<PAGE> 1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
JOHN GRILLO,
Plaintiff,
-against- C.A. No. 18606 NC
PENNACO ENERGY, INC., MARATHON
OIL ACQUISITION 1, LTD., PAUL M.
RADY, GLEN C. WARREN, JR., GREGORY [STAMP]
V. GIBSON, DAVID W. LANZA and KURT
M. PETERSON,
Defendants.
CLASS ACTION COMPLAINT
Plaintiff, by his attorneys, for his class action complaint against
defendants, alleges upon information and belief, except for paragraph 2 hereof,
which is alleged upon knowledge as follows:
1. Plaintiff brings this action pursuant to Rule 23 of the Rules of
the Court of Chancery on his behalf and as a class action on behalf of all
persons, other than defendants and those in privity with them, who own the
common stock of Pennaco Energy, Inc. ("Pennaco" or the "Company").
2. Plaintiff has been the owner of the common stock of the Company
since prior to the transaction herein complained of and continuously to date.
3. Defendant Pennaco is a corporation duly organized and existing
under the laws of the State of Delaware with principal executive offices at
1050 17th Street, Suite 700, Denver, Colorado. The Company is an independent
energy company focused on the acquisition, exploration, development and
production of natural gas from coal bed methane properties located in Wyoming
<PAGE> 2
and Montana. The Company has over 23 million shares of common stock issued and
outstanding, held by hundreds of shareholders of record, which shares trade
on the American Stock Exchange.
4. Defendant Marathon Oil Acquisition 1, Ltd. ("Acquisition") is a Delaware
corporation formed for this acquisition and is a wholly-owned subsidiary of
Marathon Oil Company ("Marathon"), an Ohio corporation, which is in turn is a
wholly-owned subsidiary of USX Corporation ("USX"), a Delaware corporation.
Acquisition, Marathon and USX are collectively referred to herein as "Marathon".
Marathon, which formed Acquisition for purposes of this transaction, is named as
an aider and abettor of the breaches of fiduciary duty alleged herein.
5. Defendant Paul M. Rady ("Rady") is and was at all relevant times
President, Chief Executive Officer and a director of Pennaco.
6. Defendant Glen C. Warren, Jr. ("Warren") is and was at all relevant
times Executive Vice President, Chief Financial Officer and a director of
Pennaco. Prior to July, 1998, Warren was an investment banker with Lehman
Brothers ("Lehman Bros."), the advisor ultimately retained by Pennaco.
7. Defendant Gregory V. Gibson ("Gibson") is and was at all relevant times
Vice President-Legal, Secretary and a director of Pennaco.
8. Defendant David W. Lanza ("Lanza") is and was at all relevant times a
director of Pennaco and a real estate developer, oil and gas property, in, inter
alia, Wyoming.
9. Defendant Kurt M. Peterson ("Peterson") is and was at all relevant
times a director of Pennaco and a partner in the natural resources department
of Davis, Graham and Stubbs, LLP, a Denver law firm that provides services to
Pennaco.
2
<PAGE> 3
10. The Individual Defendants named in paragraphs 5 through 9
constitute the Board of Directors of Pennaco (the "Board") and are in a
fiduciary relationship with plaintiff and the other public stockholders of
Pennaco and owe them the highest obligations of good faith and fair dealing.
CLASS ACTION ALLEGATIONS
11. Plaintiff brings this action on his own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of
all common stockholders of the Company (except the defendants herein and any
person, firm, trust, corporation, or other entity related to or affiliated with
any of the defendants) and their successors in interest, who are or will be
threatened with injury arising from defendants' actions as more fully described
herein.
12. This action is properly maintainable as a class action.
13. The class is so numerous that joinder of all members is
impracticable. As of January 8, 2001, there were in excess of 23 million
shares of Pennaco common stock outstanding, owned by thousands of shareholders
located throughout the country.
14. There are questions of law and fact which are common to the class
including, inter alia, the following: (a) whether defendants have breached their
fiduciary and other common law duties owed by them to plaintiff and the members
of the class; and (b) whether defendants have failed to disclose material
information to Pennaco's common stockholders; (c) whether the class is entitled
to injunctive relief or damages as a result of the wrongful conduct committed
by defendants.
15. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of the
plaintiff are typical of the claims of other members of the class and plaintiff
has the same interests as the other members the class. Plaintiff will fairly
and adequately represent the class.
