<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------
HARCOR ENERGY, INC.
(Name of Subject Company)
SENECA WEST CORP.
A WHOLLY OWNED SUBSIDIARY OF
SENECA RESOURCES CORPORATION
WHICH IS A WHOLLY OWNED SUBSIDIARY OF
NATIONAL FUEL GAS COMPANY
(BIDDERS)
COMMON STOCK, $.10 PAR VALUE
(Title of Class of Securities)
411 628 209
(CUSIP Number of Class of Securities)
---------------------
JOHN F. MCKNIGHT
VICE PRESIDENT -- LAND AND LEGAL
SENECA RESOURCES CORPORATION
1201 LOUISIANA, SUITE 400
HOUSTON, TX 77002
(713) 654-2643
FAX: (713) 654-2659
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
With a Copy To:
GARY W. ORLOFF
BRACEWELL & PATTERSON, L.L.P.
SOUTH TOWER PENNZOIL PLACE
711 LOUISIANA STREET, SUITE 2900
HOUSTON, TX 77002
(713) 221-1306
FAX: (713) 221-1212
---------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
$32,536,774 $6,508.00
</TABLE>
---------------------
* For purposes of calculating the filing fee only. This calculation assumes the
purchase of 16,268,387 shares of Common Stock, par value $.10 per share (the
"Shares"), of HarCor Energy, Inc. at $2.00 net per share in cash. Such number of
Shares represents all the Shares outstanding as of March 31, 1998.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of 1% of the
aggregate value of cash offered by Seneca West Corp. for such number of shares.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing. Amount Previously Paid: Not applicable.
Filing Party: Not applicable. Form or Registration No.: Not applicable. Dated
Filed: Not applicable.
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<PAGE> 2
SCHEDULE 14D-1
CUSIP NO.: 411 628 209
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------
(1) Name of Reporting Persons
IRS Identification No. of above person
Seneca West Corp.
- ---------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group (a)[
]
N/A (b)[
]
- ---------------------------------------------------------------------------
(3) SEC use only
- ---------------------------------------------------------------------------
(4) Source of Funds
- ---------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(d) or 2(e) [ ]
- ---------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Delaware
- ---------------------------------------------------------------------------
(7) Aggregate Amount Beneficially Owned by Each Reporting Person
0
- ---------------------------------------------------------------------------
(8) Check if the Aggregate Amount in Row (7) Excludes Certain
Shares [ ]
- ---------------------------------------------------------------------------
(9) Percent of Class Represented by Amount in Row (7)
0%
- ---------------------------------------------------------------------------
(10) Type of Reporting Person
CO
- ---------------------------------------------------------------------------
</TABLE>
1
<PAGE> 3
SCHEDULE 14D-1
CUSIP NO. 411 628 209
- --------------------------------------------------------------------------------
(1) Name of Reporting Persons
IRS Identification No. of above person
Seneca Resources Corporation
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(a) [ ]
N/A (b) [ ]
- --------------------------------------------------------------------------------
(3) SEC use only
- --------------------------------------------------------------------------------
(4) Source of Funds
- --------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Pennsylvania
- --------------------------------------------------------------------------------
(7) Aggregate Amount Beneficially Owned by Each Reporting Person
0
- --------------------------------------------------------------------------------
(8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares
[ ]
- --------------------------------------------------------------------------------
(9) Percent of Class Represented by Amount in Row (7)
0%
- --------------------------------------------------------------------------------
(10) Type of Reporting Person
CO
- --------------------------------------------------------------------------------
2
<PAGE> 4
SCHEDULE 14D-1
CUSIP NO.: 411 628 209
- --------------------------------------------------------------------------------
(1) Name of Reporting Persons
IRS Identification No. of above person
National Fuel Gas Company
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(a) [ ]
N/A (b) [ ]
- --------------------------------------------------------------------------------
(3) SEC use only
- --------------------------------------------------------------------------------
(4) Source of funds
- --------------------------------------------------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
New Jersey
- --------------------------------------------------------------------------------
(7) Aggregate Amount Beneficially Owned by Each Reporting Person
0
- --------------------------------------------------------------------------------
(8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares
[ ]
- --------------------------------------------------------------------------------
(9) Percent of Class Represented by Amount in Row (7)
0%
- --------------------------------------------------------------------------------
(10) Type of Reporting Person
CO
- --------------------------------------------------------------------------------
3
<PAGE> 5
This statement relates to a tender offer by Seneca West Corp., a Delaware
corporation (the "Purchaser") and wholly owned subsidiary of Seneca Resources
Corporation, a Pennsylvania corporation (the "Parent"), to purchase all
outstanding shares (the "Shares") of Common Stock, par value $.10 per share (the
"Common Stock") of HarCor Energy, Inc. at $2.00 per Share net to the seller in
cash and without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase (the "Offer to Purchase"), a copy of which is
attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal, a
copy of which is attached hereto as Exhibit (a)(2) (which together constitute
the "Offer"). The Parent is a wholly owned subsidiary of National Fuel Gas
Company, a New Jersey corporation ("National Fuel").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is HarCor Energy, Inc., a Delaware
corporation (the "Company"). The principal executive offices of the Company
are located at Five Post Oak Park, Suite 2220, Houston, Texas 77027.
(b) The information set forth in the Introduction to, and in Section 1, "Terms
of the Offer," of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in Section 6, "Price Range of Shares; Dividends,"
of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is being filed by the Purchaser, the Parent and National
Fuel. The information set forth in the Introduction to, and in Section 9,
"Certain Information Concerning the Purchaser, the Parent and National Fuel,"
and Schedule I, "Information Concerning the Directors and Executive Officers of
National Fuel, the Parent and the Purchaser," of the Offer to Purchase is
incorporated herein by reference.
(a)-(d) and (g)
The name, residence or business address, citizenship, present
principal occupation or employment and material occupations during
the last 5 years of each executive officer and director of
National Fuel, the Parent and the Purchaser is set forth in
Schedule I of the Offer to Purchase.
(e) and (f) During the last five years, neither National Fuel, the Parent, the
Purchaser nor any of the persons listed in Schedule I of the Offer
to Purchase has been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body
of competent jurisdiction as a result of which any such person was
or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, or
finding any violation of federal or state securities laws.
ITEM 3. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction to, and in Section
9, "Certain Information Concerning the Purchaser, the Parent and
National Fuel," and Section 10, "Background of the Offer; Contacts
with the Company," of the Offer to Purchase is incorporated herein
by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 13, "Source and Amount of
Funds," of the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
4
<PAGE> 6
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction to, and in Section
11, "Purpose of the Offer and the Merger; Plans for the Company,"
and Section 13, "Source and Amount of Funds," of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7, "Effect of the Offer on
the Market for the Shares; Exchange Listing and Exchange Act
Registration; Margin Regulations," of the Offer to Purchase is
incorporated herein by reference.
Other than as set forth in the Introduction to, or the above-referenced
sections of, the Offer to Purchase, the Purchaser has no plans or proposals that
relate to, or would result in, any transaction, change or other occurrence with
respect to the Company or the Shares that is not set forth in any of paragraphs
(a) through (g) of Item 5 of the Schedule 14D-1.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction to, and in Section
9, "Certain Information Concerning the Purchaser, the Parent and
National Fuel," and Section 12, "The Merger Agreement;
Confidentiality Agreement," of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction to, and in Section 9,
"Certain Information Concerning the Purchaser, the Parent and National Fuel,"
Section 10, "Background of the Offer; Contacts with the Company," and Section
12, "The Merger Agreement; Confidentiality Agreement," of the Offer to Purchase
is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16, "Fees and Expenses," of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9, "Certain Information Concerning the
Purchaser, the Parent and National Fuel," including the financial statements and
the notes thereto incorporated by reference in Section 9, is incorporated herein
by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Introduction to, and in Section
11, "Purpose of the Offer and the Merger; Plans for the Company,"
of the Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in the Introduction to, and in Section
15, "Certain Legal Matters," of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 7, "Effect of the Offer on
the Market for the Shares; Exchange Listing and Exchange Act
Registration; Margin Regulations," of the Offer to Purchase is
incorporated herein by reference.
(e) None.
(f) Reference is hereby made to the Offer to Purchase and the Letter
of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively, and which are incorporated herein
by reference in their entirety.
5
<PAGE> 7
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated April 6, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Text of Press Release, dated January 23, 1998, issued by the Company.
(a)(8) Text of Joint Press Release, dated March 31, 1998, issued by the Company
and the Parent.
(a)(9) Form of Summary Advertisement, dated April 6, 1998.
(c)(1) Agreement and Plan of Merger, dated as of March 31, 1998 among the
Company, the Purchaser and the Parent.
(c)(2) Confidentiality Agreement, dated as of March 17, 1997 between Dillon,
Read & Co. Inc. and the Parent.
6
<PAGE> 8
SIGNATURE
AFTER DUE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I CERTIFY
THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND CORRECT.
SENECA WEST CORP.
By: /s/ WILLIAM M. PETMECKY
----------------------------------
Name: William M. Petmecky
Title: President
Dated: April 6, 1998
7
<PAGE> 9
SIGNATURE
AFTER DUE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I CERTIFY
THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND CORRECT.
SENECA RESOURCES CORPORATION
By: /s/ JAMES A. BECK
----------------------------------------
Name: James A. Beck
Title: President
Dated: April 6, 1998
8
<PAGE> 10
SIGNATURE
AFTER DUE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I CERTIFY
THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND CORRECT.
NATIONAL FUEL GAS COMPANY
By: /s/ JOSEPH PAWLOWSKI
----------------------------------
Name: Joseph Pawlowski
Title: Treasurer
Dated: April 6, 1998
9
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated April 6, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Text of Press Release, dated January 23, 1998, issued by the
Company.
(a)(8) Text of Joint Press Release, dated March 31, 1998, issued by
the Company and the Parent.
(a)(9) Form of Summary Advertisement, dated April 6, 1998.
(c)(1) Agreement and Plan of Merger, dated as of March 31, 1998
among the Company, the Purchaser and the Parent.
(c)(2) Confidentiality Agreement, dated as of March 17, 1997
between Dillon, Read & Co. Inc. and the Parent.
</TABLE>
10
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HARCOR ENERGY, INC.
AT
$2.00 NET PER SHARE
BY
SENECA WEST CORP.,
A WHOLLY OWNED SUBSIDIARY
OF
SENECA RESOURCES CORPORATION
WHICH IS A WHOLLY OWNED SUBSIDIARY
OF
NATIONAL FUEL GAS COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY,
MAY 4, 1998, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF HARCOR ENERGY, INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN), HAS
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER AND THE MERGER AGREEMENT
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, AND
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, A NUMBER OF
SHARES (AS DEFINED HEREIN), WHICH, TOGETHER WITH ANY SHARES BENEFICIALLY OWNED
BY THE PARENT OR THE PURCHASER, REPRESENT AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS
AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 14.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
INTRODUCTION........................................................ 1
THE TENDER OFFER.................................................... 3
1. Terms of the Offer.......................................... 3
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedures for Tendering Shares............................. 5
4. Withdrawal Rights........................................... 8
5. Certain Federal Income Tax Consequences..................... 9
6. Price Range of Shares; Dividends............................ 10
7. Effect of the Offer on the Market for the Shares; Stock
Quotation; Margin Regulations and Exchange Act
Registration.............................................. 10
8. Certain Information Concerning the Company.................. 11
9. Certain Information Concerning the Purchaser, the Parent and
National Fuel............................................. 15
10. Background of the Offer; Contacts with the Company.......... 18
11. The Purpose of the Offer and the Merger; Plans for the
Company................................................... 19
12. The Merger Agreement; Confidentiality Agreement............. 21
13. Source and Amount of Funds.................................. 26
14. Certain Conditions of the Offer............................. 26
15. Certain Legal Matters....................................... 28
16. Fees and Expenses........................................... 29
17. Miscellaneous............................................... 30
SCHEDULE I Information Concerning the Directors and Executive
Officers of National Fuel, the Parent and the Purchaser........... 31
</TABLE>
i
<PAGE> 3
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (a) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver the Letter of Transmittal (or such facsimile),
together with the certificate(s) representing tendered Shares and any other
required documents to the Depositary or, in lieu of delivering certificates
representing such Shares, tender such Shares pursuant to the procedures for
book-entry transfer set forth in Section 3, or (b) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at the addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent or from brokers, dealers, commercial
banks and trust companies. A stockholder may also contact brokers, dealers,
commercial banks and trust companies for assistance concerning the Offer.
---------------------
The Information Agent for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, LLC
450 West 33rd Street, 14th Floor
New York, New York 10001
(800) 684-8823
<PAGE> 4
To the Holders of Shares of Common Stock
HarCor Energy, Inc.:
INTRODUCTION
Seneca West Corp. (the "Purchaser"), a Delaware corporation and a wholly
owned subsidiary of Seneca Resources Corporation, a Pennsylvania corporation
(the "Parent"), hereby offers to purchase all outstanding shares (the "Shares")
of the Common Stock, par value $.10 per share (the "Common Stock"), of HarCor
Energy, Inc, a Delaware corporation (the "Company"), at a price of $2.00 per
Share, net to the seller in cash, without interest (the "Offer Price"), upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, as amended or supplemented from time
to time, together constitute the "Offer"). The Parent is a wholly owned
subsidiary of National Fuel Gas Company ("National Fuel").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Parent will pay all fees and expenses of ChaseMellon Shareholder Services, LLC,
as Depositary (the "Depositary"), and as Information Agent (the "Information
Agent"), incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER AND THE MERGER AGREEMENT (EACH AS DEFINED
BELOW), HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, AND RECOMMENDS
THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
SBC Warburg Dillon Read Inc. ("SBC Warburg Dillon Read"), the Company's
financial advisor, has delivered to the Company Board its written opinion that
the consideration to be received by the stockholders of the Company pursuant to
each of the Offer and the Merger is fair to such stockholders from a financial
point of view. A copy of the opinion of SBC Warburg Dillon Read is contained in
the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which is being mailed to stockholders herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH, TOGETHER WITH ANY SHARES BENEFICIALLY OWNED BY PARENT OR
PURCHASER, REPRESENT AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS (THE "MINIMUM CONDITION"). The Company has represented and
warranted to the Purchaser and the Parent in the Merger Agreement that, as of
March 31, 1998, there were 16,268,387 Shares issued and outstanding, and
1,871,440 Shares were issuable pursuant to warrants granted to third parties and
783,000 Shares were issuable pursuant to options granted under the Company's
option plans (as defined in Section 12). However, all (i) outstanding warrants
to purchase shares of Common Stock are exerciseable at prices in excess of $2.00
per share, and therefore are not expected to be exercised, and (ii) the Company
has represented and warranted to the Purchaser and the Parent that it has taken
all action necessary so that all outstanding options and other rights to acquire
Shares granted to directors, employees or others under any stock option or
purchase plan, program or similar arrangement of the Company, whether or not
then exercisable or vested, will be canceled by the Company upon consummation of
the Offer. Since all such options are exerciseable at prices in excess of $2.00
per share, none are expected to be exercised. Further, the Company has
represented and warranted to the Purchaser and the Parent that all outstanding
warrants to purchase Shares will be converted into the right to receive $2.00
cash instead of each Share which would otherwise be purchasable upon the
exercise thereof and payment of the exercise price thereunder. Since all
warrants have exercise prices in excess of $2.00 per share, none are expected to
be exercised. Based on the foregoing and assuming no additional Shares (or
options, warrants or rights exercisable for, or convertible securities
convertible into Shares) have been issued since March 31, 1998, if
<PAGE> 5
8,134,194 Shares were validly tendered and not withdrawn prior to the Expiration
Date (as hereinafter defined) pursuant to the terms of the Offer, the Minimum
Condition would be satisfied.
Certain other conditions to consummation of the Offer are described in
Section 14. The Purchaser expressly reserves the right to waive any one or more
of the conditions to the Offer (except that the Minimum Condition may not be
waived without the Company's consent). See Section 14.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 31, 1998 (the "Merger Agreement"), among the Parent, the Purchaser
and the Company. The Merger Agreement provides that, among other things, as soon
as practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the Delaware General Corporation Law
(the "DGCL"), the Purchaser will be merged with and into the Company (the
"Merger"). Following consummation of the Merger, the Company will continue as
the surviving corporation (the "Surviving Corporation") and as a wholly owned
subsidiary of the Parent. At the effective time of the Merger (the "Effective
Time"), each Share issued and outstanding immediately prior to the Effective
Time (other than Shares owned by National Fuel, the Purchaser, the Parent, the
Company or any wholly owned subsidiary of National Fuel, the Parent or the
Company and Shares held by stockholders who perfect their dissenters' rights
under Delaware law) will be canceled and converted automatically into the right
to receive $2.00 in cash, or any higher price that may be paid per Share in the
Offer, without interest (the "Merger Consideration"). The Merger Agreement is
more fully described in Section 12.
The Merger Agreement provides that, upon the purchase by the Purchaser of a
majority of the Shares pursuant to the Offer and from time to time thereafter,
the Parent shall be entitled to designate all members of the Company Board. The
current directors of the Company have indicated to the Parent that they intend
to resign as directors of the Company as soon as reasonably practicable upon the
Purchaser purchasing at least a majority of the outstanding Shares pursuant to
the Offer, and the Company shall exercise reasonable efforts to secure the
resignations of all directors to enable such Parent designees to be so elected
or appointed. Such designees will abstain from any action proposed to be taken
by the Company to amend or terminate the Merger Agreement or waive any action by
the Parent or the Purchaser. The Company's obligations to appoint designees to
the Board of Directors shall be subject to Section 14(f) of the Exchange Act,
which provides, among other things, for dissemination of information to a
company's stockholders.
Under the DGCL, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the outstanding Shares, the Purchaser will be able to
approve the Merger Agreement and the transactions contemplated thereby without a
vote of the stockholders. In such event, the Parent, the Purchaser and the
Company have agreed in the Merger Agreement to take, at the request of the
Parent and subject to the satisfaction of the conditions set forth in the Merger
Agreement, all necessary and appropriate action to cause the Merger to become
effective as soon as reasonably practicable after such acquisition, without a
meeting of the stockholders, in accordance with Section 253 of the DGCL. If,
however, the Purchaser does not acquire at least 90% of the outstanding Shares
pursuant to the Offer or otherwise and a vote of the stockholders is required
under the DGCL, a significantly longer period of time would be required to
effect the Merger. In the Merger Agreement, the Parent, the Purchaser and the
Company have agreed that, notwithstanding that all conditions to the Offer are
satisfied or waived as of the scheduled Expiration Date, the Purchaser may
extend the Offer for a period of time not to exceed 10 business days, subject to
certain conditions, if the Shares tendered pursuant to the Offer are less than
90% of the outstanding Shares.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
<PAGE> 6
THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with the procedures set forth in Section 4. The term "Expiration
Date" means 12:00 Midnight, New York City time, on Monday, May 4, 1998, unless
and until the Purchaser shall have extended the period of time during which the
Offer is open, subject to the terms of the Merger Agreement, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition and the other conditions set forth in Section 14. If such conditions
are not satisfied prior to the Expiration Date, the Purchaser reserves the
right, but shall not be obligated, to decline to purchase any of the Shares
tendered, delay the acceptance for payment of any Shares or terminate or amend
the Offer, subject to the terms of the Merger Agreement. Subject to the terms
and conditions contained in the Merger Agreement, the Purchaser reserves the
right, but shall not be obligated, to waive in whole or in part, at any time and
from time to time, any or all of such conditions, provided that the Minimum
Condition cannot be waived by the Purchaser without the written consent of the
Company. In the Merger Agreement, the Parent, the Purchaser and the Company have
agreed that, notwithstanding that all conditions to the Offer are satisfied or
waived as of the scheduled Expiration Date, the Purchaser may extend the Offer,
subject to certain conditions as set forth in the Merger Agreement, for a period
not to exceed 10 business days if the Shares tendered pursuant to the Offer are
less than 90% of the outstanding Shares. See Section 12.
Pursuant to the Merger Agreement, the Purchaser may not, without the
written consent of the Company, (i) decrease or change the form of consideration
to be paid in the Offer, (ii) reduce the maximum number of Shares to be
purchased in the Offer or the Minimum Condition, (iii) impose additional
conditions to the Offer, (iv) change the conditions to the Offer (except that
the Parent in its sole discretion may waive any of the conditions to the Offer
other than the Minimum Condition), or (v) amend any other term or condition of
the Offer in a manner adverse to the holders of the Shares. Subject to the terms
and conditions of the Offer and the Merger, the Purchaser shall, and the Parent
shall cause the Purchaser to, pay for all Shares validly tendered and not
withdrawn pursuant to the Offer that the Purchaser becomes obligated to purchase
pursuant to the Offer as soon as practicable after the expiration of the Offer.
There can be no assurance that either the Purchaser will, or that the
Company will exercise its rights to cause the Purchaser to, extend the Offer
(other than as required by the Merger Agreement or applicable law). Any
extension, amendment or termination of the Offer, or any waiver of any condition
of the Offer, will be followed as promptly as practicable by a public
announcement. In the case of an extension, Rule 14e-l(d) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), requires that the
announcement be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
the public announcement requirements of Rule 14d-4(c) under the Exchange Act. As
used in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1 under the Exchange Act; namely, any day other than Saturday, Sunday or a
Federal holiday, and consisting of the period of time from 12:01 a.m. through
12:00 midnight Eastern time. Subject to applicable law (including Rules 14d-4(c)
and 14d-6(d) under the Exchange Act, which require that any material change in
the information published, sent or given to stockholders in connection with the
Offer be promptly disseminated to stockholders in a manner reasonably designed
to inform stockholders of such change), and without limiting the manner in which
the Purchaser may choose to make any public announcement, neither National Fuel,
the Parent nor the Purchaser will have any obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service. During any extension of the Offer, all
Shares previously tendered and not properly withdrawn will remain subject to the
Offer, subject to the rights of a tendering stockholder to withdraw such
stockholder's Shares in accordance with the procedures set forth in Section 4.
THE PURCHASER SHALL NOT HAVE ANY OBLIGATION TO PAY INTEREST ON THE PURCHASE
PRICE FOR TEN-
3
<PAGE> 7
DERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE
OFFER.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 4.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-l(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including, subject to the Merger Agreement, the Minimum Condition), the
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following a material change in the terms of the offer or information concerning
the offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release, the Securities and Exchange Commission (the "Commission") has
stated that in its view an offer must remain open for a minimum period of time
following a material change in the terms of the Offer and that waiver of a
material condition, such as the Minimum Condition, is a material change in the
terms of the Offer. The release states that an offer should remain open for a
minimum of five business days from the date a material change is first
published, sent or given to security holders and that, if material changes are
made with respect to information not materially less significant than the offer
price and the number of shares being sought, a minimum of ten business days may
be required to allow adequate dissemination and investor response. The
requirement to extend the Offer will not apply to the extent that the number of
business days remaining between the occurrence of the change and the
then-scheduled Expiration Date equals or exceeds the minimum extension period
that would be required because of such amendment. If, prior to the Expiration
Date, the Purchaser increases the consideration offered to holders of Shares
pursuant to the Offer, such increased consideration will be paid to all holders
whose Shares are purchased in the Offer whether or not such Shares were tendered
prior to such increase in consideration.
The Company has provided the Purchaser with the Company's stockholder list
and security position listing for the purpose of disseminating the Offer to
holders of the Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials are being mailed by the Purchaser to record holders
of Shares and will be furnished by the Purchaser to brokers, dealers, banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will purchase, by accepting for payment, and will
pay for, as soon as it is permitted to do so under applicable law, all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with the procedures set forth in Section 4. All determinations
concerning the satisfaction of such terms and conditions will be within the
Purchaser's reasonable discretion, which determinations will be final and
binding. See Sections 1 and 14. The Purchaser expressly reserves the right, in
its sole discretion, to delay acceptance for payment of or payment for Shares in
order to comply in whole or in part with any applicable law.
Any such delays will be effected in compliance with Rule 14e-l(c)
promulgated under the Exchange Act (relating to a bidder's obligation to pay for
or return tendered securities promptly after the termination or
4
<PAGE> 8
withdrawal of such bidder's offer). In all cases, payment for Shares purchased
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the certificates evidencing such Shares (the "Share Certificates") or
timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of
such Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 3, (ii) the Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message (as defined below) and (iii) any other documents
required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against the participant.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered prior to the
Expiration Date and not properly withdrawn if, as and when the Purchaser gives
oral or written notice to the Depositary of the Purchaser's acceptance of such
Shares for payment pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted pursuant to the Offer will
be made by deposit of the aggregate purchase price therefor with the Depositary,
which will act as agent for tendering stockholders for the purpose of receiving
payment from the Purchaser and transmitting payment to such tendering
stockholders. Under no circumstances will interest on the purchase price for
Shares be paid regardless of any extension of the Offer or any delay in making
such payment. Upon the deposit of funds with the Depositary for the purpose of
making payments to tendering stockholders, the Purchaser's obligation to make
such payment shall be satisfied and tendering stockholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. Tendering stockholders
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares pursuant to the Offer. The Purchaser will pay all charges and
expenses of the Depositary and the Information Agent.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing such
unpurchased Shares or untendered Shares will be returned, without expense to the
tendering stockholder (or, in the case of Shares tendered by book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3, such Shares will be credited to an account
maintained at such Book-Entry Transfer Facility) as promptly as practicable
following the expiration, termination or withdrawal of the Offer.
The Purchaser reserves the right to transfer or assign, in whole at any
time, or in part from time to time, to one or more of its affiliates, the right
to purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer or prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tender of Shares. In order for Shares to be validly tendered pursuant
to the Offer, the Letter of Transmittal or a facsimile thereof, properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message in connection with a book-entry delivery of Shares, and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either (i) the Share Certificates evidencing tendered Shares
must be received by the Depositary along with the Letter of Transmittal, or (ii)
Shares must be tendered pursuant to the procedure for book-entry transfer
described below and a Book-Entry Confirmation must be
5
<PAGE> 9
received by the Depositary, or (iii) the tendering stockholder must comply with
the guaranteed delivery procedures described below, in each case prior to the
Expiration Date.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY THEREOF WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed and with any required signature guarantees, or an Agent's
Message in connection with a book-entry delivery of Shares, and any other
required documents, must, in any case, be transmitted to, and received by, the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date or the tendering stockholder must comply
with the guaranteed delivery procedures described below. DELIVERY OF DOCUMENTS
TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the Securities
Transfer Agents Medallion Program (each of the foregoing being referred to as an
"Eligible Institution"), unless the Shares tendered thereby are tendered (i) by
a registered holder of Shares who has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Share
Certificate not accepted for payment or not tendered is to be returned to a
person other than the registered holder(s), then the Share Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all the
following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the Share Certificates for all tendered Shares, in proper form
for transfer, or a Book-Entry Confirmation, together with a properly
completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) with any required signature guarantee (or, in the case
of a book-entry transfer, an Agent's Message) and any other documents
required by such Letter of Transmittal, are received by
6
<PAGE> 10
the Depositary within three trading days after the date of execution of the
Notice of Guaranteed Delivery. A "trading day" is any day on which the
National Association of Securities Dealers, Inc. Automated Quotation
("Nasdaq") National Market System is open for business.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will, in all cases, be made only after timely receipt by
the Depositary of (i) the Share Certificates evidencing such Shares, or a
Book-Entry Confirmation of the delivery of such Shares, (ii) a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
thereof) (or, in the case of a book-entry transfer, an Agent's Message) and
(iii) any other documents required by the Letter of Transmittal. Accordingly,
tendering stockholders may be paid at different times, depending upon when the
foregoing materials are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
Backup Federal Withholding Tax. To prevent backup federal income tax
withholding with respect to payment to certain stockholders of the purchase
price of Shares purchased pursuant to the Offer, each such stockholder must,
unless an exemption applies, provide the Depositary with such stockholder's
correct taxpayer identification number ("TIN") and certify, under penalty or
perjury, that such TIN is correct and that such stockholder is not subject to
backup federal income tax withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a penalty on such
stockholder and payment of cash to such stockholder pursuant to the Offer may be
subject to backup withholding of 31%. All stockholders surrendering Shares
pursuant to the Offer should complete and sign the main signature form and the
Substitute Form W-9 included as part of the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to the
Purchaser and the Depositary). Certain stockholders (including, among others,
all corporations and certain foreign individuals and entities) are not subject
to backup withholding. Foreign stockholders, if exempt, should complete and sign
the main signature form and a Form W-8, Certificate of Foreign Status, a copy of
which may be obtained from the Depositary, in order to avoid backup withholding.
See Instruction 9 of the Letter of Transmittal.
Appointment as Proxy; Distributions. By executing a Letter of Transmittal
as set forth above, a tendering stockholder irrevocably appoints designees of
the Purchaser as such stockholder's attorneys-in-fact and proxies, in the manner
set forth in the Letter of Transmittal, each with full power of substitution, to
the full extent of such stockholder's rights with respect to the Shares tendered
by such stockholder and accepted for payment by the Purchaser (and any and all
non-cash dividends, distributions, rights, other Shares, or other securities
issued or issuable in respect of such Shares on or after the date of the Merger
Agreement). All such powers of attorney and proxies shall be considered coupled
with an interest in the tendered Shares. This appointment will be effective if,
when, and only to the extent that, the Purchaser accepts such Shares for payment
pursuant to the Offer. Upon such acceptance for payment, all prior powers of
attorney and proxies given by such stockholder with respect to such Shares and
other securities will, without further action, be revoked, and no subsequent
powers of attorney or proxies may be given (and, if given, will not be deemed
effective). The designees of the Purchaser will, with respect to the Shares and
other securities for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual, special, adjourned or postponed
meeting of the Company's stockholders, by written consent or otherwise, and the
Purchaser reserves the right to require that, in order for Shares or other
securities to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares the Purchaser must be able to exercise
full voting, consent and other rights with respect to such Shares and other
securities, including voting at any meeting of stockholders then
7
<PAGE> 11
scheduled. Such powers of attorney and proxies will be irrevocable and will be
granted in consideration of the purchase of the Shares by the Purchaser in
accordance with the terms of the Offer.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, whose determination will be
final and binding on all parties. The Purchaser reserves the absolute right to
reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of, or payment for, such Shares may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right, in its sole discretion, subject to the Merger Agreement, to
waive any of the conditions of the Offer or any defect or irregularity in any
tender with respect to Shares of any particular stockholder, whether or not
similar defects or irregularities are waived in the case of other stockholders.
No tender of Shares will be deemed to have been validly made until all defects
and irregularities have been cured or waived.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding on all parties. None of National Fuel, the Parent, the Purchaser,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or will incur
any liability for failure to give any such notification.
Binding Agreement. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the Offer. The Purchaser's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering stockholder and the Purchaser upon the terms and subject
to the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after June 8, 1998.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares or is unable to accept Shares for payment pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent that
tendering stockholders are entitled to withdrawal rights as described in this
Section 4.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Share Certificates, the serial numbers shown on such Share
Certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution, unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3, any notice of withdrawal must also specify the name and
number of the account at the appropriate Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with such Book-Entry
Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of National Fuel, the Parent, the Purchaser, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or will incur any
liability for failure to give any such notification.
