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EXHIBIT 10.1
APRIL 1997 AGREEMENT
THIS APRIL 1997 AGREEMENT (this "AGREEMENT") is made and entered into
as of this 28th day of April, 1997, by and among Future Petroleum Corporation,
a Utah corporation ("PARENT"), Future Petroleum Corporation, a Texas
corporation (the "GENERAL PARTNER"), Future Acquisition 1995, Ltd., a Texas
limited partnership (the "PARTNERSHIP"), Energy Capital Investment Company PLC,
an English investment company ("ENERGY PLC"), and EnCap Equity 1994 Limited
Partnership, a Texas limited partnership ("ENCAP LP").
RECITALS:
A. Reference is herein made to that certain First Amended and
Restated Agreement of Limited Partnership of the Partnership dated as of
January 29, 1997, by and among the General Partner, Energy PLC and EnCap LP
(the "ORIGINAL AGREEMENT"). Reference is also herein made to that certain
April 1997 Amendment to First Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of even date herewith by and among the
General Partner, Energy PLC and EnCap LP (the "AMENDMENT"). The Original
Agreement, as amended by the Amendment, is herein called the "PARTNERSHIP
AGREEMENT".
B. The General Partner is the sole general partner of the
Partnership and Energy PLC and EnCap LP are the limited partners of the
Partnership. The General Partner is a wholly-owned subsidiary of Parent.
C. The General Partner, Energy PLC and EnCap LP have determined that
it is in their mutual best interests to amend the Original Agreement by
executing and delivering the Amendment. Under, and subject to the terms of,
the Amendment, the Original Agreement will be amended to provide that the
Limited Partners will agree to make additional capital contributions to the
Partnership in an aggregate amount not to exceed $493,400, of which an amount
not to exceed $350,000 may be used by the Partnership for the purpose of making
distributions to the General Partner.
D. The parties hereto deem it in their mutual best interests to
execute and deliver this Agreement for the purpose of evidencing their
agreement with respect to certain matters, including their agreement in
connection with a proposed public offering by Parent and their agreement with
respect to the usage of any cash distributions made by the Partnership to the
General Partner as referenced in Paragraph C above.
E. Parent hereby further acknowledges and agrees that (i) the
execution and delivery by the General Partner, Energy PLC and EnCap LP of the
Amendment can reasonably be expected to be of benefit to Parent, (ii) the
execution and delivery by Parent of this Agreement can reasonably be expected
to be of benefit to the Partnership, the General Partner and Parent, and (iii)
Energy PLC and EnCap LP would not be willing to execute and
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deliver the Amendment and make the additional capital contributions
contemplated thereby without the execution and delivery by Parent of this
Agreement, and Parent is executing and delivering this Agreement to induce the
Limited Partners to execute and deliver the Amendment and make such additional
capital contributions.
AGREEMENT:
NOW, THEREFORE, in view of the foregoing Recitals and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
SECTION 1. AGREEMENT REGARDING OFFERING. Reference is herein made to
that certain letter of intent dated as of March 24, 1997, by and between
Xxxxxxx Investment Company Inc. and Parent, a copy of which is attached hereto
as Exhibit 1 (the "LETTER OF INTENT"). Parent agrees to use its reasonable
best efforts to effect the "OFFERING", as such term is defined in the Letter of
Intent; provided, however, that the foregoing agreement of Parent shall be
subject to a good faith determination by the members of the board of directors
of Parent, in the exercise of their fiduciary duties to Parent and its
shareholders, that it is not in the best interests of Parent to proceed with
the Offering.
SECTION 2. AGREEMENT REGARDING USAGE OF PARTNERSHIP DISTRIBUTIONS.
The General Partner and Parent hereby agree with the Partnership, Energy PLC
and EnCap LP that any cash distributions received by the General Partner from
the Partnership pursuant to clause (d) of Section 4.4 of the Partnership Agree-
ment shall be used exclusively as follows: (i) the General Partner shall
distribute or otherwise make available to Parent any such cash distribution;
and (ii) Parent shall use any such cash distribution to pay the third party
costs and expenses of effecting the Offering, including, without limitation,
the costs and expenses enumerated in paragraphs 7 and 8 of the Letter of
Intent, and for other general corporate purposes (provided, that the maximum
amount of such cash distributions that Parent can use for general corporate
purposes shall be $100,000).
SECTION 3. COMMITMENT FEE. Contemporaneously with the execution and
delivery of the Amendment by the parties thereto and of this Agreement by the
parties hereto and as a commitment fee in further consideration of the Energy
PLC's and EnCap LP's agreement in Section 3.2(f) of the Partnership Agreement,
in clause (d) of Section 4.4 of the Partnership Agreement and in Section 2
above, Parent agrees to (i) pay to Energy PLC and EnCap LP, by wire transfer of
immediately available funds to an account(s) designated by Energy PLC and
EnCap, cash in the amounts set forth opposite their respective names below and
(ii) issue and deliver to Energy PLC and EnCap LP stock certificates evidencing
the number of shares of Common Stock (as defined below) opposite their
respective names below:
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Name Cash Shares
---- ---- ------
Energy PLC $5,000 12,500
EnCap LP $5,000 12,500
In addition, but subject to the terms and provisions hereof, Parent agrees that
one year from the date hereof (the "SECOND INSTALLMENT DATE") it will issue and
deliver to Energy PLC and EnCap LP stock certificates evidencing the number of
shares of Common Stock opposite their respective names below:
Name Shares
---- ------
Energy PLC 100,000
EnCap LP 100,000;
provided, however, that the agreement of Parent set forth above in this
sentence shall terminate and be of no force and effect whatsoever if the Net
Investment (as defined in the Partnership Agreement) as of the Second
Installment Date is equal to or less than an amount equal to X times Y, where
"X" is 50%, and where "Y" is the Net Investment as of the date hereof. As used
herein, the term "COMMON STOCK" shall mean the shares of common stock of
Parent, $0.01 par value per share, and any shares issued or issuable with
respect thereto by way of a stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization.