3
<PAGE> 4
16. The prosecution of separate actions by individual members of the
class would create a risk of inconsistent or varying adjudications with respect
to individual members of the class, which would establish incompatible standards
of conduct for defendants, or adjudications with respect to individual members
of the class which would, as a practical matter, be dispositive of the interests
of other members or substantially impair or impede their ability to protect
their interests.
17. Defendants have acted in a manner which affects plaintiff and all
members of the class, thereby making appropriate injunctive relief and/or
corresponding declaratory relief with respect to the class as a whole.
SUBSTANTIVE ALLEGATIONS
18. On or about December 22, 2000, Pennaco announced in a press
release that it had entered into a definitive agreement with Marathon pursuant
to which Marathon will acquire each share of Pennaco common stock at a price of
$19 cash per share (the "transaction"). The total value of the transaction is
approximately $500 million.
19. Pursuant to the terms of the transaction, Acquisition commenced a
cash tender offer for Pennaco common stock at $19 per share on or about January
8, 2001 ("tender"). The tender is to be followed by a cash out merger at $19
per share ("Merger").
20. As described below, the transaction is fraught with procedural
unfairness. Moreover, defendants have failed to disclose material information
to Pennaco's public stockholders.
THE BACKGROUND OF THE TRANSACTION
21. On or about January 8, 2001, Acquisition filed with the Securities
and Exchange Commission ("SEC") a Form TO-T ("TO-T"). The TO-T contains
Acquisition's Offer to Purchase all outstanding common shares of Pennaco at $19
per share ("Offer"). Simultaneously, on January
4
<PAGE> 5
8, 2001, Pennaco filed its Schedule 14D-9 ("14D-9"). The Offer and 14D-9 outline
in the barest of the terms the transaction.
22. In the Offer, TO-T and 14D-9, (collectively, "offer documents"),
defendants note the background and negotiations of the transaction. The 14D-9
says that "[f]rom time to time" Pennaco "has been the subject of informal
inquiries regarding a possible acquisition or other business combination
transaction". According to the offer documents, on September 8, 2000, Pennaco
received an inquiry from Marathon regarding a possible business combination.
Following receipt of this inquiry, on September 11 and 19, 2000, Pennaco
provided Marathon with certain public information.
23. On November 8, 2000, Clarence P. Cazalot, President of Marathon,
contacted Rady to express Marathon's interest in acquiring the Company. On
November 10, 2000, Rady and Warren met with Cazalot and other members of
Marathon to discuss a possible acquisition, and agreed at this meeting to
explore such a possible transaction over the next 30 days.
24. Following this meeting, defendants Rady and Warren quickly sought
to protect their own personal interests. On November 15, 2000, Rady and Warren
executed amended employment agreements with the following key provisions: Rady
receives a $3 million termination fee and a $6 million non-compete payment in
the event his employment is terminated; Warren receives a $2 million termination
fee and a $4 million non-compete payment if his employment is terminated. Rady's
prior employment agreement provided for, inter alia, a termination fee of $3
million if terminated after July 2000 and no non-compete payment. Warren's prior
employment agreement provided for, inter alia, a termination fee of $1,250,000
and no non-compete payment.
5
<PAGE> 6
25. On this same day (i.e., November 15, 2000) Pennaco and Marathon
entered into a confidentiality agreement. Marathon conducted due diligence
through the first half of December, 2000.
26. Following Rady and Warren's execution of the amended employment
agreements, in late November, 2000, Pennaco began interviewing possible
investment advisors.
27. On December 14, 2000, after proffering a lower, undisclosed offer
on December 8 which was deemed "unacceptable" by the Board, Marathon offered $19
per share and Pennaco's Board authorized continued discussions with Marathon and
the engagement of Lehman Brothers ("Lehman").
28. On December 22, 2000 the transaction was approved. The Board of
Directors also approved the merger agreement, which provides for a $15 million
termination fee, or 3% of the transaction value and a waiver of this transaction
from the operations of Pennaco's shareholder rights plan.
29. Following the announcement of the transaction, the price of Pennaco
stock immediately climbed to surpass the $19 price, closing at $19 5/8 on
December 26, 2000, compared with the closing price of $14 5/8 on December 22,
2000. Since December 26, Pennaco stock has consistently closed over $19 per
share.
30. According to an analyst at Sanders Morris Harris, Inc., Irene Haas,
Marathon "has to pay more." Haas values Pennaco at about $22 per share.
31. On January 8, 2001, by virtue of this TO-T, the tender commenced,
and is currently scheduled to expire on Monday, February 5, 2001.
