<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
AND
SCHEDULE 13D
Under the Securities Exchange Act of 1934
BONRAY DRILLING CORPORATION
(Name of Subject Company)
ACQUISITION DRILLING, INC.
DLB OIL & GAS, INC.
(Bidders)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
098523 20 2
(CUSIP Number of Class of Securities)
-------------------------
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MICHAEL BLASCHKE Copies to:
DLB OIL & GAS, INC. N. KATHLEEN FRIDAY, P.C.
1601 NORTHWEST EXPRESSWAY, SUITE 700 AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
OKLAHOMA CITY, OKLAHOMA 73118-1401 1700 PACIFIC AVENUE, SUITE 4100
(405) 848-8808 DALLAS, TEXAS 75210
(Name, Address and Telephone Number of Persons (214) 969-2800
Authorized to Receive Notices and
Communications on Behalf of Bidders)
</TABLE>
JANUARY 6, 1997
(Date of Event Which Requires Filing Statement on Schedule 13D)
CALCULATION OF FILING FEE
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Transaction valuation Amount of Filing Fee
- --------------------------------------------------------------------------------
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$12,706,200* $2,541
================================================================================
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* For purposes of calculating fee only. This amount assumes the purchase
of 423,540 shares of Common Stock of Bonray Drilling Corporation at
$30.00 in cash per share. The amount of the filing fee, calculated in
accordance with Regulation 240.0-11 of the Securities Exchange Act of
1934, as amended, equals 1/50 of one percentum of the value of the
shares to be purchased.
Check box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: None
Form of Registration No.: N/A
Filing Party: N/A
Date Filed: N/A
<PAGE> 2
CUSIP No. 098523 20 2 14D-1 and 13D
- --------------------------------------------------------------------------------
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Acquisition Drilling, Inc.
73-1509269
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(See Instructions):
(a) X
--------------
(b)
--------------
- --------------------------------------------------------------------------------
(3) SEC Use Only
- --------------------------------------------------------------------------------
(4) Sources of Funds (See Instructions)
AF
- --------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f): [ ]
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
(7) Aggregate Amount Beneficially Owned by EACH REPORTING PERSON.
229,715
- --------------------------------------------------------------------------------
(8) Check Box if the Aggregate Amount in Row (7) Excludes Certain
Shares (See Instructions)
- --------------------------------------------------------------------------------
(9) Percent of Class Represented by Amount in Row (7)
54.2%
- --------------------------------------------------------------------------------
(10) Type of Reporting Person (See Instructions)
CO
- --------------------------------------------------------------------------------
2
<PAGE> 3
CUSIP No. 098523 20 2 14D-1 and 13D
- --------------------------------------------------------------------------------
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
DLB Oil & Gas, Inc.
73-1352899
- --------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group
(See Instructions):
(a) X
--------------
(b)
--------------
- --------------------------------------------------------------------------------
(3) SEC Use Only
- --------------------------------------------------------------------------------
(4) Sources of Funds (See Instructions)
BK
- --------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f): [ ]
- --------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Oklahoma
- --------------------------------------------------------------------------------
(7) Aggregate Amount Beneficially Owned by EACH REPORTING PERSON.
229,715
- --------------------------------------------------------------------------------
(8) Check Box if the Aggregate Amount in Row (7) Excludes Certain
Shares (See Instructions) [ ]
- --------------------------------------------------------------------------------
(9) Percent of Class Represented by Amount in Row (7)
54.2%
- --------------------------------------------------------------------------------
(10) Type of Reporting Person (See Instructions)
CO
- --------------------------------------------------------------------------------
3
<PAGE> 4
Introduction
This Tender Offer Statement on Schedule 14D-1 and on Schedule 13D
relates to the offer by Acquisition Drilling, Inc., a Delaware corporation
("Purchaser"), to purchase any and all outstanding shares of Common Stock, par
value $1.00 per share (the "Shares"), of Bonray Drilling Corporation, a
Delaware corporation, at a price of $30.00 per Share net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated January 10, 1997 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which together constitute the "Offer"), copies of which
are attached hereto as Exhibits 99(a)(1) and 99(a)(2), respectively and are
incorporated herein by reference. Purchaser is a wholly owned subsidiary of
DLB Oil & Gas, Inc., an Oklahoma corporation ("Parent").
Item 1. Security and Subject Company.
The name of the subject company is Bonray Drilling Corporation, a
Delaware corporation (the "Company"), which has its principal executive offices
at 4701 N.E. 23rd St., Oklahoma City, Oklahoma 73121.
This Statement relates to the Offer by Purchaser to purchase all
outstanding Shares at a price of $30.00 per Share net to the seller in cash.
The information set forth in the INTRODUCTION and Section 1 ("Terms of the
Offer") of the Offer to Purchase is incorporated herein by reference.
The information set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase is incorporated herein by
reference.
Item 2. Identity and Background.
(a)-(d) and (g) This Statement is being filed by Purchaser and Parent.
All of the persons listed on Schedule I of the Offer to Purchase are United
States citizens. The information set forth in the INTRODUCTION, Section 9
("Certain Information Concerning Purchaser and Parent") and Schedule I of the
Offer to Purchase is incorporated herein by reference.
4
<PAGE> 5
During the last five years, neither Purchaser nor Parent, and to the
best of their knowledge, none of the persons listed on Schedule I of the Offer
to Purchase, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
During the last five years, neither Purchaser nor Parent, and to the
best of their knowledge, none of the persons listed on Schedule I of the Offer
to Purchase, was a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violations of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject
Company.
(a) and (b) The information set forth in Section 9 ("Certain
Information Concerning Purchaser and Parent") and Section 11 ("Background of
the Offer") of the Offer to Purchase is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a) and (b) The information set forth in Section 10 ("Source and Amount
of Funds") of the Offer to Purchase is incorporated herein by reference.
Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a)-(e) The information set forth in the INTRODUCTION, Section 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; the Stockholder Tender Agreement; Appraisal Rights") of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the
Offer on the Market for the Shares, Stock Quotation and Exchange Act
Registration and Margin Securities") of the Offer to Purchase is incorporated
herein by reference.
5
<PAGE> 6
Item 6. Interest in Securities of the Subject Company.
(a)-(b) The information set forth in the INTRODUCTION, Section 9
("Certain Information Concerning Purchaser and Parent") and Section 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; the Stockholder Tender Agreement; Appraisal Rights") of the Offer to
Purchase is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
The information set forth in the INTRODUCTION, Section 9 ("Certain
Information Concerning Purchaser and Parent") Section 11 ("Background of the
Offer") and Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company; the Merger Agreement; the Stockholder Tender Agreement; Appraisal
Rights") of the Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in the INTRODUCTION, and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in Section 9 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
Item 10. Additional Information.
(a) The information set forth in the INTRODUCTION, Section 11
("Background of the Offer") and Section 12 ("Purpose of the Offer and the
Merger; Plans for the Company; the Merger Agreement; the Stockholder Tender
Agreement; Appraisal Rights") of the Offer to Purchase is incorporated herein
by reference.
6
<PAGE> 7
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares, Stock Quotation and Exchange Act Registration and
Margin Securities") of the Offer to Purchase is incorporated herein by
reference.
(e) None.
(f) The information set forth in the Offer to Purchase, a copy of
which is attached as Exhibit 99(a)(1) hereto, the Letter of Transmittal, a copy
of which is attached as Exhibit 99(a)(2) hereto, the Merger Agreement, a copy
of which is attached as Exhibit 99(c)(1) hereto, and the Stockholder Tender
Agreement, a copy of which is attached as Exhibit 99(c)(2) hereto, is
incorporated in its entirety herein by reference.
7
<PAGE> 8
Item 11. Material to be Filed as Exhibits.
99(a)(1) Offer to Purchase dated January 10, 1997.
99(a)(2) Letter of Transmittal.
99(a)(3) Notice of Guaranteed Delivery.
99(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
99(a)(5) Letter to Clients from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
99(a)(6) Text of Press Release dated January 7, 1997.
99(a)(7) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
99(b) Credit Agreement dated as of October 24, 1994, between
Parent and lenders party thereto and First Union National
Bank of North Carolina, as agent.
99(c)(1) Merger Agreement dated January 6, 1997.
99(c)(2) Stockholder Tender Agreement dated January 6, 1997.
99(d)-(f) Not applicable.
8
<PAGE> 9
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
DATED: January 10, 1997
ACQUISITION DRILLING, INC.
By /s/ GARY C. HANNA
--------------------------------------
Name Gary C. Hanna
------------------------------------
Title President
-----------------------------------
DLB OIL & GAS, INC.
By /s/ MIKE LIDDELL
--------------------------------------
Name Mike Liddell
------------------------------------
Title Chief Executive Officer
-----------------------------------
9
<PAGE> 10
INDEX TO EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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99(a)(1) Offer to Purchase dated January 10, 1997.
99(a)(2) Letter of Transmittal.
99(a)(3) Notice of Guaranteed Delivery.
99(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
99(a)(5) Letter to Clients from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
99(a)(6) Text of Press Release dated January 7, 1997.
99(a)(7) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
99(b) Credit Agreement dated as of October 24, 1994, between
Parent and lenders party thereto and First Union National
Bank of North Carolina, as agent. (Filed in paper format under
cover of Form SE)
99(c)(1) Merger Agreement dated January 6, 1997.
99(c)(2) Stockholder Tender Agreement dated January 6, 1997.
99(d)-(f) Not applicable.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BONRAY DRILLING CORPORATION
AT
$30.00 NET PER SHARE
BY
ACQUISITION DRILLING, INC.
A WHOLLY-OWNED SUBSIDIARY OF
DLB OIL & GAS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME ON FRIDAY, FEBRUARY 7, 1997,
UNLESS THE OFFER IS EXTENDED
-------------------------
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
STOCK-HOLDERS OF THE COMPANY, HAS APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AT THE
OFFER PRICE AND THE MERGER, AND RECOMMENDS THAT THE STOCK-
HOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR
SHARES TO PURCHASER HEREUNDER.
-------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE 211,771 SHARES
OR SUCH OTHER NUMBER OF SHARES REPRESENTING A MAJORITY OF THE
COMPANY'S OUTSTANDING COMMON STOCK ON A FULLY DILUTED BASIS ON
THE DATE OF PURCHASE. THE OFFER ALSO IS SUBJECT TO CERTAIN
OTHER CONDITIONS, WHICH ARE SET FORTH IN THIS OFFER TO
PURCHASE. SEE THE INTRODUCTION AND SECTIONS 1 AND 14
OF THIS OFFER TO PURCHASE.
-------------------------
IMPORTANT
Any stockholder wishing to tender all or a portion of such
stockholder's shares of common stock, par value $1.00 per share, of the Company
(the "Shares") should either (1) complete and sign the Letter of Transmittal
(or a manually signed facsimile thereof) in accordance with the instructions in
the Letter of Transmittal, mail or deliver it and any other required documents
to the Depositary (as defined herein) and either deliver the certificates for
those Shares to the Depositary along with the Letter of Transmittal or tender
those Shares pursuant to the procedures for book-entry transfer set forth in
Section 3 hereof, or (2) request such stockholder's broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for the
stockholder. Any stockholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
that broker, dealer, commercial bank, trust company or other nominee if the
stockholder wishes to tender such Shares.
Any stockholder who wishes to tender Shares and whose certificates
representing those Shares are not immediately available or who cannot comply
with the procedure for book-entry transfer on a timely basis should tender
those Shares by following the procedures for guaranteed delivery set forth in
Section 3 hereof.
Questions and requests for assistance may be directed to the
Information Agent at its address and telephone numbers set forth on the back
cover of this Offer to Purchase. Requests for additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other
related materials may be directed to the Information Agent or to brokers,
dealers, commercial banks and trust companies.
January 10, 1997
<PAGE> 2
TABLE OF CONTENTS
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Page No.
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INTRODUCTION......................................................................................................1
1. Terms of the Offer..........................................................................................2
2. Acceptance for Payment and Payment for Shares...............................................................4
3. Procedure for Tendering Shares..............................................................................5
4. Withdrawal Rights...........................................................................................7
5. Certain Federal Income Tax Consequences of the Offer and the Merger.........................................8
6. Price Range of the Shares; Dividends on the Shares..........................................................9
7. Effect of the Offer on the Market for the Shares, Stock Quotation and Exchange Act
Registration and Margin Securities.........................................................................10
8. Certain Information Concerning the Company.................................................................10
9. Certain Information Concerning Purchaser and Parent........................................................12
10. Source and Amount of Funds................................................................................14
11. Background of the Offer...................................................................................14
12. Purpose of the Offer and the Merger; Plans for the Company; the Merger Agreement;
the Stockholder Tender Agreement; Appraisal Rights........................................................15
13. Dividends and Distributions...............................................................................23
14. Certain Conditions of the Offer...........................................................................23
15. Certain Legal Matters.....................................................................................25
16. Fees and Expenses.........................................................................................26
17. Miscellaneous.............................................................................................26
Schedule I Directors and Executive Officers of Parent and Purchaser
</TABLE>
i
<PAGE> 3
To the Holders of Common Stock of
Bonray Drilling Corporation:
INTRODUCTION
Acquisition Drilling, Inc., a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of DLB Oil & Gas, Inc., an Oklahoma corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
$1.00 par value per share (the "Shares"), of Bonray Drilling Corporation, a
Delaware corporation (the "Company"), at a purchase price of $30.00 per Share
(the "Offer Price"), net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of January 6, 1997 (the "Merger Agreement"), among Parent, Purchaser
and the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that, after the
purchase of Shares pursuant to the Offer and subject to the satisfaction or
waiver of certain conditions set forth therein, Purchaser will be merged (the
"Merger") with and into the Company with the Company surviving the Merger as a
direct wholly-owned subsidiary of Parent. Pursuant to the Merger, each
outstanding Share (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")) will be converted into the right
to receive the Offer Price, in cash (the "Merger Consideration"), without
interest.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE HOLDERS OF SHARES (THE "STOCKHOLDERS"), HAS APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AT THE
OFFER PRICE AND THE MERGER, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES TO PURCHASER HEREUNDER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE 211,771 SHARES OR SUCH
OTHER NUMBER OF SHARES REPRESENTING A MAJORITY OF THE SHARES OUTSTANDING ON A
FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION"). THE
OFFER ALSO IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTIONS 1 AND 14 BELOW.
