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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14D-9
Solicitation/Recommendation Statement Pursuant to Section
14(d)(4) of the Securities Exchange Act of 1934
BONRAY DRILLING CORPORATION
(Name of Subject Company)
BONRAY DRILLING CORPORATION
(Name of Person(s) Filing Statement)
Common Stock, $1.00 par value
(Title of Class of Securities)
098523 20 2
(CUSIP Number of Class of Securities)
Richard B. Hefner
President
Bonray Drilling Corporation
4701 Northeast 23rd Street
Oklahoma City, OK 73121
405/424-4327
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of the person(s) filing statement)
Item 1. Security and Subject Company
The title of the class of securities to which this Schedule 14D-9
relates is Bonray Drilling Corporation (the "Company") common
stock, $1.00 par value per share ("Common Stock"). The principal
executive offices of the Company are located at 4701 Northeast
23rd Street, Oklahoma City, Oklahoma 73121.
Item 2. Tender Offer of the Bidder
Acquisition Drilling, Inc., a Delaware corporation ("Purchaser"),
a wholly-owned subsidiary of DLB Oil & Gas, Inc., an Oklahoma
corporation ("Parent"), has offered to purchase all outstanding
shares of Common Stock of the Company, at a purchase price of $30
per share of Common Stock (the "Offer Price"), net to the seller
in cash, without interest thereon (the "Offer"). The Offer will
commence on January 10, 1997. The principal executive offices of
Purchaser are located at 1601 Northwest Expressway, Suite 700,
Oklahoma City,
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Oklahoma 73118-1401.
Item 3. Identity and Background
This Schedule 14D-9 is filed by Bonray Drilling Corporation, 4701
Northeast 23rd Street, Oklahoma City, Oklahoma 73121.
In conjunction with the Offer, the Company, Parent and Purchaser
executed an Agreement and Plan of Merger dated January 6, 1997
(the "Merger Agreement"). The Merger Agreement provides, among
other things, for the commencement of the Offer by Purchaser and
further provides that, after the purchase of Common Stock
pursuant to the Offer and subject to the satisfaction or waiver
of certain conditions set forth in the Merger Agreement,
Purchaser will be merged with and into the Company with the
Company surviving the merger as a direct wholly-owned subsidiary
of Parent (the "Merger"). Pursuant to the Merger, each
outstanding share of Common Stock (excluding shares owned,
directly or indirectly, by the Company, Parent, Purchaser or any
other subsidiary of Parent and shares owned by holders who shall
have properly exercised their appraisal rights under the Delaware
General Corporation Law (the "DGCL") ("Dissenting Shares")) will
be converted into the right to receive the Offer Price, in cash
(the "Merger Consideration"), without interest. See Item 7 of
this Schedule 14D-9 for a summary description of the Merger
Agreement.
Concurrently with the execution of the Merger Agreement, Parent
and Purchaser entered into a Stockholder Tender Agreement dated
January 6, 1997 (the "Stockholder Tender Agreement") with certain
stockholders of the Company (collectively, the "Selling
Stockholders") pursuant to which the Selling Stockholders agreed
to tender their Common Stock in the Offer and not withdraw such
Common Stock. The Selling Stockholders collectively own 229,715
shares, or approximately 54%, of the total outstanding Common
Stock of the Company. Messrs. Raymond H. Hefner, Jr., Richard B.
Hefner and James R. Tolbert, III, directors of the Company, are
parties to the Stockholder Tender Agreement either on their own
behalf or on behalf of other entities in which they have a
beneficial interest. See Item 6 of this Schedule 14D-9 for a
summary description of the Stockholder Tender Agreement.
Item 4. The Solicitation or Recommendation
The Board of Directors of the Company has unanimously determined
that the Offer and the Merger are fair to, and in the best
interests of, the Company's stockholders, has
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approved the Merger Agreement and the transactions contemplated
thereby, including the Offer at the Offer Price and the Merger,
and recommends that the Company's stockholders accept the Offer
and tender their shares of Common Stock to Purchaser pursuant to
the terms of the Offer.
In making its recommendation, the Board of Directors considered
several factors, including the Company's past and present
financial condition, reasonable expectations for future business,
the market price of the Company's Common Stock as traded over the
last four quarters, the terms of the Offer and Merger Agreement,
the General Accounting Office's recent statement that the United
States should use foreign oil and preserve domestic inventories
and the decrease in rig count in the State of Oklahoma for the
present week from the previous week. The directors also noted
that all stockholders were receiving the same price for their
stock.
While considering the Offer and the Merger Agreement, on January
6, 1997, the Company received a preliminary offer from an
independent third party to purchase all outstanding shares of
Common Stock of the Company for $34.00 per share, subject to
substantial conditions. Although the proposal exceeded the Offer
Price from Parent, certain risks and contingencies contained in
the proposal were expected to result in downward adjustments to
the final purchase price, possibly below the Offer Price. In
addition, the proposal lacked a definite source of financing.
Further negotiation of the proposal could have also jeopardized
Parent's continued negotiation of the Offer and the Merger
Agreement. Finally, from a timing standpoint, the Offer could be
completed approximately 30 days from the date of signing the
Merger Agreement whereas the new proposal would take up to 90
days to complete after negotiation and execution of a new
agreement. The proposal would have left the Company's
stockholders subject to the inherent uncertainties of the energy
business for a materially longer time period.
During the preceding four months, the Company had received three
other inquiries concerning acquisition of the Company or its
assets. No other offers were received, although one company
discussed the possibility of a combination of cash and restricted
preferred stock or debt with a value of $27.00 in the aggregate.
Item 5. Persons Retained, Employed or to Be Compensated
No person has been employed, retained or compensated by the
Company or by any person on the Company's behalf to
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make solicitations or recommendations to the Company's
stockholders.
Item 6. Recent Transactions and Intent with Respect to Securities
On January 6, 1997, the Selling Stockholders, which group
includes three of five of the Company's directors, executed the
Stockholder Tender Agreement. The following is a summary of the
material terms of the Stockholder Tender Agreement. This summary
is not a complete description of the terms and conditions of the
Stockholder Tender Agreement and is qualified in its entirety by
reference to the full text of the Stockholder Tender Agreement,
which is incorporated by reference and a copy of which has been
filed as an exhibit to this Schedule 14D-9. Capitalized terms
not otherwise defined herein or in the following summary shall
have the meaning set forth in the Stockholder Tender Agreement.
Pursuant to the Stockholder Tender Agreement, each Selling
Stockholder has agreed to tender to Purchaser pursuant to the
Offer all shares owned by such Selling Stockholder as of the date
of the Stockholder Tender Agreement ("Existing Shares") or
acquired after such date and prior to the expiration date of the
Offer, and not withdraw any such shares of Common Stock from the
Offer. Each Selling Stockholder has agreed to so tender all
Existing Shares within 10 business days of commencement of the
Offer, and to so tender any subsequently acquired shares of
Common Stock within 2 business days of such acquisition but in
any event prior to the expiration date of the Offer.
Pursuant to the Stockholder Tender Agreement, each Selling
Stockholder has irrevocably appointed representatives of Parent
as proxies for the Stockholder to vote all shares of Common Stock
that the Stockholder is entitled to vote (together with any other
shares of Common Stock that the Stockholder may become entitled
to vote), for and in the name, place, and stead of the Selling
Stockholder at any meeting of the holders of shares of Common
Stock or any adjournments or postponements thereof or pursuant to
any consent in lieu of a meeting, or otherwise, with respect only
to the approval of the Merger Agreement, the transactions
contemplated by the Merger Agreement, any matters related to or
in connection with the Merger and any corporate action the
consummation of which would violate, frustrate the purposes of,
prevent, or delay the consummation of the transactions
contemplated by the Merger Agreement (including, without
limitation, any proposal to amend the Certificate of
Incorporation or Bylaws of the Company or approve any merger,
consolidation, sale or purchase of
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any assets, issuance of Common Stock or any other equity security
of the Company (or a security convertible into an equity security
of the Company), reorganization, recapitalization, liquidation,
winding up of or by the Company, or any similar transaction).
The foregoing proxy is coupled with an interest.
Pursuant to the Stockholder Tender Agreement, each Selling
Stockholder in his capacity as a stockholder and not in his
capacity as a director of the Company, has agreed to negotiate
exclusively with Parent and Purchaser with regard to the
acquisition of the Company and not to directly or indirectly: (i)
solicit any other buyers for all or any part of the capital stock
or assets of the Company or any of its subsidiaries; (ii)
encourage any third parties to bid for any of the assets of the
Company or any of its subsidiaries or to purchase shares of its
capital stock, or participate in any negotiations or discussions
with any such third parties with respect to such matters; (iii)
provide business or financial information (not otherwise publicly
available) concerning the Company or any of its subsidiaries to
any third parties (except as required for the making of necessary
regulatory filings or in any judicial or administrative
proceeding); (iv) purchase or otherwise acquire shares of or any
beneficial interest in any of the capital stock of the Company;
(v) make, or assist or cooperate with anyone else to make, any
proposal to purchase all or any part of the assets or capital
stock of the Company; or (vi) enter into any arrangements by
himself or itself or with others to directly or indirectly
acquire or obtain control of the Company. The Selling
Stockholder must notify Purchaser if he, she or it becomes aware
of any efforts by any person or group, directly or indirectly in
any manner whatsoever, to acquire or obtain control of the
Company.
The Stockholder Tender Agreement will terminate on the earliest
of (a) the date on which Purchaser accepts for payment the shares
of Common Stock tendered in the Offer, so long as the shares of
Common Stock of the Selling Stockholders are so tendered and not
withdrawn; (b) the termination of the Merger Agreement by the
Company pursuant to Section 9.4(a) or (c) of the Merger
Agreement; or (c) the termination of the Offer by Purchaser
without purchasing any shares of Common Stock pursuant thereto.
By executing the Stock Tender Agreement, the Selling Stockholders
have indicated their intent to tender the shares owned by the
Selling Stockholders to the Purchaser.
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Item 7. Certain Negotiations and Transactions by the Subject Company
On January 6, 1997, the Company executed the Merger Agreement.
The following is a summary of the material terms of the Merger
Agreement. This summary is not a complete description of the
terms and conditions of the Merger Agreement and is qualified in
its entirety by reference to the full text of the Merger
Agreement, which is incorporated by reference and a copy of which
has been filed as an exhibit to this Schedule 14D-9.
The Offer. The Merger Agreement provides for the commencement of
the Offer. Purchaser has expressly reserved the right to
increase the price per share of Common Stock payable in the Offer
or to make any other changes in the terms and conditions of the
Offer, except that without the written consent of the Company,
Purchaser has agreed that it will not (i) decrease the Offer
Price, change the form of consideration payable in the Offer or
decrease the number of shares of Common Stock sought, (ii) change
the conditions to the Offer (other than to waive any condition),
(iii) impose additional conditions to the Offer or (iv) amend any
other term of the Offer in any manner adverse to the holders of
shares of Common Stock (other than insignificant changes or
amendments). The Merger Agreement provides that Purchaser may,
from time to time, in its sole discretion extend the expiration
date of the Offer (w) to comply with the applicable rules and
regulations of the Securities and Exchange Commission, (x) if any
of the conditions to the Offer have not been satisfied, for the
minimum period of time necessary to satisfy such condition; (y)
if all of the conditions to the Offer have been satisfied but
fewer than 90% of the shares of Common Stock outstanding
(determined on a fully diluted basis) have been tendered in the
Offer, for the minimum period of time necessary until 90% of such
shares have been so tendered, but in no event later than the
tenth (10th) day following the initial expiration date of the
Offer; provided, however, that if Purchaser extends the
expiration date pursuant to clause (y), it will be deemed upon
such extension to have waived several of the conditions to the
Offer; or (z) if a tender or exchange offer for shares of Common
Stock or any other proposal for a business combination involving
the Company shall be publicly disclosed or Parent or Purchaser
shall have otherwise learned that a tender or exchange offer for
shares of Common Stock or any other proposal for a business
combination involving the Company shall have been made or
publicly proposed to be made by any person (including the
Company, or any of its affiliates, or any group (within the
meaning of Section 13(d)(3) of the
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Securities Exchange Act of 1934 (the "Exchange Act")) (a
"Competing Offer"), and all of the conditions to the Offer have
not been satisfied, until ten (10) days after the termination or
publicly-announced abandonment of such Competing Offer, but in no
event later than the minimum time necessary to satisfy all such
conditions; provided, further, that in no event shall the
expiration date of the Offer be extended without the prior
written consent of the Company beyond March 31, 1997 unless any
statute, rule, regulation, order or injunction prohibits the
consummation of the Offer or Merger, prohibits or materially
interferes with Purchaser's or Parent's ownership or operation of
the Company's business or assets or materially limits the
Purchaser's or Parent's ability to exercise effectively all
rights of ownership of shares of Common Stock.
Board Representation. Effective upon the payment by Purchaser
for the Common Stock pursuant to the Offer, Purchaser shall be
entitled to designate the number of directors of the Company,
rounded up to the next whole number, that equals the product of
(i) the total number of directors on the Board (giving effect to
the election or appointment of any additional directors pursuant
to the terms of the Merger Agreement), and (ii) the percentage
that the number of shares beneficially owned by Parent and
Purchaser (including shares accepted for payment) bears to the
total number of shares outstanding. The Company has agreed that
it will take all action necessary to cause Purchaser's designees
to be elected or appointed to the Board, and, to the extent
necessary, file with the Commission and mail to Company
stockholders the information required by Section 14(f) of the
Exchange Act and the rules promulgated thereunder.