6
<PAGE> 7
DEFENDANTS HAVE FAILED TO DISCLOSE MATERIAL INFORMATION
32. The Offer, the TO-T and 14D-9 fail to disclose information and
material necessary for a reasonable Pennaco stockholder to make a fully informed
decision on whether or not to tender shares in the Offer, including:
a. The 14D-9 provides Pennaco shareholders no information to
enable them to understand why the Board decided to sell the Company.
b. The Lehman fairness opinion dated December 22, 2000, which
is annexed as an exhibit to the 14D-9, states that the Company's investment
advisor relied, in part, upon information supplied by Pennaco and its
management, including projections for 2001-2005; Lehman's own analysis based
upon "more conservative assumptions" than those contained in management's
projections; and certain estimates of proved and non-proved reserves and future
production, revenue, operating costs and capital investment. The Board, in
determining to recommend the transaction to Pennaco shareholders, reached its
conclusion in part on the presentation of Lehman. Yet, the offer documents do
not detail discuss any financial analyses, range of values derived from any
analyses or any disclosure of reserve information. In fact, the analysis
prepared by Lehman and presumably presented to the Board, which is customarily
an exhibit to SEC filings in this type of transaction, is not available and has
not been made an exhibit to any of the offer documents. Thus, Pennaco
stockholders have been completely deprived of any information, known to the
defendants, about the anticipated future prospects of the Company or alternative
transactions.
c. The 14D-9 does not provide Pennaco shareholders with any
information concerning the range of values for the Company the Board considered.
In fact, the offer documents
7
<PAGE> 8
do not discuss the types of analyses prepared by Lehman, such as comparable
companies analysis, discounted cash flow analysis and the like, which are
customarily prepared in these types of transactions nor the derived ranges of
value.
d. The 14D-9 does not provide Pennaco shareholders with
information to evaluate whether or not the transaction is the best transaction
available. The 14D-9 does not say what efforts were made to determine Pennaco's
value in the market for corporate control, or even whether or not any such
efforts were made. Pennaco shareholders are not told why the Board decided to
pursue the Marathon bid as opposed to any other, particularly in light of other
inquiries the Company is said to have received in the past. The amount and
identity of the other expressions of interest received by Pennaco in the past
and briefly noted in the offer documents, are not disclosed.
33. The foregoing information is necessary and material to a Pennaco
stockholder's decision to accept or reject the Offer. Thus, defendants should
supplement the Offer promptly to cure these material deficiencies.
COUNT ONE
34. Plaintiff incorporates by reference the allegations of paragraphs
1 to 33 as if fully set forth herein.
35. The transaction represents a change in control of Pennaco and/or
sale of the Company and imposes heightened fiduciary duties on the Individual
Defendants to maximize shareholder value and to disclose to Pennaco
shareholders all information material to an informed decision.
36. Defendants have violated their fiduciary duties by disseminating
the offer documents with the material deficiencies described in paragraph 32
above.
8
<PAGE> 9
37. Plaintiff and other members of the Class have been and will be
irreparably damaged in that they must make a significant investment decision
without material information known and readily available to the Individual
Defendants.
38. Plaintiff has no adequate remedy at law.
COUNT TWO
39. Plaintiff incorporates by reference the allegations of paragraphs
1 to 33 as if fully set forth herein.
40. Even though the transaction is a change of control transaction, it
is not the result of a process designed and implemented to ascertain the
transaction offering the best value reasonably available for Pennaco's
stockholders.
41. Lehman was not authorized to solicit, and did not during its
engagement solicit, third party indications of interest in acquiring Pennaco.
42. The only substantive reasons the 14D-9 states for the Board's
approval of the transaction are that it offers Pennaco shareholders a premium
to the market price of their stock, and Lehman's fairness opinion. This
assertion does not represent an informed basis for concluding that the
transaction represents the best value available for Pennaco.
43. Accordingly, Individual Defendants have breached their fiduciary
duty of care and good faith.
44. Moreover, defendants Rudy and Warren, aided and abetted by the
remaining Individual Defendants, have protected their own interests in breach
of their fiduciary duty of loyalty.
45. Plaintiff and other members of the Class have been and will be
damaged in that they have not and will not receive the best price available in
the market for corporate control.
9
<PAGE> 10
46. In the circumstances, Marathon was aware that the Individual
Defendants were not making any efforts to inform themselves of the best value
available for Pennaco and that Rady and Warren improved their own employment
contracts in the context of negotiating the transaction. Marathon participated
in the Individual Defendants' breaches of fiduciary duty by pursuing the
transaction in these circumstances. Accordingly, it has aided and abetted the
Individual Defendants breaches of fiduciary duty.
47. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
A. Declaring this to be a proper class action and appointing plaintiff
Class representative;
B. Enjoining, preliminarily and permanently, the proposed transaction
under the terms presently proposed, requiring the Individual Defendants to
place the Company up for auction and/or to conduct a market-check, and
requiring defendants to make full and fair disclosure of all material facts to
the Class before the completion of any such acquisition.
C. To the extent, if any, that the transaction complained of is
consummated prior to the entry of this Court's final judgment, rescinding the
same or awarding rescissory damages to the Class;
D. Directing that defendants account to plaintiff and the Class for
all damages caused to them and account for all profits and any special benefits
obtained by defendants as a result of their unlawful conduct;
E. Ordering defendants to supplement the Offer to include all material
information not currently disclosed;
10
<PAGE> 11
F. Awarding to plaintiff the costs and disbursements of this action,
including a reasonable allowance for the fees and expenses of plaintiff's
attorneys and experts; and
G. Granting such other and further relief as the Court deems
appropriate.
Dated: January 9, 2001 ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Norman M. Monhait
---------------------------
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND LABATON RUDOFF
& SUCHAROW LLP
100 Park Avenue
New York, NY 10017
(212) 907-0700
11
<PAGE> 12
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
JOHN GRILLO,
Plaintiff,
-against- C.A. No. 18606 NC
PENNACO ENERGY, INC., MARATHON
OIL ACQUISITION 1, LTD., PAUL M.
RADY, GLEN C. WARREN, JR., GREGORY [STAMP]
V. GIBSON, DAVID W. LANZA and KURT
M. PETERSON.
Defendants.
NOTICE OF MOTION
TO: Pennaco Energy, Inc. Marathon Oil Acquisition 1, Ltd.
c/o The Corporation Trust Company c/o The Corporation Trust Company
1209 Orange Street 1209 Orange Street
Wilmington, DE 19801 Wilmington, DE 19801
PLEASE TAKE NOTICE that plaintiff will present the attached Motion for
Preliminary Injunction to the Court at the earliest convenience of the Court
and counsel.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Norman M. Monhait
----------------------------
Mellon Bank Center
Suite 1401
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for Plaintiff
<PAGE> 13
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
JOHN GRILLO,
Plaintiff,
-against- C.A. No. 18606 NC
PENNACO ENERGY, INC., MARATHON
OIL ACQUISITION 1, LTD., PAUL M.
RADY, GLEN C. WARREN, JR. GREGORY
V. GIBSON, DAVID W. LANZA and KURT
M. PETERSON,
Defendants.
MOTION FOR PRELIMINARY INJUNCTION
Plaintiff hereby moves, pursuant to Court of Chancery Rule 65, for an
Order:
1. Preliminarily enjoining defendants and all persons acting in concert
with them from proceeding with, consummating or otherwise closing the tender
offer by Marathon Oil Acquisition 1, Ltd. ("Acquisition")(the "Tender Offer")
for all of the issued and outstanding shares of Pennaco Energy, Inc.
("Pennaco").
2. Requiring defendants to supplement their materials furnished to
Pennaco's shareholders in connection with the Tender Offer by disclosing all
material facts and correcting the omissions described in plaintiff's Class
Action Complaint in this action.
3. Preliminarily enjoining defendants from performing any provisions
of the Agreement and Plan of Merger dated as of December 22, 2000, among
Marathon Oil Company ("Marathon"), Acquisition and Pennaco (the "Merger
Agreement") that provide for payments by Pennaco to Marathon, Acquisition, or
their affiliates, if the Merger Agreement is terminated.
<PAGE> 14
The grounds for this Motion are set forth in Plaintiff's Class Action
Complaint and will be more fully set forth in plaintiff's opening brief and
other papers to be filed in support of this motion.
ROSENTHAL, MONHAIT, GROSS
& GODDESS P.A.
By: /s/ Norman M. Monhait
------------------------------------
Mellon Bank Center
Suite 1401
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND, LABATON, RUDOLPH
& SUCHAROW, LLP
100 Park Avenue
New York, NY 10017-5563
(212)907-0700
<PAGE> 15
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 10th day of January, 2001, copies of the
foregoing Notice of Motion and Motion for Preliminary Injunction were served,
by hand delivery, upon:
Pennaco Energy, Inc. Marathon Oil Acquisition I, Ltd.
c/o The Corporation Trust Company c/o The Corporation Trust Company
1209 Orange Street 1209 Orange Street
Wilmington, DE 19801 Wilmington, DE 19801
and were sent by Federal Express to:
Pennaco Energy, Inc. Marathon Oil Acquisition I, Ltd.