SECTION 4. AGREEMENT REGARDING USAGE OF OFFERING PROCEEDS. Parent
agrees with Energy PLC and EnCap LP that upon the consummation of the Offering,
Parent will purchase Energy PLC's and EnCap LP's limited partner interests in
the Partnership for a total purchase price consisting of the following: (i)
cash in an amount sufficient to effect Special Payout (as defined in Section
10); (ii) 16,000 Units (as such term is defined in the Letter of Intent). The
closing of the purchase and sale contemplated under this Section 4 shall be
held on the same day and at the same location as the closing of the Offering
(at a time mutually agreed upon by Parent, Energy PLC and EnCap LP) or at such
other time or location as mutually agreed upon by Parent, Energy PLC and EnCap
LP. At the closing of such purchase and sale, (A) Energy PLC and EnCap LP
shall deliver to Parent a written assignment of their limited partner interests
in the Partnership in form and content reasonably satisfactory to Energy PLC,
EnCap LP and Parent (it being agreed, however, that such assignment shall
contain no representations and warranties on the part of Energy PLC or EnCap LP
other than representations and warranties to the effect that the execution and
delivery of such assignment has been duly authorized by it, that it has the
power and authority to execute and deliver such assignment, that the execution
and delivery of such assignment by it does not contravene its charter documents
or material agreements, and that it is the record and beneficial owner of its
limited partner interest in the Partnership free and clear
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of all liens and other similar encumbrances), and (B) Parent shall wire
transfer the purchase price in immediately available funds to an account or
accounts designated by Energy PLC and EnCap and shall issue and deliver the
Units. Notwithstanding the foregoing or anything else herein to the contrary,
if the terms of the actual Units or securities of Parent issued in connection
with the Offering vary from the terms set forth in the Letter of Intent, the
actual amount of the Units or securities to be issued to Energy PLC and EnCap
LP shall be adjusted in a manner reasonably acceptable to Energy PLC, EnCap LP
and Parent such that Energy PLC and EnCap LP will receive Units or securities
of Parent which are equivalent in all material respects to that which they were
to receive under the terms of this Section.
SECTION 5. PIGGYBACK REGISTRATION RIGHTS. If Parent proposes to
register any of its securities under the Securities Act other than (a) under
employee compensation or benefit programs or (b) an exchange offer or an
offering of securities solely to the existing stockholders or employees of
Parent, and the registration form to be used may be used for the registration
of Registrable Securities, Parent will give prompt written notice to Holders of
Registrable Securities of its intention to effect such a registration and will
include in such registration all Registrable Securities with respect to which
Parent has received written requests for inclusion therein within 15 days after
the receipt of Parent's notice (a "PIGGYBACK REGISTRATION"). Parent shall use
its reasonable best efforts to cause the managing underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in the registration statement (or registration statements) for such
offering to be included therein on the same terms and conditions as any similar
securities of Parent included therein. Notwithstanding the foregoing, if
Parent gives notice of such a proposed registration, the total number of
Registrable Securities which shall be included in such registration shall be
reduced pro rata to such number, if any, as in the reasonable opinion of the
managing underwriters of such offering would not adversely affect the
marketability or offering price of all of the securities proposed to be offered
by Parent in such offering; provided however, that (x) if such Piggyback
Registration is incident to a primary registration on behalf of Parent, and to
the extent not prohibited by any written registration rights agreements
existing on the date hereof, the securities to be included in the registration
statement (or registration statements) for any person other than the Holders
and Parent shall be first reduced prior to any such pro rata reduction, and (y)
if such Piggyback Registration is incident to a secondary registration on
behalf of holders of securities of Parent and to the extent not prohibited by
any written registration rights agreements existing on the date hereof, the
securities to be included in the registration statement (or registration
statements) for any person not exercising "demand" registration rights other
than the Holders shall be first reduced prior to any such pro rata reduction.
SECTION 6. REGISTRATION PROCEDURES.
(a) Whenever the holders of Registrable Securities have requested
that any Registrable Securities be registered pursuant to Section 5, Parent
will as expeditiously as possible:
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(i) effect registration under the Securities Act of the
Registrable Securities which Parent has been requested to register
hereunder, and use its reasonable best efforts to cause such
registration statement to become effective (provided, that before filing
a registration statement or prospectus or any amendments or supplements
thereto, Parent will furnish copies of all such documents proposed to be
filed to any holder of Registrable Securities covered by such
registration statement);
(ii) notify each seller of Registrable Securities requesting
registration promptly after Parent shall receive notice thereof of the
time when such registration statement has been filed;
(iii) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration
statement (including, without limitation, each preliminary prospectus)
and such other documents as such seller may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by
such seller;
(iv) use its reasonable best efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws
of such jurisdictions within the United States as any seller reasonably
requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate
the disposition in such jurisdictions of the Registrable Securities
owned by such seller (provided that Parent will not be required to
qualify generally to do business or subject itself to any general
service of process in any jurisdiction where it is otherwise not then so
subject);
(v) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event which requires
the making of any change in the prospectus included in such registration
statement so that such document will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and,
at the request of any such seller, Parent will prepare a supplement or
amendment to such prospectus so that such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(vi) use its reasonable best efforts to cause all such
Registrable Securities to be listed on each securities exchange or
exchanges, automated quotation system or over-the-counter market upon
which securities of Parent of the same class are then listed;
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(vii) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission;
(viii) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending
the disqualification of any common stock included in such registration
statement for sale in any jurisdiction, Parent will use its reasonable
best efforts promptly to obtain the withdrawal of such order; and
(ix) use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary to enable the sellers thereof to consummate the disposition of
such Registrable Securities.