The Merger. The Merger shall be consummated as soon as
practicable following the latest of (i) the expiration or
termination of the Offer, (ii) the satisfaction or waiver of the
conditions set forth in the Merger Agreement, (iii) the
expiration or termination of all required regulatory waiting
periods, and (iv) the receipt of approval of the Merger Agreement
by the stockholders of the Company. The Merger will become
effective at the date and time of filing a Certificate of Merger
with the Secretary of State of Delaware in accordance with the
DGCL (the "Effective Time"). Upon consummation of the Merger,
the separate existence of Purchaser shall cease and the Company
shall continue as the surviving corporation. The surviving
corporation of the Merger is sometimes referred to herein as the
"Surviving Corporation." The Certificate of Incorporation of the
Company shall, effective upon the Merger, be amended so that it
shall be identical in all respects to the
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Certificate of Incorporation of Purchaser as in effect
immediately prior to the Effective Time except that the name of
the surviving corporation shall be Bonray Drilling Corporation.
Similarly, the Bylaws of Purchaser, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by law. The
officers and directors of Purchaser shall be the officers and
directors of the Surviving Corporation.
Consideration to be Paid in the Merger. The Merger Agreement
provides that upon the terms and subject to the conditions in the
Merger Agreement and in accordance with the DGCL, at the
Effective Time, by virtue of the Merger, each share of Common
Stock issued and outstanding immediately prior to the Effective
Time (excluding shares owned by the Company, Parent, Purchaser or
any other subsidiary of Parent, and Dissenting Shares) shall be
converted into the right to receive the Offer Price, in cash,
without interest, upon surrender of the certificate representing
such share of Common Stock. Each share of Common Stock issued
and outstanding immediately prior to the Effective Time that is
owned by the Company, Parent, Purchaser or any other subsidiary
of Parent, automatically will be cancelled and retired without
payment of any consideration therefor and shall cease to exist.
Each share of common stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the
Effective Time will, at the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof,
be converted into and become one validly issued, fully paid and
nonassessable share of common stock, $.01 par value per share, of
the Surviving Corporation.
Dissenting Shares. Dissenting Shares will not be converted into
the right to receive the Merger Consideration unless such holder
fails to perfect or otherwise loses such holder's right to such
appraisal, if any. If, after the Effective Time, such holder
fails to perfect or loses any such right to appraisal, each such
share of such holder shall be treated as a share that had been
converted as of the Effective Time into the right to receive the
Merger Consideration in accordance with the terms of the Merger
Agreement.
Representations and Warranties. The Merger Agreement contains
various representations and warranties of the parties thereto.
No representations and warranties made by the Company, Parent or
Purchaser will survive beyond the Effective Time.
Conduct of Business Pending the Merger. The Company has
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agreed that during the period from the date of the Merger
Agreement and continuing until the Effective Time the Company
will conduct its operations according to its ordinary course of
business and consistent with past practice. The Company may not
engage in certain transactions or take certain corporate actions
without the written consent of Parent as more fully set forth in
Article 6 of the Merger Agreement, which is attached hereto as an
exhibit.
No Solicitation. Pending consummation of the Merger, neither the
Company nor any of its officers and directors shall, and the
Company will cause its employees, agents and representatives
(including, without limitation, any investment banker, attorney
or accountant retained by the Company), not to, directly or
indirectly, initiate, solicit or encourage any inquiries or the
making of any proposal with respect to a merger, consolidation or
similar action involving, or any purchase of all or a significant
portion of the assets of, or any equity interest in, the Company
(an "Acquisition Proposal") or, except to the extent required for
the discharge by the Board of Directors of its fiduciary duties
as advised by counsel in writing, engage in any negotiations
concerning, or providing any confidential information or data to,
or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise assist or facilitate any
efforts or attempt by any person or entity (other than Parent and
Purchaser, or their officers, directors, representatives, agents,
affiliate or associates) to make or implement an Acquisition
Proposal. The Company has agreed to cease any existing
activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing.
Conditions to the Merger. The obligation of each party to effect
the Merger is subject to the satisfaction or written waiver on or
prior to the closing date of the Merger of the following
conditions: (i) unless no stockholder vote is required by
applicable law to effect the Merger, the Merger Agreement shall
have been approved by the holders of a majority of the
outstanding shares of Common Stock, in accordance with applicable
law and the Company's Certificate of Incorporation and Bylaws;
(ii) all filings required to be made prior to the Effective Time
by the Company, Parent or Purchaser with, and all consents,
approvals and authorizations required to be obtained prior to the
Effective Time by the Company, Parent or Purchaser from,
governmental and regulatory authorities in connection with the
execution and delivery of the Merger Agreement by the Company,
Parent or Purchaser and the consummation of the
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transactions contemplated thereby by the Company, Parent or
Purchaser shall have been made or obtained (as the case may be);
and (iii) no United States or state court or governmental or
regulatory authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order,
whether temporary, preliminary or permanent (collectively, an
"Order"), which is in effect and prohibits consummation of the
transactions contemplated by the Merger Agreement.
The obligations of Parent and Purchaser to effect the Merger are
further subject to the conditions that (i) Purchaser shall have
purchased pursuant to the Offer all shares duly tendered and not
withdrawn; provided that this condition will be deemed to have
been met if Purchaser fails to purchase such shares pursuant to
the Offer in violation of the terms of the Offer or the Merger
Agreement; (ii) the Company shall have performed in all material
respects its obligations under the Merger Agreement required to
be performed on or prior to the Effective Time pursuant to the
terms thereof; (iii) the representations and warranties of the
Company contained in the Merger Agreement that are qualified as
to materiality shall be true and correct and any such
representations and warranties that are not so qualified shall be
true and correct in all material respects, in each case, on the
date when made and on and as of the Effective Time as if made on
and as of such date; and (iv) there shall not have occurred after
the date of the Merger Agreement any material adverse change in
the business, assets, prospects, condition (financial or
otherwise) or the results of operations of the Company.
The obligation of the Company to effect the Merger is further
subject to the conditions that: (i) Purchaser and Parent shall
have performed in all material respects their obligations under
the Merger Agreement required to be performed on or prior to the
Effective Time pursuant to the terms thereof; and (ii) the
representations and warranties of Parent and Purchaser contained
in the Merger Agreement that are qualified as to materiality
shall be true and correct and any such representations and
warranties that are not so qualified shall be true and correct in
all material respects, in each case, on the date when made and on
and as of the Effective Time as if made on and as of such date.
Fees and Expenses. The Merger Agreement provides that, except as
described below, all expenses incurred in connection with the
Merger Agreement and the transactions contemplated by the Merger
Agreement will be paid by the party incurring the expenses. If
(A) (x) any person,
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entity or group (other than Parent or any subsidiary or affiliate
of Parent or any group including Parent or any subsidiary or
affiliate of Parent) (i) shall have become beneficial owner of
25% or more of the outstanding shares of Common Stock, or (ii)
shall have publicly proposed (1) any merger or consolidation with
or acquisition of all or substantially all of the assets of the
Company or other similar business combination involving the
Company, (2) that any change be made in the composition of the
Board of Directors of the Company and such person, entity or
group shall file proxy materials with the Securities and Exchange
Commission in respect of such proposal, or (3) the purchase of
50% or more of the total voting power of the Company, including
by tender or exchange offer, or (y) the Merger Agreement is
terminated pursuant to Section 9.3(ii) or 9.4(b) thereof, and (B)
the Merger Agreement is terminated in accordance with its terms
without Purchaser having purchased any shares of Common Stock
pursuant to the Offer, then the Company shall immediately pay
Parent all actual, documented out-of-pocket expenses of Parent
relating to the transactions contemplated by the Merger
Agreement.
Termination. The Merger Agreement may be terminated and the
transactions contemplated thereby may be abandoned at any time
prior to the Effective Time, notwithstanding approval thereof by
the stockholders, in any one of the following circumstances: (i)
by mutual consent of Parent and the Company; (ii) by either
Parent or the Company if (x) the Merger shall not have been
consummated by June 30, 1997 (unless the failure to consummate
the Merger by such date is due to the action or failure to act of
the party seeking to terminate), or (y) if any Order shall have
become final and non-appealable; (iii) by Parent if (x) Purchaser
shall have terminated the Offer without purchasing any shares
pursuant thereto; provided, such termination of the Offer is not
in violation of the terms of the Offer, and Parent and Purchaser
have not failed to perform its or their obligations under the
Merger Agreement and shall not have breached any representation
or warranty contained therein in any material respect, or (y) if
the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to Parent or Purchaser its approval
or recommendation of the Offer, the Merger Agreement or the
Merger, or the Board of Directors of the Company, upon request by
Parent, shall fail to reaffirm such approval or recommendation,
or shall have resolved to do any of the foregoing; provided,
Purchaser shall not be entitled to terminate the Merger Agreement
so long as it shall have the right to acquire a majority of the
issued and outstanding shares of Common Stock of the Company
pursuant to the Offer; (iv) by the Company (a) if Parent or
Purchaser shall have failed to
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commence the Offer within the time required in the Merger
Agreement; (b) after the later of (i) ten (10) business days
following commencement of the Offer, or (ii) five (5) business
days following notice to Parent by the Company of the terms of
any of the following offers, if the Board of Directors of the
Company receives an unsolicited written offer at a higher dollar
value per share with respect to a merger, consolidation or sale
of all or substantially all of the Company's assets, or if an
unsolicited tender or exchange offer for the shares at a higher
dollar value per share is commenced, and the Board of Directors
of the Company determines to accept such merger, consolidation or
sale of all or substantially all of the Company's assets or
recommended that its stockholders accept such tender or exchange
offer, but only after receipt by the Board of Directors of (x) a
written opinion to such effect from a recognized national
investment banking firm that such transaction is more favorable
to the stockholders from a financial point of view than the Offer
and the transactions contemplated by the Merger Agreement, and
(y) a written opinion of counsel that approval, acceptance or
recommendation of such transaction is required by fiduciary
obligations under applicable law; or (c) Parent or Purchaser
shall have violated the terms of the Offer or breached any of
their representations, warranties or covenants under the Merger
Agreement which breach shall have caused a reasonable likelihood
that Parent or Purchaser will not be able to consummate the Offer
or Merger.
Indemnification. The Merger Agreement provides that as provided
in Section 145 of the DGCL and as implemented pursuant to Article
VII of the Company's Bylaws, the Company shall indemnify and,
after the Effective Time, the Surviving Corporation shall
indemnify each present and former director and officer (the
"Indemnified Party or Parties") against any expenses, including
attorneys' fees, fines, judgments and amounts paid in settlement
actually and reasonably incurred by it in connection with any
threatened, pending or completed action or suit to which it is a
party or is threatened to be made a party by reason of such
relationship with the Company and arising out of or pertaining to
any action or omission occurring prior to the Effective Time
(including, without limitation, any which arise out of or relate
to the transactions contemplated by the Merger Agreement) to the
fullest extent permitted or required under Section 145 of the
DGCL or the Company's Bylaws; provided, however, that any
determination required to be made pursuant to Section 145(d) of
the DGCL with respect to whether an Indemnified Party's conduct
complied with the standards set forth in Delaware law or the
Company's Bylaws shall be made by independent legal counsel
selected by the Company or the
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Surviving Corporation, as the case may be.
The Merger Agreement provides that the foregoing indemnification
provisions shall survive the closing of the transactions
contemplated by the Merger Agreement and are intended to benefit
the Company and each of the Indemnified Parties.
Stockholders Meetings. The Merger Agreement provides that the
Company will take all action necessary, in accordance with the
DGCL, the Exchange Act and other applicable law, and its
Certificate of Incorporation and Bylaws, to convene a special
meeting of stockholders (the "Stockholders Meeting"), if
necessary, as promptly as practicable after expiration of the
Offer for the purpose of considering and voting upon the Merger
Agreement and the transactions contemplated thereby, including
the Merger. Subject to the fiduciary duties of the Company's
Board under applicable law as advised by independent legal
counsel, the Company's Board will recommend that the holders of
the Company's Common Stock vote in favor of and approve the
Merger Agreement and the Merger at the Stockholders Meeting. At
the Stockholders Meeting, Parent and Purchaser shall vote all
shares beneficially owned by them in favor of the adoption and
approval of the Merger Agreement and the Merger.
Consents, Approvals, Filings. The Merger Agreement provides that
each of the parties to the Merger Agreement will use its best
efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the
transactions contemplated by the Merger Agreement, including,
without limitation, making any required filings under the Hart-
Scott Rodino Antitrust Improvements Act of 1976 and obtaining any
necessary third-party consents. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of the Merger Agreement, the proper
officers and directors of each party to the Merger Agreement will
take all such necessary action.
Amendment and Modification. Pursuant to the Merger Agreement,
the Merger Agreement may be amended, modified or supplemented
only by written agreement of Parent, Purchaser and the Company at
any time prior to the Effective Time; provided, however, that,
after the Merger Agreement is adopted by the Company's
stockholders, no such amendment or modification shall alter the
amount or change the form of the consideration to be delivered to
the stockholders of the Company or alter or change any of the
terms or conditions of the Merger Agreement if such
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alteration or change would adversely effect the stockholders of
the Company.
Employment Agreements. Pursuant to the Merger Agreement, Parent
and Purchaser have agreed, prior to the acceptance of shares of
Common Stock pursuant to the Offer, to make a good faith attempt
to enter into employment agreements with the following officers
of the Company: Richard B. Hefner, Donald W. Thummel, Don M.
Bode and Joanne Belcher.
Item 8. Additional Information to Be Furnished
None.
Item 9. Material to Be Filed as Exhibits
99(i) Agreement and Plan of Merger among DLB Oil & Gas, Inc.,
Acquisition Drilling, Inc. and Bonray Drilling Corporation
dated January 6, 1997.
99(ii) Stockholder Tender Agreement by and among DLB Oil & Gas,
Inc., Acquisition Drilling, Inc. and certain stockholders
of Bonray Drilling Corporation dated January 6, 1997.
99(iii) Letter from the Board of Directors of Bonray Drilling
Corporation to the stockholders of Bonray Drilling
Corporation, dated January 10, 1997.(1)
99(iv) Press release issued by Bonray Drilling Corporation and
DLB Oil & Gas, Inc. on January 7, 1997.
Signature. After reasonable 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.
BONRAY DRILLING CORPORATION
January 10, 1997 By: /s/ Richard B. Hefner
(Date) (Signature)
Richard B. Hefner, President
(Name and Title)
- ---------------
(1) Included with Schedule 14D-9 mailed to stockholders.
