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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ | |
Filed by a Party other than the Registrant o | |
Check the appropriate box: |
o Preliminary Proxy Statement | |
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ Definitive Proxy Statement | |
o Definitive Additional Materials | |
o Soliciting Material Pursuant to §240.14a-12 |
Payment of Filing Fee (Check the appropriate box):
þ No fee required. | |
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
1) Title of each class of securities to which transaction applies: |
2) Aggregate number of securities to which transaction applies: |
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
4) Proposed maximum aggregate value of transaction: |
5) Total fee paid: |
o Fee paid previously with preliminary materials. |
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) Amount Previously Paid: |
2) Form, Schedule or Registration Statement No.: |
3) Filing Party: |
4) Date Filed: |
SEC 1913 (11-01) | Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
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![(CASTLE ENERGY CORPORATION LOGO)](https://capedge.com/proxy/DEFM14A/0001035704-06-000234/d31029dd3102900.gif)
Sincerely, | |
Richard E. Staedtler | |
Chief Executive Officer | |
Castle Energy Corporation |
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Delta Petroleum Corporation | Castle Energy Corporation | |
370 17th Street, Suite 4300 | 357 South Gulph Road, Suite 260 | |
Denver, Colorado 80202 | King of Prussia, Pennsylvania 19406 | |
Attention: Corporate Secretary | Attention: Corporate Secretary | |
Telephone (303) 293-9133 | Telephone (610) 992-9900 |
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![(CASTLE ENERGY CORPORATION LOGO)](https://capedge.com/proxy/DEFM14A/0001035704-06-000234/d31029dd3102900.gif)
• | a proposal to adopt the Agreement and Plan of Merger, dated as of November 8, 2005, as amended, among Delta Petroleum Corporation, a Colorado corporation, Delta Petroleum Corporation, a Delaware corporation, DPCA LLC, a Delaware limited liability company and direct wholly owned subsidiary of Delta Petroleum (Colorado), and Castle Energy Corporation, a Delaware corporation; and | |
• | such other business as may properly come before the Castle special meeting or any adjournment or postponement thereof. |
BY ORDER OF THE BOARD OF DIRECTORS, | |
Sidney F. Wentz | |
Chairman of the Board |
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Q: | Why am I receiving this proxy statement/ prospectus? | |
A: | Castle and Delta have agreed to the acquisition of Castle by Delta pursuant to the terms of a merger agreement that is described in this proxy statement/ prospectus. A copy of the merger agreement, as amended, is attached to this proxy statement/ prospectus as Appendix A. In order to complete the merger, Castle stockholders holding a majority of the outstanding Castle common stock must adopt the merger agreement and the transactions contemplated thereby. This proxy statement/ prospectus contains important information about the merger, the merger agreement and the special meeting, which you should read carefully. The enclosed voting materials allow you to vote your shares without attending the special meeting.Your vote is important.You should be aware that certain of Castle’s officers, all of its directors, and the estate and family of Castle’s founder and former Chief Executive Officer, Joseph L. Castle II, have entered into a voting agreement (see Appendix B to the accompanying proxy statement/ prospectus) with Delta, pursuant to which they agreed, among other things, to vote, whether in person or by proxy, all shares of Castle’s common stock held by them in favor of adoption of the merger agreement. Such stockholders hold approximately 29.1% of Castle’s outstanding shares. We encourage you to vote or tender your proxy as soon as possible. | |
Q: | Why is Castle proposing the merger? | |
A: | Castle is proposing to merge for a variety of reasons, including the belief of its board of directors that the merger is the best strategic alternative available for Castle. | |
Q: | What will happen in the merger? | |
A: | In the merger, Castle will merge with and into DPCA LLC, a wholly owned subsidiary of Delta, with DPCA LLC continuing after the merger as the surviving entity and as a wholly owned subsidiary of Delta. | |
Q: | As a Castle stockholder, what will I receive in the merger? | |
A: | If the merger is completed, for each share of Castle common stock you own, you will receive approximately 1.164 shares of Delta common stock, or an aggregate of 8,500,000 shares of Delta common stock (which is referred to in this proxy statement/ prospectus, collectively, as the merger consideration). Delta will not issue fractional shares of common stock. Instead, in lieu of any fractional share of Delta common stock that you would otherwise receive, you will receive cash in an amount calculated in accordance with Section 1.7(e) of the merger agreement, as amended, attached as Appendix A to this proxy statement/ prospectus. Immediately following the merger, Castle stockholders are expected to own in the aggregate approximately 16% of the outstanding shares of Delta common stock, taking into account cancellation of the 6,700,000 shares Castle itself presently owns of the outstanding shares of Delta common stock. | |
Q: | What are the principal risks relating to the merger? | |
A: | If all of the conditions to the merger are not met, the merger may not occur and Delta and Castle may lose some or all of the intended benefits of the merger. The merger agreement contains certain termination rights for both Delta and Castle which, if exercised, could result in a termination fee of $5,000,000 or reimbursement to the other party of up to $1,000,000 in fees and expenses actually incurred relating to the merger. These and other risks are explained in the section entitled “Risk Factors — Risks Relating to the Merger” beginning on page 8 of this proxy statement/ prospectus. |
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Q: | Can the value of the transaction change between now and the time the merger is completed? | |
A: | Yes. The value of the merger consideration, which is wholly comprised of Delta common stock, can change. The exchange ratio is a fixed exchange ratio, meaning that each issued and outstanding share of Castle’s common stock will be converted into the right to receive the number of validly issued, fully paid and non-assessable shares of Delta common stock resulting by dividing 8,500,000 by the number of shares of Castle common stock outstanding at the effective time of the merger (or approximately 1.164 shares based on the number of Castle shares outstanding on the date hereof), regardless of the trading price of Delta common stock on the effective time of the merger. The market value of the Delta common stock you will receive in the merger will increase or decrease as the trading price of Delta’s common stock increases or decreases and, therefore, may be different at the time the merger is completed than it was at the time the merger agreement was signed, at the time you voted or submitted your proxy, and at the time of the special meeting or the effective time of the merger. There can be no assurance as to the market price of Delta common stock at any time prior to the completion of the merger or at any time thereafter. | |
Q: | When and where will the special meeting take place? | |
A: | The Castle special meeting will take place on April 28, 2006. The location of the meeting is specified on the cover page to this proxy statement/ prospectus. | |
Q: | Who is entitled to vote at the special meeting? | |
A: | Holders of record of Castle common stock as of the close of business on February 28, 2006 (which is referred to in this proxy statement/ prospectus as the record date), are entitled to vote at the special meeting. Each stockholder has one vote for each share of Castle common stock that the stockholder owns on the record date. | |
Q: | What vote is required to adopt the merger agreement? | |
A: | The affirmative vote of holders of a majority of the shares of Castle common stock outstanding as of the record date is the only vote required to adopt the merger and the merger agreement. As of the record date, there were 7,303,245 shares of Castle common stock outstanding, of which approximately 29.1% were owned by persons who already agreed with Delta, pursuant to the voting agreement attached to this proxy statement prospectus as Appendix B, to vote, or cause to be voted, all of the shares of Castle common stock each such stockholder owns in favor of the merger and the merger agreement. See “THE VOTING AGREEMENT” beginning on page 63 of this proxy statement/prospectus. | |
Q: | How does the Castle board of directors recommend that Castle stockholders vote? | |
A: | The directors on Castle’s board of directors who voted on the merger proposal unanimously recommend that Castle stockholders vote“FOR” the adoption of the merger agreement. One Castle director, Russell Lewis, abstained because he is also a member of Delta’s board of directors. | |
Q: | What do I need to do now? | |
A: | After you have carefully read this entire document, the documents incorporated by reference herein, and such other information you deem appropriate, please vote your shares of Castle common stock. You may do this by completing, signing, dating and mailing the enclosed proxy card. A return envelope is enclosed. This will enable your shares to be represented and voted at the Castle special meeting. | |
Q: | What if I do not vote, do not fully complete my proxy card or fail to instruct my broker? | |
A: | If you do not submit a proxy or instruct your broker how to vote your shares if your shares are held in “street name,” and you do not vote in person at the special meeting, the effect will be the same as if you voted“AGAINST” the adoption of the merger agreement. If you submit a signed proxy without specifying the manner in which you would like your shares to be voted, your shares will be voted“FOR” the adoption of the merger agreement. |
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Q: | If my shares are held in “street name” by my broker, will my broker automatically vote my shares for me? | |
A: | No. Your broker will not be able to vote your shares without instructions from you. You should instruct your broker to vote your shares, and you should follow the directions your broker provides. Please refer to the voting form used by your broker to see if it offers telephone or Internet voting. | |
Q: | What if I fail to instruct my broker? | |
A: | If you fail to instruct your broker to vote your shares and the broker submits an unvoted proxy, the resulting broker “non-vote” will be counted toward a quorum at the respective special meeting, but the effect will be the same as if you voted“AGAINST” the adoption of the merger. | |
Q: | Can I attend the special meeting and vote my shares in person? | |
A: | Yes. Holders of record of Castle common stock are invited to attend the special meeting and to vote in person at the meeting. If a broker holds your shares, then you are not a record holder and you must ask your broker how you can vote in person at the special meeting. | |
Q: | Can I change my vote? | |
A: | Yes. If you have not voted through your broker, there are three ways you can change your proxy instructions after you have submitted your proxy card. |
• First, you may send a written notice revoking your proxy to the person to whom you submitted your proxy. | ||