(b) Whenever the holders of Registrable Securities have requested
that any Registrable Securities be registered pursuant to Section 5, each
holder of Registrable Securities (including Registrable Securities in any
registration statement filed pursuant to this Agreement) will be deemed to have
agreed as follows:
(i) upon receipt of any notice from Parent of the happening of
any event of the kind described in Section 6(a)(v), the holders of
Registrable Securities will forthwith discontinue disposition of any
Registrable Securities until the holders of Registrable Securities
receive copies of the supplemented or amended prospectus contemplated by
Section 6(a)(v), or until they are advised in writing by Parent that the
use of the applicable prospectus may be resumed, and they have received
copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such prospectus (it being
the agreement of the parties hereto, however, that the obligation of
Parent with respect to maintaining the subject registration statement
current and effective shall be extended by a period of days equal to the
period the holders of Registrable Securities are required by this
Section 6(b)(i) to discontinue disposition of such Registrable
Securities); and
(ii) furnish to Parent such information regarding each holder,
the Registrable Securities held by such holder and the intended method
of disposition thereof as Parent shall reasonably request and as shall
be reasonably required in connection with the preparation of the
applicable registration statement and other actions taken by Parent
under this Agreement, and it shall be a condition precedent to the
obligation of Parent to take any action pursuant to this Agreement in
respect of the Registrable Securities that such information has been
furnished to Parent by the holders of Registrable Securities.
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SECTION 7. EXPENSES OF REGISTRATION. Parent shall pay all
Registration Expenses in connection with each registration effected pursuant to
Section 5 and, in any event, shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal and accounting duties), the expense of any annual audit and
the fees and expenses incurred in connection with the listing of the securities
to be registered on each securities exchange on which similar securities issued
by Parent are then listed. All Selling Expenses incurred in connection with a
registration effected pursuant to the terms hereof shall be borne by the seller
or sellers of Registrable Securities pro rata based upon the number of
Registrable Securities included in such registration.
SECTION 8. INDEMNIFICATION.
(a) Parent shall indemnify and hold harmless, with respect to any
registration statement filed by it, to the full extent permitted by law, each
holder of Registrable Securities covered by such registration statement, and
each other Person, if any, who controls such holder within the meaning of
Section 15 of the Securities Act (collectively, "HOLDER INDEMNIFIED PARTIES")
against all losses, claims, damages, liabilities and expenses, joint or several
to which any such Holder Indemnified Party may become subject under the
Securities Act, the Exchange Act, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement in which such Registrable Securities
were included as contemplated hereby or 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, (ii) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary, final
or summary prospectus, together with the documents incorporated by reference
therein (as amended or supplemented if Parent shall have filed with the
Commission any amendment thereof or supplement thereto), or any omission or
alleged omission to state therein 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, or (iii) any
violation by Parent of any federal, state or common law rule or regulation
applicable to Parent and relating to action of or inaction by Parent in connec-
tion with any such registration; and in each such case, Parent shall reimburse
each such Holder Indemnified Party for any reasonable legal or other expenses
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability, expense, action or proceeding; provided,
however, that Parent shall not be liable to any such Holder Indemnified Party
in any such case to the extent, that any such loss, claim, damage, liability or
expense (or action or proceeding, whether commenced or threatened, in respect
thereof) arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement
or amendment thereof or supplement thereto or in any such preliminary, final or
summary prospectus in reliance upon and in conformity with written information
furnished to Parent by or on behalf of any such Holder Indemnified Party
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for use in the preparation thereof. Such indemnity and reimbursement of
expenses and other obligations shall remain in full force and effect regardless
of any investigation made by or on behalf of the Holder Indemnified Parties and
shall survive the transfer of such securities by such Holder Indemnified
Parties.
(b) Each holder of Registrable Securities participating in any
registration hereunder shall severally (and not jointly or jointly and
severally) indemnify and hold harmless, to the fullest extent permitted by law,
Parent, its directors, officers, employees and agents, and each Person who
controls Parent (within the meaning of Section 15 of the Securities Act)
(collectively, "PARENT INDEMNIFIED PARTIES") against all losses, claims, damag-
es, liabilities and expenses to which any Parent Indemnified Party may become
subject under the Securities Act, the Exchange Act, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement in which such holder's
Registrable Securities were included or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary, final
or summary prospectus, together with the documents incorporated by reference
therein (as amended or supplemented if Parent shall have filed with the
Commission any amendment thereof or supplement thereto), or the omission or
alleged omission to state therein 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 to the extent in the
cases described in clauses (i) and (ii), that such untrue statement or omission
was furnished in writing by such holder for use in the preparation thereof, or
(iii) any violation by such holder of any federal, state or common law rule or
regulation applicable to such holder and relating to action of or inaction by
such holder in connection with any such registration; and in each such case,
such holder shall reimburse each such Parent Indemnified Party for any
reasonable legal or other expenses incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability, expense,
action or proceeding. Such indemnity obligation shall remain in full force and
effect regardless of any investigation made by or on behalf of the Parent
Indemnified Parties (except as provided above) and shall survive the transfer
of such securities by such holder.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) of written notice of the commencement of any action, suit,
proceeding, investigation or threat thereof made in writing with respect to
which a claim for indemnification may be made pursuant to this Section 8, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the indemnifying party of the threat
or commencement thereof; provided, however, that the failure to so notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. If any
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such claim or action referred to under subsection (a) or (b) is brought against
any indemnified party and it then notifies the indemnifying party of the threat
or commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
indemnifying party similarly notified, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense of any such claim or action, the indemnifying party shall not be
liable to such indemnified party under this Section 8 for any legal expenses of
counsel or any other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation unless the indemnifying party has failed to assume the defense of
such claim or action or to employ counsel reasonably satisfactory to such
indemnified party. Under no circumstances will the indemnifying party be
obligated to pay the fees and expenses of more than one law firm for all
indemnified parties. The indemnifying party shall not be required to indemnify
the indemnified party with respect to any amounts paid in settlement of any
action, proceeding or investigation entered into without the written consent of
the indemnifying party, which consent shall not be unreasonably withheld. No
indemnifying party shall consent to the entry of any judgment or enter into any
settlement without the consent of the indemnified party unless (i) such
judgment or settlement does not impose any obligation or liability upon the
indemnified party other than the execution, delivery or approval thereof, and
(ii) such judgment or settlement includes as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a full release
and discharge from all liability in respect of such claim for all persons that
may be entitled to or obligated to provide indemnification or contribution
under this Section 8.
