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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):
OCTOBER 30, 1995
CODA ENERGY, INC.
(Exact Name of Registrant as Specified in its Charter)
State of Delaware 0-10955 75-1842480
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
5735 Pineland Drive
Suite 300
Dallas, Texas 75231
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 692-1800
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Item 5. Other Events
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ANNOUNCEMENT OF EXECUTION OF DEFINITIVE MERGER AGREEMENT
On October 31, 1995, Coda Energy, Inc. ("Coda") announced that it had
entered into a definitive merger agreement dated as of October 30, 1995 (the
"Merger Agreement") by and among Coda, Joint Energy Development Investments
Limited Partnership ("JEDI"), an affiliate of Enron Capital & Trade Resources
Corp. ("ECT"), and Coda Acquisition, Inc. ("Purchaser"), a newly formed
corporation and a subsidiary of JEDI, whereby JEDI will acquire in the merger
(the "Merger") shares of common stock, par value $.02 per share, of Coda (the
"Coda Common Stock") at a price of $8.00 per share in cash. The Merger Agreement
has been approved by Coda's Board of Directors and its Special Committee of
outside directors. Concurrently with the execution of the Merger Agreement, JEDI
and Purchaser have entered into certain agreements with members of management of
Coda providing for a continuing role of management in Coda after the
acquisition. Coda expects to hold a special meeting of the stockholders, for the
purpose of voting on the Merger, as soon as practical after the Securities and
Exchange Commission has cleared the related proxy statement material for
mailing. Coda anticipates that this special meeting will occur in late 1995 or
early 1996.
PARTIES TO THE MERGER
Coda. Coda is an independent energy company which, together with its
subsidiaries, is principally engaged in the acquisition and exploitation of (i)
producing oil and natural gas properties, (ii) natural gas processing and
liquids extraction facilities and (iii) natural gas gathering systems. Coda's
producing oil and natural gas properties are concentrated in the mid-continent
region of the United States. Coda's exploitation efforts include, where
appropriate, the drilling of low-risk development wells, the initiation of
secondary recovery projects, the renegotiation of product marketing agreements
and the reduction of drilling, completion and lifting costs.
JEDI and Purchaser. JEDI is a Delaware limited partnership whose general
partner is a subsidiary of ECT, which is a wholly-owned subsidiary of Enron
Corp. The limited partner of JEDI is the California Public Employees'
Retirement System. JEDI was created primarily to invest in a portfolio of
diversified natural gas related assets. Purchaser is a Delaware corporation
formed solely for the purpose of effecting the Merger and has not carried on any
activities other than in connection with the Merger. Purchaser is a subsidiary
of JEDI.
CERTAIN TERMS OF THE MERGER
Principal Effects of the Merger. Purchaser will be merged with and into
Coda, with Coda surviving the Merger (the "Surviving Corporation"). Pursuant to
and subject to the terms and
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conditions of the Merger Agreement, at the Effective Time (as defined below),
(i) all then-outstanding shares of Coda Common Stock (other than (A) shares of
Coda Common Stock held by Purchaser, Coda or any Coda subsidiary, all of which
will be canceled without payment of any consideration, and (B) shares of Coda
Common Stock held by stockholders who perfect their appraisal rights under
Section 262 of the Delaware General Corporation Law ("DGCL")) will be converted
into the right to receive, in cash, $8.00 per share of Coda Common Stock,
without interest, and (ii) all shares of Coda Common Stock underlying then-
outstanding but unexercised options and warrants to purchase Coda Common Stock
(other than the "Specified Options" and "Specified Warrants" held by certain
members of the Management Group (as defined below)) will, at the election of the
holder, be converted into the right to receive, in cash, either (A) the
difference between (x) $8.00 per share of Coda Common Stock and (y) the exercise
or strike price of the option or warrant, without interest or (B) $8.00 per
share of Coda Common Stock, without interest, upon such holder's exercise
(including payment of the applicable exercise or strike price) of his or her
options.