• Second, you may complete and submit a new proxy card. The latest proxy actually received from a Castle stockholder before the meeting will be counted, and any earlier proxy will automatically be revoked. | ||
• Third, you may attend the Castle special meeting and vote in person. Any earlier proxy will thereby be automatically revoked. However, simply attending the meeting without voting will not revoke your proxy. | ||
If you have instructed a broker to vote your shares, you must follow directions you receive from your broker in order to change or revoke your vote. |
Q: | When do you expect to complete the merger? | |
A: | We expect to complete the merger early in the second quarter of 2006. However, we cannot assure you when or if the merger will occur. We must first obtain the approval of Castle stockholders at the special meeting and the necessary regulatory approvals, as well as satisfy other closing conditions set forth in the merger agreement. | |
Q: | Will I have appraisal rights as a result of the merger? | |
A: | No. Pursuant to Section 262 of the Delaware General Corporation Law (“DGCL”), Castle stockholders are not entitled to appraisal rights in connection with the merger. | |
Q: | What are the tax consequences of the merger to me? | |
A: | The merger is intended to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), so that for U.S. federal income tax purposes (i) you will not recognize gain or loss on the receipt of Delta common stock as part of the merger consideration and (ii) you will recognize gain or loss only with respect to any cash received in lieu of a fractional share of Delta common stock. Each of Delta’s and Castle’s obligations under the merger agreement are conditioned on the receipt of legal opinions that the merger will qualify as a reorganization for United States federal income tax purposes. If the conditions to receive such legal opinions are waived, and the tax consequences of the merger differ materially from those described herein, we will revise the proxy statement/prospectus to describe the material consequences of such circumstances and resolicit your vote. |
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For a more complete discussion of the United States federal income tax consequences of the merger, see “MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER” on page 64. | ||
The consequences of the merger to any particular Castle stockholder will depend on that stockholder’s particular facts and circumstances. You are urged to consult your own tax advisor to determine your own tax consequences from the merger. |
Q: | Should I send in my stock certificates now? | |
A: | No. You should not send in your stock certificates at this time. Castle stockholders will need to exchange their Castle stock certificates for shares of Delta common stock after we complete the merger. Delta will send you, or cause an exchange agent to send you, instructions for exchanging Castle stock certificates at that time. | |
Q: | How will Castle stockholders receive the merger consideration? | |
A: | Following the merger, you will receive a letter of transmittal and instructions on how to obtain the merger consideration in exchange for your Castle common stock. You must return the completed letter of transmittal and your Castle stock certificates as described in the instructions, and you will receive the merger consideration as soon as practicable after Corporate Stock Transfer, the exchange agent, receives your completed letter of transmittal and Castle stock certificates. If you hold shares through a brokerage account, your broker will handle the surrender of stock certificates to Corporate Stock Transfer and the receipt of your merger consideration. | |
Q: | Who will help answer my questions? | |
A: | If you have any questions about the transaction or how to submit your proxy, or if you need additional copies of this proxy statement/ prospectus, the enclosed proxy card, voting instructions or the election form, you should contact Castle Energy Corporation, 357 South Gulph Road, Suite 260, King of Prussia, Pennsylvania 19406; (610) 992-9900. |
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Delta |
370 17th Street, Suite 4300 | |
Denver, Colorado 80202 | |
(303) 293-9133 |
DPCA |
Castle |
357 South Gulph Road, Suite 260 | |
King of Prussia, Pennsylvania 19406 | |
(610) 992-9900 |
• | an opportunity to effect the distribution of a significant block of Delta common stock to Castle stockholders; and |
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• | an opportunity to acquire cash, and assets believed to be readily reducible to cash, to finance the company’s operations. |
• | it considers the merger to be the best strategic alternative available to Castle at this time; | |
• | management believes that Castle is too small to remain an independent public company; and | |
• | the merger will maximize value to the Castle stockholders. |
Delta | Castle | Implied Value of | ||||||||||
Common | Common | One Share of Castle | ||||||||||
Stock | Stock | Common Stock | ||||||||||
November 7, 2005 | $ | 18.07 | $ | 17.90 | $ | 21.03 | ||||||
March 24, 2006 | $ | 20.28 | $ | 23.22 | $ | 23.61 |
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• | by any of Delta, Castle or DPCA if the merger is not completed, through no fault of the terminating party, by May 1, 2006; | |
• | by any of Delta, Castle or DPCA if any final and nonappealable legal restraint having the effect of permanently restraining, enjoining or otherwise prohibiting the merger; | |
• | by Delta if any governmental agency or third party takes action or commences an inquiry related to Castle’s representation in the merger agreement that neither it nor any of its subsidiaries is an “investment company” as defined in the Investment Company Act of 1940 (the “Investment Company Act”), and such matter has not been resolved prior to May 1, 2006 to Delta’s satisfaction; | |
• | by either Delta or Castle if there is an insufficient vote by Castle stockholders in favor of the merger; or | |
• | by either Delta or Castle due to certain material breaches or failures to perform by the other party. |
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• | severance agreements for certain of Castle’s officers; and | |
• | the right to continued indemnification and insurance coverage by Castle for events occurring prior to or at the time of the merger. |
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The anticipated benefits of acquiring Castle may not be realized. |
The value of the shares of Delta common stock that Castle stockholders receive in the merger will vary as a result of the fixed exchange ratio and possible fluctuations in the price of Delta’s common stock. |
If the conditions to the merger are not met, the merger may not occur. |
• | there must be no temporary restraining order, preliminary or permanent injunction or other order or decree issued by any court of competent jurisdiction or other statute, law, rule, legal restraint or prohibition in effect preventing the completion of the merger; |
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• | Delta’s common stock to be issued in the merger must be approved for listing on the NASDAQ, subject to official notice of issuance; | |
• | the registration statement on Form S-4 filed by Delta relating to the common stock to be issued in the merger must have been declared effective by the Securities and Exchange Commission under the Securities Act. No stop order suspending the effectiveness of the S-4 shall have been issued by the Securities and Exchange Commission and no proceedings for that purpose shall have been initiated or threatened by the Securities and Exchange Commission; and | |
• | the merger agreement must be adopted by the holders of a majority of the outstanding shares of Castle common stock as of the record date. |
• | the representations and warranties of Castle in the merger agreement must be true and correct except for circumstances that would not reasonably be expected to have a material adverse effect on Castle; and Castle must not have breached any covenant or agreement in the merger agreement which is not remedied within 20 days of notice (or by May 1, 2006, whichever is earlier); and | |
• | there must be no pending suit, action, investigation or proceeding brought by any governmental authority or any other action taken that would in effect prevent the completion of, or make illegal, the merger or prohibit or materially limit the ownership or operation by Castle or Delta of all or any material portion of their business or assets. |
• | the representations and warranties of Delta and DPCA in the merger agreement must be true and correct except for circumstances that would not reasonably be expected to have a material adverse effect on Delta; and there must not have been a breach of any covenant or agreement by Delta or DPCA which is not remedied within 10 days of notice (or by May 1, 2006, whichever is earlier); and | |
• | there must be no pending suit, action, investigation or proceeding brought by any governmental authority or any other action taken that would in effect prevent the completion of, or make illegal, the merger. |
Castle may waive one or more of the conditions to the merger without resoliciting stockholder approval for the merger. |
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Directors and executive officers of Castle may have potential conflicts of interest in recommending that you vote in favor of the merger. |
The merger agreement restricts Castle’s ability to pursue alternatives to the merger. |
It is possible that Castle could be determined to have inadvertently been an Investment Company. |
Oil and natural gas prices are volatile and a decrease could adversely affect Delta’s revenues, cash flows and profitability. |
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• | relatively minor changes in the supply of and demand for oil and natural gas; | |
• | market uncertainty; | |
• | the level of consumer product demand; | |
• | weather conditions; | |
• | U.S. and foreign governmental regulations; | |
• | the price and availability of alternative fuels; | |
• | political and economic conditions in oil producing countries, particularly those in the Middle East, including actions by the Organization of Petroleum Exporting Countries; | |
• | the foreign supply of oil and natural gas; and | |
• | the price of oil and gas imports, consumer preferences and overall U.S. and foreign economic conditions. |
Delta may not be able to fund its planned capital expenditures. |
• | bank borrowings or the issuance of debt securities; and | |
• | the issuance of common stock, preferred stock or other equity securities. |
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Information concerning Delta’s reserves is uncertain. |
Delta may not be able to replace production with new reserves. |
If oil or natural gas prices decrease or exploration and development efforts are unsuccessful, Delta may be required to take writedowns. |
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The exploration, development and operation of oil and gas properties involve substantial risks that may result in a total loss of investment. |
• | unexpected drilling conditions; | |
• | pressure or irregularities in formations; | |
• | equipment failures or accidents; | |
• | adverse changes in prices; | |
• | weather conditions; | |
• | shortages in experienced labor; and | |
• | shortages or delays in the delivery of equipment. |
