Exhibit 10.12
EXCHANGE AND MERGER AGREEMENT
BY AND AMONG
AMERICAN RIVERS OIL COMPANY,
a Wyoming corporation,
AMERICAN RIVERS OIL COMPANY,
a Delaware corporation,
AND
ALLIANCE RESOURCES PLC
* * * * *
DATED: JULY 22, 1999
TABLE OF CONTENTS
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Page
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1. Definitions........................................................... 1
2. The Exchange Offer and Merger......................................... 5
2.1. Filings by AROC......................................... 5
2.2. Filings by Alliance..................................... 6
2.3. Solicitation of Offer................................... 7
2.4. Solicitation of The Merger.............................. 7
3. Mailing Date Actions and Completion of the Merger..................... 7
3.1. Mailing Date............................................ 7
3.2. The Merger.............................................. 9
4. Representations, Warranties and Covenants of AROC..................... 12
4.1. Corporate Organization.................................. 12
4.2. Capitalization.......................................... 12
4.3. Authority; No Violation................................. 13
4.4. Consents and Approvals.................................. 14
4.5. Violations of Laws, Permits, etc........................ 14
4.6. AROC Reports............................................ 14
4.7. AROC Financial Statements............................... 14
4.8. No Undisclosed Liabilities, etc......................... 14
4.9. Absence of Certain Changes.............................. 15
4.10. Data Regarding the AROC Assets.......................... 15
4.11. Litigation.............................................. 15
4.12. Tax Returns and Payments................................ 16
4.13. Bank Accounts........................................... 16
4.14. Contracts............................................... 16
4.15. Compensation and Employee Plans......................... 17
4.16. Brokers, Finders and Advisors........................... 17
4.17. Labor Force............................................. 17
4.18. Books and Records....................................... 17
4.19. Payments................................................ 18
4.20. Commission Filings...................................... 18
4.21. Disclosure.............................................. 18
5. Representations, Warranties and Covenants of Alliance................. 18
5.1. Organization, etc....................................... 18
5.2. Capitalization.......................................... 19
5.3. Authority; No Violation................................. 19
5.4. Consents and Approvals.................................. 20
5.5. Violations of Laws, Permits, etc........................ 20
5.6. Alliance Reports........................................ 20
5.7. Alliance Financial Statements........................... 20
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5.8. No Undisclosed Liabilities, etc......................... 21
5.9. Absence of Certain Changes.............................. 21
5.10. Data Regarding the Alliance Assets...................... 21
5.11. Litigation.............................................. 21
5.12. Tax Returns and Payments................................ 22
5.13. Contracts............................................... 22
5.14. Compensation and Employee Plans......................... 23
5.15. Brokers, Finders and Advisors........................... 23
5.16. Labor Force............................................. 23
5.17. Books and Records....................................... 23
5.18. Payments................................................ 23
5.19. Commission Filings...................................... 24
5.20. Disclosure.............................................. 24
6. Actions of AROC Prior to the Mailing Date............................. 24
6.1. Affirmative Covenants................................... 24
6.2. Negative Covenants...................................... 24
6.3. Consents................................................ 24
6.4. Advice of Changes....................................... 24
6.5. Best Efforts............................................ 25
6.6. Access to Properties and Records........................ 25
6.7. Supply Documents, Reports, etc.......................... 25
6.8. AROC Disclosure Schedule................................ 25
7. Actions of Alliance Prior to the Mailing Date......................... 25
7.1. Affirmative Covenants................................... 25
7.2. Negative Covenants...................................... 26
7.3. Consents................................................ 26
7.4. Advice of Changes....................................... 26
7.5. Best Efforts............................................ 26
7.6. Access to Properties and Records........................ 26
7.7. Supply Documents, Reports, etc.......................... 26
7.8. Alliance Disclosure Schedule............................ 27
8. Conditions to Alliance's Obligations.................................. 27
9. Conditions to AROC's Obligations...................................... 28
10. Additional Agreements................................................. 29
10.1. Confidentiality......................................... 29
10.2. Further Assurances...................................... 29
10.3. Offices................................................. 30
10.4. Warrants................................................ 30
10.5. Convertible Shares...................................... 30
10.6. Convertible Loan Notes.................................. 30
10.7. AROC Delaware Capitalization............................ 30
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10.8. Indemnification......................................... 30
11. Termination, Waiver and Amendment..................................... 31
11.1. Termination............................................. 31
11.2. Manner of Exercise...................................... 32
11.3. Effect of Termination................................... 32
12. Miscellaneous......................................................... 32
12.1. Survival................................................ 32
12.2. Expenses................................................ 32
12.3. Press Releases.......................................... 32
12.4. Binding Effect.......................................... 32
12.5. Severability............................................ 32
12.6. Notices................................................. 33
12.7. Entire Agreement........................................ 33
12.8. Amendments; Waivers..................................... 33
12.9. Headings................................................ 33
12.10. Counterparts............................................ 34
12.11. Specific Performance.................................... 34
12.12. GOVERNING LAW........................................... 34
12.13. Schedules............................................... 34
12.14. Time of Essence......................................... 34
12.15. Best Efforts............................................ 34
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EXCHANGE AND MERGER AGREEMENT
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THIS EXCHANGE AND MERGER AGREEMENT (this "Agreement") is entered into as of
July 22, 1999, by and among AMERICAN RIVERS OIL COMPANY, a Wyoming corporation
("AROC"), AMERICAN RIVERS OIL COMPANY, a Delaware corporation ("AROC Delaware"),
and ALLIANCE RESOURCES PLC, a public limited company incorporated in England and
Wales ("Alliance").
Recitals
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The parties desire to effect certain transactions on the terms, and subject
to the provisions and conditions, of this Agreement.
Agreement
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NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements hereinafter set forth, in accordance with the provisions of
applicable law, the parties hereby agree as follows:
1. Definitions. As used in this Agreement and the Exhibits, Schedules and
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documents delivered pursuant to this Agreement, the following terms shall have
the following meanings:
"ADEA" means the Age Discrimination in Employment Act, as amended, or
any successor statute.
"Affiliate" means an "affiliate" or associate" as those terms are
defined in Rule 12b-2 promulgated by the Commission under the Exchange Act.
"Alliance" means Alliance Resources PLC, a public limited company
incorporated in England and Wales.
"Alliance Assets" means all of the rights, titles and interests,
whether direct or indirect, of the Alliance Entities in and to all of the
property, rights and interests incident to, all oil, gas and mineral properties
of every kind and character, whether producing, non-producing, developed or
undeveloped, wherever situated, including without limitation all of the rights,
titles and interests of the Alliance Entities in and to all leases, royalty
interests, overriding royalty interests, rights-of-way, easements, options,
orders and rulings of applicable regulatory agencies, wells, lease and well
equipment, machinery, production facilities, processing facilities, gathering
systems, transportation systems, disposal systems, fixtures and other items of
personal property and improvements now or as of the Mailing Date appurtenant to
such properties or used, obtained or held for use in connection with the
operation of such properties or with the production, treatment, sale or disposal
of hydrocarbons or water produced therefrom or attributable thereto.
"Alliance Disclosure Schedule" means the Disclosure Schedule delivered
by Alliance to AROC within seven calendar days after the execution of this
Agreement. Each heading in the Alliance Disclosure Schedule shall refer to the
applicable section of this Agreement.
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"Alliance Entities" means Alliance and its Subsidiaries.
"Alliance Financial Statements" means, collectively, the audited
consolidated financial statements of the Alliance Entities as of and for the
year ended April 30, 1998; and the unaudited interim financial statements of the
Alliance Entities as of and for the nine months ended January 31, 1999.
"Alliance Convertible Loan Notes" means the convertible loan notes of
Alliance that are convertible into 1,193,581 Alliance Ordinary Shares.
"Alliance Convertible Shares" means the convertible restricted voting
shares of (Pounds)0.01 each in the capital of Alliance.
"Alliance Form 10-K" means Alliance's Annual Report on Form 10-K for
the year ended April 30, 1998.
"Alliance Ordinary Shares" means the ordinary shares of (Pounds)0.01
each in the capital of Alliance.
"Alliance Proxy Statement" means the proxy statement for the annual
meeting of Alliance Stockholders held March 5, 1999.
"Alliance Reports" means each registration statement, schedule,
report, proxy statement or information statement prepared by Alliance since
April 30, 1998, including, without limitation, (i) the Alliance Form 10-K, (ii)
Alliance's Quarterly Reports on Form 10-Q for the periods ended July 31, October
31, 1998 and January 31, 1999, and (iii) the Alliance Proxy Statement, each in
the form (including exhibits and any amendments thereto) filed with the
Commission.
"Alliance Shares" means the Alliance Ordinary Shares and the Alliance
Convertible Shares.
"Alliance Stockholders" means the holders of Alliance Shares from time
to time.
"Alliance Warrants" means the outstanding warrants to purchase a total
of 5,079,149 Alliance Ordinary Shares.
"AROC" means American Rivers Oil Company, a Wyoming corporation.
"AROC Assets" means all assets of the AROC Entities.
"AROC Class B Shares" means all of the issued and outstanding shares
of class B common stock of AROC, par value $0.01 per share.
"AROC Common Shares" means all of the issued and outstanding common
stock of AROC, par value $0.01 per share.
"AROC Delaware" means American Rivers Oil Company, a Delaware
corporation.
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"AROC Delaware Shares" means the common stock, par value $0.01 per
share, of AROC Delaware.
"AROC Disclosure Schedule" means the Disclosure Schedule delivered by
AROC to Alliance within seven calendar days after the execution of this
Agreement. Each heading in the AROC Disclosure Schedule shall refer to the
applicable section of this Agreement.
"AROC Entities" means AROC and its Subsidiaries.
"AROC Financial Statements" means, collectively, the respective
audited consolidated financial statements of the AROC Entities as of and for the
years ended March 31, 1998 and 1999.
"AROC Form 10-K" means AROC's Annual Report on Form 10-K for the year
ended March 31, 1999.
"AROC Reports" means each registration statement, schedule, report,
proxy statement or information statement prepared by AROC since March 31, 1998,
including, without limitation, (i) the AROC Form 10-K, and (ii) AROC's Quarterly
Reports on Form 10-Q for the periods ended June 30, September 30 and December
31, 1998, each in the form (including exhibits and any amendments thereto) filed
with the Commission.
"AROC Shares" means the AROC Common Shares and the AROC Class B
Shares.
"AROC Stockholders" means the holders of AROC Shares from time to
time.
"City Code" means the City Code on Takeovers and Mergers of the United
Kingdom.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Commission" means the Securities and Exchange Commission and/or any
other Governmental Entity that administers either the Securities Act or the
Exchange Act.
"DGCL" means the Delaware General Corporation Law.
"Dissenting Shares" has the meaning given that term in Section
3.2(g)(1).