Effective Time. The effective time of the Merger will be the date and time
when a properly executed certificate of merger, in such form as is required by
and executed in accordance with the DGCL, is duly filed with the Secretary of
State of the State of Delaware, or at such later time as the parties to the
Merger Agreement designate in such filing as the effective time (the "Effective
Time"). It is anticipated that, subject to the satisfaction or waiver, if
permissible, of the conditions to consummation of the Merger set forth in the
Merger Agreement, such filing will be made promptly after the Merger Agreement
has been approved by Coda's stockholders.
Conditions to the Merger. The respective obligations of Coda, JEDI and
Purchaser to effect the Merger are subject to the satisfaction, or waiver if
applicable, at or prior to the Effective Time, of various conditions, including,
among other things, (i) the approval and adoption of the Merger Agreement and
the Merger by the requisite vote of the holders of Coda Common Stock; (ii) the
expiration or termination of the waiting period applicable to the consummation
of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "Hart-Scott-Rodino Act"); (iii) the absence of any law, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) that is then in effect and has the effect
of making the Merger illegal or otherwise preventing or prohibiting consummation
of the Merger; (iv) the confirmation by Coda at the time of the special meeting
of Coda stockholders called for the purpose of approving and adopting the Merger
Agreement that the written opinion of Coda's financial advisor to the effect
that the Merger is fair, from a financial point of view, to the stockholders of
Coda (except that such advice will not be provided to the members of Coda's
management, consisting of Douglas H. Miller, Chairman of the Board and Chief
Executive Officer of Coda, Jarl P. Johnson, Vice Chairman of the Board and
President of Diamond Energy Operating Company, a subsidiary of Coda ("Diamond"),
Grant W. Henderson, Executive Vice President, Chief Financial Officer and a
director of Coda, and twelve other officers and employees of Coda and Diamond
(collectively, the "Management Group"), who have agreed to participate in the
equity ownership of the Surviving Corporation), has not been withdrawn; and (v)
the absence of any pending action, proceeding or investigation brought by any
person or entity before any governmental entity challenging, affecting or
seeking material
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damages in connection with, the transactions contemplated by the Merger
Agreement. Furthermore, each of Coda, on the one hand, and JEDI and Purchaser,
on the other hand, have additional conditions to their respective obligations to
consummate the Merger. Among the conditions to JEDI and Purchaser consummating
the Merger are that (i) the sale of Taurus Energy Corp., a wholly owned
subsidiary of Coda ("Taurus") shall have been completed upon terms satisfactory
to JEDI; (ii) certain members of Coda's management shall have not breached or
anticipatorily breached certain employment and other agreements with Purchaser
that are to become effective in conjunction with the consummation of the Merger
and certain specified senior executives of Coda shall not have died or become
disabled; and (iii) assuming the representations and warranties of Coda in the
Merger Agreement were made without regard to any "materiality qualifications,"
the amount that would be required to be contributed to the Surviving Corporation
at the Effective Time, so that the owners of the Surviving Corporation would be
in the same economic position as they would have been if the representations and
warranties, without regard to any materiality qualifications, had been true and
correct in all respects, in the aggregate does not exceed $7.5 million.
Regulatory Clearances. The Merger is subject to review by the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the Federal
Trade Commission (the "FTC") pursuant to the Hart-Scott-Rodino Act.