Prices may be affected by regional factors. |
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Delta’s industry experiences numerous operating hazards that could result in substantial losses. |
Delta’s level of indebtedness could adversely affect its ability to raise additional capital to fund its operations, limit its ability to react to changes in the economy or its industry and prevent it from meeting its obligations under its senior unsecured notes. |
• | it may limit its ability to obtain additional debt or equity financing or working capital, capital expenditures, further exploration, debt service requirements, acquisitions and general corporate or other purposes; | |
• | a substantial portion of Delta’s cash flows from operations will be dedicated to the payment of principal and interest on its indebtedness and will not be available for other purposes, including its operations, capital expenditures and future business opportunities; | |
• | the debt service requirements of other indebtedness in the future could make it more difficult for Delta to satisfy its financial obligations; | |
• | certain of Delta’s borrowings, including borrowings under its senior credit facility, are at variable rates of interest, exposing it to the risk of increased interest rates; | |
• | as Delta has pledged most of its oil and gas properties and the related equipment, inventory, accounts and proceeds as collateral for the borrowings under its senior credit facility, they may not be pledged as collateral for other borrowings and would be at risk in the event of a default thereunder; | |
• | it may limit Delta’s ability to adjust to changing market conditions and place it at a competitive disadvantage compared to its competitors that have less debt; and | |
• | Delta may be vulnerable in a downturn in general economic conditions or in its business, or it may be unable to carry out capital spending and exploration activities that are important to Delta’s growth. |
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Acquisitions are a part of Delta’s business strategy and are subject to the risks and uncertainties of evaluating recoverable reserves and potential liabilities. |
Delta depends on key personnel. |
Delta may not be permitted to develop some of its offshore California properties or, if Delta is permitted, the substantial cost to develop these properties could result in a reduction of its interest in these properties or cause it to incur penalties. |
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Delta is exposed to additional risks through its drilling business. |
Hedging Transactions may limit Delta’s potential gains or cause it to lose money. |
• | production is substantially less than expected; | |
• | the counterparties to Delta’s futures contracts fail to perform under the contracts; or | |
• | a sudden, unexpected event materially impacts gas or oil prices. |
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Delta may not receive payment for a portion of its future production. |
Delta has no long-term contracts to sell oil and gas. |
There is currently a shortage of available drilling rigs and equipment which could cause Delta to experience higher costs and delays that could adversely affect its operations. |
The marketability of Delta’s production depends mostly upon the availability, proximity and capacity of gas gathering systems, pipelines and processing facilities, which are owned by third parties. |
Delta’s industry is highly competitive, making its results uncertain. |
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• | acquiring reserves and leases; | |
• | obtaining goods, services and employees needed to operate and manage its business; | |
• | access to the capital necessary to drill wells and acquire properties; and | |
• | marketing oil and natural gas. |
New technologies may cause Delta’s current exploration and drilling methods to become obsolete, resulting in an adverse effect on its production. |
Terrorist attacks aimed at Delta’s facilities could adversely affect its business. |
Delta owns properties in the Gulf Coast region that could be susceptible to damage by severe weather. |
Delta may incur substantial costs to comply with the various federal, state and local laws and regulations that affect its oil and gas operations. |
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• | require applying for and receiving a permit before drilling commences; | |
• | restrict the types, quantities and concentration of substances that can be released into the environment in connection with drilling and production activities; | |
• | limit or prohibit drilling activities on certain lands lying within wilderness, wetlands and other protected areas; and | |
• | impose substantial liabilities for pollution resulting from Delta’s operations. |
Delta may issue shares of preferred stock with greater rights than its common stock. |
There may be future dilution of Delta’s common stock. |
Delta does not expect to pay dividends on its common stock. |
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The common stock is an unsecured equity interest in Delta. |
Delta’s stockholders do not have cumulative voting rights. |
Delta’s Certificate of Incorporation may have provisions that discourage corporate takeovers and could prevent Delta stockholders from realizing a premium on their investment. |
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As of and for the | |||||||||||||||||||||||||||||
Six Months Ended | As of and for the | ||||||||||||||||||||||||||||
December 31, | Years Ended June 30, | ||||||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||||||||
Total Revenues | $ | 61,774 | $ | 39,864 | $ | 94,707 | $ | 36,367 | $ | 20,718 | $ | 8,052 | $ | 12,712 | |||||||||||||||
Income(loss) from Continuing Operations(1) | $ | (12,879 | ) | $ | 8,025 | $ | 14,601 | $ | 2,297 | $ | (241 | ) | $ | (6,156 | ) | $ | 345 | ||||||||||||
Net Income (Loss) | $ | (590 | ) | $ | 8,754 | $ | 15,050 | $ | 5,056 | $ | 1,257 | $ | (6,253 | ) | $ | 345 | |||||||||||||
Income/(Loss) Per Common Share | |||||||||||||||||||||||||||||
Basic | $ | (.01 | ) | $ | .22 | $ | .37 | $ | .19 | $ | .05 | $ | (.49 | ) | $ | .03 | |||||||||||||
Diluted | $ | (.01 | ) | $ | .21 | $ | .36 | $ | .17 | $ | .05 | $ | (.49 | ) | $ | .03 | |||||||||||||
Total Assets(2) | $ | 693,393 | $ | 326,100 | $ | 512,983 | $ | 272,704 | $ | 86,847 | $ | 74,077 | $ | 29,832 | |||||||||||||||
Total Liabilities(3) | $ | 357,442 | $ | 109,543 | $ | 276,746 | $ | 86,462 | $ | 38,944 | $ | 29,161 | $ | 11,551 | |||||||||||||||
Minority Interest | $ | 15,496 | $ | 273 | $ | 14,614 | $ | 245 | $ | — | $ | — | $ | — | |||||||||||||||
Stockholders’ Equity(4) | $ | 320,455 | $ | 216,284 | $ | 221,623 | $ | 185,997 | $ | 47,903 | $ | 44,916 | $ | 18,281 | |||||||||||||||
Total Long-Term Liabilities | $ | 257,743 | $ | 86,053 | $ | 226,073 | $ | 72,281 | $ | 33,082 | $ | 24,939 | $ | 9,434 |
(1) | Also reported as “net earnings from continuing operations” in the periods presented. |
(2) | The increase in assets at June 30, 2005 and June 30, 2004 reflect the acquisitions of oil and gas properties from Manti Resources, Inc. of $59.7 million and Alpine Resources, Inc. of $122.5 million, respectively. The further increase in assets at December 31, 2005 reflects the acquisition of undeveloped properties in the Columbia River Basin and the Piceance Basin for $85.0 million and extensive development of Delta’s existing properties. |
(3) | The increase in liabilities at June 30, 2005 reflect the issuance of $150 million of 7% senior unsecured notes. The increase in liabilities at December 31, 2005 reflects the $35.0 million loan by DHS Drilling Company, increased unrealized derivative losses, and additional accounts payable from Delta’s significant capital development. |
(4) | The increase in stockholders’ equity at June 30, 2004 reflects the issuance of common stock for cash of $97.9 million and for oil and gas properties of $30.5 million. The increase in stockholders’ equity at December 31, 2005 reflects the issuance of common stock for oil and gas properties of $22.2 million and net income of $15.1 million for the year ended June 30, 2005. The further increase at December 31, 2005 reflects the issuance of common stock for cash of approximately $95.0 million. |
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For the Three | ||||||||||||||||||||||||||||||
Months Ended | ||||||||||||||||||||||||||||||
December 31, | For the Fiscal Year Ended September 30, | |||||||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||
(Unaudited) | (In thousands, except per share amounts) | |||||||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||||||||
Exploration and production | $ | 926 | $ | 699 | $ | 2,561 | $ | 1,087 | — | $ | 9,445 | $ | 21,144 | |||||||||||||||||
Gross Margin: | ||||||||||||||||||||||||||||||
Exploration and production (oil and gas sales, less production expenses) | $ | 784 | $ | 604 | $ | 1,977 | $ | 772 | — | $ | 6,178 | $ | 13,745 | |||||||||||||||||
Income (loss) from continuing operations, net of tax | $ | (125 | ) | $ | 343 | $ | 1,801 | $ | 13,620 | $ | (2,001 | ) | $ | (1,844 | ) | $ | 1,716 | |||||||||||||
Income (loss) from discontinued operations, net of tax | $ | (3,392 | ) | |||||||||||||||||||||||||||
Net income (loss)(3) | $ | (125 | ) | $ | 343 | $ | (1,591 | ) | $ | 13,620 | $ | (2,001 | ) | $ | (1,844 | ) | $ | 1,716 | ||||||||||||
Income (loss) per common share: | ||||||||||||||||||||||||||||||
Continuing operations: | ||||||||||||||||||||||||||||||
Basic | $ | (.02 | ) | $ | .05 | $ | .26 | $ | 2.04 | $ | (.30 | ) | $ | (.28 | ) | $ | .26 | |||||||||||||
Diluted | $ | (.02 | ) | $ | .05 | $ | .26 | $ | 1.96 | $ | (.30 | ) | $ | (.28 | ) | $ | .25 | |||||||||||||
Discontinued operations: | ||||||||||||||||||||||||||||||
Basic | — | — | $ | (.49 | ) | — | — | — | — | |||||||||||||||||||||
Diluted | — | — | $ | (.49 | ) | — | — | — | — | |||||||||||||||||||||
Net income (loss) | ||||||||||||||||||||||||||||||
Basic | $ | (.02 | ) | $ | .05 | $ | (.23 | ) | $ | 2.04 | $ | (.30 | ) | $ | (.28 | ) | $ | .26 | ||||||||||||
Diluted | $ | (.02 | ) | $ | .05 | $ | (.23 | ) | $ | 1.96 | $ | (.30 | ) | $ | (.28 | ) | $ | .25 | ||||||||||||
Dividends declared per share of common stock outstanding | $ | .05 | $ | .05 | $ | 1.20 | $ | .20 | $ | .20 | $ | .15 | $ | .20 |
September 30, | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2005 | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Total assets | $ | 178,368(4 | ) | $ | 177,723(1 | ) | $ | 83,826(2 | ) | $ | 49,808(2 | ) | $ | 51,941(2 | ) | $ | 59,118 | |||||||
Long-term obligations | $ | 344 | $ | 275 | $ | 246 | — | — | — | |||||||||||||||
Redeemable preferred stock | — | — | — | — | — | — | ||||||||||||||||||
Capital leases | — | — | — | — | — | — |
(1) | Included in total assets in 2005 is $139.4 million of marketable securities of Delta. |
(2) | Included in total assets in 2004, 2003 and 2002 are equity investments in Delta of $39.7 million, $29.5 million and $26.9 million, respectively. |
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(3) | Included in net income (loss) and income (loss) from continuing operations are gains on sale of Delta stock and equity in net income (loss) of Delta of $4.8 million, $19.6 million, $1.1 million and $(0.6) million for the fiscal years ended September 30, 2005, 2004, 2003 and 2002, respectively, and $0 and $842,000 for the three months ended December 31, 2005 and 2004, respectively. |
(4) | Included in total assets is $145.9 million of marketable securities of Delta. |