8
<PAGE> 12
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. Withdrawals of tenders of Shares may
not be rescinded. However, withdrawn Shares may be re-tendered at any time prior
to the Expiration Date by following one of the procedures described in Section 3
on or prior to the Expiration Date.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to stockholders whose Shares are
purchased pursuant to the Offer or whose Shares are converted to cash in the
Merger (including pursuant to the exercise of perfected dissenter rights under
the DGCL). The discussion applies only to stockholders in whose hands Shares are
capital assets, and may not apply to Shares received pursuant to the exercise of
employee stock options or otherwise as compensation, or to stockholders who are
in special tax situations (such as insurance companies, tax-exempt organizations
or dealers in securities). This discussion does not discuss the federal income
tax consequences to a stockholder who, for United States federal income tax
purposes, is a nonresident alien individual, a foreign corporation, a foreign
partnership or a foreign estate or trust.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER SHOULD CONSULT SUCH
STOCKHOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES
DISCUSSED BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS TO SUCH
STOCKHOLDER OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER INCOME TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for federal income tax purposes (and also may be a taxable
transaction under applicable state, local and other income tax laws). In
general, for federal income tax purposes, a stockholder will recognize gain or
loss in an amount equal to the difference between such stockholder's adjusted
tax basis in the Shares sold pursuant to the Offer or converted into cash in the
Merger and the amount of cash received therefor. Generally, gain or loss must be
determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) sold pursuant to the Offer or converted into
cash in the Merger, although if the identity of the separate blocks cannot be
determined, the Shares sold or converted must ordinarily be charged first
against the earliest purchases. Such gain or loss will be capital gain or loss
if the Shares are held as a capital asset by the stockholder, and will be
long-term gain or loss if the Shares were held by the stockholder for more than
one year on the date of sale (in the case of the Offer) or the Effective Time of
the Merger (in the case of the Merger). For this purpose, a stockholder's
holding period will be computed beginning on the day following the date of
purchase of the Shares and ending on the date of sale or the Effective Time of
the Merger. Pursuant to the Taxpayer Relief Act of 1997, the maximum rate of
federal income tax on long-term capital gains now varies. Capital assets held
for at least 12 months but less than 18 months are subject to various tax rates,
while capital assets held more than 18 months are subject to a reduced maximum
rate, in each instance, subject to a maximum rate of 28%.
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<PAGE> 13
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are quoted and traded on the Nasdaq National Market under the
symbol "HARC." The following table sets forth, for the fiscal quarters
indicated, the high and low reported sales prices per Share on the Nasdaq
National Market as reported by the Dow Jones News Service.
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
Fiscal Year Ended December 31, 1995:
First Quarter............................................. $4.38 $2.88
Second Quarter............................................ $4.38 $2.75
Third Quarter............................................. $3.50 $2.50
Fourth Quarter............................................ $3.38 $1.88
Fiscal Year Ended December 31, 1996:
First Quarter............................................. $5.38 $2.31
Second Quarter............................................ $5.13 $4.06
Third Quarter............................................. $6.25 $4.17
Fourth Quarter............................................ $6.11 $4.38
Fiscal Year Ended December 31, 1997:
First Quarter............................................. $6.88 $4.25
Second Quarter............................................ $6.56 $5.63
Third Quarter............................................. $6.13 $4.56
Fourth Quarter............................................ $5.25 $1.38
Fiscal Year Ending December 31, 1998:
First Quarter............................................. $2.31 $1.28
</TABLE>
On January 22, 1998, the last full trading day prior to the public
announcement of the execution by the Parent and the Company of a letter of
intent to acquire the Company for consideration of $2 per share, and on March
30, 1998, the last full trading day prior to the public announcement of the
execution of the Merger Agreement and of Purchaser's intention to commence the
Offer, the closing price per Share as reported on the Nasdaq was $1.63 and
$1.78, respectively. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION
FOR THE SHARES.
The Company has never paid any cash dividends on the Shares. The Merger
Agreement provides that, without the prior written consent of the Parent, the
Company will not declare, set aside or pay any dividend on or make any other
distribution in respect of any of its capital stock. See Section 12.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; MARGIN
REGULATIONS AND EXCHANGE ACT REGISTRATION.
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and could reduce
the number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by the public.
Stock Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements for continued
inclusion in the Nasdaq National Market and may be deregistered under Section
12(g) of the Exchange Act. The Parent and the Purchaser intend to cause the
removal from quotation and deregistration of the Shares following consummation
of the Offer.
According to Nasdaq's published guidelines, in order for the shares to be
eligible for continued inclusion in the Nasdaq National Market, there must
continue to be, among other things, at least 750,000 publicly held Shares, held
by at least 400 stockholders of round lots, with a market value of at least $5
million. The Company has advised the Purchaser that, as of March 31, 1998, there
were 16,268,387 Shares outstanding, held by approximately 1,610 holders of
record. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares are no longer eligible for inclusion in the Nasdaq
National Market, the market for the Shares could be adversely affected.
10
<PAGE> 14
If the Shares were no longer eligible for inclusion in the Nasdaq National
Market, they may nevertheless continue to be included in the Nasdaq SmallCap
Market, unless, among other things, the number of publicly held Shares
(excluding Shares held by officers, directors and beneficial owners of more than
10% of the Shares) was less than 500,000, or there were fewer than 300
shareholders of round lots in total. If the Shares are no longer eligible for
inclusion in the Nasdaq National Market or the Nasdaq SmallCap Market, the
Shares may still be quoted on the OTC Bulletin Board. The extent of the public
market therefor and the availability of such quotations would depend, however,
upon such factors as the number of stockholders and/or the aggregate market
value of such securities remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act as described below, and other factors.
The Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause future
market prices to be greater or less than the Merger Consideration.
Margin Regulations. The Shares are currently "margin securities," as such
term is defined under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing banks to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer it is possible that the Shares might no
longer constitute "margin securities" for purposes of the margin regulations of
the Federal Reserve Board, in which event such Shares might no longer be
eligible as collateral for loans made by banks.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would, subject to Section 15(d) of the Exchange Act, substantially reduce the
information required to be furnished by the Company to its stockholders and to
the Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as (i) the short-swing profit recovery
provisions of Section 16(b) of the Exchange Act, (ii) the requirement of
furnishing a proxy or information statement pursuant to Section 14(a) or (c) of
the Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and, (iii) the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated.
THE PURCHASER INTENDS TO SEEK TO CAUSE THE COMPANY TO APPLY FOR REMOVAL OF
THE SHARES FROM QUOTATION ON THE NASDAQ NATIONAL MARKET AND FOR TERMINATION OF
REGISTRATION OF THE SHARES UNDER THE EXCHANGE ACT AS SOON AFTER THE COMPLETION
OF THE OFFER AS THE REQUIREMENTS FOR SUCH DELISTING AND/OR TERMINATION ARE MET.
IF EXCHANGE ACT REGISTRATION OF THE SHARES IS NOT TERMINATED PRIOR TO THE
MERGER, THEN THE REGISTRATION OF THE SHARES UNDER THE EXCHANGE ACT WILL BE
TERMINATED FOLLOWING THE CONSUMMATION OF THE MERGER.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or been taken
from or based upon publicly available documents and records on file with the
Commission and other public sources. Neither National Fuel, the Parent nor the
Purchaser assumes any responsibility for the accuracy or completeness of the
information concerning the Company contained in such documents and records or
for any failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information, but which are
unknown to National Fuel, the Parent or the Purchaser.
11
<PAGE> 15
The Company is a Delaware corporation and its principal executive offices
are located at Five Post Oak Park, Suite 2220, Houston, Texas 77027.
The Company is an independent oil and gas company engaged in the
acquisition, exploitation and exploration of onshore oil and gas properties
located in the United States. Formerly named Pangea Petroleum Company, the
Company was organized as a California corporation in 1976, but did not conduct
significant operations until after May 1980. In 1987, control was shifted to a
group including its current chairman, the jurisdiction of incorporation was
changed from California to Delaware, and the Company changed its name from
Pangea Petroleum Company to its present name. The Company's proved reserves have
grown from approximately 0.5 million barrels of oil equivalent ("MMBOE") at
January 1, 1987 to approximately 25.6 MMBOE at January 1, 1998. Following the
Company's sale of its non-California properties in February 1998 for
approximately $12.8 million in cash (plus an additional cash amount of
approximately $700,000, to be based upon the determination of reserves for a
recently completed well), the Company's principal reserves and producing
properties are now located in the San Joaquin Basin of California. Based on the
estimates of independent petroleum engineers as of January 1, 1998, the Company
had total proved reserves of approximately 25.6 MMBOE consisting of 11.5 million
barrels of crude oil and natural gas liquids and 84.4 billion cubic feet of
natural gas, including 1.6 million barrels of crude oil and 9.7 billion cubic
feet of natural gas attributable to the non-California properties. The Company's
estimate at that time of future net cash flows before income taxes from its
total proved reserves, or the pre-tax SEC 10% present value at January 1, 1998,
was approximately $95.4 million, approximately $13.8 million of which was
attributable to net proved reserves attributable to the non-California
properties. The above net cash flows include the Company's ownership of a 75%
interest in a 22 million cubic feet per day gas processing and fractionation
plant in the San Joaquin Basin which processes the natural gas produced in the
San Joaquin Basin by the Company and certain third parties.
Set forth below is certain selected consolidated financial information with
respect to the Company, excerpted or derived from the Company's 1997 Annual
Report on Form 10-K, filed with the Commission pursuant to the Exchange Act.
More comprehensive information concerning the Company is included in such report
and in other documents filed by the Company with the Commission. The following
summary is qualified in its entirety by reference to such report and other
documents and all of the financial information (including any related notes)
contained therein. Such report and other documents may be inspected and copies
may be obtained from the Commission and the Nasdaq in the manner set forth
below.
12
<PAGE> 16
HARCOR ENERGY COMPANY
SELECTED CONSOLIDATED STATEMENT OF OPERATIONS DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Total Revenues:............................................. $21,946 $31,622 $22,595
Total Costs and Expenses:................................... 26,680 31,285 25,325
Income (loss) before provision for income taxes
and extraordinary item.................................... (4,733) 337 (2,730)
Net operating income (loss) before
extraordinary item........................................ (4,733) 337 (2,730)
Extraordinary Item
Loss on early extinguishment of debt...................... -- (2,135) (1,888)
Net Loss.................................................. (4,733) (1,798) (4,618)
Net Loss Applicable to Common Stockholders.................. (4,793) (2,259) (7,765)
Net Loss Per Common Share Before Extraordinary Item......... n/a (.01) (.74)
Net Loss Per Common Share After Development Costs
Extraordinary Item........................................ (.30) (.20) (.98)
</TABLE>
13
<PAGE> 17
HARCOR ENERGY COMPANY
SELECTED CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------
1997 1996 1995
------- -------- -------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and Cash Investments................................. $ 1,144 $ 1,593 $12,204
Accounts Receivable....................................... 4,111 8,894 3,830
Prepaids and Others....................................... 169 186 283
------- -------- -------
Total Current Assets...................................... 5,424 10,673 16,317
======= ======== =======
PROPERTY AND EQUIPMENT
Unproved oil and gas properties........................... 4,403 4,080 5,040
Proved oil and gas properties:
Leasehold Costs........................................ 57,875 56,935 54,794
Plant, lease and well.................................. 22,262 19,195 16,858
Intangible Development................................. 34,659 28,918 18,547
Furniture and Equipment................................... 397 374 256
Less -- accumulated depletion, depreciation and
amortization........................................... (34,121) (28,876) (22,648)
Net property, plant and equipment......................... 85,475 80,626 72,847
OTHER ASSETS................................................ 2,629 3,328 5,067
------- -------- -------
Total Assets...................................... $93,528 $ 94,627 $94,231
======= ======== =======
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Total Current Liabilities................................. $10,008 $ 10,734 $14,992
LONG-TERM DEBT:
Long-Term Bank Debt....................................... 4,505 1,700 5,600
14 7/8% Senior Secured Notes.............................. 52,638 52,400 63,109
STOCKHOLDERS' EQUITY:
Total Stockholders' Equity................................ 26,377 29,793 10,215
</TABLE>
14
<PAGE> 18
The Company is subject to the informational and reporting requirements of
the Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of such persons in
transactions with the Company and other matters is required to be disclosed in
proxy statements distributed to the Company's stockholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and also should be available for inspection and copying at prescribed
rates at the following regional offices of the Commission: 7 World Trade Center,
13th Floor, New York, New York 10048; and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of this material may also be obtained by mail,
upon payment of the Commission's customary fees, from the Commission's public
reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a World Wide Web site on the internet at
http://www.sec.gov that contains reports and certain other information regarding
registrants, including the Company, that file electronically with the
Commission. Reports, proxy statements and other information concerning the
Company should also be on file at the offices of the Nasdaq National Market,
1735 K Street, N.W., Washington, D.C. 20006.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER, THE PARENT AND NATIONAL FUEL.
The Purchaser. The Purchaser is a newly formed Delaware corporation
organized in connection with the Offer and the Merger and has not carried on any
activities other than in connection with its formation and capitalization and
the transactions contemplated by the Offer and the Merger. The principal
executive offices of the Purchaser are located at 1201 Louisiana, Suite 400,
Houston, Texas 77002. The Purchaser is a wholly owned subsidiary of the Parent,
which in turn is a wholly owned subsidiary of National Fuel.
The Parent. The Parent is a corporation organized under the laws of
Pennsylvania, and its principal executive offices are located at 1201 Louisiana,
Suite 400, Houston, Texas 77002. The Parent is engaged in the exploration for
and the development and purchase of, natural gas and oil reserves in the Gulf
Coast of Texas and Louisiana, in California and in the Appalachian Region of the
United States.
National Fuel. National Fuel is a registered holding company under the
Public Utility Holding Company Act of 1935, as amended, organized under the laws
of the state of New Jersey, and its principal executive offices are located at
10 Lafayette Square, Buffalo, New York 14203.
National Fuel's $2.1 billion in assets is distributed among four business
segments: utility, pipeline and storage, exploration and production and other
nonregulated activities. Utility operations sell or transport natural gas to
nearly 732,500 customers in western New York and northwestern Pennsylvania.
Major areas served include Buffalo, Niagara Falls and Jamestown in New York and
Erie and Sharon in Pennsylvania. These operations are regulated by a state
Commission in each state. Pipeline and storage operations transport and store
natural gas for National Fuel's local distribution areas, as well as for
utilities, pipelines and other companies in the growing markets of the
northeastern United States. These operations own and operate a 3,241 mile
pipeline network that extends from southwestern Pennsylvania to the Canadian
gateway at Niagara Falls. The subsidiary operating in this segment also owns and
operates 30 underground natural gas storage areas and is co-owner and operator
of four others. Most of its operations are regulated by the Federal Energy
Regulatory Commission. Exploration and production operations of National Fuels
are conducted principally through the Parent. Other nonregulated activities
include the marketing and brokering of natural gas for utilities and retail
customers; foreign and domestic energy related investment opportunities,
including wholesale generation of electricity; the operation of a sawmill and
kiln at Kane, Pennsylvania where timber is processed from north central
Pennsylvania; and a subsidiary which, with other unaffiliated companies,
operates market center hubs and electronic trading platforms throughout North
America, involving the transportation, storage, purchase, sale, exchange,
borrowing or lending of natural gas.
Set forth below is certain selected consolidated financial information with
respect to National Fuel and its subsidiaries for the three month periods ended
December 31, 1997 and 1996 and the fiscal years ended
15
<PAGE> 19
September 30, 1997, 1996 and 1995. Such financial information has been taken
from the periodic reports and other documents filed by National Fuel with the
Commission. More comprehensive information concerning National Fuel is included
in such reports and other documents filed by National Fuel with the Commission.
The following summary is qualified in its entirety by reference to such reports
and other documents and all of the financial information (including any related
notes) contained therein. Such reports and other documents may be inspected and
copies may be obtained from the offices of the Commission and the New York Stock
Exchange in the manner set forth below.
16
<PAGE> 20
NATIONAL FUEL GAS COMPANY
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT OUTSTANDING SHARES AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED DECEMBER 31, YEAR ENDED SEPTEMBER 30,
------------------------- ---------------------------------------
1997 1996 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating Revenues............ $ 371,021 $ 363,492 $ 1,265,812 $ 1,208,017 $ 975,496
Operating Income.............. 51,573 52,153 168,303 157,446 124,399
Net Income Available for
Common Stock............... 36,827 38,590 114,688 104,671 75,894
Earnings Per Common Share..... .96 1.02 3.01 2.78 2.03
Weighted Average Common Shares
Outstanding................ 38,197,757 37,952,194 38,083,514 37,613,305 37,396,875
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT SEPTEMBER 30,
-------------------- -----------------------
1997 1996
(UNAUDITED) ---------- ----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Property Plant and Equipment...................... $2,775,126 $2,688,478 $2,471,063
Current Assets.................................... 327,250 208,667 220,981
Total Assets...................................... 2,427,695 2,267,331 2,149,772
Long-Term Debt, Net of Current Portion............ 586,273 581,640 574,000
Total Common Stock Equity......................... 934,639 913,704 855,998
</TABLE>
National Fuel is subject to the informational and reporting requirements of
the Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning National Fuel's directors and
officers, their remuneration, stock options granted to them, the principal
holders of National Fuel's securities, any material interests of such persons in
transactions with National Fuel and other matters is required to be disclosed in
proxy statements distributed to National Fuel's stockholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection and copies may be obtained in the same manner as set
forth for the Company in Section 8, except that National Fuel's common stock is
traded on the New York Stock Exchange, and reports, proxy statements and other
information concerning National Fuel should also be on file at the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of National Fuel, the Purchaser and the Parent are set forth in
Schedule I hereto.
None of National Fuel, the Parent or the Purchaser, or, to the knowledge of
National Fuel, the Parent or the Purchaser, any of the persons listed in
Schedule I hereto, or any associate or majority-owned subsidiary of such
persons, beneficially owns any equity security of the Company, and neither
National Fuel, the Parent nor the Purchaser, nor, to the knowledge of National
Fuel, the Parent and the Purchaser, any of the other persons referred to above,
or any of the respective directors, executive officers or subsidiaries of any of
the foregoing, has effected any transaction in any equity security of the
Company during the past 60 days.
Except as set forth in this Offer to Purchase, none of National Fuel, the
Parent or the Purchaser, or, to the knowledge of National Fuel, the Parent and
the Purchaser, any of the persons listed in Schedule I hereto or any associate
or majority-owned subsidiary of any of the foregoing, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, none of
National Fuel, the Parent or the Purchaser, or, to the knowledge of National
Fuel, the
17
<PAGE> 21
Parent and the Purchaser, any of the persons listed in Schedule I hereto nor any
associate or majority-owned subsidiary of any of the foregoing has had any
transactions with the Company, or any of its executive officers, directors or
affiliates that would require reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between National Fuel, the Parent or the Purchaser,
or their respective subsidiaries, or, to the knowledge of National Fuel, the
Parent or the Purchaser, any of the persons listed in Schedule I hereto, on the
one hand, and the Company or its executive officers, directors or affiliates, on
the other hand, concerning a merger, consolidation or acquisition, tender offer
or other acquisition of securities, election of directors, or a sale or other
transfer of a material amount of assets.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In March 1997, the Parent was contacted by a representative of SBC Warburg
Dillon Read Inc. ("SBC Warburg Dillon Read") to determine the Parent's interest
in acquiring the Company. Following the execution of a confidentiality agreement
dated March 17, 1997, the Parent received an information memorandum concerning
the business and operations of the Company. The Parent subsequently learned that
the Company's non-California properties would be sold as a separate package.
On May 8, 1997, six of the Parent's personnel visited the Company's data
room in Bakersfield, California to learn more about the Company's California
properties. Francis Roth, the Company's President and Chief Operating Officer,
made a joint presentation with Robert Shore, the Chief Executive Officer of
Bakersfield Energy Resources ("Bakersfield"), the operator of the Company's
California properties. Following the first day of data room presentations and
initial due diligence review, a field tour of the Company's properties was
conducted on the second day.
Throughout the last week of May, 1997, representatives of SBC Warburg
Dillon Read and the Parent discussed broad aspects of a possible transaction for
the California properties, but on June 2, 1997, the Parent advised SBC Warburg
Dillon Read that it would not make a cash offer.
On July 25, 1997, the Parent made an offer to acquire only the 25% interest
in the California properties held by Bakersfield. A condition of such offer was
that the Company consent to the appointment of the Parent as operator of the
property. This consent was a material part of the Parent's offer, as the joint
operating agreement between the Company and Bakersfield required operatorship of
the California properties to automatically revert to the Company in the event
that Bakersfield sold its interest. The Parent indicated to SBC Warburg Dillon
Read that it had no intention at that time to make a separate offer for all the
shares of the Company. Ultimately, Bakersfield did not accept the Parent offer
for its 25% interest in the California properties.
Representatives of SBC Warburg Dillon Read continued to contact the Parent
through the summer. Apparently in response to numerous investor inquiries, on
October 23, 1997, the Company issued a press release confirming the status of
the ongoing sales process. On November 14, 1997, as part of its third quarter
earnings press release, the Company announced that it had bifurcated the sales
process during the second quarter for its California properties and
non-California properties as separate packages and provided an update on its
waterflood program and recent successful drilling on its California properties.
Shortly thereafter, representatives of SBC Warburg Dillon Read encouraged the
Parent to make an offer.
On December 4, 1997, the Parent verbally indicated an interest in the
Company to SBC Warburg Dillon Read. A meeting was held in Houston at the
Company's office on December 5, 1997, attended by James Beck, President of the
Parent, and John McKnight, Vice President-Land and Legal of the Parent, two
representatives of SBC Warburg Dillon Read and Mark Harrington, Francis Roth and
Gary Peck of the Company. At that meeting, Mr. Beck expressed the Parent's
desire to purchase the Company, without its non-California properties, but
contingent upon a simultaneous purchase of Bakersfield's 25% interest in the
California properties. A valuation in a range from 700,000 to 800,000 shares of
stock in National Fuel was discussed as consideration for the Company's
interest. (National Fuel common stock is listed on The New York Stock Exchange
and traded at approximately $46.00 per share during this time period.) Such
consideration would be
18
<PAGE> 22
further increased by the retention by the Company of the net proceeds from the
sale of the Company's non-California properties. Without accepting the valuation
range, the Parent's representatives indicated a desire to structure any
acquisition as a pooling-of-interests.
On December 12, 1997, Mr. Beck and Mr. McKnight again met with Messrs.
Harrington, Roth and Peck. Philip Ackerman, Senior Vice President of National
Fuel, also participated in the meeting. Separately, the Parent delivered a
written proposal to purchase all the shares of the Company in exchange for
550,000 shares of National Fuel common stock, after the sale of the
non-California properties was closed and the proceeds were distributed to the
Company's stockholders. The proposal provided, among other things, for a
concurrent acquisition of the Bakersfield 25% interest in the California
properties.
The Parent subsequently withdrew that proposal, and on December 17, 1997,
delivered a second proposal that removed the Bakersfield acquisition contingency
and adjusted for the Company's net debt levels. The number of shares of National
Fuel stock being offered under this proposal, however, was decreased to 200,000
shares, with the proviso that if the proceeds of the non-California properties
sale were not distributed to the Company's stockholders, additional National
Fuel shares would be issued.
Upon learning that the December 17 proposal was unacceptable, on December
19, 1997, the Parent delivered a revised proposal which increased the proposed
purchase price to 550,000 shares of National Fuel stock, plus additional shares
to be issued for the proceeds from the Company's non-California properties
sales; however, this proposal still contained a requirement of a
pooling-of-interests, which the Company advised was unattainable. Several of the
other previous contingencies found unacceptable to the Company, however, had
been removed.
On December 29, 1997, following extensive discussions among the parties, a
fourth proposal was delivered for $5.0 million in cash plus 200,000 shares of
National Fuel stock, with additional shares to be issued for the proceeds of the
sale of the Company's non-California properties.
Following intensive negotiations between the parties, on January 22, 1998,
the Parent submitted a written letter of intent to the Company proposing to
acquire all of the shares at a price $2.00 per share, (total cash consideration
of $32,536,000) subject to execution of a definitive agreement, the delivery to
the Parent of an audit of the Company's financial statements for the year ending
December 31, 1997 to be performed by Arthur Andersen L.L.P. that revealed no
previously undisclosed material adverse information, that the Company must be
free of debt and other liabilities except disclosed and scheduled amounts, that
$13.2 million in proceeds be received from the sale of the Company's
non-California properties, that there shall be no material adverse change in the
Company's business, and satisfactory completion of a due diligence review of the
Company and other conditions. The Company executed the Parent's letter of intent
on January 23, 1998, and issued a press release announcing such development.
During the weeks following execution of the letter of intent, various due
diligence meetings and conference calls were conducted between the Parent, the
Company and their respective advisors, and representatives of the Parent
conducted on-site reviews of the Company's operations in Bakersfield,
California. Extensive negotiations were also conducted during this period with
respect to the Merger Agreement and several revised drafts were exchanged.
On March 31, 1998, the respective boards of directors of the Parent and the
Purchaser, aware that the board of directors of the Company had approved the
Merger Agreement and the transactions contemplated thereby, likewise approved
the Merger Agreement and the transactions contemplated thereby. The parties
executed the Merger Agreement and issued a joint press release announcing the
transaction immediately thereafter. A copy of the press release has been filed
with the Commission as an exhibit to the Schedule 14D-1 of the Parent and the
Purchaser (the "Schedule 14D-1"). On April 6, 1998, the Purchaser and the Parent
commenced the Offer.
11. THE PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY.
General. The purpose of the Offer is to acquire control of, and the entire
equity interest in, the Company. The purpose of the Merger is to acquire all
Shares not beneficially owned by the Purchaser following consummation of the
Offer. Upon the consummation of the Merger, the Company will become a wholly
owned subsidiary of the Parent.
19
<PAGE> 23
The DGCL requires, among other things, that the adoption of any plan of
merger or consolidation of the Company must be approved by the Company Board and
generally by the holders of a majority of the Company's outstanding voting
securities. The Company Board has approved the Offer, the Merger and the Merger
Agreement and the transactions contemplated thereby; consequently, the only
additional action of the Company that may be necessary to effect the merger is
approval by such stockholders if the "short-form" merger procedure described
below is not available.
Plans for the Company. It is currently expected that, following
consummation of the Offer, initially the business and the operations of the
Company will, except as set forth in this Offer to Purchase, be continued by the
Company, at the discretion of the Company Board which will consist of the
Parent's representatives, substantially as they are currently being conducted
with such changes as deemed appropriate by such Board. The Parent will continue
to evaluate the business and operations of the Company during the pendency of
the Offer and after the consummation of the Offer and the Merger, and will take
such actions as it deems appropriate under the circumstances then existing. The
Parent intends to seek additional information about the Company during this
period. Thereafter, the Parent intends to review such information as part of a
comprehensive review of the Company's business, operations, capitalization and
management with a view to maximizing the Company's potential in conjunction with
the Parent's businesses. It is expected that the business and operations of the
Company would form an important part of the Parent's future business plans.
Except as indicated in this Offer to Purchase, neither the Parent nor the
Purchaser has any present plans or proposals which relate to or would result in
an extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company, a sale or transfer of a material amount of
assets of the Company or any material change in the Company's capitalization or
dividend policy or any other material changes in the Company's corporate
structure or business, or the composition of the Company Board or management.
The Parent and the Purchaser reserve the right to acquire additional Shares
following the expiration of the Offer through private purchases, market
transactions, tender or exchange offers or otherwise on terms and at prices that
may be more or less favorable than those of the Offer or, subject to any
applicable legal restrictions, to dispose of any or all Shares beneficially
acquired by the Parent and the Purchaser.
The Merger. In general, under the DGCL and the Company's certificate of
incorporation, the Merger requires the approval of the Company Board and the
approval by the holders of a majority of all outstanding Shares.
If the Purchaser acquires, through the Offer or otherwise, voting power
with respect to at least a majority of the outstanding Shares (which would be
the case if the Minimum Condition is satisfied and the Purchaser were to accept
for payment Shares tendered pursuant to the Offer), the Purchaser would have
sufficient voting power to effect the Merger without the vote of any other
stockholders.
Further, the DGCL provides that if the parent corporation owns 90% or more
of each class of outstanding shares of a Delaware subsidiary, the Delaware
subsidiary may be the surviving corporation of a merger with its parent
corporation upon a majority vote of each corporation's entire board of
directors, without action or vote by the stockholders of either corporation.
Accordingly, if the Purchaser acquires at least 90% or more of the outstanding
Shares pursuant to the Offer or otherwise, the Purchaser will be able to approve
the Merger without a vote of the Company's stockholders. In such event, the
Purchaser has agreed that it will take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after such
acquisition. If the Purchaser does not acquire at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, a significantly longer time may be
required to effect the Merger because a vote or the consent of the Company' s
stockholders would be required under the DGCL.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company at the
time of the Merger will have certain rights under the DGCL to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their Shares.
Such rights to dissent, if the statutory procedures are complied with, could
lead to a judicial determination of the fair value of the Shares (excluding any
element of value arising from the accomplishment or expectation
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of the Merger), required to be paid in cash to such dissenting holders for their
Shares. In addition, such dissenting stockholders would be entitled to receive
payment of a fair rate of interest from the date of consummation of the Merger
on the amount determined to be the fair value of their Shares. In determining
the fair value of the Shares, a Delaware court would be required to take into
account all relevant factors. Accordingly, such determination could be based
upon considerations other than, or in addition to, the market value of the
Shares, including among other things, asset values and earning capacity of the
Company. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among
other things, that "proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in an appraisal proceeding. Therefore,
the value so determined in any appraisal proceeding could be different from the
price being paid in the Offer. The Delaware Supreme Court stated in Weinberger
and Rabkin v. Philip A. Hunt Chemical Corp. that although the remedy ordinarily
available to minority stockholders in a cash-out merger is the right to
appraisal described above, a damages remedy or injunctive relief may be
available if a merger is found to be the product of procedural unfairness,
including fraud, misrepresentation or other misconduct.
Rule 13e-3. The Merger would have to comply with any applicable Federal law
operative at the time. Rule 13e-3 under the Exchange Act is applicable to
certain "going private" transactions. The Purchaser does not believe that Rule
13e-3 will be applicable to the Merger. Rule 13e-3 requires, among other things,
that certain financial information concerning the Company, and certain
information relating to the fairness of the proposed transaction and the
consideration offered to minority stockholders in such a transaction, be filed
with the Commission and disclosed to minority stockholders prior to consummation
of the transaction.