The Company has informed Purchaser that, as of January 6, 1997,
423,540 Shares were issued and outstanding and no options or other rights
obligating the Company to issue Shares were outstanding. As a result, as of
such date, the Minimum Condition would be satisfied if Purchaser acquired
211,771 Shares.
Concurrently with the execution of the Merger Agreement, Parent and
Purchaser also 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 (and not withdraw) their Shares in the
Offer. The Selling Stockholders collectively own 229,715 Shares.
Parent and Purchaser do not presently directly own any Shares. As a
result of the agreement of the Selling Stockholders to tender their Shares
pursuant to the Stockholder Tender Agreement, Parent and Purchaser may each be
deemed to beneficially own 229,715 Shares or 54.2% of the outstanding Shares
on a fully diluted basis.
The consummation of the Merger is subject to the satisfaction or
waiver of a number of conditions, including, if required, the approval of the
Merger by the requisite vote or consent of the Stockholders. Under the DGCL,
the stockholder vote necessary to approve the Merger will be the affirmative
vote of at least a majority of the outstanding Shares, including Shares held by
Purchaser and its affiliates. If the Minimum Condition is satisfied and
Purchaser purchases at least a majority of the outstanding Shares in the Offer,
Purchaser will be able
<PAGE> 4
to effect the Merger without the affirmative vote of any other Stockholder. If
at least 90% of the outstanding Shares are acquired in the Offer, Purchaser
will be able to effect the Merger pursuant to Section 253 of the DGCL without
prior notice to, or any action or vote by, any other Stockholder. In that
event, Purchaser intends to effect the Merger as promptly as practicable
following the purchase of Shares in the Offer. If at least 90% of the
outstanding Shares are not acquired in the Offer, the Company will furnish the
Stockholders a proxy or information statement containing detailed information
concerning the Merger and will call a special meeting to vote on the Merger.
Pursuant to the Merger Agreement, Parent and Purchaser have agreed to vote the
Shares acquired by them pursuant to the Offer in favor of the Merger. See
Section 12 below.
The Merger Agreement and the Stockholder Tender Agreement are more
fully described in Section 12 below. Certain federal income tax consequences of
the sale of Shares pursuant to the Offer and the exchange of Shares for the
Merger Consideration pursuant to the Merger are described in Section 5 below.
Tendering Stockholders who have Shares registered in their names will
not be charged brokerage fees or commissions or, except as set forth in
Instruction 6 to the Letter of Transmittal, transfer taxes on the purchase of
Shares pursuant to the Offer or the Merger. Purchaser will pay all charges and
expenses of Liberty Bank & Trust Company of Oklahoma City, N.A., as the
depositary (the "Depositary"), and Morrow & Co., Inc., as the information agent
(the "Information Agent"), in connection with the Offer. See Section 16 below.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment), Purchaser will accept for payment and pay for (and
thereby purchase) any and all Shares validly tendered and not withdrawn in
accordance with Section 4 below prior to the Expiration Date. As used in the
Offer, the term "Expiration Date" means 12:00 midnight, New York City time, on
Friday, February 7, 1997, unless and until Purchaser, in accordance with the
terms of the Offer and the Merger Agreement, shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
means the latest time and date at which the Offer, as so extended, expires. As
used in this Offer to Purchase, "business day' has the meaning set forth in
Rule 14d-1(c)(6) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition. The Offer also is subject to certain other conditions set
forth in Section 14 below. Pursuant to the terms of the Merger Agreement,
Purchaser expressly reserves the right (but will not be obligated) to waive any
or all of the conditions of the Offer.
Subject to the terms of the Merger Agreement, Purchaser expressly
reserves the right, subject to applicable law, to extend the period of time
during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement of such
extension. There can be no assurance that Purchaser will extend the Offer.
Purchaser also expressly reserves the right, subject to applicable law
(including applicable rules and regulations of the Securities and Exchange
Commission (the "Commission")) and the terms of the Merger Agreement, at any
time or from time to time, to (i) delay acceptance for payment of, or payment
for, any Shares, regardless of whether the Shares were theretofore accepted for
payment, or to terminate the Offer and not accept for payment or pay for any
Shares not theretofore accepted for payment or paid for, upon the occurrence of
any of the conditions specified in Section 14 below by giving oral or written
notice of such delay in payment or termination to the Depositary, and (ii)
waive any conditions or otherwise amend the Offer in any respect, by giving
oral or written notice to the Depositary. Any extension, delay in payment,
termination or amendment will be followed as promptly as practical by public
announcement, the announcement in the case of an extension to be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. Without limiting the manner in which
Purchaser may choose to make any public announcement,
2
<PAGE> 5
Purchaser will have no obligation to publish, advertise or otherwise
communicate any such announcement, other than by issuing a release to the Dow
Jones News Service or as otherwise required by law. The reservation by
Purchaser of the right to delay acceptance for payment of, or payment for,
Shares is subject to the provisions of Rule 14e-1(c) under the Exchange Act,
which requires that Purchaser pay the consideration offered or return the
Shares deposited by or on behalf of Stockholders promptly after the termination
or withdrawal of the Offer.
Pursuant to the Merger Agreement, Purchaser expressly reserves the
right to increase the price per Share 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 shall not (i) decrease the Offer
Price, 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 Merger Agreement
provides that Purchaser may, from time to time, in its sole discretion extend
the Expiration Date, (w) to comply with the applicable rules and regulations of
the 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; provided,
however, that if Purchaser extends the Expiration Date pursuant to clause (y),
it will be deemed upon such extension to have waived conditions set forth in
Section 14 of this Offer to Purchase other than conditions (c), (d)(i) and
(d)(iii); 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
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 March 21, 1997 unless condition (d)
set forth in Section 14 of this Offer to Purchase shall not be then satisfied.
Assuming the prior satisfaction or waiver of the conditions to the Offer,
Purchaser will accept for payment, and pay for, in accordance with the terms of
the Offer, Shares validly tendered and not properly withdrawn pursuant to the
Offer promptly after the Expiration Date.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. If Purchaser
decides to increase or, subject to the consent of the Company, to decrease the
consideration in the Offer, to make a change in the percentage of Shares sought
or to change or waive the Minimum Condition and, if at the time that notice of
any such change or waiver is first published, sent or given to Stockholders,
the Offer is scheduled to expire at any time earlier than the tenth business
day after (and including) the date of that notice, the Offer will be extended
at least until the expiration of that period of ten business days.
The Company has provided Purchaser with its stockholder list and
security position listings for the purpose of disseminating the Offer to
Stockholders. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
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<PAGE> 6
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Merger Agreement
and the Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), Purchaser will accept for
payment and will pay for any and all Shares that are validly tendered on or
prior to the Expiration Date, and not properly withdrawn in accordance with
Section 4 below, promptly after the later to occur of (i) the Expiration Date
and (ii) the satisfaction or waiver of the conditions to the Offer set forth in
Section 14 below. All questions as to the satisfaction of such terms and
conditions will be determined by Purchaser in its sole discretion, which
determination will be final and binding. Subject to the applicable rules of the
Commission and the Merger Agreement, Purchaser expressly reserves the right to
delay acceptance for payment of, or payment for, Shares in order to comply, in
whole or in part, with any other applicable law or government regulation. Any
such delays will be effected in compliance with Rule 14e-1(c) under the
Exchange Act (relating to a bidder's obligation to pay for or return securities
promptly after the termination or withdrawal of such bidder's offer). See
Section 15 below.
In all cases, Shares accepted for payment pursuant to the Offer will
be paid for only after timely receipt by the Depositary of (i) certificates
evidencing (or a timely Book-Entry Confirmation (as defined in Section 3 below)
with respect to) such Shares, (ii) a Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message (as defined below), and (iii) any other documents required by
the Letter of Transmittal. See Section 3 below.
The term "Agent's Message" means a message, transmitted by a
Book-Entry Transfer Facility (as defined in Section 3 below) to, and received
by, the Depositary and forming part of a Book-Entry Confirmation, which states
that (i) such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering Shares which are the subject of such Book-Entry Confirmation, (ii)
such participant has received and agrees to be bound by the terms of the Letter
of Transmittal, and (iii) Purchaser may enforce such agreement against such
participant.
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares properly tendered to Purchaser and
not withdrawn, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering Stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering Stockholders. Upon the deposit of funds with
the Depositary for the purpose of making payments to tendering Stockholders,
Purchaser's obligation to make such payment shall be satisfied, and tendering
Stockholders must thereafter look solely to the Depositary for payment of
amounts owed to them by reason of the acceptance for payment of Shares pursuant
to the Offer.
If, for any reason, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or Purchaser is unable to accept for payment
Shares tendered pursuant to the Offer, then, without prejudice to Purchaser's
rights under the Offer (but subject to Rule 14e-1(c) under the Exchange Act),
the Depositary may, nevertheless, on behalf of Purchaser, retain tendered
Shares, and such Shares may not be withdrawn, except to the extent that the
tendering Stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 4 below. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE OFFER PRICE TO BE PAID BY PURCHASER, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason or if certificates are submitted for more Shares than are tendered,
certificates for Shares not purchased or tendered will be returned pursuant to
the instructions of the tendering Stockholder without expense to the tendering
Stockholder (or, in the case of Shares delivered by book-entry transfer into
the Depositary's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3 below, the Shares will be credited to an
account maintained at the appropriate Book-Entry Transfer Facility) as promptly
as practicable following the expiration or termination of the Offer.
4
<PAGE> 7
If, prior to the Expiration Date, Purchaser increases the
consideration to be paid per Share pursuant to the Offer, Purchaser will pay
the increased consideration for all Shares purchased pursuant to the Offer,
whether or not such Shares were tendered prior to the increase in
consideration.
3. PROCEDURE FOR TENDERING SHARES
Valid Tenders. For a Stockholder validly to tender Shares pursuant to
the Offer, either (i) a Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents, must be received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date and either (a) certificates evidencing Shares must
be received by the Depositary at any such address prior to the Expiration Date
or (b) the Shares must be delivered pursuant to the procedures for book-entry
transfer set forth below and a Book-Entry Confirmation must be received by the
Depositary prior to the Expiration Date; or (ii) the tendering Stockholder must
comply with the guaranteed delivery procedures set forth below. No alternative,
conditional or contingent tenders will be accepted.
Book-Entry Transfer. The Depositary will establish accounts with
respect to the Shares at The Depository Trust Company and the Philadelphia
Depository Trust Company (each, a "Book-Entry Transfer Facility" and, together,
the "Book-Entry Transfer Facilities") for purposes of the Offer within two
business days after the date of this Offer to Purchase. Any financial
institution that is a participant in any of the Book-Entry Transfer Facilities'
systems may make book-entry delivery of Shares by causing a Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account at a Book-entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message, and any other required documents,
must, in any case, be transmitted to, and received by, the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date, or the tendering Stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a
book-entry transfer of Shares into the Depositary's account at a Book-Entry
Transfer Facility as described above is referred to as a "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF CERTIFICATES EVIDENCING SHARES, THE LETTER
OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK
OF THE TENDERING STOCKHOLDERS, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL
WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter
of Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal; or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(an "Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of
the Letter of Transmittal. If the certificates representing Shares are
registered in the name of a person other than the signer of the Letter of
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<PAGE> 8
Transmittal or if payment is to be made or certificates for Shares not tendered
or not accepted for payment are to be returned to a person other than the
registered holder of the certificates surrendered, then the tendered
certificates evidencing Shares must be endorsed or accompanied by appropriate
stock powers, in each case signed exactly as the name or names of the registered
holder or owners appear on the certificates, with the signatures on the
certificates or stock powers guaranteed as described above and as provided in
the Letter of Transmittal. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a Stockholder desires to tender Shares
pursuant to the Offer and such Stockholder's certificates for Shares are not
immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Stockholder's tender
may be effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received
by the Depositary (as provided below) prior to the Expiration Date;
and
(iii) the certificates for all tendered Shares in proper form for
transfer (or a Book-Entry Confirmation with respect to all such
tendered Shares) together with a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile) with any
required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other documents required by the
Letter of Transmittal are received by the Depositary within three New
York Stock Exchange, Inc. trading days after the date of execution of
the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by telegram, facsimile transmission or mailed to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
the Notice of Guaranteed Delivery.
IN ALL CASES SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A
PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY
SIGNED FACSIMILE THEREOF) IS TIMELY RECEIVED BY THE DEPOSITARY.
Notwithstanding any other provision of this Offer to Purchase, payment
for Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, a Letter of Transmittal
(or a manually signed facsimile), properly completed and duly executed, with
any required signature guarantees and any other documents required by the
Letter of Transmittal (or in the case of a book-entry transfer, an Agent's
Message).
Determination of Validity. All questions as to the form of documents
and the validity, eligibility (including time of receipt) and acceptance for
payment of any tender of Shares pursuant to any of the procedures described
above will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any or all tenders of Shares determined not to be in
proper form or the acceptance of or payment for which may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to
waive any defect or irregularity in any tender of any Shares of any particular
Stockholder whether or not similar defects or irregularities are waived in the
case of other Stockholders. Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and its
instructions) will be final and binding on all parties. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of Purchaser, Parent, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such information.
Backup Federal Income Tax Withholding. To prevent backup federal
income tax withholding of 31% of the payments made to Stockholders with respect
to the purchase price of Shares purchased pursuant to the Offer or
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<PAGE> 9
the Merger, a Stockholder must provide the Depositary with his or her correct
taxpayer identification number and certify that he or she is not subject to
backup federal income tax withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. See Instruction 10 of the Letter of
Transmittal. See Section 5 below.
A tender of Shares pursuant to any of the procedures described above
will constitute the tendering Stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering Stockholder's representation
and warranty to Purchaser that (i) the Stockholder has a net long position in
the Shares being tendered, within the meaning of Rule 14e-4 under the Exchange
Act ("Rule 14e-4"), and (ii) the tender of Shares complies with Rule 14e-4. It
is a violation of Rule 14e-4 for a person, directly or indirectly, to tender
Shares for such person's own account, unless, at the time of tender, the person
so tendering (i) has a net long position equal to or greater than the amount of
(a) Shares tendered or (b) other securities immediately convertible into or
exchangeable or exercisable for Shares tendered and that person will acquire
the Shares for tender by conversion, exchange or exercise and (ii) will cause
Shares to be delivered in accordance with the terms of the Offer. Rule 14e-4
provides a similar restriction applicable to the tender or guarantee of a
tender on behalf of another person. Purchaser's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering Stockholder and Purchaser upon the terms and conditions
of the Offer.