"Effective Time" has the meaning given that term in Section 3.2(a).
"Encumbrance" means any option, pledge, security interest, lien,
charge, encumbrance, or restriction (whether on voting, sale, transfer,
disposition or otherwise), whether imposed by agreement, understanding, law or
otherwise, except those arising under applicable federal or state securities
laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute.
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"Exchange Agent" means the transfer agent for the AROC Shares.
"Excluded Shares" has the meaning given that term in Section
3.2(g)(1).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, in statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Entity" means any federal, state, municipal, domestic or
foreign court, tribunal, administrative agency, department, commission, board,
bureau or other governmental authority or instrumentality.
"Indemnified Parties" has the meaning given in Section 10.8.
"Information Statement" means the information statement filed by AROC
pursuant to Section 2.1(b) and any amendments or supplements to the information
statement.
"Mailing Date" has the meaning given in Section 3.1.
"Material Effect" means a material adverse effect on the business or
financial condition of a party and its Subsidiaries taken as a whole.
"Merger" means the merger of AROC with and into Newco, with Newco
being the surviving corporation, pursuant to Section 3.2.
"Merger Consideration" has the meaning given that term in Section
3.2(g)(1).
"Newco" means a Delaware corporation to be formed as a subsidiary of
AROC Delaware.
"Offer" means the offer made pursuant to Section 2.3.
"Offer Documents" means the prospectus included in the Registration
Statement and any other documents used to solicit the Alliance Stockholders to
accept the Offer.
"Plan" means (i) any employee benefit plan as defined in Section 3(3)
of ERISA, which is (a) maintained by a party or any of its Subsidiaries, or (b)
to which a party or any of its Subsidiaries is making or accruing an obligation
to make contributions, or (ii) any other formal or informal obligation to,
arrangement with, or plan or program for the benefit of, employees of a party or
any of its Subsidiaries, including, but not limited to, stock options, stock
bonuses, stock purchase agreements, bonuses, incentive compensation, deferred
compensation, supplemental pensions, vacations, severance pay, insurance or any
other benefit, program or practice.
"Registration Statement" means the registration statement filed by
AROC Delaware pursuant to Section 2.1 and any amendments or supplements to the
registration statement.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute.
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"Subsidiary" or "Subsidiaries" means any corporation more than fifty
percent (50%) of the voting power of which is owned directly or indirectly by a
party or other relevant person, as the context requires.
"Surviving Corporation" has the meaning given that term in Section
3.2(b).
"Taxes" means all taxes, charges, fees, levies, duties or other
assessments, including, without limitation, income, gross receipts, excise, ad
valorem, property, production, severance, sales, use, license, payroll and
franchise taxes, imposed by any Governmental Entity and includes any estimated
tax, interest and penalties or additions to tax.
"Tax Return" means a report, return or other information required to
be supplied by a party comprising a part of the Alliance Entities or the AROC
Entities, as the case may be, to a Governmental Entity in connection with Taxes
including, where permitted or required, combined or consolidated returns for any
group of entities that includes that entity.
"WBCA" means the Wyoming Business Corporation Act.
2. The Exchange Offer and Merger.
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2.1. Filings by AROC.
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(a) As soon as reasonably practicable after the date of this Agreement,
AROC Delaware will, in compliance with all applicable state and federal laws,
and in form and substance satisfactory to Alliance, file with the Commission a
registration statement relating to the AROC Delaware Shares to be offered to the
Alliance Stockholders pursuant to the Offer and to be issued to the AROC
Shareholders in the Merger (the "Registration Statement"), and will thereafter
use its best efforts to obtain as promptly as possible and to continue the
effectiveness of the Registration Statement.
(b) As soon as reasonably practicable after the date of this Agreement,
AROC will, in compliance with all applicable state and federal laws, and in form
and substance satisfactory to Alliance, file with the Commission an information
or proxy statement relating to a meeting of the AROC Stockholders to approve the
Merger (the "Information Statement"), and will thereafter use its best efforts
to respond as promptly as possible to all comments of the Commission with
respect to the Information Statement.
(c) Prior to delivering the Offer Documents to the Alliance Stockholders,
AROC Delaware will, in compliance with all applicable state and federal laws,
and in form and substance satisfactory to Alliance, file with the Commission a
Tender Offer Statement on Schedule 14D-1 relating to the Offer containing the
prospectus included in the Registration Statement.
(d) AROC Delaware will prepare and file with the Commission and use its
best efforts to cause as promptly as possible and to continue the effectiveness
of such amendments and supplements to the registration statement, the prospectus
included in the Registration Statement and the Schedule 14D-1 for so long as the
Offer shall continue, and to comply with the requirements of all applicable laws
regarding the conduct of the Offer.
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(e) AROC Delaware will use its best efforts to register or qualify the
AROC Delaware Shares offered pursuant to the Offer and the Merger under the
securities or blue sky laws of such jurisdictions as Alliance shall request and
do any and all other acts or things that may be necessary or advisable to enable
to Offer and the Merger to be made and consummated.
(f) After the Commission completes its review of the Information
Statement, and contemporaneously with the making of the Offer, AROC will deliver
the Information Statement, together with such documents as are required under
the City Code, to the AROC Stockholders.
(g) The materials filed by AROC and AROC Delaware with the Commission and
the materials sent by AROC Delaware to the Alliance Stockholders in connection
with the Offer and to the AROC Stockholders in connection with the Information
Statement will not include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The materials shall in form and substance be satisfactory to
Alliance and shall include all information regarding the AROC Entities required
by applicable law and the City Code to inform the Alliance Stockholders of the
Offer and to inform the AROC Stockholders of the matters contemplated by this
Agreement.
(h) Alliance agrees to furnish to AROC and AROC Delaware all information
(which shall meet the standard of the preceding paragraph) reasonably requested
by AROC and AROC Delaware in connection with preparing such materials.
2.2. Filings by Alliance.
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(a) Not less than 10 business days after the commencement of the Offer,
Alliance will, in compliance with all applicable state and federal laws, and in
form and substance satisfactory to AROC, file with the Commission and deliver to
the Alliance Stockholders a Tender Offer Solicitation/Recommendation Statement
on Schedule 14D-9, and file with applicable state authorities such other
documents as may be necessary or appropriate, recommending (subject to the
fiduciary duties of the directors of Alliance) that the Alliance Stockholders
accept the Offer.
(b) Alliance will prepare and file with the Commission and use its best
efforts to cause as promptly as possible and to continue the effectiveness of
such amendments and supplements to the Schedule 14D-9 for so long as the Offer
shall continue, and to comply with the requirements of all applicable laws and
the City Code regarding the conduct of the Offer.
(c) As soon as reasonably practicable after the date of this Agreement,
Alliance will, in compliance with all applicable laws, and in form and substance
satisfactory to AROC, file with London Stock Exchange Limited and all other
applicable regulatory bodies in the United Kingdom, all materials reasonably
necessary to make, and use its best efforts, to obtain the approval of those
authorities to, the Offer.
(d) The materials filed by Alliance and the materials sent by Alliance to
the Alliance Stockholders in connection with the Offer will not include any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The materials shall in
form and substance be satisfactory to AROC and shall include all information
regarding the
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Alliance Entities required by applicable law and the City Code to inform the
Alliance Stockholders of the Offer.
(e) AROC agrees to furnish to Alliance all information (which shall meet
the standard of the preceding paragraph) reasonably requested by Alliance in
connection with preparing such materials.
2.3. Solicitation of Offer. Promptly after the satisfaction of all
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applicable regulatory requirements, including the filings contemplated by
Sections 2.1 and 2.2 and the completion of the actions contemplated by Section
3, each of Alliance, AROC and AROC Delaware agrees (subject to the fiduciary
duties of the directors of each of them):
(a) that AROC will deliver the Information Statement, together with such
documents as are required under the City Code, to the AROC Stockholders;
(b) to use its best efforts to solicit the Alliance Stockholders to accept
the offer of AROC Delaware to exchange one AROC Delaware Share for each Alliance
Ordinary Share and 0.5 AROC Delaware Shares for each Alliance Convertible Share
(the "Offer");
(c) to make such press announcements as are required under the City Code
in relation to the Offer;
(d) to make the Offer unconditional under U.K. law and the City Code as
soon as practicable after Alliance Stockholders holding a majority of both the
Alliance Ordinary Shares and the Alliance Convertible Shares have accepted the
Offer; and
(e) to continue the Offer for so long as required by applicable U.S. and
U.K. law and the City Code.
2.4. Solicitation of The Merger. Promptly after the satisfaction of all
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applicable regulatory requirements, including the filings contemplated by
Sections 2.1 and 2.2 and the completion of the actions contemplated by Section
3, each of Alliance, AROC and AROC Delaware agrees (subject to the fiduciary
duties of the directors of each of them):
(a) to use its best efforts to deliver the Information Statement to the
AROC Stockholders and recommend and solicit the vote of the AROC Stockholders to
approve the Merger;
(b) to hold the meeting of AROC Stockholders contemplated by the
Information Statement;
3. Mailing Date Actions and Completion of the Merger.
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3.1. Mailing Date. On or prior to the date the Offer Documents are to be
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mailed to the Alliance Stockholders (the "Mailing Date"), the parties shall
deliver the following documents at the offices of Jenkens & Gilchrist, P.C.,
1445 Ross Avenue, Suite 3200, Dallas, Texas at 10:00 a.m., local time.
(a) AROC shall deliver to Alliance the following:
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(1) A copy of the charters of each of the AROC Entities certified as of a
date within ten days of the Mailing Date by the Secretary of State of the
state of incorporation of each of the respective entities and certified by the
respective corporate secretary as to the absence of any amendments between the
date of certification by the respective Secretary of State and the Mailing
Date;
(2) A certificate from the appropriate governmental officials of the state
of incorporation as to the existence and good standing of each of the AROC
Entities and the payment of Taxes by each of the AROC Entities as of a date
within ten days of the Mailing Date, and, if available, a telecopy from such
officials as to the same matters dated the business day before the Mailing
Date;
(3) A certificate of the corporate secretary of each of the AROC Entities
attaching thereto a true and correct copy of the bylaws of the respective
entity;
(4) A certificate of the corporate secretary of AROC attaching copies of
the resolutions of the board of directors approving the Offer;
(5) All correspondence of AROC with the Commission relating to the filing
of the documents referred to in Section 2.1;
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(6) The certificate of an officer of AROC referred to in Section 8(c);
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(7) The opinion of AROC's counsel referred to in Section 8(e);
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(8) All consents or approvals of any third party that are required to be
identified pursuant to Section 4.4; and
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(9) Such other documents as are required pursuant to this Agreement or as
may reasonably be requested from AROC by Alliance or its counsel.
(b) Alliance shall deliver to AROC the following:
(1) a copy of the Memorandum and Articles of Association (and all
amendments thereto, if any) of Alliance and each of Alliance's U.K.