12. THE MERGER AGREEMENT; CONFIDENTIALITY AGREEMENT.
THE MERGER AGREEMENT. The following is a summary of certain provisions of
the Merger Agreement. The summary is qualified in its entirety by reference to
the Merger Agreement, which is incorporated herein by reference. Capitalized
terms used but not defined herein shall have the meaning given to them in the
Merger Agreement.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to prior satisfaction or waiver
of the conditions of the Offer, the Purchaser will purchase all Shares validly
tendered and not properly withdrawn pursuant to the Offer. The Offer is
conditioned upon, among other things, there being tendered and not withdrawn
prior to the Expiration Date, a number of Shares which, together with any Shares
beneficially owned by the Parent and the Purchaser, represent a majority of the
outstanding Shares, and the Parent not having received notice from holders of
more than 5% of the Shares that such holders have exercised or intend to
exercise their appraisal rights under the DGCL. The Merger Agreement provides
that, without the written consent of the Company, the Purchaser will not
decrease or change the form of consideration to be paid in the Offer, reduce the
maximum number of Shares to be purchased in the Offer or the Minimum Condition,
impose additional conditions to the Offer, change the conditions of the Offer
(except that the Parent in its sole discretion may waive any of the conditions
to the Offer other than the Minimum Condition), or amend any other term or
condition of the Offer in a manner adverse to the holders of Shares. In the
event that all conditions of the Offer have not been satisfied or waived by the
Expiration Date, May 4, 1998, the Purchaser may terminate the Offer and the
Merger Agreement. Notwithstanding that all conditions are satisfied or waived
prior to the scheduled Expiration Date, the Purchaser may extend the Offer,
subject to certain conditions, if the Shares tendered pursuant to the Offer are
less than 90% of the outstanding Shares. The Purchaser will, on the terms and
subject to the prior satisfaction or waiver of the conditions of the Offer,
accept for payment and pay for Shares validly tendered and not properly
withdrawn as soon as practicable after expiration of the Offer.
The Merger. Following the consummation of the Offer, the Merger Agreement
provides that, subject to the terms and conditions thereof, and in accordance
with Delaware law, as soon as practicable, the Purchaser will be merged with and
into the Company. As a result of the Merger, the separate corporate existence of
the Purchaser will cease and the Company will continue as the Surviving
Corporation and a wholly owned subsidiary of the Parent.
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The respective obligations of the Parent and the Purchaser, on the one
hand, and the Company, on the other hand, to effect the Merger are subject to
the satisfaction on or prior to the Closing Date (as defined in the Merger
Agreement) of each of the following conditions: (i) the Merger Agreement shall
have been approved and adopted by the requisite vote of the holders of Shares,
if required by applicable law, in order to consummate the Merger; (ii) no
federal or state governmental or regulatory body or court of competent
jurisdiction shall have enacted, issued, promulgated or enforced any statute,
rule, regulation, executive order, decree, judgment, preliminary or permanent
injunction or other order that is in effect and that prohibits, enjoins or
otherwise restrains the consummation of the Merger; (iii) all material filings
required to be made prior to the Effective Time with, and all material consents,
approvals, permits and authorizations required to be obtained prior to the
Effective Time from, governmental and regulatory authorities or third parties in
connection with the Merger and the consummation of the other transactions
contemplated by the Merger Agreement shall have been made or obtained, as the
case may be; and (iv) the Purchaser shall have purchased Shares pursuant to the
Offer.
At the Effective Time of the Merger (i) each issued and outstanding Share
(other than Shares that are owned by the Company, any Shares owned by the Parent
or any wholly owned subsidiary of the Parent or any of their respective
affiliates, or any Shares which are held by stockholders exercising dissenters'
rights, if any, under Delaware law) will be converted into the right to receive
the Merger Consideration, and (ii) each issued and outstanding share of capital
stock of the Purchaser will be converted into one share of common stock of the
Surviving Corporation.
The Company Board. The Merger Agreement provides that upon the purchase and
payment by the Parent or the Purchaser of Shares representing at least a
majority of the outstanding Shares, the Parent shall be entitled to designate
all members of the Company Board. The current directors of the Company have
indicated to the Parent that they intend to resign as directors of the Company
as soon as reasonably practicable upon the Purchaser purchasing at least a
majority of the outstanding Shares pursuant to the Offer, and the Company shall
exercise reasonable efforts to secure the resignations of all directors to
enable such Parent designees to be so elected or appointed. Such designees will
abstain from any action proposed to be taken by the Company to amend or
terminate the Merger Agreement or waive any action by the Parent or the
Purchaser. The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act, which provides,
among other things, for dissemination of information to a company's
stockholders.
Stockholders' Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger: (i) duly call,
give notice of, convene and hold a special meeting of its stockholders (the
"Special Meeting"') as soon as reasonably practicable following the purchase of
Shares by the Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the Merger and the adoption of the Merger Agreement; (ii)
prepare and file with the Commission a preliminary proxy or information
statement relating to the Merger and the Merger Agreement and include in any
preliminary or definitive proxy statement or information statement with respect
to the Special Meeting (the "Proxy Statement"), the recommendation of the
Company Board that stockholders of the Company vote in favor of the approval of
the Merger Agreement and the transactions contemplated thereby; and (iii) use
all reasonable efforts (A) to obtain and furnish the information required to be
included by it in the Proxy Statement and, after consultation with the Parent
and the Purchaser, respond promptly to any comments made by the Commission with
respect to the Proxy Statement and any preliminary version thereof and cause the
Proxy Statement to be mailed to its stockholders at the earliest practicable
time following the expiration or termination of the Offer and (B) obtain the
necessary approvals by its stockholders of the Merger Agreement and the
transactions contemplated thereby. The Parent has agreed that it will vote, or
cause to be voted, all of the Shares then owned by it, the Purchaser or any of
its other subsidiaries and affiliates in favor of the approval of the Merger and
the adoption of the Merger Agreement. If the Purchaser acquires, through the
Offer or otherwise, at least a majority of the outstanding Shares, the Purchaser
will have sufficient voting power to approve the Merger, even if no other
stockholders vote in favor of the Merger.
The Merger Agreement provides that in the event that the Purchaser shall
acquire at least 90% of the then outstanding Shares, the parties agree to take
all necessary and appropriate action to cause the Merger to
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become effective, in accordance with Section 253 of the DGCL, as soon as
practicable after such acquisition, without a meeting of the stockholders of the
Company. See Section 11.
Options and Warrants. The Company has represented and warranted to the
Purchaser and the Parent in the Merger Agreement that it has taken all action
necessary so that all outstanding options and other rights to acquire Shares
granted to directors, employees or others under any stock option or purchase
plan, program or similar arrangement of the Company, whether or not then
exercisable or vested, will be canceled by the Company upon consummation of the
Offer. The holders thereof shall be entitled to receive, for each Share, in
settlement and cancellation thereof, an amount in cash equal to the positive
difference, if any, between the per Share Merger Consideration and the exercise
price per share of such option. Since all such options have exercise prices in
excess of $2.00 per share, none are expected be exercised. The Company has
represented and warranted to the Purchaser and the Parent that all outstanding
warrants to purchase Shares will be converted into the right to receive $2.00
cash instead of each Share which would otherwise be purchasable by the holder of
the warrant upon the exercise thereof and payment of the warrant exercise price
thereunder. Since all warrants have exercise prices in excess of $2.00 per
share, none are expected to be exercised.
Interim Operations. Pursuant to the Merger Agreement, the Company has
agreed that, except as expressly contemplated by the Merger Agreement or agreed
to in writing by the Parent, prior to the Effective Time, the Company shall (a)
use all commercially reasonable efforts to conduct its business in all material
respects only in the ordinary course of business and consistent with past
practice; (b) not amend its certificate of incorporation or bylaws or declare,
set aside or pay any dividend or other distribution or payment in cash, stock or
property in respect to its capital stock; or acquire, directly or indirectly,
any of its capital stock; (c) not issue, grant, sell or pledge or agree or
authorize the issuance, grant, sale or pledge of any shares of, or rights of any
kind to acquire any shares of, its capital stock other than Shares issuable upon
the exercise of stock options; (d) not acquire, sell, transfer or lease any
assets except in the ordinary course of business and consistent with past
practice or encumber any assets of the Company; (e) use all commercially
reasonable efforts to preserve intact its business organizations and to keep
available the services of its present key officers and employees; provided,
however, that to satisfy the foregoing obligation, the Company shall not be
required to make any payments other than those agreed to with the Parent or
enter into or amend any contractual arrangements or understandings, except in
the ordinary course of business and consistent with past practice; (f) not adopt
a plan of complete or partial liquidation or adopt resolutions provided for the
complete or partial liquidation, consolidation, merger, restructuring or
recapitalization of the Company; (g) not grant any severance or termination pay
(otherwise than pursuant to policies or contracts in effect on the date of the
Merger Agreement) to, or enter into any employment agreement with, any of its
executive officers or directors; (h) not increase the compensation payable or to
become payable to its officers or employees, enter into any contract or other
binding commitment in respect of any such increase with any of its directors, or
officers or other employees, and not establish, adopt, enter into, make any new
grants or awards under or amend, any collective bargaining agreement or Company
Benefit Plan (as defined in the Merger Agreement), except as required by
applicable law, including any obligation to engage in good faith collective
bargaining, to maintain tax-qualified status or as may be required by any
Company Benefit Plan as of the date of the Merger Agreement; (i) not settle or
compromise any material claims or litigation or, except in the ordinary course
of business, modify, amend or terminate any of its material contracts or waive,
release or assign any material rights or claims, or make any payment, direct or
indirect, of any material liability before the same becomes due and payable in
accordance with its terms; (j) not take any action, other than reasonable and
usual actions in the ordinary course of business and consistent with past
practice with respect to accounting policies or procedures (including tax
accounting policies and procedures), except as may be required by the Commission
or the Financial Accounting Standards Board; (k) not make any material tax
election or permit any material insurance policy naming it as a beneficiary or a
loss payable payee to be canceled or terminated without notice to the Parent,
except in the ordinary course of business; (l) confer at such times as the
Parent may reasonably request with one or more representatives of the Parent to
report material operational matters and the general status of ongoing operations
(in each case to the extent the Parent reasonably requires such information) and
to consult with the Parent regarding material operational decisions; (m) not (i)
enter into any loan or credit agreement, or incur any indebtedness (other than
borrowings under its existing credit agreement for the purpose of paying fees
and severance payments disclosed pursuant to the Merger Agreement and expenses
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incurred in connection with the transactions contemplated thereunder) or
guarantee any indebtedness or amend any existing loan or credit agreement, (ii)
make or enter into any agreement or contract for capital expenditures, except
for capital expenditures required to be made under the Company's joint operating
agreements and other expenditures on the Company's existing properties up to
$25,000 per expenditure or $100,000 in the aggregate or (iii) enter into any
agreement or contract outside the ordinary course of business of the Company;
(n) not adjust, split, combine or reclassify its capital stock; (o) not enter
into any agreement, understanding or arrangement with respect to the sale or
voting of its capital stock; (p) not enter into any derivative instruments; and
(q) not authorize or enter into any agreement to do any of the foregoing.
No Solicitation. Pursuant to the Merger Agreement, the Company shall not,
and shall use its best efforts to cause its officers, directors, employees,
attorneys, accountants, financial advisors, agents or other representatives not
to, directly or indirectly, initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal relating to, or that may reasonably
be expected to lead to, the acquisition of all or a significant part of the
business and properties or capital stock of the Company, whether by merger,
purchase of assets, tender offer or otherwise with a third party other than the
Parent (an "Acquisition Proposal"), or enter into discussions or negotiate with
any person or entity in furtherance of such inquiries or to obtain an
Acquisition Proposal, or agree to or endorse any Acquisition Proposal, or
authorize or permit any of the officers, directors, employees or agents or
representatives of the Company or any investment banker, financial advisor,
attorney, accountant or other representative retained by the Company to take any
such action. The Company shall as promptly as practicable notify the Parent of
all relevant terms of any such inquiries or proposals received by the Company
and, if such inquiry or proposal is in writing, the Company shall as promptly as
practicable deliver or cause to be delivered to the Parent a copy of such
inquiry or proposal. The foregoing is not intended to prohibit the Company Board
from (a) furnishing information to, or entering into discussions or negotiations
with, any persons or entities in connection with an unsolicited bona fide
proposal in connection with an Acquisition Proposal if, and only to the extent
that (i) such unsolicited bona fide proposal is on terms that the Company Board
determines it cannot reject, based on applicable fiduciary duties and the advice
of outside counsel (except with respect to furnishing information) and for which
financing to the extent required is then committed, and (ii) prior to furnishing
such information to or entering into discussions or negotiations with, such
person or entity the Company provides written notice to the Parent to the effect
that it is furnishing information to or entering into discussions or
negotiations with, such person or entity; or (b) complying with Rule 14d-9 or
Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal.
Termination; Fees. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
approval of the stockholders of the Company, (a) by mutual written consent of
the Company and the Parent; (b) by either the Company or the Parent, if the
Effective Time shall not have occurred on or before 120 days from the date of
the Merger Agreement; provided, that the right to terminate the Merger Agreement
under this clause (b) shall not be available to any party whose
misrepresentation in the Merger Agreement or whose failure to perform any of the
covenants and agreements or to satisfy an obligation under the Merger Agreement
has been the cause of or resulted in the failure of the Merger to occur on or
before such date; (c) by either the Company or the Parent, if any federal or
state court of competent jurisdiction or other federal or state governmental or
regulatory body shall have issued any judgment, injunction, order or decree
prohibiting, enjoining or otherwise restraining the transactions contemplated by
the Merger Agreement and such judgment, injunction, order or decree shall have
become final and nonappealable (provided, however, that the party seeking to
terminate the Merger Agreement pursuant to this clause (c) shall have used
commercially reasonable efforts to remove such judgment, injunction, order or
decree) or if any statute, rule, regulation or executive order promulgated or
enacted by any federal or state governmental authority after the date of the
Merger Agreement which prohibits the consummation of the Offer or the Merger
shall be in effect; (d) by the Company, if (i) the Parent fails to commence the
Offer within five business days of the public announcement of the execution of
the Merger Agreement, (ii) the Offer expires or is terminated without any Shares
being purchased thereunder or (iii) the Parent fails to purchase validly
tendered Shares in violation of the terms and conditions of the Offer or the
Merger Agreement; (e) by the Parent, if (i) the Offer is not commenced within
five business days of the public announcement of the execution of the Merger
Agreement directly as a result of actions or
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inaction by the Company or (ii) the Offer is terminated or expires as a result
of the failure of a condition specified in Section 14 of this Offer to Purchase
or on the expiration of the Offer without the purchase of any Shares thereunder,
unless such termination or expiration has been caused by or resulted from the
failure of the Parent or the Purchaser to perform any covenants and agreements
of the Parent or the Purchaser contained in the Merger Agreement; (f) prior to
the consummation of the Offer, by the Parent, if the Company Board withdraws or
modifies in a manner materially adverse to the Parent or the Purchaser its
favorable recommendation of the Offer or the Merger or shall have recommended
any Acquisition Proposal with a party other than the Parent or any of its
affiliates; (g) by the Company, if the Merger Agreement is not adopted or,
unless the Merger is consummated without a meeting of stockholders, the Merger
is not approved at the Company's stockholders meeting by the holders of a
majority of the outstanding Shares; (h) by the Parent, if there shall have been
a material breach of any representation, warranty or material covenant or
agreement on the part of the Company, which is incurable or which is not cured
after 30 days' written notice by the Parent to the Company; (i) by the Company,
if there shall have been a material breach of any representation, warranty or
material covenant or agreement on the part of either of the Parent or the
Purchaser, which is incurable or which is not cured after 30 days' written
notice by the Company to the Parent; or (j) by the Company, if (i) as provided
in the Merger Agreement, an unsolicited bona fide proposal is received from any
Person and is on terms that the Company Board determines it cannot reject, based
on applicable fiduciary duties and the advice of outside counsel and for which
financing to the extent required is then committed, the Company Board shall
withdraw, modify or change its approval or recommendation of the Offer or the
Merger or shall have resolved to do any of the foregoing or (ii) any Person or
group of Persons shall have made an Acquisition Proposal the acceptance of which
the Company Board determines, after consultation with outside counsel and after
the Company Board has satisfied itself that the financing for the Acquisition
Proposal has been committed, is required to comply with its fiduciary duties
under applicable law.
In the event that (i) prior to the consummation of the Offer, the Company
Board terminates the Merger Agreement pursuant to clause (j) of the preceding
paragraph or the Parent terminates the Merger Agreement pursuant to clause (f)
of the preceding paragraph and (ii) as a result thereof, the Parent shall have
terminated the Offer, allowed the Offer to expire without purchasing any Shares
thereunder or failed to commence the Offer in accordance with the terms thereof
and (iii) the Company enters into a definitive agreement relating to an
Acquisition Proposal or a business combination or other transaction contemplated
by such Acquisition Proposal shall have been consummated within 12 months
following such termination, then the Company shall thereupon pay to the Parent a
fee of $1,000,000 in cash, payable in same day funds.
Indemnification. Pursuant to the Merger Agreement, for six years after the
Effective Time, the Parent and the Surviving Corporation will indemnify the
present and former officers and directors of the Company with respect to matters
occurring at or prior to the Effective Time to the full extent permitted under
Delaware law, the terms of the Company's charter, by-laws and indemnification
agreements, each as in effect as of the date of the Merger Agreement.
Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to the Parent and the
Purchaser with respect to, among other things, its organization, capitalization,
authority, financial statements, need for consents or approvals, public filings,
conduct of business, employee benefit plans, employment matters, compliance with
laws, tax matters, insurance, litigation, title to properties, environmental
matters, vote required to approve the Merger Agreement, undisclosed liabilities,
information to be contained in the Proxy Statement and the opinion of its
financial advisor.
Pursuant to the Merger Agreement, the Parent and the Purchaser have made
substantially similar representations and warranties as to their organization,
authority, need for consents or approvals and information to be contained in the
Proxy Statement.
CONFIDENTIALITY AGREEMENT. Pursuant to the Confidentiality Agreement
entered into as of March 17, 1997 by the Parent and the Company's financial
advisor, on behalf of the Company (the "Confidentiality Agreement"), the Company
and the Parent agreed to provide, among other things, for the confidential
treatment of their discussions regarding a possible transaction and for the
delivery of certain confidential
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information concerning the Company. The Confidentiality Agreement is
incorporated herein by reference and a copy of it has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Parent further agreed that,
for a period of two years from the date of the Confidentiality Agreement, the
Parent would not, as a result of knowledge or information obtained from the
Confidential Information (as defined therein) employ or attempt to employ any
employee of the Company.
13. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required to purchase all Shares validly tendered
pursuant to the Offer, consummate the Merger, repay outstanding indebtedness and
pay the costs and expenses related to the Offer and the Merger is estimated to
be approximately $90 million. The Parent and the Purchaser intend to obtain all
funds required in connection with the Offer and the Merger from National Fuel in
accordance with existing cash management and intercompany loan procedures
established by National Fuel.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend the Offer under certain
circumstances (subject to the provisions of the Merger Agreement), the Purchaser
shall not be required to accept for payment or, subject to the applicable rules
and regulations of the Commission, purchase or pay for, and may delay the
acceptance for payment of or, subject to the applicable rules and regulations of
the Commission, payment for, any Shares tendered pursuant to the Offer, may
amend the Offer as to any Shares not then accepted for payment and may terminate
the Offer and not accept for payment any Shares, if (i) the Minimum Condition
has not been satisfied or (ii) at any time on or after the date of execution of
the Merger Agreement and before the time of acceptance of Shares pursuant to the
Offer, any of the following events shall have occurred:
(a) there shall have been any action or proceeding brought by any
governmental authority before any federal or state court, or any order or
preliminary or permanent injunction entered in any action or proceeding
before any federal or state court or governmental, administrative or
regulatory authority or agency, located or having jurisdiction within the
United States, or any other action taken, proposed or threatened, or
statute, rule, regulation, legislation, interpretation, judgment or other
proposed, sought, enacted, entered, enforced, promulgated, amended, issued
or deemed applicable to the Purchaser, the Company or any subsidiary or
affiliate of the Purchaser or the Company or the Offer or the Merger, by
any legislative body, court, government or governmental, administrative or
regulatory authority or agency located or having jurisdiction with the
United States, which would reasonably be expected to have the effect of:
(i) making illegal, materially delaying or otherwise restraining or
prohibiting the Offer or the Merger or the acquisition by the Parent or the
Purchaser of any Shares; (ii) prohibiting or materially limiting the
ownership or operation by the Parent, the Purchaser or their respective
affiliates of any material portion of their business or assets or those of
the Company or compelling the Parent or the Purchaser to dispose of or hold
separate all or any material portion of their business or assets or those
of the Company, in each case as a result of the transactions contemplated
by the Merger Agreement; (iii) imposing material limitations on the ability
of the Parent or any of its affiliates to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote any Shares
purchased by them on all matters properly presented to the stockholders of
the Company; or (iv) preventing the Parent or any of its affiliates from
acquiring, or to require divestiture by the Parent or any of its affiliates
of, any Shares; or
(b) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) the
declaration of any banking moratorium or any suspension of payments in
respect of banks or any limitation (whether or not mandatory) on the
extension of credit by lending institutions in the United States, (iii) the
commencement or any escalation of a war, material armed hostilities or any
other material international or national calamity involving the United
States, or (iv) in the case of any of the foregoing existing at the time of
the commencement of the Offer; a material acceleration or worsening
thereof; or
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(c) any Person, entity or "group" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Parent or any of its
affiliates shall have become the beneficial owner (as that term is used in
Rule 13d-3 under the Exchange Act) of more than 50% of the outstanding
Shares; or
(d) the Company shall have breached or failed to comply in any
material respect with any of its obligations under the Merger Agreement
(which breach, if curable, has not been cured within 30 days following
receipt of written notice thereof by the Parent specifying in detail the
basis of such alleged breach), or any representation or warranty of the
Company contained in the Merger Agreement that is qualified as to
materiality shall not have been true and correct and any such
representation and warranty that is not so qualified shall not have been
true and correct in any material respect, except (i) for changes
specifically permitted or contemplated by the Merger Agreement and (ii)
those representations and warranties that address matters only as to a
particular date which are true and correct as of such date; or
(e) the Merger Agreement shall have been terminated pursuant to its
terms or amended pursuant to its terms to provide for such termination or
amendment of the Offer; or
(f) the Company Board shall have modified or amended in any manner
materially adverse to the Parent or the Purchaser or shall have withdrawn
its recommendation of the Offer or the Merger, or shall have resolved to do
any of the foregoing; or
(g) the Parent shall not have received notice from the holder or
holders of more than 5%, on a fully diluted basis of the Shares issued and
outstanding on the record date for the determination of stockholders
entitled to vote on the Merger, that such holders have exercised or intend
to exercise their appraisal rights under the DGCL; or
(h) the Company shall not have received at least $12,789,000
(including all material purchase price adjustments) in immediately
available funds from the sale of the Company's non-California oil and gas
assets and shall be entitled to receive an additional amount in immediately
available funds determined under the Company's agreement with Penroc Oil
Company ("Penroc") dated January 15, 1998 for the sale of the Beaurline No.
9 well, Beaurline/McAllen Ranch Area, South Texas and its pooled or
allocated producing unit (the "Well") as follows: if the Well is restored
by sidetrack or redrill or associated operations, an agreed amount equal to
the present value of the future production from the Well discounted at 10%,
as determined by Ryder Scott Company (the "New Reserve Evaluation"), with
payment to be made ten business days after Penroc's receipt of the New
Reserve Evaluation; or
(i) the Company shall have completed and delivered to the Parent an
audit of the Company's financial statements for the fiscal year ended
December 31, 1997, to be performed by the accounting firm of Arthur
Anderson LLP, which reveals material adverse information not previously
disclosed in writing to the Parent, or a material variance from the written
or printed disclosures furnished by the Company or its representatives and
used by the Parent in its economic models; or
(j) there shall have occurred any event, change, effect or development
having a Material Adverse Effect on the Company;
which, in the good faith judgment or Parent makes it inadvisable to proceed with
the Offer or with acceptance for payment or payment for Shares.
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of the Parent and the Purchaser and, subject to the Merger
Agreement, may be asserted by the Parent or the Purchaser regardless of the
circumstances giving rise to such condition or may be waived by the Parent or
the Purchaser in whole or in part at any time and from time to time in its sole
discretion. The failure by the Parent or the Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
27
<PAGE> 31
15. CERTAIN LEGAL MATTERS.
Except as described in this Section 15, based on information provided by
the Company, none of the Company, the Purchaser or the Parent is aware of any
license or regulatory permit that appears to be material to the business of the
Company that might be adversely affected by the Purchaser's acquisition of
Shares as contemplated herein or of any approval or other action by a domestic
or foreign governmental, administrative or regulatory agency or authority that
would be required or desirable for the acquisition and ownership of the Shares
by the Purchaser as contemplated herein. Should any such approval or other
action be required or desirable, the Purchaser and the Parent presently
contemplate that such approval or other action will be sought, except as
described below under "State Takeover Laws." While, except as otherwise
described in this Offer to Purchase, the Purchaser does not presently intend to
delay the acceptance for payment of or payment for Shares tendered pursuant to
the Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if needed, would be obtained, or would be
obtained without substantial conditions, or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of or other substantial conditions complied with in the
event that such approvals were not obtained or such other actions were not taken
in order to obtain any such approval or other action. If certain types of
adverse action are taken with respect to the matters discussed below, the
Purchaser could decline to accept for payment or pay for any Shares tendered.
See Section 14 for certain conditions to the Offer, including conditions with
respect to governmental actions.
State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL prevents an "interested
stockholder" (e.g., a person who owns or has the right to acquire 15% or more of
a corporation's outstanding voting stock) from engaging in a "business
combination" (defined to include mergers and certain other transactions) with a
Delaware corporation for a period of three years following the time such person
became an interested stockholder unless, among other things, the corporation's
board of directors approves such business combination or the transaction in
which the interested stockholder becomes such prior to the time the interested
stockholder becomes such. The Company Board has unanimously approved the Offer,
the Merger and the Merger Agreement for the purposes of Section 203 of the DGCL.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However in 1987, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
Except as described above with respect to Section 203 of the DGCL, the
Purchaser has not attempted to comply with the takeover laws of any other state.
Should any person seek to apply any state takeover law, the Purchaser will take
such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer and the Merger. In such case,
the Purchaser may not be obligated to accept for payment any Shares tendered.
See Section 14.
The Company currently conducts business in California. Neither the Parent
nor the Purchaser knows whether any California takeover laws and regulations
will by their terms apply to the Offer, and, except as set
28
<PAGE> 32
forth above, neither the Parent nor the Purchaser has currently complied with
any other state takeover statute or regulation. The Purchaser reserves the right
to challenge the applicability or validity of any state law purportedly
applicable to the Offer and nothing in this Offer to Purchase or any action
taken in connection with the Offer is intended as a waiver of such right. If it
is asserted that any state takeover statute is applicable to the Offer and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer, the Purchaser might be required to file certain
information with, or to receive approvals from, the relevant state authorities,
and the Purchaser might be unable to accept for payment or pay for Shares
tendered pursuant to the Offer, or may be delayed in consummating the Offer. In
such case, the Purchaser may not be obligated to accept for payment or pay for
any Shares tendered pursuant to the Offer. See Section 14.
Antitrust. The Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") frequently
scrutinize the legality under the antitrust laws of transactions such as the
Purchaser's acquisition of Shares pursuant to the Offer and the Merger. At any
time before or after the Purchaser's acquisition of Shares, the Antitrust
Division or the FTC could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
acquisition of Shares pursuant to the Offer or otherwise or seeking divestiture
of Shares acquired by the Purchaser or divestiture of substantial assets of the
Parent or its subsidiaries. Private parties, as well as state governments, may
also bring legal action under the antitrust laws under certain circumstances.
Based upon an examination of information provided by the Company relating to the
businesses in which the Parent and the Company are engaged, the Parent and the
Purchaser believe that the acquisition of Shares by the Purchaser will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer or other acquisition of Shares by the Purchaser on
antitrust grounds will not be made or, if such a challenge is made, of the
result. See Section 14 for certain conditions to the Offer, including conditions
with respect to injunctions and certain governmental actions.
Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral. As described in Section 13
of this Offer to Purchase, the financing of the Offer will not be directly or
indirectly secured by the Shares or other securities which constitute margin
stock. Accordingly, all financing for the Offer will be in full compliance with
the Margin Regulations.
16. FEES AND EXPENSES.
Except as set forth below, neither National Fuel, the Parent nor the
Purchaser will pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of Shares pursuant to the Offer.
The Purchaser has retained ChaseMellon Shareholder Services, LLC to act as
the Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, facsimile, telegraph and personal
interviews and may request brokers, dealers and other nominee stockholders to
forward materials relating to the Offer to beneficial owners of Shares. The
Information Agent will receive reasonable and customary compensation for its
services, will be reimbursed for certain reasonable out-of-pocket expenses and
will be indemnified against certain liabilities and expenses in connection
therewith, including certain liabilities under the federal securities laws.
In addition, ChaseMellon Shareholder Services, LLC, which acts as transfer
agent and registrar for the Company, has been retained by the Purchaser as the
Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the federal securities laws. Brokers, dealers, commercial
banks and trust companies will be reimbursed by the Purchaser for customary
mailing and handling expenses incurred by them in forwarding offering material
to their customers.
29
<PAGE> 33
17. MISCELLANEOUS.
The Purchaser is not aware of any jurisdiction where the making of the
Offer is prohibited by any administrative or judicial action pursuant to any
valid state statute. If the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of the Shares pursuant
thereto, the Purchaser may (except as described in Section 15 with respect to
state takeover laws), in its sole discretion, make a good faith effort to comply
with such state statute. If, after such good faith effort, the Purchaser cannot
comply with any such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such state.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Purchaser by one or more registered brokers or dealers
which are licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF NATIONAL FUEL, THE PARENT, THE PURCHASER OR THE
COMPANY NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS OFFER TO PURCHASE
NOR ANY PURCHASE PURSUANT TO THE OFFER, SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF NATIONAL FUEL,
THE PARENT, THE PURCHASER OR THE COMPANY SINCE THE DATE AS OF WHICH INFORMATION
IS FURNISHED OR THE DATE OF THIS OFFER TO PURCHASE.
National Fuel, the Parent and the Purchaser have filed with the Commission
a Schedule 14D-l, together with exhibits, pursuant to Rule 14d-3 of the General
Rules and Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer, and may file amendments thereto. In
addition, the Company has filed with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9 (including exhibits)
pursuant to Rule 14d-9 under the Exchange Act. Such statements and any
amendments thereto, including exhibits, may be inspected at, and copies may be
obtained from, the same places and in the same manner as set forth in Section 8
(except that they will not be available at the regional offices of the
Commission).
SENECA WEST CORP.
April 6, 1998
30
<PAGE> 34
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF NATIONAL FUEL, THE PARENT AND THE PURCHASER
1. Directors and Executive Officers of National Fuel. Set forth below is
the name, current business address, citizenship and the present principal
occupation or employment and material occupations, positions, offices or
employments for the past five years of each director and executive officer of
the National Fuel. Unless otherwise indicated, each person identified below is a
U.S. citizen employed by the National Fuel. The principal address of the
National Fuel and, unless otherwise indicated below, the current business
address for each individual listed below is 10 Lafayette Square, Buffalo, New
York 14203. Directors are identified by an asterisk.