Appointment as Proxy. By accepting a Letter of Transmittal, a
tendering Stockholder irrevocably appoints designees of Purchaser as such
Stockholder's attorneys-in-fact and proxies, with full power of substitution,
in the manner set forth in the Letter of Transmittal, to the full extent of
such Stockholder's rights with respect to Shares tendered by such Stockholder
and purchased by Purchaser and with respect to any and all other Shares or
other securities issued or issuable in respect of those Shares, on or after the
date of the Offer. All such powers of attorney and proxies will be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, Purchaser accepts such purchased
Shares for payment. Upon acceptance for payment, all prior powers of attorney,
proxies or consents given by the Stockholder with respect to the Shares (and
any other Shares or other securities so issued in respect of such purchased
Shares) will be revoked, without further action, and no subsequent powers of
attorney and proxies may be given (and, if given, will not be deemed effective)
by the Stockholder. The designees of Purchaser will be empowered to exercise
all voting and other rights of the Stockholder with respect to such Shares (and
any other Shares or securities so issued in respect of such purchased Shares)
as they in their sole discretion may deem proper, including, without
limitation, in respect of any annual or special meeting of the Stockholders, or
any adjournment or postponement of any such meeting, or in connection with any
action by written consent in lieu of any such meeting or otherwise (including
any such meeting or action by written consent to approve the Merger). Purchaser
reserves the absolute right to require that, in order for Shares to be validly
tendered, immediately upon Purchaser's acceptance for payment of the Shares,
Purchaser must be able to exercise full voting and other rights of a record and
beneficial owner with respect to the Shares, including voting at any meeting of
Stockholders then scheduled.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except
as otherwise provided in this Section 4. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior
to the Expiration Date and, unless theretofore accepted for payment and paid
for by Purchaser pursuant to the Offer, may also be withdrawn at any time after
March 10, 1997. If Purchaser extends the Offer, is delayed in its purchase of
or payment for Shares or is unable to purchase or pay for Shares for any
reason, then, without prejudice to the rights of Purchaser, tendered Shares may
be retained by the Depositary on behalf of Purchaser and may not be withdrawn,
except to the extent that tendering Stockholders are entitled to withdrawal
rights as set forth in this Section 4. The reservation by Purchaser of the
right to delay the acceptance or purchase of or payment for Shares is subject
to the provisions of Rule 14e-1(c) under the Exchange Act, which requires
Purchaser to pay the consideration offered or return the Shares deposited by or
on behalf of Stockholders promptly after the termination or withdrawal of the
Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the persons who tendered the
Shares to be
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<PAGE> 10
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder, if different from that of the person who tendered the Shares. If
certificates evidencing Shares have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such certificates, the
tendering Stockholder must also submit to the Depositary the serial numbers
shown on the particular certificates evidencing the Shares to be withdrawn, and
the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution (except in the case of Shares tendered for the account of an
Eligible Institution). If Shares have been tendered pursuant to the procedure
for book-entry transfer set forth in Section 3 above, the notice of withdrawal
must also specify the name and number of the account at the applicable
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. No
withdrawal of Shares will be deemed to have been properly made until all
defects and irregularities have been cured or waived. None of Parent,
Purchaser, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failing to give such
notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3
above.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of the principal federal income tax
consequences of the Offer and the Merger to holders whose Shares are purchased
pursuant to the Offer or whose Shares are converted into the right to receive
the Merger Consideration in the Merger (including any cash amounts received by
dissenting Stockholders pursuant to the exercise of appraisal rights). This
discussion is based upon the provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), the applicable Treasury Regulations promulgated and
proposed thereunder, judicial authority and administrative rulings and
practice. Legislative, judicial or administrative rulings or interpretations
are subject to change, possibly on a retroactive basis, at any time and
therefore could alter or modify the statements and conclusions set forth below.
It is assumed that the Shares are held as "capital assets" within the meaning
of Section 1221 of the Code (i.e., property held for investment). This
discussion does not address all aspects of federal income taxation that may be
relevant to a particular Stockholder in light of such Stockholder's personal
investment circumstances, or those Stockholders subject to special treatment
under the federal income tax laws (for example, life insurance companies,
tax-exempt organizations, foreign corporations and nonresident alien
individuals) or to Stockholders who acquired their Shares through the exercise
of employee stock options or other compensation arrangements. In addition, the
discussion does not address any aspect of foreign, state, local or estate and
gift taxation that may be applicable to a Stockholder.
Consequences of the Offer and the Merger to Stockholders. The receipt
of the Offer Price or the Merger Consideration, as the case may be (including
any cash amounts received by dissenting Stockholders pursuant to the exercise
of appraisal rights), will be a taxable transaction for federal income tax
purposes (and also may be a taxable transaction under applicable state, local
and other income tax laws). In general, for federal income tax purposes, a
Stockholder will recognize gain or loss equal to the difference between his
adjusted tax basis in the Shares sold pursuant to the Offer or converted to
cash in the Merger and the amount of cash received therefor. Gain or loss must
be determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) sold pursuant to the Offer or converted to
cash in the Merger. Such gain or loss will be capital gain or loss and will be
long-term gain or loss, if, on the date of sale (or, if applicable, the date of
the Merger), the Shares were held for more than one year.
Backup Tax Withholding. Under the Code, a Stockholder may be subject,
under certain circumstances, to "backup withholding" at a 31% rate with respect
to payments made in connection with the Offer or the Merger. Backup withholding
generally applies if the Stockholder (i) fails to furnish his social security
number or other taxpayer identification number ("TIN"), (ii) furnishes an
incorrect TIN, (iii) fails properly to report interest or
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<PAGE> 11
dividends or (iv) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN provided is his
correct number and that he is not subject to backup withholding. Backup
withholding is not an additional tax but merely an advance payment, which may
be refunded to the extent it results in an overpayment of tax. Certain persons
generally are exempt from backup withholding, including corporations and
financial institutions. Certain penalties apply for failure to furnish correct
information and for failure to include the reportable payments in income. Each
Stockholder should consult with his own tax advisor as to his qualifications
for exemption from withholding and the procedure for obtaining such exemption.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS
WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES, AND FOREIGN
CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED
TO CONSULT THEIR RESPECTIVE TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND
EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS IN
VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are included in the Nasdaq Stock Market under the symbol
BNRY. The following table sets forth, for each of the periods indicated, the
high and low bid price per Share as reported by the Nasdaq Stock Market. Bid
quotations reflect interdealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
HIGH LOW
-------- ---------
<S> <C> <C>
Fiscal Year Ended June 30, 1995
1st Quarter.............................................. $ 7.50 $ 7.00
2nd Quarter.............................................. 8.25 7.75
3rd Quarter.............................................. 8.50 8.50
4th Quarter.............................................. 8.50 8.50
Fiscal Year Ended June 30, 1996
1st Quarter.............................................. $ 8.75 $ 8.50
2nd Quarter.............................................. 10.50 8.75
3rd Quarter.............................................. 11.25 10.25
4th Quarter.............................................. 12.75 10.25
Fiscal Year Ending June 30, 1997
1st Quarter.............................................. $ 16.00 $ 13.00
2nd Quarter.............................................. 26.25 20.00
3rd Quarter (through January 9, 1997).................... 29.50 21.00
</TABLE>
On January 6, 1997, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the closing bid price
per Share quoted on Nasdaq was $21.00. On January 9, 1997, the last full
trading day prior to the date of this Offer to Purchase, the closing bid price
per Share quoted on Nasdaq was $29.50. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
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<PAGE> 12
The Company has not paid or declared any cash dividends on the Shares
during the periods set forth above and the Merger Agreement prohibits the
Company from paying any dividends.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK QUOTATION AND
EXCHANGE ACT REGISTRATION AND MARGIN SECURITIES
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of holders of Shares,
which could adversely affect the liquidity and market value of the remaining
Shares held by Stockholders other than Purchaser.
Depending upon the number of Shares purchased pursuant to the Offer,
the Shares may no longer meet the requirements of The National Association of
Securities Dealers, Inc. ("NASD") for continued inclusion in the Nasdaq Stock
Market. If the number of holders of the Shares were to fall below 300, or if
the number of publicly held Shares were to fall below 100,000, or if there were
not at least two registered and active market makers for the Shares, the NASD's
rules provide that the Shares would no longer be "qualified" for Nasdaq Stock
Market reporting, and the Nasdaq Stock Market would cease to provide any
quotations. Shares held directly or indirectly by officers, directors or
beneficial owners of more than 10% of the Shares are not considered as being
publicly held for this purpose. If, as a result of the purchase of Shares
pursuant to the Offer, the Shares no longer meet the requirements of the NASD
for inclusion in the Nasdaq Stock Market and the Shares are no longer included
in the Nasdaq Stock Market, the market for the Shares could be adversely
affected.
If, as a result of the purchase of Shares pursuant to the Offer, the
Shares no longer meet the requirements of the NASD for continued inclusion in
the Nasdaq Stock Market and the Shares are no longer included in the Nasdaq
Stock Market, it is possible that the Shares would continue to trade in the
local over-the-counter market and that price quotations would be reported by
other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
stockholders remaining at the time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of
registration under the Exchange Act, as described below, and other factors.
The Shares are currently registered under the Exchange Act.
Registration of the Shares under the Exchange Act may be terminated upon
application of the Company to the Commission if the Shares are neither listed
on a national securities exchange nor held by 300 or more holders of record.
Termination of the registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
holders of Shares and to the Commission and would make certain of the
provisions of the Exchange Act no longer applicable to the Company. Such
provisions include the short-swing profit recovery provisions of Section 16(b),
the requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with a Stockholders' meeting and the related requirement of
providing an annual report to Stockholders and the requirements of Rule 13e-3
under the Exchange Act with respect to "going private" transactions.
Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 as promulgated under the Securities Act of
1933, as amended (the "Securities Act"). If registration of Shares under the
Exchange Act were terminated, Shares would no longer be "margin securities" or
eligible for Nasdaq reporting.
The Shares are currently "margin securities" under the regulations of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of such Shares. Depending upon factors similar
to those described above regarding listing and market quotations, following the
Offer the Shares may no longer constitute "margin securities" for the purposes
of the Federal Reserve Board's margin regulations and, if this were to occur,
could no longer be used as collateral for loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a corporation organized and existing under the laws of
the State of Delaware, with its principal executive offices located at 4701
N.E. 23rd Street, Oklahoma City, Oklahoma 73121. The Company
10
<PAGE> 13
provides onshore contract drilling services to the oil and gas industry. The
Company currently owns and operates fifteen land rigs in Oklahoma having depth
capabilities ranging from 7,000 to 25,000 feet.
Selected Consolidated Financial Data. Set forth below is certain
selected financial data with respect to the Company. Most of such data is
excerpted or derived from financial information contained in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1996 (the
"Company Form 10-K"), and the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 (the "Company Form 10-Q"). More comprehensive
financial information is included in such reports and other documents filed by
the Company with the Commission. The following summary is qualified in its
entirety by reference to such reports and other documents and all financial
information (including any related notes) contained therein. The Company Form
10-K, the Company Form 10-Q and such other documents should be available for
inspection and copies thereof should be obtainable from the offices of the
Commission in the manner set forth below.
SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
FISCAL YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------- --------------------
1996 1995 1994 1996 1995
-------- -------- -------- -------- ---------
(AUDITED)
<S> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA
Revenues .................. $ 10,280 $ 9,687 $ 8,046 $ 3,026 $ 2,364
Net income (loss) ......... (142) 866 (575) 179 (140)
Net income (loss) per Share (.34) 2.05 (1.36) .42 (.33)
BALANCE SHEET DATA
Working capital ........... $ 166 $ 508 $ 351 $ 354 $ 359
Total assets .............. 10,311 10,647 8,896 10,456 10,268
Total stockholders' equity 7,906 8,048 7,182 8,085 7,908
</TABLE>
Other Information. The Company is subject to the information filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of such persons in
transactions with the Company and other matters is required to be described in
proxy statements distributed to the Company's stockholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available
for inspection and copying at prescribed rates at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of this material may also be obtained by mail, upon
payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
Except as otherwise provided in this Offer to Purchase, the
information concerning the Company contained in this Offer to Purchase,
including financial information, has been taken from or based upon records on
file with the Commission and other publicly available information. Although
neither Purchaser nor Parent has any knowledge that any such information is
untrue, neither Purchaser nor Parent takes any responsibility for the accuracy
or completeness of such information or for any failure by the Company to
disclose events that may have occurred or may affect the significance or
accuracy of such information.
Certain Projected Financial Information. In the course of its
discussions with Parent described in Section 11, the Company provided Parent
with certain business and financial information which Parent believes was not
publicly available. Such information included, among other things, certain
financial projections for 1997
11
<PAGE> 14
through 2005 (the "Company Projections") prepared by management of the Company
as a long-range plan. The Company Projections do not take into account any of
the potential effects of the transactions contemplated by the Offer and the
Merger. The Company does not as a matter of course publicly disclose internal
projections as to future revenues or financial condition.
Set forth below is a summary of the Company Projections.
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
(FISCAL YEARS)
1997 1998 1999 2000 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rig Revenues............. $10,167 $10,370 $10,577 $10,789 $11,005 $11,225 $11,449 $11,678 $11,912
</TABLE>
THE COMPANY PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC
DISCLOSURE OR COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE
GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS. THE PROJECTIONS ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY
BECAUSE SUCH INFORMATION WAS PROVIDED TO PARENT. NONE OF PARENT, PURCHASER OR
ANY PARTY TO WHOM THE PROJECTIONS WERE PROVIDED ASSUMES ANY RESPONSIBILITY FOR
THE ACCURACY OF SUCH INFORMATION. WHILE PRESENTED WITH NUMERICAL SPECIFICITY,
THESE PROJECTIONS ARE BASED UPON A VARIETY OF ASSUMPTIONS RELATING TO THE
BUSINESS OF THE COMPANY WHICH, THOUGH PARENT HAS BEEN ADVISED WERE CONSIDERED
REASONABLE BY THE COMPANY AT THE TIME THEY WERE FURNISHED TO PARENT, MAY NOT BE
REALIZED AND ARE SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY
OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY. THERE CAN BE NO ASSURANCE THAT
SUCH PROJECTIONS WILL BE REALIZED, OR THAT ACTUAL RESULTS WILL NOT BE HIGHER OR
LOWER THAN THOSE ESTIMATED. THE INCLUSION OF SUCH PROJECTIONS HEREIN SHOULD NOT
BE REGARDED AS AN INDICATION THAT PARENT, PURCHASER OR ANY OTHER PARTY WHO
RECEIVED SUCH INFORMATION CONSIDERS IT AN ACCURATE PREDICTION OF FUTURE EVENTS.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, a Delaware corporation, was organized to acquire all of the
outstanding Shares pursuant to the Offer and the Merger and has not conducted
any unrelated activities since its organization. All of the outstanding capital
stock of Purchaser is owned directly by Parent. The principal executive offices
of Purchaser and Parent are located at 1601 Northwest Expressway, Suite 700,
Oklahoma City, Oklahoma 73118-1401.