Subsidiaries certified by the corporate secretary as to the absence of any
amendments as of the Mailing Date;
(2) a copy of the charters of each of Alliance's U.S. Subsidiaries
certified as of a date within ten days of the Mailing Date by the appropriate
governmental officials of the jurisdiction of organization of each of the
respective entities and certified by the respective corporate secretary as to
the absence of any amendments between the date of certification by the
governmental official and the Mailing Date;
(3) A certificate from the appropriate governmental officials of the
jurisdiction of organization of each of Alliance's U.S. Subsidiaries as to the
existence and good standing of such Subsidiary as of the date within ten days
of the Mailing Date, and, if available, a telecopy from such officials as to
the same matters dated the business day before the Mailing Date;
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(4) A certificate of the corporate secretary of each of Alliance's U.S.
Entities attaching thereto a true and correct copy of the bylaws of the
respective entity;
(5) A certificate of the corporate secretary of Alliance attaching copies
of corporate resolutions duly adopted by its board of directors resolving to
recommend the Offer;
(6) All correspondence of Alliance with the Commission relating to the
filing of the documents referred to in Section 2.2;
(7) The certificate of an officer of Alliance referred to in Section 9(b);
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(8) The opinion of Alliance's counsel referred to in Section 9(d);
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(9) All consents or approvals of any third party that are required to be
identified pursuant to Section 5.4;
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(10) Such other documents as are required pursuant to this Agreement or as
may reasonably be requested from Alliance by AROC or its counsel.
3.2. The Merger.
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(a) As soon as practicable after the AROC shareholders have approved the
Merger and it is determined that at least a majority of the Alliance
Stockholders have accepted the Offer, and immediately before the Offer becomes
unconditional and AROC Delaware Shares are issued to those Alliance Stockholders
who have accepted the Offer, provided that this Agreement has not been
terminated or abandoned pursuant to Article 11, AROC and Newco will cause a (i)
a Certificate of Merger to be executed and filed with the Secretary of State of
Delaware as provided in Section 251 of the DGCL and (ii) Articles of Merger to
be executed and filed with the Secretary of State of Wyoming as provided in
Section 17-16-1105 of the WBCA. The Merger shall become effective on the date
on which the Delaware Certificate of Merger has been duly filed with the
Secretary of State of Delaware and the Wyoming Articles of Merger have been duly
filed with the Secretary of State of the State of Wyoming, and such time is
hereinafter referred to as the "Effective Time."
(b) At the Effective Time AROC shall be merged with and into Newco and the
separate corporate existence of AROC shall thereupon cease. Newco shall be the
surviving corporation (the "Surviving Corporation") in the Merger and shall
continue to be governed by the laws of the State of Delaware, and the separate
corporate existence of Newco with all its rights, privileges, immunities, powers
and franchises shall continue unaffected by the Merger, except as set forth in
Section 3.2(f) and (g). The Merger shall have the effects specified in the
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Delaware General Corporation Law and the Wyoming Business Corporation Act.
(c) Change of Name of AROC Delaware. The Information Statement and
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Registration Statement shall provide for, and concurrently with the Effective
Time, AROC Delaware shall file a Certificate of Amendment to its Certificate of
Incorporation to effect, a change of the name of AROC Delaware to "Alliance
Resources Inc."
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(d) The Certificate of Incorporation. The Certificate of Incorporation of
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Newco in effect at the Effective Time shall be the Certificate of Incorporation
of the Surviving Corporation, until duly amended in accordance with the terms
thereof and the DGCL.
(e) By-Laws. The By-Laws of Newco in effect at the Effective Time shall
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be the By-Laws of the Surviving Corporation, until duly amended in accordance
with the terms thereof and the DGCL.
(f) Directors and Officers. The directors and officers of AROC Delaware
----------------------
and of Newco shall, from and after the Effective Time, and until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the respective
corporation's Certificate of Incorporation and By-Laws, be the following:
John A. Keenan President and Director of AROC Delaware
and Newco
Francis M. Munchinski Secretary of AROC Delaware and Newco
Paul R. Fenemore Director of AROC Delaware and Newco
Robert E. Schulte Director of Newco
M. Phillip Douglas Director of AROC Delaware
Michael E. Humphries Director of AROC Delaware
William J.A. Kennedy Director of AROC Delaware
John R. Martinson Director of AROC Delaware
(g) Conversion or Cancellation of Shares. The manner of converting or
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canceling shares of AROC in the Merger shall be as follows:
(1) At the Effective Time, each AROC Share issued and outstanding
immediately prior to the Effective Time, other than AROC Shares that are owned
by AROC or any direct or indirect subsidiary of AROC or Shares ("Dissenting
Shares") which are held by stockholders ("Dissenting Stockholders") properly
exercising appraisal rights pursuant to (S)17-16-1321 and (S)17-16-1323 of the
WBCA, if applicable (collectively, "Excluded Shares") shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive, 0.11 AROC Delaware Shares (the "Merger
Consideration"). At the Effective Time, all AROC Shares, by virtue of the
Merger and without any action on the part of the holders thereof, shall no
longer be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such AROC Shares
(other than Excluded Shares) shall thereafter cease to have any rights with
respect to such AROC Shares, except the right to receive the Merger
Consideration for such AROC Shares upon the surrender of such certificate in
accordance with Section 3.2(h) or the right, if any, to receive payment from
the Surviving Corporation of the "fair value" of such Shares as determined in
accordance with (S)17-16-1325 of the WBCA.
10
(2) At the Effective Time, each AROC Share issued and outstanding at the
Effective Time and owned by AROC Delaware or held in AROC's treasury or owned
by AROC or any direct or indirect subsidiary of AROC shall, by virtue of the
Merger and without any action on the part of the holder thereof, cease to be
outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(3) At the Effective Time, each Newco Share issued and outstanding at the
Effective Time shall continue to be outstanding and shall not be affected by
the Merger.
(4) At the Effective Time, each AROC Delaware Share issued and outstanding
at the Effective Time (other than AROC Delaware Shares issued or to be issued
pursuant to the Offer) shall, by virtue of the merger and without any action
on the part of the holder thereof, cease to be outstanding, shall be canceled
and retired without payment of any consideration therefore and shall cease to
exist.
(h) Payment for AROC Shares.
-----------------------
(1) AROC Delaware shall make available or cause to be made available to
the Paying Agent at the Effective Time certificates representing the AROC
Delaware Shares sufficient to enable the Paying Agent to deliver the necessary
certificates to the former holders of AROC Shares as required by paragraph
(b).
(2) On or after the Effective Time, each person who was immediately before
the Effective Time a holder of record of issued and outstanding AROC Shares
may deliver to the Paying Agent a letter of transmittal in a form suitable to
the Paying Agent duly executed and completed in accordance with the
instructions thereto, together with such holders' certificates representing
such AROC Shares, and AROC Delaware shall cause the Paying Agent to deliver to
such holders certificates in respect of the AROC Delaware Shares and any
dividends or distributions thereon to which such holders are then entitled.
(3) Fractional AROC Delaware Shares will not be issued to any person. In
lieu of issuing a fractional AROC Delaware Share to any person, AROC Delaware
will round the number of AROC Delaware Shares to be issued to each person to
the nearest whole number of AROC Delaware Shares.
(4) If AROC Delaware Shares are to be issued to a person other than the
registered holder of the certificates surrendered, it shall be a condition of
such issue that the certificates so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
delivery shall pay any transfer or other taxes required by reason of the
delivery to a person other than the registered holder of the certificates
surrendered or establish to the satisfaction of AROC Delaware or the Paying
Agent that such tax has been paid or is not applicable.
(i) Dissenters' Rights.
------------------
(1) Notwithstanding anything in this Agreement to the contrary, AROC
Shares that are issued and outstanding immediately prior to the Effective Time
and that are held by AROC
11
Stockholders who have delivered a written demand for appraisal of such AROC
Shares in the manner provided in Section 17-16-1321 of the WBCA (the
"Dissenting Shares") shall not be canceled and the holders thereof shall not
receive the right to receive the consideration provided in Section 3.2(g)(1),
unless and until such holder shall have failed to perfect or shall have
effectively withdrawn or lost the right to appraisal and payment under the
WBCA, as the case may be. If such holder shall have failed to perfect or shall
have effectively withdrawn or lost such right, the AROC Shares shall thereupon
be deemed to have been canceled and the holders thereof to have become
entitled, with effect from the Effective Time, to receive the consideration
specified in Section 3.2(g)(1).
(2) AROC promptly shall give Alliance notice of any demand made by or on
behalf of any dissenting AROC Stockholder to be paid the "fair value" of the
AROC Stockholder's AROC Shares, as provided in Section 17-16-1321 of the WBCA,
and the Surviving Corporation shall thereupon have sole and exclusive rights
to conduct and resolve, in its sole discretion, all negotiations and
proceedings with respect to, and the ultimate disposition of, any such demands
in any manner that the Surviving Corporation may elect. All such payments
shall be made solely by the Surviving Corporation and shall not be made by,
nor shall Alliance reimburse the Surviving Corporation for, such payments.
(j) Transfer of AROC Shares After the Effective Time. No transfers of AROC
------------------------------------------------
Shares shall be made on the stock transfer books of the Surviving Corporation at
or after the Effective Time. If, after the Effective Time, certificates formerly
representing AROC Shares are presented to the Surviving Corporation, they shall
be canceled and the holders thereof shall instead be entitled to be issued AROC
Delaware Shares as provided in this Section 3.2.
-----------
4. Representations, Warranties and Covenants of AROC. Except as expressly set
-------------------------------------------------
forth and specifically identified by section number of this Agreement in the
AROC Disclosure Schedule, AROC represents, warrants and covenants to Alliance,
on the date hereof and as of the Mailing Date, as follows:
4.1. Corporate Organization.
----------------------
(a) Each of the AROC Entities is a corporation duly organized and validly
existing as a corporation and in good standing under the laws of its
jurisdiction of incorporation.
(b) Each of the AROC Entities has the requisite corporate power and
authority to carry on its business as now being conducted and to own, lease and
operate its property and assets, and each of the AROC Entities is duly qualified
or licensed to do business and is in good standing in every jurisdiction in
which the failure to be so qualified and licensed could have a Material Effect.
(c) AROC has delivered or made available to Alliance true, correct and
complete copies of each of the AROC Entities' respective Certificate of
Incorporation and Bylaws as presently in effect.