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
*Philip C. Ackerman.................. Director since 1994, Senior Vice President; since 1995, Mr.
Ackerman has served as President of National Fuel Gas
Distribution Corporation and is also President of certain
subsidiaries of National Fuel. Mr. Ackerman has been
employed by National Fuel since 1968.
*Robert T. Brady..................... Director since March, 1995; Member of Executive Committee
and Compensation Committee. Mr. Brady has been the
President, Chief Executive Officer and a director of Moog,
Inc., a manufacturer of motion control systems and
components, for more than five years. He was appointed
Chairman of Moog, Inc. in February 1996.
Anna Marie Cellino.................. Secretary since 1995. Ms. Cellino was Assistant Secretary
from 1994 to 1995 and has been a Vice President of National
Fuel Gas Distribution Corporation since June 1994. Prior to
June 1994, she was an Assistant Vice President of National
Fuel Gas Distribution Corporation. She has been employed by
National Fuel or one of its affiliates since 1981.
*James V. Glynn...................... Director since December 1997; Member of the Audit Committee.
Mr. Glynn has been the President of Maid of the Mist
Corporation for more than five years.
*William J. Hill..................... Prior to his retirement in October, 1995, Mr. Hill served as
President of National Fuel Gas Distribution Corporation;
Director since September 1995; Member of Executive Committee
and Audit Committee. Mr. Hill was first employed by National
Fuel or one of its affiliated companies in October, 1949.
*Bernard J. Kennedy.................. Director since 1978, President since 1987, Chief Executive
Officer since 1988, and Chairman since 1989; Chairman of the
Executive Committee. Mr. Kennedy joined the National Fuel in
1958.
*Bernard S. Lee, Ph.D................ Director since June 1994; Member of Audit Committee. Mr. Lee
has been the President of the Institute of Gas Technology, a
not-for-profit research and educational institution in Des
Plaines, Illinois, for more than five years.
*Eugene T. Mann...................... Director since 1993; Member of Executive Committee and
Compensation Committee. Mr. Mann was the Executive Vice
President of Fleet Financial Group, a financial services
company where he was employed until his retirement more than
five years ago.
</TABLE>
31
<PAGE> 35
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
*George L. Mazanec................... Director since October 1996; Chairman of the Compensation
Committee and Member of the Executive Committee. Mr. Mazanec
has been the Advisor to the Chief Operating Officer of Duke
Energy Corporation since August 1997. Mr. Mazanec was the
Executive Vice President of PanEnergy Corp. and President
and C.E.O. of Texas Eastern Transmission Corporation from
1991 to 1993. From 1993 to 1996, he served as Vice Chairman
of PanEnergy Corp., and from 1996 to August 1997, he was an
Advisor to the C.E.O. of PanEnergy Corp.
Joseph Pawlowski.................... Treasurer for more than five years. Mr. Pawlowski is also
Senior Vice President and Treasurer of National Fuel Gas
Distribution Corporation and Secretary and Treasurer of
certain other subsidiaries of National Fuel.
*George H. Schofield................. Director since 1990; Chairman of the Audit Committee. Mr.
Schofield retired as Chairman of the Board of Zurn
Industries in March 1995 and, until October, 1994, he also
served as Chief Executive Officer of Zurn Industries, Inc.
Gerald T. Wehrlin................... Controller for more than five years. Mr. Wehrlin has also
been a Senior Vice President of National Fuel Gas
Distribution Corporation for more than five years. He has
been employed by National Fuel or one or more of its
affiliates since 1976. He has served as Controller of the
Parent for more than five years.
</TABLE>
2. Directors and Executive Officers of the Parent. Set forth below is the
name, current business address, citizenship and the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years of each director and executive officer of the Parent. Unless
otherwise indicated, each person identified below is a U.S. citizen employed by
the Parent. The principal address of the Parent and, unless otherwise indicated
below, the current business address for each individual listed below is 1201
Louisiana Street, Suite 400, Houston, Texas 77002. Directors are identified by
an asterisk.
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
*Philip C. Ackerman.................. Director since 1994. Mr. Ackerman serves as Director and
Senior Vice President of National Fuel and has served as
President of National Fuel Gas Distribution Corporation and
is the President of certain subsidiaries of the Parent. He
has been employed by National Fuel or one or more of its
affiliates since 1968. Mr. Ackerman's business address is 10
Lafayette Square, Buffalo, New York 14203.
*James A. Beck....................... Director since February 1997; President since October 1996.
Prior to becoming President of the Parent, Mr. Beck served
as the Executive Vice President from May 1995 to September
1996, and as Vice President from January 1994 to April 1995.
Mr. Beck has been employed by the Parent since 1989.
Don A. Brown........................ Vice President since May 1995. Mr. Brown has been employed
by the Parent since 1991.
*Bernard J. Kennedy.................. Chairman of the Board since February 1997. Mr. Kennedy also
serves as Director, President, Chief Executive Officer,
Chairman; and Chairman of the Executive Committee of
National Fuel. Mr. Kennedy's business address is 10
Lafayette Square, Buffalo, New York 14203.
Calvin H. Friedrich................. Treasurer since May 1995. Mr. Friedrich has been employed by
the Parent since 1981.
</TABLE>
32
<PAGE> 36
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
Gil E. Klefstad..................... Vice President since June 1997. Mr. Klefstad has been
employed by the Parent since 1995. Before that, Mr. Klefstad
served as General Manager of Transco Exploration from 1984
to 1995.
John F. McKnight.................... Vice President since May 1995. Mr. McKnight has been
employed by the Parent since 1991.
William M. Petmecky................. Senior Vice President and Secretary since 1995. Mr. Petmecky
has been employed by the Parent since 1979. He is also
Secretary and Treasurer of National Fuel Resources, Inc.
*David F. Smith...................... Director since November 1990. Mr. Smith has been the Senior
Vice President and Secretary of National Fuel Gas
Distribution Corporation for more than five years. He has
been employed by National Fuel or one or more of its
affiliates since 1978.
Emmett E. Wassell................... Vice President since 1995. Mr. Wassell has been with the
Parent since 1987.
Gerald T. Wehrlin................... Controller for over five years. Mr. Wehrlin has also served
as the Controller of National Fuel and as Senior Vice
President of National Fuel Gas Distribution Corporation for
more than five years. He has been employed by National Fuel
or one or more of its affiliated companies since 1976.
</TABLE>
3. Directors and Executive Officers of the Purchaser. Set forth below is
the name, current business address, citizenship and the present principal
occupation or employment and material occupations, positions, offices or
employments for the past five years of each director and officer of the
Purchaser. Unless otherwise indicated, each person identified below is a U.S.
citizen employed by the Purchaser. The principal address of the Purchaser and,
unless otherwise indicated below, the current business address for each
individual listed below is 1201 Louisiana Street, Suite 400, Houston, Texas
77002. Directors are identified by an asterisk.
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------- --------------------------------------------------
<S> <C>
Calvin H. Friedrich................. Vice President and Treasurer since the incorporation and
organization of the Purchaser in 1998.
*John McKnight....................... Director since the incorporation and organization of the
Purchaser in 1998; Vice President and Secretary since the
incorporation and organization of the Purchaser in 1998.
William M. Petmecky................. President since the incorporation and organization of the
Purchaser in 1998.
</TABLE>
33
<PAGE> 37
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for the Shares
and any other required documents should be sent by each stockholder of the
Company or such stockholder's broker-dealer, commercial bank, trust company or
other nominee to the Depositary as follows:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, LLC
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand:
Reorganization Department (201) 329-8936 Reorganization Department
Post Office Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
</TABLE>
Confirmation of Receipt of
Facsimile by Telephone:
(201) 296-4860
By Overnight Courier:
Reorganization Department
85 Challenger Road, Mail Drop -- Reorg
Ridgefield Park, NJ 07660
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent at its telephone numbers and locations listed below. You may also contact
your broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, LLC
450 West 33rd Street, 14th Floor
New York, New York 10001
BANKS AND BROKERS CALL COLLECT: (212) 273-8070
ALL OTHERS CALL TOLL-FREE: (800) 684-8823
34
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
HARCOR ENERGY, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED APRIL 6, 1998
BY
SENECA WEST CORP.,
A WHOLLY OWNED SUBSIDIARY OF
SENECA RESOURCES CORPORATION
WHICH IS A WHOLLY OWNED SUBSIDIARY OF
NATIONAL FUEL GAS COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, MAY 4, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, LLC
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand:
Reorganization Department (201) 329-8936 Reorganization Department
Post Office Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
</TABLE>
Confirmation of Receipt of
Facsimile by Telephone:
(201) 296-4860
By Overnight Courier:
Reorganization Department
85 Challenger Road, Mail Drop -- Reorg
Ridgefield Park, NJ 07660
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
THAT LISTED ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders if
certificates for Shares (as defined below) are to be forwarded herewith or if
delivery of Shares is to be made by book-entry transfer to the Depositary's
account at The Depository Trust Company ("DTC") or the Philadelphia Depository
Trust Company ("PDTC") (each, a "Book-Entry Transfer-Facility" and collectively,
the "Book-Entry Transfer Facilities") pursuant to the book-entry transfer
procedure described in Section 3 of the Offer to Purchase (as defined below).
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
Stockholders whose certificates are not immediately available or who cannot
deliver their certificates and all other documents required hereby to the
Depositary so that they are received prior to 12:00 Midnight, New York City
time, on Monday, May 4, 1998 (or if the Offer is extended as provided in the
Offer to Purchase, prior to the time specified in such extension) must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2 of this Letter of
Transmittal. DELIVERY OF DOCUMENTS TO THE PURCHASER OR THE PARENT (AS BOTH ARE
DEFINED BELOW) DOES NOT CONSTITUTE A DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY
MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name(s) of Tendering Institution:
- --------------------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE) [ ] DTC [ ] PDTC
Account Number ________ Transaction Code Number ________
[ ] CHECK HERE IF THE TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY PRIOR TO THE DATE
HEREOF AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
- --------------------------------------------------------------------------------
Window Ticket Number (if any)
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
- ---------------------------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery
- -------------------------------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility, if Delivered by Book-Entry
Transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
- --------------------------------------------------------------------------------
Transaction Code Number
- --------------------------------------------------------------------------------
BOXES ABOVE FOR USE BY ELIGIBLE INSTITUTIONS ONLY
2
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------------------
PRINT NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) CERTIFICATE(S) TENDERED
ON THE SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES
- ----------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders delivering shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the
Depositary are tendered. See Instruction 4.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF YOU CANNOT LOCATE YOUR CERTIFICATE(S) AND REQUIRE ASSISTANCE
IN REPLACING THEM. UPON RECEIPT OF NOTIFICATION BY THIS LETTER OF
TRANSMITTAL, THE COMPANY'S STOCK TRANSFER AGENT WILL CONTACT YOU DIRECTLY
WITH REPLACEMENT INSTRUCTIONS.
3
<PAGE> 4
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
STOCKHOLDER'S AGREEMENT
Ladies and Gentlemen:
The undersigned hereby tenders to Seneca West Corp., a Delaware corporation
(the "Purchaser"), the above-described shares (the "Shares") of common stock,
par value $.10 per share (the "Common Stock"), of HarCor Energy, Inc., a
Delaware corporation (the "Company"), at $2.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Purchaser's
Offer to Purchase, dated April 6, 1998 (the "Offer to Purchase"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which, together
with the Offer to Purchase, each as amended or supplemented from time to time,
constitute the "Offer"). The undersigned understands that the Purchaser reserves
the right to transfer or assign, in whole or in part from time to time, to one
or more direct or indirect wholly owned subsidiaries of the Parent (as defined
in the Offer to Purchase), the right to purchase Shares tendered pursuant to the
Offer.
Accordingly, the undersigned hereby deposits with you the above-described
certificates representing the Shares. Subject to, and effective upon, acceptance
for payment of and payment for the Shares validly tendered herewith in
accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Purchaser, all right, title and
interest in and to all Shares tendered hereby that are purchased pursuant to the
Offer (and any and all other distributions, rights, Shares or other securities
issued or issuable in respect thereof on or after March 31, 1998) and hereby
irrevocably constitutes and appoints the Depositary as the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares (and any
such other distributions, rights, Shares or other securities), with full power
of substitution and resubstitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Shares (and any such other distributions, rights, Shares, or other
securities), together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of the Purchaser, (b) present
such certificates (and any such other distributions, rights, Shares or other
securities) for cancellation and transfer of such Shares on the Company's books,
and (c) receive all benefits (including all dividends or distributions resulting
from any stock split, combination or exchange of Shares) and otherwise exercise
all rights of beneficial ownership of such Shares (and all such distributions,
rights, Shares or other securities), all in accordance with the terms of the
Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any other distributions, rights, Shares or other securities
issued or issuable in respect thereof on or after March 31, 1998
("Distributions")) and that the Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges,
encumbrances, conditional sales agreements or other obligations relating to the
sale or transfer thereof, and the same will not be subject to any adverse claim,
when and to the extent the same are purchased by the Purchaser. Upon request,
the undersigned will execute and deliver any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby. In addition, the
undersigned shall promptly remit and transfer to the Depositary for the account
of the Purchaser any such Distributions issued to the undersigned, in respect of
the tendered Shares, accompanied by documentation of transfer, and pending such
remittance or appropriate assurance thereof, the Purchaser shall be entitled to
all rights and privileges as owner of any such Distributions and, subject to the
terms of the Merger Agreement (as defined in the Offer to Purchase), may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by the Purchaser in its sole discretion.
The undersigned hereby irrevocably appoints William M. Petmecky and John F.
McKnight and each of them, and any other designee of the Purchaser, and each of
them, the attorneys and proxies of the undersigned, each with full power of
substitution, to vote in such manner as such attorney and proxy or his
substitute shall in his sole discretion deem proper, and otherwise to act
(including pursuant to written consent) with respect to all the Shares tendered
hereby which have been accepted for payment by the Purchaser prior to the time
of such vote or other action (whether at an annual, special, adjourned or
postponed meeting or by means of written consent in lieu of such meetings or
otherwise) of the Company's stockholders or otherwise and any and all other
shares of capital stock or other securities issued or issuable in respect of
such Shares on or after March 31, 1998. This appointment is effective upon the
purchase of such Shares by the Purchaser
4
<PAGE> 5
as provided in the Offer to Purchase. This proxy is irrevocable and coupled with
an interest and is granted in consideration of the purchase of such Shares. Such
purchase shall revoke all prior proxies given by the undersigned at any time
with respect to such Shares (and such other distributions, rights, Shares or
other securities issued by the undersigned at any time with respect to such
Shares (and such other distributions, rights, Shares or other securities issued
in respect thereof) and no subsequent proxies will be given with respect thereto
by the undersigned, and if given shall not be valid. The Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser must be able to exercise full voting and other rights with respect to
such Shares, including voting at any meeting of stockholders then scheduled.
The undersigned understands that the valid tender of Shares pursuant to one
of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute an agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, the Purchaser may not be required to accept for payment any of the
tendered Shares. The Purchaser's acceptance for payment of Shares pursuant to
the Offer will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, trustees
in bankruptcy and legal representatives, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of any Shares
purchased and/or return any certificates for Shares not tendered or not accepted
for payment in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price for any Shares purchased and return any certificates for Shares
not tendered or accepted for payment (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing under
"Descriptions of Shares Tendered." In the event that the boxes entitled "Special
Payment Instructions" and "Special Delivery Instructions" are both completed,
please issue the check for the purchase price of all Shares purchased and return
all certificates representing Shares not purchased or not tendered in the
name(s) of, and mail such check and certificates to, the person(s) so indicated.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please credit any Shares tendered hereby and delivered by
book-entry transfer, but which are not purchased, by crediting the account at
the Book-Entry Transfer Facility designated above. The undersigned recognizes
that the Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if the Purchaser does not purchase any of the Shares tendered hereby.
5
<PAGE> 6
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Certificates evidencing Shares not tendered or not purchased are to
be issued in the name of someone other than the undersigned, or if Shares
tendered hereby and delivered by book-entry transfer which are not purchased are
to be returned by credit to an account at one of the Book-Entry Transfer
Facilities other than that designated above.
Issue [ ] check [ ] Certificate(s) to:
Name:
-----------------------------------------------------
(PRINT)
Address:
-------------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
[ ] Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:
Check appropriate box:
[ ] DTC [ ] PDTC
Account Number
------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Certificates evidencing Shares not tendered or not purchased are to
be mailed to someone other than that shown under "Description of Shares
Tendered."
Mail [ ] check [ ] Certificate(s) to:
Name:
-----------------------------------------------------
(PRINT)
Address:
-------------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
6
<PAGE> 7
STOCKHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF OWNER(S))
- --------------------------------------------------------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by an officer of a corporation, trustee, executor,
administrator, guardian, attorney or other person acting in a fiduciary or
representative capacity, please set forth full title. See Instruction 5. For
information concerning signature guarantees, see Instruction 1.)
Dated:
- --------------------------------------- , 1998
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title):
- --------------------------------------------------------------------------------
(SEE INSTRUCTIONS)
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
- ----------------------------------------------------------------
GUARANTEE OF SIGNATURES
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY, PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------- , 1998
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution which is a bank, broker, dealer, credit union, savings association
or other entity that is a member in good standing in the Security Transfer
Agents Medallion Program (each an "Eligible Institution"). No signature
guarantee is required on this Letter of Transmittal (a) if this Letter of
Transmittal is signed by the registered holder(s) (which term, for purposes of
this document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares) of
Shares tendered herewith, unless such holder(s) has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" above, or (b) if such Shares are tendered for the account of an
Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders either
if certificates for Shares are to be forwarded herewith or if a tender of Shares
is to be made pursuant to the procedures for delivery by book-entry transfer set
forth in Section 3 of the Offer to Purchase. For Shares to be validly tendered
pursuant to the Offer, (i) a Letter of Transmittal (or facsimile thereof)
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of the Depositary's
addresses set forth herein and either certificates or a timely Book-Entry
Confirmation for tendered Shares must be received by the Depositary at one of
such addresses, in each case prior to the Expiration Date (as defined in the
Offer to Purchase), or (ii) the tendering stockholder must comply with the
guaranteed delivery procedure set forth below.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedures, (i) such tender must be made by or through an Eligible Institution,
(ii) a properly completed Notice of Guaranteed Delivery provided by the
Purchaser (or facsimile thereof) must be duly executed and received by the
Depositary prior to the Expiration Date and (iii) the certificates for all
physically tendered Shares, or a Book-Entry Confirmation with respect to all
tendered Shares, together with this Letter of Transmittal (or facsimile thereof)
properly completed and duly executed with any required signature guarantees, and
any other documents required by this Letter of Transmittal, must be received by
the Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to
Purchase. A "trading day" is any day on which the National Association of
Securities Dealers, Inc. Automated Quotation National Market System is open for
business.
The stockholder understands that tenders of Shares pursuant to any one of
the procedures described in "Procedures for Tendering Shares" -- Section 3 of
the Offer to Purchase and in the instructions hereto will constitute a binding
agreement between the stockholder and the Purchaser upon the terms and
conditions of the Offer.
THE METHOD OF DELIVERY OF STOCK CERTIFICATES AND OTHER DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING STOCKHOLDER AND DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED OF THE DEPOSITARY. IF SENT BY MAIL, REGISTERED MAIL
RETURN RECEIPT REQUIRED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractions of Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal, waive any right to receive any notice of the
acceptance of their Shares for payment.
3. Inadequate Space. If the space provided is inadequate, the certificate
numbers and number of Shares should be listed on a separate signed schedule and
attached hereto.
4. Partial Tenders. If fewer than all of the Shares evidenced by any
certificate are to be tendered, fill in the number of Shares which are to be
tendered in the column entitled "Number of Shares Tendered." A new certificate
for the remainder of the Shares evidenced by your old certificate(s) will be
sent to you as soon as practicable after the Expiration
8
<PAGE> 9
Date. All Shares represented by certificates delivered to the Depositary are
deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the names as written on the face of the certificate(s) without
any change whatsoever.
(b) If the Shares tendered are held of record by two or more joint
holders, all such holders must sign this Letter of Transmittal.
(c) If any Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
(d) If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, no endorsements of certificates or
separate stock powers are required. If, however, payment is to be made to,
or the certificates for Shares not tendered or accepted for payment are to
be issued to, a person other than the registered holder(s), then the
certificates transmitted hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of
the registered holder(s) appears on the certificates. Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
(e) If this Letter of Transmittal is signed by a person other than the
registered holder of the certificates tendered, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the
certificates. Signatures on such certificates or stock powers required by
Instruction 1 above must be guaranteed by an Eligible Institution.
(f) If this Letter of Transmittal or any certificates or stock powers
are signed by officers of corporations, trustees, executors,
administrators, guardians, attorneys-in-fact or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and must submit proper evidence satisfactory to the Purchaser of
their authority so to act.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6, the
Purchaser will pay, or cause to be paid, any stock transfer taxes with respect
to the transfer and sale of Shares to it or its assignee pursuant to the Offer.
If, however, payment of the purchase price is to be made to, or if certificates
for Shares not tendered or accepted for payment are to be registered in the name
of, any persons other than the registered holder(s), or if tendered certificates
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder or such person) payable on the account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or certificate(s)
representing Shares not tendered or not purchased are to be issued, in the name
of a person other than the person(s) signing this Letter of Transmittal or if
such check or any such certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered", the appropriate boxes in this Letter
of Transmittal must be completed. Stockholders delivering Shares tendered hereby
by book entry transfer may request that Shares not purchased be credited to such
account maintained at a Book-Entry Transfer Facility as such stockholder may
designate in the box entitled "Special Payment Instructions". If no such
instructions are given, all such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated herein as
the account from which such Shares were delivered.
8. Irregularities. All questions as to the validity, form, eligibility
(including timeliness of receipt) and acceptance for payment, of any tender of
Shares will be determined by the Purchaser, in its sole discretion, which
determination shall be final and binding on all parties. The Purchaser reserves
the absolute right to reject any or all tenders of any Shares
9
<PAGE> 10
determined by it to be not in appropriate form or the acceptance of or payment
for which may, in the opinion of the Purchaser's counsel, be unlawful. The
Purchaser also reserves the absolute right to waive any of the conditions of the
Offer or any defect or irregularity in any tender with respect to any particular
Shares or any particular stockholder, and the Purchaser's interpretations of the
terms and conditions of the Offer (including these instructions) shall be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders must be cured within such time as the Purchaser shall
determine. None of the Purchaser, the Depositary, the Information Agent or any
of their respective affiliates or any other person will be under any duty to
give notification of any defects or irregularities in tenders, or incur any
liability for failure to give such notification. Tenders will not be deemed to
have been validly made until all defects and irregularities have been cured or
waived.
9. Substitute Form W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9. Failure to provide the information on the form may subject
the tendering stockholder to 31% federal income tax withholding on any amount
otherwise payable to the stockholder. The box in Part 2 of the form may be
checked if the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future. If the box in
Part 2 is checked and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% on all payments of the purchase price
thereafter until a TIN is provided to the Depositary. See "Important Tax
Information" below.
10. Requests for Assistance or Additional Copies. Requests for assistance
or additional copies of the Offer to Purchase and this Letter of Transmittal may
be directed to the Information Agent at the address set forth or to your broker,
dealer, commercial bank or trust company.
11. Lost or Destroyed Certificates. If any certificate(s) representing
Shares has been lost or destroyed, the stockholder should check the appropriate
box on the third page of the Letter of Transmittal. The Company's stock transfer
agent will then instruct such stockholder as to the procedure to be followed in
order to replace the certificate(s). The stockholder may have to post a surety
bond of approximately 2% of the current market value of the stock. This Letter
of Transmittal and related documents cannot be processed until procedures for
replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF)
TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ALL OTHER
REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY (OR A FACSIMILE COPY
THEREOF) MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE
(AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct taxpayer identification number on Substitute
Form W-9. If such a stockholder is an individual, the taxpayer identification
number is such stockholder's Social Security number. For businesses and other
entities, the taxpayer identification number is its Employer Identification
Number. If the Depositary is not provided with the correct taxpayer
identification number, the stockholder may be subject to a $50 penalty imposed
by the Internal Revenue Service, and payments made to such stockholder with
respect to Shares purchased pursuant to the Offer may be subject to federal
income tax backup withholding. To prevent federal income tax backup withholding
on payments made to a stockholder with respect to Shares purchased pursuant to
the Offer, each stockholder is required to notify the Depositary with such
stockholder's correct taxpayer identification number by completing the form
certifying that the taxpayer identification number provided on Substitute Form
W-9 is correct (or that such stockholder is awaiting a taxpayer identification
number) and that (1) the stockholder has not been notified by the Internal
Revenue Service that such stockholder is subject to federal income tax backup
withholding as a result of failure to report all interest or dividends or (2)
the Internal Revenue Service has notified the stockholder that such stockholder
is no longer subject to federal income tax backup withholding.
Exempt stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these federal income tax backup
withholding and reporting requirements. In order for a foreign individual to
qualify as an exempt recipient, that stockholder must submit a statement, signed
under penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number of Substitute Form W-9 for
additional instructions.
10
<PAGE> 11
If federal income tax backup withholding applies, the Depositary is
required to withhold 31% of the payments made to a stockholder. Backup
withholding is not an additional tax. Rather, the tax liability of person
subject to federal income tax backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund
generally may be obtained.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the Social Security
number or Employer Identification Number of the registered holder of the Shares.
If the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guideline for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report.
NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN A $50
PENALTY IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF
31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE> 12
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PAYOR: [ ]
- -------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE
PART 1 -- PLEASE ENTER YOUR TIN IN THE BOX AT RIGHT AND TIN: ------------------
CERTIFY BY SIGNING AND DATING BELOW. Social Security Number
or Employer
Identification Number
-----------------------------------------------------------------------------------
Form W-9 Name (Please Print) PART 2
-------------------------------------------------------- Awaiting [ ]
DEPARTMENT OF THE TREASURY, Address TIN
INTERNAL REVENUE SERVICE --------------------------------------------------------
City State Zip Code
--------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION PART 3 -- CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: (1) the
NUMBER ("TIN") number shown on this form is my correct taxpayer identification number (or a TIN
AND CERTIFICATION has not been issued to me, I have mailed or delivered an application to receive a
TIN or intend to do so in the near future), (2) I am not subject to backup
withholding either because I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of a failure to
report all interest or dividends or the IRS has notified me that I am no longer
subject to backup withholding, and (3) all other information provided on this form
is true, correct and complete.
-----------------------------------------------------------------------------------
SIGNATURE-------------------------------------- DATE-------------------------
You must cross out item (2) above if you have been notified by the IRS that you are
currently subject to backup withholding because of under reporting interest or
dividends on your tax return.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT a taxpayer identification number
has been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable cash payments made to me will be withheld until I provide a taxpayer
identification number.
Signature
- ------------------------------------------------------------ Date
- ------------------------
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be directed
to the Information Agent as set forth below:
The Information Agent for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, LLC
450 West 33rd Street, 14th Floor
New York, New York 10001
BANKS AND BROKERS CALL COLLECT: (212) 273-8070
ALL OTHERS CALL TOLL-FREE: (800) 684-8823
12
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
HARCOR ENERGY, INC.
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates for shares (the "Shares") of Common Stock, par
value $.10 per share (the "Common Stock"), of HarCor Energy, Inc., a Delaware
corporation (the "Company"), are not immediately available, or if the procedure
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary at the address set forth
below prior to the Expiration Date (as defined in the Offer to Purchase). This
form may be delivered by hand to the Depositary or transmitted by telegram,
facsimile transmission or mail to the Depositary and must include a guarantee by
an Eligible Institution (as defined in the Offer to Purchase). See Section 3 of
the Offer to Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, LLC
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand:
Reorganization Department (201) 329-8936 Reorganization Department
Post Office Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Confirmation of Receipt of New York, NY 10271
Facsimile by Telephone:
(201) 296-4860
</TABLE>
By Overnight Courier:
Reorganization Department
85 Challenger Road, Mail Drop -- Reorg
Ridgefield Park, NJ 07660
---------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID
DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Seneca West Corp., a Delaware corporation
which is a wholly owned subsidiary of Seneca Resources Corporation, a
Pennsylvania corporation, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated April 6, 1998 (the "Offer to Purchase") and the
related Letter of Transmittal (which together constitute the "Offer"), receipt
of which is hereby acknowledged, the number of Shares (as such term is defined
in the Offer to Purchase), set forth below, pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Number of Shares:
- ---------------------------------
Certificate No(s). (if available):
- ------------------------------------------------------
Check ONE box if Shares will be tendered by book-entry transfer.
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
- ----------------------------------
Dated
- ------------------------------------ , 1998
Name(s) of Record Holder(s):
- ------------------------------------------------------
- ------------------------------------------------------
Please Type or Print
Address(es)
- ----------------------------------------
- ------------------------------------------------------
Zip Code
Area Code and Tel. No.
- ---------------------------
Signature(s)
- ---------------------------------------
Dated
- ------------------------------------ , 1998
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation with respect to such
Shares, in any such case together with a Letter of Transmittal (or facsimile
thereof) properly completed and duly executed, with any required signature
guarantees, or an Agent's Message, and any other required documents within three
trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
All capitalized terms used but not otherwise defined herein have the meanings
ascribed to them in the Offer to Purchase.
- ------------------------------------------------------
Name of Firm
- ------------------------------------------------------
Address
- ------------------------------------------------------
Zip Code
Area Code and Tel. No.
- ---------------------------
- ------------------------------------------------------
Authorized Signature
- ------------------------------------------------------
Title
- ------------------------------------------------------
Please Type or Print
Date
- ------------------------------------ , 1998
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HARCOR ENERGY, INC.
BY
SENECA WEST CORP.
A WHOLLY OWNED SUBSIDIARY OF
SENECA RESOURCES CORPORATION
WHICH IS A WHOLLY OWNED SUBSIDIARY OF
NATIONAL FUEL GAS COMPANY
AT
$2.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 4, 1998, UNLESS THE OFFER IS EXTENDED.
April 6, 1998
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We have been engaged by Seneca West Corp., a Delaware corporation (the
"Purchaser"), which is a wholly owned subsidiary of Seneca Resources
Corporation, a Pennsylvania corporation, (the "Parent"), to act as Dealer
Manager in connection with the Purchaser's offer to purchase all outstanding
shares (the "Shares") of Common Stock, $.10 par value per share (the "Common
Stock"), of HarCor Energy, Inc., a Delaware corporation (the "Company"), at a
purchase price of $2.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated April 6, 1998 (the "Offer to Purchase"), and
in the related Letter of Transmittal (which, together with any amendments and
supplements thereto, collectively constitute the "Offer") enclosed herewith. The
Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
March 31, 1998 (the "Merger Agreement"), among the Parent, the Purchaser and the
Company. All capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Offer to Purchase. Please furnish copies of
the enclosed materials to those of your clients for whom you hold Shares
registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated April 6, 1998;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of your
nominee, with space provided for obtaining such clients'
instructions with regard to the Offer;
4. The Notice of Guaranteed Delivery;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. A return envelope addressed to the Depositary.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
shares which, together with any shares beneficially owned by the Parent or the
Purchaser, represent at least a majority of the Shares outstanding on a fully
diluted basis.