(d) Indemnification similar to that specified in the preceding
subsections of this Section 8 (with appropriate modifications) shall be given
by Parent and each seller of Registrable Securities with respect to any
required registration or qualification of securities under any state securities
or blue sky laws.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b), then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages, liabilities or expenses (or actions or proceedings in respect
thereof) referred to in subsection (a) or (b) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the indemnified party on the other in connection with the statements,
omissions, actions or inactions which resulted in such losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the indemnifying party
or the indemnified party, any action or inaction by any such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement,
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omission, action or inaction. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses (or
actions or proceedings in respect thereof) pursuant to this subsection (e)
shall be deemed to include, without limitation, any reasonable legal or other
expenses incurred by such indemnified party in connection with investigating or
defending any such action or claim (which shall be limited as provided in
subsection (c) if the indemnifying party has assumed the defense of any such
action in accordance with the provisions thereof) which is the subject of this
subsection (e). No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Promptly after receipt by an indemnified party under this
subsection (e) of written notice of the commencement of any action, suit,
proceeding, investigation or threat thereof made in writing with respect to
which a claim for contribution may be made against an indemnifying party under
this subsection (e), such indemnified party shall, if a claim for contribution
in respect thereof is to be made against an indemnifying party, give written
notice to the indemnifying party in writing of the commencement thereof (if the
notice specified in subsection (c) has not been given with respect to such
action); provided, however, that the failure to so notify the indemnifying
party shall not relieve it from any obligation to provide contribution which it
may have to any indemnified party under this subsection (e) except to the
extent that the indemnifying party is actually prejudiced by the failure to
give notice.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this paragraph were determined by pro rata allocation
or by any other method of allocation which does not take account the equitable
considerations referred to in the immediately preceding paragraph.
If indemnification is available under this Section 8, the indemnifying
parties shall indemnify each indemnified party to the fullest extent provided
in subsections (a) and (b), without regard to the relative fault of said
indemnifying party or any other equitable consideration provided for in this
subsection. The provisions of this subsection shall be in addition to any
other rights to indemnification or contribution which any indemnified party may
have pursuant to law or contract, shall remain in full force and effect
regardless of any investigation made by or on behalf of any indemnified party,
and shall survive the transfer of securities by any such party.
(f) In connection with any underwritten offering contemplated by this
Agreement which includes Registrable Securities, Parent and all sellers of
Registrable Securities included in any registration statement shall agree to
customary provisions for indemnification and contribution (consistent with the
other provisions of this Section 8) in respect of losses, claims, damages,
liabilities and expenses of the underwriters of such offering.
SECTION 9. RULE 144. Parent covenants to each Holder that, to the
extent that Parent shall be required to do so under the Exchange Act, Parent
shall (a) timely file the reports required
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to be filed by it under the Exchange Act or the Securities Act (including, but
not limited to, the reports under Section 13 and 15(d) of the Exchange Act
referred to in subparagraph (c) (1) of Rule 144 adopted by the Commission under
the Securities Act) and the rules and regulations adopted by the Commission
thereunder, and (b) take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act
within the limitations of the exemption provided by Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission. Upon the request of
any Holder, Parent shall deliver to such Holder a written statement as to
whether it has complied with such requirements.
SECTION 10. DEFINITIONS, REFERENCES AND CONSTRUCTION.
(a) When used in this Agreement, the following terms shall have the
respective meanings assigned to them in this Section 10 or in the sections,
subsections or other subdivisions referred to below:
"AGREEMENT" shall mean this April 1997 Agreement, as hereafter changed,
modified or amended in accordance with the terms hereof.
"AMENDMENT" shall have the meaning assigned to it in Paragraph A of the
Recitals hereto.
"COMMISSION" shall mean the Securities and Exchange Commission (or any
successor body thereto).
"COMMON STOCK" shall have the meaning assigned to it in Section 3.
"ENCAP LP" shall have the meaning assigned to it in the introductory
paragraph hereof.
"ENERGY PLC" shall have the meaning assigned to it in the introductory
paragraph hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated under such Act.
"GENERAL PARTNER" shall have the meaning assigned to it in the
introductory paragraph hereof.
"HOLDER" shall mean any Person that holds Registrable Securities.
"HOLDER INDEMNIFIED PARTIES" shall have the meaning assigned to it in
Section 9(a).
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"LETTER OF INTENT" shall have the meaning assigned to it in Section 1.
"OFFERING" shall have the meaning assigned to it in Section 1.
"ORIGINAL AGREEMENT" shall have the meaning assigned to it in Paragraph
A of the Recitals hereto.
"PARENT" shall have the meaning assigned to it in the introductory
paragraph hereof.
"PARTNERSHIP" shall have the meaning assigned to it in the introductory
paragraph hereof.
"PARTNERSHIP AGREEMENT" shall have the meaning assigned to it in
Paragraph A of the Recitals hereto.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited partnership, limited liability company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"PIGGYBACK REGISTRATION" shall have the meaning assigned to it in
Section 5.
"REGISTRABLE SECURITIES" shall mean (i) the shares of Common Stock
and/or other securities issued pursuant to this Agreement and (ii) any
securities issued or issuable with respect to the shares described in clause
(i) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization; provided, that a share of Common Stock or security described in
clauses (i) and (ii) shall cease to be a Registrable Security for purposes of
this Agreement at such time as either (A) counsel to Parent renders an opinion
to the Holder of such share or security to the effect that such share or
security can be freely transferred without registration under the Securities
Act (which counsel and opinion shall be reasonably acceptable to such Holder)
or (B) counsel to a Holder of such share or security renders an opinion to
Parent to the effect that such share or security can be freely transferred
without registration under the Securities Act (which counsel and opinion shall
be reasonably acceptable to Parent).
"REGISTRATION EXPENSES" shall mean all expenses incident to Parent's
performance of or compliance with the registration rights granted hereunder,
including (without limitation) all registration and filing fees, fees and
expenses of compliance with securities and blue sky laws, printing and
engraving expenses, messenger, telephone and delivery expenses, and fees and
disbursements of counsel for Parent, all independent certified public
accountants and underwriters (excluding discounts and commissions); provided,
that Registration Expenses shall not include any Selling Expenses.
12
13
"SECOND INSTALLMENT DATE" shall have the meaning assigned to it in
Section 3.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
all rules and regulations under such Act.