4.2. Capitalization.
--------------
(a) The authorized capital stock of AROC consists of 20,000,000 shares of
common stock, par value $0.01 per share, 3,615,770 of which are issued and
outstanding, 8,000,000 shares of class B common stock, par value $0.01 per
share, 7,267,820 of which are issued and outstanding, and
12
5,000,000 shares of preferred stock, par value $0.50 per share, none of which
are outstanding. The authorized capital stock of AROC Delaware consists of 100
shares of common stock, par value $0.001 per share, all of which are issued and
outstanding. Section 4.2 of the AROC Disclosure Schedule sets forth the number
and type of securities of AROC that may be acquired pursuant to outstanding
options or rights to purchase AROC Common Shares and the exercise prices at
which such equity securities may be acquired. All of the issued shares of each
of the AROC Entities are, and all of the AROC Delaware Shares to be issued
pursuant to the Offer, when issued in accordance with the terms of the Offer,
will be validly issued, fully paid and nonassessable and none of such shares
have been issued in violation of the preemptive rights of any person. AROC has
no shares of capital stock reserved for issuance.
(b) Except as described in Section 4.2(a), there are no (i) shares of
capital stock or other securities bearing voting or other equity rights, whether
contingent or not, of any of the AROC Entities outstanding; (ii) outstanding
subscriptions, puts, options, warrants or other rights, contract ual or
otherwise, to purchase or acquire any capital stock of any of the AROC Entities;
or (iii) contracts, commitments, understandings, arrangements or restrictions by
which any of the AROC Entities is or may become bound to issue any additional
equity interests or any options or rights with respect thereto, or any
securities convertible into any equity interests.
(c) The issued and outstanding stock of AROC owned by the directors,
executive officers and 5% or greater stockholders of AROC is owned of record,
and to the knowledge of AROC, beneficially, as described in the AROC Form 10-K.
AROC owns all of the issued and outstanding stock of each of its Subsidiaries,
directly or indirectly, free and clear of all Encumbrances. Except for its
Subsidiaries, neither AROC nor any of its Subsidiaries owns or holds any equity,
debt or other interest in any entity or business or any option to acquire any
such interest, except for accounts receivable that have arisen in the ordinary
course of business.
4.3. Authority; No Violation.
-----------------------
(a) The execution and performance of this Agreement by AROC have been duly
and validly authorized by the board of directors of AROC and, except for the
approval of the AROC shareholders, no other corporate action is necessary to
authorize the execution, delivery and performance of this Agreement by AROC.
AROC has full, absolute and unrestricted right, power and authority to execute
and perform this Agreement and, subject to the approval of the AROC
shareholders, to carry out the transactions contemplated hereby. This Agreement
has been duly and validly executed by AROC and, is a valid and binding
obligation of AROC, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, moratorium, reorganization,
receivership or similar laws affecting the rights of creditors generally.
(b) None of the execution, delivery or performance of this Agreement does
or will, after the giving of notice, lapse of time or otherwise, (i) result in
any violation of or be in conflict with or constitute a default under any term
or provision of the Certificate of Incorporation or Bylaws of any of the AROC
Entities of or any term or provision of any judgment, decree, order, statute,
injunction, rule or regulation applicable to any of the AROC Entities, or of any
material note, bond, mortgage, indenture, lease, license, franchise, agreement
or other instrument or obligation to which any of the AROC Entities is bound;
(ii) result in the creation of any material Encumbrance upon AROC Shares, any of
the Alliance Assets or any of the AROC Assets pursuant to any such term or
provision; or (iii) constitute a material default under or give any party the
right to accelerate, amend or modify,
13
terminate, abandon or refuse to perform or comply with, any material contract,
agreement, arrangement, commitment or plan to which any AROC Entities is a
party, or by which any of the AROC Entities or any of their rights, properties
or assets may be subject or bound.
4.4. Consents and Approvals. No consent, waiver, approval or
----------------------
authorization of, or declaration, designation, filing, registration or
qualification with, any Governmental Entity or any third party, is required to
be made or obtained by the AROC Entities in connection with the execution,
delivery and performance of this Agreement or to preserve any material rights
and benefits enjoyed by any of the AROC Entities on the date hereof following
the consummation of the transactions contemplated by this Agreement except (a)
those that have already been obtained or (b) those specifically contemplated by
this Agreement.
4.5. Violations of Laws, Permits, etc.
---------------------------------
(a) None of the AROC Entities is in violation of any term or provision of
its Certificate of Incorporation or Bylaws. None of the AROC Entities is in
violation of any term or provision of any judgment, decree, order, statute,
injunction, rule, ordinance or regulation applicable to it, or of any agreement
or instrument applicable to such entity where the violation thereof would result
in a Material Effect.
(b) Each of the AROC Entities holds and has maintained in full force and
effect all certificates, licenses and permits material to the conduct of its
business, and has not received any notification that any revocation or
limitation thereof is threatened or pending where such revocation or limitation
would result in a Material Effect.
4.6. AROC Reports. AROC has made available to Alliance each of the AROC
------------
Reports. As of their respective dates, the AROC Reports did not, and any AROC
Reports filed with the Commission subsequent to the date of this Agreement will
not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
4.7. AROC Financial Statements.
-------------------------
(a) In all material respects the consolidated AROC Financial Statements
fairly present the consolidated assets, liabilities and financial position of
the respective entities purported to be covered thereby as of the dates thereof
and the results of their operations and cash flow for the respective periods
ended on such dates, all in conformity with GAAP consistently applied.
(b) The AROC Financial Statements were prepared from the books and records
of each of the respective entities purported to be covered thereby. Such AROC
Financial Statements do not contain any items of a material special or
nonrecurring nature, except as expressly noted in such statements.
4.8. No Undisclosed Liabilities, etc. None of the AROC Entities has any
--------------------------------
material liabilities or obligations, whether direct, indirect, absolute or
contingent (including, without limitation, liabilities as guarantor or otherwise
with respect to obligations of others), except (a) liabilities that are fully
reflected on or reserved against on the latest balance sheet of such entity
included in the AROC Financial Statements or (b) liabilities incurred in the
ordinary course of
14
business since the date of the latest balance sheet included in the AROC
Financial Statements that are consistent with past practice.
4.9. Absence of Certain Changes. Since the date of the latest audited
--------------------------
AROC Financial Statement, none of the AROC Entities has:
(a) Suffered any change that would result in a Material Effect;
(b) Borrowed any money or incurred, assumed or become subject to, whether
directly or by way of guarantee or otherwise, any other material obligation or
liability for borrowed money, whether absolute or contingent;
(c) (i) Issued, purchased or redeemed any of its capital securities or any
option, warrant or right to purchase any of the same; or (ii) authorized,
declared or made any dividends, distributions of earnings or capital on, or
splits or any other reclassification of its equity securities;
(d) Acquired any material assets or properties having a value in excess of
$100,000 in the aggregate;
(e) Increased the salaries, compensation, pension or other benefits
payable, or paid any bonuses, to its officers and directors or their Affiliates;
(f) Agreed, either in writing or otherwise, to take any action described
in this Section 4.9.
-----------
4.10. Data Regarding the AROC Assets. All of the information made or to
------------------------------
be made available to Alliance and its representatives regarding the AROC Assets
is accurate and complete in all material respects, when considered in context
and together with all relevant information made available.
4.11. Litigation.
----------
(a) There is no action, proceeding, investigation or inquiry pending or,
to the knowledge of the AROC Entities, threatened (i) against or affecting any
of the AROC Entities or their assets or ordinary conduct of the business that,
if determined adversely to the AROC Entities, would result in a Material Effect,
except as described in the AROC Reports, or (ii) that questions this Agreement
or any action contemplated by this Agreement or in connection with the Merger.
(b) There are no citations, fines or penalties heretofore asserted against
any of the AROC Entities or their assets under any federal, state or local law
relating to air, noise or water pollution or other environmental protection
matters, or relating to occupational health or safety, of which such entity has
received notice and that remain unpaid or that could otherwise bind the assets
of any of the AROC Entities and that would result in a Material Effect.
(c) AROC has no knowledge of any state of facts or of the occurrence or
nonoccurrence of any event or group of related events, that should reasonably
cause AROC to determine that there exists any basis for any material claim
against the AROC Entities for any of the matters described in paragraphs (a) or
(b).
15
4.12. Tax Returns and Payments.
------------------------
(a) The AROC Entities (or the common parent of any affiliated group of
which any of such entities is or has been a member) have duly filed in correct
form in all material respects all Tax Returns required to be filed by such
entities and have duly paid or provided for payment of (or there have been paid
on their behalf) all Taxes due or claimed to be due from them by federal, state,
local or foreign taxing authorities, excluding Taxes that are being contested in
good faith by appropriate proceedings and as to which adequate reserves have
been provided in the AROC Financial Statements.
(b) There are no tax liens upon any property or assets owned by any of the
AROC Entities that would have a Material Effect.
(c) All Tax Returns of the AROC Entities filed, including any amendments
to date, have been prepared in good faith without willful misrepresentation and
are complete and accurate in all material respects. The federal income tax
returns of the AROC Entities have been examined by the Internal Revenue Service
for all periods described in Section 4.12 of the AROC Disclosure Schedule, and
all deficiencies assessed as a result of such examination have been paid in full
or finally settled and no issue has been raised by the Internal Revenue Service
in any such examination that has been resolved adversely to any of the AROC
Entities or is still pending and, by application of similar principles,
reasonably could be expected to result in an assertion by the Internal Revenue
Service of a material deficiency in any other taxable year or with respect to
any other of the AROC Entities. There are no outstanding agreements, waivers or
other arrangements providing for an extension of time with respect to the filing
of any Tax Returns or the payment by, or assessment against, any of the AROC
Entities for any Taxes.
(d) The reserves made for Taxes on the respective balance sheets in the
AROC Financial Statements are sufficient for the payment of all unpaid Taxes due
and payable by the AROC Entities attributable to all periods ended on or before
the date of the respective balance sheets in accordance with GAAP.
4.13. Bank Accounts. AROC has provided Alliance with the names and
-------------
locations of all bank institutions at which the AROC Entities maintain accounts
or lock boxes of any nature, the account or box number and the names of all
persons authorized to draw thereon or make withdrawals therefrom.
4.14. Contracts.
---------
(a) AROC has made available to Alliance complete and correct copies of all
written agreements, contracts and commitments, together with all amendments
thereto, and accurate (in all material respects) descriptions of all oral
agreements, to which any of the AROC Entities is a party or by which any of
their properties is bound. Such agreements, contracts and commitments are in
full force and effect, and all of such entities and, to the knowledge of the
AROC Entities, all other parties to such agreements, contracts and commitments
have performed all obligations required to be performed by them to date
thereunder in all material respects and are not in default thereunder in any
material respect.
16
(b) None of the AROC Entities is a party to or bound by any employment,
management, consulting, option, note, loan, lease or other agreements with any
of the officers, directors or shareholders of more than 5% of the outstanding
securities of any of the AROC Entities;
(c) None of the AROC Entities is a party to any agreement that, upon or
after completion of the Merger, could result in the creation of any Encumbrance
upon any of the Alliance Assets or any of the assets of AROC Delaware other than
the AROC Assets.