Parent is engaged primarily in the exploration for and development of
oil and gas fields utilizing 3-D and high resolution 2-D seismic surveys and
computer-aided exploration technology in areas where substantial amounts of oil
and gas have been produced. Parent has historically focused its efforts and is
one of the most active explorers in Oklahoma and Kansas. Parent's principal
producing activities are located in the Northern Anadarko Basin Shelf, the Ames
Field of northwestern Oklahoma and the Sooner Trend of central Oklahoma. Parent
expects significant future exploration activities in one or more of these
areas, as well as the Northeastern Oklahoma Platform, located in northeastern
Oklahoma, the Nemaha Ridge, extending from south central Oklahoma to northern
Kansas, southern Oklahoma, and the Central Kansas Uplift and Sedgwick Basin,
both located in central Kansas. Parent also engages in the gathering,
processing, transportation and marketing of hydrocarbons and conducts secondary
oil recovery activities.
Set forth below is certain selected consolidated financial information
with respect to Parent and its consolidated subsidiaries excerpted from
Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 1995
(the "Parent Form 10-K") and from its Quarterly Report on Form 10-Q for the
fiscal quarter
12
<PAGE> 15
ended September 30, 1996 (the "Parent Form 10-Q"). More comprehensive financial
information is included in such reports and other documents filed by Parent
with the Commission. The following summary is qualified in its entirety by
reference to such reports and other documents and all financial information
(including any related notes) contained therein. Such reports and other
documents are available for inspection and copies are obtainable in the manner
set forth in Section 8 above with respect to information about Parent in
Section 8.
DLB OIL & GAS, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AT OR FOR THE NINE MONTHS AT OR FOR THE YEAR
ENDED SEPTEMBER 30, ENDED DECEMBER 31,
------------------------- -------------------------------------
1995 1996 1993 1994 1995
------------ ----------- ----------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Total revenues................................... $ 16,671 $ 18,667 $ 11,309 $ 23,155 $ 22,052
Net income (loss)................................ (5,789) 2,399 3,079 5,944 (5,176)
Net income (loss) per common share............... (.54) .18 .31 .59 (.46)
BALANCE SHEET DATA
Working capital.................................. 19,098 11,928 2,591 773 13,724
Total assets..................................... 75,455 115,203 35,084 54,041 78,207
Long-term debt, including current portion........ -- 321 483 8,231 --
Shareholders' equity............................. 59,049 61,762 30,164 39,012 59,544
</TABLE>
Parent is subject to the information filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Information, as of
particular dates, concerning Parent's directors and officers, their
remuneration, stock options granted to them, the principal holders of Parent's
securities, any material interests of such persons in transactions with Parent
and other matters is required to be described in proxy statements distributed
to Parent's stockholders and filed with the Commission. These reports, proxy
statements and other information are available for inspections and copies are
obtainable in the manner set forth in Section 8 above.
Except as described in this Offer to Purchase, during the last five
years, none of Purchaser, Parent or, to the best knowledge of Purchaser or
Parent, any of the persons listed in Schedule I hereto (i) has been convicted
in a criminal proceeding (excluding traffic violations and similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, Federal or state
securities laws or finding any violation of such laws. The name, business
address, present principal occupation or employment, five year employment
history and citizenship of each director and executive officer of Purchaser and
Parent are set forth in Schedule I.
Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent or, to the best knowledge of Purchaser or Parent, any of the persons
listed in Schedule I has any contract, arrangement, understanding or
relationship (whether or not legally enforceable) with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies; (ii) there have been no contacts, negotiations or
transactions between Purchaser, Parent or any of their respective subsidiaries
or, to the best knowledge of Purchaser or Parent, any of the persons listed on
Schedule I on the one hand, and the Company or any of its directors, officers
or affiliates, on the other hand, that are required to be disclosed pursuant to
the rules and regulations of the Commission.
13
<PAGE> 16
10. SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon any financing arrangements.
Purchaser estimates that the total amount of funds required to consummate the
Offer and the Merger and to pay related fees and expenses will be approximately
$13.0 million. Purchaser will obtain all such funds from Parent in the form of
capital contributions and/or loans.
Parent will provide such funds through borrowings under its revolving
credit facility with the lenders party thereto and First Union National Bank of
North Carolina, as agent. Under the facility, Parent may borrow up to an
aggregate of $20.0 million. Borrowings under the facility bear interest, at the
bank's prime, floating, or the London Interbank Offered Rate ("LIBOR") plus 175
basis points or a pricing grid with the rate determined by the percentage of
the borrowing base commitment outstanding. Principal payments on the credit
facility are due at maturity in October 2000, or when any amounts outstanding
thereunder are in excess of the borrowing base. Interest payments are due
quarterly. The credit facility is collateralized by a mortgage on Parent's
producing and non-producing oil and gas properties.
It is anticipated that the borrowings described above will be repaid
from funds generated internally by Parent (including, after the Merger, if
consummated, funds generated by the Company) and from other sources. No final
decisions have been made concerning the repayment of such borrowings and
decisions will be made based on Parent's review from time to time of the
advisability of particular actions, as well as on prevailing interest rates and
financial and other economic conditions.
11. BACKGROUND OF THE OFFER
On November 1, 1996, Mike Liddell, the Chief Executive Officer of
Parent, and Mark Liddell, the President of Parent, met with Raymond H. Hefner,
Jr., the Chairman of the Board of the Company, and Richard B. Hefner, the
President and Chief Executive Officer of the Company. At the meeting, the two
executive officers of Parent inquired as to whether the Company would be
interested in pursuing a possible business combination with, or acquisition by,
Parent. Messrs. Raymond and Richard Hefner informed Messrs. Mike and Mark
Liddell that the Company would consider the matter.
On December 5, 1996, Messrs. Mike and Mark Liddell again met with
Messrs. Raymond and Richard Hefner to discuss further the possible acquisition
of the Company by Parent. At this meeting, the parties explored possible
structures for an acquisition and a potential range of consideration to be paid
for the Shares.
At several social events during December 1996 at which Messrs. Mike
and Mark Liddell and Messrs. Raymond and Richard Hefner were present, they
informally discussed Parent's interest in acquiring the Company.
On December 13, 1996, Messrs. Mike and Mark Liddell had a telephone
conversation with Messrs. Raymond and Richard Hefner, James R. Tolbert III, a
director of the Company, a legal advisor to the Company and a financial advisor
for the Hefner family. The parties discussed the possible acquisition of the
Company by Parent, and the two executive officers of Parent expressed Parent's
interest in acquiring the Company pursuant to a merger in which all
Stockholders of the Company would receive $30.00 per Share in cash.
On December 16, 1996, the Board of Directors of Parent (the "Parent
Board") held a special meeting by telephone to review, with the advice and
assistance of Parent's legal advisors, the proposed acquisition and the offer
price of $30.00 per share and the Parent Board unanimously authorized and
approved the proposed acquisition and directed its executive officers to
negotiate, execute and deliver the agreements necessary to consummate the
transaction..
Commencing December 16, 1996 and continuing throughout the remainder
of December 1996, Parent, along with its legal advisors and independent
accountants, conducted a due diligence review of information provided by the
Company and conducted various interviews with members of the Company's
management.
14
<PAGE> 17
On December 17, 1996, Parent's legal advisors had a telephonic
discussion with the Company's legal advisors concerning the terms and structure
of the proposed transaction. On December 23, 1996, legal counsel for Parent
distributed a draft Merger Agreement and Stockholder Tender Agreement to the
Company and its legal advisors. The parties and their legal advisors continued
to negotiate the terms of the Merger Agreement and Stockholder Tender Agreement
from December 26, 1996 through January 2, 1997.
On January 2, 1997, Messrs. Raymond and Richard Hefner met with
Messrs. Mike and Mark Liddell and informed them that the Company had
received other inquiries and that a meeting of the Board of Directors of the
Company was scheduled for January 6, 1997. Messrs. Mike and Mark Liddell
informed Messrs. Raymond and Richard Hefner that Parent's offer was not
subject to further negotiation.
On January 6, 1997, representatives of the Company informed Parent
that the Board of the Company had accepted Parent's offer. On January 6, 1997,
Parent, Purchaser and the Company executed and delivered the Merger Agreement,
and Parent, Purchaser and the Selling Stockholders executed and delivered the
Stockholder Tender Agreement.
On January 7, 1997, Parent and the Company jointly announced the
signing of the definitive Merger Agreement. On January 10, 1997, pursuant to
the terms of the Merger Agreement, Purchaser commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; THE STOCKHOLDER TENDER AGREEMENT; APPRAISAL RIGHTS
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer is for Parent to acquire a majority equity
interest in the Company and acquire control of the Board as a first step in
acquiring the entire equity interest in the Company. The purpose of the Merger
is for Parent to acquire all Shares not purchased pursuant to the Offer. Upon
consummation of the Merger, the Company will become a wholly-owned subsidiary
of Parent. The Offer is being made pursuant to the Merger Agreement.
Under the DGCL, the approval of the Board and the affirmative vote of
the holders of a majority of the outstanding Shares is required to approve and
adopt the Merger Agreement and the transactions contemplated thereby, including
the Merger. The Board has unanimously approved and adopted the Merger Agreement
and the transactions contemplated thereby. Thus, the only remaining required
corporate action of the Company is the approval and adoption of the Merger
Agreement and the transactions contemplated thereby by the affirmative vote of
the holders of a majority of the Shares. ACCORDINGLY, IF THE MINIMUM CONDITION
IS SATISFIED, PURCHASER WILL HAVE SUFFICIENT VOTING POWER TO CAUSE THE APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY
WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER.
In the Merger Agreement, the Company has agreed to convene a meeting
of Stockholders as promptly as practicable following the consummation of the
Offer for the purpose of considering and taking action on the Merger Agreement
and the transactions contemplated thereby. Parent and Purchaser have agreed
that all Shares owned by them will be voted in favor of the Merger Agreement
and the transactions contemplated thereby.
PLANS FOR THE COMPANY
It is expected that, following the Merger, the business and operations
of the Company will, except as set forth in this Offer to Purchase, be
continued substantially as they are currently being conducted. Parent will,
however, continue to evaluate the business and operations of the Company after
the consummation of the Offer and the Merger, and will take such actions as it
deems appropriate under the circumstances then existing.
15
<PAGE> 18
Following consummation of the Offer, Parent expects a majority of the
Company's Board of Directors to be comprised of persons designated by Parent as
provided in the Merger Agreement. Following the Merger, the Company's entire
Board of Directors will initially consist of the directors of Purchaser, as set
forth in Schedule I hereto, and the executive officers of Purchaser, as set
forth in Schedule I hereto, will become the executive officers of the Company.
Pursuant to the Merger Agreement, Parent and Purchaser have agreed, prior to
acceptance of Shares pursuant to the Offer, to make a good faith attempt to
enter into employment agreements with Richard B. Hefner, Donald W. Thummel, Don
M. Bode and Joanne Belcher. Mr. Hefner is currently the President and Chief
Executive Officer of the Company, Mr. Thummel is the Company's Vice President
of Contracts, Mr. Bode serves as the Company's Vice President of Operations,
and Ms. Belcher is the Company's Controller and Chief Accounting Officer. Their
positions with the Company pursuant to such employment agreements have not been
determined.
Except as noted in this Offer to Purchase, Purchaser and Parent have
no present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation or sale or transfer
of a material amount of assets, involving the Company or any subsidiary or any
other material changes in the Company's capitalization, dividend policy,
corporate structure, business or composition of its management or Board.
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 with the Commission as an exhibit
to the Schedule 14D-1. The Merger Agreement may be examined, and copies
obtained, as set forth in Section 8 above.
The Offer. The Merger Agreement provides for the commencement of the
Offer. Purchaser has expressly reserved the right to increase the price per
Share 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 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 Merger Agreement provides that
Purchaser may, from time to time, in its sole discretion extend the Expiration
Date, (w) to comply with the applicable rules and regulations of the
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; provided, however, that if
Purchaser extends the Expiration Date pursuant to clause (y), it will be deemed
upon such extension to have waived all conditions to the Offer set forth in
Section 14 of this Offer to Purchase other than conditions (c), (d)(i) and
(d)(iii); 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
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 March 31, 1997 unless condition (d)
set forth in Section 14 of this Offer to Purchase is not then satisfied.
Board Representation. The Merger Agreement provides that effective
upon the payment by Purchaser for Shares pursuant to the Offer, Purchaser shall
be entitled to designate the number of directors, rounded up to the
16
<PAGE> 19
next whole number, on the Board 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, including, without limitation, by increasing the size of the Board,
amending its Bylaws, using its reasonable best efforts to obtain resignations
of incumbent directors, and, to the extent necessary, filing with the
Commission and mailing to Stockholders the information required by Section
14(f) of the Exchange Act and the rules promulgated thereunder.
The Merger. The Merger Agreement provides that the Merger will be
effected at 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 Merger will become
effective upon the filing of the Certificate of Merger (the "Certificate of
Merger") with the Delaware Secretary of State or at such time thereafter as is
agreed upon by the parties and specified in the Certificate of Merger.
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 issued and outstanding immediately prior to the Effective Time
(excluding Shares owned by the Company or by 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. Each share of common
stock 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 of the
Surviving Corporation. Each Share 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.
Dissenting Shares. Shares issued and outstanding immediately prior to
the Effective Time held by a holder (if any) who has the right to demand, and
who properly demands, an appraisal of such Shares in accordance with Section
262 of the DGCL (or any successor provision) ("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. These include
representations by the Company with respect to (i) organization, standing and
corporate power, (ii) capitalization, (iii) authority, consents and
noncontravention, (iv) Commission reports, (v) absence of certain changes or
events, (vi) employee benefit plans, (vii) tax matters, (viii) compliance with
laws and agreements, (ix) tradenames, (x) litigation, (xi) environmental
matters, (xii) contracts, (xiii) assets and (xiv) absence of finders or
brokers' fees.