-14-
<PAGE> 15
INDEX TO EXHIBITS
99(i) Agreement and Plan of Merger among DLB Oil & Gas, Inc.,
Acquisition Drilling, Inc. and Bonray Drilling Corporation
dated January 6, 1997.
99(ii) Stockholder Tender Agreement by and among DLB Oil & Gas,
Inc., Acquisition Drilling, Inc. and certain stockholders
of Bonray Drilling Corporation dated January 6, 1997.
99(iii) Letter from the Board of Directors of Bonray Drilling
Corporation to the stockholders of Bonray Drilling
Corporation, dated January 10, 1997.(1)
99(iv) Press release issued by Bonray Drilling Corporation and
DLB Oil & Gas, Inc. on January 7, 1997.
<PAGE> 1
================================================================================
AGREEMENT AND PLAN OF MERGER
among
DLB OIL & GAS, INC.,
ACQUISITION DRILLING, INC.
and
BONRAY DRILLING CORPORATION
-------------------------
January 6, 1997
-------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE I THE TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Company Action . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Board of Directors of the Company . . . . . . . . . . . . . 3
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Effect of the Merger . . . . . . . . . . . . . . . . . . . . 3
2.4 Certificate of Incorporation . . . . . . . . . . . . . . . . 4
2.5 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 ADI Directors . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 ADI Officers . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Additional Actions . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . . . 4
3.1 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . 5
3.3 ADI Common Stock . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Exchange of Common Stock . . . . . . . . . . . . . . . . . . 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF DLB AND ADI . . . . . . . . . . 7
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Authority Relative to this Agreement . . . . . . . . . . . . 7
4.3 Consents and Approvals; No Violations . . . . . . . . . . . 7
4.4 Offer Documents; Proxy Statement; Other Information . . . . 8
4.5 No Prior Activities . . . . . . . . . . . . . . . . . . . . 8
4.6 Finders and Investment Bankers . . . . . . . . . . . . . . . 8
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . 8
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . 9
5.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 9
5.4 Authority Relative to this Agreement . . . . . . . . . . . . 9
5.5 Consents and Approvals; No Violations . . . . . . . . . . . 9
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . 10
5.8 Tradenames . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.9 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 11
5.10 Environmental Matters . . . . . . . . . . . . . . . . . . . 11
5.11 Compliance with Agreements . . . . . . . . . . . . . . . . . 13
5.12 Employee Benefit Matters . . . . . . . . . . . . . . . . . . 13
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
5.13 Special Warranty of Title to Company Assets . . . . . . . . 13
5.14 Maintenance of Assets . . . . . . . . . . . . . . . . . . . 14
5.15 Absence of Certain Changes or Events . . . . . . . . . . . . 14
5.16 Governmental Authorization and Compliance with Laws . . . . 14
5.17 Offer Documents; Proxy Statement; Other Information . . . . 14
5.18 Finders and Investment Bankers . . . . . . . . . . . . . . . 15
ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Conduct of Business of the Company . . . . . . . . . . . . . 15
6.2 Acquisition Proposals . . . . . . . . . . . . . . . . . . . 16
6.3 Notification of Certain Matters . . . . . . . . . . . . . . 17
6.4 Meetings of the Company's Stockholders . . . . . . . . . . . 17
6.5 Access to Information . . . . . . . . . . . . . . . . . . . 18
6.6 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . 18
6.7 Public Announcements . . . . . . . . . . . . . . . . . . . . 19
6.8 Exchange Act Compliance . . . . . . . . . . . . . . . . . . 19
6.9 Consent of DLB . . . . . . . . . . . . . . . . . . . . . . . 19
6.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . 20
7.1 Conditions to Obligations of the Company, DLB and ADI . . . 20
7.2 Conditions to Obligation of DLB and ADI . . . . . . . . . . 20
7.3 Conditions to Obligation of the Company . . . . . . . . . . 21
ARTICLE VIII CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . . 21
8.2 Filings at the Closing . . . . . . . . . . . . . . . . . . . 21
ARTICLE IX TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . . . . 22
9.1 Termination by Mutual Consent . . . . . . . . . . . . . . . 22
9.2 Termination by Either DLB or the Company . . . . . . . . . . 22
9.3 Termination by DLB . . . . . . . . . . . . . . . . . . . . . 22
9.4 Termination by the Company . . . . . . . . . . . . . . . . . 22
9.5 Procedure and Effect of Termination Procedure and
Effect of Termination . . . . . . . . . . . . . . . . . . . 23
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.1 Payment of Expenses . . . . . . . . . . . . . . . . . . . . 23
10.2 Amendment and Modification . . . . . . . . . . . . . . . . . 24
10.3 Waiver of Compliance; Consents . . . . . . . . . . . . . . . 24
10.4 Investigations; Survival of Warranties . . . . . . . . . . . 24
10.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 25
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 26
ii
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<PAGE> 4
<TABLE>
<S> <C> <C> <C>
10.9 Interpretation . . . . . . . . . . . . . . . . . . . . . . . 26
10.10 Employment Arrangements . . . . . . . . . . . . . . . . . . 26
10.11 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 26
ANNEX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, this 6th day of January, 1997 (this
"Agreement"), is made and entered into among DLB OIL & GAS, INC., an Oklahoma
corporation ("DLB"), ACQUISITION DRILLING, INC., a Delaware corporation and a
wholly-owned subsidiary of DLB ("ADI"), and BONRAY DRILLING CORPORATION, a
Delaware corporation (the "Company"). The Company and ADI are hereinafter
sometimes collectively referred to as the "Constituent Corporations."
WHEREAS, the respective Boards of Directors of DLB, ADI and the
Company have approved the acquisition of the Company by DLB pursuant to the
terms of this Agreement; and
WHEREAS, in furtherance thereof ADI will make a tender offer for all
shares of the Company's common stock, par value $1.00 per share (the "Common
Stock"), upon the terms of and subject to the conditions set forth in this
Agreement; and
WHEREAS, the respective Boards of Directors of DLB, ADI and the
Company have approved the merger of ADI into the Company (the "Merger") upon
the terms and subject to the conditions set forth herein; and
WHEREAS, in order to induce DLB and ADI to enter into this Agreement,
certain holders of Common Stock (the "Selling Stockholders") have entered into
a Stockholder Tender Agreement with ADI (the "Stockholder Agreement"), pursuant
to which each such holder has agreed, among other things, to tender such
holder's shares of Common Stock to ADI pursuant to the Offer (hereinafter
defined) upon the terms and conditions set forth in such Stockholder Agreement.
NOW, WHEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
THE TENDER OFFER
1.1. The Offer. Provided that nothing shall have occurred which
would result in a failure of any of the conditions set forth in Annex A,
attached hereto and made a part hereof, as promptly as practicable, and in no
event later than the fifth (5th) business day following the date hereof, ADI
shall commence a cash tender offer (the "Offer") for all of the outstanding
shares (the "Shares") of the Common Stock at a price of Thirty and No/100
Dollars ($30.00) per share net to the seller in cash (the "Price Per Share"),
which Offer shall be subject to the conditions set forth in Annex A hereto, and
ADI shall file a Schedule 14D-1 with respect to the Offer in accordance with
Rule 14d-3(a) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). ADI shall, subject only to the satisfaction or waiver of
the conditions set forth on Annex A hereto, accept for payment all Shares
validly tendered and not
1
<PAGE> 6
withdrawn pursuant to the Offer as soon as practicable after such acceptance is
legally permitted. Notwithstanding the foregoing, ADI expressly reserves the
right to increase the price per Share payable in the Offer and make any other
changes to the terms or conditions of the Offer, provided, however, that ADI
will not, without the prior written consent of the Company (such consent to be
authorized by the Board of Directors of the Company), (i) decrease the Price
Per Share, change the form of consideration payable in the Offer or decrease
the number of Shares sought, (ii) change the conditions to the Offer (other
than to waive any condition), (iii) impose additional conditions to the Offer
or (iv) amend any other term of the Offer in any manner adverse to the holders
of Shares (other than insignificant changes or amendments). The Offer shall
expire at 12:00 midnight, New York City time, on the twentieth (20th) business
day following commencement of the Offer (such date and time, as may be extended
in accordance with the terms hereof, is referred to as the "Expiration Date");
provided, however, and notwithstanding anything in the foregoing to the
contrary, it is understood and agreed that ADI may, from time to time, in its
sole discretion extend the Expiration Date, (w) to comply with applicable rules
and regulations of the Securities and Exchange Commission ("SEC"); (x) if any
of the conditions to the Offer have not been satisfied, for the minimum period
of time necessary to satisfy such condition; (y) if all of the conditions to
the Offer have been satisfied but fewer than 90% of the shares of Common Stock
outstanding (determined on a fully diluted basis) have been tendered in the
Offer, for the minimum period of time necessary until 90% of such shares have
been so tendered, but in no event later than the tenth (10th) day following the
initial Expiration Date; provided, however, that if ADI extends the Expiration
Date pursuant to the clause (y), it will be deemed upon such extension to have
waived all conditions except (c), (d)(i) and (d)(iii) set forth on Annex A
hereto; or (z) if a tender or exchange offer for shares of Common Stock or any
other proposal for a business combination involving the Company shall be
publicly disclosed or DLB or ADI shall have otherwise learned that a tender or
exchange offer for shares of Common Stock or any other proposal for a business
combination involving the Company shall have been made or publicly proposed to
be made by any person (including the Company, or any of its affiliates, or any
group (within the meaning of Section 13(d)(3) of the Exchange Act)) (a
"Competing Offer"), and all of the conditions to the Offer have not been
satisfied, until ten (10) days after the termination or publicly-announced
abandonment of such Competing Offer, but in no event later than the minimum
time necessary to satisfy all such conditions; provided, further, that in no
event shall the Expiration Date be extended without the prior written consent
of the Company beyond the 21st day of March, 1997 unless condition (d) set
forth in Annex A to this Agreement shall not then be satisfied.
1.2. Company Action. The Company hereby consents to the Offer and
represents that its Board of Directors has unanimously approved the Offer, the
Merger, this Agreement, the Stockholder Agreement and the acquisition of shares
of Common Stock pursuant thereto, and unanimously resolved to recommend
acceptance of the Offer and approval of the Merger by the stockholders of the
Company. Upon commencement of the Offer, the Company shall promptly file with
the SEC and mail to the holders of Common Stock a Solicitation/Recommendation
Statement on Schedule 14D-9 reflecting such recommendation and shall permit ADI
to include a copy of such Schedule 14D-9 in its Offering Documents, as such
phrase is hereinafter defined. The Company hereby consents to the inclusion in
the Offer of the recommendation referred to in the preceding sentence. In
connection with the Offer, the Company will furnish ADI with such
2
<PAGE> 7
information, including current lists of the stockholders of the Company,
mailing labels and lists of security positions, and such assistance as ADI or
its agents may reasonably request in communicating the Offer to the Company's
stockholders.
1.3. Board of Directors of the Company. Effective upon the payment
by ADI for Shares pursuant to the Offer, ADI will be entitled to designate that
number of directors of the Company, rounded up to the next whole number, that
equals the product of (x) the total number of directors on the Board of
Directors (giving effect to the election or appointment of any additional
directors pursuant to this Section 1.3) and (y) the percentage that the number
of Shares owned by DLB and ADI (including Shares accepted for payment) bears to
the total number of outstanding Shares. The Board of Directors of the Company
will at all relevant times be composed of a sufficient number of directors so
that the right of ADI under this Section 1.3 will not be impaired. The Company
will at such time cause the designees of ADI to be elected to or appointed by
the Board of Directors, including, without limitation, increasing the number of
directors, amending its Bylaws, using its reasonable best efforts to obtain
resignations of incumbent directors, and, to the extent necessary, filing with
the SEC and mailing to its stockholders the information required by Section
14(f) of the Exchange Act and the rules promulgated thereunder, as promptly as
possible. DLB and ADI will supply any information with respect to themselves
and their respective nominees, officers, directors, and affiliates required by
Section 14(f) of the Exchange Act and such Bylaws of the Company.
ARTICLE II.
THE MERGER
2.1. The Merger. Subject to the terms and conditions hereof, the
Merger shall be consummated in accordance with the Delaware General Corporation
law (the "DGCL") as soon as practicable following the latest of (i) the
expiration or termination of the Offer, (ii) the satisfaction or waiver of the
conditions set forth in Article VII of this Agreement, (iii) the expiration or
termination of all required waiting periods with respect to the acquisition of
the Company by DLB pursuant to the Merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), if applicable, and (iv) the receipt
of any required approvals from the stockholders of the Company. At the
Effective Time (as hereinafter defined), subject to the terms and conditions of
this Agreement and in accordance with the laws of the State of Delaware, ADI
shall be merged with and into the Company, which shall be the surviving
corporation. The Company hereinafter is sometimes referred to as the
"Surviving Corporation."
2.2. Effective Time. The Merger shall become effective at the date
and time of filing of a certificate of merger with the Secretary of State of
the State of Delaware in accordance with the provisions of the DGCL (the
"Certificate of Merger"), which shall be so filed as provided in Section 8.2 of
this Agreement. The date and time when the Merger shall become effective is
herein referred to as the "Effective Time."
2.3. Effect of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
3
<PAGE> 8
2.4. Certificate of Incorporation. The Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by law; provided that effective upon the
Merger, the Certificate of Incorporation of the Company shall be amended so
that it shall be identical in all respects to the Certificate of Incorporation
of ADI as in effect immediately prior to the Effective Time except that the
name of the Surviving Corporation shall be "Bonray Drilling Corporation".
2.5. By-Laws. The By-Laws of ADI, as in effect immediately prior
to the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law.
2.6. ADI Directors. The directors of ADI at the Effective Time
shall be the directors of the Surviving Corporation and will 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 By-Laws of the Surviving Corporation, or as otherwise
provided by law.
2.7. ADI Officers. The officers of ADI at the Effective Time shall
be the officers of the Surviving Corporation and will 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
By-Laws of the Surviving Corporation, or as otherwise provided by law.