Termination; Expenses and Termination Fees. Under certain conditions, the
Merger Agreement may be terminated at any time prior to the Effective Time,
whether prior to or after approval of the Merger Agreement by the stockholders
of Coda. In the event of the termination of the Merger Agreement, there will be
no obligation or liability on the part of any party thereto, except for the
payment of certain expenses and/or the Break-up Fee (as defined below) or as
otherwise expressly provided for in the Merger Agreement; provided, however,
that no termination pursuant to the termination provisions will relieve any
party from liability for any breach of the Merger Agreement. Pursuant to the
Merger Agreement, if the Merger Agreement is terminated by Purchaser for certain
reasons, then Coda would be obligated to reimburse Purchaser for certain out-of-
pocket expenses not to exceed $750,000. Additionally, if the Merger Agreement
is terminated for certain reasons and if Coda were to consummate another
acquisition transaction prior to October 30, 1996, that provides better value to
Coda's stockholders than the Merger would have provided, then Coda would be
obligated to pay Purchaser a fee (the "Break-up Fee") of $3.5 million. If the
Merger Agreement is terminated by Coda due to a breach on the part of JEDI or
Purchaser, JEDI is obligated to reimburse Coda for certain expenses not to
exceed $750,000.
Business of Coda. Coda has agreed that, during the period from the date of
the Merger Agreement to the Effective Time, except as otherwise contemplated by
the Merger Agreement or unless Purchaser otherwise consents in writing, Coda
will conduct its operations in the ordinary course of business, consistent with
past practices. In addition, unless Purchaser consents in writing or except as
otherwise permitted pursuant to the Merger Agreement, prior to the Effective
Time Coda is not permitted to engage in certain actions specified in the Merger
Agreement.
Obligations of JEDI and Purchaser. Each of JEDI and Purchaser has agreed
to use its
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reasonable best efforts to refrain from taking any action that would, or
reasonably might be expected to, result in any of its representations and
warranties set forth in the Merger Agreement being or becoming untrue in any
material respect as of the Effective Time, or in any of the conditions to the
Merger not being satisfied, or (unless such action is required by applicable
law) that would adversely affect the ability of JEDI or Purchaser to obtain any
of the regulatory approvals required to consummate the Merger.
OPINION OF FINANCIAL ADVISOR
The Special Committee engaged Bear, Stearns & Co. Inc. ("Bear Stearns") to
act as its financial advisor in connection with the Merger and related matters.
On September 27, 1995, Bear Stearns orally advised the Special Committee that
the Merger is fair, from a financial point of view, to Coda's stockholders
(except that no advice was given as to the Management Group).
NO SOLICITATION OF OTHER BIDS
Prior to the Effective Time, Coda has agreed not to, nor to permit any of
its subsidiaries to, nor to authorize or permit any of its officers, directors
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its subsidiaries to, directly
or indirectly, initiate, solicit, negotiate or encourage (including by way of
furnishing information), or take any other action to facilitate or entertain,
any inquiries or the making of any proposal that constitutes, or may be
reasonably expected to lead to, any proposal or offer to acquire all or
substantially all of the business of Coda and its subsidiaries, or all or
substantially all of the capital stock of Coda; provided, however, that Coda may
negotiate with a potential acquiror if (i) the potential acquiror has made a
tender or exchange offer, or a proposal to Coda's Board of Directors to acquire
Coda, (ii) Coda's Board of Directors believes, based in part upon advice of its
financial advisor and after having an opportunity to discuss any such proposal
with a potential acquiror, that such potential acquiror has the financial
wherewithal to consummate such offer or transaction and such offer or
transaction would yield a better value to Coda's stockholders than would the
Merger and (iii) based upon the advice of counsel to Coda given to the Board of
Directors, the Board of Directors determines in good faith that there is a
significant risk that the failure to negotiate with the potential acquiror could
constitute a breach of the Board's fiduciary duty to Coda's stockholders.
TAURUS DISPOSITION
On August 23, 1995, Coda announced that it had received an offer to
purchase substantially all of the assets of Taurus. On the same date Coda's
Board of Directors authorized the Special Committee to reach a determination or
recommendation, if any, with respect to the possible sale or restructuring of
Coda's ownership of Taurus. The sale of Taurus on terms acceptable to JEDI
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is also a condition to the consummation of the Merger. Mr. Lohman is an officer
and director of Taurus. The Company understands that Mr. Lohman has been active
in trying to find a buyer for Taurus in a transaction that would provide a
continuing role for Taurus' management.