1050 - 17th Street 5555 San Felipe Road
Suite 700 Houston, TX 77056-2723
Denver, CO 80265 Attn: General Counsel
Attn: General Counsel
Charles Schwartz, Esquire
Vinson & Elkins, L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, TX 77002-6760
/s/ CARMELLA P. KEENER
----------------------
Carmella P. Keener
<PAGE> 16
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
[STAMP]
JOHN GRILLO,
Plaintiff,
-against- C.A. No. 18606 NC
PENNACO ENERGY, INC., MARATHON
OIL ACQUISITION 1, LTD., PAUL M.
RADY, GLEN C. WARREN, JR., GREGORY
V. GIBSON, DAVID W. LANZA and KURT
M. PETERSON,
Defendants.
NOTICE OF MOTION
TO: Pennaco Energy, Inc. Marathon Oil Acquisition 1, Ltd.
c/o The Corporation Trust Company c/o The Corporation Trust Company
1209 Orange Street 1209 Orange Street
Wilmington, DE 19801 Wilmington, DE 19801
PLEASE TAKE NOTICE that the plaintiff will present the attached Motion
for Expedited Proceedings to the Court at the earliest convenience of the Court
and counsel.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Norman M. Monhait
---------------------------
Mellon Bank Center
Suite 1401
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for Plaintiffs
<PAGE> 17
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
JOHN GRILLO,
Plaintiff,
-against- C.A. No. 18606 NC
PENNACO ENERGY, INC., MARATHON
OIL ACQUISITION 1, LTD., PAUL M.
RADY, GLEN C. WARREN, JR., GREGORY
V. GIBSON, DAVID W. LANZA and KURT
M. PETERSON,
Defendants
MOTION FOR EXPEDITED PROCEEDINGS
Plaintiff, by his attorneys, respectfully moves the Court to schedule
his Motion for Preliminary Injunction, served and filed herewith, for a hearing
prior to February 5, 2001, the presently scheduled date for the closing of the
tender offer (the "Tender Offer") by Marathon Oil Acquisition 1, Ltd.
("Marathon") for all the issued and outstanding shares of Pennaco Oil, Inc.
("Pennaco") at $19.00 per share. As grounds for this Motion, plaintiff
represents as follows:
1. Plaintiff alleges that he is a stockholder of Pennaco. He brings
this action on behalf of all Pennaco stockholders, contending that the
defendants breached their fiduciary duties to plaintiff and the proposed class
by failing to include in materials disseminated to Pennaco's shareholders in
connection with the Tender Offer information material to the decision facing
Pennaco's shareholders of whether or not to tender their shares. The
allegations are particularized in plaintiff's Class Action Complaint, filed on
January 9, 2001 (the "Complaint").
2. Among other things, the Complaint alleges that Marathon's Tender
Offer statement
2
<PAGE> 18
("TO-T") and Pennaco's Solicitation/Recommendation Statement of 14D-9 ("14D-9"),
disseminated on or about January 8, 2001 (the TO-T and 14D-9 are referred to
collectively as the "offer documents") omit material information in a number of
respects:
a. The 14D-9 provides Pennaco shareholders no information to
enable them to understand why the Board decided to sell the Company.
b. The fairness opinion issued by Lehman Brothers ("Lehman"),
Pennaco's financial advisor, and dated December 22, 2000, which is annexed as an
exhibit to the 14D-9, states that Lehman relied, in part, upon information
supplied by Pennaco and its management, including projections for 2001-2005;
Lehman's own analysis based upon "more conservative assumptions" than those
contained in management's projections; and certain estimates of proved and
non-proved reserves and future production, revenue, operating costs and capital
investment. The Board, in determining to recommend the transaction to Pennaco
shareholders, reached its conclusion in part on the presentation of Lehman.
Yet, the offer documents do not discuss any financial analyses, range of values
derived from any analyses or any disclosure of reserve information. In fact, the
analysis prepared by Lehman and presumably presented to the Board, which is
customarily an exhibit to SEC filings in this type of transaction, is not
available and has not been made an exhibit to any of the offer documents. Thus,
Pennaco stockholders have been completely deprived of any information, known to
the defendants, about the anticipated future prospects of the Company or
alternative transactions.
c. The 14D-9 does not provide Pennaco shareholders with any
information concerning the range of values for the Company the Board considered.