2.8. Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Constituent Corporations acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, the officers and directors
of the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of each of the Constituent Corporations or otherwise, all
such deeds, bills of sale, assignments and assurances and to take and do, in
the name and on behalf of each of the Constituent Corporations or otherwise,
all such other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and under such
rights, properties or assets in the Surviving Corporation or otherwise to carry
out this Agreement.
ARTICLE III.
CONVERSION OF SECURITIES
3.1. Common Stock.
(i) Each share of the Common Stock issued and
outstanding immediately prior to the Effective Time (except for shares of
Common Stock then owned beneficially or of record by DLB, ADI or any subsidiary
of DLB and except for Dissenting Shares (as hereinafter
4
<PAGE> 9
defined) in respect of which appraisal rights are perfected) shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into the right to receive the Price Per Share in cash payable to the
holder thereof, without interest thereon, upon surrender of the certificate
representing such share of Common Stock.
(ii) Each share of Common Stock issued and outstanding
immediately prior to the Effective Time which is then owned beneficially or of
record by DLB, ADI or any subsidiary of DLB shall, by virtue of the Merger and
without any action on the part of the holder thereof, be canceled and retired
and cease to exist, without any conversion thereof.
(iii) Each share of Common Stock held in the Company's
treasury immediately prior to the Effective Time shall, by virtue of the
Merger, be canceled and retired and cease to exist, without any conversion
thereof.
3.2. Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders who
have not voted such shares in favor of the approval and adoption of the Merger
and shall have delivered a written demand for appraisal of such shares in the
manner (including the time of delivery) provided in Section 262 of the DGCL
(the "Dissenting Shares") shall not be converted into or be exchangeable for
the right to receive the consideration provided in Section 3.1, but shall be
entitled to receive such consideration as shall be determined pursuant to
Section 262 of the DGCL; provided, however, that, if such holder shall have
failed to perfect or shall have effectively withdrawn or lost his right to
appraisal and payment under the DGCL, such holder's shares of Common Stock
shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the
consideration provided for in Section 3.1, without any interest thereon, in
accordance with Section 3.4, and such shares shall no longer be Dissenting
Shares.
3.3. ADI Common Stock. Each share of common stock, par value $.01
per share, of ADI issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and exchangeable for one share of common
stock of the Surviving Corporation.
3.4. Exchange of Common Stock.
(i) At the Effective Time, ADI (or the Company, as the
Surviving Corporation) shall deposit in trust with a bank or trust company
designated by DLB (the "Exchange Agent") cash, a letter of credit or a
combination thereof issued by a commercial bank selected by DLB which
irrevocably commits the issuer to provide the Exchange Agent from time to time
with the funds necessary to make the payments required hereunder in an
aggregate amount equal to the product of (i) the number of shares of Common
Stock issued and outstanding at the Effective Time (other than any such shares
owned beneficially or of record by DLB, ADI or any subsidiary of DLB or held in
the Company's treasury and other than Dissenting Shares in respect of which
appraisal rights are perfected), and (ii) the Price Per Share (such product
being hereinafter referred to as the "Exchange Fund"). The Exchange Agent
shall, pursuant to
5
<PAGE> 10
irrevocable instructions, make the payments provided for in Section 3.1(i) out
of the Exchange Fund. The Exchange Agent may invest all or portions of the
Exchange Fund as the Surviving Corporation shall direct. Any net profit
resulting from, or interest or income produced by the investment of the
Exchange Fund, shall be paid to the Surviving Corporation.
(ii) Promptly after the Effective Time, the Exchange
Agent shall mail to each record holder (other than DLB, ADI or any subsidiary
of DLB), as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented shares
of Common Stock (the "Certificates") a form 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
Exchange Agent) and instructions for use in effecting the surrender of the
Certificates for payment therefor. Upon surrender by such holder to the
Exchange Agent of a Certificate, together with such letter of transmittal duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor cash in an amount equal to the product of the number of
shares of Common Stock represented by such Certificate and the Price Per Share,
and such Certificate shall forthwith be canceled. No interest will be paid or
accrued on the cash payable upon the surrender of the Certificates. If payment
is to be mailed to a person other than the person in whose name a Certificate
surrendered is registered, it shall be a condition of payment that (a) the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that (b) the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this
Section 3.4, each Certificate (other than Certificates representing shares
owned beneficially or of record by DLB, ADI or any subsidiary of DLB and other
than Dissenting Shares in respect of which appraisal rights are perfected)
shall represent for all purposes whatsoever only the right to receive the Price
Per Share in cash multiplied by the number of shares evidenced by such
Certificate, without any interest thereon.
(iii) After the Effective Time there shall be no transfers
on the stock transfer books of the Surviving Corporation of the shares of
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation for transfer or for any other reason, they shall be canceled and
exchanged for cash as provided in this Article III.
(iv) Any portion of the Exchange Fund which remains
unclaimed by the stockholders of the Company for six (6) months after the
Effective Time shall be repaid to the Surviving Corporation, upon demand, and
any stockholders of the Company who have not theretofore complied with Section
3.4(ii) shall thereafter look only to the Surviving Corporation for payment of
their claim for the Price Per Share for each share of Common Stock, without any
interest thereon.
6
<PAGE> 11
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF DLB AND ADI
DLB and ADI each jointly and severally represent and warrant to the
Company as follows:
4.1. Organization. Each of DLB and ADI is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and each has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so existing and
in good standing would not affect materially and adversely the business,
assets, prospects, condition (financial or otherwise) or the results of
operations of DLB and ADI.
4.2. Authority Relative to this Agreement. Each of DLB and ADI has
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Boards of Directors of DLB and ADI
and by DLB as the sole stockholder of ADI, and no other corporate proceedings
on the part of DLB or ADI are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of DLB and ADI, and constitutes a valid and
binding agreement of DLB and ADI, enforceable against DLB and ADI in accordance
with its terms, except to the extent that enforceability thereof may be limited
by applicable bankruptcy, insolvency, reorganization or other laws affecting
the enforcement of creditors' rights generally and by principles of equity
regarding the availability of remedies.
4.3. Consents and Approvals; No Violations. Except for applicable
requirements of the Exchange Act, the HSR Act and filing and recordation of
appropriate merger documents as required by the DGCL, no filing with, and no
permit, authorization, consent or approval of, any public body is necessary for
the consummation by DLB and ADI of the transactions contemplated by this
Agreement, the absence of which would or might result in the divestiture of any
assets which are material to DLB and ADI taken as a whole or would otherwise
have a material adverse effect on the business of DLB and ADI taken as a whole.
Neither the execution and delivery of this Agreement nor the compliance by DLB
and ADI with any of the provisions hereof will (i) conflict with or result in
any breach of any provision of the Articles or Certificate of Incorporation or
By-Laws of DLB or ADI, (ii) require any consent, approval or notice under or
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or change the rights or obligations of any
party under, or trigger any obligation or payment by DLB or ADI under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which DLB or ADI is a
party or by which either of them or any of their properties or assets may be
bound, or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to DLB or ADI or any of their properties or assets.
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4.4. Offer Documents; Proxy Statement; Other Information. None of
the information supplied by DLB or ADI for inclusion in the Offer (together
with the related letter of transmittal, the "Offer Documents") (including any
amendments or supplements thereto and including Statements on Schedules 14D-1
and 14D-9) will, at the respective times the Offer Documents or any amendments
or supplements thereto are filed with the SEC, contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information relating to DLB or ADI supplied
for inclusion in the proxy statement which is to be mailed to the stockholders
of the Company in connection with any meeting of stockholders convened in
accordance with Section 6.4 or any information statement which is to be mailed
to the stockholders of the Company in connection with any action taken without
solicitation of proxies or consents (such proxy statement or information
statement is herein referred to as the "Proxy Statement") will, at the time the
Proxy Statement is mailed, be false or misleading with respect to any material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading or, at the
time of the meeting of stockholders to which any such Proxy Statement relates,
as then amended or supplemented, necessary to correct any statement which has
become false or misleading in any earlier communication with respect to the
solicitation of any proxy for such meeting. The Statement on Schedule 14D-1
will comply in all material respects as to form with the requirements of the
Exchange Act and the rules and regulations thereunder.
4.5. No Prior Activities. ADI has not engaged, directly or through
any subsidiary, in any business or activity of any type or kind whatsoever, or
entered into any agreements or arrangements with any person or entity, or is
subject to or bound by any liability, obligation or undertaking, which is not
in connection with its organization, this Agreement and the transactions
contemplated hereby (including the financing necessary to consummate the Offer
and the Merger).
4.6. Finders and Investment Bankers. Neither DLB, ADI nor any of
their officers or directors has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated herein.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to DLB and ADI as follows:
5.1. Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. The
Company is duly qualified or licensed and in good standing to do business in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not individually or in the
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aggregate affect materially and adversely the business, assets, properties,
condition (financial or otherwise) or the results of operations of the Company.
The Company has heretofore made available to DLB accurate and complete copies
of the Certificate of Incorporation and By-Laws, as currently in effect, of the
Company.
5.2. Capitalization. The authorized capital stock of the Company
consists of 800,000 shares of Common Stock, of which on December 31, 1996 there
were 423,540 shares issued and outstanding and less than 10,000 shares held in
the Company's treasury. No other capital stock of the Company is authorized.
All issued and outstanding shares of capital stock of the Company are validly
issued, fully paid, non-assessable and free of preemptive rights. There are
not, and at the Effective Time there will not be, any existing options,
warrants, calls, subscriptions, stock appreciation rights, or other rights or
other agreements, arrangements or commitments obligating the Company to issue,
transfer or sell, or securities or rights convertible or exchangeable for, any
shares of capital stock of the Company.
5.3. Subsidiaries. The Company has no subsidiaries. The Company
does not own any equity interest in any corporation or other entity.
5.4. Authority Relative to this Agreement. The Company has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Company's Board of Directors and
no other corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement or to consummate the
transactions so contemplated (other than the adoption of this Agreement by the
stockholders of the Company in accordance with the DGCL and the Certificate of
Incorporation and By-Laws of the Company). This Agreement has been duly and
validly executed and delivered by the Company, and, subject insofar as Article
II of this Agreement is concerned to the approval and adoption of this
Agreement by the stockholders of the Company, constitutes the valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally and by principles of equity
regarding the availability of remedies. The Company and its Board of Directors
have approved this Agreement and the Stockholder Agreement and the transactions
contemplated hereby and thereby, including, without limitation, the Offer, the
Merger and the agreements by the Selling Stockholders to tender their Shares,
and the Company and the Board of Directors have taken all steps necessary to
render Section 203 of the DGCL inapplicable to this Agreement, the Stockholder
Agreement and the transactions contemplated hereby and thereby, including
without limitation, the Merger, the Offer (regardless of whether this Agreement
is terminated) and the agreements by the Selling Stockholders to tender their
Shares (regardless of whether this Agreement is terminated).
5.5. Consents and Approvals; No Violations. Except for applicable
requirements of the Exchange Act, the HSR Act and the filing and recordation of
appropriate merger documents as required by the DGCL, no filing with, and no
permit, authorization, consent or approval of, any
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<PAGE> 14
public body, domestic or foreign, is necessary for the consummation by the
Company of the transactions contemplated by this Agreement, the absence of
which would or might result in the divestiture of any assets which are material
to the Company or would otherwise affect materially and adversely the business,
assets, prospects, condition (financial or otherwise) or the results of
operations of the Company. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation or By-Laws of the Company, (ii) except as is disclosed in
paragraph 5.5 of the Disclosure Letter delivered by the Company to DLB
concurrently with the execution of this Agreement (the "Disclosure Letter"),
require any consent, approval or notice under or result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a material default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which the Company is a party or by which it or any material
portion of its properties or assets may be bound or (iii) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company
or any material portion of its properties or assets.
5.6. Litigation. Except as may be disclosed in the SEC filings
referred to in Section 5.7 or as otherwise disclosed in paragraph 5.6 of the
Disclosure Letter, as of the date hereof there are no claims, actions,
proceedings or, to the best knowledge of the Company, investigations pending
or, to the best knowledge of the Company, threatened against the Company or any
properties or rights of the Company before any court, administrative,
governmental or regulatory authority or body which, if decided adversely, would
materially and adversely affect the business, assets, prospects, condition
(financial or otherwise) or the results of operations of the Company. As of
the date hereof, neither the Company nor any of its property is subject to any
order, judgment, injunction or decree which might affect materially and
adversely the business, assets, prospects, condition (financial or otherwise)
or the results of operations of the Company.
5.7. SEC Filings. The Company has heretofore made available to DLB
its (i) Annual Report on Form 10-K for the fiscal year ended June 30, 1996 as
filed with the SEC, (ii) Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1996, (iii) proxy statements relating to the Company's
meetings of stockholders (whether annual or special) since June 30, 1996 and
(iv) all other reports, filings or registration statements filed by the Company
with the SEC since June 30, 1996. As of their respective dates, such reports
and statements (including all exhibits and schedules thereto and documents
incorporated by reference therein) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited financial statements and
unaudited interim financial statements of the Company included or incorporated
by reference in such reports and in the Company's Annual Reports on Form 10-K
for the fiscal years ended June 30, 1996 and June 30, 1995 heretofore made
available to DLB have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
assets, liabilities and financial position of the Company as of the dates
thereof and the results of its operations and
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changes in financial position for the periods then ended (subject, in the case
of any unaudited interim financial statements, to normal year-end adjustments).
5.8. Tradenames. To the Company's knowledge, no other person, firm
or corporation is presently using or claiming, or has the right to use or to
claim the tradename: "Bonray Drilling Corporation".
5.9. Tax Matters.
(i) The Company has filed when due (taking into account
extensions) with the appropriate federal, state, local, foreign and other
governmental agencies, all tax returns, estimates and reports required to be
filed by it with respect to its tax obligations and has paid when due all
required taxes and has established sufficient reserves to pay taxes when due
through the Closing Date.