Parent and Purchaser have also made certain representations and
warranties, including with respect to (i) organization, standing and corporate
power, (ii) capitalization, and (iii) authority, consents and noncontravention.
No representations and warranties made by the Company, Parent or Purchaser will
survive beyond the Effective Time and no covenants made in the Merger Agreement
will survive beyond the Effective Time except for any covenant or agreement
which by its terms contemplates performance after the Effective Time.
Conduct of Business Pending the Merger. The Company has 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, and will use its
best efforts to preserve intact its business organization as a going concern,
keep available the services of officers, employees and other work force and
maintain satisfactory relationships with licensors, licensees, suppliers,
distributions, oil and
17
<PAGE> 20
gas operators and other customers and others having business relationships with
it. The Company has agreed that, during such period it will not, without the
prior consent of Parent, (i) amend or propose to amend its Certificate of
Incorporation or Bylaws; (ii) authorize for issuance, 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 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; (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, 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 or 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.
No Solicitation. The Merger Agreement provides that from and after the
date of the Merger Agreement until the termination of the Merger Agreement,
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, 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 Parent 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.
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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, 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 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 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 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.
Conditions to the Merger. Pursuant to the Merger Agreement, 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, 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 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 are 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.
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 by action of their respective Boards of Directors; (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
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party seeking to terminate), or (y) if an 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, as
provided and permitted by the Merger Agreement, 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, however, Parent shall not be entitled to terminate the
Merger Agreement or abandon the Merger pursuant to this clause (y) so long as
Parent shall have the right to acquire a majority of the issued and outstanding
Shares pursuant to the Offer, or (iv) by the Company (a) if Parent or Purchaser
shall have failed to 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
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 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
By-Laws shall be made by independent legal counsel selected by the Company or
the 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 the consummation 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 Board of Directors of the Company under applicable law
as advised by independent legal counsel, the Board of Directors of the Company
will recommend that the holders of the Shares vote in favor of and approve the
Merger Agreement and the Merger at the Stockholders Meeting. At the
Stockholders Meeting, Parent and Purchaser shall
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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 (the "HSR Act") 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.
Employment Agreements. Pursuant to the Merger Agreement, Parent and
Purchaser have agreed, prior to the acceptance of Shares pursuant to the Offer,
to make a good faith attempt to enter into employment agreements with Richard
B. Hefner, Donald W. Thummel, Don M. Bode and Joanne Belcher, who are officers
of the Company.
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 alteration or change would adversely affect the
Stockholders of the Company.
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 with the
Commission as an exhibit to the Schedule 14D-1. The Stockholder Tender
Agreement may be examined, and copies obtained, as set forth in Section 8
above. 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 Stockholder as of the date of the Stockholder Agreement ("Existing
Shares") or acquired after such date and prior to the Expiration Date, and not
withdraw any such Shares from the Offer. Each Selling Stockholder has agreed to
so tender all Existing Shares within ten business days of commencement of the
Offer, and to so tender any subsequently acquired Shares within two business
days of such acquisition but in any event prior to the Expiration Date. The
Selling Stockholders and the amount of Existing Shares to be tendered by each
pursuant to the Stockholder Tender Agreement is as follows: HBH Enterprises
ALP, 148,850 Shares; Hefner Children's Trusts, 120 Shares; Raymond H. Hefner,
Jr., 15,170 Shares; Raymond H. Hefner, 960 Shares; Richard B. Hefner, 120
Shares; Egean Financiera Corporation, 29,819 Shares; Circle Shipping Company,
8,570 Shares; Sierra Financiera Corporation, 7,915 Shares; M. Teriakidis, 6,741
Shares; James R. Tolbert III, Custodian, 10 Shares; James R. Tolbert III
Revocable Trust, 11,440 Shares. A total of 229,715 Existing Shares are subject
to the Stockholder Tender Agreement..
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
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
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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). 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 Stockholder will immediately
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 will direct his, her and its financial
and other advisers and representatives to comply with each of the foregoing
covenants.
The Stockholder Tender Agreement will terminate on the earliest of (a)
the date on which Purchaser accepts for payment the Shares tendered in the
Offer, so long as the Shares 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 pursuant
thereto.
APPRAISAL RIGHTS
No appraisal rights are available in connection with the Offer. If the
Merger is consummated, Stockholders will have certain rights under the DGCL to
dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. Such rights to dissent, if the statutory procedures are
complied with, could lead to a judicial determination of the fair value of the
Shares required to be paid in cash to such dissenting holders for their Shares.
In addition, such dissenting Stockholders would be entitled to receive payment
of a fair rate of interest from the date of consummation of the Merger on the
amount determined to be the fair value of their Shares. In determining the fair
value of the Shares, a Delaware court would be required to take into account
all relevant factors. Accordingly, such determination could be based upon
considerations other than, or in addition to, the market value of the Shares,
including, among other things, asset values and earning capacity. In Weinberger
v. UOP, Inc., the Delaware Supreme Court stated, among other things, that
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in an appraisal proceeding. Therefore, the value so determined in
any appraisal proceeding could be different from the price being paid in the
Offer or the value of the Merger Consideration.
In addition, several decisions by Delaware courts have held that, in
certain circumstances, a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders which requires that the
merger be fair to such other stockholders. In determining whether a merger is
fair to minority stockholders, Delaware courts have considered, among other
things, the type and amount of consideration to be received by the stockholders
and whether there was fair dealing among the parties. The Delaware Supreme
Court stated in Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that
although the remedy ordinarily available to minority stockholders in a cash-out
merger is the right to appraisal described above, a damages remedy or
injunctive relief may be available if a merger is found to be the product of
procedural unfairness, including fraud, misrepresentations or other misconduct.
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Dissenting Shares will not be converted into the right to receive the
Merger Consideration, but the holders of Dissenting Shares will be entitled to
receive such consideration as shall be determined pursuant to the DGCL,
provided, however, that if any such holder shall have failed to perfect or
shall withdraw or lose his right to appraisal and payment under the DGCL, such
holder's Shares shall thereupon be deemed to have been converted as of the
Effective Time into the right to receive the Merger Consideration, and such
Shares shall no longer be Dissenting Shares. Failure to follow the steps
required by Section 262 of the DGCL for perfecting appraisal rights may result
in the loss of those rights.
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser seeks
to acquire the remaining Shares not held by it. However, Rule 13e-3 will not be
applicable to the Merger or any such other business combination if (i) the
Shares are deregistered under the Exchange Act prior to the Merger or other
business combination or (ii) the Merger or other business combination is
consummated within one year after the purchase of the Shares pursuant to the
Offer and the value of the consideration paid per Share in the Merger or other
business combination (measured at the time of consummation of the Merger) is at
least equal to the amount paid per Share in the Offer. If applicable, Rule
13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction be filed with the Commission and disclosed to stockholders
prior to consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS
If on or after the date of the Merger Agreement, the Company should
(i) split, combine or otherwise change the Shares or its capitalization, (ii)
issue or sell any additional securities of the Company or otherwise cause an
increase in the number of outstanding securities of the Company or (iii)
acquire currently outstanding Shares or otherwise cause a reduction in the
number of outstanding Shares, then, without prejudice to Purchaser's rights
under Sections 1 and 14 hereof, Purchaser in its sole discretion, subject to
the terms of the Merger Agreement, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any dividend on the Shares or make any distribution (including,
without limitation, cash dividends, the issuance of additional Shares pursuant
to a stock dividend or stock split, the issuance of other securities or the
issuance of rights for the purchase of any securities) with respect to the
Shares that is payable or distributable to Stockholders of record on a date
prior to the transfer to the name of Purchaser or its nominee or transferee on
the Company's stock transfer records of the Shares purchased pursuant to the
Offer, then, without prejudice to Purchaser's rights under Sections 1 and 14
hereof, any such dividend, distribution or right to be received by the
tendering Stockholders will be received and held by the tendering Stockholder
and tendered to the Depositary for the account of Purchaser, accompanied by
appropriate documentation of transfer. Pending such remittance and subject to
applicable law, Purchaser will be entitled to all rights and privileges as
owner of any such dividend, distribution or right and may withhold the entire
Offer Price or deduct from the Offer Price the amount or value thereof, as
determined by Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is
prohibited from taking any of the actions described in the two preceding
paragraphs, and nothing in this Offer to Purchase shall constitute a waiver by
Purchaser or Parent of any of its rights under the Merger Agreement or a
limitation of remedies available to Purchaser or Parent for any breach of the
Merger Agreement, including termination of the Merger Agreement.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange
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Act, to pay for any Shares tendered, and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for any such
Shares tendered, and, subject to the provisions of the Merger Agreement, may
terminate the Offer (whether or not any Shares have theretofore been purchased
or paid for) if, (1) the Minimum Condition shall not have been satisfied, (2)
the Merger Agreement shall have been terminated in accordance with its terms,
or (3) at any time before acceptance for payment of, or payment for, 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 Merger Agreement, or of the Selling Stockholders
set forth in the Stockholder Tender 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 Merger
Agreement and such failure continues for two (2) days after
receipt by the Company of notice from Parent 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 Tender Agreement and such
failure continues for two (2) days after receipt by the
Selling Stockholder of notice from Parent specifying such
failure; or
(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 Parent's or Purchaser's ownership or
operation of all or any material portion of their or the
Company's business or assets, or which compels Parent or
Purchaser to dispose of or hold separate all or any material
portion of Parent's or Purchaser'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 Parent or Purchaser 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 Parent or Purchaser on all matters properly
presented to the Stockholders of the Company, or (v) which
imposes any limitations on the ability of Parent or
Purchaser, or any of their respective subsidiaries,
effectively to control in any material respect the business
or operations of the Company;
(e) Parent or Purchaser 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
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regulatory authority in connection with the execution and
delivery of the Merger Agreement by the Company or the
consummation of the Offer or the transactions contemplated by
the Merger 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 Parent and Purchaser, 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 Parent and
Purchaser and may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to any such condition or may be waived by Parent and
Purchaser, in whole or in part, at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right and may be asserted at any time and
from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation, neither Purchaser nor Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company
and its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated in this Offer to Purchase or
of any approval or other action by any governmental authority that would be
required for the acquisition or ownership of Shares by Purchaser as
contemplated in this Offer to Purchase. Should any such approval or other
action be required, Purchaser and Parent presently contemplate that such
approval or other action will be sought, except as described below under "State
Takeover Laws."
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission ("FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice and the FTC
and certain waiting period requirements have been satisfied. The acquisition of
Shares by Purchaser pursuant to the Offer at the Offer Price is not subject to
such requirements.
State Takeover Laws. A number of states throughout the United States
have enacted takeover statutes that purport, in varying degrees, to be
applicable to attempts to acquire securities of corporations that are
incorporated or have assets, shareholders, executive offices or places of
business in those states. In Edgar v. MITE Corp., the Supreme Court of the
United States held that the Illinois Business Takeover Act, which involved
state securities laws that made the takeover of certain corporations more
difficult, imposed a substantial burden on interstate commerce and therefore
was unconstitutional. In CTS Corp. v. Dynamics Corp. of America, however, the
Supreme Court of the United States held that a state may, as a matter of
corporate law and, in particular, those laws concerning corporate governance,
constitutionally disqualify, a potential acquiror from voting on the affairs of
a target corporation without prior approval of the remaining shareholders,
provided that the laws were applicable only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation
to engage in business combinations with "interested stockholders" (defined as
any beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval of either the business combination or the
transaction that resulted in the stockholder becoming an "interested
stockholder." The Company has represented in the Merger Agreement that it
approved the Merger Agreement, the Stockholder Tender Agreement and the
transactions contemplated thereby, including the Offer and the Merger, and has
taken all necessary steps to render Section 203 of the DGCL inapplicable to the
Merger Agreement, the Stockholder Tender Agreement and the transactions
contemplated thereby, including the Offer and the Merger.
25
<PAGE> 28
The Company conducts business in a number of states throughout the
United States, some of which have enacted takeover laws. The Oklahoma Take-over
Disclosure Act of 1985 (the "Oklahoma Act") purports to regulate tender offers
for publicly traded equity securities of any company in which at least twenty
percent of its equity securities are beneficially held by residents of the
state of Oklahoma and which has substantial assets in such state. The Oklahoma
Act requires Purchaser to file a statement with the Administrator of the
Department of Securities of Oklahoma and contains prohibitions against
deceptive practices in connection with making a tender offer. Pursuant to the
Oklahoma Act, Purchaser has filed with such Administrator a Tender Offer
Statement on Schedule 14D-1, together with all exhibits thereto, concurrently
with Purchaser's filing thereof with the Commission. Purchaser does not know
whether the laws of any other states will, by their terms, apply to the Offer
or the Merger and has not complied with any such laws. Should any person seek
to apply any state takeover law, Purchaser will take such action as then
appears desirable, which may include challenging the validity or applicability
of any such statute in appropriate court proceedings. In the event it is
asserted that one or more state takeover laws is applicable to the Offer or the
Merger, and an appropriate court does not determine that it is inapplicable or
invalid as applied to the Offer, Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities. In
addition, if enjoined, Purchaser might be unable to accept for payment any
Shares tendered pursuant to the Offer, or be delayed in continuing or
consummating the Offer and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See Section 14.
16. FEES AND EXPENSES
Purchaser has retained Morrow & Co., Inc. to act as the Information
Agent, and Liberty Bank & Trust Company of Oklahoma City, N.A. to act as the
Depositary, in connection with the Offer. Each of the Information Agent and the
Depositary will receive reasonable and customary compensation for its services,
will be reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws.
Except as set forth above, Purchaser will not pay any fees or
commissions to any broker or dealer or other person for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies will be reimbursed by Purchaser for customary mailing and handling
expenses incurred by them in forwarding the offering materials to their
customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or
on behalf of) holders of Shares residing in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the securities, blue sky or other laws of the jurisdiction. However, Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in that
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers that are licensed under the laws of the jurisdiction.
Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act containing certain additional information
with respect to the Offer. The Schedule 14D-1 and any amendments to the
Schedule 14D-1, including exhibits, may be examined and copies may be obtained
from the principal office of the Commission in the manner set forth in Section
8 above (except that they will not be available at the regional offices of the
Commission).
26
<PAGE> 29
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THE OFFER TO PURCHASE OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, THE INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
ACQUISITION DRILLING, INC.
January 10, 1997
27
<PAGE> 30
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation
or employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, the business address of each such person is DLB Oil
& Gas, Inc., 1601 Northwest Expressway, Suite 700, Oklahoma City, OK
73118-1401, and each such person is a citizen of the United States.
