable Securities who
is also a transferee of the registration rights provided under Sections 2 and 3
hereof shall be a Holder of Registrable Securities within the meaning of this
Agreement and shall have the rights as such hereunder.
11. Miscellaneous
(a) Binding Effect. Unless otherwise provided herein, the provisions
of this Agreement shall be binding upon and accrue to the benefit of the parties
hereto and their respective heirs, legal representatives, transferees,
successors and assigns.
(b) Amendment. This Agreement may be amended or terminated only by a
written instrument signed by Issuer and the holders of a majority of the
Registrable Securities.
(c) Applicable Law. The internal laws of the State of Texas shall
govern the interpretation, validity and performance of the terms of this
Agreement.
(d) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered personally or when received
if sent by registered or certified mail, return receipt requested, or by
facsimile transmission to the parties at the following addresses (or at such
other address as a party may specify by like notice):
(i) If to Powell Resources, Inc.:
Powell Resources, Inc.
3030 Northwest Expressway, Suite 1602
Oklahoma City, Oklahoma 73112
Attention: Mr. V. Lee Powell
Telephone No.: (405) 943-4581
Facsimile No.: (405) 943-4584
11
<PAGE>
(ii) If to any other Seller:
c/o Thomas O. Goldsworthy
Fremont Exploration, Inc.
3030 Northwest Expressway, Suite 1602
Oklahoma City, Oklahoma 73112
Telephone No.: (405) 943-4581
Facsimile No.: (405) 943-4584
(iii) If to Amerac Energy Corporation:
Amerac Energy Corporation
700 Louisiana, Suite 3330
Houston, Texas 77002-2730
Attention: Mr. Jeffrey B. Robinson
Telephone No.: (713) 223-1833
Facsimile No.: (713) 223-5110
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one instrument.
(f) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants, and
restrictions of this Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
AMERAC ENERGY CORPORATION
By: /s/ JEFFREY B. ROBINSON
----------------------------------------
Jeffrey B. Robinson
President and Chief Executive Officer
POWELL RESOURCES, INC.
By: /s/ V. LEE POWELL
----------------------------------------
V. Lee Powell
President
12
<PAGE>
THE LANGSTROTH FAMILY LIMITED I
By: /s/ THOMAS O. GOLDSWORTHY
----------------------------------------
Thomas O. Goldsworthy
Attorney-in-Fact
/s/ THOMAS O. GOLDSWORTHY
----------------------------------------
THOMAS O. GOLDSWORTHY
JAMES B. TOLLERTON
By: /s/ THOMAS O. GOLDSWORTHY
----------------------------------------
Thomas O. Goldsworthy
Attorney-in-Fact
13
<PAGE>
EXHIBIT 3
[LOGO OF AMERAC ENERGY CORPORATION APPEARS HERE]
Contact: Jeffrey B. Robinson Jeffrey L. Stevens
President/CEO Vice President/CFO
Telephone (713) 223-1833 Telephone (817) 339-1010
NEWS
---------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
DATE: January 17, 1996
Amerac Energy Corporation ("Amerac" or the "Company"), announced today the
acquisition of Fremont Energy Corporation ("Fremont"), an Oklahoma based oil and
gas company. The total acquisition price of $7.64 million was paid in cash and
common stock. The Company financed the cash portion of the acquisition
through its $15 million credit facility with Bank One, Texas. Fremont's 131
wells are located predominately in central Oklahoma and Kansas and are
concentrated in three major fields. Fremont's estimated net proved reserves
total approximately 14.1 billion cubic feet equivalent. Jeffrey Robinson,
Amerac's President and Chief Executive Officer stated, "This acquisition
significantly strengthens the base upon which we will continue building the
Company. We intend to continue our aggressive growth through a carefully planned
and well executed acquisitions and exploitation program. We will stay focused on
our primary objective of building value for our shareholders."