(ii) Except as is disclosed in paragraph 5.9(ii) of the
Disclosure Letter, there are no taxes assessed or asserted in writing with
respect to any tax return filed by the Company or claimed in writing to be due
by a taxing authority or otherwise. No tax return of the Company is currently
being audited by the Internal Revenue Service ("IRS") or any other taxing
authority having jurisdiction over the Company. The Company has not executed
any agreement or other document extending or having the effect of extending the
period of assessment or collection of any taxes. All final adjustments made by
the IRS with respect to any Federal tax return of the Company have been
reported to the relevant state, local or foreign taxing authority to the extent
required by law. No request by the Company for any rulings or any
determination letters are pending with any taxing authority.
(iii) The Company will deliver to DLB at Closing, all tax
files currently being maintained or stored by the Company.
5.10. Environmental Matters.
(i) Except as is disclosed in paragraph 5.10(i) of the
Disclosure Letter, all real property owned, leased or operated by the Company
(the "Property"), the operations conducted thereon and all operations of the
Company conducted off of the Property are not in material violation of any
order or requirement of any court or Governmental Authority or any
Environmental Laws (as such terms are defined herein).
(ii) Except as is disclosed in paragraph 5.10(ii) of the
Disclosure Letter, the Property and the operations conducted thereon by the
Company or the operations conducted by any prior owner or operator of the
Property are not subject to any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or Governmental
Authority.
(iii) Except as is disclosed in paragraph 5.10(iii) of the
Disclosure Letter, all notices, permits, licenses or similar authorizations, if
any, required to be obtained or filed in connection with the current operation
or use of the Property, including without limitation
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authorizations related to the treatment, storage, disposal or release of any
hazardous substances or solid waste have been duly obtained or filed, and the
Company is in material compliance with the terms and conditions of all such
notices, permits, licenses and similar authorizations.
(iv) Except as is disclosed in paragraph 5.10(iv) of the
Disclosure Letter, there are no leaking or deteriorating above ground or below
ground storage tanks or containers on the Property and no hazardous substance
or solid waste is known to have been disposed of or otherwise released on or to
the property except in compliance with Environmental Laws.
(v) The Company is not subject to any contingent
liability in connection with any release or threatened release of any hazardous
substance or solid waste into the environment or on or at the Property or from
the operations conducted thereon other than minor instances, the clean-up of
which will exceed the sum of Ten Thousand Dollars ($10,000) per occurrence
based upon standard industry practices as of the Closing Date.
(vi) For purposes of this Section 5.10, "Environmental
Laws" shall mean any and all laws, statutes, ordinances, rules, regulations,
orders, or determinations by any Governmental Authority pertaining to health or
the environment in effect in any and all jurisdictions in which the Property is
located, including without limitation, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980
("CERCLA"), as amended, the Federal Water Pollution Control Act, as amended,
the Operational Safety and Health Act of 1970 ("OSHA"), as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe
Drinking Water Act, as amended, the Toxic Substances Control Act, as amended,
the Superfund Amendments and the Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, and other environmental,
conservation or protection laws. The terms "hazardous substance" and "release"
(or "threatened release") have the meanings specified in CERCLA, and the term
"solid waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that the terms "hazardous substance" and "solid waste"
shall include all oil and gas exploration and production wastes that may
present an endangerment to public health or welfare or the environment, even if
such wastes are specifically exempt from classification as hazardous substances
or solid wastes pursuant to CERCLA or RCRA or the state analogues to those
statutes.
(vii) For purposes of this Section 5.10, "Governmental
Authority" shall mean the United States, the state, county, city and political
subdivisions in which the Property is located or which exercises jurisdiction
over any such Property and any agency, department, commission, board, bureau or
instrumentality which exercises jurisdiction over such Property.
(viii) Except as is disclosed in paragraph 5.10(viii) of
the Disclosure Letter, there have been no environmental investigations,
studies, audits, reviews or other analyses conducted by, or which are in the
possession of the Company regarding any facility or property now or previously
owned, leased or operated by the Company or upon which the Company has
performed any operations.
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5.11. Compliance with Agreements. The Company has complied in all
material respects with all terms and conditions of its agreements and contracts
with third parties.
5.12. Employee Benefit Matters.
(i) Paragraph 5.12(i) of the Disclosure Letter provides
a description of each "employee benefit plan", as such term is defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Other
than as is disclosed in paragraph 5.12 of the Disclosure Letter, there are no
stock option plans, collective bargaining agreements, bonus plans, incentive
award plans, vacation policies, severance pay plans, deferred compensation
agreements, medical or disability insurance plans, executive compensation or
supplemental income plans, or any other employee benefit plans, agreements or
programs.
(ii) True, correct and complete copies of each of the
plans disclosed in paragraph 5.12(i) of the Disclosure Letter have been
furnished to DLB.
(iii) The Company has substantially performed all
obligations, whether arising by operation of law or by contract, required to be
performed by it in connection with said employee benefit plans.
(iv) Any employee benefit plan intended to be qualified
under Section 401 of the Internal Revenue Code of 1986, as amended, satisfies
the requirements of such Section and has received a favorable determination
letter from the IRS regarding such qualification status.
(v) Except as is disclosed in paragraph 5.12(v) of the
Disclosure Letter, there are no actions, suits, unfunded obligations or claims
pending (other than routine claims for benefits involving less than Ten
Thousand Dollars ($10,000) in the aggregate) with respect to any of the
employee benefit plans.
(vi) Paragraph 5.12(vi) of the Disclosure Letter sets
forth by number and employment classification the approximate number of
employees employed by the Company as of the date of this Agreement and the
employee benefit plans to which such employee is entitled.
5.13. Special Warranty of Title to Company Assets. Disclosed in
paragraph 5.13 of the Disclosure Letter is a list of all of the Company's real
and tangible personal property and assets owned or leased (the "Assets"). The
Company has prepared paragraph 5.13 on a best efforts basis and hereby
specifically disclaims the completeness of paragraph 5.13. As to the title to
the Assets, as specifically set forth and described in paragraph 5.13, the
Company does hereby represent, warrant and covenant with DLB that the Company
has not made, done, executed or permitted any act or thing whatsoever, whereby
any of the Assets, or any part thereof, now or at any time hereafter through
the Closing Date shall have become impaired, charged or encumbered in any
manner whatsoever, except as is specifically indicated in paragraph 5.13, and
that the Company will warrant and defend the title to the Assets to be free and
clear against the lawful claims and demands of all persons claiming by, through
or under the Company from events, transactions, actions or failures to act
prior to the Closing Date, but not otherwise.
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5.14. Maintenance of Assets. Except as is disclosed in paragraph
5.14 of the Disclosure Letter, the Company's Assets currently used by the
Company in the ordinary course of business have been maintained in accordance
with customary industry maintenance practices and are in a state of repair
(normal wear and tear excepted) which the Company believes to be adequate for
the normal use of such Assets in the ordinary course of business.
5.15. Absence of Certain Changes or Events. Except as contemplated
by this Agreement, or reflected in any financial statement or notes thereto
referred to in Section 5.7, or reflected in the monthly financial statements of
the Company for the months of October and November 1996, previously furnished
to DLB, or disclosed in paragraph 5.15 of the Disclosure Letter or in SEC
filings made prior to the date hereof, since June 30, 1996 there has not been:
(i) any material adverse change in the business, Assets, customer relations,
condition (financial or other) or the results of operations of the Company;
(ii) any damage, destruction or loss, whether covered by insurance or not,
having a material adverse effect upon the properties or business of the
Company; (iii) any change by the Company in accounting principles or methods
except insofar as may be required by a change in generally accepted accounting
principles; (iv) any declaration, payment or setting aside for payment of any
dividend or any redemption, purchase or other acquisition of any shares of
capital stock or securities of the Company; (v) a grant of any general increase
in the compensation of its officers or employees (including any such increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment) or
any increase in the compensation payable or to become payable to any such
officer or employee.
5.16. Governmental Authorization and Compliance with Laws. The
business of the Company has been operated in compliance with all laws,
ordinances, regulations and orders of all governmental entities, domestic or
foreign, except for violations which do not affect and will not affect
materially and adversely the business, assets, prospects, condition (financial
or otherwise) or the results of operations of the Company or, as the case may
be, the Surviving Corporation. The Company has all permits, certificates,
licenses, approvals and other authorizations required in connection with the
operation of their business, except those the absence of which does not affect
and will not affect materially and adversely the business, assets, prospects,
condition (financial or otherwise) or the results of operations of the Company
or the Surviving Corporation.
5.17. Offer Documents; Proxy Statement; Other Information. None of
the information supplied by the Company for inclusion in the Offer Documents
(including any amendments or supplements thereto and including Statements on
Schedules 14D-1 and 14D-9) will, at the respective times the Offer Documents or
any amendments or supplements thereto are filed with the SEC, contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information relating to the Company included in the Proxy Statement, at the
time it is mailed, or as amended or supplemented, will contain any statement
which, at the time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or which omits to state
any material fact necessary in order to make the statements therein not
misleading or necessary to correct any statement in an earlier communication
with respect to the solicitation of a proxy for the same meeting or
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subject matter which has become misleading. The Statement on Schedule 14D-9
and the Proxy Statement each will comply in all material respects as to form
with the requirements of the Exchange Act and the rules and regulations
thereunder.
5.18. Finders and Investment Bankers. Neither the Company nor any
of its officers or directors has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated herein.
ARTICLE VI.
COVENANTS
6.1. Conduct of Business of the Company. Except as contemplated by
this Agreement, during the period from the date of this Agreement to the
Effective Time, the Company shall conduct its operations according to its
ordinary course of business and consistent with past practice, and the Company
shall use its best efforts to preserve intact its business organization as a
going concern, to keep available the services of its officers, employees and
other work force and to maintain satisfactory relationships with licensors,
licensees, suppliers, contractors, distributors, oil and gas operators and
other customers and others having business relationships with it. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, the Company will not,
without the prior written consent of DLB:
(i) Amend or propose to amend its Certificate of
Incorporation or By-Laws;
(ii) Authorize for issuance, issue, sell, pledge, deliver
or agree or commit to issue, sell, pledge or deliver (whether through the
issuance or granting of any options, warrants, commitments, subscriptions,
rights to purchase, awards or otherwise) any stock of any class or any
securities convertible into or exchangeable for shares of stock of any class of
the Company;
(iii) Split, combine or reclassify any shares of its
capital stock or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, or redeem, purchase or otherwise acquire or offer to acquire
any shares of its capital stock;
(iv) (a) Except as contemplated in this Agreement or in
the ordinary course of business consistent with past practice, create, incur,
assume, maintain or permit to exist any short-term or long-term debt (including
obligations in respect of capital leases) in excess of the amount currently
outstanding; (b) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, indirectly, contingently or otherwise) for the
obligations of any other person; (c) make any loans, advances or capital
contributions to, or investments in, any other person; or (d) incur any
material liability or obligation (absolute, accrued, contingent or otherwise)
other than in the ordinary and usual course of business and consistent with
past practice; or (e) change any assumption underlying, or methods of
calculating, any bad debt, contingency or other reserve;
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(v) (a) Increase in any manner the compensation of any
of its directors, officers or employees; (b) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or permitted by any
existing plan, agreement or arrangement to any such director, officer or
employee, whether past or present; (c) commit itself to any additional pension,
profit-sharing, bonus, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay, retirement or
other employee benefit plan, agreement or arrangement, or to any employment or
consulting agreement with or for the benefit of any person, or to amend any of
such plans or any of such agreements in existence on the date hereof or (d)
make any payment or award under any executive compensation plan of the Company
except in the ordinary course of business consistent with past practice;
(vi) Except in the ordinary course of business consistent
with past practice, sell, transfer, mortgage, or otherwise dispose of, or
encumber, or agree to sell, transfer, mortgage or otherwise dispose of or
encumber, any assets or properties, real, personal or mixed, which have a value
on the Company's books, either individually or in the aggregate, in excess of
$10,000;
(vii) Enter into any other agreements, commitments or
contracts which, individually or in the aggregate, are material to the Company,
except agreements, commitments or contracts for the purchase, sale or lease of
goods or services, consistent with past practice and not in excess of current
requirements, or otherwise make any material change in the conduct of the
business or operations of the Company;
(viii) Make any change in the Company's accounting
principles, practices or methods;
(ix) Make any tax election or permit any insurance policy
naming the Company as a beneficiary or a loss payable payee to be canceled or
terminated without providing for substitute coverage which is the same in all
material respects;
(x) Enter into any agreement or amend any existing
agreement with any affiliate of the Company;
(xi) Enter into any agreement or commitment that
restricts or limits the Company's ability to compete with or conduct any
business in any geographic area; or
(xii) Agree, commit or arrange to do any of the foregoing.
6.2. Acquisition Proposals. Neither the Company nor any of its
officers and directors shall, and the Company will cause its employees, agents
and representatives (including, without limitation, any investment banker,
attorney or accountant retained by the Company) not to, initiate or solicit,
directly or indirectly, encourage, initiate or solicit any inquiries or the
making of any proposal with respect to a merger, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
Assets of, or any equity interest in, the Company (an "Acquisition Proposal")
or, except to the extent required for the discharge by the Board of Directors
of its fiduciary duties as advised by counsel in writing, engage in any
negotiations
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concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
assist or facilitate any effort or attempt by any person or entity (other than
DLB and ADI, or their officers, directors, representatives, agents, affiliates
or associates) to make or implement an Acquisition Proposal. The Company will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. The Company will notify DLB promptly if any such
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be instituted or
continued with, the Company, such notice to include the material terms
communicated to the Company.
6.3. Notification of Certain Matters. The Company shall give
prompt notice to DLB and ADI of: (i) any notice of, or other communication
relating to, a default or event which, with notice or lapse of time or both,
would become a default, received by the Company subsequent to the date of this
Agreement and prior to the Effective Time, under any agreement, indenture or
instrument material to the business, Assets, property, condition (financial or
otherwise) or the results of operations of the Company to which the Company is
a party or is subject; (ii) any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement; and (iii) any
material adverse change in the business, Assets, prospects, condition
(financial or otherwise) or results of operations of the Company, or the
occurrence of an event which, so far as reasonably can be foreseen at the time
of its occurrence, could result in any such change (except for such changes
that are caused by the Company's compliance with the terms of this Agreement
and the Offer and are contemplated hereby) and except as otherwise disclosed to
DLB in writing.