Charles E. Davidson has been Chairman of the Board of Directors of
Parent since its merger with Davidson Oil & Gas, Inc. ("Davidson") in 1995. He
served Davidson in the same capacity from its incorporation in 1993 until the
merger, and from 1991 until its incorporation managed the operations of its
unincorporated predecessor. Since 1994, he has also served as Managing Partner
of Wexford Capital Corporation, a private investment firm. From 1984 to 1994,
he was a partner in Steinhardt Partners, L.P., a private investment firm. From
1977 to 1984, Mr. Davidson was employed by Goldman, Sachs & Co., last serving
as Vice President of corporate bond trading. Mr. Davidson is Chairman of the
Board of Resurgence Properties, Inc. and is also a director of Presidio
Capital, Inc., both of which are publicly-held real estate companies. Mr.
Davidson's address is c/o Concurrency Management Corporation, 411 West Putnam
Avenue, Greenwich, Connecticut 06830.
Mike Liddell has served as Chief Executive Officer of Parent since
October 1994, and as a director of Parent since 1991. From 1991 to 1994, Mr.
Liddell was President of Parent. From 1979 to 1991, he was President and Chief
Executive Officer of DLB Energy Corporation ("DLB Energy").
Mark Liddell has served as the President of Parent since October 1994,
and since 1991 has been a director of Davidson and Parent. From 1991 to 1994,
Mr. Liddell was Vice President of Parent. From 1985 to 1991, he was Vice
President of DLB Energy. From 1991 to May 1995, Mr. Liddell served as a
director of TGX Corporation, a publicly-held oil and gas company, and, from
1989 to 1990, he served as a director of Kaneb Services, Inc., a publicly-held
industrial services and pipeline transportation company. He is the brother of
Mike Liddell.
Joel-Andre Ornstein has served as a director of Parent since August,
1995. Mr. Ornstein is a former investment banker with The First Boston
Corporation and Dean Witter. He is chairman of Euristate and Finestates, the
U.S. subsidiaries of the Euris Group, a $2 billion investment holding company
based in Paris, France. Mr. Ornstein is a director of Athletes Foot, Inc. and
Baker & Taylor, Inc. the Washington Capital Group, and he sits on several
investment partnership committees such as The Carlyle Partners II and Landmark
Equity Partners II and III funds. Mr. Ornstein's address is c/o Euris, 83, rue
du FG., Saint Honore, Paris, France 75008.
David A. Rogath has been a director of Parent since August, 1995. Mr.
Rogath is the owner of Chalk and Vermilion Fine Arts Publishers Association a
major publisher of limited edition fine art prints and sculpture in the United
States. Mr. Rogath has served as President of the Fine Arts Publishers
Association since 1989, and also serves on the Advisory Board of the St. Louis
Rams. Mr. Rogath's address is c/o Chalk Vermillion, 200 Greenwich, Greenwich,
Connecticut 06830.
Martin L. Solomon has been a director of Parent since August, 1995.
Mr. Solomon has been an officer and director of Great Dane Holding Company
since 1985. Great Dane subsidiaries include The Great Dane Trailer Company, one
of the largest manufacturers of over-the-road trailers in the world. Other
Great Dane subsidiaries engage in the leasing of taxi cabs and the issuance of
property and casualty insurance. Mr. Solomon is also a director of XTRA
Corporation, one of the world's largest lessors of transportation equipment.
Mr. Solomon has been a security analyst and portfolio manager at various
institutions and partnerships since 1959, including, Value
<PAGE> 31
Equity, L.P., Steinhardt Partners and First City Capital Corporation. Mr.
Solomon's address is 2665 S. Bayshore Drive, Suite 906, Coconut Grove, Florida
33133.
Gary C. Hanna has served as Executive Vice President and Chief
Operating Officer of Parent since October 1994. From 1982 to October 1994, he
was President and Chief Executive Officer of Hanna Oil Properties, Inc., an
Oklahoma City-based petroleum consulting company. Beginning in 1991 and
continuing until Mr. Hanna joined the Company, Hanna Oil Properties, Inc.
performed most of the Company's acquisition and land services.
William N. Young, III has served as President of Gathering and Energy
Marketing Company LLC, a wholly owned subsidiary of Parent since February 1995,
and from 1992 to that time, he was President of LEDCO, Inc. From 1986 to 1992,
he was employed by Noram Energy Services, Inc., most recently serving as Vice
President - Gas Acquisitions and, from 1984 to 1986, he was employed by Midcon
Services, Inc., most recently serving as Vice President of Marketing.
Ronald D. Youtsey has served as Senior Vice President and Chief
Financial Officer of Parent since October 1994. Mr. Youtsey joined Parent as
Controller in 1991. From 1979 to 1991, he was employed by French Petroleum
Corporation, an oil and gas exploration and production company, last serving as
Vice President of Finance.
Ted A. Campbell has served as Vice President of Drilling and
Production for Parent since October 1994 and was Operations Manager from 1991
until 1994. From 1987 until the formation of Parent, he was employed by DLB
Energy as a geologist.
Rick A. Carlson has served as Vice President of Exploration of Parent
since October 1994 and was Senior Geologist from 1991 until 1994. From 1984
until the formation of Parent, he was a geologist for DLB Energy.
Wesley E. Myers has served as Vice President of Engineering for Parent
since October 1994. From 1993 to 1994, he was a consulting petroleum engineer
and, from 1975 to 1993, he was employed by Grace Petroleum Corporation, an oil
and gas exploration and production company, last serving as Vice President of
Engineering.
Fred W. Standefer has served as Vice President of Corporate
Development of Parent since August 1995. From 1990 to 1995, he was a financial
consultant with Merrill Lynch & Co. From 1983 to 1995, Mr. Standefer was an
owner, officer and director of NYTEX Corporation, a closely-held independent
oil company.
B. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The directors of Purchaser are Mike Liddell and Mark Liddell. The
executive officers of Purchaser are Gary C. Hanna, President; Ronald D.
Youtsey, Secretary/Treasurer; and Ted A. Campbell, Vice President. The present
principal occupation or employment and material occupations, positions, offices
or employment for the past five years of such persons are set forth in part A
of this Schedule I. The business address of each such person is c/o DLB Oil &
Gas, Inc., 1601 Northwest Expressway, Suite 700, Oklahoma City, OK 73118-1401
and each such person is a citizen of the United States.
I-2
<PAGE> 32
Facsimile copies of the Letter of Transmittal properly completed and
duly signed, will be accepted. The Letter of Transmittal, certificates for
Shares and any other required documents should be sent or delivered by each
Stockholder or his or her broker, dealer, commercial bank, trust company or
other nominee to the Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
LIBERTY BANK & TRUST COMPANY OF OKLAHOMA CITY, N.A.
By Mail: By Facsimile: By Hand/Overnight Courier:
Stock Transfer Department (For Eligible Stock Transfer Department
P.O. Box 25848 Institutions Only) 9th Floor-Liberty Tower
Oklahoma City, OK 73125 (405) 231-6058 100 North Broadway
Oklahoma City, OK 73102
Confirm by Telephone:
(405) 231-6331
Questions and requests for assistance may be directed to the
Information Agent at its address and telephone numbers listed below. Additional
copies of this Offer to Purchase, the Letter of Transmittal and other tender
offer materials may be obtained from the Information Agent as set forth below
and will be furnished promptly at Purchaser's expense. You may also contact your
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9058
Banks and Brokerage Firms, please call:
(800) 662-5200
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
BONRAY DRILLING CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 10, 1997
BY
ACQUISITION DRILLING, INC.
A WHOLLY-OWNED SUBSIDIARY OF
DLB OIL & GAS, INC.
***************************************************************************
* *
* THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW *
* YORK CITY TIME, ON FRIDAY, FEBRUARY 7, 1997, UNLESS THE *
* OFFER IS EXTENDED. *
* *
***************************************************************************
The Depositary for the Offer is:
LIBERTY BANK & TRUST COMPANY OF OKLAHOMA CITY, N.A.
By Hand/
By Mail: By Facsimile: Overnight Courier:
Stock Transfer Department (For Eligible Stock Transfer
P.O. Box 25848 Institutions Only) Department
Oklahoma City, OK 73125 (405) 231-6058 9th Floor--Liberty Tower
Confirm by Telephone 100 North Broadway
(405) 231-6331 Oklahoma City, OK 73102
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- -----------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE NUMBER OF SHARES NUMBER OF
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATES REPRESENTED BY SHARES
APPEAR(S) ON THE CERTIFICATE(S) NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
TOTAL SHARES
----------------------------------------------------------
(1) Need not be completed by Stockholders delivering Shares by Book-Entry Transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to the
Depositary are being tendered. See Instruction 4.
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Bonray Drilling Corporation (the "Stockholders") if
certificates evidencing Shares ("Certificates") are to be forwarded with this
Letter of Transmittal or if delivery of Shares is to be made by book-entry
transfer to an account maintained by Liberty Bank & Trust Company of Oklahoma
City, N.A. (the "Depositary") at The Depository Trust Company ("DTC") or the
Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 3 of the Offer to
Purchase (as defined below).
Stockholders whose Certificates are not immediately available or who
cannot deliver either their Certificates for, or a Book-Entry Confirmation (as
defined in Section 3 of the Offer to Purchase) with respect to, their Shares
and all other required documents to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) may tender their Shares
according to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. See Instruction 2 hereof. DELIVERY OF DOCUMENTS TO A BOOK-
ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS
IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY
TRANSFER).
Name of Tendering Institution:
----------------------------------------
Check Box of Book-Entry Transfer Facility:
[ ] DTC [ ] PDTC
Account Number:
-------------------------------------------------------
Transaction Code Number:
----------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY.
Name(s) of Registered Holder(s):
--------------------------------------
Window Ticket Number (if any):
----------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------
Name of Institution Which Guaranteed Delivery:
------------------------
If delivered by book-entry transfer, check box of applicable Book-Entry
Transfer Facility:
[ ] DTC [ ] PDTC
Account Number:
-------------------------------------------------------
Transaction Code Number:
----------------------------------------------
2
<PAGE> 3
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Acquisition Drilling, Inc., a
Delaware corporation ("Purchaser") and a wholly-owned subsidiary of DLB Oil &
Gas, Inc., an Oklahoma corporation ("Parent"), the above-described shares of
common stock, $1.00 par value per share (the "Shares"), of Bonray Drilling
Corporation, a Delaware corporation (the "Company"), for $30.00 per Share, net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated January 10, 1997 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with any amendments or supplements
thereto, constitute the "Offer").
Subject to, and effective upon, acceptance for payment of, or payment
for, Shares tendered with this Letter of Transmittal in accordance with the
terms and subject to the conditions of the Offer (including, if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all of the Shares
that are being tendered hereby and any and all other Shares or other securities
issued or issuable in respect of such Shares on or after January 6, 1997 (a
"Distribution"), and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and any Distributions), with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver Certificates evidencing such Shares (and any
Distributions), or transfer ownership of such Shares (and any Distributions) on
the account books maintained by a Book Entry Transfer Facility together, in any
such case, with all accompanying evidences of transfer and authenticity to, or
upon the order of, Purchaser, upon receipt by the Depositary as the
undersigned's agent, of the purchase price with respect to such Shares; (ii)
present such Shares (and any Distributions) for transfer on the books of the
Company; and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any Distributions), all in accordance
with the terms and subject to the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser
as the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to
all Shares tendered hereby and accepted for payment and paid for by Purchaser
(and any Distributions), including, without limitation, the right to vote such
Shares (and any Distributions) in such manner as each such attorney and proxy
or his substitute shall, in his sole discretion, deem proper. All such powers
of attorney and proxies, being deemed to be irrevocable, shall be considered
coupled with an interest in the Shares tendered with this Letter of
Transmittal. Such appointment will be effective if, when, and only to the
extent that, Purchaser accepts such Shares for payment pursuant to the Offer.
Upon such acceptance for payment, all prior powers of attorney, proxies and
consents given by the undersigned with respect to such Shares (and any
Distributions) will be revoked, without further action, and no subsequent
powers of attorneys and proxies may be given with respect thereto (and, if
given, will be deemed ineffective). The designees of Purchaser will, with
respect to the Shares (and any Distributions) for which such appointment is
effective, be empowered to exercise all voting and other rights of the
undersigned with respect to such Shares (and any Distributions) as they in
their sole discretion may deem proper. Purchaser reserves the absolute right
to require that, in order for Shares to be deemed validly tendered, immediately
upon the acceptance for payment of such Shares, Purchaser or its designees are
able to exercise full voting rights with respect to such Shares (and any
Distributions), including voting at any meeting of Stockholders then scheduled.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions), that the undersigned own(s) the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that such
tender of Shares complies with Rule 14e-4 under the Exchange Act, and that,
when the Shares are accepted for payment and paid for by Purchaser, Purchaser
will
3
<PAGE> 4
acquire good, marketable and unencumbered title thereto (and to any
Distributions), free and clear of all liens, restrictions, charges and
encumbrances, and that the Shares tendered hereby (and any Distributions) will
not be subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary to complete the sale, assignment and transfer of
Shares tendered hereby (and any Distributions). In addition, the undersigned
shall promptly remit and transfer to the Depositary for the account of
Purchaser any and all Distributions issued to the undersigned on or after
January 6, 1997, in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount of value thereof,
as determined by Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant
to any one of the procedures described in Section 3 of the Offer to Purchase
and in the instructions to this Letter of Transmittal will constitute a binding
agreement between the undersigned and Purchaser with respect to such Shares,
upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth
in the Offer to Purchase, Purchaser may not be required to accept for payment
any of the Shares tendered hereby.
Unless otherwise indicated in this Letter of Transmittal under
"Special Payment Instructions," please issue the check for the purchase price
and return any Certificates evidencing Shares not purchased or not tendered, in
the name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of all Shares
purchased and return any Certificates evidencing Shares not tendered or not
purchased (and accompanying documents, as appropriate) to the address(es) of
the registered holder(s) appearing under "Description of Shares Tendered." In
the event that both the "Special Payment Instructions" and the "Special
Delivery Instructions" are completed, please issue the check for the purchase
price of all Shares purchased and return any such Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) in the name(s) of, and deliver such check and return such
Certificates (and accompanying documents, as appropriate) to the person(s) so
indicated. Unless otherwise indicated in this Letter of Transmittal under
"Special Payment Instructions," in the case of a book-entry delivery of Shares,
please credit the account maintained by the undersigned at the Book-Entry
Facility indicated above with respect to any Shares not purchased. The
undersigned recognizes that Purchaser has no obligation pursuant to the
"Special Payment Instructions" to transfer any Shares from the name of the
registered holder(s) if Purchaser does not accept for payment any of the Shares
tendered hereby.