Delta Historical | Castle Historical | ||||||||||||||||
For the Six | For the Year | For the Three | For the Year | ||||||||||||||
Months Ended | Ended | Months Ended | Ended | ||||||||||||||
December 31, 2005 | June 30, 2005 | December 31, 2005 | September 30, 2005 | ||||||||||||||
(Unaudited) | |||||||||||||||||
Net income (loss) per share: | |||||||||||||||||
Basic | $ | (0.01 | )(1) | $ | 0.37 | $ | (.02 | ) | $ | (0.23 | )(2) | ||||||
Diluted | $ | (0.01 | )(1) | $ | 0.36 | $ | (.02 | ) | $ | (0.23 | )(2) | ||||||
Net income (loss) per share from continuing operations: | |||||||||||||||||
Basic | $ | (0.29 | )(1) | $ | 0.36 | $ | (.02 | ) | $ | 0.26 | (2) | ||||||
Diluted | $ | (0.29 | )(1) | $ | 0.35 | $ | (.02 | ) | $ | 0.26 | (2) | ||||||
Cash dividends declared (per share) | — | — | $ | .05 | $ | 1.20 | (3) |
As of | As of | As of | As of | |||||||||||||
December 31, 2005 | June 30, 2005 | December 31, 2005 | September 30, 2005 | |||||||||||||
Book value per share | $ | 6.70 | $ | 5.27 | $ | 18.53 | $ | 18.12 |
(1) | For the six months ended December 31, 2005, Delta’s net loss included $9.9 million of unrealized losses on derivative contracts, $8.0 million of realized losses on derivative contracts, and $11.8 million gain from sale of discontinued operations. Delta’s net loss from continuing operations did not include the gain from sale of discontinued operations. |
(2) | For the year ended September 30, 2005, Castle’s net loss and net income from continuing operations included $3.1 million of gain on sale of Delta stock and $1.7 million of equity in net income of Delta. Accordingly, net loss per share and net income per share from continuing operations each include a per share income of $0.28, net of tax, from the gain on sale and equity income of Delta. |
(3) | Includes a non-recurring dividend of $1.00 per share. |
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Implied Value of | ||||||||||||
Delta Common | Castle Common | One Share of Castle | ||||||||||
Stock | Stock | Common Stock | ||||||||||
November 7, 2005 | $ | 18.07 | $ | 17.90 | $ | 21.03 | ||||||
March 24, 2006 | $ | 20.28 | $ | 23.22 | $ | 23.61 |
Delta Common | |||||||||
Stock | |||||||||
High | Low | ||||||||
2003 | |||||||||
First Quarter (September 30) | $ | 5.73 | $ | 4.12 | |||||
Second Quarter (December 31) | $ | 6.30 | $ | 4.75 | |||||
Third Quarter (March 31) | $ | 11.19 | $ | 6.04 | |||||
Fourth Quarter (June 30) | $ | 15.93 | $ | 10.00 | |||||
2004 | |||||||||
First Quarter (September 30) | $ | 15.47 | $ | 10.01 | |||||
Second Quarter (December 31) | $ | 16.11 | $ | 12.67 | |||||
Third Quarter (March 31) | $ | 17.07 | $ | 12.87 | |||||
Fourth Quarter (June 30) | $ | 14.95 | $ | 8.99 | |||||
2005 | |||||||||
First Quarter (September 30) | $ | 20.82 | $ | 14.01 | |||||
Second Quarter (December 31) | $ | 22.31 | $ | 15.07 | |||||
2006 | |||||||||
First Quarter (through March 24, 2006) | $ | 24.71 | $ | 18.05 |
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Castle Common | |||||||||
Stock | |||||||||
High | Low | ||||||||
2003 | |||||||||
First Quarter (December 31) | $ | 4.35 | $ | 3.65 | |||||
Second Quarter (March 31) | $ | 4.00 | $ | 2.98 | |||||
Third Quarter (June 30) | $ | 4.95 | $ | 3.10 | |||||
Fourth Quarter (September 30) | $ | 5.95 | $ | 4.50 | |||||
2004 | |||||||||
First Quarter (December 31) | $ | 7.50 | $ | 5.22 | |||||
Second Quarter (March 31) | $ | 10.50 | $ | 7.25 | |||||
Third Quarter (June 30) | $ | 14.00 | $ | 9.04 | |||||
Fourth Quarter (September 30) | $ | 15.40 | $ | 9.81 | |||||
2005 | |||||||||
First Quarter (December 31) | $ | 13.35 | $ | 10.56 | |||||
Second Quarter (March 31) | $ | 12.80 | $ | 10.36 | |||||
Third Quarter (June 30) | $ | 13.22 | $ | 9.01 | |||||
Fourth Quarter (September 30) | $ | 22.00 | $ | 12.40 | |||||
2006 | |||||||||
First Quarter (December 31) | $ | 25.10 | $ | 16.21 | |||||
Second Quarter (through March 24, 2006) | $ | 28.16 | $ | 20.61 |
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• | submitting written notice of revocation to the Secretary of Castle prior to the voting of such proxy; | |
• | submitting a properly executed proxy of a later date; or | |
• | voting in person at the special meeting; however, simply attending the special meeting without voting will not revoke an earlier proxy. |
Castle Energy Corporation | |
357 South Gulph Road, Suite 260 | |
King of Prussia, Pennsylvania 19406 | |
Attention: Susan Pyle, Secretary |
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• | Directors and executive officers of Castle and their affiliates beneficially owned or had the right to vote 411,650 shares of Castle common stock, approximately 5.6% of the Castle common stock outstanding on that date. | |
• | To Castle’s knowledge, directors and executive officers of Castle and their affiliates, not otherwise subject to the voting agreement, have indicated that they intend to vote their shares of Castle common stock in favor of the adoption of the merger agreement and the transactions contemplated by the merger agreement, including the merger. |
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Delta Petroleum Corporation | |
370 17th Street, Suite 4300 | |
Denver, Colorado 80202 | |
(303) 293-9133 |
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357 South Gulph Road, Suite 260 | |
King of Prussia, Pennsylvania 19406 | |
(610) 992-9200 |
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• | reviewed the financial terms and conditions of the merger agreement; | |
• | analyzed certain publicly available financial statements and historical business information relating to Castle and Delta, respectively; | |
• | reviewed certain other public and non-public information, primarily financial in nature, relating to the respective businesses, earnings, cash flow, assets and prospects of Castle and Delta provided to them or publicly available; | |
• | held discussions with members of the senior management of Delta with respect to the business and prospects of Delta; | |
• | reviewed public information, including stock trading prices and market multiples of certain other publicly held oil and gas companies that Snyder & Company believed to be generally relevant to its evaluation of the Delta common stock; | |
• | reviewed the financial terms, to the extent publicly available, of certain acquisition transactions of oil and gas companies that Snyder & Company believed to be generally relevant to its evaluation of the Delta common stock; | |
• | reviewed the historical stock prices and trading volumes of Delta common stock and Castle common stock; |
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• | analyzed the financial implication of a Castle liquidation alternative as compared to the proposed merger with Delta; and | |
• | conducted such other financial studies, analyses and investigations as Snyder & Company deemed appropriate. |
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Overview of Snyder & Company Analyses |
Summary of Valuation Analyses of Castle |
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(B) Exchange Premium | ||||||||||||||||
(Discount) Versus | ||||||||||||||||
(A) Castle | Liquidation Other Asset | |||||||||||||||
Share | Valuation Range | |||||||||||||||
Exchange | ||||||||||||||||
Delta Closing Price | Value | Castle | Low | High | ||||||||||||
10.00 | 11.64 | (4.77 | ) | (4.69 | ) | (5.46 | ) | |||||||||
11.00 | 12.81 | (3.61 | ) | (3.53 | ) | (4.30 | ) | |||||||||
12.00 | 13.97 | (2.44 | ) | (2.36 | ) | (3.13 | ) | |||||||||
13.00 | 15.14 | (1.28 | ) | (1.20 | ) | (1.97 | ) | |||||||||
14.00 | 16.30 | (0.11 | ) | (0.04 | ) | (0.80 | ) | |||||||||
15.00 | 17.47 | 1.05 | 1.13 | 0.36 | ||||||||||||
16.00 | 18.63 | 2.22 | 2.29 | 1.53 | ||||||||||||
17.00 | 19.79 | 3.38 | 3.46 | 2.69 | ||||||||||||
18.00 | 20.96 | 4.54 | 4.62 | 3.85 | ||||||||||||
19.00 | 22.12 | 5.71 | 5.79 | 5.02 | ||||||||||||
20.00 | 23.29 | 6.87 | 6.95 | 6.18 | ||||||||||||
21.00 | 24.45 | 8.04 | 8.12 | 7.35 | ||||||||||||
22.00 | 25.62 | 9.20 | 9.28 | 8.51 |
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(A) | Based on 7,303,000 Castle shares outstanding: | |
(B) | Castle liquidation at Delta trading price of $17.72 per share |
Delta 10-day average selling price | 17.72 | 17.72 | 17.72 | |||||||||
Selling price @ 5% blockage discount* | 16.83 | 16.83 | 16.83 | |||||||||
Delta stock proceeds | 112,788 | 112,788 | 112,788 | |||||||||
Less corporate tax on gain** | (33,027 | ) | (33,027 | ) | (33,027 | ) | ||||||
Castle other assets @ FMV | 40,115 | 39,546 | 45,153 | |||||||||
119,876 | 119,307 | 124,914 | ||||||||||
Per share liquidation proceeds | 16.41 | 16.34 | 17.10 | |||||||||
* | Discount from trading price in most recent Delta private placement |
** | Per share gain on sale ($16.83 selling price less $2.75 tax basis) x’s 6.7 million shares, taxed at 35% corporate tax rate |
Summary of Valuation Analyses of Delta |
• | Over the last 18-24 months, Delta’s business has shifted from one of growth through acquisition, to growth principally through the exploratory drilling of its acquired interests in proved undeveloped and undeveloped acreage. | |
• | Delta has significant undeveloped acreage in two areas that are viewed in the oil & gas industry as prime prospects for major natural gas reserve finds. | |
• | Delta has established a drilling subsidiary and has maintained a controlling interest in order to have better control over its drilling schedule. | |
• | Delta has strengthened its executive management and industry expertise at the board of directors level, as well as increased its staffing to better manage the operational challenges of Delta’s ambitious drilling and production plans. |
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• | The speculative value of the Delta interests in the California offshore leases is a less significant component of Delta’s total market value as a result of Delta’s recent reserve and production growth, and its projected future growth. Snyder & Company’s after-tax value estimate for Delta’s California offshore leases is a range of $.12 to $1.34 per share based on a future settlement of the lawsuit filed by the holders of the offshore leases. | |
• | Delta’s drilling budget for 2006 will require additional outside financing. |
• | The Delta stock price has been volatile, trading in a52-week trading range of $8.99-$21.65 per share. Its price volatility measured in terms of BETA was 1.41 versus the S&P 500 and 1.47 versus the oil & gas industry stocks. | |
• | The Delta trading market is highly liquid, with a52-week average daily average trading volume of approximately 434,000 shares with approximately 40+ million shares outstanding during the period. | |
• | The Delta stock is followed by 6 industry analysts with ratings, projections, and price targets, with the stock price targets presently ranging between $18 and $22 per share. The consensus view of Delta by these analysts is as a growth company based on their projections of future reserve growth. |
Comparable Public Company Analysis. |
• | Market capitalizations of less than $2 billion | |
• | Natural gas representing a significant percentage of production and reserves | |
• | Principally onshore oil & gas properties | |
• | No significant other businesses |
• | Bill Barrett Corporation | |
• | Carrizo Oil & Gas, Inc. | |
• | Comstock Resources, Inc. | |
• | Edge Petroleum Corporation | |
• | Houston Exploration | |
• | KCS Energy, Inc. | |
• | St. Mary Land & Exploration Company | |
• | Whiting Petroleum |