"SELLING EXPENSES" shall mean underwriting discounts or commissions, any
selling commissions and stock transfer taxes attributable to sales of
Registrable Securities and the fees and expenses of counsel for any Holder.
"SPECIAL PAYOUT" shall mean the last day of the earliest calendar month
during which (a) the aggregate cash distributions (other than any cash
distributions made pursuant to Section 10.2 of the Partnership Agreement) which
the Limited Partners (as defined in the Partnership Agreement) shall have
actually received from the Partnership, when discounted back from the
respective dates such cash distributions are made to the last day of the month
immediately preceding the month in which the Delivery Date (as defined in the
Partnership Agreement) occurs at a rate of 22% per annum compounded monthly
shall equal (b) the aggregate Capital Contributions (as defined in the
Partnership Agreement) actually paid by the Limited Partners pursuant to
Sections 3.2, 3.2A and 3.3 of the Partnership Agreement, which Capital
Contributions shall be discounted back from the respective dates such Capital
Contributions are made to the last day of the month immediately preceding the
month in which the Delivery Date occurs at a rate of 22% per annum compounded
monthly. For purposes of making such discount calculations, each cash distri-
bution and Capital Contribution shall be deemed to have been made on the last
day of the month during which it was paid or received, and all such discount
calculations shall be made on a monthly basis and by application of the
appropriate discount factors set forth in Exhibit 10--Special Payout.
(b) All references in this Agreement to sections, subsections and
other subdivisions refer to corresponding sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any of such subdivisions are for convenience only
and shall not constitute part of such subdivisions and shall be disregarded in
construing the language contained herein. The words "this Agreement", "this
instrument", "herein", "hereof", "hereby", "hereunder" and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. Words in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise requires.
Pronouns in masculine, feminine and neuter genders shall be construed to
include any other gender.
SECTION 11. NOTICES. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally or sent by reputable express courier service (charges prepaid), or
mailed to the recipient by certified or registered mail, return receipt
13
14
requested and postage prepaid, or sent by telefax, to the parties at the
following address (or to such other address or to the attention of such other
person as the recipient party has specified by prior like notice to the sending
party):
If to Parent or the General Partner:
Future Petroleum Corporation
0000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Telecopier No.: (000)000-0000
Attention: Xxxx Xxxxx
If to the Partnership:
Future Acquisition 1995, Ltd.
0000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Telecopier No.: (000)000-0000
Attention: Xxxx Xxxxx
If to Energy PLC or EnCap LP:
c/o EnCap Investments L.C.
0000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopier No.: (000)000-0000
Attention: Xxxx X. Xxxxxxxx, Managing Director
SECTION 12. MARKET STANDOFF AGREEMENT.
(a) In order to facilitate the possibility of future public offerings
of securities of Parent, the Holders agree that the shares of Common Stock
issued pursuant to this Agreement will not be resold during a period commencing
30 days preceding the filing by the Parent of a registration statement under
the Securities Act for a public offering for cash by Parent of its Common Stock
or securities convertible into or exercisable or exchangeable for its Common
Stock and continuing until the earlier of the abandonment of the proposed
public offering or 30 days following the date of the last closing in the public
offering period, but not to exceed, in any event, 120 days, except to the
extent such shares are included
14
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in such registration. Certificates representing the shares of Common Stock
issued pursuant to this Agreement will bear a legend noting the foregoing
restriction. Holders of such securities also agree that they will cooperate
with Parent in providing reasonable written assurances respecting the foregoing
to the underwriter of any such public offering. Holders agree that during the
above restricted period they will not directly or indirectly sell, offer to
sell, contract to sell (including without limitation any short sale), grant an
option to purchase or otherwise transfer of dispose of (other than donees who
agree to be similarly bound) shares of Common Stock issued pursuant to this
Agreement at any time during such period except securities included in such
registration. In order to enforce the foregoing covenant, Parent may impose
stop-order instructions with respect to such shares of Common Stock held by
each Holder, which shall be binding upon any assignee or successor of such
Holder (and the shares or securities of every other person subject to the
foregoing restriction), until the end of the restricted period.
(b) Without limiting the foregoing, each of Energy PLC and EnCap LP
acknowledges the provisions of Section 11(b) of the Letter of Intent and agrees
with Parent that if it is the holder of 5% or more of the Common Stock
(computed as provided in such Section) and therefore subject to the terms of
such Section, it will comply with such terms.
SECTION 13. REPRESENTATIONS AND WARRANTIES.
(a) Each party hereto hereby severally represents and warrants to the
other parties hereto as follows:
(i) It is duly organized and validly existing under the laws
of its state of formation.
(ii) It has all requisite power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
(iii) The execution, delivery and performance of this Agreement
are within its powers and do not (A) contravene or violate any
provisions of its charter or other governing documents, as amended to
the date hereof, or (B) contravene or result in any breach of or
constitute a default under any applicable law, rule or regulation or any
loan, note or other agreement or instrument to which it is a party or by
which it or any of its properties are bound.
(iv) No consent, approval, authorization, or order of any court
or governmental agency or authority or of any third party which has not
been obtained is required in connection with the execution, delivery and
performance by it of this Agreement.
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16
(v) When delivered to the other parties hereto, this Agreement
will be duly and validly executed by it and will be binding upon it in
accordance with the terms hereof.
(b) Each of Energy PLC and EnCap LP hereby severally represents and
warrants to Parent with respect to the shares of Common Stock or other
securities of Parent to be issued to it (in this Section 13(b) called the
"SECURITIES") as follows:
(i) It is able to bear the economic risks of its investment in
the Securities, and consequently without limiting the generality of the
foregoing, it is able to hold the Securities acquired pursuant to the
terms hereof for an indefinite period of time and has a sufficient net
worth to sustain a loss of all or a portion of its investment in the
Securities in the event such loss should occur. It has such knowledge
and experience in financial and business matters that it is capable of
evaluating the risks and merits of an investment in the Securities.
(ii) It is acquiring the Securities for its own account for
investment and not with view to the distribution, resale, subdivision,
or fractionalization thereof, and it has no present plans to enter into
any contract, undertaking, agreement, or arrangement for any such
distribution, resale, subdivision, or fractionalization.