In fact, the offer documents do not discuss the types of analyses prepared by
Lehman, such as comparable companies analysis, discounted cash flow analysis and
the like, which are customarily prepared in these types of
3
<PAGE> 19
transactions nor the derived ranges of value.
d. The 14D-9 does not provide Pennaco shareholders with
information to evaluate whether or not the transaction is the best transaction
available. The 14D-9 does not say what efforts were made to determine Pennaco's
value in the market for corporate control, or even whether or not any such
efforts were made. Pennaco shareholders are not told why the Board decided to
pursue the Marathon bid as opposed to any other, particularly in light of other
inquiries the Company is said to have received in the past. The amount and
identity of the other expressions of interest received by Pennaco in the past
and briefly noted in the offer documents, are not disclosed.
3. In short, the Complaint alleges that Pennaco's shareholders are
being denied the opportunity to make an informed judgment on the Tender Offer.
Accordingly, plaintiff seeks a preliminary injunction against the completion of
the Tender Offer. This Court has previously held that lack of complete
information in connection with a Tender Offer can constitute irreparable injury
sufficient to warrant preliminary injunctive relief. See, e.g., Joseph v. Shell
Oil Company, Del. Ch., 482 A.2d 335 (1984).
4. Plaintiff also alleges that the individual defendants breached their
fiduciary duties to Pennaco's shareholders by failing to design and implement a
process to ascertain the transaction offering the best value reasonably
available for Pennaco's shareholders. See QVC Network v. Paramount
Communications, Del. Supr., 635 A.2d 1245 (1993). Since Pennaco's Certificate of
Incorporation likely includes a provision pursuant to 8 Del. C. Section
102(b)(7) which would protect the defendants from liability for money damages
for any subsequently found violation of this obligation, irreparable injury
sufficient to warrant preliminary injunctive relief may exist on this claim as
well.
4
<PAGE> 20
Arnold v. Society for Sav. Bancorp, Inc., 678 A.2d 533, 541-542 (1996).
5. Since the Tender Offer is scheduled to close on February 5, 2001,
plaintiff requests that this Court hear his preliminary injunction motion
sufficiently prior to that date to permit a decision and Order if the Court is
persuaded the Tender Offer should be enjoined.
6. Plaintiff has not previously applied for this relief.
WHEREFORE, plaintiff respectfully requests the Court to enter an Order
in the form attached hereto.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Norman M. Monhait
---------------------------
Mellon Bank Center
Suite 1401
P.O. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND, LABATON, RUDOLPH
& SUCHAROW, LLP
100 Park Avenue
New York, NY 10017-5563
(212) 907-0700
5
<PAGE> 21
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
JOHN GRILLO,
Plaintiff,
-against- C.A. No. 18606 NC
PENNACO ENERGY, INC., MARATHON
OIL ACQUISITION 1, LTD., PAUL M.
RADY, GLEN C. WARREN, JR., GREGORY
V. GIBSON, DAVID W. LANZA and KURT
M. PETERSON.
Defendants.
ORDER
Upon plaintiff's Motion for expedited Proceedings and for good cause
shown, subject to further Order of the Court upon timely application, IT IS
this ___ day of January, 2001,
ORDERED:
1. Plaintiff's application for preliminary injunction shall be heard
on ______, 2001, at _______ __.m.
2. Counsel for the parties shall confer promptly concerning a
discovery and briefing schedule for the preliminary injunction motion and
present it to the Court for approval.
-----------------------------
<PAGE> 22
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 10th day of January, 2001, copies of the
foregoing Notice of Motion and Motion for Expedited Proceedings were served,
by hand delivery, upon:
<TABLE>
<S> <C>
Pennaco Energy, Inc. Marathon Oil Acquisition 1, Ltd.
c/o The Corporation Trust Company c/o The Corporation Trust Company
1209 Orange Street 1209 Orange Street
Wilmington, DE 19801 Wilmington, DE 19801
and were sent by Federal Express to:
Pennaco Energy, Inc. Marathon Oil Acquisition 1, Ltd.
1050 - 17th Street 5555 San Felipe Road
Suite 700 Houston, TX 77056-2723
Denver, CO 80265 Attn: General Counsel
Attn: General Counsel
Charles Schwartz, Esquire
Vinson & Elkins, L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, TX 77002-6760
</TABLE>
/s/ CARMELLA P. KEENER
----------------------
Carmella P. Keener