<PAGE> 2
The Offer is also subject to other terms and conditions contained in the
Offer to Purchase. See Section 14 of the Offer to Purchase.
The Board of Directors of the Company has unanimously approved the Offer
and the Merger and the Merger Agreement, has determined that the terms of the
Offer and the Merger are fair to, and in the best interests of, the Company and
its stockholders, and recommends that stockholders accept the Offer and tender
their Shares.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay promptly after
the Expiration Date (as defined in the Offer to Purchase) for all Shares validly
tendered prior to the Expiration Date and not properly withdrawn as, if and when
the Purchaser gives written notice to the Depositary of the Purchaser's
acceptance of such Shares. Payment for Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares or a timely Book-Entry Confirmation (as defined in the Offer to
Purchase), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase) and (iii) any other documents required by the Letter of Transmittal.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates prior to the Expiration Date or to comply
with the book-entry transfer procedures on a timely basis, a tender may be
effected by following the guaranteed delivery procedures specified in Section 3
of the Offer to Purchase.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS
PROMPTLY. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MAY 4, 1998, UNLESS THE OFFER IS
EXTENDED.
Neither the Purchaser nor the Parent will pay any fees or commissions to
any broker or dealer or other person (other than the Dealer Manager, the
Depositary and the Information Agent, as described in the Offer to Purchase) in
connection with the solicitation of tenders of Shares pursuant to the Offer. The
Purchaser will, however, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary expenses incurred by them
in forwarding the enclosed offering materials to their customers. The Purchaser
will pay all stock transfer taxes applicable to its purchase of shares pursuant
to the Offer, subject to Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed material may be obtained from, the
Information Agent, ChaseMellon Shareholder Services, LLC, 450 West 33rd Street,
14th Floor, New York, New York 10001; Banks and Brokers Call Collect: (212)
273-8070; All Others Call Toll-Free: (800) 684-8823.
Very truly yours,
ChaseMellon Shareholder Services,
LLC,
as Information Agent
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY AFFILIATE THEREOF OR AUTHORIZE YOU OR ANY OTHER PERSON
TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF
ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HARCOR ENERGY, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED APRIL 6, 1998
BY
SENECA WEST CORP.,
A WHOLLY OWNED SUBSIDIARY OF
SENECA RESOURCES CORPORATION
WHICH IS A WHOLLY OWNED SUBSIDIARY OF
NATIONAL FUEL GAS COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, MAY 4, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated April 6,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the offer by Seneca West Corp., a Delaware corporation (the
"Purchaser"), which is a wholly owned subsidiary of Seneca Resources
Corporation, a Pennsylvania corporation (the "Parent"), to purchase for cash all
outstanding shares (the "Shares") of Common Stock, $.10 par value per share (the
"Common Stock"), of HarCor Energy, Inc., a Delaware corporation (the "Company").
We are the holder of record of Shares held by us for your account. A TENDER OF
SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION
ONLY AND CANNOT BE USE TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. All
capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Offer to Purchase.
Accordingly, we request your instructions as to whether you wish to tender
any of or all the Shares held by us for your account upon the terms and subject
to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $2.00 per Share, net to the seller in cash,
without interest thereon.
2. The Offer is being made for all outstanding Shares.
3. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER AND THE MERGER, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE
MERGER AND THE MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY AND ITS STOCKHOLDERS, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Monday, May 4, 1998, unless the Offer is extended by the
Purchaser. In all cases, payment for Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) the Share
Certificates or timely Book-Entry Confirmation of such Shares, if such
procedure is available, into the Depositary's account at the Book-Entry
Transfer Facilities pursuant to the procedures set forth in Section 3 of
the Offer to Purchase, (ii) the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message
and (iii) any other documents required by the Letter of Transmittal.
<PAGE> 2
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares which, together with any Shares beneficially owned by the
Parent or the Purchaser, represent at least a majority of the Shares
outstanding on a fully diluted basis.
6. The Offer is being made pursuant to an Agreement and Plan of Merger
dated as of March 31, 1998 (the "Merger Agreement"), among the Parent, the
Purchaser and the Company. The Merger Agreement provides that the Purchaser
will be merged (the "Merger") with and into the Company after the
completion of the Offer and the satisfaction of certain conditions. As a
result of the Merger, each Share issued and outstanding immediately prior
to the Effective Time (as defined in the Merger Agreement) (other than
Dissenting Shares (as defined in the Merger Agreement) and Shares then
owned by the Company, the Parent, the Purchaser, or any of their respective
affiliates) will be converted into the right to receive the price paid in
the Offer in cash, without interest.
7. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser pursuant to the Offer will be borne by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any of or all your Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth on the reverse side of this letter. An
envelope to return your instructions to us is enclosed. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
specified below in this letter. Your instructions to us should be forwarded in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Offer is not being made to, nor will tenders be accepted from,
or on behalf of, holders of Shares in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. If the securities laws of any jurisdiction require the Offer
to be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of the Purchaser by one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HARCOR ENERGY, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
to Purchase, dated April 6, 1998, of Seneca West Corp., a Delaware corporation
and wholly owned subsidiary of Seneca Resources Corporation, a Pennsylvania
corporation, and the related Letter of Transmittal, relating to shares (the
"Shares") of Common Stock, $.01 par value per share (the "Common Stock"), of
HarCor Energy, Inc., a Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in such
Offer to Purchase and related Letter of Transmittal.
Dated: , 1998
NUMBER OF SHARES TO BE TENDERED*
--------------- SHARES
I (we) understand that if I (we) sign this instruction form without
indicating a lesser number of Shares in the space above, all Shares held by you
for my (our) account will be tendered.
SIGN HERE
- --------------------------------------------------------------------------------
Signature(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Print Name(s)
- --------------------------------------------------------------------------------
Print Address(es)
- --------------------------------------------------------------------------------
Area Code and Telephone Number(s)
- --------------------------------------------------------------------------------
Tax ID or Social Security Number(s)
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by your
firm for my (our) account are to be tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payer.
- ---------------------------------------------------------
---------------------------------------------------------
<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL
SECURITY
NUMBER OF --
- ---------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
IDENTIFICATION
NUMBER OF --
- ---------------------------------------------------------
<C> <S> <C>
1. An individual's account. The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, the first
individual on the
account(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also trustee)
b So-called trust account The actual owner(1)
that is not a legal or
valid trust under State
law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a State or local government,
school district, or prison)
that receives agricultural
program payments
</TABLE>
- ---------------------------------------------------------
---------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE:If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a)
- An exempt charitable remainder trust under section 664, or a non-exempt trust
described in section 4947.
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
- A futures commission merchant registered with the Commodity Futures Trading
Commission.
- A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc. Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid to the payer.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see section 6041, 6041A(a), 6042, 6044, 6045, 6049,
6050A, and 6050N and their regulations.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. IRS uses the numbers for identification
purposes and to help verify the accuracy of your return. Payers must be given
the numbers whether or not recipients are required to file tax returns. Payers
must generally withhold 31% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
EXHIBIT (a)(7)
NEWS RELEASE
January 23, 1998
Contact: Mark Harrington, Chairman and Chief Executive Officer
Gary S. Peck, V.P. Finance and Chief Financial Officer
Fran Reeder, Investor Relations
713-961-1804
HARCOR ENERGY ANNOUNCES PROPOSED SALE OF COMPANY.
Houston, Texas, January 23, 1998 -- HarCor Energy, Inc. (NASDAQ NMS: HARC)
today reported reaching an agreement in principle with Seneca Resources
Corporation for the sale of HarCor to Seneca for a total cash price of
$32,536,000, or $2.00 per share of HarCor Common Stock. The sale is subject to
the preparation and execution of a definitive agreement, satisfactory
completion of the audit of HarCor's financial statements for the year ended
December 31, 1997, receipt of all required approvals, including approval of
HarCor's stockholders, satisfactory completion of the previously announced sale
of HarCor's non-California assets for $13.2 million (the proceeds of which
would be effectively acquired by Seneca in connection with its purchase of
HarCor), and completion by Seneca of a satisfactory due diligence review of
HarCor's assets, liabilities and business.
Closing of the proposed sale is expected to occur by June.
HarCor and Seneca are energy companies headquartered in Houston. Seneca is a
wholly-owned subsidiary of National Fuel Gas Co.
HarCor Energy, Inc. is a Houston-based independent energy company engaged in
the acquisition, exploitation and exploration of onshore crude oil and natural
gas properties in the United States.
<PAGE> 1
EXHIBIT (a)(8)
NEWS RELEASE
MARCH 31, 1998
CONTACT: MARK HARRINGTON, CHAIRMAN
FRANCIS ROTH, PRESIDENT
FRAN REEDER, INVESTOR RELATIONS
SENECA RESOURCES CORPORATION AND
HARCOR ENERGY, INC. ANNOUNCE
EXECUTION OF MERGER AGREEMENT
Houston, Texas, March 31, 1998 -- Seneca Resources Corporation, the
exploration and production subsidiary of National Fuel Gas Company (NYSE:
NGF), and HarCor Energy, Inc. (NASDAQ NMS: HARC) today jointly announced that
the two companies have signed a definitive merger agreement for the acquisition
of HarCor by Seneca for a total price of approximately $32.5 million in cash.
Under the terms of the agreement, a subsidiary of Seneca will commence
a tender offer no later than April 6, 1998, to acquire all of the outstanding
shares of HarCor's Common Stock for $2.00 per share in cash. Following
completion of the tender offer, the Seneca subsidiary will merge with HarCor,
pursuant to which the remaining HarCor stockholders will also receive $2.00 per
share in cash.
Chase Mellon Shareholder Services, LLC will act as Information Agent
for the tender offer. SBC Warburg Dillon Read Inc. served as financial advisor
to HarCor and has provided a fairness opinion in connection with the
transaction.
HarCor is a Houston-based independent oil and gas company with
properties located primarily on the west side of the San Joaquin Basin in Kern
County, California. The properties produce gas and high gravity oil and
provide for additional drilling and development over the next four years.
According to James Beck, President of Seneca Resources, "The
acquisition of HarCor will establish Seneca as a significant independent
producer in California. These reserves, combined with our activity in the Gulf
of Mexico and Appalachian Basin, provide the groundwork for our future growth."
National Fuel Gas Company is an integrated energy company with
operations in all segments of the natural gas industry, including utility,
pipeline and storage, exploration and production, and marketing operations.
Seneca is headquartered in Houston and explores for and produces natural gas
and oil in the lower 48 States and the Gulf of Mexico.
The tender offer and merger are subject to customary conditions,
including the tender of a majority of HarCor's shares and the occurrence of no
material adverse change in HarCor prior to the closing. The tender offer will
be made pursuant to definitive documents to be filed with the Securities and
Exchange Commission.
Statements contained in this press release which are not historical
facts are forward-looking statements. Such forward-looking statements are
necessary estimates reflecting the best judgment of the party making such
statements based upon current information and involve a number of risk and
uncertainties. Forward-looking statements contained in this press release or
in other public statements of the parties should be considered in light of
those factors. There can be no assurance that such factors or other factors
will not affect the accuracy of such forward-looking statements.
<PAGE> 1
EXHIBIT (a)(9)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase dated April 6, 1998 and the related Letter of
Transmittal and is being made to all holders of Shares. The Purchaser (as
defined below) is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser may, in its sole discretion, make a good faith effort to comply with
that state statute. If, after that good faith effort, Purchaser cannot comply
with that state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in that state. In any
jurisdiction, the securities, blue sky or other laws of which require the Offer
to be made by a licensed broker or dealer, the Offer shall be deemed made on
behalf of Purchaser by one or more registered brokers or dealers licensed under
the laws of that jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HARCOR ENERGY, INC.
AT
$2.00 NET PER SHARE
BY
SENECA WEST CORP.,
A WHOLLY OWNED SUBSIDIARY OF
SENECA RESOURCES CORPORATION
WHICH IS A WHOLLY OWNED SUBSIDIARY OF
NATIONAL FUEL GAS COMPANY
<PAGE> 2
Seneca West Corp. (the "Purchaser"), a Delaware corporation and a
wholly owned subsidiary of Seneca Resources Corporation (the "Parent"), a
Pennsylvania corporation is offering to purchase all outstanding shares (the
"Shares") of common stock, par value $.10 per share, of HarCor Energy, Inc.
(the "Company"), a Delaware corporation, at $2.00 per Share, net to the seller
in cash, upon the terms, and subject to the conditions set forth in the Offer
to Purchase dated April 6, 1998 and in the related Letter of Transmittal (which
together constitute the "Offer"). Following the Offer, the Purchaser intends
to effect the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK TIME,
ON MONDAY, MAY 4, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, A NUMBER OF
SHARES WHICH, TOGETHER WITH ANY SHARES BENEFICIALLY OWNED BY NATIONAL FUEL GAS
COMPANY, THE PARENT OR THE PURCHASER, REPRESENT AT LEAST A MAJORITY OF THE
SHARES OUTSTANDING ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS CONTAINED IN THE OFFER TO PURCHASE.
The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of March 31, 1998 (the "Merger Agreement"), among the Parent, the
Purchaser and the Company pursuant to which, among other things, following
consummation of the Offer or the expiration or termination of the Offer under
certain circumstances and the satisfaction or waiver of certain conditions and
in accordance with relevant provision of the Delaware General Corporation Law,
the Purchaser will be merged with and into the Company (the "Merger").
Following consummation of the Merger, the Company will continue as the
surviving corporation (the "Surviving Corporation") and will become a wholly
owned subsidiary of the Parent. At the effective time of the Merger, each
outstanding Share (other than Shares owned by National Fuel Gas Company, the
Parent, the Purchaser and Shares held by stockholders who perfect their
dissenters' rights under Delaware law) will be converted into the right to
receive in cash the amount per Share paid pursuant to the Offer, without
interest.
Under the Company's Certificate of Incorporation and Delaware law, the
affirmative vote of the holders of a majority of the outstanding Shares is
required to approve and adopt the Merger Agreement and the Merger. If at least
90% of the outstanding Shares are tendered in the Offer and accepted for
payment by the Purchaser, the Purchaser will have sufficient voting power to
cause the approval and adoption of the Merger Agreement and the transactions
contemplated thereby without the affirmative vote of any other stockholder.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER AND THE MERGER AND THE MERGER AGREEMENT AND DETERMINED THAT EACH OF THE
OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND
ITS STOCKHOLDERS, AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment, and thereby purchased, Shares validly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or written
notice to ChaseMellon Shareholder Services, LLC (the "Depositary") of the
Purchaser's acceptance for payment of those Shares pursuant to the Offer.
Payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment
-2-
<PAGE> 3
from the Purchaser and transmitting payment to tendering stockholders whose
Shares have been accepted for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (a) certificates evidencing those Shares pursuant to the
procedure set forth in Section 2 of the Offer to Purchase or timely
confirmation of book-entry transfer of those Shares into the Depositary's
account at the Book-Entry Transfer Facilities (as defined in Section 2 of the
Offer to Purchase), pursuant to the procedure set forth in Section 3 of the
Offer to Purchase, (b) a Letter of Transmittal (or facsimile thereof) properly
completed and duly executed with any required signature guarantees or an
Agent's Message (as defined in Section 2 of the Offer to Purchase) in
connection with a book-entry transfer, and (c) any other documents required by
the Letter of Transmittal. Under no circumstances will interest be paid by the
Purchaser on the purchase price of Shares, regardless of any delay in making
that payment.
The Purchaser expressly reserves the right, in its sole discretion
(subject to the terms of the Merger Agreement), at any time or from time to
time, and regardless of whether or not any of the events set forth in Section
14 of the Offer to Purchase shall have occurred or shall have been determined
by the Purchaser to have occurred, to extend the period of time during which
the Offer is open and thereby delay acceptance for payment of, and payment for,
and Shares, by giving oral or written notice of that extension to the
Depositary. The Purchaser shall not have any obligation to pay interest on the
purchase price for tendered Shares in the event the Purchaser exercises the
right to extend the period of time during which the Offer is open. There can
be no assurance that the Purchaser will exercise its right to extend the Offer.
Any such extension will be followed by a public announcement thereof no later
than 9:00 a.m. New York City time, on the next business day after the
previously scheduled expiration date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of each tendering stockholder to withdraw that stockholder's
Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
12:00 midnight, New York City time, on May 4, 1998 (or, if the Purchaser shall
have extended the period of time during which the Offer is open, the latest
time and date at which the Offer, as so extended by the Purchaser shall
expire), and unless theretofore accepted for payment, may also be withdrawn at
any time after June 8, 1998. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at its address set forth on the back cover of the
Offer to Purchase and must specify the name of the person having tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of the Shares to be withdrawn, if different from the name
of the person who tendered the Shares. If certificates evidencing Shares have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of those certificates, the serial numbers shown on those
certificates must be submitted to the Depositary and, unless those Shares have
been tendered by an Eligible Institution (as defined in Section 2 of the Offer
to Purchase), the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution. If Shares have been delivered pursuant to the
procedure for book-entry transfer set forth in Section 3 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with the Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 3 of the Offer to Purchase at any time
prior to the Expiration Date. All questions as to the form and validity
(including the time of receipt) of any notice of withdrawal will be determined
by the Purchaser, in its sole discretion, whose determination shall be final
and binding on all parties.
The Company has provided Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the stockholder lists of the
-3-
<PAGE> 4
Company or, if applicable, who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii)
promulgated under the Securities Exchange Act of 1934, as amended, is contained
in the Offer to Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO
THE OFFER.
Questions and requests for assistance or for additional copies of the
Offer to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at the Purchaser's expense. No fees or
commissions will be paid to brokers, dealers or other persons for soliciting
tenders of Shares pursuant to the Offer.
The Information Agent of the Offer is:
[LOGO] CHASEMELLON SHAREHOLDER SERVICES, LLC
450 West 33rd Street, 14th Floor
New York, New York 10001
BANKS AND BROKERS CALL COLLECT: (212) 273-8070
ALL OTHERS CALL TOLL-FREE: (800) 684-8823
April 6, 1998
-4-
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
among
HARCOR ENERGY, INC.
and
SENECA WEST CORP.
and
SENECA RESOURCES CORPORATION
Dated as of March 31, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
THE OFFER
<S> <C>
1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Company Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Stockholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
THE MERGER
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 Consideration; Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.9 Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Options and Other Purchase Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.12 Company Stockholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.13 Merger Without Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.14 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 SEC Reports; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Schedule 14D9; Offer Documents and Company Proxy Statement . . . . . . . . . . . . . . . . . . . . . 11
3.8 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.9 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.14 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.15 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.16 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.17 Certain Business Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.18 Permits; Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.19 Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.21 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
<S> <C>
4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.6 Offer Documents; Company Proxy Statement; Schedule 14D9 . . . . . . . . . . . . . . . . . . . . . . 23
4.7 Financing; Sufficient Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.8 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.9 Operations of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
COVENANTS
5.1 Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2 Access; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.3 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.4 Notice of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.5 Company Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.6 State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.7 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.8 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.9 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.10 D&O Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.11 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions to Obligations of Each Party to Effect the Merger . . . . . . . . . . . . . . . . . . . . 31
6.2 Conditions Precedent to the Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . 31
6.3 Conditions Precedent to the Obligations of Parent and Purchaser . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
TERMINATION
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE VIII
MISCELLANEOUS
<S> <C> <C>
8.1 No Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.3 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.5 Assignment; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.6 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.7 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.10 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
-iii-
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of March 31, 1998 by and among
HarCor Energy, Inc., a Delaware corporation (the "Company"), Seneca Resources
Corporation, a Pennsylvania corporation ("Parent"), and Seneca West Corp., a
Delaware corporation and wholly owned indirect subsidiary of Parent
("Purchaser").
RECITALS
WHEREAS, the respective Boards of Directors of the Company, Parent and
Purchaser have unanimously approved the acquisition of the Company by Parent,
upon the terms and subject to the conditions set forth herein;
WHEREAS, it is intended that the acquisition be accomplished by
Purchaser commencing a cash tender offer for Shares (as defined in Section 1.1)
to be followed by a merger of Purchaser with and into the Company; and
NOW, THEREFORE, in consideration of the foregoing and of the
respective representations, warranties, covenants and agreements set forth in
this Agreement, the parties hereto hereby agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer.
(a) As promptly as practicable (but in no event later than five
business days following the public announcement of the execution hereof),
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), an offer to purchase
all of the Company's outstanding shares of common stock, par value $0.10 per
share (the "Shares"), at a price of $2.00 per Share, net to the seller in cash
(as such offer may be amended in accordance with the terms of this Agreement,
the "Offer"), subject to the conditions set forth in Annex A hereto. Purchaser
will not, without the prior written consent of the Company, (i) decrease or
change the form of the consideration payable in the Offer, (ii) decrease the
number of Shares sought pursuant to the Offer, (iii) impose additional
conditions to the Offer, (iv) change the conditions to the Offer, except that
Parent in its sole discretion may waive any of the conditions to the Offer
other than the condition set forth in clause (1) of Annex A, which may not be
waived without the Company's prior written consent, or (v) make any other
change in the terms or conditions of the Offer that is adverse to the holders
of Shares. Purchaser will, on the terms and subject to the prior satisfaction
or waiver of the conditions to the Offer, accept for payment and pay for all
Shares validly tendered and not withdrawn pursuant to the Offer promptly after
expiration of the Offer; provided that, Purchaser may extend the Offer up to
the tenth business day after the later of (i) the initial expiration date of
the Offer and (ii) the date on which all such conditions shall first have been
satisfied or waived. The Company agrees that no Shares held by the Company
will be tendered to Parent pursuant to the Offer; provided, that Shares held
beneficially or of record by any
<PAGE> 6
plan, program or arrangement sponsored or maintained for the benefit of
employees of the Company shall not be deemed to be held by the Company,
regardless of whether the Company has, directly or indirectly, the power to
vote or control the disposition of such Shares. The obligations of Purchaser
to commence the Offer and to accept for payment and to pay for Shares validly
tendered on or prior to the expiration of the Offer and not withdrawn shall be
subject only to the conditions set forth in Annex A hereto.
(b) On the date of commencement of the Offer, Parent and Purchaser
shall file or cause to be filed with the Securities and Exchange Commission
(the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with all
amendments thereto, the "Schedule 14D-1") with respect to the Offer, which
shall contain the offer to purchase and related letter of transmittal and other
ancillary offer documents and instruments pursuant to which the Offer will be
made (collectively, together with any supplements or amendments thereto, the
"Offer Documents"). Parent and Purchaser will disseminate the Offer Documents
to holders of Shares. Each of Parent, Purchaser and the Company will promptly
correct any information provided by it for use in the Offer Documents that
becomes false or misleading in any material respect and Parent and Purchaser
will take all steps necessary to cause the Offer Documents as so corrected to
be filed with the SEC and to be disseminated to holders of Shares, in each case
as and to the extent required by applicable law. The Company and its counsel
shall be given a reasonable opportunity to review and comment on the Offer
Documents prior to their filing with the SEC. Parent and Purchaser agree to
provide the Company with any comments that may be received from the SEC or its
staff with respect to the Offer Documents promptly after receipt thereof and to
further provide the Company with a reasonable opportunity to participate in all
substantive communications with the SEC and its staff relating to the Offer
Documents, the Offer or the transactions contemplated thereby.
1.2 Company Actions. The Company hereby consents to the Offer and
represents and warrants (i) that its Board of Directors (at meetings duly
called and held) (a) has unanimously determined as of the date hereof that the
Offer and the Merger are fair to and in the best interests of the stockholders
of the Company, (b) has unanimously approved this Agreement and resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement
and the Merger by the stockholders of the Company, (ii) that such approval
constitutes approval of this Agreement and the transactions contemplated hereby
for purposes of Section 203 of the DGCL and (iii) that the Board of Directors
will not withdraw, amend or modify such recommendation unless it determines in
good faith, on the advice of outside counsel, that such action is necessary for
the Board of Directors to comply with its duties to the Company's stockholders
under applicable law. On the date of the commencement of the Offer, the
Company shall file or cause to be filed with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
containing the unanimous recommendation of the Board of Directors in favor of
the Offer and the Merger and shall permit the inclusion in the Schedule 14D-1
of such recommendation, in each case subject to the fiduciary duties of the
Board of Directors of the Company. Each of the Company, Parent and Purchaser
will promptly correct any information provided by it for use in the Schedule
14D-9 that becomes false or misleading in any material respect and the Company
will take all steps necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable law. Parent and its counsel shall be
given a reasonable opportunity to review and comment on the Schedule 14D-9
prior to its filing with the SEC. The Company agrees to provide Parent with
any comments that may be
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received from the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt thereof and to further provide Parent with a reasonable
opportunity to participate in all substantive communications with the SEC and
its staff relating to the Schedule 14D-9, the Offer or the transactions
contemplated thereby.
1.3 Stockholder Lists. In connection with the Offer, the Company shall
promptly furnish or cause to be furnished to Purchaser mailing labels and
security position listings and any available listing or computer file
containing the names and addresses of the record holders of Shares as of a
recent date and shall furnish Purchaser with such information (including,
without limitation, updated lists of stockholders, mailing labels and lists of
securities positions) reasonably available to the Company and such assistance
as Parent or its agents may reasonably request in communicating the Offer to
the record and beneficial holders of Shares. Subject to the requirements of
applicable law and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Parent, Purchaser and their respective affiliates will hold in
confidence such listings and other information, shall use such information only
in connection with the Offer and the Merger and, if this Agreement is
terminated, shall, and shall cause their respective agents or other
representatives to, promptly deliver to the Company all copies of all such
information (and extracts or summaries thereof) then in their possession.
1.4 Directors. Promptly upon the purchase by Purchaser pursuant to the
Offer of such number of Shares as represents at least a majority of the
outstanding Shares and from time to time thereafter, Parent shall be entitled
to designate all members of the Board of Directors of the Company. The current
directors of the Company have indicated to the Parent that they intend to
resign as directors of the Company as soon as reasonably practicable upon the
Purchaser purchasing at least a majority of the outstanding Shares pursuant to
the Offer, and the Company shall exercise reasonable efforts to secure the
resignations of all directors to enable such Parent designees to be so elected
or appointed. Such designees will abstain from any action proposed to be taken
by the Company to amend or terminate this Agreement or waive any action by
Parent or Purchaser. The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange Act. At
the request of Parent, the Company shall take all action reasonably necessary
to effect any such election or appointment, including mailing to its
stockholders the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, unless such information previously has been
provided to the Company's stockholders in the Schedule 14D-9. Parent and
Purchaser will supply to the Company, and will be solely responsible for, all
information with respect to themselves and their officers, directors and
affiliates required by such Section and Rule.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions of this
Agreement, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), at the Effective Time (as defined below), Purchaser
shall be merged with and into the Company (the "Merger"). As a result of the
Merger, the separate corporate existence of Purchaser shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
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2.2 Closing. Unless this Agreement shall have been terminated pursuant to
Article VII and subject to the satisfaction or, if permissible, waiver of the
conditions set forth in Article VI, the consummation of the Merger and the
other transactions contemplated hereby (the "Closing") shall take place at the
offices of Vinson & Elkins, L.L.P., 1001 Fannin St., Houston, Texas 77002-6760
as promptly as practicable (and in any event within two business days)
following the satisfaction or, if permissible, waiver of the conditions set
forth in Article VI, unless another place, date or time is agreed to in writing
by Parent and the Company.
2.3 Effective Time. As promptly as practicable after the Closing, the
parties hereto will cause a certificate of merger (the "Certificate of Merger")
to be executed, acknowledged and filed with the Delaware Secretary of State in
accordance with the DGCL. The Merger shall become effective at such time as
the Certificate of Merger is filed with the Delaware Secretary of State in
accordance with the DGCL, or at such later time as may be agreed to by Parent
and the Company and specified in the Certificate of Merger in accordance with
applicable law. The date and time when the Merger shall become effective is
referred to herein as the "Effective Time."
2.4 Effect of the Merger. The Merger shall have the effects set forth in
the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all properties, rights,
privileges, powers and franchises of the Company and Purchaser shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Purchaser shall become the debts, liabilities and duties of the Surviving
Corporation.
2.5 Certificate of Incorporation and Bylaws. At the Effective Time, the
Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") and the Amended and Restated Bylaws (the "Bylaws") of the
Company, in each case as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation and the Bylaws of the Surviving
Corporation until thereafter amended as provided by law.
2.6 Directors and Officers. At the Effective Time, the officers and
directors of Purchaser immediately prior to the Effective Time shall become the
officers and directors of the Surviving Corporation, each to hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation and applicable law. The
Company shall use commercially reasonable efforts to cause each executive
officer and director of the Company to tender his or her resignation effective
at or before the Effective Time.
2.7 Consideration; Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of any of the parties hereto
or the holders of any of the following securities:
(a) Each Share that is issued and outstanding immediately prior to
the Effective Time (other than any Shares to be canceled pursuant to Section
2.7(b) and any Dissenting Shares, as defined in Section 2.11) shall be changed
and converted into and represent the right to receive $2.00 in cash, or any
higher price paid per Share in the Offer (the "Per Share Merger
Consideration"). All such Shares shall no longer be outstanding and shall
automatically be cancelled and extinguished and shall cease to exist, and each
certificate which immediately prior to the Effective Time
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evidenced any such Shares (other than Shares to be cancelled pursuant to
Section 2.7(b) and any Dissenting Shares) shall thereafter represent the right
to receive (without interest and less any applicable withholding of taxes),
upon surrender of such certificate in accordance with the provisions of Section
2.8, the Per Share Merger Consideration multiplied by the number of Shares
evidenced by such certificate (the "Merger Consideration"). The holders of
certificates previously evidencing Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect thereto (including,
without limitation, any rights to vote or to receive dividends and
distributions in respect of such Shares), except as otherwise provided herein
or by law.
(b) All Shares, which immediately prior to the Effective Time are
owned by Parent, Purchaser or their respective affiliates or held by the
Company in its treasury, shall be cancelled and extinguished and shall cease to
exist and no consideration shall be delivered with respect thereto.
(c) Each share of capital stock of Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation.
2.8 Exchange of Certificates.
(a) Paying Agent. As of the Effective Time, Parent shall,
pursuant to an agreement with its paying agent (the "Paying Agent"), deposit,
or cause to be deposited, with or for the account of the Paying Agent in trust
for the benefit of the holders of Shares (other than Shares to be cancelled
pursuant to Section 2.7(b) and any Dissenting Shares) for exchange through the
Paying Agent in accordance with this Article II, cash in the aggregate amount
required to be exchanged for Shares pursuant to Section 2.7 (the "Payment
Fund"). The Paying Agent shall, pursuant to irrevocable instructions, deliver
the Merger Consideration out of the Payment Fund to holders of Shares. The
Payment Fund shall not be used for any other purpose. The Paying Agent shall
invest funds in the Payment Fund only in short-term securities issued or
guaranteed by the United States government or certificates of deposit of
commercial banks that have consolidated total assets of not less than
$5,000,000,000 and are "well capitalized" within the meaning of the applicable
federal bank regulations. Any interest or other income earned on the
investment of funds in the Payment Fund shall be for the account of and payable
to the Surviving Corporation. Parent shall replace any monies lost through any
investment made pursuant to this Section 2.8.