(iii) It is aware that it must bear the economic risk of its
investment in the Securities for an indefinite period of time because
the shares of Securities have not been registered under the Securities
Act or under the securities laws of any state of the United States, and
therefore cannot be sold unless they are subsequently registered under
the Securities Act and any applicable state securities laws or unless an
exemption from such registration is available. It also recognizes that
no U.S. federal or state agency has passed upon the shares of Securities
to be issued hereunder to date or made any finding or determination as
to the fairness of an investment in such shares.
(iv) It agrees that the Securities acquired hereunder shall not
be sold, assigned, pledged, hypothecated or otherwise transferred unless
they are registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration is
available.
(v) It acknowledges that a legend in substantially the
following form will be placed on any certificate(s) evidencing the
Securities issued hereunder:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS AND ARE "RESTRICTED SECURITIES" WITHIN
THE MEANING OF RULE 144 PROMULGATED
16
17
UNDER THE SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLYING
WITH RULE 144 IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OR
OTHER COMPLIANCE WITH THE SECURITIES ACT."
It further understands that Parent may refuse to register transfer of
the Securities issued hereunder in the absence of compliance with Rule
144 unless it furnishes Parent with a "no-action" or interpretive letter
from the SEC or an opinion of counsel reasonably acceptable to Parent
stating that the transfer may be effected without registration under the
Securities Act.
(vi) All information which it has provided to Parent or its
agents or representatives concerning its suitability to hold the
Securities following the transactions contemplated hereby is complete,
accurate and correct.
(vii) It was not any time solicited by any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio or
television advertisement, or any other form of general advertising or
solicitation in connection with the offer, sale or purchase of
Securities under this Agreement.
(viii) It is an "accredited investor", as such term is defined in
Regulation D promulgated pursuant to the Securities Act.
(c) Parent hereby represents and warrants to Energy PLC and EnCap LP
that the shares of Common Stock or other securities issued or to be issued
pursuant to this Agreement have been duly authorized for issuance and, when
issued and delivered pursuant to the terms hereof, will have been validly
issued, fully paid and nonassessable.
SECTION 14. RATIFICATION OF GUARANTY. Reference is herein made to
that certain Guaranty Agreement dated as of December 13, 1995, executed by
Parent in favor of the Partnership, Energy PLC and EnCap LP, as amended by that
certain Agreement of Parent dated as of January 29, 1996, by and among Parent,
the Partnership, Energy PLC and EnCap LP (the "GUARANTY"). Parent hereby
ratifies and confirms the Guaranty in all respects.
SECTION 15. MISCELLANEOUS.
(a) From and after the date of this Agreement, Parent will not,
without the prior written consent of the holders of a majority of the number of
Registrable Securities then outstanding, enter into any agreement with respect
to its securities which is inconsistent with or violates the rights granted to
the holders of Registrable Securities in this Agreement.
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18
(b) In connection with the Offering, Parent, Energy PLC and EnCap LP
agree to enter into a mutually acceptable indemnification agreement, which
agreement shall contain provisions similar in all material respects to the
indemnification provisions contained in Section 8.
(c) All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal law, and not
the law of conflicts, of the State of Texas.
(d) All covenants and agreements in this Agreement by or on behalf of
any of the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether expressed or not.
(e) This Agreement is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter herein contained.
(f) If any provision of this Agreement is held to be unenforceable,
this Agreement shall be considered divisible and such provision shall be deemed
inoperative to the extent it is deemed unenforceable, and in all other respects
this Agreement shall remain in full force and effect; provided, however, that
if any such provision may be made enforceable by limitation thereof, then such
provision shall be deemed to be so limited and shall be enforceable to the
maximum extent permitted by applicable law.
(g) This Agreement may be executed by the parties hereto in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same agreement. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all, the parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FUTURE PETROLEUM CORPORATION, a Utah
corporation
By: /s/ XXXX XXXXX
--------------------------------
Name: Xxxx Xxxxx
Title: President
FUTURE PETROLEUM CORPORATION, a Texas
corporation
By: /s/ XXXX XXXXX
--------------------------------
Name: Xxxx Xxxxx
Title: President
FUTURE ACQUISITION 1995, LTD.
By: FUTURE PETROLEUM CORPORATION, a
Texas corporation
By: /s/ XXXX XXXXX
--------------------------------
Name: Xxxx Xxxxx
Title: President
ENERGY CAPITAL INVESTMENT COMPANY
PLC
By: /s/ XXXX X. XXXXXXXX
--------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Director
ENCAP EQUITY 1994 LIMITED
PARTNERSHIP
By: ENCAP INVESTMENTS L.C.
By: /s/ XXXX X. XXXXXXXX
--------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
19
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[XXXXXXX INVESTMENT COMPANY INC. LETTERHEAD]
March 24, 1997
Xxxx Xxxxx
President
Future Petroleum Corporation
0000 X. Xxxxxxxxx Xxx., Xxx. 0000 Schedule I
Xxxxxx, XX 00000
Re: Proposed Public Offering
Dear Mr. Price:
This letter, if executed in the space provided below, will set forth our
mutual intent to make a firmly underwritten public offering (the "Offering") of
Units, each Unit consisting of one share of convertible preferred stock
("Preferred Stock") of Future Petroleum Corporation (the "Company") and five
warrants ("Warrants"), each to purchase one share of common stock ("Common
Stock"). The Preferred Stock and the Warrants will be sold as a Unit, but will
be issued and traded separately. Each share of Preferred Stock will convert
automatically into five shares of Common Stock if the Preferred Stock closes
at, at least 150 percent of the Unit price on the Offering, as reported on
Nasdaq, for ten consecutive trading days. Each share of Preferred Stock will
pay an annual stock dividend (the "Stock Dividend") equal to .5 shares of
Common Stock, which will accrue to the Preferred Stock on a quarterly basis.
