Each one in plain English, with the numbers worked through for a shareholder.
26 May 2011material agreement● NeutralMajor
On May 19, 2011 Eternal and American Eagle Energy agreed to sell a buyer 50% of their combined interest in the Spyglass Prospect in Divide County, North Dakota. The first sale (about 8,188 net acres) is $7,165,000, split equally between the two sellers, with closing scheduled for May 26, 2011. A second sale is $959,000 for about 1,096 net acres, scheduled for July 26, 2011. Eternal continues as manager of future operations under a joint operating agreement. This sells part of the Spyglass asset mentioned in the merger deal.
The company filed an S-4 on May 4, 2011 to register up to 164,023,288 shares for American Eagle Energy's stockholders under the April 2011 merger agreement. Eternal holders keep their shares and would own about 20% after closing, with American Eagle holders at about 80%. The merger needs approval by a majority of American Eagle's shares, and Eternal's own holders are not asked to vote. A NYSE Amex listing is intended after closing but not assured. This moves the merger toward closing and is a continuation of that thread.
On April 8, 2011 the company signed a merger agreement with American Eagle Energy Inc. (a different company from the filer's later name), which will merge into a new Eternal subsidiary, with Eternal surviving. After closing, American Eagle holders will own 80% and Eternal holders 20%, an outcome an investment bank called fair to Eternal. A reverse split and a listing application on a senior exchange are planned, and closing is expected in early summer, subject to share registration and American Eagle shareholder approval. The press release also references the Spyglass prospect in North Dakota and the Hardy project in Saskatchewan.
On October 14, 2009 the company issued 6,500,000 restricted shares to its three directors and two senior managers in exchange for them giving up their outstanding stock options. The shares are booked at $117,000 ($0.018 per share), cannot be sold for two years, and are forfeited if officers leave within one year (or directors fail to serve one year). The company will also lend the officers about $30,000 for tax withholding. This adds shares and replaces the earlier option awards (including Colby's 1,443,800-share option, inference).