During the period after execution of the Merger Agreement and prior to the
Effective Time, Coda has agreed in the Merger Agreement to use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable to promptly negotiate a
definitive agreement (the "Taurus Disposition Agreement") providing for the sale
of Taurus, whether by merger, sale of all or substantially all of the assets of
Taurus, sale of all of the capital stock of Taurus or otherwise (the "Taurus
Disposition") as soon as reasonably practicable. Coda has agreed to deliver the
final version of the Taurus Disposition Agreement to JEDI for review at least
five business days prior to its execution. Coda has agreed to use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate the
Taurus Disposition if a Taurus Disposition Agreement that has been approved by
JEDI is executed.
SOURCES AND AMOUNT OF FUNDS
The total amount of funds required by JEDI and Purchaser to acquire all of
the then-outstanding (except for shares of Coda Common Stock held by Purchaser)
capital stock of Coda (including options and warrants to purchase Coda Common
Stock, but excluding the Specified Options and the Specified Warrants), is
estimated to be approximately $182.2 million. Coda will also need cash to pay
the fees and expenses incurred or to be incurred by Coda associated with
effecting the Merger, the financing thereof and with providing loans to certain
members of management to purchase shares of capital stock of Purchaser,
including an estimated $3.8 million in transaction fees expected to be paid to
ECT Securities Corp., an affiliate of the general partner of JEDI. JEDI expects
Purchaser to have available to it at the Effective Time approximately $190
million from (i) a $90 million equity investment to be made in Purchaser by JEDI
prior to the Effective Time and (ii) proceeds of a $100 million loan to be made
to Purchaser by JEDI prior to the Effective Time. The obligation of JEDI and
Purchaser to consummate the Merger under the Merger Agreement is not subject to
a condition that any financing be available to JEDI or Purchaser.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Four of Coda's ten directors, Douglas H. Miller, Chairman of the Board and
Chief Executive Officer, Jarl P. Johnson, Vice Chairman and President of
Diamond, Grant W. Henderson, Executive Vice President and Chief Financial
Officer, and Tommie E. Lohman, President of Taurus, abstained from voting on
the Merger Agreement and related resolutions because of their interests in the
transactions. Messrs. Miller, Johnson and Henderson have entered into written
agreements with Purchaser pursuant to which, effective at the Effective Time,
they will be employed by the Surviving Corporation and will acquire equity
interests in the Surviving
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Corporation. Certain members of Coda's management have also entered into written
agreements with Purchaser concerning their employment with and/or equity
participation in the Surviving Corporation. Immediately following closing of the
Merger, management will hold an aggregate of approximately 1.5% of the Surviving
Corporation's common stock (approximately 5% on a fully diluted basis, including
options granted to such persons).
These agreements will terminate automatically if the Merger Agreement is
terminated. The agreements are summarized below:
Subscription Agreement. The Purchaser has entered into a Subscription
Agreement dated as of October 30, 1995, with each member of the Management Group
(the "Subscription Agreement") which provides for the acquisition by such
persons of Purchaser common stock and the grant to them of nonqualified stock
options to purchase shares of Surviving Corporation common stock (the
"Replacement Options"). Under the Subscription Agreement, each member of the
Management Group who is acquiring Purchaser common stock is paying $100 per
share for shares of Purchaser common stock, which is the same price per share
being paid by JEDI for the remaining shares of Purchaser. Under the
Subscription Agreement, the Management Group will acquire Purchaser common stock
immediately prior to the Effective Time in exchange for varying combinations of
(i) proceeds from limited recourse promissory notes payable to the Purchaser
(the "Notes"), (ii) Coda Common Stock, which is valued for this purpose at $8.00
per share and (iii) cash. The Purchaser common stock so acquired will not have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), or any state securities laws and will not have the benefit of any
registration rights, but will be subject to the Stockholders Agreement described
below. By virtue of the Merger, each share of Purchaser common stock will be
converted into one share of Surviving Corporation common stock.