The stock dividends will not be paid out, but will be added to the number of
shares of Common Stock that the holder of the Preferred Stock receives upon
conversion. Assuming the Unit price is $25, each Warrant will be exercisable
for a period of five years at a price equal to $7.50 and will become callable
at $.10 per Warrant when the Common Stock closes at a price of at least $15.00,
as reported on Nasdaq, for at least ten consecutive trading days. You have
informed us that there are currently approximately 4,067,000 shares of Common
Stock outstanding (4,435,000 fully diluted). Prior to the Offering the Company
will complete a 1-for-5 reverse split of its Common Stock. This letter is
intended to confirm the principal elements of our mutual understanding and,
except as to provisions that are expressly stated to be legally binding, is not
intended to create a contractual relationship between us and the Company,
whether with respect to the Offering or otherwise. We understand that the
Company proposes to undertake the Offering in the manner described below.
1. The Offering. The Company proposes to offer 300,000 Units (the "Firm
Units").
2. Underwriting Commitment. We propose to form a syndicate of investment
banking firms (the "Underwriters") to purchase the Firm Units on a firm
commitment basis for resale to the public on terms and subject to conditions
set forth in an Underwriting Agreement to be prepared by our legal counsel in
our customary form for such agreements. We propose to act as managing
underwriter of the Offering.
21
3. Registration; Legal and Regulatory Compliance; Listing.
Registration. The Company will cause to be carefully prepared and filed
with the Securities and Exchange Commission (the "Commission") a Registration
Statement (the "Registration Statement") relating to the Units and complying in
form and substance with the requirements of the Securities Act of 1933, as
amended (the "Act"), the rules and regulations thereunder (the "Rules") and
current interpretations thereof by the Commission and courts of competent
jurisdiction, and will use all reasonable efforts to cause the Registration
Statement to be declared effective by the Commission on a date as to which we
and the Company will agree (the "Effective Date").
Blue Sky Compliance. The Company will execute such applications and other
documents and provide such information as may be required to cause the offering
to be qualified for sale in such States as we deem appropriate, and when such
qualification is required, and will assist our counsel in making the
appropriate state filings and responding to requests by state securities
authorities for additional information. To the extent reasonably necessary to
consummate the Offering, the Company will make such changes in its
organizational structure or other changes as may be required by state
securities authorities as a condition for qualification of the Offering,
provided, however, that the Company will not be required to make any such
change that would have a materially adverse effect on its business or financial
condition or materially and adversely affect the rights of its shareholders.
NASD Review. The Company will provide such information as may be required
in connection with the review of the Offering by the National Association of
Securities Dealers, Inc. ("NASD") under the Corporate Financing Rule.
NASDAQ. The Company will cause the Preferred Stock and Warrants comprising
the Units to be accepted for trading when issued on the NASDAQ Small Cap Market.
4. Overallotment Option. In the Underwriting Agreement the Company will
grant to the Underwriters an option (the "Overallotment Option") to purchase,
for a period of up to 45 days from the Effective Date, up to 45,000 additional
Units, solely to cover overallotments in the sale of the Firm Units to the
public.
5. Due Diligence. The Company will fully cooperate with us, our legal
counsel and others that we may retain for the purpose of conducting a due
diligence investigation of the Company and its business. Without limiting the
generality of the foregoing, the Company will permit us to contact, and will
assist us in contacting, to the extent we deem necessary, principal or
representative customers and suppliers and others with whom the Company has
material relationships and will cause its auditors to
2
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be available to meet with us and our legal counsel and to provide the
Underwriters with "cold comfort" letters in customary form.
6. Underwriting Discount. The Underwriters will purchase any Firm Units
or Units subject to the Overallotment Option at a discount of 10 percent (10%)
from the initial public offering price of the Firm Units as set forth on the
cover page of the final prospectus related to the Offering.
7. Offering Expenses. The Company will pay for the following expenses,
whether or not the Offering is consummated and without regard for the reason,
if any, for the termination of the Offering:
(a) Registration and other fees and expenses related to compliance with
the Act and the Rules, State blue sky laws and the securities laws of any
foreign jurisdiction in which we agree the Units will be offered.
(b) The fee charged by the NASD under the Corporate Financing Rule.
(c) The fees and expenses of legal counsel to the Underwriters incurred in
connection with Blue Sky compliance and compliance with the securities laws of
jurisdictions other than the United States.
(d) Its own, out of pocket expenses including, without limitation, the
fees and expenses of its legal counsel, auditors and other outside advisors,
the expenses related to "road show" meetings and its travel and other, similar
expenses.
(e) Expenses relating to the preparation and filing of the Registration
Statement, the final prospectus and all amendments thereto, including expenses
required in connection with the Commission's XXXXX filing requirements.
(f) The expenses of preparing, printing and distributing preliminary and
final prospectuses.
8. Our Expenses. Within two weeks after its execution of this letter, the
Company will pay us $35,000 as an advance against our expense reimbursement
described below. If the Offering is consummated, we will be entitled to
withhold at each closing with respect to the sale of Units from the amount
otherwise due to the Company a non-accountable expense allowance equal to three
(3) percent of the aggregate initial public offering price of the Units
purchased at such closing provided that the first amount so withheld will be
reduced by the $35,000 paid to us as provided above. If the Offering is not
consummated for any reason, we will be entitled, upon presentation of a written
accounting therefor in reasonable detail (but without the need to include the
underlying statements or evidence of payment), to prompt reimbursement of up to
$75,000 (including the $35,000 already paid) of our actual, out-of-pocket
expenses related to the Offering, including but not limited to fees and
expenses of our
3
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legal counsel, travel expenses, expenses for background reports on Company
management, and the fees and expenses of outside experts, if any, retained to
assist us with due diligence.
9. Representative's Warrants. If the Offering is consummated, the Company
will issue to us or to such other Underwriters or officers or partners of an
Underwriter as we may direct, warrants (the "Representative's Warrants") to
purchase, in the aggregate, ten percent of the Firm Units sold to the public.
The Representative's Warrants will become exercisable on the first anniversary
of the Effective Date and will expire on the fifth anniversary of the Effective
Date. The exercise price of the Representative's Warrants will be 120% of the
initial public offering price of the Units, subject to adjustment in certain
events. The Representative's Warrants will have registration rights and will
have terms and be subject to conditions as set forth in our customary form of
Representative's Warrants, subject to such changes, if any, as may be required
by the NASD.