4
<PAGE> 5
[ ] CHECK HERE IF ANY OF THE CERTIFICATES EVIDENCING SHARES THAT YOU OWN
HAVE BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates:
------------
<TABLE>
<CAPTION>
- -------------------------------------------------- --------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
<S> <C>
To be completed ONLY if Certificates for To be completed ONLY if Certificates for
Shares not tendered or not purchased and/or the Shares not tendered or not purchased and/or the
check for the purchase price of Shares check for the purchase price of Shares purchased
purchased are to be issued in the name of are to be sent to someone other than the
someone other than the undersigned, or if undersigned at an address other than that shown
Shares delivered by book-entry transfer that above.
are not purchased are to be returned by credit
to an account maintained at a Book-Entry
Transfer Facility, other than to the account
indicated above.
Issue Check and/or Certificate(s) to: Mail Check and/or Certificate(s) to:
Name: Name:
------------------------------------- -------------------------------------
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
Address: Address:
--------------------------------- ---------------------------------
- ------------------------------------------- -------------------------------------------
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
- ------------------------------------------- -------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(ALSO COMPLETE SUBSTITUTE FORM W-9)
Credit unpurchased Shares delivered by book-
entry transfer to the Book-Entry Transfer
Facility account set forth below:
[ ] DTC [ ] PDTC
(check one)
-------------------------
(DTC/PDTC ACCOUNT NUMBER)
- -------------------------------------------------- --------------------------------------------------
</TABLE>
5
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below,
no signature guarantee is required on this Letter of Transmittal (a) if this
Letter of Transmittal is signed by the registered holder(s) (which term, for
the purposes of this document, includes any participant in any of the Book-
Entry Facilities' systems whose name appears on a security position listing as
the owner of the Shares) of Shares tendered herewith and such registered holder
has not completed either the box entitled "Special Delivery Instructions" or
the box entitled "Special Payment Instructions" on this Letter of Transmittal
or (b) if such Shares are tendered for the account of a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program (an "Eligible Institution") . In all
other cases, all signatures on the Letter of Transmittal must be guaranteed by
an Eligible Institution. See Instruction 5. If the Certificates are
registered in the name of a person other than the signer of this Letter of
Transmittal, or if payment is to be made or delivered to, or Certificates
evidencing unpurchased Shares are to be issued or returned to, a person other
than the registered owner, then the tendered Certificates must be endorsed or
accompanied by duly executed stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the Certificates,
with the signatures on the Certificates or stock powers guaranteed by an
Eligible Institution as provided in this Letter of Transmittal. See
Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be
completed by Stockholders if Certificates evidencing Shares are to be forwarded
with this Letter of Transmittal or if delivery of Shares is to be made pursuant
to the procedures for book-entry transfer set forth in Section 3 of the Offer
to Purchase. For a Stockholder to validly tender Shares pursuant to the Offer,
either (a) a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile), with any required signature guarantees and any
other required documents, must be received by the Depositary at one of its
addresses set forth in this Letter of Transmittal on or prior to the Expiration
Date (as defined in the Offer to Purchase) and either (i) Certificates for
tendered Shares must be received by the Depositary at one of those addresses on
or prior to the Expiration Date or (ii) Shares must be delivered pursuant to
the procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase and a Book-Entry Confirmation must be received by the Depositary on or
prior to the Expiration Date or (b) the tendering Stockholder must comply with
the guaranteed delivery procedures set forth below and in Section 3 of the
Offer to Purchase.
Stockholders whose Certificates are not immediately available or who
cannot deliver their Certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer on or prior to
the Expiration Date may tender their Shares by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (i) tender must be made by or through an Eligible Institution, (ii)
a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, must be received by the
Depositary prior to the Expiration Date, and (iii) Certificates representing
all tendered Shares in proper form for transfer, or a Book-Entry Confirmation
with respect to all the tendered Shares, together with a Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and duly executed,
with any required signature guarantees or an Agent's Message (as defined in
Section 2 of the Offer to Purchase) in connection with a book-entry transfer
and any other documents required by this Letter of Transmittal, must be
received by the Depositary within three New York Stock Exchange, Inc. trading
days after the date of such Notice of Guaranteed Delivery. If Certificates are
forwarded separately to the Depositary, a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile) must accompany each
delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
6
<PAGE> 7
No alternative, conditional or contingent tenders will be accepted and
no fractional Shares will be purchased. All tendering Stockholders, by
execution of this Letter of Transmittal (or a facsimile), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of
Transmittal is inadequate, the information required under "Description of
Shares Tendered" should be listed on a separate signed schedule attached to
this Letter of Transmittal.
4. PARTIAL TENDERS. If fewer than all of the Shares represented
by any Certificates delivered to the Depositary with this Letter of Transmittal
are to be tendered, fill in the number of Shares which are to be tendered in
the box entitled "Number of Shares Tendered." In such cases, a new Certificate
for the remainder of the Shares that were evidenced by the old Certificate(s)
will be sent, without expense, to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on this
Letter of Transmittal, as soon as practicable after the expiration or
termination of the Offer. All Shares represented by Certificate(s) delivered
to the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER
AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or
more persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names
on several Certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
Certificates.
If this Letter of Transmittal or any Certificates or instruments of
transfer are signed by a trustee, executor, administrator, guardian, attorney-
in-fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, that person should so indicate when signing, and
proper evidence satisfactory to Purchaser of that person's authority to so act
must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on the Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificates must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures
on the Certificate(s) or instruments of transfer must be guaranteed by an
Eligible Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any transfer taxes with respect to the
transfer and sale of Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price of any Shares purchased is to be made
to, or (in the circumstances permitted hereby) if Certificates for Shares not
tendered or not purchased are to be registered in the name of, any person other
than the registered holder(s), or if tendered Certificates are registered in
the name of any person other than the person(s) signing this Letter of
Transmittal, the amount of any transfer taxes (whether imposed on the
registered holder(s), such other person or otherwise) payable on account of the
transfer to such other person will be deducted from the purchase price of such
Shares purchased, unless evidence satisfactory to Purchaser of the payment of
such taxes or exemption therefrom is submitted.
7
<PAGE> 8
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER
OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the
purchase price of any Shares tendered hereby is to be issued, or a Certificate
evidencing Shares not tendered or not purchased is to be issued in the name of
a person other than the persons signing this Letter of Transmittal or if such
check or any such Certificate is to be sent to someone other than the persons
signing this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal must be completed.
If any tendered Shares are not purchased for any reason and the Shares are
delivered by Book-Entry Transfer Facility, the Shares will be credited to an
account maintained at the appropriate Book-Entry Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Information Agent (as defined
below) at its address or telephone number set forth below and requests for
additional copies of the Offer to Purchase, this Letter of Transmittal, the
Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 may be directed to the Information
Agent or brokers, dealers, commercial banks and trust companies and such
materials will be furnished at Purchaser's expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be
waived by Purchaser, in whole or in part, at any time or from time to time, in
Purchaser's sole discretion.
10. BACKUP WITHHOLDING TAX. Each tendering Stockholder is
required to provide the Depositary with a correct Taxpayer Identification
Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax
Information" below and to certify under penalties of perjury, that such number
is correct and that the Stockholder is not subject to backup withholding or
federal income tax. Failure to provide the information on the Substitute Form
W-9 may subject the tendering Stockholder to a penalty and 31% federal income
tax withholding on the payment of the purchase price for the Shares. If the
tendering Stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, the tendering Stockholder should
check the box in Part III of the Substitute Form W-9 and sign and date both the
Substitute Form W-9 and the "Certificate of Awaiting Taxpayer Identification
Number." If the Stockholder has indicated in the box in Part III that a Tin
has been applied for and the Depositary is not provided with a TIN by the time
of payment, the Depositary will withhold 31% of all payments of the purchase
price, if any, made thereafter pursuant to the Offer until a TIN is provided to
the Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s)
representing Shares has been lost, destroyed or stolen, the Stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The Stockholders will then be instructed as to the steps that
must be taken in order to replace the Certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost or destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
(TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY
OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
8
<PAGE> 9
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Stockholder whose tendered
Shares are accepted for payment is required to provide the Depositary (as
payer) with such Stockholder's correct TIN on Substitute Form W-9 below. If
such Stockholder is an individual, the TIN is his social security number. If
the tendering Stockholder has not been issued a TIN and has applied for a TIN
or intends to apply for a TIN in the near future, the Stockholder should so
indicate on the Substitute Form W-9. See Instruction 10. If the Depositary is
not provided with the correct TIN, the Stockholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that
are made to the Stockholder with respect to Shares purchased pursuant to the
Offer may be subject to backup federal income tax withholding at a 31% rate.
Certain Stockholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements and should indicate their status by writing "exempt"
across the face of, and by signing and dating, the Substitute Form W-9. In
order for a foreign individual to qualify as an exempt recipient, that
Stockholder must submit a statement, signed under penalties of perjury,
attesting to that individual's exempt status. Forms for such statements can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold
31% of any payments made to the Stockholder. Backup withholding is not an
additional tax. Rather, the federal income tax liability of persons subject to
backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to
payment of the purchase price for Shares purchased pursuant to the Offer, a
Stockholder must provide the Depositary with his correct TIN by completing the
Substitute Form W-9 below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that the Stockholder is awaiting a TIN) and that (1) the
Stockholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report all interest
or dividends or (2) the Internal Revenue Service has notified the Stockholder
that he is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Stockholder is required to give the Depositary the Social Security
Number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
9
<PAGE> 10
IMPORTANT
STOCKHOLDER: SIGN HERE AND COMPLETE
SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: , 1997
--------------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
Certificate or on a security position listing or by person(s) authorized to
become registered holder(s) by Certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers or corporations or others acting in a
fiduciary or representative capacity, please provide the following information.
See Instruction 5.)
Name(s):
------------------------------------------------------------------------
------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity (Full Title)
-----------------------------------------------------------
(SEE INSTRUCTION 5)
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone Number:
-----------------------------------------
(HOME)
-----------------------------------------
(BUSINESS)
Tax Identification or Social Security No.
---------------------------------------
(Complete Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE(S))
- --------------------------------------------------------------------------------
(NAME)
- --------------------------------------------------------------------------------
(NAME OF FIRM)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ADDRESS INCLUDING ZIP CODE)
- --------------------------------------------------------------------------------
(AREA CODE AND TELEPHONE NUMBER)
Dated: , 1997
--------------------------
10
<PAGE> 11
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: [ ]
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART I - PLEASE PROVIDE YOUR TIN IN THE PART III--Social Security Number OR
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND Employee Identification Number
DEPARTMENT OF THE DATING BELOW.
TREASURY
INTERNAL REVENUE SERVICE -------------------------------------
(If awaiting TIN write "Applied for")
------------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART II --For Payees exempt from backup withholding, see the enclosed Guidelines
IDENTIFICATION NUMBER (TIN) for Certification of Taxpayer Identification Number on Substitute Form W-9 and
complete as instructed therein.
- -----------------------------------------------------------------------------------------------------------------------------
Certifications--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be
issued to me); and
(2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service
("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or
the IRS has notified me that I am no longer subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you have been notified by the IRS that you are subject
to backup withholding because of underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you are subject to backup withholding, you receive another notification from the IRS that
you were no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed
guidelines).
- -----------------------------------------------------------------------------------------------------------------------------
SIGNATURE DATE
-------------------------------------------------------- ------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS
MADE TO YOU PURSUANT TO THE OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN THE BOX IN PART III OF THE SUBSTITUTE
FORM W-9.
- -----------------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a Taxpayer Identification Number has not been issued to me, and either (1) I have
mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near
future. I understand that if I do not provide a Taxpayer Identification Number by the time of payment, 31% of all
payments of the purchase price pursuant to the Offer made to me thereafter will be withheld until I provide a number.
SIGNATURE DATE
-------------------------------------------------------- ------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9058
Banks and Brokerage Firms, please call:
(800) 662-5200
11
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
BONRAY DRILLING CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, FEBRUARY 7, 1997, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery or a notice substantially
equivalent hereto must be used to accept the Offer (as defined below) if
certificates representing the common stock, $1.00 par value per share (the
"Shares"), of Bonray Drilling Corporation, a Delaware corporation, are not
immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach Liberty Bank & Trust Company of Oklahoma City, N.A. (the "Depositary")
prior to the Expiration Date (as defined in the Offer to Purchase). This
Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary. See Section 3 of the Offer
to Purchase.
The Depositary for the Offer is:
Liberty Bank & Trust Company of Oklahoma City, N.A.
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Courier:
Stock Transfer Department (For Eligible Institutions Only) Stock Transfer Department
P.O. Box 25848 (405) 231-6058 9th Floor--Liberty Tower
Oklahoma City, OK 73125 Confirm by Telephone 100 North Broadway
(405) 231-6331 Oklahoma City, OK 73102
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE
TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to the Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Acquisition Drilling, Inc., a
Delaware corporation and a wholly-owned subsidiary of DLB Oil & Gas, Inc., an
Oklahoma corporation, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated January 10, 1997 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer"), receipt of each of which is
hereby acknowledged, the number of Shares indicated below pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
- --------------------------------------------------
Number of Shares:
-------------------------
Certificate Nos. (if available):
-------------------------------------------
Check ONE box if Shares will be tendered by
book-entry transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
---------------------------
Date: ,1997
---------------------
- --------------------------------------------------
- --------------------------------------------------
Name(s) of Record Holder(s):
---------------
--------------------------------------------
(Please Type or Print)
Address(es):
-------------------------------
--------------------------------------------
(Zip Code)
Area Code and Tel. No.:
Signature(s): --------------------
--------------------------------------------
- --------------------------------------------------
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as such term is defined in
Section 3 of the Offer to Purchase), hereby (a) represents that the above-named
person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4
under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b)
represents that the tender of Shares effected hereby complies with Rule 14e-4,
and (c) guarantees to deliver to the Depositary the certificates evidencing the
Shares tendered hereby, in proper form for transfer, or a Book-Entry
Confirmation (as defined in Section 3 of the Offer to Purchase) with respect to
such Shares, in either case together with a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof), with
any required signature guarantees or an Agent's Message (as defined in Section
2 of the Offer to Purchase) in connection with a book-entry transfer, and any
other documents required by the Letter of Transmittal, all within three New
York Stock Exchange, Inc. trading days after the date hereof.