6.4. Meetings of the Company's Stockholders. If required to
consummate the Merger, following expiration of the Offer, the Company will take
all action necessary in accordance with applicable law and its Certificate of
Incorporation and By-Laws to convene a meeting of holders of Shares as promptly
as practicable to consider and vote upon the approval of this Agreement and the
Merger. The Board of Directors of the Company shall recommend unanimously such
approval and the Company shall take all lawful action to solicit such approval.
At any such meeting of the Company all of the Shares then owned by DLB or ADI,
or any of their affiliates (collectively, the "Purchaser Companies") will be
voted in favor of this Agreement and the Merger. The Company hereby
represents, warrants and covenants that the proxy or information statement with
respect to such meeting of shareholders (the "Proxy Statement"), at the date
thereof and at the date of such meeting, will not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
the foregoing shall not apply to the extent that any such untrue statement of a
material fact or omission to state a material fact was made by the Company in
reliance upon and in conformity with written information concerning the
Purchaser Companies furnished to the Company by DLB specifically for use in the
Proxy Statement. The Proxy Statement shall not be filed, and no amendment or
supplement to the Proxy Statement will be made by the Company, without
consultation with DLB and its counsel. In the event the Purchaser Companies
acquire
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at least 90% of the outstanding Shares pursuant to the Offer or otherwise, DLB,
ADI and the Company shall take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of the stockholders of the Company, in accordance with the
DGCL.
6.5. Access to Information.
(i) Between the date of this Agreement and the Effective
Time, the Company will give DLB and its authorized representatives at all
reasonable times access to all drilling rigs, offices, warehouses, shops,
storage yards and other facilities and to all its books and records, will
permit DLB to make such inspections as it may require and will cause its
officers to furnish DLB with such financial and operating data and other
information with respect to the business and properties of the Company as DLB
may from time to time request in its due diligence investigation.
(ii) DLB and ADI and their affiliates will each hold and
will each cause its respective employees, representatives, consultants and
advisors to hold in strict confidence, unless compelled to disclose by judicial
or administrative process, or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning the Company
furnished to DLB or ADI or their affiliates in connection with the transactions
contemplated by this Agreement (except to the extent that such information can
be shown to have been (a) previously known by DLB or ADI, (b) in the public
domain through no fault of DLB or ADI or their affiliates, or (c) later
lawfully acquired by DLB or ADI from other sources unless DLB and ADI knew such
information was obtained in violation of an agreement of confidentiality) and
will not release or disclose such information to any other person, except its
auditors, attorneys, financial advisors and other consultants and advisors and
lending institutions (including banks) in connection with this Agreement (it
being understood that such persons shall be informed by DLB or ADI of the
confidential nature of such information and shall be directed by DLB or ADI to
treat such information confidentially). If the transactions contemplated by
this Agreement are not consummated, such confidence shall be maintained except
to the extent such information comes into the public domain under requirements
of law or through no fault of DLB or ADI or their affiliates and, if requested
by the Company, DLB or ADI will destroy or return to the Company all copies of
written information furnished by the Company to DLB or ADI, or their
affiliates, agents, representatives or advisors. If DLB or ADI shall be
required to make disclosure of any such information by operation of law, DLB or
ADI shall give the Company prior notice of the making of such disclosure and
shall use all reasonable efforts to afford the Company an opportunity to
contest the making of such disclosure.
6.6. Best Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including without
limitation making filings under the HSR Act, if applicable, and obtaining any
necessary third party consents. In case at any time after the Effective Time
any further action is necessary or
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<PAGE> 23
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each corporation which is a party to this Agreement shall take all
such necessary action.
6.7. Public Announcements. DLB and the Company will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Offer or the Merger and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law.
6.8. Exchange Act Compliance. In making the Offer and in
consummating the Merger, DLB, ADI and the Company shall comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
6.9. Consent of DLB. DLB, as the sole stockholder of ADI, by
executing this Agreement consents to the execution, delivery and performance of
this Agreement by ADI, and such consent shall be treated for all purposes as a
vote duly adopted at a meeting of the stockholders of ADI held for such
purpose.
6.10. Indemnification.
(i) As provided in Section 145 of the DGCL and as
implemented pursuant to Article VII of the Company's By-Laws, the Company shall
indemnify and, after the Effective Time, the Surviving Corporation shall
indemnify each present and former director and officer (the "Indemnified Party
or Parties") against any expenses, including attorneys' fees, fines, judgments
and amounts paid in settlement actually and reasonably incurred by it in
connection with any threatened, pending or completed action or suit to which it
is a party or is threatened to be made a party by reason of such relationship
with the Company and arising out of or pertaining to any action or omission
occurring prior to the Effective Time (including, without limitation, any which
arise out of or relate to the transactions contemplated by this Agreement) to
the fullest extent permitted or required under Section 145 of the DGCL or the
Company's By-Laws; provided, however, that any determination required to be
made pursuant to Section 145(d) of the DGCL with respect to whether an
Indemnified Party's conduct complied with the standards set forth in Delaware
law or the Company's By-Laws shall be made by independent legal counsel
selected by the Company or the Surviving Corporation, as the case may be.
(ii) This Section 6.10 shall survive the closing of the
transactions contemplated hereby, is intended to benefit the Company and each
of the Indemnified Parties (each of whom shall be entitled to enforce this
Section 6.10 against the Company or the Surviving Corporation, as the case may
be) and shall be binding on all successors and assigns of the Surviving
Corporation. In the event the Surviving Corporation or any of its successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case, proper provisions shall be made so
that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 6.10.
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(iii) Each of the parties hereto agrees vigorously to
defend against any actions, suits or proceedings in which such party is named
as a defendant which seeks to enjoin, restrain or prohibit the transactions
contemplated hereby or seeks damages with respect to such transactions.
ARTICLE VII.
CLOSING CONDITIONS
7.1. Conditions to Obligations of the Company, DLB and ADI. The
obligations of the Company, DLB and ADI to consummate the Merger are subject to
the fulfillment of each of the following conditions, any or all of which may be
waived in whole or in part by the Company, DLB or ADI, as the case may be, to
the extent permitted by applicable law:
(a) Shareholder Approval. Unless no shareholder
approval is required by applicable law to effect the Merger, this Agreement
shall have been duly approved by the holders of a majority of the outstanding
Shares, in accordance with applicable law and the Certificate of Incorporation
and By-Laws of the Company;
(b) Government and Regulatory Consent. All filings
required to be made prior to the Effective Time by the Company, DLB or ADI
with, and all consents, approvals and authorizations required to be obtained
prior to the Effective Time by the Company, DLB or ADI from, governmental and
regulatory authorities in connection with the execution and delivery of this
Agreement by the Company, DLB or ADI and the consummation of the transactions
contemplated hereby by the Company, DLB or ADI shall have been made or obtained
(as the case may be); and
(c) Statutes; Injunctions. No United States or state
court or governmental or regulatory authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order, whether temporary,
preliminary or permanent (collectively, an "Order"), which is in effect and
prohibits consummation of the transactions contemplated by this Agreement.
7.2. Conditions to Obligation of DLB and ADI. The obligation of
DLB and ADI to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions, any one or more of
which may be waived by DLB and ADI:
(i) ADI shall have purchased pursuant to the Offer all
shares of Common Stock duly tendered and not withdrawn; provided that this
condition will be deemed to have been met if ADI fails to purchase such shares
pursuant to the Offer in violation of the terms of the Offer or this Agreement;
(ii) The Company shall have performed in all material
respects its obligations under this Agreement required to be performed on or
prior to the Effective Time pursuant to the terms hereof;
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(iii) The representations and warranties of the Company
contained in this Agreement that are qualified as to materiality shall be true
and correct and all such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case, on
the date when made and on and as of the Effective Time as if made on and as of
such date;
(iv) There shall not have occurred after the date hereof
any material adverse change in the business, Assets, prospects, condition
(financial or otherwise) or the results of operations of the Company.
7.3. Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions, any one or more of
which may be waived by the Company:
(i) DLB and ADI shall have performed in all material
respects their obligations under this Agreement required to be performed on or
prior to the Effective Time pursuant to the terms hereof; and
(ii) The representations and warranties of DLB and ADI
contained in this Agreement that are qualified as to materiality shall be true
and correct and all such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case, on
the date when made and on and as of the Effective Time as if made on and as of
such date.
ARTICLE VIII.
CLOSING
8.1. Time and Place. Subject to the provisions of Article VII, the
closing of the Merger (the "Closing") shall take place in Oklahoma City,
Oklahoma, at the offices of McAfee & Taft, as soon as practicable but in no
event later than 10:00 A.M., local time, on the first business day after the
latest to occur of:
(i) the day the Merger is approved and adopted by the
stockholders of the Company pursuant to Section 6.4 or as may otherwise be
effected pursuant to this Agreement; or
(ii) the date on which each of the conditions set forth in
Article VII have been satisfied or waived by the party or parties entitled to
the benefit of such conditions;
or at such other place, at such other time, or on such other date as DLB and
the Company may mutually agree. The date on which the Closing actually occurs
is herein referred to as the "Closing Date."
8.2. Filings at the Closing. Subject to the provisions of Article
VII, on the Closing Date, the Company shall execute the Certificate of Merger
and cause it to be filed in accordance
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with the provisions of Sections 103 and 251(c) of the DGCL and shall take any
and all other lawful actions and do any and all lawful things necessary to
cause the Merger to become effective.
ARTICLE IX.
TERMINATION AND ABANDONMENT
9.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of Shares, by the mutual consent
of DLB and the Company by action of their respective Boards of Directors.
9.2. Termination by Either DLB or the Company. This Agreement may
be terminated and the Merger may be abandoned by action of the Board of
Directors of either DLB or the Company if (i) the Merger shall not have been
consummated by the 30th day of June, 1997 (unless the failure to consummate the
Merger by such date is due to the action or failure to act of the party seeking
to terminate), or (iii) if an Order pursuant to Section 7.1(c) shall have
become final and non-appealable.
9.3. Termination by DLB. This Agreement may be terminated and the
Merger may be abandoned by action of the Board of Directors of DLB if (i) ADI
(or any Purchaser Company) shall have terminated the Offer without purchasing
any Shares pursuant thereto; provided, such termination of the Offer is not in
violation of the terms of the Offer, as provided and permitted by this
Agreement, and DLB and ADI have not failed to perform its or their obligations
under this Agreement and shall not have breached any representation or warranty
contained herein in any material respect; or (ii) if the Board of Directors of
the Company shall have withdrawn or modified in a manner adverse to DLB or ADI
its approval or recommendation of the Offer, this Agreement or the Merger, or
the Board of Directors of the Company, upon request by DLB, shall fail to
reaffirm such approval or recommendation, or shall have resolved to do any of
the foregoing; provided, however, DLB shall not be entitled to terminate this
Agreement or abandon the Merger pursuant to this Section 9.3(ii) so long as DLB
shall have the right to acquire a majority of the issued and outstanding Shares
of the Company pursuant to the Offer.
9.4. Termination by the Company. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval by holders of Shares, by action of the Board of Directors
of the Company, (a) if DLB or ADI (or another Purchaser Company) shall have
failed to commence the Offer within the time required in Section 1.1; (b) after
the later of (i) ten (10) business days following commencement of the Offer or
(ii) five (5) business days following notice to DLB by the Company of the terms
of any of the following offers, if the Board of Directors of the Company
receives an unsolicited written offer at a higher dollar value per Share with
respect to a merger, consolidation or sale of all or substantially all of the
Company's assets, or if an unsolicited tender or exchange offer for the Shares
at a higher dollar value per Share is commenced, and the Board of Directors of
the Company determines to accept such merger, consolidation or sale of all or
substantially all of the
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Company's assets or recommend that its stockholders accept such tender or
exchange offer, but only after receipt by the Board of Directors of (x) a
written opinion to such effect from a recognized national investment banking
firm that such transaction is more favorable to the stockholders from a
financial point of view than the Offer and the transactions contemplated hereby
and (y) a written opinion of counsel that approval, acceptance or
recommendation of such transaction is required by fiduciary obligations under
applicable law; or (c) DLB or ADI shall have violated the terms of the Offer or
breached any of their representations, warranties or covenants under this
Agreement which breach shall have caused a reasonable likelihood that DLB or
ADI will not be able to consummate the Offer or Merger.
9.5. Procedure and Effect of Termination Procedure and Effect of
Termination. In the event of termination and abandonment of the Merger by DLB
or by the Company pursuant to this Article IX, written notice thereof shall
forthwith be given to the other and this Agreement shall terminate and the
Merger shall be abandoned without further action by any of the parties hereto.
ADI agrees that any termination by DLB shall be conclusively binding upon it,
whether given expressly on its behalf or not, and the Company shall have no
further notice obligation with respect to it. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article IX, no
party hereto (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, except that nothing
will relieve any party from liability for any breach of this Agreement. No
termination of this Agreement shall result in the termination of the
obligations of the parties under Section 6.5 (respecting confidentiality) or
Section 10.1(b) (respecting the payment of expenses).
ARTICLE X.
MISCELLANEOUS
10.1. Payment of Expenses.
(a) Whether or not the Merger shall be consummated, each
party hereto shall pay its own expenses incident to preparing for, entering
into and carrying out this Agreement and the consummation of the Merger. Any
separate counsel fees and other expenses incurred by the stockholders executing
the Stockholder Agreement shall not be borne by the Company.