(b) Payment Procedure. Promptly after the Effective Time, Parent
will cause the Paying Agent to mail to each holder of record of a certificate
or certificates that immediately prior to the Effective Time evidenced
outstanding Shares (other than Shares to be cancelled pursuant to Section
2.7(b) and any Dissenting Shares) ("Certificates"), (i) a notice of the
effectiveness of the Merger, (ii) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent
and shall be in such customary form and have such other provisions as Parent
may reasonably specify in accordance with the terms of this Agreement) and
(iii) instructions to effect the surrender of the Certificates in exchange for
the Merger Consideration. Upon surrender of a Certificate for cancellation to
the Paying Agent together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration and the
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Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, the Merger Consideration may be paid or issued to the
transferee if the Certificate representing such Shares is presented to the
Paying Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. In the event that any Certificate shall have been lost, stolen or
destroyed, the Paying Agent shall issue in exchange therefor, upon the making
of an affidavit of that fact by the holder thereof and such bond, security or
indemnity as Parent may reasonably require, the Merger Consideration that such
holder has the right to receive pursuant to the provisions of this Article II.
Until surrendered as contemplated by this Section 2.8, each Certificate shall
be deemed at any time after the Effective Time to evidence only the right to
receive upon such surrender the Merger Consideration applicable to the Shares
evidenced by such Certificate.
(c) Termination of Payment Fund. Any portion of the Payment Fund
that remains undistributed to the holders of Shares for six months after the
Effective Time shall be delivered to Parent upon demand, and any holders of
Shares who have not theretofore complied with this Article II shall thereafter
look, subject to Section 2.8(d), only to Parent or the Surviving Corporation
for the Merger Consideration to which they are entitled pursuant to this
Article II.
(d) Abandoned Property Laws. Neither the Surviving Corporation
nor the Paying Agent nor the Company, the Parent or any of their respective
affiliates shall be liable to any holder of a Certificate for any cash from the
Payment Fund properly delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) Transfer Taxes. Except as provided in paragraph (b) above,
Parent shall pay or cause to be paid any real property transfer, gains or
similar real property taxes imposed in connection with or as a result of the
Merger.
2.9 Stock Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed, and there shall be no further registration of
transfers of Shares thereafter on the records of the Company other than to
reflect transfers of Shares effected on or prior to the date on which and the
time at which the Effective Time occurs. At and after the Effective Time, any
Certificates presented to the Paying Agent or the Surviving Corporation for any
reason shall be converted into the Merger Consideration applicable to the
Shares evidenced thereby.
2.10 Options and Other Purchase Rights.
(a) The Company represents and warrants to the Purchaser and
Parent that it has taken all action necessary so that all outstanding options
and other rights to acquire Shares granted to directors, employees or others
under any stock option or purchase plan, program or similar arrangement of the
Company (each, as amended, an "Option Plan" and, such options and other rights,
"Stock Options"), whether or not then exercisable or vested, will be cancelled
by the Company upon consummation of the Offer. The holders thereof shall be
entitled to receive, for each Share subject to such Stock Option, in settlement
and cancellation thereof, an amount in cash equal to the positive difference,
if any, between the Per Share Merger Consideration and the exercise price per
share of such Stock Option, which amount shall be paid at the time the Stock
Option or is
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cancelled; provided, that, with respect to any person subject to Section 16 of
the Exchange Act, any such amount shall be paid as soon as practicable after
the first date payment can be made without liability to such person under
Section 16(b) of the Exchange Act. All applicable withholding taxes
attributable to the payments made hereunder or to distributions contemplated
hereby shall be deducted from the amounts payable under this Section 2.10 and
all such taxes attributable to the cancellation of Stock Options shall be
withheld from the proceeds received in connection with the cancellation
thereof.
(b) Except as provided herein or as otherwise agreed to by the
parties and to the extent permitted by the Option Plans, the Option Plans shall
terminate as of or prior to the Effective Time and any rights under the Stock
Options granted under the Stock Option Plans shall be cancelled as of or prior
to the Effective Time.
(c) The Company represents and warrants to the Purchaser and
Parent that all outstanding warrants to purchase Shares will, upon the
Effective Time, be converted into the right to receive $2.00 cash instead of
each Share which would otherwise be purchasable by the holder of the warrant
upon the exercise thereof and payment of the warrant exercise price thereunder
(which in each case is greater than $2.00 per Share). The Company will provide
Purchaser with evidence of the foregoing or, with respect to any specific
warrant, evidence of cancellation of such warrant satisfactory to Purchaser
prior to the acceptance by Purchaser for payment of any Shares tendered under
the Offer.
2.11 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, Shares that are outstanding immediately prior to the Effective Time
and that are held by stockholders who shall have perfected dissenters' rights
in accordance with Section 262 of the DGCL (the "Dissenting Shares") shall not
be converted into or represent the right to receive the Merger Consideration
(but instead shall be converted into the right to receive payment from the
Surviving Corporation with respect to such Dissenting Shares in accordance with
the DGCL), unless and until such holder shall have failed to perfect or shall
have effectively withdrawn or lost such holder's rights to appraisal under the
DGCL. If any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such holder's rights to appraisal of such Shares
under the DGCL, such holder's shares shall thereupon be deemed to have been
converted into and to have become exchangeable for, at the Effective Time, the
right to receive, upon surrender as provided above, the Merger Consideration
for the Certificate or Certificates that formerly evidenced such Shares.
2.12 Company Stockholders' Meeting. Unless the Merger is consummated in
accordance with Section 253 of the DGCL as contemplated by Section 2.13 hereof,
and subject to applicable law, the Company, acting through its Board of
Directors, shall, in accordance with the DGCL, its Certificate of Incorporation
and its Bylaws, (a) duly call, give notice of, convene and hold a special
meeting of its stockholders as soon as reasonably practicable following the
consummation of the Offer for the purpose of considering and taking action upon
this Agreement and the approval of the Merger Agreement (the "Company
Stockholders' Meeting"), (b) include in the proxy statement or information
statement prepared by the Company for distribution to stockholders of the
Company in advance of the Company Stockholders' Meeting in accordance with
Regulation 14A or Regulation 14C promulgated under the Exchange Act (the
"Company Proxy Statement") the recommendation of its Board of Directors
referred to in Section 1.2 hereof and (c) use all reasonable
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efforts (A) to obtain and furnish the information required to be included by it
in the Company Proxy Statement and, after consultation with the Parent and the
Purchaser, respond promptly to any comments made by the Commission with respect
to the Company Proxy Statement and any preliminary version thereof and cause
the Company Proxy Statement to be mailed to its stockholders at the earliest
practicable time following the expiration or termination of the Offer and (B)
to obtain the necessary approvals by its stockholders of the Merger Agreement
and the transactions contemplated thereby. Parent will provide the Company
with the information concerning Parent and Purchaser required to be included in
the Company Proxy Statement, and will vote, or cause to be voted, all Shares
owned by it or its affiliates in favor of approval and adoption of this
Agreement and the Merger.
2.13 Merger Without Meeting of Stockholders. Notwithstanding anything to
the contrary in this Agreement, if Parent, Purchaser or their respective
affiliates shall acquire at least 90% of the outstanding Shares, each of
Parent, Purchaser and the Company shall take all necessary and appropriate
action to cause the Merger to become effective, as soon as practicable after
the consummation of the Offer, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
2.14 Withholding Taxes. Except as otherwise provided in Section 2.8(e),
Parent and Purchaser shall be entitled to deduct and withhold, or cause the
Paying Agent to deduct and withhold, from the consideration otherwise payable
to a holder of Shares pursuant to the Offer or the Merger any stock transfer
taxes and such amounts as are required under the Internal Revenue Code of 1986,
as amended (the "Code"), or any applicable provision of state, local or foreign
tax law, as specified in the Offer Documents. To the extent that amounts are
so withheld by Parent or Purchaser, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the Shares
in respect of which such deduction and withholding was made by Parent or
Purchaser, in the circumstances described in the Offer Documents, and Parent
shall provide, or cause the Paying Agent to provide, to the holders of such
Certificates written notice of the amounts so deducted or withheld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to Parent as follows:
3.1 Organization and Qualification. The Company (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (b) has all requisite corporate power to carry on its business
as it is now being conducted, and (c) is in good standing and duly qualified to
do business in each jurisdiction in which the transaction of its business makes
such qualification necessary, except where the failure to be in good standing
or so qualified would not have a Material Adverse Effect (as defined in Section
8.3(c) below) on the Company. True and complete copies of the Certificate of
Incorporation and the Bylaws, as amended to date, of the Company have been made
available to Parent. The Company does not own any subsidiaries or have any
equity or partnership or joint venture interests other than as reflected on
Section 3.1 of the Company Disclosure Schedule.
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3.2 Capitalization of the Company. The authorized capital stock of the
Company consists of 25,000,000 Shares and 1,500,000 shares of preferred stock,
$0.01 par value (the "Company Preferred Stock"). As of the date hereof,
16,268,387 Shares are issued and outstanding and no shares of Company Preferred
Stock are outstanding. All outstanding Shares are validly issued and are fully
paid and nonassessable. Except as disclosed in the Company SEC Documents (as
defined in Section 3.6) or in Section 3.2 of the Company's disclosure schedule
delivered to Parent in connection with this Agreement (the "Company Disclosure
Schedule") there are no outstanding subscriptions, options, warrants, calls,
rights, commitments or any other agreement to which the Company is a party or
by which the Company is bound that, directly or indirectly, obligate the
Company to issue, deliver or sell or cause to be issued, delivered or sold any
additional Shares or any other capital stock of the Company or any other
securities convertible into, or exercisable or exchangeable for, or evidencing
the right to subscribe for any such Shares or other capital stock of the
Company. As reflected on Section 3.2 of the Company Disclosure Schedule, the
exercise prices for all outstanding options, warrants or other rights to
acquire capital stock of the Company are at prices in excess of the Offer
price.
3.3 Authorization and Validity of Agreement. The Company has the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof (subject to the approval and adoption of this Agreement and the Merger
by the holders of a majority of the outstanding Shares, if required by
applicable law). All members of the Company's Board of Directors (the "Company
Board") have duly authorized the execution, delivery and performance of this
Agreement by the Company, and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or the transactions
contemplated hereby (other than the approval and adoption of this Agreement and
the Merger by the holders of a majority of the outstanding Shares, if required
by applicable law). This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes the legal, valid and binding
obligation of Parent and Purchaser, constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as may be limited by any bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
3.4 Consents and Approvals.
(a) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby will require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority by
reason of the Company's status or operations, except (i) pursuant to the
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder, and
the Exchange Act, and the rules and regulations promulgated thereunder, and
state securities or "blue sky" laws and state takeover laws, (ii) the filing
and recordation of the Certificate of Merger pursuant to the DGCL and
appropriate documents with the relevant authorities of other states in which
the Company is authorized to do business, (iii) as set forth in Section 3.4 of
the Company Disclosure Schedule or (iv) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a Material Adverse Effect on the
Company.
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(b) Each member of the Company Board has approved this Agreement
and the transactions contemplated hereby for purposes of Section 203 of the
DGCL so that Section 203 of the DGCL is not applicable to the transactions
provided for in this Agreement. Unless the Merger is otherwise consummated as
contemplated by Section 2.13 hereof, the affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of capital
stock of the Company necessary to approve the Merger.
3.5 No Violation. Except as set forth in Section 3.5 of the Company
Disclosure Schedule, assuming the Merger has been duly approved by the holders
of a majority of the outstanding Shares or the Merger is consummated as
contemplated by Section 2.13 hereof, neither the execution and delivery of this
Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will conflict with or violate the Certificate
of Incorporation or Bylaws of the Company, result in a violation or breach of,
constitute a default under, give rise to any right of termination, cancellation
or acceleration of, or result in the imposition of any lien, charge or other
encumbrance on any material assets or property of the Company pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license or other
instrument or obligation to which the Company is a party or by which the
Company or any of its assets or properties may be bound, except for such
violations, breaches and defaults (or rights of termination, cancellation or
acceleration or lien or other charge or encumbrance) as to which requisite
waivers or consents have been obtained or which in the aggregate would not have
a Material Adverse Effect on the Company or assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in Section
3.4 and this Section 3.5 are duly and timely obtained or made and the approval
of the Merger by the holders of a majority of the outstanding Shares has been
obtained or the Merger is consummated as contemplated by Section 2.13 hereof,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its assets and properties, except for such
violations which would not in the aggregate have a Material Adverse Effect on
the Company.
3.6 SEC Reports; Financial Statements.
(a) Except as set forth in Section 3.6 of the Company Disclosure
Schedule, since January 1, 1997, the Company has filed with the SEC all forms,
reports, schedules, statements and other documents required to be filed by it
with the SEC pursuant to the Exchange Act, the Securities Act and the SEC's
rules and regulations thereunder (all such forms, reports and other documents,
including any such reports filed prior to the Effective Time, collectively, the
"Company SEC Documents"). The Company SEC Documents, including, without
limitation, any financial statements or schedules included therein, at the time
filed (or, if amended, at the time of such amended filing), or in the case of
registration statements on their respective effective dates, complied in all
material respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be, and the applicable rules and regulations of
the SEC thereunder and did not at the time they were filed (or, if amended, at
the time of such amended filing and, in the case of registration statements, at
the time of effectiveness), contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
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(b) Each of the consolidated financial statements of the Company
(including any related notes thereto) included in the Company SEC Documents
(excluding the Company SEC Documents described in Section 3.7 hereof) comply as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the period involved (except as may be
indicated in such financial statements or in the notes thereto or, in the case
of unaudited financial statements, as permitted by the requirements of Form
10-Q) and fairly present (subject, in the case of the unaudited statements, to
normal year-end adjustments and the absence of footnotes) the consolidated
financial position of the Company as of the dates thereof and the consolidated
results of the Company's operations and cash flows for the periods presented
therein.
3.7 Schedule 14D-9; Offer Documents and Company Proxy Statement. None of
the Schedule 14D-9, the Company Proxy Statement nor any information supplied by
the Company specifically for inclusion in the Offer Documents will, at the
respective times filed with the SEC or first published, sent or given to
stockholders, as the case may be, or, in the case of the Company Proxy
Statement, at the date mailed to the Company stockholders and at the time of
the Company Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Schedule 14D-9
and the Company Proxy Statement will, when filed by the Company with the SEC,
comply as to form in all material respects with the applicable provisions of
the Exchange Act and the rules and regulations thereunder. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to the
statements made in any of the foregoing documents based on information supplied
by or on behalf of Parent or Purchaser or any of their respective affiliates
specifically for inclusion therein.
3.8 Compliance with Law. The Company is not in violation of any
applicable law, rule, regulation, decree or order of any governmental or
regulatory authority applicable to the Company, except for violations which in
the aggregate do not have a Material Adverse Effect on the Company. The
Company holds all permits, licenses, exemptions, orders and approvals of all
governmental and regulatory authorities necessary for the lawful conduct of its
businesses, except where the failures to hold permits, licenses, exemptions,
orders and approvals do not in the aggregate have a Material Adverse Effect on
the Company.
3.9 Absence of Certain Changes. Except as disclosed in the Company SEC
Documents filed with the SEC prior to the date hereof or in Section 3.9 of the
Company Disclosure Schedule, since December 31, 1996, the Company has conducted
its business only in the ordinary course of such business and there has not
been (a) any Material Adverse Effect on the Company; (b) any declaration,
setting aside or payment of any dividend or other distribution with respect to
the Company's capital stock; or (c) any material change in the Company's
accounting principles, practices or methods.
3.10 Litigation. Except as disclosed in the Company SEC Documents or in
Section 3.10 of the Company Disclosure Schedule, there are no claims, actions,
proceedings or governmental investigations pending or, to the knowledge of the
Company, threatened against the Company, by or before any court or other
governmental or regulatory body, which, if adversely determined, would
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have a Material Adverse Effect on the Company. As of the date hereof, to the
knowledge of the executive officers of the Company, no action or proceeding has
been instituted or threatened before any court or other governmental or
regulatory body by any Person (as defined in Section 8.3) seeking to restrain
or prohibit the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
3.11 Employee Benefit Matters. All employee benefit plans and other
benefit and compensation arrangements covering employees of the Company are
listed in Section 3.11 of the Company Disclosure Schedule (the "Company Benefit
Plans"). True and complete copies of the Company Benefit Plans, their related
trust and summary plan descriptions, and any reports, forms and documents
required to be filed or distributed for the preceding three years relating to
the Company Benefit Plans have been delivered to Parent. To the extent
applicable, the Company Benefit Plans comply, in all material respects, with
the requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code, and any Company Benefit Plan and its related
trust intended to be qualified under Sections 401(a) and 501(a) of the Code
comply in form and in operation with Sections 401(a) and 501(a) of the Code.
No Company Benefit Plan is covered by Title IV of ERISA or Section 412 of the
Code. There has been no transaction involving any Company Benefit Plan that
has resulted or would result in any liability or penalty under Section 4975 of
the Code or Section 502(i) of ERISA. Each Company Benefit Plan has been
maintained and administered in all material respects in compliance with its
terms and with ERISA and the Code to the extent applicable thereto. There are
no pending or anticipated material claims against or otherwise involving any of
the Company Benefit Plans and no suit, action or other litigation (excluding
claims for benefits incurred in the ordinary course of Company Benefit Plan
activities) has been brought against or with respect to any such Company
Benefit Plan, except for any of the foregoing that would not have a Material
Adverse Effect on the Company. All contributions required to be made as of the
date hereof to the Company Benefit Plans have been made or provided for.
Neither the Company nor any entity under "common control" with the Company
within the meaning of Section 4001 of ERISA has contributed to or ever
maintained, or been required to contribute to or maintain, any employee pension
plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA or
Section 412 of the Code or to any "multi-employer plan" (as defined in Sections
3(37) and 4001(a)(3) of ERISA). Except as disclosed in Section 3.11 of the
Company Disclosure Schedule, the Company does not maintain or contribute to any
plan or arrangement that provides or has any liability to provide life
insurance, medical or other employee welfare benefits to any employee or former
employee upon his retirement or termination of employment, except as required
by Section 4980B of the Code, and the Company has never represented, promised
or contracted (whether in oral or written form) to any employee or former
employee that such benefits would be provided. All insurance premiums have
been paid in full, subject only to normal retrospective adjustments in the
ordinary course, with regard to Company Benefit Plans for policy years or other
applicable policy periods ending before the closing and have been paid as
required under the policies for policy years or other applicable policy periods
beginning on or before the closing. All expenses and liabilities relating to
all of Company Benefit Plans have been, and will on the Closing Date be, fully
and properly accrued on the Company's books and records and disclosed in
accordance with generally accepted accounting principles and in the Employee
Benefit Plan financial statements. The Company does not have any agreement,
arrangement, commitments or understanding to create any additional plan which
would constitute an Employee Benefit Plan or to increase the rate of benefit
accrual or contribution requirements under any of the Employee
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<PAGE> 17
Benefit Plans or to modify, change or terminate in any respect any existing
Employee Benefit Plan. None of the Employee Benefit Plans is currently under
investigation, audit, or review by the Department of Labor, the Internal
Revenue Service or any other federal or state agency, and no violations of the
Code or ERISA have been alleged by any such agency with respect to such
Employee Benefit Plans. The Employee Benefit Plans may be amended or
terminated at any time. Except as disclosed in Section 3.11 of the Company
Disclosure Schedule, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any benefit
plan, policy, arrangement or agreement or any trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligations to fund benefits with respect to any employee. The consummation of
the transactions contemplated by this Agreement, either alone or in combination
with another event, has not resulted in and will not result in payments to
"disqualified individuals" (as defined in Section 280G(c) of the Code) of the
Company which, individually or in the aggregate, will constitute "excess
parachute payments" (as defined in Section 280G(b) of the Code) resulting in
the imposition of excise tax under Section 4999 of the Code or will result in
the disallowance of deductions under Sections 162 (m) or 280G of the Code.
3.12 Taxes.
(a) Each of the Company and any affiliated, combined, or
unitary group of which any such corporation is or was a member (collectively,
the "Tax Affiliates") has timely filed all Tax Returns that are required to be
filed by it. The Company does not currently have any Tax Affiliate. All such
Tax Returns were accurate and complete and correctly reflected the facts
regarding the income, business, assets, operations, activities and stocks of
the Company.
(b) Except as set forth in Section 3.12 of the Company
Disclosure Schedule, the Company and each Tax Affiliate has timely paid all
Taxes that are due and payable (except for taxes that are being contested in
good faith by appropriate proceedings and for which reserves, which are
adequate under generally accepted accounting principles, have been
established).
(c) Each Tax Affiliate has properly accrued or made
provision, which are adequate under generally accepted accounting principles,
for all Taxes for any periods subsequent to the periods covered by the Tax
Returns described in Section 3.12, above.
(d) Each Tax Affiliate has complied with all applicable
laws, rules and regulations relating to the withholding and payment of Taxes
and has timely withheld and paid to the proper governmental authorities all
amounts required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor or stockholder.
(e) Except as set forth in Section 3.12 of the Company
Disclosure Schedule:
(i) no audits or other administrative or court
proceedings are presently pending with regard to any Taxes for which a
Tax Affiliate could be liable,
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<PAGE> 18
(ii) no dispute or claim concerning any Taxes for
which a Tax Affiliate could be liable has been either:
(A) claimed or raised by any authority in
writing, or
(B) as to which employees responsible for
Tax matters, directors and officers of a Tax Affiliate after
due inquiry have knowledge;
(iii) with respect to each Tax Affiliate, there are
no pending requests for rulings from any taxing authority with respect
to any Taxes. If a Tax Affiliate has filed for a ruling request from
any taxing authority with respect to any Taxes within the previous
three years, copies of the ruling requests and related correspondence
have been delivered to the Purchaser;
(iv) with respect to each Tax Affiliate, there are no
proposed reassessments by any taxing authority of any property owned
or leased;
(v) with respect to each Tax Affiliate there are no
agreements in effect to extend the time to file any Tax Return or to
extend or waive the period of limitations for the assessment or
collection of any Taxes for which a Tax Affiliate may be liable;
(vi) to the knowledge of each Tax Affiliate, no
claim has been made by any authority in a jurisdiction where the
Company does not file Tax Returns that it is or may be, subject to
taxation by that jurisdiction; and
(f) None of the Tax Affiliates has made any payments, is
obligated to make any payments or is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G or under Code Section 162(m).
(g) Each of the Tax Affiliates has disclosed on its
federal income Tax Returns all positions taken therein that could give rise to
a substantial understatement of federal income Tax within the meaning of Code
Section 6662;
(h) No Tax Affiliate (a) has been a member of an
Affiliated Group filing a consolidated federal income Tax Return other than the
groups of which the Company is the parent and (b) has liability for the Taxes
of any person (other than members of the groups described in (a) above) under
Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(i) All elections with respect to Taxes affecting the Tax
Affiliates as of the date hereof are set forth in the Company Disclosure
Schedules and after the date hereof, no election with respect to Taxes will be
made without the written consent of the Purchaser other than those elections
which would have no material adverse effect and which are consistent with past
practices of the Company;
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<PAGE> 19
(j) None of the Tax Affiliates has filed a consent
pursuant to the collapsible corporation provisions of Section 341(f) of the
Code (or any corresponding provisions of state, local or foreign income tax
law) or agreed to have Section 341(f)(2) of the Code (or any corresponding
provision of state, local, or foreign income tax law) apply to any disposition
of any asset owned by it:
(k) None of the assets of the Tax Affiliates is property that
the Tax Affiliates are required to treat as being owned by any other person
pursuant to the "safe harbor lease" provisions of former Section 168(f)(8) of
the Code;
(l) The Tax Affiliates do not have, and have not had, a
permanent establishment in any foreign country, as defined in any applicable
tax treaty or convention between the United States ad such foreign country;
(m) Except as set forth in Section 3.12 of the Company
Disclosure Schedule, none of the Tax Affiliates were a party to any Tax
allocation or Tax sharing agreement. The Tax Affiliates have delivered an
accurate and complete copy of any Tax sharing or allocation agreement or
arrangement involving a Tax Affiliate and an accurate and complete description
of any such unwritten or informal agreement or arrangement;
(n) None of the Tax Affiliates:
(i) has or is projected to have any amount
includible in its income for the current taxable year under Section
951 of the Code,
(ii) has been a passive foreign investment company
within the meaning of Section 1296 of the Code, or
(iii) has an unrecaptured overall foreign loss
within the meaning of Section 904(f) of the Code.
(o) None of the Tax Affiliates has any:
(i) income reportable for a period ending after the
Closing Date but attributable to a transaction (e.g., installment
sale) or a change in accounting method occurring in or made for a
period ending on or prior to the Closing Date which resulted in a
deferred reporting on income from such transaction or from such change
in accounting method (other than a deferred intercompany transaction),
or
(ii) a deferred gain or loss rising out of any
deferred intercompany transaction.
(p) The Company's tax net operating loss carry forwards and a
schedule of their expirations are set forth on the Company Disclosure
Schedules.
(q) For purposes of this Agreement:
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<PAGE> 20
"Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") means (i) any net income, gross income, gross
receipts, sales, use, ad valorem, transfer, transfer gains, franchise,
profits, license, withholding, payroll, employment, social security
(or similar), unemployment, disability, excise, severance, stamp,
rent, recording, registration, occupation, premium, real or personal
property, intangibles, environmental (including taxes under Code
Section 59A) or windfall profits tax, alternative or add-on minimum
tax, capital stock, customs duty or other tax, fee, duty, levy,
impost, assessment or charge of any kind whatsoever (including but not
limited to taxes assessed to real property and water and sewer rents
relating thereto), together with any interest and any fine, penalty,
addition to tax or additional amount or deductions imposed by any
governmental body (domestic or foreign) (a "Tax Authority")
responsible for the imposition of any such tax, whether disputed or
not, including any liability arising under any tax sharing agreement,
with respect to a Tax Affiliate; (ii) any liability for the payment of
any amount of the type described in the immediately preceding clause
(i) as a result of the Tax Affiliate being a member of an affiliated
or combined group with any other corporation at any time on or prior
to the Closing Date; and (iii) any liability of the Tax Affiliate for
the payment of any amounts of the type described in the immediately
preceding clause (i) as a result of a contractual obligation to
indemnify any other person; and
"Tax Return" means any return, declaration,
report, claim for refund, or information return or statement relating
to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
3.13 Insurance. True and complete copies of all existing insurance
policies purchased by the Company have been delivered to Parent. Such policies
provide coverage for the operations of the Company in amounts and covering such
risks as the Company believes is necessary to conduct its business. The
Company has not received notice that any such policy is invalid or
unenforceable.
3.14 Employment Agreements. Except as disclosed in the Company SEC
Documents or as set forth in Section 3.14 of the Company Disclosure Schedule,
there are no (a) employment, consulting, noncompetition, severance or
indemnification agreements between the Company and any current or former
officer or director of the Company, (b) employment, consulting or severance
agreements between the Company and any other Person providing for payments in
excess of $50,000 in the aggregate and (c) noncompetition or indemnification
agreements between the Company and any other Person.
3.15 Brokers and Finders. No broker, finder or investment bank has acted
directly or indirectly for the Company, nor has the Company incurred any
obligation to pay any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby, other than SBC Warburg
Dillon Read Inc. ("Dillon Read"), Rauscher Pierce Refsnes, Inc. ("RPR"),
Jefferies & Company, Inc. ("Jefferies") and Griffiths McBurney ("GMB"), the
fees and expenses of which shall be borne by the Company. Section 3.15 of the
Company Disclosure Schedule sets forth the fees payable to Dillon Read, RPR,
Jefferies and GMB pursuant to the Company's engagement letters with Dillon
Read, RPR, Jefferies and GMB (copies of which have been provided to Parent).
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<PAGE> 21
3.16 Opinion of Financial Advisor. Dillon Read has delivered its opinion,
dated the date of this Agreement, to the Board of Directors of the Company for
the benefit of its stockholders to the effect that, as of the date of this
Agreement, the cash consideration to be received by the holders of Shares
(other than Parent and its affiliates) in the Offer and the Merger is fair,
from a financial point of view, to such holders.
3.17 Certain Business Practices. None of the Company or, to the Company's
knowledge, any directors, officers, agents or employees of the Company (in
their capacities as such) has (a) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity,
(b) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (c)
made any other unlawful payment, in all cases except where the impact from such
contributions, gifts, entertainment, payments, violations, agreements,
arrangements, actions or payments would not in the aggregate have a Material
Adverse Effect on the Company.
3.18 Permits; Compliance. Except as disclosed in Section 3.18(a) of the
Company Disclosure Schedule, the Company is in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, identification and registration numbers, approvals and
orders necessary to own, lease and operate its properties and to carry on its
business as it is now being conducted (collectively, the "Company Permits"),
except where the failure to possess such Company Permits could not reasonably
be expected to have a Material Adverse Effect on the Company. Section 3.18(a)
of the Company Disclosure Schedule sets forth, as of the date of this
Agreement, all actions, proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company that could reasonably
be expected to result in (i) the loss or revocation of a Company Permit or (ii)
the suspension or cancellation of any other Company Permit, except any such
Company Permit where such loss, revocation, suspension or cancellation could
not reasonably be expected to have a Material Adverse Effect on the Company.
Except as set forth in Section 3.18(a) of the Company Disclosure Schedule, the
Company is not in conflict with, or in default or violation of (a) any law
applicable to the Company or by or to which any of its properties is bound or
subject or (b) any of the Company Permits, except for any such conflicts,
defaults or violations that could not reasonably be expected to have a Material
Adverse Effect on the Company. Except as set forth in Section 3.18(a) of the
Company Disclosure Schedule, since December 31, 1996, the Company has not
received from any Governmental Entity (as defined in Section 5.7) any written
notification with respect to possible conflicts, defaults or violations of
laws, except for written notices relating to possible conflicts, defaults or
violations of laws that could not reasonably be expected to have a Material
Adverse Effect on the Company.
3.19 Certain Agreements. Section 3.19 of the Company Disclosure Schedule
sets forth a complete and accurate list in all material respects of all (i)
real property leases, (ii) agreements with respect to indebtedness for borrowed
money (including capital leases) with a principal amount in excess of $50,000
and (iii) acquisition agreements providing for the payment in the future of
contingent consideration in an amount in excess of $50,000, in each case to
which the Company is a party on the date hereof.