10. Pricing. Numerous factors affect the price at which securities may be
successfully offered to the public. Although we will use reasonable efforts to
offer and sell the Units to the public at a price meeting the Company's
expectations, and will inform the Company from time to time of our best
judgment (and the best judgment of the Underwriters) as to the price at which
the Units may be sold, the Company understands that many factors beyond our
control, including both the Company's performance and market factors unrelated
to the Company, will affect the price at which the Units may be sold and the
number of Units that may be sold at that price or at all. Our current
expectation is that the Units will be initially offered at a price (to be
reflected on the cover of the preliminary prospectus) of $25. You are advised,
however, that market conditions may cause us to advise a price either above or
below the stated range.
11. Company Undertakings. The Company undertakes and agrees to cause the
following to occur:
(a) If the Offering is consummated, the Company will cause a Transfer
Agent to be appointed and retained with respect to the Common Stock, Preferred
Stock and a Warrant Agent to be appointed and retained with respect to the
Warrants, which Transfer Agent and Warrant Agent will be reasonably acceptable
to us.
(b) As a condition of the Underwriters' purchase of the Units, the Company
will, and will cause its officers, directors and the holders of 5% or more of
its Common Stock (including holders of securities convertible into or
exercisable for Common Stock) to execute an agreement, in our customary form,
to the effect that, (i) except as permitted in the agreement, without our prior
written consent, they will not sell or otherwise dispose of equity securities
of the Company for a period of one year following the Effective Date and (ii)
for a period of two years from the Effective Date,
4
24
they will provide us with prior notice of any sales of equity securities of
the Company pursuant to Rule 144 or other similar rule.
(c) If the Offering is consummated, for a period of two years from the
Effective Date, the Company will give us notice of all meetings of its Board of
Directors and any Executive or similar Committee thereof.
12. News Releases and Publicity. Between the date hereof and a date 25
days after the Effective Date or the earlier termination of the Offering, the
Company will provide to us and our legal counsel prior to their release copies
of all press releases, proposed communications with shareholders or other
interested constituencies and other public announcements and will permit us
and our legal counsel to comment thereon prior to their release, provided,
however, that ordinary and routine communications not related to the Offering
or the financial condition of the Company may be provided concurrently with
their release.
13. Advisors and Others. The Company represents that it has retained, or
will retain, legal counsel and auditors having substantial experience with
public offerings of securities and that it will retain a financial printer of
national reputation in connection with the Offering that will be reasonably
acceptable to us.
14. Nature of this Agreement. Except for the provisions of Sections 7, 8,
12 and 14, which are intended to be binding agreements between us, this letter
is an agreement in principle and is not to be interpreted to constitute an
obligation of either us or the Company to consummate the Offering or any other
transaction in securities.
Please indicate your agreement with the foregoing by executing a copy of
this letter and returning it to us.
Very truly yours,
XXXXXXX INVESTMENT COMPANY, INC.
By:
--------------------------------
Title:
The undersigned agrees to the foregoing.
FUTURE PETROLEUM CORPORATION
Date:
-----------------
By:
---------------------------
Title
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Exhibit 10 -- Special Payout
Delivery Date: December 13, 1995
22.00% Discount Factors
Number of Number of
Monthly Discount Monthly Discount
Periods Month Factor Periods Month Factor
--------- ----- --------- --------- ----- --------
0 Dec-95 1.0000000
1 Jan-96 0.9819967 41 May-99 0.4748010
2 Feb-96 0.9643176 42 Jun-99 0.4662531
3 Mar-96 0.9469567 43 Jul-99 0.4578590
4 Apr-96 0.9299084 44 Aug-99 0.4496160
5 May-96 0.9131670 45 Sep-99 0.4415214
6 Jun-96 0.8967270 46 Oct-99 0.4335726
7 Jul-96 0.8805830 47 Nov-99 0.4257669
8 Aug-96 0.8647296 48 Dec-99 0.4181017
9 Sep-96 0.8491616 49 Jan-2000 0.4105745
10 Oct-96 0.8338739 50 Feb-2000 0.4031828
11 Nov-96 0.8188615 51 Mar-2000 0.3959242
12 Dec-96 0.8041193 52 Apr-2000 0.3887963
13 Jan-97 0.7896425 53 May-2000 0.3817967
14 Feb-97 0.7754264 54 Jun-2000 0.3749231
15 Mar-97 0.7614662 55 Jul-2000 0.3681732
16 Apr-97 0.7477573 56 Aug-2000 0.3615449
17 May-97 0.7342952 57 Sep-2000 0.3550359
18 Jun-97 0.7210755 58 Oct-2000 0.3486441
19 Jul-97 0.7080938 59 Nov-2000 0.3423674
20 Aug-97 0.6953457 60 Dec-2000 0.3362036
21 Sep-97 0.6828272 61 Jan-2001 0.3301509
22 Oct-97 0.6705341 62 Feb-2001 0.3242071
23 Nov-97 0.6584623 63 Mar-2001 0.3183703
24 Dec-97 0.6466078 64 Apr-2001 0.3126386
25 Jan-98 0.6349668 65 May-2001 0.3070101
26 Feb-98 0.6235353 66 Jun-2001 0.3014829
27 Mar-98 0.6123096 67 Jul-2001 0.2960552
28 Apr-98 0.6012860 68 Aug-2001 0.2907252
29 May-98 0.5904609 69 Sep-2001 0.2854912
30 Jun-98 0.5798307 70 Oct-2001 0.2803515
31 Jul-98 0.5693918 71 Nov-2001 0.2753042
32 Aug-98 0.5591409 72 Dec-2001 0.2703478
33 Sep-98 0.5490746 73 Jan-2002 0.2654807
34 Oct-98 0.5391894 74 Feb-2002 0.2607012
35 Nov-98 0.5294822 75 Mar-2002 0.2560077
36 Dec-98 0.5199498 76 Apr-2002 0.2513987
37 Jan-99 0.5105890 77 May-2002 0.2468727
38 Feb-99 0.5013968 78 Jun-2002 0.2424282
39 Mar-99 0.4923700 79 Jul-2002 0.2380637
40 Apr-99 0.4835057 80 Aug-2002 0.2337778
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