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• | Price per share as a multiple of earnings per share for the last twelve months and estimated 2006; | |
• | Price per share as a multiple of the last twelve months discretionary cash flow per share (“DCFPS”); | |
• | Aggregate (enterprise) value (equal to equity value plus net debt) as a multiple of earnings before interest, taxes, depreciation and amortization, and exploration (“EBITDX”) for the last twelve months and estimated 2006; and | |
• | Aggregate value per MCFE of reserves for 2004. |
Comparable Public Companies | ||||||||||||||||||||||
Valuation Multiples | High | Low | Median | Barrett | Carrizo | |||||||||||||||||
Share Price as a Multiple of: | ||||||||||||||||||||||
Earnings per share | ||||||||||||||||||||||
Last twelve months | 45.0 | 10.1 | 16.8 | NM | 45.0 | |||||||||||||||||
2006 estimate | 27.5 | 7.0 | 9.2 | 25.0 | 27.5 | |||||||||||||||||
DCFPS | ||||||||||||||||||||||
Last twelve months | 13.5 | 3.4 | 6.6 | NM | 13.5 | |||||||||||||||||
Aggregate Value as a Multiple of: | ||||||||||||||||||||||
EBITDX | ||||||||||||||||||||||
Last twelve months | 15.8 | 3.8 | 6.5 | 12.2 | 15.8 | |||||||||||||||||
2006 estimate | 7.6 | 2.8 | 5.1 | 7.6 | NA | |||||||||||||||||
Per MCFE of reserves | ||||||||||||||||||||||
2004 | $ | 6.02 | $ | 1.75 | $ | 3.70 | $ | 4.93 | $ | 6.02 |
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Multiples | ||||||||||||||||||||||
Delta per Share Value | ||||||||||||||||||||||
Barrett/ | ||||||||||||||||||||||
Delta Value | Median | Carrizo Ave | Median | Barrett/Carrizo Ave | ||||||||||||||||||
Share Price as a Multiple of: | ||||||||||||||||||||||
Earnings per share | ||||||||||||||||||||||
Last twelve months | $ | 0.35 | 16.8 | 45.0 | $ | 6.61 | $ | 16.48 | ||||||||||||||
2006 estimate | $ | 0.77 | 9.2 | 26.3 | $ | 7.81 | $ | 20.98 | ||||||||||||||
DCFPS | ||||||||||||||||||||||
Last twelve months | $ | 1.07 | 6.6 | 13.5 | $ | 7.79 | $ | 15.18 | ||||||||||||||
Aggregate Value as a Multiple of: | ||||||||||||||||||||||
EBITDX (000s) | ||||||||||||||||||||||
Last twelve months | $ | 48,071 | 6.5 | 14.0 | $ | 3.07 | $ | 10.65 | ||||||||||||||
2006 estimate | $ | 98,000 | 5.1 | 7.6 | $ | 7.01 | $ | 12.16 | ||||||||||||||
Per MCFE of reserves | ||||||||||||||||||||||
2004 (MCFE) | 224,300 | $ | 3.70 | $ | 5.48 | $ | 13.95 | $ | 22.34 |
Acquisition Transaction Analysis. |
• | Revenues ranging from $40 million to $500 million | |
• | Transactions date range: June 30, 2002 — June 30, 2005 (to present) | |
• | Natural gas representing a significant percentage of production and reserves | |
• | Principally onshore properties | |
• | No significant other businesses |
Transaction Date | Target | Acquirer | ||
7/18/02 | Maynard Oil | Plantation Petroleum | ||
12/2/02 | EEX Corp. | Newfield Exploration Co. | ||
7/29/03 | EXCO Resources Inc. | Private Group lead by EXCO mgt. | ||
6/4/03 | 3TEC Energy Corp. | Plains Exploration & Production Co. | ||
5/17/04 | Nuevo Energy Co. | Plains Exploration & Production Co. | ||
5/19/04 | Tom Brown Inc. | EnCana Corp. | ||
6/28/04 | Wiser Oil Co. | Forest Oil Corp. | ||
7/23/04 | Prima Energy Corp. | Petro Canada | ||
9/28/04 | Evergreen Resources, Inc. | Pioneer Natural Resources Co. |
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• | Price per share as a multiple of earnings per share for the last twelve months; | |
• | Price per share as a multiple of the last twelve months discretionary cash flow per share (“DCFPS”); | |
• | Aggregate (enterprise) value (equal to equity value plus net debt) as a multiple of earnings before interest, taxes, depreciation and amortization, and exploration (“EBITDX”) for the last twelve months; and | |
• | Aggregate value per MCFE of reserves for the most recently completed fiscal year. |
Comparable Acquisition | ||||||||||||||
Transactions | ||||||||||||||
Valuation Multiples | High | Low | Median | |||||||||||
Share Price as a Multiple of: | ||||||||||||||
Earnings per share | ||||||||||||||
Last twelve months | 27.9 | 18.4 | 22.1 | |||||||||||
DCFPS | ||||||||||||||
Last twelve months | 11.0 | 1.2 | 4.7 | |||||||||||
Aggregate Value as a Multiple of: | ||||||||||||||
EBITDX | ||||||||||||||
Last twelve months | 12.2 | 4.2 | 8.7 | |||||||||||
Per MCFE of reserves | ||||||||||||||
Last fiscal year | $ | 3.59 | $ | 0.81 | $ | 1.31 |
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Delta per Share Value | ||||||||||||||||||
Delta Value | Median Multiple | Control | Minority Interest | |||||||||||||||
Share Price as a Multiple of: | ||||||||||||||||||
Earnings per share | ||||||||||||||||||
Last twelve months | $ | 0.35 | 22.1 | $ | 8.47 | $ | 7.37 | |||||||||||
DCFPS | ||||||||||||||||||
Last twelve months | $ | 1.07 | 4.7 | $ | 5.76 | $ | 5.01 | |||||||||||
Aggregate Value as a Multiple of: | ||||||||||||||||||
EBITDX (000s) | ||||||||||||||||||
Last twelve months | $ | 48,071 | 8.7 | $ | 5.30 | $ | 4.61 | |||||||||||
Per MCFE of reserves | ||||||||||||||||||
2004 (MCFE) | 224,300 | $ | 1.31 | $ | 10.27 | $ | 8.93 |
• | The valuation multiples derived from the analysis and applied to Delta were all historical based rather than forward looking estimates of value; with Delta perceived as a growth company, the value of its future growth was not captured in this analysis. | |
• | All of the comparable acquisition transactions were prior to 2005, with the most recent acquisition announcement in June 2004; with the run up in oil and natural gas prices in 2005, these dated transactions significantly understate the current reserve values. |
Description of Additional Analysis of the Delta Merger Proposal |
Impact of merger on Delta. |
• | The transaction increases the Delta stockholder base. | |
• | The merger announcement eliminates the potential overhang on the market of the possible sale of up to 6.7 million share of Delta stock by Castle if Castle is liquidated. | |
• | Delta has indicated that it will probably sell Castle’s Appalachia Basin oil & gas properties that should net Delta a minimum of $14 million; the proceeds from this sale together with Castle’s |
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other assets, primarily cash, should net Delta approximately $40 million, providing needed funds for Delta’s ambitious drilling program. | ||
• | Delta is issuing 1.8 million Delta shares for Castle’s other net assets. These other net assets have an estimated orderly liquidation value of approximately $40 million. Delta will, therefore, be raising new equity at approximately $22.22 per share, which represents a premium of $4.50 per share, or 25%, over Delta’s10-day average closing price of $17.72 per share. This premium of 25% compares to a discount of approximately 10% from Delta’s10-day average closing price realized in the September 2005 private placement of 5.4 million shares at $18.50 per share. |
Impact of the Delta merger proposal on Castle shares. |
Miscellaneous |
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• | proper organization and good standing; | |
• | its capital structure; | |
• | the corporate authorization and enforceability of the merger agreement; | |
• | the filing and accuracy of its reports to the Securities and Exchange Commission and the preparation and accuracy of financial statements; | |
• | information supplied in this registration statement and proxy statement/ prospectus; |
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• | board approval and recommendation; | |
• | the applicable shareholder vote required to complete the merger; | |
• | brokers and finders; | |
• | litigation, and settlements thereof; | |
• | compliance with laws and agreements; | |
• | absence of any Company Material Adverse Effect (as defined below), and certain other changes or events; | |
• | taxes; | |
• | oil and gas reserves; | |
• | environmental matters; | |
• | intellectual property matters; | |
• | certain agreements and relationships; | |
• | employee benefit plan matters; | |
• | employment matters; | |
• | stockholder rights plan; | |
• | financial and commodity hedging | |
• | title to properties; | |
• | accounting controls; | |
• | take-or-pay deliveries; | |
• | gas imbalances; and | |
• | investment company status. |
• | proper organization and good standing of each party; | |
• | their capital structure; | |
• | the corporate authorization and enforceability of the merger agreement; | |
• | the filing and accuracy of Delta’s reports to the Securities and Exchange Commission and the preparation and accuracy of financial statements; | |
• | litigation; | |
• | information supplied in this registration statement and proxy statement/ prospectus; | |
• | brokers and finders; | |
• | interested stockholder; | |
• | oil and gas reserves; and | |
• | certain contracts and arrangements. |
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• | after consultation with its financial advisors and outside, that failing to take such action would reasonably be expected to constitute a breach of the fiduciary duties of the board; and | |
• | that the Takeover Proposal is a “Superior Proposal” (as defined below). |
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(1) contemplates |
(A) a merger or other business combination, reorganization, share exchange, recapitalization, liquidation, dissolution, tender offer, exchange offer or similar transaction involving Castle as a result of which Castle’s stockholders prior to such transaction in the aggregate cease to own at least 50% of the voting securities of the ultimate parent entity resulting from such transaction; or | |
(B) a sale, lease, exchange, transfer or other disposition (including, without limitation, a contribution to a joint venture) of at least 50% of the value of the net assets of Castle and its subsidiaries, taken as a whole; and |
(2) is otherwise on terms which Castle’s board of directors determines after consultation with its financial advisor and outside legal counsel, |
(A) would result in a transaction that, if consummated, is more favorable to Castle’s stockholders from a financial point of view than the merger or, if applicable, any proposal by Delta to amend the terms of the merger agreement taking into account all the terms and conditions of such proposal and the merger agreement; and | |
(B) is reasonably capable of being completed without undue delay. |
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• | No Injunctions or Restraints. There will be no preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, nor any statute, rule, regulation or executive order promulgated or enacted by any governmental authority in effect that would make the merger illegal or otherwise prevent the consummation of the merger provided, however, that prior to invoking this condition, each party will have complied fully with its obligations to use its reasonable best efforts (as described below under — Reasonable Best Efforts on page 61 hereto) and, in addition, will use commercially reasonable efforts to have any such decree, ruling, injunction or order vacated, except as otherwise contemplated by the merger agreement. | |
• | Stock Exchange Listing. The shares of Delta common stock to be issued in the merger have been approved for listing on the NASDAQ, subject to official notice of issuance. | |
• | Effective Registration Statement. This registration statement filed by Delta to register the shares of Delta common stock to be issued in the merger has been declared effective by the Securities and Exchange Commission and is not subject to any stop order suspending its effectiveness, and no proceeding for that purpose has been initiated or threatened by the Securities and Exchange Commission. | |