<TABLE>
<S> <C>
Name of Firm:
--------------------------------- ---------------------------------------------
(Authorized Signature)
Address:
----------------------------- Name:
----------------------------------------
- --------------------------------------- (Please Type or Print)
(Zip Code) Title:
--------------------------------------
Area Code and Tel. No.:
--------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES EVIDENCING SHARES WITH THIS NOTICE OF
GUARANTEED DELIVERY. CERTIFICATES FOR SHARES SHOULD ONLY BE SENT
TOGETHER WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
Offer to Purchase for Cash
All Outstanding Shares of Class A and Class B Common Stock
of
BONRAY DRILLING CORPORATION
at
$30.00 Net Per Share
by
Acquisition Drilling, Inc.
a wholly-owned subsidiary of
DLB Oil & Gas, Inc.
***************************************************************************
* *
* THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW *
* YORK CITY TIME, ON FRIDAY, FEBRUARY 7, 1997, UNLESS THE OFFER *
* IS UNLESS THE OFFER IS EXTENDED. *
* *
***************************************************************************
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Acquisition Drilling, Inc. ("Purchaser"), a Delaware corporation and
wholly-owned subsidiary of DLB Oil & Gas, Inc., an Oklahoma corporation, is
offering to purchase all shares of Common Stock, $1.00 par value per share (the
"Shares"), of Bonray Drilling Corporation, a Delaware corporation (the
"Company"), at a purchase price of $30.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated January 10, 1997 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, together constitute the "Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your
clients for whose accounts you hold Shares in your name or in the name of your
nominee.
Enclosed herewith for your information and forwarding to your clients
are copies of the following documents:
1. The Offer to Purchase, dated January 10, 1997.
2. The Letter of Transmittal to tender Shares for your use and
for the information of your clients. Facsimile copies of the Letter of
Transmittal (with manual signature) may be used to tender Shares.
3. The Notice of Guaranteed Delivery to be used to accept the
Offer in the circumstances described below.
4. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such client's instructions with
regard to the Offer.
5. Guidelines of the Internal Revenue Service for Certification
of Taxpayer Identification Number on Substitute Form W-9.
6. A return envelope addressed to Liberty Bank & Trust Company of
Oklahoma City, N.A., the Depositary.
YOUR PROMPT ACTION IS REQUESTED, WE URGE YOU TO CONTACT YOUR CLIENTS
AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 7, 1997,
UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
Please note the following:
1. The Offer Price is $30.00 per Share, net to the seller in cash
without interest thereon.
2. The Offer is being made for all outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight,
New York City time, on Friday,
4. February 7, 1997, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn 211,771 Shares or such other number of
Shares representing a majority of the Company's outstanding Common Stock on the
date of purchase.
6. Tendering stockholders will not be obligated to pay brokerage
fees or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
In all cases, payment for Shares accepted for purchase pursuant to the
Offer will be made only after timely receipt by the Depository of (a)
certificates for such Shares or timely confirmation of the book-entry transfer
of such Shares into the Depository's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase), pursuant to the procedures
set forth in Section 3 of the Offer to Purchase, (b) the Letter of Transmittal
(or facsimile thereof) properly completed and duly executed with any required
signature guarantees, and (c) any other documents required by the Letter of
Transmittal.
If a stockholder desires to tender Shares pursuant to the Offer, and
if (a) certificates representing the Shares to be tendered for purchase and
payment are not lost but are not immediately available, (b) the procedures for
book-entry transfer cannot be completed prior to the Expiration Date or (c)
time will not permit all required documents to reach the Depositary prior to
the Expiration Date, such stockholder may tender Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to brokers, dealers or
other persons (other than the Information Agent and Depositary, as described in
the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer.
Purchaser will, however, upon request, reimburse you for customary clerical and
mailing expenses incurred by you in forwarding any of the enclosed materials to
your clients. Purchaser will pay or cause to be paid any transfer taxes payable
on the transfer of Shares to it, except as otherwise provided in Instruction 6
of the Letter of Transmittal.
Questions and requests for assistance with respect to the Offer or for
copies of the Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Information Agent at the address and
telephone number set forth on the outside back cover page of the Offer to
Purchase.
Very truly yours,
Acquisition Drilling, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF PURCHASER, THE DEPOSITARY, THE INFORMATION AGENT,
THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BONRAY DRILLING CORPORATION
AT
$30.00 NET PER SHARE
BY
ACQUISITION DRILLING, INC.
A WHOLLY-OWNED SUBSIDIARY OF
DLB OIL & GAS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT
NEW YORK CITY TIME, ON FEBRUARY 7, 1997,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated
January 10, 1997 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
together constitute the "Offer"), relating to an offer by Acquisition Drilling,
Inc. ("Purchaser"), a Delaware corporation and wholly-owned subsidiary of DLB
Oil & Gas, Inc., an Oklahoma corporation, to purchase all outstanding shares of
the Common Stock, par value $1.00 per share (the "Shares"), of Bonray Drilling
Corporation, a Delaware corporation (the "Company"), at a purchase price of
$30.00 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer. This material is being
forwarded to you as the beneficial owner of Shares carried by us in your
account but not registered in your name.
A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU
FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US
FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender
any or all of the Shares held by us for your account, upon the terms and
conditions set forth in the Offer.
1. The tender price is $30.00 per Share, net to you in cash.
2. The Offer is being made for all Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, February 7, 1997, unless the Offer is extended.
<PAGE> 2
4. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn 211,771 Shares or such other number of
Shares representing a majority of the Company's outstanding Common Stock on the
date of purchase.
5. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
If you wish to have us tender any or all of your Shares, please so
instruct us by completing, executing, detaching and returning to us the
instruction form contained in this letter. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Shares, all
such Shares will be tendered unless otherwise indicated in such instruction
form. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US
AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
The Offer is made solely by the Offer to Purchase and the related
Letter of Transmittal and any supplements or amendments thereto. The Offer is
not being made to, nor will tenders be accepted from or on behalf of, holders
of Shares residing in any jurisdiction in which the making of the Offer or
acceptance thereof would not be in compliance with the securities laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Purchaser by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Purchase, dated January 10, 1997, and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, together constitute the
"Offer") relating to the Offer by Acquisition Drilling, Inc., a Delaware
corporation and wholly-owned subsidiary of DLB Oil & Gas, Inc., an Oklahoma
corporation, to purchase all outstanding shares of Common Stock, $1.00 par
value per share, of Bonray Drilling Corporation, a Delaware corporation
(collectively, the "Shares").
You are instructed to tender the number of Shares indicated below (or, if no
number is indicated below, all Shares) that are held by you for the account of
the undersigned, upon the terms and subject to the conditions set forth in the
Offer.
NUMBER OF SHARES TO BE TENDERED: SHARES
--------------------
ACCOUNT NUMBER:
---------------------
DATE: , 1997
---------------------
- --------------------------------------------------------------------------------
SIGN HERE
SIGNATURE(S):
-----------------------------------------------------------------
PRINT NAME(S):
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
PRINT ADDRESS(ES):
------------------------------------------------------------
- ------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NO.:
--------------------------------------------------
TAXPAYER ID NO. OR SOCIAL SECURITY NO.:
---------------------------------------
UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN IN A SIGNED SCHEDULE
ATTACHED HERETO, YOUR SIGNATURE(S) HEREON SHALL CONSTITUTE AN INSTRUCTION TO US
TO TENDER ALL OF YOUR SHARES.
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 99(a)(6)
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.
<PAGE> 1
EXHIBIT 99(a)(7)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Give the Give the EM-
SOCIAL PLOYER IDENTI-
For this type of account: SECURITY For this type of account: FICATION number
number of-- of--
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. An individual's The individual 9. A valid trust, estate, or Legal entity (Do not
account pension trust furnish the identification
number of the personal
2. Two or more The actual owner of the representative or trustee
individuals (joint account or, if combined unless the legal entity
account) funds, the first itself is not designated
individual on the account(1) in the account title.)(4)
3. Husband and wife The actual owner of the 10. Corporate account The corporation
(joint account) account or, if joint
funds, either person(1) 11. Association, club, religious, The organization
charitable, educational
4. Custodian account of a The minor(2) organization or other tax-exempt
minor (Uniform Gift to organization account
Minors Act)
12. Partnership account The partnership
5. a. The usual The grantor-trustee(1)
revocable savings 13. A broker or registered nominee The broker or nominee
trust account
(grantor is also 14. Account with the Department of The public entity
trustee) Agriculture in the name of a
public entity (such as a State
b. So-called trust The actual owner(1) or local government, school
account that is district, or prison) that
not a legal or receives agricultural program
valid trust under payments
State law
6. Sole proprietorship The owner(3)
account
7. Account in the name of The ward, minor or
guardian or committee incompetent person(5)
for a designated ward,
minor or incompetent
person
8. Adult and minor (joint The adult or, if the minor
account) is the only contributor,
the minor(1)
</TABLE>
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner. You may also list the name of the business.
You may use either the social security or employer identification number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(5) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
NOTE: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
<TABLE>
<S> <C>
OBTAINING A NUMBER * Payments to partnerships not engaged in a trade or
business in the U.S. and which have at least one
If you don't have a taxpayer identification number ("TIN") nonresident partner.
or you don't know your number, obtain Form SS-5,
Application for a Social Security Number Card, or Form SS- * Payments of patronage dividends where the amount
4, Application for Employer Identification Number, at the received is not paid in money.
local office of the Social Security Administration or the
Internal Revenue Service and apply for a number. * Payments made by certain foreign organizations.
PAYEES EXEMPT FROM BACKUP WITHHOLDING Payment of interest not generally subject to backup
withholding include the following:
Payees specifically exempted from backup withholding and
information reporting on MOST payments include the * Payments of interest on obligations issued by
following: individuals.
1. A corporation. NOTE: You may be subject to withholding if this interest
is $600 or more and is paid in the course of the payer's
2. A financial institution. trade or business and you have not provided your correct
TIN to the payer.
3. An organization exempt from tax under section 501(a),
or an individual retirement plan, or a custodial * Payments of tax-exempt interest (including exempt
account under section 403(b)(7). interest dividends under section 852).
4. The United States or any agency or instrumentality * Payments described in section 6049(b)(5) to
thereof. nonresident aliens.
5. A State, the District of Columbia, a possession of the * Payments on tax-free covenant bonds under section
United States, or any subdivision or instrumentality 1451.
thereof.
* Payments made by certain foreign organizations.
6. A foreign government, a political subdivision of a
foreign government, or any agency or instrumentality * Payments of mortgage interest.
thereof.
Exempt payees described above should file Form W-9 to avoid
7. An international organization or any agency or possible erroneous backup withholding. FILE THIS FORM WITH
instrumentality thereof. THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
8. A registered dealer in securities or commodities FORM AND RETURN IT TO THE PAYER. Nonresident aliens and
registered in the US. or a possession of the U.S. foreign entities not subject to backup withholding should
also furnish a completed Form W-8.
9. A real estate investment trust.
Certain payments other than interest, dividends, and
10. A common trust fund operated by a bank under section patronage dividends that are not subject to information
584(a). reporting are also not subject to backup withholding. For
details, see the regulations under section 6041, 6041A(a),
11. An exempt charitable remainder trust, or a non-exempt 6042, 6044, 6045, 6049, 6050A and 6050N.
trust described in section 4947(a)(1).
PRIVACY ACT NOTICE. --Section 6109 requires most recipients
12. An entity registered at all times under the Investment of dividend, interest, or other payments to give TINs to
Company Act of 1940. payers who must report the payments to IRS. TINs also must
be given to persons who must report to the IRS on mortgage
13. A foreign central bank of issue. interest paid, the acquisition or abandonment of secured
property and contributions to an individual retirement
14. A futures commission merchant registered with the account. IRS uses TINs for identification purposes and to
Commodity Futures Trading Commission. verify the accuracy of tax returns. Payers must be given
the numbers whether or not recipients are required to file
15. A middleman known in the investment community as a tax returns. Payers must generally withhold 31% of taxable
nominee or listed in the most recent publication of interest, dividends, and certain other payments to a payee
the American Society of Corporate Secretaries, Inc., who has not furnished a TIN to a payer. Certain penalties
Nominee List. may also apply.
For interest and dividends, a futures commission merchant PENALTIES
registered with the Commodity Futures Trading Commission is
NOT exempt. For broker transactions, payees listed in (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION
items (11) and (15) are NOT exempt. Payments subject to NUMBER.--If you fail to furnish your correct TIN to a
reporting under sections 6041 and 6041A are exempt only if requester, you are subject to a penalty of $50 for each
made to payees listed in items (1), (3), (4), (5), (6), (7) such failure unless your failure is due to reasonable cause
and (13), except a corporation that provides medical and and not to willful neglect.
health care services or bills and collects payments for
such services. Only payees listed in items (3) through (7) (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO
are exempt from backup withholding for barter exchange WITHHOLDING.--If you make a false statement with no
transactions, patronage dividends and payment by certain reasonable basis which results in no imposition of backup
fishing boat operators. withholding, you are subject to a penalty of $500.
Payments of dividends and patronage dividends not generally (3) CRIMINAL PENALTY FOR FALSIFYING
subject to backup withholding include the following: INFORMATION.--Willfully falsifying certifications or
affirmations may subject you to criminal penalties
* Payments to nonresident aliens subject to withholding including fines and/or imprisonment.
under section 1441.
FOR ADDITIONAL INFORMATION CONTACT
YOUR TAX CONSULTANT OR THE IRS
</TABLE>
<PAGE> 1
EXHIBIT 99(c)(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
----
<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
</TABLE>
<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
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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.
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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
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<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
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<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.
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<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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<PAGE> 12
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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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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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,
23
<PAGE> 28
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);
24
<PAGE> 29
(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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<PAGE> 30
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
26
<PAGE> 31
BONRAY DRILLING CORPORATION
By: /S/Richard B. Hefner
-----------------------------------
Name: Richard B. Hefner
Title: President
27
<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
28
<PAGE> 33
(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.
29
<PAGE> 1
EXHIBIT 99(c)(2)
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
2
<PAGE> 3
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
3
<PAGE> 4
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:
4
<PAGE> 5
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.
5
<PAGE> 6
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
6
<PAGE> 7
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
7
<PAGE> 8
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
8
<PAGE> 9
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
=======