(d) None of the AROC Entities has outstanding any powers of attorney,
including powers of attorney with respect to representation before any
Governmental Entity, customs agents and brokers, or given in connection with
qualification to conduct business in any other jurisdiction.
4.15. Compensation and Employee Plans.
-------------------------------
(a) AROC has provided Alliance (i) the names and current annual
compensation rates of all present directors, officers, employees, independent
contractors or agents of each of the AROC Entities and (ii) the number, job
category and range of compensation by job category of all employees of such
entities.
(b) AROC has made available to Alliance the name of each Plan applicable
to any of the AROC Entities and all documents evidencing any Plan applicable to
any of the AROC Entities.
(c) Each Plan applicable to any of the AROC Entities is now, and has been
from its inception, administered in compliance in all material respects with the
provisions of all applicable laws and regulations, including ERISA, the Code and
the ADEA, insofar as such statutes are applicable to such Plan.
4.16. Brokers, Finders and Advisors. AROC has not employed any broker,
-----------------------------
finder, or investment advisor on its behalf, or incurred any liability for any
brokerage or finder's fees or commissions in connection with the transaction
contemplated hereby.
4.17. Labor Force. Each of the AROC Entities is in compliance in all
-----------
material respects with all applicable laws (including without limitation federal
income tax laws), ordinances, regulations, statutes, rules and restrictions of
any Governmental Entity respecting employment and employment practices and terms
and conditions of employment.
4.18. Books and Records. The books and records of each of the AROC
-----------------
Entities (including, without limitation, the books of account, minute books and
stock record books) are complete and correct in all material respects and have
been maintained in accordance with sound business practices. The minute books of
each of the AROC Entities contain accurate and complete records in all material
respects of all meetings held of, and corporate action taken by, the
shareholders and the Boards of Directors of the respective entities and no
meetings of or actions by such shareholders or any such Boards of Directors have
been held or taken for which minutes have not been prepared and are not
contained in such minute books. None of the records and written documents
furnished or made available to Alliance's representatives or agents by the AROC
Entities concerning the AROC Assets, when considered in context and together
with any relevant or related documents also so furnished or made available,
contain any untrue statement of material fact or omit a material fact necessary
to make any statement therein not misleading.
17
4.19. Payments. None of the AROC Entities has, directly or indirectly,
--------
paid or delivered any fee, commission or other sum of money or item of property
however characterized to any finder, agent, government official or other party,
in the United States or any other country, in any manner related to its business
or operations, which such entity knows or has reason to believe to have been
illegal under any federal, state or local laws of the United States or any other
country or territory having jurisdiction over such entity, and has not
participated, directly or indirectly, in any boycotts or similar practices.
4.20. Commission Filings. AROC has filed all forms, reports and documents
------------------
required to be filed with the Commission since January 1, 1996 . All of such
filings were prepared in accordance with the requirements of all applicable laws
and did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
4.21. Disclosure. No representation or warranty made by AROC in this
----------
Agreement (including, without limitation, in the AROC Disclosure Schedule)
contains any untrue statement of material fact or omits or will omit to state
any material fact necessary to make the statements herein or therein not
misleading in light of the circumstances under which made.
5. Representations, Warranties and Covenants of Alliance.
-----------------------------------------------------
Except as expressly set forth and specifically identified by section number
of this Agreement in the Alliance Disclosure Schedule, Alliance represents,
warrants and covenants to AROC, on the date hereof and as of the Mailing Date,
as follows:
5.1. Organization, etc.
-----------------
(a) Alliance is a public limited company duly incorporated and validly
existing under the laws of England and Wales.
(b) Each of Alliance's U.K. Subsidiaries is a limited company duly
incorporated and validly existing under the laws of England and Wales. Each of
Alliance's other Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation.
(c) Each of the Alliance Entities has the requisite corporate power and
authority to carry on its business as now being conducted and to own, lease and
operate its property and assets, and each of the United States Alliance Entities
is duly qualified or licensed to do business and is in good standing in every
jurisdiction in which the failure to be so qualified and licensed could have a
Material Effect.
(d) Alliance has delivered or made available to AROC true, correct and
complete copies of the organizational documents of each of the Alliance Entities
as presently in effect.
18
5.2. Capitalization.
--------------
(a) The authorized capital stock of Alliance consists of 415,001,376
ordinary shares of (Pounds)0.01 each, 47,487,142 of which are issued and
outstanding, 10,000,000 shares of Alliance Convertible Stock, of which
10,000,000 are issued and outstanding and 1,414,998,624 deferred shares of 1p
each of which 1,217,166,912 are issued and outstanding. There are outstanding
options to subscribe for 3,040,000 Alliance Ordinary Shares at subscription
prices varying from 13.5p to (Pounds)3.00. There are outstanding warrants to
purchase 5,079,149 Alliance Ordinary Shares at purchase prices varying from 1p
to (Pounds)1.00 per share and outstanding convertible loan notes that are
convertible into 1,078,125 Alliance Common Shares at any time upon the payment
by the holder to Alliance of 1p per share. All of the issued shares of each of
the Alliance Entities are validly issued, fully paid and nonassessable and none
of such shares have been or will be issued in violation of the preemptive rights
of any person.
(b) Except as described in Section 5.2(a), there are no (i) shares of
capital stock or other securities bearing voting or other equity rights, whether
contingent or not, of any of the Alliance Entities outstanding; (ii) outstanding
subscriptions, puts, options, warrants or other rights, contract ual or
otherwise, to purchase or acquire any capital stock of any of the Alliance
Entities; or (iii) contracts, commitments, understandings, arrangements or
restrictions by which any of the Alliance Entities is or may become bound to
issue any additional equity interests or any options or rights with respect
thereto, or any securities convertible into any equity interests.
(c) The issued and outstanding stock of Alliance owned by the directors
and 5% or greater stockholders of Alliance is owned of record, and to the
knowledge of Alliance, beneficially, as described in the Alliance Proxy
Statement. Alliance beneficially owns all of the issued and outstanding stock of
each of its Subsidiaries, directly or indirectly, free and clear of all
Encumbrances. Except for its Subsidiaries, neither Alliance nor any of its
Subsidiaries owns or holds any equity, debt or other interest in any entity or
business or any option to acquire any such interest, except for accounts
receivable that have arisen in the ordinary course of business.
5.3. Authority; No Violation.
-----------------------
(a) The execution and performance of this Agreement by Alliance have been
duly and validly authorized by the board of directors of Alliance and no other
corporate action is necessary to authorize the execution, delivery and
performance of this Agreement by Alliance. Alliance has full, absolute and
unrestricted right, power and authority to execute and perform this Agreement
and to carry out the transactions contemplated hereby. This Agreement has been
duly and validly executed by Alliance and is a valid and binding obligation of
Alliance, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, moratorium, reorganization, receivership or similar
laws affecting the rights of creditors generally.
(b) None of the execution, delivery or performance of this Agreement does
or will, after the giving of notice, lapse of time or otherwise, (i) result in
any violation of or be in conflict with or constitute a default under any term
or provision of the organizational documents of any of the Alliance Entities, or
any term or provision of any judgment, decree, order, statute, injunction, rule
or regulation applicable to any of the Alliance Entities or of any material
note, bond, mortgage, indenture, lease, license, franchise, agreement or other
instrument or obligation to which any of the Alliance Entities is bound; (ii)
result in the creation of any material Encumbrance upon Alliance
19
Shares, any of the AROC Assets or any of the Alliance Assets pursuant to any
such term or provision; or (iii) constitute a material default under or give any
party the right to accelerate, amend or modify, terminate, abandon or refuse to
perform or comply with, any material contract, agreement, arrangement,
commitment or plan to which any of the Alliance Entities is a party, or by which
any of the Alliance Entities or any of their rights, properties or assets may be
subject or bound.
5.4. Consents and Approvals. No consent, waiver, approval or
----------------------
authorization of, or declaration, designation, filing, registration or
qualification with, any Governmental Entity or any third party, is required to
be made or obtained by any of the Alliance Entities in connection with the
execution, delivery and performance of this Agreement or to preserve any
material rights and benefits enjoyed by any of the Alliance Entities on the date
hereof following the consummation of the transactions contemplated by this
Agreement except (a) those that have already been obtained or (b) those
specifically contemplated by this Agreement.
5.5. Violations of Laws, Permits, etc.
---------------------------------
(a) None of the Alliance Entities is in violation of any term or provision
of its organizational documents. None of the Alliance Entities is in violation
of any term or provision of any judgment, decree, order, statute, injunction,
rule, ordinance or regulation applicable to it, or of any agreement or
instrument applicable to such entity where the violation thereof would result in
a Material Effect.
(b) Each of the Alliance Entities holds and has maintained in full force
and effect all certificates, licenses and permits material to the conduct of its
business, and has not received any notification that any revocation or
limitation thereof is threatened or pending where such revocation or limitation
would result in a Material Effect.
5.6. Alliance Reports. Alliance has made available to AROC each of the
----------------
Alliance Reports. As of their respective dates, the Alliance Reports did not,
and any Alliance Reports filed with the Commission subsequent to the date of
this Agreement will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading.
5.7. Alliance Financial Statements.
-----------------------------
(a) In all material respects the consolidated Alliance Financial
Statements fairly present the consolidated assets, liabilities and financial
position of the respective entities purported to be covered thereby as of the
dates thereof and the results of their operations and cash flow for the
respective periods ended on such dates, all in conformity with GAAP consistently
applied, except that the January 31, 1999, unaudited interim financial
statements do not contain footnotes (that, if presented, would not differ
materially from those in the audited Alliance Financial Statements) and are
subject to normal, recurring year-end adjustments (which will not, individually
or in the aggregate, have a Material Effect).
(b) The Alliance Financial Statements were prepared from the books and
records of each of the respective entities purported to be covered thereby.
Such Alliance Financial Statements do not contain any items of a material
special or nonrecurring nature, except as expressly noted in such statements.
20
5.8. No Undisclosed Liabilities, etc. None of the Alliance Entities has
--------------------------------
any material liabilities or obligations, whether direct, indirect, absolute or
contingent (including, without limitation, liabilities as guarantor or otherwise
with respect to obligations of others), except (a) liabilities that are fully
reflected on or reserved against on the latest balance sheet of such entity
included in the Alliance Financial Statements or (b) liabilities incurred in the
ordinary course of business since the date of the latest balance sheet included
in the Alliance Financial Statements that are consistent with past practice.