Amerac Energy Corporation is engaged in the acquisition, production and further
development of oil and gas properties primarily in Texas and Oklahoma. Amerac's
common stock is traded on the NASDAQ Bulletin Board under the symbol AENC and
its $4.00 senior preferred stock trades currently on the "Pink Sheets" of the
over-the-counter market under the symbol AENCP. The Company's common and $4.00
senior preferred stock are traded on the Boston Stock Exchange under the symbols
AMC, AMCp respectively.
<PAGE>
EXHIBIT 4
FIRST AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
-----------------------------
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"First Amendment") made and entered into the 16th day of January, 1996, by and
- ----------------
between AMERAC ENERGY CORPORATION, a Delaware corporation, and BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the above named parties did execute and exchange counterparts
of that certain Amended and Restated Credit Agreement dated as of May 12, 1995
(the "Agreement") to which reference is here made for all purposes;
---------
WHEREAS, the above named parties are desirous of amending the
Agreement in the particulars hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and agreements
of the parties to the Agreement and agreements of the parties hereto as set
forth in this First Amendment, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
As used herein, each term defined in the Agreement shall have the
meaning assigned thereto in the Agreement and terms defined herein shall be
incorporated into the Agreement unless expressly provided to the contrary.
<PAGE>
ARTICLE II. AMENDMENTS
2.01 The Agreement is hereby amended to substitute for the first
paragraph of Section 2.4 the following:
Unit redetermined by the Lender as set forth below in this Section,
as of January 16, 1996 the Borrowing Base is $10,600,000.00 and will
decrease (a) $185,000.00 on the first day of each calendar month
beginning on February 1, 1996 and (b) $185,000.00 when that certain
Mortgaged Property commonly known as the Northwest Arapahoe Unit
located in Cheyenne County, Colorado is sold.
2.02 The Agreement is hereby amended to substitute for Section 5.20
of the Agreement the following:
5.20 Proceeds of Production. Direct all purchasers of production or
----------------------
disbursers of proceeds of production from the Borrowing Base
Properties to pay such proceeds directly to a lock-box maintained by
the Borrower and the Lender.
2.03 The Agreement is hereby amended to substitute for Section 5.23 of
the Agreement the following:
5.23 Fixed Charge Coverage Ratio. The Borrower will maintain for the
---------------------------
one (1) fiscal quarter period ending March 31, 1996, a ratio of (a)
net cash flow from operations exclusive of working capital changes to
(b) twenty-five percent (25%) of an amount equal to the quotient of
(i) the Borrowing Base as of March 31, 1996 divided by (ii) five, of
no less than 1.2 to 1.0.
The Borrower will maintain for the two (2) fiscal quarter period
ending June 30, 1996, a ratio of (a) net cash flow from operations
exclusive of working capital changes to (b) fifty percent (50%) of an
amount equal to the quotient of (i) the Borrowing Base as of June 30,
1996 divided by (ii) five, of no less than 1.2 to 1.0.
2
<PAGE>
The Borrower will maintain for the three (3) fiscal quarter period
ending September 30, 1996, a ratio of (a) net cash flow from
operations exclusive of working capital changes to (b) seventy-five
percent (75%) of an amount equal to the quotient of (i) the Borrowing
Base as of September 30, 1996 divided by (ii) five, of no less than
1.2 to 1.0.
The Borrower will maintain for each four (4) fiscal quarter period
beginning with the four (4) fiscal quarter period ending December 31,
1996, a ratio of (a) net cash flow from operations exclusive of
working capital changes to (b) an amount equal to the quotient of (i)
the Borrowing Base as of the last day of the last fiscal quarter in
such four fiscal quarter period divided by (ii) five, of no less than
1.2 to 1.0.
2.04 The Agreement is hereby amended to substitute for Section 6.16 of
the Agreement the following:
6.16 Overhead Expense. For each of the 1995 and 1996 fiscal years of
----------------
the Borrower, the Borrower will not incur general and administrative
expenses in excess of $1,600,000.00. For each fiscal quarter of the
Borrower after the 1996 fiscal year of the Borrower, the Borrower will
not incur general and administrative expenses in excess of twenty-four
percent (24%) of gross revenues attributable to its oil and gas
operations for any such fiscal quarter.