The Subscription Agreement provides that the Specified Options
(representing certain Coda stock options held by certain members of the
Management Group) and Specified Warrants (representing warrants to purchase Coda
Common Stock held by certain members of the Management Group) will not be
exercised prior to the Effective Time and shall, as of the Effective Time, be
canceled without exercise and without payment of consideration. Concurrently,
the Management Group will enter into Nonstatutory Stock Option Agreements
governing the Replacement Options providing for the right for a period of 10
years from and after the Effective Time to purchase shares of Surviving
Corporation common stock for $.01 per share. However, the Replacement Options
may only be exercised while the holder remains an employee of the Surviving
Corporation and for a limited period of time thereafter. The number of shares of
Surviving Corporation common stock underlying the Replacement Options each
member of the Management Group receives is based on the amount of cash the
holder would have received if his Specified Options or Specified Warrants had
been converted into cash in the Merger on the same basis as other outstanding
options and warrants to purchase Coda Common Stock were converted, divided by
the $100 per share purchase price paid by JEDI and the other Management Group
members for their common stock of Purchaser. Thus, if the Replacement Options
are exercised, the holders will have effectively paid the same purchase price
per share
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as JEDI and the Management Group paid for their shares of common stock of the
Surviving Corporation.
The Notes will be due on the fifth anniversary of the Effective Time, will
bear interest at the mid-term applicable federal rate (annual compounding) for
the month in which the Effective Time occurs (6.11% for November 1995), will be
secured by the Surviving Corporation common stock purchased with the proceeds
thereof and certain rights of the maker under the Stockholders Agreement
described below, and will provide that in no event will an individual maker's
liability thereunder for any deficiency on his respective Note (after the sale
and disposition of all collateral securing same) exceed 35% of the original
principal balance of the Note.
The members of the Management Group, their current positions with Coda
and/or Diamond and the number of shares of fully diluted Purchaser Common Stock
to be acquired by them are set forth in the following table:
Name of Member of Surviving Fully Diluted
Management Group Corporation Ownership
and Current Position with Common Stock Replacement --------------------
Coda and/or Diamond Direct Ownership Options Shares %
- --------------------------------------- ---------------- ----------- ---------- --------
Randell A. Bodenhamer,
Vice President - Land;
Executive Vice President,
Diamond Energy
Operating Company.................... 2,322 178 2,500 .26
Joe I. Callaway,
Vice President - General Counsel....... 500 500 1,000 .11
J. David Choisser,
Vice President - Controller............ 1,105 395 1,500 .17
J. William Freeman,
Vice President - Engineering........... 1,250 1,250 2,500 .26
Roy Harney,
Manager - Engineering,
Diamond Energy
Operating Company.................... 500 0 500 .05
Grant W. Henderson,
Executive Vice President,
Chief Financial Officer
and Director........................... 2,500 2,500 5,000 .53
Jarvis A. Hensley,
Vice President - Operations,
Diamond Energy Operating
Company.............................. 500 0 500 .05
Chris A. Jackson,
Manager - Production................... 500 500 1,000 .11
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Jarl P. Johnson,
Vice Chairman of the Board, Director;
President, Diamond Energy
Operating Company.................... 2,543 1,457 4,000 .42
Douglas H. Miller,
Chairman of the Board,
Chief Executive Officer
and Director........................... 0 25,000 25,000 2.64
Gary M. Nelson,
Manager - Data Processing.............. 250 250 500 .05
Gary R. Scoggins,
Vice President -
Human Resources...................... 250 250 500 .05
Claude A. Seaman,
Manager - Financial
Reporting............................ 250 250 500 .05
J. W. Spencer, III,
Vice President - Operations............ 1,372 1,128 2,500 .26
Scott E. Studdard,
Manager - Tax Department............... 250 250 500 .05
------ ------ ------ ----
Total............................. 14,092 33,908 48,000 5.06
====== ====== ====== ====
Stockholders Agreement. The Purchaser, JEDI and the Management Group have
entered into a Stockholders Agreement dated as of October 30, 1995 (the