5.9. Absence of Certain Changes. Since the date of the latest audited
--------------------------
Alliance Financial Statement, except as specifically disclosed in the January
31, 1999, unaudited interim consolidated Alliance Financial Statements, none of
the Alliance Entities has:
(a) Suffered any change that would result in a Material Effect;
(b) Borrowed any money or incurred, assumed or become subject to, whether
directly or by way of guarantee or otherwise, any other material obligation or
liability for borrowed money, whether absolute or contingent;
(c) (i) Issued, purchased or redeemed any of its capital securities or any
option, warrant or right to purchase any of the same; or (ii) authorized,
declared or made any dividends, distributions of earnings or capital on, or
splits or any other reclassification of its equity securities;
(d) Acquired any material assets or properties, other than oil and gas
production in the ordinary course of business, or other assets having a value in
excess of $100,000 in the aggregate;
(e) Increased the salaries, compensation, pension or other benefits
payable, or paid any bonuses, to its officers and directors or their Affiliates;
(f) Agreed, either in writing or otherwise, to take any action described
in this Section 5.9.
-----------
5.10. Data Regarding the Alliance Assets. All of the information made or
----------------------------------
to be made available to AROC and its representatives regarding the Alliance
Assets is accurate and complete in all material respects, when considered in
context and together with all relevant information made available.
5.11. Litigation.
----------
(a) There is no action, proceeding, investigation or inquiry pending or,
to the knowledge of the Alliance Entities, threatened (i) against or affecting
any of the Alliance Entities or their assets or ordinary conduct of the business
that, if determined adversely to the Alliance Entities, would result in a
Material Effect, except as described in the Alliance Reports, or (ii) that
questions this Agreement or any action contemplated by this Agreement or the
transactions contemplated hereby.
(b) There are no citations, fines or penalties heretofore asserted against
any of the Alliance Entities or their assets under any federal, state or local
law relating to air, noise or water pollution or other environmental protection
matters, or relating to occupational health or safety, of which such
21
entity has received notice and that remain unpaid or that could otherwise bind
the assets of any of the Alliance Entities and that would result in a Material
Effect.
(c) Alliance has no knowledge of any state of facts or of the occurrence
or nonoccurrence of any event or group of related events, that should reasonably
cause Alliance to determine that there exists any basis for any material claim
against the Alliance Entities for any of the matters described in paragraphs (a)
or (b).
5.12. Tax Returns and Payments.
------------------------
(a) The Alliance Entities (or the common parent of any affiliated group of
which any of such entities is or has been a member) have duly filed in correct
form in all material respects all Tax Returns required to be filed by such
entities and have duly paid or provided for payment of (or there have been paid
on their behalf) all Taxes due or claimed to be due from them by federal, state,
local or foreign taxing authorities, excluding Taxes that are being contested in
good faith by appropriate proceedings and as to which adequate reserves have
been provided in the Alliance Financial Statements.
(b) There are no tax liens upon any property or assets owned by any of the
Alliance Entities that would have a Material Effect.
(c) All Tax Returns of the Alliance Entities filed, including any
amendments to date, have been prepared in good faith without willful
misrepresentation and are complete and accurate in all material respects. The
federal income tax returns of the Alliance Entities have been examined by the
Internal Revenue Service for all periods described in Section 5.12 of the
Alliance Disclosure Schedule, and all deficiencies assessed as a result of such
examination have been paid in full or finally settled and no issue has been
raised by the Internal Revenue Service or other relevant tax authority in any
such examination that has been resolved adversely to any of the Alliance
Entities or is still pending and, by application of similar principles,
reasonably could be expected to result in an assertion by the Internal Revenue
Service or other relevant tax authority of a material deficiency in any other
taxable year or with respect to any other of the Alliance Entities. There are no
outstanding agreements, waivers or other arrangements providing for an extension
of time with respect to the filing of any Tax Returns or the payment by, or
assessment against, any of the Alliance Entities for any Taxes.
(d) The reserves made for Taxes on the respective balance sheets in the
Alliance Financial Statements are sufficient for the payment of all unpaid Taxes
due and payable by the Alliance Entities attributable to all periods ended on or
before the date of the respective balance sheets in accordance with GAAP.
5.13. Contracts.
---------
(a) Alliance has made available to AROC complete and correct copies of all
written agreements, contracts and commitments, together with all amendments
thereto, and accurate (in all material respects) descriptions of all oral
agreements, in all cases, to which any of the Alliance Entities is a party or by
which any of their properties is bound. Such agreements, contracts and
commitments are in full force and effect, and all of such entities and, to the
knowledge of the Alliance Entities, all other parties to such agreements,
contracts and commitments have performed
22
all obligations required to be performed by them to date thereunder in all
material respects and are not in default thereunder in any material respect.
(b) None of the Alliance Entities has outstanding any powers of attorney,
including powers of attorney with respect to representation before any
Governmental Entity, customs agents and brokers, or given in connection with
qualification to conduct business in any other jurisdiction.
5.14. Compensation and Employee Plans.
-------------------------------
(a) Alliance has provided AROC (i) the names and current annual
compensation rates of all present directors, officers, employees, independent
contractors or agents of each of the Alliance Entities and (ii) the number, job
category and range of compensation by job category of all employees of such
entities.
(b) Alliance has made available to AROC the name of each Plan applicable
to any of the Alliance Entities and all documents evidencing any Plan applicable
to any of the Alliance Entities.
(c) Each Plan applicable to any of the Alliance Entities is now, and has
been from its inception, administered in compliance in all material respects
with the provisions of all applicable laws and regulations, including ERISA, the
Code and the ADEA, insofar as such statutes are applicable to such Plan.
5.15. Brokers, Finders and Advisors. Alliance has not employed any
-----------------------------
broker, finder, or investment advisor on its behalf, or incurred any liability
for any brokerage or finder's fees or commissions in connection with the
transaction contemplated hereby.
5.16. Labor Force. Each of the Alliance Entities is in compliance in all
-----------
material respects with all applicable laws (including without limitation federal
income tax laws), ordinances, regulations, statutes, rules and restrictions of
any Governmental Entity respecting employment and employment practices and terms
and conditions of employment.
5.17. Books and Records. The books and records of each of the Alliance
-----------------
Entities (including, without limitation, the books of account, minute books and
stock record books) are complete and correct in all material respects and have
been maintained in accordance with sound business practices. The minute books
of each of the Alliance Entities contain accurate and complete records in all
material respects of all meetings held of, and corporate action taken by, the
shareholders and the Boards of Directors of the respective entities and no
meetings of or actions by such shareholders or any such Boards of Directors have
been held or taken for which minutes have not been prepared and are not
contained in such minute books. None of the records and written documents
furnished or made available to AROC's representatives or agents by the Alliance
Entities concerning the Alliance Assets, when considered in context and together
with any relevant or related documents also so furnished or made available,
contain any untrue statement of material fact or omit a material fact necessary
to make any statement therein not misleading.
5.18. Payments. None of the Alliance Entities has, directly or
--------
indirectly, paid or delivered any fee, commission or other sum of money or item
of property however characterized to any finder, agent, government official or
other party, in the United States or any other country, in any manner related to
its business or operations, which such entity knows or has reason to believe to
have been
23
illegal under any federal, state or local laws of the United States or any other
country or territory having jurisdiction over such entity, and has not
participated, directly or indirectly, in any boycotts or similar practices.
5.19. Commission Filings. Alliance has filed all forms, reports and
------------------
documents required to be filed with the Commission since May 1, 1997. All of
such filings were prepared in accordance with the requirements of all applicable
laws and did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
5.20. Disclosure. No representation or warranty made by Alliance in this
----------
Agreement (including, without limitation, in the Alliance Disclosure Schedule)
contains any untrue statement of material fact or omits or will omit to state
any material fact necessary to make the statements herein or therein not
misleading in light of the circumstances under which made.
6. Actions of AROC Prior to the Mailing Date.
-----------------------------------------
6.1. Affirmative Covenants. Prior to the Mailing Date, AROC covenants
---------------------
that, unless the prior written consent of Alliance is first obtained, which
consent shall not be unreasonably withheld, the AROC Entities will:
(a) Carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and use
all reasonable efforts to (i) preserve intact their respective present business
organizations, (ii) keep available the services of their respective present
officers and key employees and (iii) preserve their respective relationships
with customers, suppliers and any others having business dealings with them; and
(b) Duly comply with all laws applicable to them and their respective
properties, operations, business and employees which if not complied with would
result in a Material Effect.
6.2. Negative Covenants. Prior to the Mailing Date, except with the
------------------
prior written consent of Alliance, the AROC Entities will not:
(a) Do any of the restricted acts set forth in Section 4.9 hereof, or
-----------
enter into any agreement of a nature set forth in Section 4.14 hereof;
------------
(b) Enter into or permit any of the AROC Entities to enter into any
transaction other than in the ordinary course of business; or
(c) Amend the respective organizational or governing documents of any of
the AROC Entities.
6.3. Consents. The AROC Entities will use their best efforts to obtain
--------
all consents from third parties necessary or appropriate to effectuate the
transactions contemplated by this Agreement.
6.4. Advice of Changes. AROC will promptly advise Alliance in writing
-----------------
from time to time prior to the Mailing Date with respect to any matter hereafter
arising and known to it that, if
24
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in the AROC Disclosure Schedule or would have resulted
in any representation of AROC in this Agreement being untrue.
6.5. Best Efforts. The AROC Entities will use their best efforts to
------------
cause to be fulfilled those of the conditions to Alliance's obligations to
consummate the transactions contemplated by this Agreement that are dependent
upon their actions and to execute and deliver such instruments and take such
other actions as necessary or appropriate in order to carry out the intent of
this Agreement.
6.6. Access to Properties and Records. From and after the date of this
--------------------------------
Agreement through the earlier of the Mailing Date or the termination of this
Agreement, the AROC Entities shall (a) provide Alliance an identification of and
access to all books, records and documents, including contracts, agreements,
consents, settlements, revenue and expense information, and all other data and
information relating to the AROC Assets, (b) afford to Alliance and their
officers, attorneys, accountants and other authorized representatives free and
full access during normal business hours to the offices, properties, books and
records of the AROC Entities, and (c) cause counsel and accountants to the AROC
Entities to furnish such additional financial and operating data and other
information as Alliance shall from time to time request in order that Alliance
may have full opportunity to make such investigation as they shall desire to
make of the affairs of the AROC Entities and their assets.
6.7. Supply Documents, Reports, etc.
-------------------------------
(a) AROC shall furnish or make available to Alliance all documents,
reports and other information and data (including financial statements)
concerning the AROC Entities as Alliance may reasonably require in connection
with any statement, application, or document required to be filed with
applicable Governmental Entities in connection with the transactions
contemplated by this Agreement or furnished to any other person, firm,
corporation or Governmental Entity in connection with this Agreement, including,
but not limited to the Commission, the Federal Trade Commission and the
Department of Justice.
(b) AROC represents and warrants that all such information shall be true,
correct, and complete in all material respects and shall not omit any material
fact required to be stated to make such information not misleading in light of
the circumstances under which made.
6.8. AROC Disclosure Schedule. AROC agrees to deliver the AROC
------------------------
Disclosure Schedule to Alliance within seven calendar days after the execution
of the Agreement by all parties.