• | Castle Stockholder Approval. The merger agreement has been adopted by Castle’s stockholders. |
• | Representations and Warranties; No Breach. |
(1) Castle’s representations and warranties in the merger agreement will be true and correct except for circumstances which would have not had and which would not reasonably be expected to have a Company Material Adverse Effect, in each case as if such representations and warranties were made as of the date of the merger agreement and as of the Closing Date (other than to the extent they are made as of a specified date, in which case they will be true and correct as of such date and provided that any representation or warranty that is qualified by materiality or Company Material Adverse Effect will be true and correct in all respects); and |
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(2) Castle will not have breached in any respect any covenant or agreement set forth in the merger agreement which breach is not remedied within 20 days (or by May 1, 2006, if sooner) of written notice (other than breaches which would not have a Company Material Adverse Effect). |
• | No Pending Suit. There will be no pending suit, action investigation or proceeding brought by any governmental authority before any court (domestic or foreign) or any action taken, or any statute, rule, regulation, decree, order or injunction promulgated, enacted, entered into or enforced by any state, federal or foreign government or governmental agency or authority or by any court (domestic or foreign) that would reasonably be expected to have the effect of: (i) making illegal or otherwise restraining or prohibiting the consummation of the merger or materially delaying the merger; or (ii) prohibiting or materially limiting the ownership or operation by Castle or any of its subsidiaries or Delta, DPCA or any of Delta’s affiliates of all or any material portion of the business or assets of Castle and its subsidiaries, taken as a whole, or Delta and any of its subsidiaries, taken as a whole, or compelling Delta, DPCA or any of Delta’s subsidiaries to dispose of or hold separate all or any material portion of the business or assets of Castle and any of its subsidiaries, taken as a whole, or Delta and its subsidiaries, taken as a whole, as a result of the transactions contemplated herein. | |
• | Legal Opinion. Delta has received a legal opinion dated the Effective Time from Duane Morris LLP, counsel to Castle, or William Liedtke, general counsel to Castle, in a form previously reviewed and reasonably satisfactory to Delta. | |
• | No Material Adverse Change. There has not occurred and continue to exist any event that individually or in the aggregate would reasonably be expected to have a Company Material Adverse Effect on Castle (other than those previously disclosed to Delta). | |
• | Non-Foreign Status. Castle has provided an executed certificate of non-foreign status under Section 1445 of the Code. | |
• | Tax Opinion. Delta has received a written legal opinion from Davis Graham & Stubbs LLP, dated as of the Effective Time, to the effect that the merger and the reincorporation will each constitute a reorganization within the meaning of Section 368(a) of the Code. |
• | Representations and Warranties; No Breach. |
(1) Each of the representations and warranties by Delta, DPCA and Delta’s other subsidiaries in the merger agreement will be true and correct except for circumstances which would have not had and which would not reasonably be expected to have a Parent Material Adverse Effect, in each case as if such representations and warranties were made as of the date of the merger agreement and as of the Closing Date (other than to the extent they are made as of a specified date, in which case they will be true and correct as of such date and provided that any representation or warranty that is qualified by materiality or Parent Material Adverse Effect will be true and correct in all respects); and | |
(2) Delta and DPCA have not breached in any respect any covenant or agreement set forth in the merger agreement which breach is not remedied within 10 days (or by May 1, 2006, if sooner) of written notice (other than breaches which would not have a Parent Material Adverse Effect). |
• | No Pending Suit. There is no pending suit, action, investigation or proceeding brought by any governmental authority before any court (domestic or foreign) or any action taken, or any statute, rule, regulation, decree, order or injunction promulgated, enacted, entered into or enforced by any state, federal or foreign government or governmental agency or authority or by any court (domestic or foreign) that would reasonably be expected to have the effect of making illegal or otherwise restraining or prohibiting the consummation of the merger or materially delaying the merger. |
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• | Legal Opinion. Castle has received a legal opinion dated the Effective Time from Davis Graham & Stubbs LLP or Krys Boyle, P.C., as counsel to Delta and DPCA, in a form previously reviewed and reasonably satisfactory to Castle. | |
• | Tax Opinion. Castle has received a written legal opinion from Duane Morris LLP, dated as of the Effective Time, to the effect that the merger will constitute a reorganization within the meaning of Section 368(a) of the Code. |
• | acquire, sell, encumber, lease, transfer or dispose of any assets, rights or securities that are material to Castle and its subsidiaries or terminate, cancel, materially modify or enter into any material commitment, transaction, line of business or other agreement, in each case other than in the ordinary course of business consistent with past practice or acquire by merging or consolidating with or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof, except that Castle may (i) obtain a six-year run-off (tail) policy with respect to its current directors and officers liability insurance policy and (ii) terminate certain of its office leases; | |
• | amend or propose to amend its certificate of incorporation or bylaws or, in the case of Castle’s subsidiaries, their respective constituent documents; | |
• | split, combine or reclassify any outstanding shares of, or interests in, its capital stock; | |
• | declare, set aside or pay any dividend or distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (other than to declare and pay its regularly scheduled quarterly dividend of $0.05 per share); | |
• | redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire, any shares of its capital stock or any options, warrants or rights to acquire Castle capital stock; | |
• | issue, sell, pledge, dispose of or encumber, or authorize, propose or agree to the issuance, sale, pledge or disposition or encumbrance by Castle or any of its subsidiaries of, any shares of, or any options, warrants or rights of any kind to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock outstanding on the date of the merger agreement; | |
• | modify the terms of any existing indebtedness for borrowed money or incur any indebtedness for borrowed money or issue any debt securities; | |
• | assume, guarantee, endorse or otherwise as an accommodation become responsible for, the obligations of any other person, or make any loans or advances; | |
• | authorize, recommend or propose any change in its capitalization; |
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• | take any action with respect to the grant of or increase in any severance or termination pay involving a payment of more than $2,075,000 in the aggregate (when combined with any payments permitted by the following bullet point relating to employee benefit plans); | |
• | adopt or establish any new employee benefit plan or amend in any material respect any employee benefit plan or, other than in the ordinary course of business consistent with past practice, increase the compensation or fringe benefits of any employee (except as required by any existing employee benefit plans or employment agreements or applicable Law) or pay any material benefit not required by any existing employee benefit plan involving a payment of more than $2,075,000 in the aggregate (when combined with any payments permitted by the bullet point above relating to severance and termination pay) other than arranging for continued health insurance for its employees; | |
• | other than in the ordinary course of business consistent with past practice, enter into or amend in any material respect (other than as required by existing employee benefit plans or employment agreements or by applicable law) any employment, consulting, severance or indemnification agreement entered into or made by Castle or any of its subsidiaries with any of their respective directors, officers, agents, consultants or employees, or any collective bargaining agreement or other obligation to any labor organization or employee incurred or entered into by Castle or any of its subsidiaries (other than as required by existing employee benefit plans or employment agreements or by applicable law); | |
• | settle or compromise any liability for taxes, other than in the ordinary course of business; | |
• | make or commit to make capital expenditures in excess of $50,000, except for emergency action in the face of risk to life, property or the environment; | |
• | make any material changes in tax accounting methods except as required by generally accepted accounting principles or applicable law; | |
• | other than in the ordinary course of business, pay or discharge any claims, liens or liabilities involving more than $25,000 individually or $100,000 in the aggregate, which are not reserved for on the balance sheet included in the Castle’s financial statements; | |
• | write off any accounts or notes receivable in excess of $25,000 except in the ordinary course of business; | |
• | knowingly take, or agree to commit to take, any action that would or is reasonably likely to result in any of the conditions to the merger not being satisfied, or would make any representation or warranty of Castle in the merger agreement inaccurate in any material respect at, or as of any time prior to, the effective time of the merger, or that would materially impair the ability of Castle, Delta, DPCA or Castle’s stockholders to consummate the merger in accordance with the terms of the merger agreement or materially delay such consummation; or | |
• | take any action that would, or is reasonably likely to, prevent or impede the merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; or | |
• | enter into or modify any contract, agreement, commitment or arrangement to do any of the foregoing. |
• | adopt or propose to adopt any amendments to its constituent documents, other than relating to the reincorporation merger, and other than amendments which would not have a material adverse effect on the consummation of the transactions contemplated by merger agreement; |
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• | take any action that would or is reasonably likely to prevent or impede the merger and the reincorporation merger from each qualifying as a reorganization described in Section 368(a) of the Code; | |
• | with respect to Delta only, split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, make any other actual, constructive or deemed distribution in respect of its capital stock or otherwise make any payments to stockholders in their capacity as such; | |
• | adopt a plan of complete or partial liquidation or dissolution of Delta; | |