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<PAGE> 22
3.20 Environmental Matters. Notwithstanding any other warranty or
representation in Article III of this Agreement:
(a) Except as set forth in Section 3.20 of the Company Disclosure
Schedule, (i) the Company has obtained all Environmental Permits (as
hereinafter defined) that are required in connection with the business,
operations and properties of the Company, (ii) the Company has been, and the
Company is, in compliance in all material respects with all terms and
conditions of all applicable requirements of Environmental Law (as hereinafter
defined) and Environmental Permits, (iii) the Company has received no written
notice from a governmental authority of any violation, alleged violation, or
liability arising under any requirements of Environmental Law or Environmental
Permits, (iv) no Environmental Claims (as hereinafter defined) have ever been
threatened or asserted or are presently pending against the Company
attributable to present or past operations on premises owned, leased or
operated by the Company, and (v) no condition or set of facts or circumstances
exists that could reasonably be expected to give rise to an Environmental Claim
against the Company.
(b) Except as set forth in Section 3.20 of the Company Disclosure
Schedule, the Company has not disposed, treated, or arranged for the disposal
or treatment of any toxic or hazardous waste, materials or substances at a site
or location, or has leased, used, operated or owned a site or location which
(i) has been placed on the National Priorities List or its state equivalent
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended ("CERCLA"), or similar foreign, territorial or state
law, (ii) the Environmental Protection Agency or relevant foreign, territorial
or state authority has proposed, or is proposing, to place on the National
Priorities List or foreign, territorial or state equivalent, (iii) is subject
to a lien, administrative order or other demand either to take response or
other action under CERCLA or other Environmental Law, or to develop or
implement a "Corrective Action Plan" or "Compliance Plan," as each is defined
in regulations promulgated pursuant to the Resource Conservation and Recovery
Act, as amended ("RCRA"), or to reimburse any person who has taken response or
other action in connection with that site, (iv) is on any Comprehensive
Environmental Response Compensation Liability Information System List, or (v)
has been the site of any Release (as hereinafter defined) from present or past
operations of the Company (or any of its predecessors) which would be either
reportable under any requirements of Environmental Law or which has caused at
such site or any third party site any condition that has resulted in or could
reasonably be expected to result in a claim against the Company under
Environmental Law.
(c) Except as set forth in Section 3.20 of the Company Disclosure
Schedule, (i) the Company has not ever owned or operated any underground
storage tanks ("USTs") containing petroleum products or wastes or other
substances regulated by 40 CFR Part 280 or other applicable requirements of
Environmental Law, and has not owned or operated any real estate having any
USTs, (ii) there are no polychlorinated biphenyls or asbestos in or on premises
currently owned, leased or operated by the Company, the presence of which would
cause a material violation of any Environmental Law, and (iii) no entities or
sites owned or operated by third parties have been used by the Company in
connection with the treatment, storage, disposal or transportation of Hazardous
Substances (as hereinafter defined), except in compliance with applicable
Environmental Law and except for such violations that have been remedied.
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<PAGE> 23
(d) Except as set forth in Section 3.20 of the Company Disclosure
Schedule, the plants, structures, equipment and other properties currently
owned or used by the Company are adequate and sufficient for the current
operations of the Company in substantial conformance with all applicable
requirements of Environmental Law.
(e) When used in this Agreement, the following terms shall have
the following respective meanings:
(i) "Environmental Claims," as referred to herein, shall
mean any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or other adversarial proceedings relating to any Environmental
Law or Environmental Permit including, without limitation (i) any and all
claims by governmental, territorial or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other similar actions or damages
pursuant to any applicable Environmental Law and (ii) any and all claims by a
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Substances or
arising from alleged injury or threat of injury to human health, property, or
the environment resulting from exposures to or releases of Hazardous
Substances. An "Environmental Claim" includes, but is not limited to, a common
law action, as well as a proceeding to issue, modify, terminate or enforce the
provisions of an Environmental Permit or requirement of Environmental Law, or
to adopt or amend a regulation to the extent that such a proceeding attempts to
redress violations or alleged violations of the applicable permit, license, or
regulation.
(ii) "Environmental Law," as referred to herein, shall
mean any federal, state, territorial, local or foreign statute, law, rule,
regulation, ordinance, code, policy (compliance with which is required by law
or if the failure to comply therewith would be reasonably foreseeable to result
in adverse administrative action) or rule of common law in effect and in each
case as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to the environment or Hazardous Substances, including, without
limitation to the extent applicable under the circumstances, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Section
9601 et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
Section 11001 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136 et
seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the Toxic
Substance Control Act, 15 U.S.C. Section 2601 et seq.; the Oil Pollution Act
of 1990, 33 U.S.C. Section 2701 et seq.; the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 5101 et seq.; the Atomic
Energy Act, as amended, 42 U.S.C. Section 2011 et seq.; any laws regulating
the use of biological agents or substances including medical or infectious
wastes; and the corresponding foreign, territorial or state laws, regulations
and local ordinances, which may be applicable, as any such acts may be amended.
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<PAGE> 24
(iii) "Environmental Permits" as referred to herein, shall
mean all permits, approvals, identification numbers, licenses and other
authorizations required under any applicable Environmental Law.
(iv) "Hazardous Substances" as referred to herein, shall
mean (i) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "hazardous air pollutants," "pollutants," "contaminants," "toxic
chemicals," "toxics," "hazardous chemicals," "extremely hazardous substances,"
"regulated substances" or "pesticides" as defined as such in any applicable
Environmental Law, (ii) any radioactive materials, asbestos-containing
materials; urea formaldehyde foam insulation, and radon in harmful quantities
or concentration that are regulated by any governmental authority having
jurisdiction in the location of such materials and (iii) any other chemical,
material or substances, exposure to which is prohibited, limited or regulated
by any governmental authority having jurisdiction in the location of such
substances on the basis of potential hazards.
(v) "Release," as referred to herein, shall mean any
release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration of any Hazardous Substance into the
environment or into or out of any property, including the movement of any
Hazardous Substance through or in the air, soil, surface water, groundwater or
property.
3.21 Title.
(a) The Company has Marketable Title to all of its Oil and Gas
Properties.
For the purposes of this subsection 3.21(a), "Marketable
Title" shall mean, with respect to any well identified on Schedule 3.21(a)
("Well"), such title as (i) will enable the Company to receive a percentage of
the oil and gas produced and saved from such Well (subject to any depth
restrictions noted in Schedule 3.21(a)) that is not less than the "Net Revenue
Interest" shown for such well on Schedule 3.21(a), without reduction,
suspension or termination throughout the productive life of such Well, except
for any reduction, suspension or termination (a) caused by the Company, any of
its affiliates, successors in title or assigns arising out of transactions or
actions occurring after the Closing, (b) caused by orders of the appropriate
regulatory agency having jurisdiction over such Well that are promulgated after
the date hereof and that concern pooling, unitization, communitization or
spacing matters affecting such Well, (c) caused by any Contract containing a
sliding-scale royalty clause or other similar clause with respect to a
production burden associated with a particular Well, or (d) otherwise set forth
in Schedule 3.21(a); (ii) will not obligate the Company to bear and pay a
portion of the costs and expenses of operating such Well (subject to any depth
restrictions noted in Schedule 3.21(a)) that is not greater than the "Working
Interest" shown for such Well on Schedule 3.21(a), without increase throughout
the productive life of such Well, except for any increase (a) caused by the
Company, any of its affiliates, successors in title or assigns arising out of
transactions or actions occurring after the Closing, (b) that also results in
the Net Revenue Interest associated with such Well being proportionately
increased, (c) caused by contribution requirements provided for under
provisions similar to those contained in Article VII.B. of the A.A.P.L. Form
610-1982 Model Form Operating Agreement, (d) caused by orders of the
appropriate regulatory agency having jurisdiction over an Oil and Gas Property
that are promulgated
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<PAGE> 25
after the date hereof and that concern pooling, unitization, communitization or
spacing matters affecting a particular Oil and Gas Property, or (e) otherwise
set forth in Schedule 3.21(a); and with respect to all Oil and Gas Properties
(iii) is free and clear of all encumbrances, liens, claims, easements, rights,
agreements, instruments, obligations, burdens or defects (collectively "Liens")
except for Permitted Encumbrances. No overriding interest or similar burden on
any Oil and Gas Property has been granted or has been contracted to be granted
by the Company which is not disclosed on Schedule 3.21(a) or accounted for in
the Net Revenue Interests indicated on Schedule 3.21(a).
(ii) For the purposes of this subsection 3.21(a),
"Permitted Encumbrances" shall mean (i) liens for taxes not yet delinquent,
(ii) lessors' royalties, overriding royalties, division orders, reversionary
interests, and similar burdens that do not operate to reduce the Net Revenue
Interest of the Company in any of the Oil and Gas Properties to less than the
amount set forth therefor on Schedule 3.21(a), (iii) the consents and rights
described in Schedule 3.21(a), and (iv) Contracts insofar as the Contracts do
not operate to increase the Working Interest of the Company set forth on
Schedule 3.21(a) for any of the Oil and Gas Properties or decrease the Net
Revenue Interest of the Company set forth on Schedule 3.21(a) for any of the
Oil and Gas Properties.
(iii) For purposes of this subsection 3.21(a), "Contracts"
means contracts, commitments, agreements, and arrangements that in any way
relate to either the Wells or the Oil and Gas Properties, including the
production, storage, treatment, transportation, processing, purchase, sale or
other disposal of substances therefrom or in connection therewith and any and
all amendments, ratifications or extensions of the foregoing, together with (i)
all rights, privileges, and benefits of the Company thereunder arising on or
after January 1, 1998, (ii) all rights of the Company thereunder to audit the
records of any party thereto and receive refunds of any nature thereunder,
whether relating to periods before or after January 1, 1998, and (iii) rights
of subrogation under any insurance policy held by or on behalf of the Company
in connection with the properties described in Section 1.1, inclusive for any
claim that arises from January 1, 1998, through the Closing Date in connection
with either the Wells or the Oil and Gas Properties.
(iv) For purposes of this subsection 3.21(a), "Oil and Gas
Properties" means such properties in the nature of fee interests, leasehold
interests, working interests, farmout rights, royalty, overriding royalty or
other non-working or carried interests, operating rights or other mineral
rights of every nature and any rights that arise by operation of law or
otherwise in all properties and lands pooled, unitized, communitized or
consolidated with such properties.
(b) The Company has indefeasible title to all of its properties
other than the Oil and Gas Properties.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant, jointly and
severally, to the Company as follows:
4.1 Organization and Qualification. Each of Parent and Purchaser (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) has all requisite corporate power to
carry on its business as it is now being conducted and (c) is in good standing
and duly qualified to do business in each jurisdiction in which the transaction
of its business makes such qualification necessary, except where the failure to
be in good standing or so qualified would not have a Material Adverse Effect on
Parent and Purchaser taken as a whole.
4.2 Authorization and Validity of Agreement. Each of Parent and Purchaser
has all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby in accordance
with the terms hereof. The Boards of Directors of Parent and Purchaser,
respectively, and Parent, as the sole stockholder of Purchaser, have duly
authorized the execution, delivery and performance of this Agreement by each of
Parent and Purchaser, and no other corporate proceedings on the part of either
Parent or Purchaser are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Purchaser and, assuming this Agreement
constitutes the legal, valid and binding obligation of the Company, constitutes
the legal, valid and binding obligation of each of Parent and Purchaser,
enforceable against each of Parent and Purchaser in accordance with its terms,
except as may be limited by any bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.3 Consents and Approvals. Neither the execution and delivery of this
Agreement by Parent and Purchaser nor the consummation by Parent and Purchaser
of the transactions contemplated hereby will require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority by reason of Parent's or Purchaser's status or (as
applicable) operations, except (a) pursuant to the applicable requirements of
the Securities Act, the Public Utility Holding Company Act of 1935, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
and state securities or "blue sky" laws and state takeover laws, (b) the filing
and recordation of the Certificate of Merger pursuant to the DGCL, (c) except
as may be required in connection with the Financing (as defined in Section 4.7
below), which consents have been duly obtained or (d) where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not in the aggregate have a Material Adverse Effect on
Parent and Purchaser taken as a whole or prevent the consummation of the
transactions contemplated hereby.
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4.4 No Violation. Neither the execution and delivery of this Agreement by
Parent and Purchaser nor the consummation by Parent and Purchaser of the
transactions contemplated hereby will conflict with or violate the Certificate
of Incorporation or Bylaws of Parent or Purchaser, result in a violation or
breach of, constitute (with or without notice or lapse of time or both) a
default under, give rise to any right of termination, cancellation or
acceleration of, or result in the imposition of any lien, charge or other
encumbrance on any material assets or property of either of Parent or Purchaser
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license or other instrument or obligation to which either of Parent or
Purchaser is a party or by which either of Parent or Purchaser or any of their
respective assets or properties are bound, except for such violations, breaches
and defaults (or rights of termination, cancellation or acceleration or lien or
other charge or encumbrance) as to which consents have been obtained or which
in the aggregate would not have a Material Adverse Effect on Parent and
Purchaser taken as a whole or prevent the consummation of the transactions
contemplated hereby or assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in Section 4.3 are duly and
timely obtained or made, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to either of Parent or Purchaser or any of their
respective assets or properties, except for such violations which would not in
the aggregate have a Material Adverse Effect on Parent and Purchaser taken as a
whole or prevent the consummation of the transactions contemplated hereby.
4.5 Litigation. Except as set forth in the Parent SEC Documents, there
are no claims, actions, proceedings or governmental investigations pending or,
to the knowledge of Parent and Purchaser, threatened against either of Parent
or Purchaser or any of their respective subsidiaries before any court or other
governmental or regulatory body, which, if adversely determined, would impair,
interfere with, or otherwise adversely affect the ability of Parent or
Purchaser to consummate the transactions contemplated hereby in any material
respect. As of the date hereof, no action or proceeding has been instituted or,
to the knowledge of Parent or Purchaser, threatened before any court or other
governmental or regulatory body by any Person seeking to restrain or prohibit
or to obtain damages with respect to the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.
4.6 Offer Documents; Company Proxy Statement; Schedule 14D-9. Neither the
Offer Documents nor any other document filed or to be filed by or on behalf of
Parent or Purchaser with the SEC or any other governmental entity in connection
with the transactions contemplated by this Agreement nor any information
supplied by or on behalf of Parent or Purchaser specifically for inclusion in
the Schedule 14D-9 or Company Proxy Statement will, at the respective times
filed with the SEC or other governmental entity, or at any time thereafter when
the information included therein is required to be updated pursuant to
applicable law, or, in the case of the Company Proxy Statement, at the date
mailed to the Company's stockholders and at the time of the Company
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. The Offer Documents will, when filed by Parent
or Purchaser with the SEC or other governmental entity, comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, Parent and Purchaser
make no representation or warranty with respect to the statements made in the
foregoing documents based on information supplied by or on behalf of the
Company or any of its affiliates specifically for inclusion therein.
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4.7 Financing; Sufficient Funds. Parent and Purchaser have no knowledge
of any facts or circumstances, nor will Parent or Purchaser take any action or
omit to take any action, that could be expected to result in the inability of
Parent or Purchaser to obtain and use the funds available to them for
consummation of the Offer and the transactions contemplated thereby. Parent
and Purchaser will have available to them and will utilize, upon consummation
of the Offer and at the Effective Time, all immediately available funds
necessary to consummate the transactions contemplated by this Agreement and to
pay all related fees and expenses for which Parent or Purchaser will be
responsible.
4.8 Brokers and Finders. No broker, finder or investment bank has acted
directly or indirectly for either of Parent or Purchaser, nor has either of
Parent or Purchaser incurred any obligation to pay any brokerage, finder's or
other fee or commission in connection with the transactions contemplated
hereby.
4.9 Operations of Purchaser. Purchaser has been formed solely for the
purpose of engaging in the transactions contemplated hereby and prior to the
Effective Time will have engaged in no other business activities, will have
incurred no other liabilities or obligations other than as contemplated herein,
will have no subsidiaries and will have conducted its operations only as
contemplated hereby.
ARTICLE V
COVENANTS
5.1 Conduct of Business Pending the Merger. From the date hereof until
the Effective Time, except as otherwise required or contemplated hereunder or
as required by applicable law, without the prior written consent of the
Purchaser, the Company shall:
(a) use all commercially reasonable efforts to conduct its
business in all material respects only in the ordinary course of business and
consistent with past practice;
(b) not amend its certificate of incorporation or bylaws or
declare, set aside or pay any dividend or other distribution or payment in
cash, stock or property in respect of its capital stock; or acquire, directly
or indirectly, any of its capital stock;
(c) not issue, grant, sell or pledge or agree or authorize the
issuance, grant, sale or pledge of any shares of, or rights of any kind to
acquire any shares of, its capital stock other than Shares issuable upon the
exercise of stock options;
(d) not acquire, sell, transfer or lease any assets except in the
ordinary course of business and consistent with past practice or encumber any
assets of the Company;
(e) use all commercially reasonable efforts to preserve intact its
business organizations and to keep available the services of its present key
officers and employees; provided, however, that to satisfy the foregoing
obligation, the Company shall not be required to make any payments other than
those disclosed in Sections 3.11 or 3.14 of the Company Disclosure Schedule or
enter into or amend any contractual arrangements or understandings, except in
the ordinary course of business and consistent with past practice;
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(f) not adopt a plan of complete or partial liquidation or adopt
resolutions providing for the complete or partial liquidation, dissolution,
consolidation, merger, restructuring or recapitalization of the Company;
(g) not grant any severance or termination pay (otherwise than
pursuant to policies or contracts in effect on the date hereof, as disclosed in
Sections 3.11 and 3.14 of the Company Disclosure Schedule) to, or enter into
any employment agreement with, any of its executive officers or directors;
(h) not increase the compensation payable or to become payable to
its officers or employees, enter into any contract or other binding commitment
in respect of any such increase with any of its directors, officers or other
employees, and not establish, adopt, enter into, make any new grants or awards
under or amend, any collective bargaining agreement or Company Benefit Plan,
except as required by applicable law, including any obligation to engage in
good faith collective bargaining, to maintain tax-qualified status or as may be
required by any Company Benefit Plan as the date hereof;
(i) not settle or compromise any material claims or litigation or,
except in the ordinary course of business, modify, amend or terminate any of
its material contracts or waive, release or assign any material rights or
claims, or make any payment, direct or indirect, of any material liability
before the same becomes due and payable in accordance with its terms;
(j) not take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice with
respect to accounting policies or procedures (including tax accounting policies
and procedures), except as may be required by the SEC or the Financial
Accounting Standards Board;
(k) not make any material tax election or permit any material
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without notice to Parent, except in the ordinary course
of business;
(l) confer at such times as Parent may reasonably request with one
or more representatives of Parent to report material operational matters and
the general status of ongoing operations (in each case to the extent Parent
reasonably requires such information) and to consult with Parent regarding
material operational decisions;
(m) not (i) enter into any loan or credit agreement, or incur any
indebtedness (other than borrowings under its existing credit agreement for the
purpose of paying fees and severance payments disclosed in Sections 3.11, 3.14
and 3.15 of the Company Disclosure Schedule and expenses incurred in connection
with the transactions contemplated hereunder) or guarantee any indebtedness or
amend any existing loan or credit agreement, (ii) make or enter into any
agreement or contract for capital expenditures, except for (y) capital
expenditures in the ordinary course of business required to be made by the
Company under the Company's existing joint operating agreements, and (z) other
expenditures in the ordinary course of business on the Company's existing
properties of up to $25,000 per expenditure or $100,000 in the aggregate or
(iii) enter into any agreement or contract outside the ordinary course of
business of the Company;
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(n) not adjust, split, combine or reclassify its capital stock;
(o) not enter into any agreement, understanding or arrangement
with respect to the sale or voting of its capital stock;
(p) not enter into derivative instruments;
(q) not create or acquire any subsidiaries; and
(r) not authorize or enter into an agreement to do any of the
foregoing.
5.2 Access; Confidentiality.
(a) From the date of this Agreement until the Effective Time, upon
reasonable prior notice to the Company, the Company shall give Parent and its
authorized representatives reasonable access during normal business hours to
its executive officers and such other officers or other representatives of the
Company approved in advance by the Company (which approval shall not be
unreasonably withheld or delayed), properties, books and records, and shall
furnish Parent and its authorized representatives with such financial and
operating data and other information concerning the business and properties of
the Company as Parent may from time to time reasonably request.
(b) Parent and Purchaser will hold and treat, and will cause their
respective affiliates, agents and other representatives to hold and treat, all
documents and information concerning the Company furnished to Parent, Purchaser
or their respective representatives in connection with the transactions
contemplated by this Agreement confidential in accordance with the
Confidentiality Agreement dated March 17, 1997, between Dillon Read and Parent,
which Confidentiality Agreement shall remain in full force and effect until the
termination of this Agreement or otherwise in accordance with its terms.
5.3 Further Actions. Upon the terms and subject to the conditions hereof,
each of the parties hereto shall act in good faith toward and use all
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable, and
consult and fully cooperate with and provide reasonable assistance to each
other party, in order to consummate and make effective the transactions
contemplated by this Agreement as soon as practicable hereafter, including,
without limitation, (a) using all commercially reasonable efforts to obtain all
consents, approvals, authorizations or permits of governmental or regulatory
authorities or other Persons as are necessary for the consummation of the
transactions contemplated hereby, (b) taking such actions and doing such things
as any other party hereto may reasonably request in order to cause any of the
conditions specified in Article VI to such other party's obligation to
consummate such transactions to be fully satisfied, and (c) in the event and to
the extent required, amending this Agreement so that this Agreement and the
Merger comply with the DGCL. Prior to making any application to or filing
with any governmental or regulatory authority or other Person in connection
with this Agreement, the Company, on the one hand, and Parent and Purchaser, on
the other hand, shall provide the other with drafts thereof and afford the
other a reasonable opportunity to comment on such drafts.
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5.4 Notice of Certain Matters. The Company shall give prompt notice to
Parent, and Parent and Purchaser shall give prompt notice to the Company, of
(a) the occurrence or nonoccurrence of any event that would be likely to cause
(i) any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (ii) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied in all
material respects and (b) any failure of the Company or of Parent or Purchaser,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect. The Company shall give prompt notice to Parent of the Company's
receipt of any authority for expenditure with respect to the Company's Oil and
Gas Properties ("AFE") requiring a payment by the Company in excess of $25,000,
and Parent shall advise the Company in writing as promptly as practicable
thereafter whether Parent consents to the payment by the Company requested
under such AFE. If the Company does not receive a response from Parent by the
close of business on the sixth business day immediately preceding the deadline
for the Company's response under such AFE, Parent shall be deemed to have
consented to such payment by the Company.
5.5 Company Proxy Statement. Unless the Merger is consummated as
contemplated in Section 2.13 hereof, the Company shall, as soon as reasonably
practicable after the consummation of the Offer, prepare a preliminary form of
the Company Proxy Statement (the "Company Preliminary Proxy Statement"). The
Company shall (a) file the Company Preliminary Proxy Statement with the SEC
promptly after it has been prepared in a form reasonably satisfactory to the
Company and Parent and (b) use commercially reasonable efforts to promptly
prepare any amendments to the Company Preliminary Proxy Statement required in
response to comments of the SEC or its staff or that the Company with the
advice of counsel deems necessary or advisable and to cause the Company Proxy
Statement to be mailed to the Company's stockholders as soon as reasonably
practicable after the Company Preliminary Proxy Statement, as so amended, is
cleared by the SEC.
5.6 State Takeover Statutes. The Company, Parent and Purchaser will
cooperate to take reasonable steps to (a) exempt the Offer and the Merger from
the requirements of any applicable state takeover law and (b) assist in any
challenge by any of the parties to the validity or applicability to the Offer
or the Merger of any state takeover law.
5.7 Cooperation. Subject to the terms and conditions of this Agreement
and applicable law, each of the parties shall act in good faith and use
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement as soon as
practicable, including such actions or things as any other party may reasonably
request in order to cause any of the conditions to such other party's
obligation to consummate the transactions contemplated by this Agreement to be
fully satisfied. Without limiting the foregoing, the parties shall (and shall
cause their respective subsidiaries, and use reasonable efforts to cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives, to) consult and fully cooperate with and
provide assistance to each other in (a) the preparation and filing with the SEC
of the Offer Documents, the Schedule 14D-9, the Company Preliminary Proxy
Statement and the Company Proxy Statement, and any necessary amendments or
supplements thereto; (b) seeking to have the Company Preliminary Proxy
Statement cleared by the SEC as soon as reasonably practicable after filing;
(c) obtaining all necessary consents, approvals, waivers, licenses, permits,
authorizations, registrations, qualifications, or other permissions or actions
by, and giving all
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necessary notices to and making all necessary filings with and applications and
submissions to, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic (federal, state or local)
or foreign (collectively, "Governmental Entity") or other Person as soon as
reasonably practicable after filing; (d) providing all such information
concerning such party, its subsidiaries and its officers, directors, partners
and affiliates and making all applications and filings as may be necessary or
reasonably requested in connection with any of the foregoing; (e) in general,
consummating and making effective the transactions contemplated hereby; and (f)
in the event and to the extent required, amending this Agreement so that this
Agreement and the Offer and the Merger comply with the DGCL. The parties shall
(and shall cause their respective affiliates, directors, officers, employees,
agents, attorneys, accountants and representatives to) use their reasonable
efforts to cause the lifting of any permanent or preliminary injunction or
restraining order or other similar order issued or entered by any court or
other Governmental Entity preventing or restricting consummation of the
transactions contemplated hereby in the manner provided for herein. Prior to
making any application to or filing with any Governmental Entity or other
Person in connection with this Agreement, each party shall provide the other
party with drafts thereof and afford the other party a reasonable opportunity
to comment on such drafts.
5.8 Public Announcements. No party hereto shall or shall permit any of
its subsidiaries to (and each party shall use commercially reasonable efforts
to cause its affiliates, directors, officers, employees, agents or
representatives not to) issue any press release or make any public statement
concerning this Agreement or any of the transactions contemplated hereby,
without the prior written consent of the other parties hereto; provided,
however, that a party may, without the prior written consent of the other party
hereto, issue such a press release or make such a public statement to the
extent required by applicable law or any listing agreement with a national
securities exchange by which such party is bound if it has used commercially
reasonable efforts to consult with the other parties and to obtain such
parties' consent but has been unable to do so in a timely manner.
5.9 Acquisition Proposals. Except as contemplated hereby, the Company
shall not (and shall use its best efforts to cause its officers, directors and
employees and any investment banker, financial advisor, attorney, accountant,
or other agent or representative retained by it not to) directly or indirectly,
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the
making of any proposal relating to, or that may reasonably be expected to lead
to, the acquisition of all or a significant part of the business and properties
or capital stock of the Company, whether by merger, purchase of assets, tender
offer or otherwise with a third party other than Parent (an "Acquisition
Proposal"), or enter into discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain an Acquisition Proposal, or agree to
or endorse any Acquisition Proposal, or authorize or permit any of the
officers, directors, employees or agents of the Company or any investment
banker, financial advisor, attorney, accountant or other representative
retained by the Company to take any such action. The Company shall as promptly
as practicable notify Parent of all relevant terms of any such inquiries or
proposals received by the Company and, if such inquiry or proposal is in
writing, the Company shall as promptly as practicable deliver or cause to be
delivered to Parent a copy of such inquiry or proposal. Notwithstanding the
foregoing, nothing shall prohibit the Company's Board of Directors from (a)
furnishing information to, or entering into discussions or negotiations with,
any persons or entity in connection with an unsolicited bona fide proposal in
connection with an Acquisition Proposal if, and only to the extent that (i)
such unsolicited bona fide proposal is on terms that the Company's
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Board of Directors determines it cannot reject, based on applicable fiduciary
duties and the advice of outside counsel (except with respect to furnishing
information) and for which financing, to the extent required, is then
committed, and (ii) prior to furnishing such information to or entering into
discussions or negotiations with, such person or entity the Company provides
written notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or entity; or (b)
complying with Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal.
5.10 D&O Indemnification.
(a) From the Effective Time through the later of (i) the sixth
anniversary of the date on which the Effective Time occurs and (ii) the
expiration of any statute of limitations applicable to any claim, action, suit,
proceeding or investigation referred to below, the Surviving Corporation shall
indemnify and hold harmless each present and former director and officer of the
Company, determined as of the Effective Time (the "Indemnified Parties"),
against any claims, losses, liabilities, damages, judgments, fines, fees, costs
or expenses, including without limitation attorneys' fees and disbursements
(collectively, "Costs"), incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time (including, without limitation, the Merger, the
preparation, filing and mailing of the Proxy Statement and the other
transactions and actions contemplated by this Agreement), whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that
the Company would have been permitted, under applicable law, indemnification
agreements existing on the date hereof, the Certificate of Incorporation or
Bylaws of the Company in effect on the date hereof, to indemnify such Person
(and the Surviving Corporation shall also advance expenses as incurred to the
fullest extent permitted under applicable law provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification under
this Section 5.10, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Surviving Corporation thereof, but the
failure to so notify shall not relieve the Surviving Corporation of any
liability or obligation it may have to such Indemnified Party except, and only
to the extent, that such failure materially prejudices the Surviving
Corporation. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before, at or after the Effective Time), the
Surviving Corporation shall have the right to assume the defense thereof and
the Surviving Corporation shall not be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Parties in connection with the defense thereof, except that
if the Surviving Corporation elects not to assume such defense or counsel for
the Indemnified Parties advises that there are issues that raise conflicts of
interest between the Surviving Corporation and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received. If such
indemnity is not available with respect to any Indemnified Party, then the
Surviving Corporation and the Indemnified Party shall contribute to the amount
payable in such proportion as is appropriate to reflect relative faults and
benefits. In the event that any claim or claims are asserted
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or made within the aforesaid six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until the final disposition
of any and all such claims.
(c) Notwithstanding anything herein to the contrary, if any claim,
action, suit, proceeding or investigation (whether arising before, at or after
the Effective Time) is made against any present or former director or officer
of the Company, on or prior to the sixth anniversary of the Effective Time, the
provisions of this Section 5.10 shall continue in effect until the final
disposition of such claim, action, suit, proceeding or investigation.
(d) This covenant is intended to be for the benefit of, and shall
be enforceable by, each of the Indemnified Parties and their respective heirs
and legal representatives. The indemnification provided for herein shall not
be deemed exclusive of any other rights to which an Indemnified Party is
entitled, whether pursuant to law, contract or otherwise.
(e) To the extent that the Surviving Corporation fails to perform
any of its obligations pursuant to this Section 5.10, Parent shall assume the
obligations and rights of the Surviving Corporation under this Section 5.10.
5.11 Employee Matters.
(a) The Company will terminate all of its employees effective
immediately prior to the Closing Date, and the Company and the Surviving
Corporation shall pay all such terminated employees any and all benefits earned
under the Company Benefit Plans in accordance with their terms including any
amounts owing under any employment agreement or severance agreement, as
described in Section 3.11 of the Company Disclosure Schedule.