2.05 The Agreement is hereby amended to add all of the Oil and Gas
Properties set forth on Exhibit A hereto (identified by their commonly known
names) to Exhibits C and D of the Credit Agreement.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Borrower hereby expressly remakes in favor of the Lender all of
the representations and warranties set forth in ARTICLE IV of the Agreement, as
amended
3
<PAGE>
hereby, and represents and warrants that all such representations and warranties
remain true and unbreached, except as affected by the transactions contemplated
in the Agreement.
ARTICLE IV. RATIFICATION
Each of the parties hereto does hereby adopt, ratify and confirm the
Agreement, in all things in accordance with the terms and provisions thereof, as
modified or amended by this First Amendment.
ARTICLE V. MISCELLANEOUS
5.01 All references to the Agreement in any document heretofore or
hereafter executed in connection with the transactions contemplated in the
Agreement shall be deemed to refer to the Agreement as amended by this First
Amendment.
5.02 THIS FIRST AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER,
AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, this First Amendment to Amended and Restated
Credit Agreement is executed as of the date first above written.
AMERAC ENERGY CORPORATION
By: /s/ JEFFREY B. ROBINSON
---------------------------------------
Jeffrey B. Robinson
President and Chief Executive Officer
(Signatures continued on next page)
4
<PAGE>
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: /s/ MELANIE M. OTTENS
----------------------------------------
Melanie M. Ottens
Vice President
5
<PAGE>
EXHIBIT A
TO
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
GARVIN COUNTY, OKLAHOMA (GOLDEN TREND)
- -----------------------
Rose, George L.C. #1 (everything except Hart Sand formation)
Wacker, G. F. #1 (everything except Gibson Sand formation)
Adams #2
Olmstead #2 (everything except Gibson Sand formation)
Bradshaw, L.R. #1
Olmstead #4 (everything except Gibson Sand formation)
Townsend "C" #1 (everything except Gibson Sand formation)
Roller #2
Worden, Gordon #1-12 (everything except Gibson Sand formation)
Tippitt Lease #3 (everything except Gibson Sand formation)
Bonney, W.C. #1 (Unit)
Bradshaw #2
Buckhultz, Mollie (Viola and Hart formations only)
Rose, George L. #1 (everything except Hart Sand formation)
Powell, Grady #1 (Hart, Hunton, Sycamore & Viola formations only)
Lindsay, S.A. #1
Porter "A" #1-35 (Hunton & Woodford formations only)
<PAGE>
Eskridge, T. H. #1
Ball, J. B. #1-11
Rankin "A"
Gardenhire A #1
Temple "A" #1
Brinkman A #1-11
Trammel McCaughey
Bell #2
Wesley Wolfe #1-35
Searcy #32-1
Lemke, Beulah #1
Bradley #1A-7
Poindexter "A"
ROOKS COUNTY, KANSAS (RIFFE)
- --------------------
Walker-Miller #1
F. Walker, B. Lease
Walker A#11 PUD
Walker A #10 PUD
Walker A #9
Walker-Miller #12
2
<PAGE>
Walker A & B Lease
F. Walker #1
Bird-Hale
Smith #1
Bird B-1
Balderston #1-13
Randolph, C. Lease
STEPHENS COUNTY, OKLAHOMA (SHO-VEL-TUM)
- -------------------------
Saird #'s 1-8 (Sycamore Lime formation only)
Emmerson #1 (Sycamore Lime formation only)
CLEVELAND COUNTY, OKLAHOMA
- --------------------------
Fessenbeck #4 (wellbore of #4 and Tulip Creek formation only)
JONES COUNTY, TEXAS
- -------------------
Truby Well
3