"Stockholders Agreement"), which provides generally that all parties, including
JEDI and the Management Group, (i) have rights of first refusal to acquire
additional shares of Surviving Corporation Common Stock that may be issued by
the Surviving Corporation and (ii) are restricted from transferring their
Surviving Corporation common stock. The Surviving Corporation has a right to
match any third party offer to purchase shares of Surviving Corporation common
stock from any stockholder, and, in the event that the Surviving Corporation
does not purchase those shares, the other stockholders may have a right to
include a pro rata portion of their Surviving Corporation common stock in the
transaction. The Stockholders Agreement provides that, if the employment of a
member of the Management Group terminates for any reason (including death or
disability) other than his voluntary termination (except upon retirement at age
65 or older or the expiration of the term of any employment agreement he has
with the Surviving Corporation) or his termination by the Surviving Corporation
for cause, then the Surviving Corporation shall have a right to purchase such
member's shares of Surviving Corporation common stock at a purchase price to be
determined from time to time by the Surviving Corporation pursuant to a formula
that values the shares on the basis of a comparison of the discretionary cash
flow and EBITDA (as defined therein) of the Surviving Corporation and a group of
peer companies. The Stockholders Agreement also provides that, if the
employment of a member of the Management Group terminates for any reason other
than voluntary termination or termination of such member for
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cause, then such member shall have the right to require the Surviving
Corporation to purchase such member's shares of Surviving Corporation common
stock based on the previously described formula. The purchase price under the
formula will vary depending on the financial performance of the Surviving
Corporation and the group of peer companies. The Stockholders Agreement
provides that each member of the Management Group shall have the right (the
"Special Management Rights") to receive from JEDI, upon the occurrence of
certain events (generally an initial public offering, a business combination
with another person or the liquidation of the Surviving Corporation) (each, a
"Trigger Event"), an amount, which is payable in cash or additional shares of
Surviving Corporation Common Stock depending upon the cause of the Trigger
Event, designed to result in the Management Group receiving in connection with
the Trigger Event one-third of the proceeds, attributable to the shares of
Surviving Corporation common stock purchased by JEDI, above the amount of
proceeds necessary for JEDI to achieve an internal annual rate of return on that
investment of 15%. The individual member's interest in such Special Management
Rights is proportional to such member's ownership of the fully diluted common
stock of the Surviving Corporation, as reflected in the table above. The
Stockholders Agreement also provides that if the employment of a member of the
Management Group terminates, then his Special Management Rights shall terminate
and, if the termination is other than a voluntary termination or a termination
for cause, he may be entitled to receive an amount based on the discretionary
cash flow and EBITDA formula discussed above. The Stockholders Agreement
further provides that, after the Effective Time, the Surviving Corporation will
establish an employee benefit plan for the benefit of its employees who are not
members of the Management Group and will contribute to the plan 2,000 shares of
Surviving Corporation common stock, and pursuant to the Stockholders Agreement
4% of the Special Management Rights will be allocated thereto.
The Stockholders Agreement will terminate and no party thereto will have
any further obligations or rights thereunder upon the earliest to occur of (i)
the termination of the Merger Agreement in accordance with its terms, (ii)
October 30, 2005, (iii) the date on which an initial public offering of
Surviving Corporation common stock is consummated or of any business transaction
involving the Surviving Corporation whereby Surviving Corporation common stock
becomes a publicly traded security, (iv) the date of the dissolution,
liquidation or winding-up of the Surviving Corporation and (v) the date of the
delivery to the Surviving Corporation of a written termination notice executed
by certain parties to the Stockholders Agreement.