(b) If (A) (x) any person, entity or group (other than
DLB or any subsidiary or affiliate of DLB or any group including DLB or any
subsidiary or affiliate of DLB) (i) shall have become beneficial owner of 25%
or more of the outstanding Shares or (ii) shall have publicly proposed (1) any
merger or consolidation with or acquisition of all or substantially all of the
assets of the Company or other similar business combination involving the
Company, (2) that any change be made in the composition of the Board of
Directors of the Company and such person, entity or group shall file proxy
materials with the SEC in respect of such proposal or (3) the purchase of 50%
or more of the total voting power of the Company, including by tender or
exchange offer, or (y) this Agreement is terminated pursuant to Section 9.3(ii)
or 9.4(b), and (B) this Agreement is terminated in accordance with its terms
without ADI having purchased any Shares pursuant to the Offer, then the Company
shall immediately pay DLB all actual,
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documented out-of-pocket expenses of DLB and ADI relating to the transaction
contemplated by this Agreement.
10.2. Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
DLB, ADI and the Company at any time prior to the Effective Time with respect
to any of the terms contained herein; provided, however, that, after this
Agreement is adopted by the Company's stockholders pursuant to Section 6.4, no
such amendment or modification shall alter the amount or change the form of the
consideration to be delivered to the stockholders of the Company or alter or
change any of the terms or conditions of this Agreement if such alteration or
change would adversely affect the stockholders of the Company.
10.3. Waiver of Compliance; Consents. Any failure of DLB or ADI, on
the one hand, or the Company, or the other hand, to comply with any obligation,
covenant, agreement or condition herein may be waived by the Company or DLB,
respectively, only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 10.3. ADI hereby
agrees that any consent or waiver of compliance given by DLB hereunder shall be
conclusively binding upon it, whether given expressly on its behalf or not.
10.4. Investigations; Survival of Warranties. The respective
representations and warranties of DLB, ADI and the Company contained herein or
in the certificates or other documents delivered prior to or at the Closing
shall not be deemed waived or otherwise affected by any investigation made by
any party hereto. Each and every such representation and warranty shall expire
with, and be terminated and extinguished by, the Merger, and thereafter neither
DLB, ADI nor the Company, nor any officer or director thereof shall be under
any liability whatsoever with respect to any such representation or warranty.
This Section 10.4 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the Closing.
10.5. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by cable, telegram or telex or registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice);
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(i) If to DLB or ADI, to
DLB Oil & Gas, Inc.
1601 N.W. Expressway, Suite 700
Oklahoma City, Oklahoma 73118-1401
Attention: Michael J. Blaschke, Esq.
General Counsel
Telephone: (405) 848-8808
Facsimile: (405) 848-9449
With a copy to
Harry H. Selph, II, Esq.
Fellers, Snider, Blankenship, Bailey & Tippens
120 North Robinson, Suite 2400
Oklahoma City, Oklahoma 73102
Telephone: (405) 232-0621
Facsimile: (405) 232-9659
(ii) If to the Company, to
Bonray Drilling Corporation
4701 N.E. 23rd Street
Oklahoma City, Oklahoma 73121
With a copy to
Gary F. Fuller, Esq.
McAfee & Taft
Two Leadership Square, 10th Floor
211 North Robinson
Oklahoma City, Oklahoma 73102
10.6. Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties, nor,
except for Section 6.10 (which may be enforced solely by the Indemnified
Parties), is this Agreement intended to confer upon any other person except the
parties hereto any rights or remedies hereunder.
10.7. Governing Law. This Agreement shall be governed by the laws
of the State of Delaware (regardless of the laws that might otherwise govern
under applicable Delaware principles of conflict of law) as to all matters,
including but not limited to, matters of validity, construction, effect,
performance and remedies.
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10.8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9. Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i) the term
"person" shall mean and include an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof; (ii) the term "affiliate" shall have the meaning
set forth in Rule 12b-2 promulgated under the Exchange Act; and (iii) the term
"subsidiary" of any specified corporation shall mean any corporation 50 percent
or more of whose outstanding voting securities, or any partnership, joint
venture or other entity 50 percent or more of whose total equity interest, is
directly or indirectly owned by such specified corporation.
10.10. Employment Arrangements. Prior to the acceptance of Shares
pursuant to the Offer, DLB and ADI will make a good faith attempt to enter into
employment agreements with Richard B. Hefner, Donald W. Thummel, Don M. Bode
and Joanne Belcher substantially in the form of the drafts of January 4, 1997,
furnished to the Company.
10.11. Entire Agreement. This Agreement, including all exhibits
attached hereto and the documents and instruments referred to herein, embodies
the entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and the understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, DLB, ADI and the Company have caused this
Agreement to be signed by their respective duly authorized officers on the date
first above written.
DLB OIL & GAS, INC.
By /S/Mike Liddell
------------------------------------
Name: Mike Liddell
Title: Chief Executive Officer
ACQUISITION DRILLING, INC.
By: /S/Mike Liddell
-----------------------------------
Name: Mike Liddell
Title: Chief Executive Officer
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BONRAY DRILLING CORPORATION
By: /S/Richard B. Hefner
-----------------------------------
Name: Richard B. Hefner
Title: President
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<PAGE> 32
ANNEX A
Certain Conditions Of The Offer
Notwithstanding any other provision of the Offer, Acquisition
Drilling, Inc. ("ADI") shall not be required to accept for payment or pay for,
or may delay the acceptance for payment of or payment for, any tendered Shares,
or may, in its sole discretion, terminate or amend the Offer as to any Shares
not then paid for if (x) a majority of the Shares outstanding on a fully
diluted basis shall not have been validly tendered pursuant to the Offer and
not withdrawn prior to the expiration of the Offer (the "Minimum Condition"),
(y) the Agreement shall have been terminated in accordance with its terms, or
(z) on or after the date of the Agreement, and at or before the time of payment
for any such Shares, any of the following events shall occur:
(a) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New
York Stock Exchange or on NASDAQ, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of
banks in the United States, (iii) a commencement of a war,
armed hostilities or other international or national calamity
directly involving the armed forces of the United States, (iv)
any general limitation (whether or not mandatory) by any
governmental authority on the extension of credit by banks or
other lending institutions, (v) in the case of any of the
foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof, (vi) a
decline of at least thirty percent (30%) in the Dow Jones
Industrial Average or (vii) a change in general financial,
bank or capital market conditions which materially and
adversely affects the ability of financial institutions in the
United States to extend credit or syndicate loans;
(b) any of the representations and warranties of the Company set
forth in the Agreement, or of the Selling Stockholders set
forth in the Stockholder Agreement, that are qualified as to
materiality shall not be true and correct or any such
representations and warranties that are not so qualified shall
not be true and correct in any material respect, in each case,
on the date when made and at the Expiration Date, or in the
case of any representations and warranties that are made as of
a different date, as of that date; or
(c) the Company shall have breached or failed to comply in any
material respect with any of its obligations under the
Agreement and such failure continues for two (2) days after
receipt by the Company of notice from DLB specifying such
failure or any Selling Stockholder shall have breached or
failed to comply in any material respect with any of its
obligations under the Stockholder Agreement and such failure
continues for two (2) days after receipt by the Selling
Stockholder of notice from DLB specifying such failure; or
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(d) any statute, rule, regulation, order or injunction shall be
enacted, promulgated, entered, enforced or deemed applicable
to the Offer or the Merger or any other action shall have been
taken by any United States governmental authority or court (i)
which prohibits the consummation of the transactions
contemplated by the Offer or the Merger; (ii) which prohibits
DLB's or ADI's ownership or operation of all or any material
portion of their or the Company's business or assets, or which
compels DLB or ADI to dispose of or hold separate all or any
material portion of DLB's or ADI's or the Company's business
or assets as a result of the transactions contemplated by the
Offer or the Merger, (iii) which makes the acceptance for
payment, purchase of, or payment for, some or all of the
Shares illegal; (iv) which imposes material limitations on the
ability of DLB or ADI to acquire or hold or to exercise
effectively all rights of ownership of Shares including,
without limitation, the right to vote any Shares purchased by
ADI or DLB on all matters properly presented to the
stockholders of the Company, or (v) which imposes any
limitations on the ability of DLB or ADI, or any of their
respective subsidiaries, effectively to control in any
material respect the business or operations of the Company;
(e) DLB or ADI shall have reached an agreement or understanding in
writing with the Company providing for termination of the
Offer;
(f) any filing required to be made by the Company with, or any
consent, approval or authorization required to be obtained
prior to the Effective Time by the Company from, any
governmental or regulatory authority in connection with the
execution and delivery of the Agreement by the Company or the
consummation of the Offer or the transactions contemplated by
the Agreement, shall not have been made or obtained;
(g) there shall have occurred any material adverse change in the
business, assets, conditions (financial or otherwise), results
of operations or prospects of the Company,
which, in the reasonable judgment of DLB and ADI, in any such case, and
regardless of the circumstances giving rise to any such conditions, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
of or payment for Shares.
The foregoing conditions are for the sole benefit of DLB and ADI and
may be asserted by DLB or ADI regardless of the circumstances or may be waived
by DLB or ADI in whole or in part at any time and from time to time in its sole
discretion.
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STOCKHOLDER TENDER AGREEMENT
THIS STOCKHOLDER TENDER AGREEMENT (this "Agreement"), dated the 6th
day of January, 1997, by and among Acquisition Drilling, Inc. , a Delaware
corporation ("ADI"), DLB Oil & Gas, Inc., an Oklahoma corporation ("DLB"), and
the stockholders of Bonray Drilling Corporation, a Delaware corporation (the
"Company"), listed on Exhibit A attached hereto (each a "Stockholder" and
collectively the "Stockholders").
RECITALS
Simultaneous with the execution and delivery of this Agreement, ADI
and its parent corporation, DLB, are entering into an Agreement and Plan of
Merger (as amended from time to time, the "Merger Agreement") with the Company,
pursuant to which ADI will commence a tender offer (the "Offer") to acquire any
and all shares of common stock, par value $1.00 per share (the "Common Stock"),
of the Company.
As an inducement to DLB and ADI to enter into and perform the Merger
Agreement, the Stockholders have agreed to enter into this Agreement, and DLB
and ADI are entering into the Merger Agreement in reliance upon the
Stockholders' representations, warranties, covenants and agreements contained
herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and promises set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1. Tender of Stock. Each Stockholder hereby agrees to tender to
ADI pursuant to the Offer all shares of Common Stock of the Company now owned
or hereafter acquired by the Stockholder prior to the Expiration Date (as
defined in the Merger Agreement) (all such shares being defined as the
"Shares") and not withdraw any such Shares from the Offer except in accordance
with the terms and provisions of this Agreement. Each Stockholder agrees to so
tender all Shares presently owned by such Stockholder ("Existing Shares")
within 10 business days of commencement of the Offer, and agrees to so tender
any Shares hereafter acquired by such Stockholder within 2 business days of
such acquisition but in any event prior to the Expiration Date. Attached as
Schedule 1 to this Agreement is an accurate and complete list of all shares of
Common Stock beneficially owned by each Stockholder and a list of each option
or other right of any Stockholder to acquire shares of Common Stock.
2. Representations and Warranties of the Stockholders. Each
Stockholder hereby represents and warrants to ADI and DLB as follows:
2.1. Binding Agreement. This Agreement constitutes the
legal, valid, and binding agreement of the Shareholder, enforceable against the
Stockholder in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally and by principles of equity regarding the availability of remedies.
<PAGE> 2
2.2. Shares. Set forth opposite such Stockholder's name
on Schedule 1 to this Agreement is the total number of Existing Shares and
options or other rights to acquire shares of Common Stock owned by the
Stockholder on the date of this Agreement. The Stockholder has all required
authority and has taken all necessary action to permit the Stockholder at all
times from the date of this Agreement to deliver and sell the Shares.
2.3. No Conflicts. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated by this
Agreement will violate or result in any violation of or be in conflict with, or
constitute a default under, the terms of any statute, regulation, agreement,
instrument, judgment, decree, rule, or order applicable to the Stockholder.
2.4. No Approvals or Notices Required. The execution,
delivery, and performance of this Agreement by the Stockholder and the
consummation by the Stockholder of the transactions contemplated by this
Agreement will not violate (with or without the giving of notice or the lapse
of time or both) or require any consent, approval, filing, or notice by the
Stockholder under any provision of law applicable to the Stockholder except for
any filings required by the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), if applicable, and filings on Schedule 13D
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
2.5. Title. Upon acceptance for purchase and payment by
ADI pursuant to the Offer, ADI will acquire good title to the Shares, free and
clear of any claims, liens, charges, encumbrances, security interests, options,
warrants, rights to purchase, voting agreements, voting trusts, and charges of
any nature whatsoever other than restrictions on transfer under applicable
federal and state securities laws. On the date of this Agreement the
Stockholder has (and the Stockholder will have at all times up to the purchase
by ADI of the Existing Shares) good title to the Existing Shares, free and
clear of all claims, liens, charges, encumbrances, security interests, options,
warrants, rights to purchase, voting agreements, voting trusts and charges
other than restrictions on transfer under applicable federal and state
securities laws.
2.6. Finder's Fees. No person is, or will be, entitled to
any commission or finder's fees from the Stockholder in connection with this
Agreement or the transactions contemplated hereby.
3. Representations and Warranties of ADI and DLB. ADI and DLB
hereby represent and warrant to the Stockholders as follows:
3.1. Due Authorization. This Agreement has been duly
authorized by all necessary action on the part of ADI and DLB and has been duly
executed and delivered by ADI and DLB.
3.2. No Conflicts. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated by this
Agreement will violate or result in any violation of or be in conflict with or
constitute a default under any terms of the Certificates
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of Incorporation or Bylaws of ADI or DLB or any statute, regulation, agreement,
instrument, judgment, decree, rule, or order applicable to ADI or DLB.
3.3. No Approvals or Notices Required. The execution,
delivery, and performance of this Agreement by ADI and DLB and the consummation
by ADI and DLB of the transactions contemplated by this Agreement will not
violate (with or without the giving of notice or the lapse of time or both) or
require any consent, approval, filing or notice by ADI or DLB under any
provision of law applicable to ADI or DLB except for filings required by the
HSR Act, if applicable, and filings on Schedules 13D and 14D-1 of the Exchange
Act.