7. Actions of Alliance Prior to the Mailing Date.
---------------------------------------------
7.1. Affirmative Covenants. Prior to the Mailing Date, Alliance
---------------------
covenants that, unless the prior written consent of AROC is first obtained,
which consent shall not be unreasonably withheld, the Alliance Entities will:
(a) Carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and use
all reasonable efforts to (i) preserve intact their respective present business
organizations, (ii) keep available the services of their
25
respective present officers and key employees and (iii) preserve their
respective relationships with customers, suppliers and any others having
business dealings with them; and
(b) Duly comply with all laws applicable to them and their respective
properties, operations, business and employees which if not complied with would
result in a Material Effect.
7.2. Negative Covenants. Prior to the Mailing Date, except with the
------------------
prior written consent of AROC, the Alliance Entities will not:
(a) Do any of the restricted acts set forth in Section 5.9 hereof, or
-----------
enter into any agreement of a nature set forth in Section 5.13 hereof;
------------
(b) Enter into or permit any of the Alliance Entities to enter into any
transaction other than in the ordinary course of business; or
(c) Amend the respective organizational or governing documents of any of
the Alliance Entities.
7.3. Consents. The Alliance Entities will use their best efforts to
--------
obtain all consents from third parties necessary or appropriate to effectuate
the transactions contemplated by this Agreement.
7.4. Advice of Changes. Alliance will promptly advise AROC in writing
-----------------
from time to time prior to the Mailing Date with respect to any matter hereafter
arising and known to it that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in the Alliance
Disclosure Schedule or would have resulted in any representation of Alliance in
this Agreement being untrue.
7.5. Best Efforts. The Alliance Entities will use their best efforts to
------------
cause to be fulfilled those of the conditions to AROC's obligations to
consummate the transactions contemplated by this Agreement that are dependent
upon their actions and to execute and deliver such instruments and take such
other actions as necessary or appropriate in order to carry out the intent of
this Agreement.
7.6. Access to Properties and Records. From and after the date of this
--------------------------------
Agreement through the earlier of the Mailing Date or the termination of this
Agreement, the Alliance Entities shall (a) provide AROC an identification of and
access to all books, records and documents, including contracts, agreements,
consents, settlements, maps, revenue and expense information, production data
and geological and geophysical data relating to the Alliance Assets, (b) afford
to AROC and their officers, attorneys, accountants and other authorized
representatives free and full access during normal business hours to the
offices, properties, books and records of the Alliance Entities, and (c) cause
counsel and accountants to the Alliance Entities to furnish such additional
financial and operating data and other information as AROC shall from time to
time request in order that AROC may have full opportunity to make such
investigation as they shall desire to make of the affairs of the Alliance
Entities and their assets.
7.7. Supply Documents, Reports, etc.
-------------------------------
(a) Alliance shall furnish or make available to AROC all documents,
reports and other information and data (including financial statements)
concerning the Alliance Entities as AROC may
26
reasonably require in connection with any statement, application, or document
required to be filed with applicable Governmental Entities in connection with
the transactions contemplated by this Agreement or furnished to any other
person, firm, corporation or Governmental Entity in connection with this
Agreement, including, but not limited to the Commission, the Federal Trade
Commission and the Department of Justice.
(b) Alliance represents and warrants that all such information shall be
true, correct, and complete in all material respects and shall not omit any
material fact required to be stated to make such information not misleading in
light of the circumstances under which made.
7.8. Alliance Disclosure Schedule. Alliance agrees to deliver the
----------------------------
Alliance Disclosure Schedule to AROC within seven calendar days after the
execution of the Agreement by all parties.
8. Conditions to Alliance's Obligations. Each and every obligation of
------------------------------------
Alliance under this Agreement to be performed on or before the Mailing Date is,
at the option of Alliance, subject to the satisfaction on or before the date on
which the formal press announcement of the Offer pursuant to the City Code is
made (following which the Offer shall be subject only to the conditions set out
in the press announcement, including the completion of the Merger) of each of
the following conditions:
(a) All outstanding options or rights to purchase or acquire AROC Shares
shall have been canceled.
(b) All employment, management, consulting, option, note, loan, lease or
other agreements with any of the officers, directors or shareholders of more
than 5% of the outstanding securities of any of the AROC Entities shall have
been terminated without liability to Alliance, AROC or AROC Delaware. All
amounts owed to AROC by any officer, director or shareholder of more than 5% of
the outstanding securities of any of the AROC Entities shall have been repaid in
full.
(c) The agreements described in Sections 10.4, 10.5 and 10.6 shall have
------------- ---- ----
been entered into and the actions required by Section 10.7 shall have occurred.
------------
(d) (i) All of the terms, covenants and conditions of this Agreement to be
complied with or performed by AROC at or before the Mailing Date shall have been
duly complied with and performed in all material respects, (ii) the
representations and warranties of AROC set forth in Article 4, as modified by
---------
the statements contained in the AROC Disclosure Schedule, shall be true in all
material respects on and as of the Mailing Date with the same force and effect
as if such representations and warranties had been made on and as of the Mailing
Date (but this provision shall not mean that representations and warranties
relating to a specific date, shall relate to any other date) and (iii) Alliance
shall have received a certificate to such effect from an officer of AROC.
Whether the conditions in subparagraphs (i) and (ii) above have been satisfied
shall be determined without regard to any materiality qualifications or
provisions contained in any such covenants, representations or warranties.
(e) All consents, waivers, approvals, licenses, authorizations of, or
filings or declarations with third parties or Governmental Entities required to
be obtained by the AROC Entities in order to permit the transactions
contemplated by this Agreement to be consummated in accordance with governmental
laws, rules, regulations and agreements shall have been obtained, and the
registration
27
statement required by Section 2.1(a) shall be effective under the Securities
--------------
Act, no stop orders suspending the effectiveness of the registration statement
shall have been issued, no action, suit, proceeding or investigation by the
Commission to suspend the effectiveness thereof shall have been initiated and be
continuing, and all necessary approvals under state securities laws or the
Securities Act or the Securities Exchange Act of 1934 relating to the issuance
or trading of the Alliance Shares issuable pursuant to the Offer shall have been
received.
(f) Alliance shall have received the opinion of counsel for AROC, dated
the Mailing Date, in substance and form acceptable to Alliance and its counsel.
(g) All actions, proceedings, instruments and documents in connection with
the consummation of the transactions contemplated by this Agreement, including
the forms of all documents, legal matters, opinions and procedures in connection
therewith, shall have been approved in form and substance by counsel for
Alliance, which approval shall not be unreasonably withheld.
(h) The AROC Entities shall have furnished such certificates to evidence
compliance with the conditions set forth in this Article, as may be reasonably
requested by Alliance or its counsel.
(i) There shall not have been any material loss resulting from destruction
of the AROC Assets due to acts of God, fire, explosion or other casualty which
is not reimbursable in all material respects under policies of insurance
maintained by or for the benefit of the AROC Entities.
(j) No material information or data provided or made available to Alliance
by or on behalf of AROC shall be incorrect in any material respect.
9. Conditions to AROC's Obligations. Each and every obligation of AROC under
--------------------------------
this Agreement to be performed on the Mailing Date is, at the option of
AROC, subject to the satisfaction on or before the date on which the formal
press announcement of the Offer pursuant to the City Code is made
(following which the Offer shall be subject only to the conditions set out
in the press announcement, including the completion of the Merger) of each
of the following conditions:
(a) The agreements described in Sections 10.4, 10.5 and 10.6 shall have
------------- ---- ----
been entered into and the actions required by Section 10.7 shall have occurred.
------------
(b) (i) All of the terms, covenants and conditions of this Agreement to
be complied with or performed by Alliance at or before the Mailing Date shall
have been duly complied with and performed in all material respects, (ii) the
representations and warranties of Alliance set forth in Article 5, as modified
---------
by the statements contained in the Alliance Disclosure Schedule, shall be true
in all material respects on and as of the Mailing Date with the same force and
effect as if such representations and warranties had been made on and as of the
Mailing Date (but this provision shall not mean that representations and
warranties relating to a specific date shall relate to any other date), and
(iii) AROC shall have received a certificate to such effect from an officer of
each of Alliance at Mailing Date. Whether the conditions in subparagraphs (i)
and (ii) above have been satisfied shall be determined without regard to any
materiality qualifications or provisions contained in any such covenants,
representations or warranties.
(c) All consents, waivers, approvals, licenses, authorizations of, or
filings or declarations with third parties or Governmental Entities required to
be obtained by Alliance in order to permit
28
the transactions contemplated by this Agreement to be consummated in accordance
with governmental laws, rules, regulations and agreements shall have been
obtained, and the registration statement required by Section 2.1(a) shall be
--------------
effective under the Securities Act, no stop orders suspending the effectiveness
of the registration statement shall have been issued, no action, suit,
proceeding or investigation by the Commission to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary approvals
under state securities laws or the Securities Act or the Securities Exchange Act
of 1934 relating to the of the Alliance Shares pursuant to this Agreement shall
have been received.
(d) AROC shall have received opinions from counsel for Alliance dated the
Mailing Date, in substance and form acceptable to AROC and its counsel.
(e) All outstanding options or other rights to purchase or acquire AROC
Shares (other than the Warrants) shall have been canceled without further
liability to AROC or Alliance.
(f) All actions, proceedings, instruments and documents in connection with
the consummation of the transactions contemplated by this Agreement, including
the forms of all documents, legal matters, opinions and procedures in connection
therewith, shall have been approved in form and substance by counsel for AROC,
which approval shall not be unreasonably withheld.
(g) Alliance shall have furnished such certificates of its officers and
others to evidence compliance with the conditions set forth in this Article, as
may be reasonably requested by AROC or its counsel.
(h) There shall not have been any material loss resulting from destruction
of the Alliance Assets due to acts of God, fire, explosion or other casualty
which is not reimbursable in all material respects under policies of insurance
maintained by or for the benefit of the Alliance Entities.
(i) No material information or data provided or made available to AROC by
or on behalf of Alliance shall be incorrect in any material respect.
10. Additional Agreements.
---------------------
10.1. Confidentiality. The parties hereto will, and will cause their
---------------
officers, directors, employees and authorized representatives to, hold in
confidence all, and not to use or to disclose to others any, nonpublic
information received by them from another party hereto in connection with the
transactions contemplated by this Agreement; provided, however, the foregoing
shall not restrict necessary disclosures in compliance with requirements of any
law, governmental order or regulation, the City Code or the rules of the London
Stock Exchange.
10.2. Further Assurances. After the Mailing Date, the parties shall
------------------
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments and take such other action including payment of
monies as may be necessary or advisable to carry out their obligations under
this Agreement and under any document, certificate or other instrument delivered
pursuant hereto or required by law. If at any time subsequent to the Mailing
Date, any party comes into possession of money or property belonging to another
party, such money or property shall be promptly turned over to the party
entitled thereto.