• | knowingly take, or agree to commit to take, any action that would or is reasonably likely to result in any of the conditions to the merger not being satisfied, or would make any representation or warranty of Delta or DPCA contained in the merger agreement inaccurate in a manner that would be reasonably likely to have a Parent Material Adverse Effect on Delta at, or as of any time prior to, the Effective Time, or that would materially impair the ability of the Castle, Delta, DPCA or the Delta shareholders to consummate the merger in accordance with the terms hereof or materially delay such consummation; or | |
• | take or agree in writing or otherwise to take any of the actions relating to the foregoing. |
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• | by the mutual written consent of Delta, DPCA and Castle; | |
• | by either Delta or Castle, if the stockholders of Castle fail to adopt the merger agreement; | |
• | by Delta, DPCA or Castle, if the merger has not been consummated on or before May 1, 2006; provided, however, that this right to terminate the merger agreement will not be available to any party if such party’s action or failure to act has been the cause of, or resulted in, the failure of the merger to be consummated on or before such date; | |
• | by Delta, DPCA or Castle, if any court or other governmental body of competent jurisdiction has issued a nonappealable order or taken any nonappealable action restraining, enjoining or otherwise prohibiting the merger; |
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• | by Delta, if the Castle board of directors withdraws, modified or amends its approval or recommendation in favor of the merger or recommends or approves to Castle’s stockholders a Takeover Proposal or resolves to do any of the foregoing, or otherwise breaches its obligations relating to the solicitation of Takeover Proposals; | |
• | by Delta if Castle has exempted, for purposes of Section 203 of the DGCL, any acquisition of shares of Castle’s common stock by any person or “group” (as defined in Section 13(d)(3) of the Exchange Act), other than Delta, DPCA or their affiliates; | |
• | by Delta, if any governmental agency or third party has taken any action or commenced any inquiry relating to Castle’s representation in the merger agreement as to its status as an investment company, and such matter has not been resolved prior to May 1, 2006 to Delta’s satisfaction in its sole, unfettered discretion; | |
• | by Delta, if prior to the closing of the merger, there has been a breach of any representation, warranty, covenant or agreement on the part of Castle such that the conditions to Delta’s obligations are not capable of being satisfied on or before May 1, 2006; provided that Delta can not terminate on this basis if Delta or DPCA is in material breach of the merger agreement; or | |
• | by Castle, if prior to the closing of the merger, there has been a breach of any representation, warranty, covenant or agreement on the part of Delta or DPCA such that the conditions to Castle’s obligations are not capable of being satisfied on or before May 1, 2006; provided that Castle can not terminate on this basis if Castle is in material breach of the merger agreement. |
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• | a citizen or resident of the United States; | |
• | a corporation, or an entity treated as a corporation, created or organized in or under the laws of the United States or any state or political subdivision thereof; | |
• | a trust that (i) is subject to (a) the primary supervision of a court within the United States and (b) the authority of one or more United States persons to control all substantial decisions or (ii) has a valid election in effect under applicable Treasury regulations to be treated as a United States person; or | |
• | an estate that is subject to U.S. federal income tax on its income regardless of its source. |
• | a financial institution; | |
• | a tax-exempt organization; | |
• | an S corporation or other pass-through entity; | |
• | an insurance company; | |
• | a mutual fund; | |
• | a dealer in stocks and securities, or foreign currencies; | |
• | a trader in securities who elects themark-to-market method of accounting for your securities; | |
• | a holder of Castle common stock subject to the alternative minimum tax provisions of the Code; | |
• | a holder of Castle common stock who received his or her Castle common stock through the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan; | |
• | a holder that is not a U.S. holder, certain expatriates or a person that has a functional currency other than the U.S. dollar; | |
• | a holder of options granted under any Castle benefit plan; or | |
• | a holder of Castle common stock who holds Castle common stock as part of a hedge against currency risk, a straddle or a constructive sale or a conversion transaction. |
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• | the merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code and each of Castle and Delta will be a party to the reorganization within the meaning of Section 368(b) of the Code; | |
• | subject to the paragraph captioned “Cash in Lieu of Fractional Shares” below, you will not recognize gain or loss upon exchanging Castle common stock for shares of Delta common stock in the merger; | |
• | your aggregate tax basis in the shares of Delta common stock that you receive in the merger (including any fractional share interest you are deemed to receive and exchange for cash) will equal your aggregate tax basis in the Castle common stock you surrendered in the merger; and | |
• | your holding period for the shares of Delta common stock that you receive in the merger (including any fractional share interest that you are deemed to receive and exchange for cash) will include your holding period for the shares of Castle common stock that you surrender in the exchange. |
Tax Consequences If the Merger Does Not Qualify as a Reorganization Under Section 368(a) of the Code. |
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• | furnish a correct taxpayer identification number and certify that you are a U.S. person (including a U.S. resident alien) not subject to backup withholding on the substitute Form W-9 you will receive; | |
• | are a corporation and, when required, demonstrate that fact and otherwise comply with applicable requirements of the backup withholding rules; or | |
• | otherwise establish that you are exempt from backup withholding. |
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Delta | Castle | |||
Classification of Directors | Delta’s Certificate of Incorporation does not provide for a classified board of directors. Accordingly, under the DGCL, all directors of Delta are elected annually. | As permitted under the DGCL, the Castle Certificate of Incorporation provides for a classified board of directors, the existence of which may make a hostile takeover of a corporation more difficult to complete. | ||
Removal of Directors | Under the DGCL and Delta’s Certificate of Incorporation, as amended, directors may generally be removed by shareholders with or without cause. | Under the DGCL, directors may generally be removed by shareholders with or without cause. However, the Delaware Bylaws provide that Directors may only be removed by the shareholders for cause. | ||
Number of Directors | The DGCL permits a certificate of incorporation to specify the number of directors. Under Delta’s Certificate of Incorporation, the board of directors of Delta is to have between three and eleven members. Under the DGCL, Delta’s Certificate of Incorporation cannot be amended unless the amendment is approved by the board of directors; stockholders will not have the ability to increase the size of the board of directors of Delta to more than eleven without the approval of the board. | The DGCL permits a certificate of incorporation to specify the number of directors. Under the Castle Certificate of Incorporation, the board of directors of Castle is to have between three and fifteen members, divided into three classes; provided, however, that the Castle By-laws further restrict the number of directors to between three and nine members. Under the DGCL, the Delaware Certificate of Incorporation cannot be amended unless the amendment is approved by the board of directors of Castle; shareholders will not have the ability to increase the size of the board of directors of Castle to more than fifteen without the approval of the board. | ||
Shareholders’ Power to Call Special Meetings & Action By Written Consent | Under the DGCL, special shareholder meetings may be called by shareholders to the extent authorized by the certificate of incorporation or bylaws. Delta’s Certificate of Incorporation provides that, except as otherwise required by law and subject to the rights of the holders of any class or series of preferred stock, special meetings of the stockholders may be called only by the chairman of the board, the chief executive officer or any officer of Delta upon the written request of a majority of the board of directors. | Under the DGCL, special shareholder meetings may be called by shareholders to the extent authorized by the certificate of incorporation or bylaws. The Castle Bylaws provides that special meetings of the stockholders may be called only by the Castle board of directors. | ||
Pursuant to Delta’s Certificate of Incorporation, Delta does not | Pursuant to the Castle Certificate of Incorporation, Castle permits |
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Delta | Castle | |||
permit action by written consent of the shareholders in lieu of a meeting. | action by written consent of the shareholders in lieu of a meeting. | |||
Quorum for Shareholder Action | Delta’s Bylaws provide that not less than one third of shares entitled to vote shall represent a quorum. | The Castle Bylaws provide that, subject to certain exceptions, holders of outstanding shares representing a majority of the voting power shall constitute a quorum for the transaction of business. | ||
Notice of Shareholder Nominations for Directors and Business to be Brought Before Meetings | Delta’s Bylaws provide that no business may be brought before any meeting of stockholders, including the nomination or election of persons to the board of directors, by a shareholder unless the shareholder satisfies certain advance notice requirements. Advance notice of any such business must generally be provided not less than ninety days nor more than one hundred twenty days prior to the date of the meeting, unless public disclosure of the date of the meeting is first made less than one hundred days prior to the date of the meeting, in which case notice by the shareholder must be provided not later than the tenth day following the date on which such public disclosure of the date of the meeting was made. A notice must include specified information concerning the business proposed to be conducted, the shareholder making the proposal and, if applicable, the persons nominated to be elected as directors. Any late or deficient nominations or proposals may be rejected by Delta. | The Castle Bylaws provide that no business may be brought before any meeting of shareholders, including the nomination or election of persons to the board of directors, by a shareholder unless the shareholder satisfies certain advance notice requirements. Advance notice of any such business must generally be provided not less than sixty days nor more than ninety prior to the date of the meeting, unless public disclosure of the date of the meeting is first made less than seventy days prior to the date of the meeting, in which case notice by the shareholder must be provided not later than the tenth day following the date on which such public disclosure of the date of the meeting was made. A notice must include specified information concerning the business proposed to be conducted, the shareholder making the proposal and, if applicable, the persons nominated to be elected as directors. Any late or deficient nominations or proposals may be rejected by Castle. | ||