Business Opportunity Agreement. ECT, the Purchaser, JEDI and the
Management Group have also entered into a Business Opportunity Agreement (the
"Business Opportunity Agreement") that is intended to make it clear that Enron
and its affiliates have no duty to make business opportunities available to the
Surviving Corporation in most circumstances. The Business Opportunity Agreement
also provides that ECT and its affiliates may pursue certain business
opportunities to the exclusion of the Surviving Corporation. The Business
Opportunity Agreement may limit the business opportunities available to the
Surviving Corporation and the opportunity of the Management Group to earn
incentive compensation under the Stockholders Agreement or otherwise. In
addition, there may be circumstances in which the Surviving Corporation will
offer business opportunities to certain affiliates of Enron. If an Enron
affiliate
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is offered such an opportunity and decides to pursue it, the Surviving
Corporation may be unable to pursue it.
Employment Agreements. Messrs. Miller, Johnson, Henderson, Randell A.
Bodenhamer, J. William Freeman and J.W. Spencer, III, have entered into
employment agreements (the "Employment Agreements") with the Purchaser to become
effective at the Effective Time. The Employment Agreements are for a period of
five years from the Effective Time (three years in the case of Messrs. Johnson
and Spencer) and provide for the payment of base salaries, together with other
benefits generally available to employees of the Surviving Corporation, and
positions with the Surviving Corporation as set forth below:
Name Position with Surviving Corporation Annual Base Salary
- ----------------------- ---------------------------------------------- ------------------
Randell A. Bodenhamer.. Vice President - Land $145,000
J. William Freeman..... Vice President - Engineering $170,000
Grant W. Henderson..... President and Chief Financial Officer $225,000
Jarl P. Johnson........ Vice Chairman of the Board and Chief $250,000
Operating
Officer
Douglas H. Miller...... Chairman of the Board and Chief Executive $350,000
Officer
J.W. Spencer, III...... Vice President - Operations $170,000
Each of these persons would receive his salary for the remaining term of
his Employment Agreement if the Surviving Corporation were to terminate his
Employment Agreement other than for cause. The Employment Agreements provide
that the employees agree not to compete with the Surviving Corporation for a
period of six months after their voluntary termination or termination for cause;
in the case of Mr. Miller, the covenant not to compete is for a period of two
years, except that the noncompetition period is one year in the event of
incapacity, involuntary termination other than for cause or his resignation due
to a breach by Surviving Corporation of Mr. Miller's Employment Agreement.
OPERATION AND MANAGEMENT OF SURVIVING CORPORATION AFTER THE MERGER
Following the Merger, JEDI and the Management Group will own approximately
98.5% and 1.5%, respectively, of the outstanding shares of Surviving Corporation
Common Stock (approximately 95% and 5%, respectively, on a fully diluted basis,
including options granted to the Management Group). Coda is expected to
continue to manage and operate its business and properties substantially as
before the Merger and is expected to maintain its current offices.
The Bylaws of the Surviving Corporation will provide that the Chairman of
the Board and the Vice Chairman of the Board of the Surviving Corporation will
be directors. As such, Douglas H. Miller, as Chairman of the Board of the
Surviving Corporation, and Jarl P. Johnson,
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as Vice Chairman of the Board of the Surviving Corporation, will be directors of
the Surviving Corporation. The other five members of the Board of Directors
will be elected by the stockholders of the Surviving Corporation. JEDI
anticipates that Grant W. Henderson will also be elected to one of the other
five positions on the Board of Directors of the Surviving Corporation. In
addition, the respective executive officers of Coda, with the exception of T.W.