(b) Prior to the Closing Date, the Company shall take any and all
action necessary to terminate the HarCor Energy 401(k) Savings Plan ("HarCor
Savings Plan") with such termination to be effective immediately prior to the
Closing Date, and upon the termination of the HarCor Savings Plan, the Company
and the Surviving Corporation shall distribute to all HarCor Savings Plan
participants their account balances thereunder as soon as administratively
possible.
(c) Except for those Company Benefit Plans which the Parent
advises the Company in writing within 30 days following the date of this
Agreement that the Parent wishes to remain in effect following the Closing
Date, the Company shall take any and all action necessary to terminate all
Company Benefit Plans on or before the Closing Date.
(d) Notwithstanding the above, Parent shall be freely able to
contract with or employ, as the case may be, any terminated employee of the
Company without restriction or interference by the Company.
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ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party hereto to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Purchase of Shares. Parent will have accepted for payment and
purchased all Shares validly tendered and not withdrawn pursuant to the Offer.
(b) Stockholder Approval. Unless the Merger is consummated as
contemplated in Section 2.13 hereof, this Agreement shall have been adopted,
and the Merger shall have been approved, by a vote of the holders of a majority
of the outstanding Shares.
(c) No Injunction. No federal or state governmental or regulatory
body or court of competent jurisdiction shall have enacted, issued, promulgated
or enforced any statute, rule, regulation, executive order, decree, judgment,
preliminary or permanent injunction or other order that is in effect and that
prohibits, enjoins or otherwise restrains the consummation of the Merger;
provided, however, that the parties shall use all commercially reasonable
efforts to cause any such decree, judgment, injunction or order to be vacated
or lifted.
(d) Governmental and Regulatory Consents. All material filings
required to be made prior to the Effective Time with, and all material
consents, approvals, permits and authorizations required to be obtained prior
to the Effective Time from, governmental and regulatory authorities or third
parties in connection with the Merger and the consummation of the other
transactions contemplated hereby which are listed in Section 3.4 of the Company
Disclosure Schedule shall have been made or obtained, as the case may be.
6.2 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to effect the Merger is also subject to the
satisfaction at or prior to the Effective Time of each of the following
additional conditions, unless waived by the Company:
(a) Accuracy of Representations and Warranties. All representations
and warranties made by Parent and Purchaser herein shall be true and correct in
all material respects on and as of the Effective Time, with the same force and
effect as though such representations and warranties had been made on and as of
the Effective Time, except for changes permitted or contemplated by this
Agreement and except for representations and warranties that are made as of a
specific date or time, which shall be true and correct in all material respects
only as of such specific date or time.
(b) Compliance with Covenants. Each of Parent and Purchaser shall
have performed in all material respects all obligations and agreements, and
complied in all material respects with all covenants, contained in this
Agreement to be performed or complied with by it prior to or on the Effective
Time.
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6.3 Conditions Precedent to the Obligations of Parent and Purchaser. The
obligation of Parent and Purchaser to effect the Merger is also subject to the
satisfaction at or prior to the Effective Time of each of the following
additional conditions, unless waived by either of Parent or Purchaser:
(a) Accuracy of Representations and Warranties. All representations
and warranties made by the Company herein shall be true and correct in all
material respects on and as of the Effective Time, with the same force and
effect as though such representations and warranties had been made on and as of
the Effective Time, except for changes permitted or contemplated by this
Agreement and except for representations and warranties that are made as of a
specific date or time, which shall be true and correct in all material respects
only as of such specific date or time.
(b) Compliance with Covenants. The Company shall have performed in
all material respects all obligations and agreements, and complied in all
material respects with all covenants, contained in this Agreement to be
performed or complied with by it prior to or on the Effective Time.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and the Offer and the
Merger may be abandoned at any time (notwithstanding approval of the Merger by
the stockholders of the Company, if required by applicable provisions of the
DGCL), prior to the Effective Time:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Effective Time shall
not have occurred on or before 120 days from the date hereof; provided, that
the right to terminate this Agreement under this clause (b) shall not be
available to any party whose misrepresentation in this Agreement or whose
failure to perform any of its covenants and agreements or to satisfy any
obligation under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date;
(c) by either the Company or Parent, if any federal or state court
of competent jurisdiction or other federal or state governmental or regulatory
body shall have issued any judgment, injunction, order or decree prohibiting,
enjoining or otherwise restraining the transactions contemplated by this
Agreement and such judgment, injunction, order or decree shall have become
final and nonappealable (provided, however, that the party seeking to terminate
this Agreement pursuant to this clause (c) shall have used commercially
reasonable efforts to remove such judgment, injunction, order or decree) or if
any statute, rule, regulation or executive order promulgated or enacted by any
federal or state governmental authority after the date of this Agreement which
prohibits the consummation of the Offer or the Merger shall be in effect;
(d) by the Company, if (i) Purchaser fails to commence the Offer
as provided in Section 1.1, (ii) the Offer expires or is terminated without any
Shares being purchased thereunder or (iii) Parent fails to purchase validly
tendered Shares in violation of the terms and conditions of the Offer or this
Agreement;
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<PAGE> 37
(e) by Parent, if (i) the Offer is not commenced as provided in
Section 1.1 directly as a result of actions or inaction by the Company or (ii)
the Offer is terminated or expires as a result of the failure of a condition
specified in Annex A hereto or on the expiration of the Offer without the
purchase of any Shares thereunder, unless such termination or expiration has
been caused by or resulted from the failure of Parent or Purchaser to perform
any covenants and agreements of Parent or Purchaser contained in this
Agreement;
(f) prior to the consummation of the Offer, by Parent, if the
Company Board withdraws or modifies in a manner materially adverse to Parent or
Purchaser its favorable recommendation of the Offer or the Merger or shall have
recommended any Acquisition Proposal with a party other than Parent or any of
its affiliates;
(g) by the Company, if this Agreement is not adopted or, unless
the Merger is consummated as contemplated in Section 2.13 hereof, the Merger is
not approved at the Company Stockholders' Meeting by the holders of a majority
of the outstanding Shares;
(h) by Parent, if there shall have been a material breach of any
representation, warranty or material covenant or agreement on the part of the
Company, which is incurable or which is not cured after thirty (30) days'
written notice by Parent to the Company;
(i) by the Company, if there shall have been a material breach of
any representation, warranty or material covenant or agreement on the part of
either of Parent or Purchaser, which is incurable or which is not cured after
thirty (30) days' written notice by the Company to Parent; or
(j) by the Company, if (i) pursuant to Section 5.9 hereof the
Company Board shall withdraw, modify or change its approval or recommendation
of the Offer or the Merger or shall have resolved to do any of the foregoing or
(ii) any Person or group of Persons shall have made an Acquisition Proposal the
acceptance of which the Company Board determines, after consultation with legal
counsel and after the Company Board has satisfied itself that the financing for
the Acquisition Proposal has been committed, is required to comply with its
fiduciary duties under applicable law.
7.2 Effect of Termination. In the event of any termination of this
Agreement pursuant to Section 7.1, this Agreement forthwith shall become void
and of no further force or effect, and no party hereto (or any of its
affiliates, directors, officers, agents or representatives) shall have any
liability or obligation hereunder, except in any such case (a) as provided in
Sections 5.2(b) (Confidentiality), 5.8 (Public Announcements), and 7.3 (Fees
and Expenses), which shall survive any such termination and (b) to the extent
such termination results from the breach by such party of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
7.3 Fees and Expenses.
(a) Whether or not the Offer or the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including, without limitation, fees and
disbursements of counsel, financial advisors and accountants) shall be
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<PAGE> 38
borne by the party which incurs such cost or expense; provided, that if this
Agreement is terminated pursuant to Section 7.1 as a result of a material
misrepresentation by a party or a material breach by a party of any of its
covenants or arrangements set forth herein, such party shall pay the costs and
expenses incurred by the other party in connection with this Agreement; and
provided, further, that all costs and expenses related to the preparation,
printing, filing and mailing (as applicable) of the Company Proxy Statement and
all SEC and other regulatory filing fees incurred in connection with the
Company Proxy Statement shall be borne equally by the Company, on the one hand,
and Parent and Purchaser, on the other hand.
(b) Notwithstanding the foregoing, provided that neither Parent
nor Purchaser shall be in breach of their respective obligations under this
Agreement, if (i) prior to the consummation of the Offer, the Company Board
terminates this Agreement pursuant to Section 7.1(j) or Parent terminates this
Agreement pursuant to Section 7.1(f) and (ii) as a result thereof, Parent shall
have terminated the Offer, allowed the Offer to expire without purchasing any
Shares thereunder or failed to commence the Offer in accordance with the terms
hereof and (iii) the Company enters into a definitive agreement relating to an
Acquisition Proposal or a business combination or other transaction
contemplated by such Acquisition Proposal shall have been consummated within 12
months following such termination, then the Company shall thereupon pay to
Parent, as liquidated damages, a fee of $1,000,000 in cash, payable in same day
funds. The Company acknowledges that the provisions of this Section 7.3(b) are
an integral part of the transactions contemplated in this Agreement and that,
without such provisions, Parent and Purchaser would not enter into this
Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 No Survival. None of the representations, warranties, covenants or
agreements contained in this Agreement or in any certificate or other
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the covenants and agreements contained in Sections 5.10 (D&O
Indemnification and Insurance), 5.11 (Company Plans) and 5.12 (Severance
Agreements).
8.2 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) or sent by facsimile (with
immediate confirmation) or nationally recognized overnight courier service, as
follows:
(a) if to Parent or Purchaser, to:
Seneca Resources Corporation
1201 Louisiana, Suite 400
Houston, Texas 77002
Attn: John F. McKnight
Fax: (713) 654-2659
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<PAGE> 39
with a copy (not required as notice) to:
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place, Suite
711 Louisiana
Houston, Texas 77002-2781
Attn: Gary W. Orloff
Fax: (713) 221-1212
(b) if to the Company, to:
HarCor Energy, Inc.
Five Post Oak Park
4400 Post Oak Parkway
Suite 2220
Houston, Texas 77027
Attn: Mark G. Harrington
Fax: (713) 961-9773
with a copy (not required as notice) to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin
Houston, Texas 77002
Attn: Michael P. Finch
Fax: (713) 615-5282
or to such other Person or address or facsimile number as any party shall
specify by like written notice to the other parties hereto (any such notice of
a change of address to be effective only upon actual receipt thereof).
8.3 Certain Definitions. The following terms, when used in this
Agreement, shall have the following respective meanings:
(a) "affiliate" shall have the meaning assigned to such term in
Section 12(b)-2 of the Exchange Act.
(b) "business day" shall have the meaning set forth in Rule
14d-1(c)(6) under the Exchange Act.
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<PAGE> 40
(c) "Material Adverse Effect" means, with respect to any Person,
any change or effect that is materially adverse to the financial condition or
results of operations of such Person and its subsidiaries, taken as a whole,
excluding in all cases: (i) events or conditions generally affecting the
industry in which such Person and its subsidiaries operate or arising from
changes in general business or economic conditions; (ii) out-of-pocket fees and
expenses (including without limitation legal, accounting, investigatory, and
other fees and expenses) incurred in connection with the transactions
contemplated by this Agreement; (iii) in the case of the Company, the payment
by the Company of all amounts due to any officers or employees of the Company
under employment contracts or other employee benefit plans in effect as of the
date hereof and which have been listed in the Company Disclosure Schedule; (iv)
any effect resulting from any change in law or generally accepted accounting
principles, which affect generally entities such as such Person; and (v) any
effect resulting from compliance by such Person with the terms of this
Agreement.
(d) "Person" means any natural person, corporation, limited
liability company, partnership, unincorporated organization or other entity.
(e) "subsidiary" of any Person means any other corporation or
entity of which such Person owns, directly or indirectly, stock or other equity
interests having a majority of the votes entitled to be cast in the election of
directors of such corporation or entity under ordinary circumstances or of
which such Person owns a majority beneficial interest.
8.4 Entire Agreement. This Agreement (including the schedules, exhibits
and other documents referred to herein), together with the Confidentiality
Agreement referred to in Section 5.2(b), constitutes the entire agreement
between and among the parties hereto and supersedes all prior agreements and
understandings, oral and written, between or among any of the parties with
respect to the subject matter hereof.
8.5 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, benefits or obligations hereunder may be assigned, in whole or in part,
by any party (whether by operation of law or otherwise) without the prior
written consent of the other parties hereto. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
Nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties or their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, other than rights conferred upon Indemnified Parties under Section
5.10.
8.6 Amendments. This Agreement may be amended by the parties at any time
prior to the Effective Time; provided, that, after approval of the Merger and
this Agreement by the stockholders of the Company if required under applicable
law, no amendment shall be made that by law requires further approval by the
stockholders of the Company, without such approval. This Agreement may not be
amended or modified except by an instrument in writing signed on behalf of each
of the parties hereto.
8.7 Waivers. At any time prior to the Effective Time, Parent (for Parent
and Purchaser), on the one hand, or the Company, on the other hand, may, to the
extent legally allowed, extend the time specified herein for the performance
of any of the obligations or other acts of the other, waive any
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<PAGE> 41
inaccuracies in the representations and warranties of the other contained
herein or in any document delivered pursuant hereto, or waive compliance by
the other with any of the agreements or covenants of such other party or
parties (as the case may be) contained herein. Any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
the party or parties to be bound thereby. No such extension or waiver shall
constitute a waiver of, or estoppel with respect to, any subsequent or other
breach or failure to strictly comply with the provisions of this Agreement.
The failure of any party to insist on strict compliance with this Agreement or
to assert any of its rights or remedies hereunder or with respect hereto shall
not constitute a waiver of such rights or remedies.
8.8 Captions. The Table of Contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.9 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.
8.10 Validity. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
8.11 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to any
applicable principles of conflicts of law, except to the extent that the DGCL
mandatorily applies to the Merger.
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<PAGE> 42
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Merger as of the date first above written.
HARCOR ENERGY, INC.
By: /s/ MARK G. HARRINGTON
-----------------------------------
Mark G. Harrington
Chairman of the Board and
Chief Executive Officer
SENECA WEST CORP.
By: /s/ WILLIAM M. PETMECKY
------------------------------------
William M. Petmecky
President
SENECA RESOURCES CORPORATION
By: /s/ JAMES A. BECK
-----------------------------------
James A. Beck
President
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<PAGE> 43
ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex A shall have the meanings
assigned to them in the Agreement to which it is attached (the "Merger
Agreement").
Parent shall not be required to accept for payment, purchase or pay
for any Shares tendered and Parent may terminate or, subject to the terms and
conditions of the Merger Agreement, amend the Offer as to any Shares not then
accepted for payment, shall not be required to accept for payment or pay for
any Shares, or may delay the acceptance for payment of Shares tendered, if (1)
at the expiration of the Offer, the number of Shares validly tendered and not
withdrawn, together with the Shares beneficially owned by Parent and its
affiliates, shall not constitute a majority of the outstanding Shares on a
fully diluted basis or (2) at any time after the date of execution of the
Merger Agreement and prior to the acceptance for payment of Shares, any of the
following events shall occur:
(a) there shall have been any action or proceeding
brought by any governmental authority before any federal or state
court, or any order or preliminary or permanent injunction entered in
any action or proceeding before any federal or state court or
governmental, administrative or regulatory authority or agency,
located or having jurisdiction within the United States, or any other
action taken, proposed or threatened, or statute, rule, regulation,
legislation, interpretation, judgment or order proposed, sought,
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to Purchaser, the Company or affiliate of Purchaser or the
Company or the Offer or the Merger, by any legislative body, court,
government or governmental, administrative or regulatory authority or
agency located or having jurisdiction within the United States, which
could reasonably be expected to have the effect of: (i) making
illegal, materially delaying or otherwise restraining or prohibiting
the Offer or the Merger or the acquisition by Parent or Purchaser of
any Shares; (ii) prohibiting or materially limiting the ownership or
operation by Parent, Purchaser or their respective affiliates of any
material portion of their business or assets or those of the Company
or compelling Parent or Purchaser to dispose of or hold separate all
or any material portion of their business or assets or those of the
Company, in each case as a result of the transactions contemplated by
the Merger Agreement; (iii) imposing material limitations on the
ability of Parent or any of its affiliates to exercise full rights of
ownership of the Shares, including, without limitation, the right to
vote any Shares purchased by them on all matters properly presented to
the stockholders of the Company; or (iv) preventing Parent or any of
its affiliates from acquiring, or to require divestiture by Parent or
any of its affiliates of, any Shares; or
(b) there shall have occurred (i) any general suspension
of, or limitation on prices for, trading in securities on any national
securities exchange or in the over-the-counter market in the United
States, (ii) the declaration of any banking moratorium or any
suspension of payments in respect of banks or any limitation (whether
or not mandatory) on the extension of credit by lending institutions
in the United States, (iii) the commencement or any escalation of a
war, material armed hostilities or any other material international or
A-1
<PAGE> 44
national calamity involving the United States, or (iv) in the case of
any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof; or
(c) any Person, entity or "group" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than Parent or any of
its affiliates shall have become the beneficial owner (as that term is
used in Rule 13d-3 under the Exchange Act) of more than 50% of the
outstanding Shares; or
(d) the Company shall have breached or failed to comply
in any material respect with any of its obligations under the Merger
Agreement (which breach, if curable, has not been cured within thirty
(30) days following receipt of written notice thereof by Parent
specifying in reasonable detail the basis of such alleged breach), or
any representation or warranty of the Company contained in the Merger
Agreement that is qualified as to materiality shall not have been true
and correct and any such representation and warranty that is not so
qualified shall not have been true and correct in any material
respect, except (i) for changes specifically permitted or contemplated
by the Merger Agreement and (ii) those representations and warranties
that address matters only as to a particular date which are true and
correct as of such date; or
(e) the Merger Agreement shall have been terminated
pursuant to its terms or amended pursuant to its terms to provide for
such termination or amendment of the Offer; or
(f) the Board of Directors of the Company shall have
modified or amended in any manner materially adverse to Parent or
Purchaser or shall have withdrawn its recommendation of the Offer or
the Merger, or shall have resolved to do any of the foregoing; or
(g) Parent shall not have received notice from the holder
or holders of more than 5%, on a fully diluted basis of the Shares
issued and outstanding on the record date for the determination of
stockholders entitled to vote on the Merger that such holders have
exercised or intend to exercise their appraisal rights under the DGCL;
or
(h) the Company shall not have received at least
$12,789,000 (including all material purchase price adjustments) in
immediately available funds from the sale of the Company's
non-California oil and gas assets and shall be entitled to receive an
additional amount in immediately available funds determined under the
Company's agreement with Penroc Oil Company ("Penroc") dated January
15, 1998 for the sale of the Beaurline No. 9 well, Beaurline/McAllen
Ranch Area, South Texas and its pooled or allocated producing unit
(the "Well") as follows: if the Well is restored by sidetrack or
redrill or associated operations, an agreed amount equal to the
present value of the future production from the Well discounted at
10%, as determined by Ryder Scott Company (the "New Reserve
Evaluation"), with payment to be made ten business days after Penroc's
receipt of the New Reserve Evaluation; or
A-2
<PAGE> 45
(i) the Company shall not have retained the proceeds from
the sale of its non-California oil and gas assets or used such
proceeds to repay Company indebtedness or other liabilities incurred
by the Company in the ordinary course of business or pursuant to the
transactions contemplated by the Merger Agreement; or
(j) the Company shall have completed and delivered to
Parent an audit of the Company's financial statements for the fiscal
year ended December 31, 1997, to be performed by the accounting firm
of Arthur Andersen LLP, which reveals material adverse information not
previously disclosed in writing to Parent, or a material variance from
the written or printed disclosures furnished by the Company or its
representatives and used by Parent in its economic models; or
(k) there shall have occurred any event, change, effect
or development having a Material Adverse Effect on the Company;
which, in the good faith judgment of Parent makes it inadvisable to proceed
with the Offer or with acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted or waived by Parent or Purchaser in whole or in
part at any time or from time to time in its discretion subject to the terms
and conditions of the Merger Agreement. The failure of Parent or Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.
A-3
<PAGE> 1
EXHIBIT (c)(2)
[DILLON, READ & CO. INC. LETTERHEAD]
MARCH 17, 1997
STRICTLY PRIVATE AND CONFIDENTIAL
Seneca Resources Corporation
1201 Louisiana Street
Suite 400
Houston, Texas 77002
Attention: Mr. John F. McKnight
Re: CONFIDENTIALITY AGREEMENT
Dear Sirs:
You have requested information on HarCor Energy, Inc. ("HarCor" or the
"Company") directly or through us in connection with your investigation
concerning the acquisition by you of certain businesses, assets or stock of
HarCor (the "Transaction"). Dillon, Read & Co. Inc. ("Dillon Read"), which for
purposes of this letter shall also include all of its officers, directors,
employees, agents and controlling persons, has been retained by the Company as
a financial advisor to attempt to identify and consummate a Transaction. As a
condition of the Company's consent to communicate such information to you, it
is required that you agree, on the terms set forth below (the "Agreement"), to
treat confidentially all such information that Dillon Read, HarCor or its agents
may communicate to you for this purpose, whether communications before or after
the date of this letter, orally, in writing, by inspection, or through any
other means, regardless of whether specifically identified as "confidential"
and regardless of whatever form or medium such information may take during or
after its communication (collectively, the "Confidential Information"). For
greater certainty, all information communicated to you shall be deemed
Confidential Information except information which:
(a) as shown by written records, was already known by you at the time of
its receipt by you;
(b) has been or becomes published or otherwise within the public
knowledge as is generally known at the time of its disclosure to you
without any breach by you of your obligations hereunder; or
(c) as shown by written records, was known or available to you through an
independent third party source under no obligation of confidentiality
to Dillon Read or HarCor and without breach of your obligations
hereunder.
<PAGE> 2
You understand and agree that the Confidential Information is being given to
you without any liability on the part of HarCor or Dillon Read, or on the part
of the Company's directors and officers, whatsoever, and no representation or
warranty with respect to the accuracy, completeness or validity of any
Confidential Information is hereby made by Dillon Read or HarCor or its
directors or officers. You agree that neither Dillon Read, HarCor nor its
directors and officers, shall have any liability to you resulting from the
selection, or reliance of the Confidential Information by you.
In consideration of our communicating the Confidential Information to you, you
agree on your own behalf and on behalf of your directors, officers, employees,
advisors, agents, consultants, affiliates and other representatives
(collectively included in the term "you"), all of whom must agree to be bound
by the terms of this Agreement as a condition of receiving the Confidential
Information, that:
1. the Confidential Information is strictly confidential and
shall be treated in the strictest confidence and privilege and
shall be used only for the purpose of evaluating a proposed
Transaction and for no other purpose;
2. you shall not disclose or allow disclosure, to any third
party individual or corporate entity of whatever nature
("person") that the Confidential Information has been made
available to you. Further, without HarCor's prior written
consent, you shall not disclose to any person, that
discussions or negotiations, are taking place concerning any
possible Transaction or any of the terms, conditions or other
facts regarding any possible Transaction or its status; This
paragraph does not apply as to any person who may join with
you in a possible transaction with HarCor.
3. you will not assert or allege the existence of any
representation, warranty or agreement by Dillon Read, HarCor
or its directors or officers arising from the communication to
you of the Confidential Information, it being the intent of
this clause that there shall be no liability or obligation
except in respect of any representations, warranties and
agreements which are in writing and duly executed by HarCor in
a definitive agreement with respect to a Transaction;
4. should you be requested or required by oral questions,
interrogations, requests for more information, subponea, civil
investigatory demand or similar process to disclose any
Confidential Information, you shall provide HarCor with prompt
written notice thereof so that HarCor may seek an appropriate
protective order and/or waive your compliance with provisions
of the Agreement. You further agree to provide to HarCor your
active assistance and cooperation as may be reasonably
required by HarCor to secure protection of the Confidential
Information. If, however, you are, in the reasonable opinion
of your counsel, compelled to disclose Confidential
Information concerning HarCor to any tribunal, legislative
authority or government body or else stand liable for contempt
or suffer other censure or penalty, you may so disclose that
portion of the Confidential Information so compelled without
liability hereunder;
5. the Confidential Information is and shall remain at all times
the sole, absolute and exclusive property of HarCor. In the
event that the Transaction is not effected with HarCor after
you have been furnished with the Confidential Information, you
will promptly return to HarCor all the Confidential
Information and will destroy any and all internal working
papers, analysis, documents or materials directly or
indirectly derived from or reflecting anything contained in
the Confidential Information, without retaining any copy
thereof or any notes relating thereto. You shall certify
<PAGE> 3
that you have returned all Confidential Information and destroyed all
such internal memoranda derived from the Confidential Information;
6. this Agreement shall inure to the benefit of and be binding upon
any successors and assigns of the parties hereto, such assignment by
you only to be upon HarCor's written consent which may be arbitrarily
withheld;
7. in addition to all other remedies available, HarCor shall be entitled
to equitable relief, including injunction or specific performance
other than being required to enter into a transaction with HarCor, as
to any breach of the provisions of this Agreement without any
requirement for the securing or posting of any bond in connection with
such remedy. You hereby agree to the granting of such injunctive
relief in HarCor's favor without proof of mutual damages. You agree
that any failure by HarCor in exercising any right, power or privilege
herein shall not operate as a waiver thereof, or that any single or
partial exercise thereof shall not preclude any other or further
exercise thereof by HarCor or the exercise of any right, power or
privilege hereunder;
8. except in connection with the negotiation of the terms of a
Transaction or in accordance with the terms of a Transaction Agreement
or through standard business transactions (such as farming, farmouts,
joint ventures or other similar transactions) directly with HarCor,
for a period of eighteen months from the date of this Agreement
neither you or your representatives nor any person or entity
controlled by you shall, directly or indirectly:
(i) acquire, or offer or agree to acquire, directly or indirectly, by
purchase or otherwise, 5% or more of any securities of the Company (or
direct or indirect rights or options to acquire any securities of the
Company), except by way of stock dividends or other distributions made
on a pro rata basis with respect to securities of the Company acquired
by you prior to the date of this Agreement;
(ii) solicit proxies or consents or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the
Securities Exchange Act of 1934, as amended) of proxies or consents
with respect to securities of the Company with regard to seeking
control or influence of management of Company;
(iii) seek to control or influence the management or Board of
Directors of the Company with respect to the policies of the Company,
seek to advise, encourage or influence any person with respect to the
voting of any securities of the Company or seek to induce or in any
manner to assist any other person to initiate any stockholder proposal
with respect to the securities of the Company, any change of control
of the Company or for the purpose of convening a meeting of
stockholders of the Company or to initiate any tender or exchange
offer for securities of the Company;
(iv) acquire or agree to acquire, by purchase or otherwise, more than
5% of any class of equity securities of any entity which, prior to the
time you acquire or agree to acquire more than 5% of such class, has
publicly disclosed (by a filing with the Securities and Exchange
Commission or otherwise) that it is, or is otherwise known to you to
be, the beneficial owner of more than 5% of the outstanding common
stock of the Company;
(v) without the prior written consent of the Company, make any public
announcement (except as required by law or stock exchange policy) or
make any written or oral proposal relating to a tender or exchange
offer for securities of the Company, a business combination (or other
similar transaction which would result in a change of control), sale
of assets, liquidation or other extraordinary corporate
<PAGE> 4
transaction between the Company or any of its affiliates and you (each
such transaction being referred to herein as a "Transaction") or take
any action which might require the Company to make a public
announcement regarding any Transaction;
(vi) deposit any securities of the Company in a voting trust or
subject any securities of the Company to any arrangement or agreement
with respect to the voting of securities of the Company; or
(vii) form, join or in any way participate in a partnership, limited
partnership, syndicate or other group (or otherwise act in concert
with any other person) for the purpose of acquiring, holding, voting
or disposing of more than 5% of the securities of the Company or
taking any other actions restricted or prohibited under clauses (i)
through (vi) of this Section 8.
9. the parties hereto understand and agree that unless and until a
definitive agreement has been executed and delivered, no contract or
agreement providing for a transaction between the parties shall be
deemed to exist between the parties, and neither party will be under
any legal obligation of any kind whatsoever with respect to such
Transaction by virtue of this or any written or oral expression
thereof, except, in the case of this Agreement, for the matters
specifically agreed to herein. For purposes of this Agreement, the
term "definitive agreement" does not include an executed letter of
intent or any other preliminary written agreement or offer, unless
specifically so designated in writing and executed by both parties.
Furthermore, this Agreement is not intended to and does not create a
partnership, joint venture or any other business combination between
the parties. You agree that HarCor reserves the right, in its sole and
absolute discretion, to reject any or all proposals, to decline to
furnish further information, to deny access to data rooms and to
terminate discussions and negotiations with you at any time. The
exercise by HarCor of these rights shall not affect the enforceability
of any provision of this Agreement;
10. you will not directly or indirectly contact any employee, officer, or
representative of HarCor with respect to the Transaction without the
prior authorization of Dillon Read;
11. you will not, during the two year period after the date hereof,
directly or indirectly, solicit for employment or hire any employee of
HarCor with whom you have had contact or who became known to you in
connection with the consideration of the Transaction, provided that
this restriction is not prohibited by any law or regulation and does
not prevent you from employing any person who contacts you on his or
her own initiative without encouragement from you; and
12. you acknowledge that this Agreement is for the benefit of HarCor and
Dillon Read. You agree that any action, suit or proceeding for the
enforcement of the terms of this Agreement may be brought by HarCor
without the necessity of any joinder therein by Dillon Read, and you
expressly waive any claim that there is a lack of privity of contract
between you and HarCor and that, as a consequence thereof, HarCor has
no standing to bring any action with respect to this Agreement.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Texas applicable to agreements made and to be performed within
such State without regard to principles of conflicts of laws.
<PAGE> 5
All obligations under this Agreement shall terminate upon the earlier of (a)
the successful closing of Transaction; and (b) the second anniversary date of
this Agreement.
Very truly yours,
DILLON, READ & CO. INC.
By: /s/ JEFFERY W. MILLER
------------------------------
Name: Jeffery W. Miller
Title: Vice President
AGREED TO AND ACCEPTED this
20th day of March, 1997.
By: /s/ JOHN S. CRON*
---------------------------
Name: John S. Cron
Title: Offshore Area Landman
*THE PARTIES HERETO AGREE THAT ANY DISPUTE THAT ARISES WITH RESPECT TO THIS
AGREEMENT SHALL BE ARBITRATED IN ACCORDANCE WITH THE TEXAS GENERAL ARBITRATION
ACT ("ACT") AND THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION ("RULES") AND
THAT THE DECISION OF THE ARBITRATOR RENDERED PURSUANT TO THE ACT AND RULES
SHALL BE BINDING UPON THE PARTIES AND MAY BE ENFORCED IN ANY COURT OF COMPETENT
JURISDICTION. ANY ARBITRATION PROCEEDINGS PURSUANT TO THIS AGREEMENT SHALL BE
HELD IN HOUSTON, HARRIS COUNTY, TEXAS. THE ARBITRATOR SHALL NOT AWARD PUNITIVE,
CONSEQUENTIAL, NOR MULTIPLE DAMAGES IN SETTLEMENT OF ANY DISPUTE.
