Exchange And Merger Agreement - American Rivers Oil

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


Page
----


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


i


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


ii


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


iii


EXCHANGE AND MERGER AGREEMENT
-----------------------------


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
--------


The parties desire to effect certain transactions on the terms, and subject to the provisions and conditions, of this Agreement.


Agreement
---------


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
----------- 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.


1


"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.


2


"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.


3


"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.


4


"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.
-----------------------------


2.1. Filings by AROC.
---------------


(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.


5


(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.
-------------------


(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


6


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
--------------------- 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 th ...