Eubank, Coda's President and Chief Operating Officer, will continue as executive
officers of Surviving Corporation. Grant W. Henderson will assume the
additional title of President and Jarl P. Johnson will assume the additional
title of Chief Operating Officer.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for shares of Coda Common Stock pursuant to the Merger
or pursuant to the exercise of appraisal rights will be a taxable transaction
for federal income tax purposes and may also be a taxable transaction under
applicable state, local, foreign or other tax laws. For United States federal
income tax purposes, in general, a stockholder who receives cash for shares of
Coda Common Stock pursuant to the Merger will recognize a gain or loss equal to
the difference between the stockholder's tax basis for the shares of Coda Common
Stock converted into the right to receive cash in such transaction and the
amount of cash received in exchange therefor. Assuming that the shares of Coda
Common Stock constitute capital assets in the hands of the stockholder, such
gain or loss will be long-term capital gain or loss if, as of the date of
disposition, such shares of Coda Common Stock have been held for more than one
year.
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Item 7. Financial Statements and Exhibits
---------------------------------
The following documents are attached hereto as exhibits:
2.1 Agreement and Plan of Merger by and among Coda Energy, Inc., Joint Energy
Development Investments Limited Partnership and Coda Acquisition, Inc.
dated as of October 30, 1995.
99.1 Coda Energy, Inc. Press Release dated October 31, 1995.
99.2 Stockholders Agreement dated October 30, 1995, including exhibits but
omitting schedules.
99.3 Subscription Agreement among Coda Acquisition, Inc. and The Management
Investors dated October 30, 1995, including exhibits but omitting
schedules.
99.4 Business Opportunity Agreement dated as of October 30, 1995.
99.5 Executive Employment Agreement between Coda Acquisition, Inc. and Randell
A. Bodenhamer.
99.6 Executive Employment Agreement between Coda Acquisition, Inc. and J.
William Freeman.
99.7 Executive Employment Agreement between Coda Acquisition, Inc. and Grant
W. Henderson.
99.8 Executive Employment Agreement between Coda Acquisition, Inc. and Jarl P.
Johnson.
99.9 Executive Employment Agreement between Coda Acquisition, Inc. and Douglas
H. Miller.
99.10 Executive Employment Agreement between Coda Acquisition, Inc. and J.W.
Spencer, III.
99.11 Agreement of Coda to provide schedules to Stockholders Agreement (Exhibit
99.3) and Subscription Agreement (Exhibit 99.4).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 9, 1995 CODA ENERGY, INC.
By: \s\ Joe Callaway
-------------------------------------
Joe Callaway, Vice President
and General Counsel
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EXHIBIT INDEX
Sequential
Exhibit No. Description of Exhibit Page No.
- ----------- ---------------------- ----------
2.1 Agreement and Plan of Merger by and among
Coda Energy, Inc., Joint Energy Development
Investments Limited Partnership and Coda Ac-
quisition, Inc. dated as of October 30, 1995.
99.1 Coda Energy, Inc. Press Release dated October
31, 1995.
99.2 Stockholders Agreement dated October 30,
1995.
99.3 Subscription Agreement among Coda Acquisi-
tion, Inc. and The Management Investors dated
October 30, 1995.
99.4 Business Opportunity Agreement dated as of
October 30, 1995.
99.5 Executive Employment Agreement between
Coda Acquisition, Inc. and Randell A.
Bodenhamer.
99.6 Executive Employment Agreement between
Coda Acquisition, Inc. and J. William Freeman.
99.7 Executive Employment Agreement between
Coda Acquisition, Inc. and Grant W.
Henderson.
99.8 Executive Employment Agreement between
Coda Acquisition, Inc. and Jarl P. Johnson.
99.9 Executive Employment Agreement between
Coda Acquisition, Inc. and Douglas H. Miller.
99.10 Executive Employment Agreement between
Coda Acquisition, Inc. and J.W. Spencer, III.
99.11 Agreement of Coda to provide schedules to
Stockholders Agreement (Exhibit 99.3) and
Subscription Agreement (Exhibit 99.4).
Page - 15