29
10.3. Offices. After the Offer becomes unconditional, the executive
-------
offices of AROC shall be located in Tulsa, Oklahoma.
10.4. Warrants. On or prior to the Mailing Date, AROC Delaware shall
--------
enter into warrant agreements with the holders of Alliance Warrants, on terms
satisfactory to Alliance, providing that, after the Offer becomes unconditional,
those warrants will represent the right to receive one AROC Delaware Share in
lieu of each Alliance Ordinary Share that they currently represent the right to
receive.
10.5. Convertible Shares. On or prior to the Mailing Date, AROC Delaware
------------------
shall enter into agreements with the holders of the Alliance Convertible Shares,
on terms satisfactory to Alliance, providing that after the then outstanding
Alliance Convertible Shares are tendered pursuant to the Offer and the Offer
becomes unconditional, each then outstanding Alliance Convertible Share shall be
exchanged for 0.5 AROC Delaware Shares and the right to receive additional AROC
Delaware Shares on terms substantially similar to the terms of the Alliance
Convertible Shares.
10.6. Convertible Loan Notes. On or prior to the Mailing Date, AROC
----------------------
Delaware shall enter into agreements with the holders of the Alliance
Convertible Loan Notes, on terms satisfactory to Alliance, providing that after
the Offer becomes unconditional, the then outstanding Alliance Convertible Loan
Notes shall be exchanged for notes convertible into one AROC Delaware Share in
lieu of each Alliance Ordinary Share that they currently represent the right to
receive, on terms substantially similar to the terms of the Alliance Convertible
Loan Notes.
10.7. AROC Delaware Capitalization. On or prior to the Mailing Date, AROC
----------------------------
Delaware shall revise its Certificate of Incorporation to provide that the
authorized capital stock of AROC Delaware shall consist of 175,000,000 shares of
common stock, par value $0.001 per share, 100 of which shall be issued and
outstanding, and 10,000,000 shares of preferred stock, par value $0.001 per
share, none of which shall be issued and outstanding.
10.8. Indemnification.
---------------
(a) Alliance agrees to indemnify and hold harmless each officer and
director of AROC (the "Indemnified Parties") from and against any and all
losses, claims, damages, liabilities and expenses arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
(i) the documents referred to in Sections 2.1 and 2.2 (or any amendment or
------------ ---
supplement to any of them) and (ii) any other document or correspondence
prepared by or on behalf of Alliance and furnished to the AROC shareholders or
Alliance shareholders pursuant to this Agreement, 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 untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with information provided by AROC or the
Indemnified Parties.
(b) If any action, suit or proceeding shall be brought against any
Indemnified Person in respect of which indemnity may be sought against Alliance
pursuant to Section 10.8(a), the Indemnified Party shall promptly notify
---------------
Alliance and Alliance shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Alliance shall not settle
30
any such action, suit or proceeding without the prior written consent of the
Indemnified Party unless such settlement includes an unconditional release of
the Indemnified Party from all liability on claims that are the subject matter
of such action, suit or proceeding. Alliance shall not be liable for any
settlement of any such action, suit or proceeding effected without its written
consent.
11. Termination, Waiver and Amendment.
---------------------------------
11.1. Termination. This Agreement and the transactions contemplated
-----------
herein may be terminated and abandoned at any time on or prior to the date on
which the formal press announcement of the Offer pursuant to the City Code is
made.
(a) By mutual consent of AROC and Alliance; or
(b) By Alliance if:
(1) Any representation, warranty or covenant made herein for the
benefit of Alliance or any certificate, schedule or document furnished to
Alliance pursuant to this Agreement is untrue in any material respect
(without regard to any materiality or knowledge qualifications or
provisions contained in such representation, warranty or covenant) and such
breach is not cured within ten (10) days of AROC's receipt of a notice from
Alliance that such breach exists or has occurred;
(2) AROC shall have defaulted in any material respect (without regard
to any materiality qualifications or provisions contained in such
representation, warranty or covenant) in performance of any material
obligation under this Agreement and such breach is not cured within ten
(10) days of AROC's receipt of a notice from Alliance that such breach
exists or has occurred; or
(3) Consummation of the transactions contemplated by this Agreement
would violate any nonappealable final order, decree or judgment of any
court or governmental body having competent jurisdiction; or
(c) By AROC if:
(1) Any representation, warranty or covenant made herein for the
benefit of AROC or any certificate, schedule or document furnished to AROC
pursuant to this Agreement is untrue in any material respect (without
regard to any materiality or knowledge qualifications or provisions
contained in such representation, warranty or covenant) and such breach is
not cured within ten (10) days of Alliance's receipt of a notice from AROC
that such breach exists or has occurred;
(2) Alliance shall have defaulted in any material respect (without
regard to any materiality qualifications or provisions contained in such
representation, warranty or covenant) in performance of any material
obligation under this Agreement and such breach is not cured within ten
(10) days of Alliance's receipt of a notice from AROC that such breach
exists or has occurred; or
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(3) Consummation of the transactions contemplated by this Agreement
would violate any nonappealable final order, decree or judgment of any
court or governmental body having competent jurisdiction; or
(d) By AROC in its sole discretion within seven calendar days after its
receipt of the Alliance Disclosure Schedule or by Alliance in its sole
discretion within seven calendar days after its receipt of the AROC Disclosure
Schedule; or
(e) By either party if the Mailing Date does not occur on or before
December 31, 1999 (or such later date as may be mutually agreed upon by the
parties hereto), and such party has complied with the provisions of Section 6.5
-----------
or Section 7.5, as the case may be.
-----------
11.2. Manner of Exercise. In the event of termination and abandonment by
------------------
Alliance or AROC, or both, authorized by Section 11.1, written notice thereof
------------
shall forthwith be given to the other parties and this Agreement shall terminate
and the transactions contemplated hereunder shall be abandoned without further
action by the parties.
11.3. Effect of Termination. In the event of the termination and
---------------------
abandonment authorized by Section 11.1, then, this Agreement shall become void
------------
and have no effect, without any liability on the part of any of the parties or
their directors or officers or stockholders in respect of this Agreement and the
transactions contemplated hereby, except for the confidentiality obligation of
Section 10.1 and this Section 11.3.
- ------------ ------------
12. Miscellaneous.
-------------
12.1. Survival. Except for Sections 2.1 through 2.3 and this Article 12,
-------- ------------ --- ----------
the representations, warranties, covenants and agreements of the parties to this
Agreement shall not survive after the Offer becomes unconditional and shall
thereafter be of no further force and effect for any purpose.
12.2. Expenses. Except as otherwise provided herein, the parties shall
--------
each pay their own expenses and costs in connection with this Agreement and the
transactions contemplated hereby.
12.3. Press Releases. Subject to the requirements of law, regulatory
--------------
bodies, the City Code and the rules of the London Stock Exchange, no party shall
make any public announcement or press release with respect to this transaction
without first consulting with the other parties and giving such parties the
opportunity to review and comment thereon.
12.4. Binding Effect. This Agreement and all of the provisions hereof
--------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any party
without the prior written consent of the others. Nothing contained herein,
express or implied, is intended to confer on any person other than the parties
hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
12.5. Severability. Any provision of this Agreement that is prohibited or
------------
unenforceable in any jurisdiction shall, in such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
32
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.6. Notices. Any notice, request, instructions or other document to be
-------
given hereunder to any party shall be in writing, sent by facsimile transmission
or delivered personally or by courier or sent by certified mail, postage
prepaid, as follows:
If to AROC (prior to the completion of the Offer):
American Rivers Oil Company
700 East 9/th/ Avenue
Denver, Colorado 80203
Attn: Karlton Terry, President
FAX: (303)832-2404
If to Alliance (prior to completion of the Offer):
Alliance Resources PLC
4200 East Skelly Drive
Suite 1000
Tulsa, Oklahoma 74135
Attn: John A. Keenan, Managing Director
FAX: (918) 494-4918
Any party may change its address for purposes of this Section by giving written
notice of such change of address to the other parties in the manner herein
provided for giving notice. Any notice or communication hereunder shall be
deemed to have been given when (i) deposited in the United States mail, if by
certified mail, and (ii) received, if delivered personally or by courier or
facsimile transmission.
12.7. Entire Agreement. This Agreement (including the instruments between
----------------
the parties referred to herein and any waivers delivered pursuant hereto)
constitutes the entire agreement among the parties and supersedes all other
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof. The exhibits and
schedules are a part of this Agreement as if fully set forth herein. All
references to articles, sections, subsections, paragraphs, clauses, exhibits and
schedules shall be deemed references to such part of this Agreement, unless the
context shall otherwise require.
12.8. Amendments; Waivers. No supplement, modification, or amendment of
-------------------
this Agreement or waiver of any provision of this Agreement will be binding
unless executed in writing by, or on behalf of, all parties to this Agreement.
No waiver of any of the provisions of this Agreement will be deemed or will
constitute a waiver of any other provision of this Agreement (regardless of
whether similar), nor will any such waiver constitute a continuing waiver unless
otherwise expressly provided.
12.9. Headings. Descriptive headings contained herein are for convenience
--------
of reference only and shall not affect the meaning or interpretation hereof.
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12.10. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute but one agreement.
12.11. Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur if any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provision hereof in any court of the United States or any state
having jurisdiction, in addition to any other remedy to which they are entitled
at law or in equity.
12.12. GOVERNING LAW. THIS AGREEMENT AND THE LEGAL RELATIONS AMONG THE
-------------
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF OKLAHOMA APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED IN THAT STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
12.13. Schedules. Any item disclosed by any party in the its Disclosure
---------
Schedule for one purpose and in response to a specific section of this Agreement
shall not be deemed disclosed for any other purpose and in response to any other
section of the Agreement unless specifically so stated.
12.14. Time of Essence. Time is of the essence of the parties' obligations
---------------
to consummate the transactions contemplated by this Agreement on the Mailing
Date.
12.15. Best Efforts. No provision of this Agreement calling for a party to
------------
use its best efforts or reasonable efforts shall be construed so as to require
such party to incur out-of-pocket expenditures other than expenditures normally
incurred in transactions similar to the Offer or to take any step that would not
be commercially reasonable, in light of all of the circumstances.
[Remainder of page intentionally left blank]
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EXECUTED as of the day and year first above written.
AROC:
AMERICAN RIVERS OIL COMPANY
By:
-------------------------------------------
Name: Karlton Terry
Title: President
AROC Delaware:
AMERICAN RIVERS OIL COMPANY
By:
-------------------------------------------
Name: Karlton Terry
Title: President
Alliance:
ALLIANCE RESOURCES PLC
By:
-------------------------------------------
Name: John A. Keenan
Title: Managing Director
35