4. Other Agreements of the Stockholders.
4.1. Proxy. Each Stockholder hereby irrevocably appoints
(i) Mike Liddell and Mark Liddell and each of them, with full power of
substitution and resubstitution (or any other designees of ADI), as proxies for
the Stockholder to vote, all shares of Common Stock that the Stockholder is
entitled to vote (together with any other shares of Common Stock that the
Stockholder may become entitled to vote), for and in the name, place, and stead
of the Stockholder at any meeting of the holders of shares of Common Stock or
any adjournments or postponements thereof or pursuant to any consent in lieu of
a meeting, or otherwise, with respect only to the approval of the Merger
Agreement, the transactions contemplated by the Merger Agreement, any matters
related to or in connection with the merger contemplated in the Merger
Agreement (the "Merger"), and any corporate action the consummation of which
would violate, frustrate the purposes of, prevent, or delay the consummation of
the transactions contemplated by the Merger Agreement (including, without
limitation, any proposal to amend the Certificate of Incorporation or Bylaws of
the Company or approve any merger, consolidation, sale or purchase of any
assets, issuance of Common Stock or any other equity security of the Company
(or a security convertible into an equity security of the Company),
reorganization, recapitalization, liquidation, winding up of or by the Company,
or any similar transaction) and (ii) Raymond H. Hefner, Jr. and Richard B.
Hefner and each of them as his true and lawful attorneys-in-fact and agents and
in his name, place and stead, to agree to and sign any and all amendments to
this Agreement and to receive any and all notices to the Stockholder pursuant
to this Agreement, granting to each said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite
and necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person. Each Stockholder agrees that the
foregoing proxy is coupled with an interest.
4.2. Exclusivity Covenants. From the date of this
Agreement, each Stockholder, in his capacity as a stockholder and not in his
capacity as a director of the Company, covenants and agrees to negotiate
exclusively with DLB and ADI with regard to the acquisition of the Company and
will not directly or indirectly: (i) solicit any other buyers for all or any
part of the capital stock or assets of the Company or any of its subsidiaries;
(ii) encourage any third parties to bid for any of the assets of the Company or
any of its subsidiaries or to purchase shares of its capital stock, or
participate in any negotiations or discussions with any such third parties with
respect to such matters; (iii) provide business or financial information (not
otherwise publicly available) concerning the Company or any of its subsidiaries
to any third parties (except as required for the making of necessary regulatory
filings or in any judicial or administrative
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proceeding); (iv) purchase or otherwise acquire shares of or any beneficial
interest in any of the capital stock of the Company except upon exercise of
options listed on Schedule 1; (v) make, or assist or cooperate with anyone else
to make, any proposal to purchase all or any part of the assets or capital
stock of the Company; or (vi) enter into any arrangements by himself or itself
or with others to directly or indirectly acquire or obtain control of the
Company. The Stockholder will immediately notify ADI if he, she or it becomes
aware of any efforts by any person or group, directly or indirectly in any
manner whatsoever, to acquire or obtain control of the Company. The
Stockholder will direct his, her and its financial and other advisers and
representatives to comply with each of the foregoing covenants.
4.3. Notification of Record Date. At any time from and
after the date of this Agreement until the time that ADI purchases Shares
pursuant to the Offer, each Stockholder will give ADI fifteen (15) days' prior
written notice of any record date for determining the holders of record of the
Common Stock entitled to vote on any matter, to receive any dividend or
distribution, or to participate in any rights offering or other matters, or to
receive any other benefit or right with respect to the Common Stock.
5. Termination. This Agreement (other than the provisions of
Section 6.10) shall terminate on the earliest of (a) the date on which ADI
accepts for payment the Shares tendered in the Offer, so long as the Shares are
so tendered and not withdrawn; (b) the termination of the Merger Agreement by
the Company pursuant to Section 9.4(a) or (c) of the Merger Agreement; or (c)
the termination of the Offer by ADI without purchasing any Shares pursuant
thereto.
6. Miscellaneous.
6.1. Assignment. This Agreement is not assignable, by
operation of law or otherwise, by any party except pursuant to the laws of
descent and distribution (except that any such transferee will be bound by the
terms of this Agreement) and except that ADI may assign this Agreement and its
rights under this Agreement to a subsidiary of DLB.
6.2. Amendments. This Agreement may not be modified,
amended, altered, or supplemented, except upon the execution and delivery of a
written agreement executed by each party.
6.3. Notices. All notices, requests, claims, demands, and
other communications under this Agreement will be in writing and will be given
(and will be deemed to have been duly received when so given) by delivery, by
cable, facsimile, telegram or telex, or by registered mail, postage prepaid,
return receipt requested, to the respective parties as follows:
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If to ADI or DLB:
c/o DLB Oil & Gas, Inc.
1601 N.W. Expressway, Suite 700
Oklahoma City, OK 73118-1401
Attn: Michael J. Blaschke, Esq.
General Counsel
With copies to:
Harry H. Selph, II, Esq.
Fellers, Snider, Blankenship,
Bailey & Tippens
First National Center
120 North Robinson, Suite 2400
Oklahoma City, OK 73102-7875
If to the Stockholders:
c/o Raymond H. Hefner, Jr.
Bonray Drilling Corporation
4701 N.E. 23rd Street
Oklahoma City, OK 73121
With copies to:
Gary F. Fuller, Esq.
McAfee & Taft
Two Leadership Square, 10th Floor
211 North Robinson
Oklahoma City, OK 73102
6.4. Governing Law. This Agreement will be governed by
and construed in accordance with the substantive law of the State of Delaware
without giving effect to the principles of conflicts of law.
6.5. Counterparts. This Agreement may be executed in
several counterparts, each of which will be an original, but all of which
together will constitute one and the same agreement.
6.6. Effect of Headings. The section headings in this
Agreement are for convenience only and will not affect the construction of this
Agreement.
6.7. Parties in Interest. This Agreement will inure to
the benefit of and be binding upon the parties to this Agreement and their
respective permitted successors and assigns.
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Nothing in this Agreement, express or implied, is intended to confer on any
person other than the parties to this Agreement and their respective permitted
successors and assigns, any rights or remedies under or by reason of this
Agreement.
6.8. Severability. If any term, provision, covenant, or
restriction, or any portion thereof, contained in this Agreement is held by a
court of competent jurisdictions to be invalid, void, voidable, or
unenforceable, such term, provision, covenant, restriction, or portion will be
curtailed whether as to time, area, or otherwise, to the minimum extent
required by applicable law and the remaining terms, provisions, covenants, and
restrictions will remain in full force and effect and will in no way be
affected, impaired, or invalidated.
6.9. Certain Definitions; Interpretation. The word
"person" when used in this Agreement will be broadly construed to include any
individual, company, corporation, partnership, joint venture, trust, firm, or
other entity, and the word "affiliate" has the meaning given in Rule 144(a)(1)
under the Securities Act.
6.10. Expenses. No party to this Agreement will be
obligated to pay the expenses of any other party in connection with the
transactions contemplated by this Agreement, including, without limitations,
the fees and expenses of its counsel and other advisers.
6.11. DLB Guaranty. DLB irrevocably guarantees the
performance by ADI of all of its obligations under this Agreement.
6.12. Facsimile Signature. After execution of this
Agreement, the signature pages may be transmitted to the other parties via
facsimile so long as the original signature pages are delivered the following
business day via overnight delivery service.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Stockholder Purchase Agreement the date first above written.
ACQUISITION DRILLING, INC.,
a Delaware corporation
By: /S/Mike Liddell
-------------------------------------------
Name: Mike Liddell
Title: Chief Executive Officer
DLB OIL & GAS, INC.,
an Oklahoma corporation
By: /S/Mike Liddell
-------------------------------------------
Name: Mike Liddell
Title: Chief Executive Officer
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STOCKHOLDERS:
HBH ENTERPRISES ALP
By: HBH HOLDING CORPORATION,
General Partner
By: /S/Raymond H. Hefner, Jr.
----------------------------------
Name: Raymond H. Hefner, Jr.
Title: President
/S/Raymond H. Hefner, Jr.
----------------------------------------------
Raymond H. Hefner, Jr.
/S/Raymond H. Hefner
----------------------------------------------
Raymond H. Hefner
/S/Richard B. Hefner
----------------------------------------------
Richard B. Hefner
HEFNER CHILDREN'S TRUSTS
By: /S/Gary F. Fuller, Trustee
-------------------------------------------
Name: Gary F. Fuller
Title: Trustee
/S/James R. Tolbert III
----------------------------------------------
James R. Tolbert III, Custodian
JAMES R. TOLBERT III REVOCABLE TRUST
By: /S/James R. Tolbert III
-------------------------------------------
Name: James R. Tolbert III
Title: Trustee
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EGEAN FINANCIERA CORPORATION
By: /S/A. Kedros
-------------------------------------------
Name: Alexandros C. Kedros
Title: Authorized Signatory
CIRCLE SHIPPING COMPANY
By: /S/Michael Teriakidis
-------------------------------------------
Name: Michael Teriakidis
Title: Secretary
SIERRA FINANCIERA CORPORATION
By: /S/Michael Teriakidis
-------------------------------------------
Name: Michael Teriakidis
Title: Secretary
/S/Michael Teriakidis
----------------------------------------------
Michael Teriakidis
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EXHIBIT "A"
HBH Enterprises ALP
Hefner Children's Trusts
Raymond H. Hefner, Jr.
Raymond H. Hefner
Richard B. Hefner
Egean Financiera Corporation
Circle Shipping Company
Sierra Financiera Corporation
M. Teriakidis
James R. Tolbert III, Custodian
James R. Tolbert III Revocable Trust
<PAGE> 10
Bonray Drilling/DLB
SCHEDULE 1
TO
STOCKHOLDER TENDER AGREEMENT
HBH Enterprises ALP 148,850
Hefner Children's Trusts 120
Raymond H. Hefner, Jr. 15,170
Raymond H. Hefner 960
Richard B. Hefner 120
Egean Financiera Corporation 29,819
Circle Shipping Company 8,570
Sierra Financiera Corporation 7,915
M. Teriakidis 6,741
James R. Tolbert III, Custodian 10
James R. Tolbert III Revocable Trust 11,440
-------
TOTAL 229,715
=======
<PAGE> 1
BONRAY DRILLING CORPORATION
4701 N.E. 23RD STREET
P.O. BOX 50128
OKLAHOMA CITY, OKLAHOMA 73140
(405) 424-4327
Dear Stockholder:
Your Board of Directors is pleased to inform you that on January 6,
1997, Bonray Drilling Company ("Bonray") entered into a merger agreement with
DLB Oil and Gas, Inc., and its wholly owned subsidiary, Acquisition Drilling,
Inc. (the "Merger Agreement"), pursuant to which Acquisition Drilling Inc. has
today commenced a tender offer to purchase all outstanding shares of common
stock of Bonray for $30 per share in cash. The Merger Agreement provides that,
following completion of the tender offer, Acquisition Drilling, Inc. will be
merged with and into Bonray. In the merger, shares that are not acquired in
the tender offer will be converted into the right to receive in cash the same
price as is paid in the tender offer.
Your Board of Directors has determined that the Merger Agreement and
the transactions contemplated thereby, including the offer and the merger,
taken together are fair to and in the best interests of the stockholders of
Bonray. Accordingly, your Board recommends that stockholders accept the offer
and tender their shares pursuant thereto.
Enclosed are Acquisition Drilling, Inc.'s Offer to Purchase and related
materials, including a Letter of Transmittal, to be used for tendering your
shares. These documents set forth in detail the terms and conditions of the
tender offer and provide instructions on how to tender your shares. Attached
is a copy of Bonray's Schedule 14D-9, as filed with the Securities and Exchange
Commission. We urge you to read all these materials carefully.
The Board of Directors
Bonray Drilling Corporation
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NEWS RELEASE
For Further Information FOR IMMEDIATE RELEASE
Contact: DLB Oil & Gas, Inc.
Fred Standefer
Vice President Corporate Development
Bonray Drilling Corporation
Joanne Belcher
Chief Accounting Officer
DLB OIL & GAS TO ACQUIRE BONRAY DRILLING CORPORATION
OKLAHOMA CITY, OKLAHOMA - January 7, 1997 - DLB Oil & Gas, Inc. (NASDAQ:
"DLBI") and Bonray Drilling Corporation ("NASDAQ: "BNRY") announced today that
they have entered into a definitive agreement by which Bonray will become a
wholly-owned subsidiary of DLB Oil & Gas, Inc. and the Bonray stockholders will
receive $30.00 per share in cash. In connection with the transaction, DLB will
make a cash tender offer for all of the outstanding common stock of Bonray at
$30.00 per share. Shareholders owning approximately 54% of the outstanding
stock of Bonray have agreed to tender their shares pursuant to the tender
offer.
The tender offer is to be followed by a merger in which each remaining share
will be converted into the right to receive the cash price per share paid in
the offer. The transaction has been unanimously approved by the boards of
directors of both companies.
Mike Liddell, Chief Executive Officer of DLB, said: "We consider this merger to
be a positive step towards insuring DLB's access to drilling rigs and enhancing
Bonray's rig utilization. We expect that the management and employees of Bonray
will continue with the combined companies. DLB is joining forces with a very
high quality company with excellent prospects. Bonray, founded in 1957,
currently owns 15 land rigs in Oklahoma which have depth capabilities ranging
from 7,000 to 25,000 feet. Bonray, as a wholly-owned subsidiary of DLB, will
continue its operations under the name Bonray Drilling Corporation."
Raymond H. Hefner, Jr., the Chairman of the Board of Bonray, said: "The Board
of Directors and I believe that DLB's offer is in the best interest of all our
shareholders."
The offer will be made only pursuant to the definitive offering documents,
which will be filed with the Securities and Exchange Commission and mailed to
Bonray shareholders.
DLB Oil & Gas, Inc. is an Oklahoma City based company engaged in the
exploration for and the development of crude oil and natural gas fields with a
special emphasis on the application of state-of-the-art technologies to
underanalyzed and underexplored areas. The Company's common stock trades under
the symbol DLBI.