Indemnification | Delta’s Certificate of Incorporation provides for mandatory, rather than permissive, indemnification of former or current officers and directors of Delta with respect to expenses incurred in any action brought against those persons as a result of their role with Delta if certain conditions are satisfied. Subject to certain conditions, Delta’s Certificate of | The Castle Certificate of Incorporation provides for mandatory, rather than permissive, indemnification of former or current officers and directors of Castle to the extent permitted by the DGCL. The Castle Bylaws also provide mandatory indemnification of former or current officers and directors of Castle to the full extent permitted by the DGCL |
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Delta | Castle | |||
Incorporation also provides for mandatory advancement of expenses incurred by those persons in defending such an action. Under the DGCL, a person seeking indemnification is generally required to have acted in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation. | with respect to all expenses, liabilities and losses incurred in any action brought against those persons as a result of their role with Castle if certain conditions are satisfied and to receive an advancement of such expenses. Under the DGCL, a person seeking indemnification is generally required to have acted in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation. | |||
Personal Liability of Directors | As permitted by the DGCL, Delta’s Certificate of Incorporation provides that Delta directors shall not be personally liable to Delta or its stockholders for monetary damages for breach of fiduciary duty as a director except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. | As permitted by the DGCL, the Castle Certificate of Incorporation provides that directors of Castle shall not be personally liable to Castle or its stockholders for monetary damages for breach of fiduciary duty except in certain specified circumstances. | ||
Amendment to Certificate of Incorporation | Under the DGCL, a proposed amendment to a corporation’s certificate of incorporation may not be submitted to a vote of shareholders without the approval of the board of directors. To the extent Delta’s Certificate of Incorporation includes provisions that would make a hostile takeover of Delta more difficult, this aspect of the DGCL would prevent those provisions from being amended or removed without the consent of the board of directors of Delta, and may therefore have anti-takeover effects. In addition, Delta’s Certificate of Incorporation provides that certain provisions of the certificate (including those relating to the structure of the board of directors of Delta, the removal of directors from the board and the indemnification of directors and officers) may be amended only with the approval of two-thirds of the shares of stock of Delta entitled to vote in an election of directors. | Under the DGCL, a proposed amendment to a corporation’s certificate of incorporation may not be submitted to a vote of shareholders without the approval of the board of directors. To the extent the Castle Certificate of Incorporation includes provisions that would make a hostile takeover of Castle more difficult, this aspect of the DGCL would prevent those provisions from being amended or removed without the consent of the board of directors of Castle, and may therefore have anti-takeover effects. |
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Delta | Castle | |||
Amendment to the Bylaws | Under the DGCL, the power to amend the bylaws is conferred upon the shareholders, provided however that the certificate of incorporation may confer the power to the directors. The fact that such power has been conferred to the directors does not limit the power of the shareholders to amend the bylaws. Delta’s Certificate of Incorporation contains a provision conferring authority to amend the bylaws to the board of directors. Delta’s Bylaws include a provision that the bylaws may be amended at any annual meeting of the stockholders or at any special meeting of the stockholders called for that purpose by the affirmative vote of the holders of not less than two-thirds of the outstanding shares entitled to vote. | Under the DGCL, the power to amend the bylaws is conferred upon the shareholders, provided however that the certificate of incorporation may confer the power to the directors. The fact that such power has been conferred to the directors does not limit the power of the shareholders to amend the bylaws. The Castle Certificate of Incorporation contains a provision conferring authority to amend the bylaws to the board of directors. The Castle Bylaws include a provision that the bylaws may be amended at any meeting of the stockholders or at any special meeting of the stockholders called for that purpose by the affirmative vote of the holders of not less than 70% of the outstanding shares entitled to vote. | ||
Authorized Shares | Under Delta’s Certificate of Incorporation, Delta is authorized to issue a total of 300,000,000 shares of common stock, $.01 par value per share, and 3,000,000 shares of preferred stock, $.01 par value per share. | Under its Certificate of Incorporation, Castle is authorized to issue a total of 25,000,000 shares of common stock, $.50 par value per share, and 10,000,000 non-voting shares of preferred stock, $1.00 par value per share. |
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Delta SEC Filings | Period or Date Filed | |
Transition Report on Form 10-K | Transition period from July 1, 2005 to December 31, 2005 | |
Current Reports on Form 8-K | Filed on March 6, 8, 10, and 14, 2006; February 1, 3, 13, and 22, 2006; and January 12, 2006 (excluding information furnished pursuant to Item 2.02 or Item 7.01 and any exhibits thereto) | |
Registration Statement on Form S-3 (containing description of Delta common stock) | Filed on February 1, 2006 |
Castle SEC Filings | Period or Date Filed | |
Annual Report on Form 10-K | Year ended September 30, 2005 | |
Quarterly Report on Form 10-Q | Quarter ended December 31, 2005 | |
Current Reports on Form 8-K | Filed on February 23, 2006; and November 3 and 10, 2005 (excluding information furnished pursuant to Item 7.01 and any exhibits thereto) |
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Delta Petroleum Corporation | Castle Energy Corporation | |||
Attention: Corporate Secretary | Attention: Corporate Secretary | |||
370 17th Street, Suite 4300 | 357 South Gulph Road, Suite 260 | |||
Denver, Colorado 80202 | King of Prussia, Pennsylvania 19406 | |||
Phone: (303) 293-9133 | (610) 992-9900 |
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A-1
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Page | ||||||||
ARTICLE 1 | THE MERGER | A-6 | ||||||
1.1 | The Merger | A-6 | ||||||
1.2 | Closing | A-6 | ||||||
1.3 | Effective Time | A-7 | ||||||
1.4 | Effects Of The Merger | A-7 | ||||||
1.5 | Effect on Capital Stock | A-7 | ||||||
1.6 | Stock Options | A-8 | ||||||
1.7 | Exchange Of Certificates | A-8 | ||||||
1.8 | Taking of Necessary Action; Further Action | A-11 | ||||||
1.9 | Reincorporation Merger | A-11 | ||||||
ARTICLE 2 | REPRESENTATIONS AND WARRANTIES OF THE COMPANY | A-13 | ||||||
2.1 | Organization | A-13 | ||||||
2.2 | Capital Stock of the Company | A-14 | ||||||
2.3 | Authority Relative to this Agreement | A-14 | ||||||
2.4 | SEC Reports and Financial Statements | A-15 | ||||||
2.5 | Certain Changes | A-16 | ||||||
2.6 | Litigation | A-16 | ||||||
2.7 | Disclosure in Proxy Statement | A-16 | ||||||
2.8 | Broker’s or Finder’s Fees | A-16 | ||||||
2.9 | Employee Plans | A-16 | ||||||
2.10 | Board Recommendation; Company Action; Requisite Vote of the Company’s Stockholders | A-18 | ||||||
2.11 | Taxes | A-19 | ||||||
2.12 | Environmental | A-20 | ||||||
2.13 | Compliance with Laws | A-21 | ||||||
2.14 | Employment Matters | A-21 | ||||||
2.15 | Rights Agreement | A-21 | ||||||
2.16 | Oil and Gas Reserves | A-22 | ||||||
2.17 | Certain Contracts and Arrangements | A-22 | ||||||
2.18 | Financial and Commodity Hedging | A-22 | ||||||
2.19 | Properties | A-22 | ||||||
2.20 | Accounting Controls | A-22 | ||||||
2.21 | Take-or-Pay Deliveries | A-22 | ||||||
2.22 | Gas Imbalances | A-23 | ||||||
2.23 | Intellectual Property | A-23 | ||||||
2.24 | GAMXX | A-23 | ||||||
2.25 | Investment Company | A-23 | ||||||
2.26 | Texaco Settlement | A-23 | ||||||
ARTICLE 3 | REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY | A-23 | ||||||
3.1 | Organization | A-23 | ||||||
3.2 | Capital Stock | A-24 | ||||||
3.3 | Authority Relative to this Agreement | A-25 | ||||||
3.4 | SEC Reports and Financial Statements | A-26 |
A-2
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Page | ||||||||
3.5 | Litigation | A-26 | ||||||
3.6 | Disclosure in Proxy Statement | A-26 | ||||||
3.7 | Broker’s or Finder’s Fees | A-27 | ||||||
3.8 | Parent Not An Interested Stockholder | A-27 | ||||||
3.9 | Oil and Gas Reserves | A-27 | ||||||
3.10 | Certain Contracts and Arrangements | A-27 | ||||||
ARTICLE 4 | CONDUCT OF BUSINESS PENDING THE MERGER | A-27 | ||||||
4.1 | Conduct of Business by the Company Pending the Merger | A-27 | ||||||
4.2 | Conduct of Business of Parent | A-29 | ||||||
ARTICLE 5 | ADDITIONAL AGREEMENTS | A-30 | ||||||
5.1 | Shareholders’ Meeting | A-30 | ||||||
5.2 | Registration Statement | A-30 | ||||||
5.3 | Employee Benefit Matters | A-31 | ||||||
5.4 | Consents and Approvals | A-31 | ||||||
5.5 | Public Statements | A-32 | ||||||
5.6 | Reasonable Best Efforts | A-32 | ||||||
5.7 | Notification of Certain Matters | A-32 | ||||||
5.8 | Access to Information; Confidentiality | A-33 | ||||||
5.9 | No Solicitation | A-33 | ||||||
5.10 | Affiliates | A-34 | ||||||
5.11 | Section 16 Matters | A-34 | ||||||
5.12 | Voting Agreement | A-35 | ||||||
5.13 | Stock Exchange Listing | A-35 | ||||||
5.14 | Tax Treatment | A-35 | ||||||
5.15 | Indemnification | A-35 | ||||||
ARTICLE 6 | CONDITIONS | A-35 | ||||||
6.1 | Conditions to the Obligation of Each Party to Effect the Merger | A-35 | ||||||
6.2 | Additional Conditions to the Obligation of Parent and Subsidiary | A-36 | ||||||
6.3 | Additional Conditions to the Obligation of the Company | A-36 | ||||||
ARTICLE 7 | TERMINATION, AMENDMENT AND WAIVER | A-37 | ||||||
7.1 | Termination | A-37 | ||||||
7.2 | Effect of Termination | A-38 | ||||||
7.3 | Fees and Expenses | A-38 | ||||||
7.4 | Amendment | A-39 | ||||||
7.5 | Waiver | A-39 | ||||||
ARTICLE 8 | GENERAL PROVISIONS | A-39 | ||||||
8.1 | Notices | A-39 | ||||||
8.2 | Representations and Warranties | A-40 | ||||||
8.3 | Governing Law; Waiver of Jury Trial | A-40 | ||||||
8.4 | Counterparts; Facsimile Transmission of Signatures | A-40 | ||||||
8.5 | Assignment; No Third Party Beneficiaries | A-40 | ||||||
8.6 | Severability | A-41 | ||||||
8.7 | Entire Agreement | A-41 |
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Term | Section | |
‘33 Act | 2.3(c) | |
‘34 Act | 2.3(c) | |
Acquiring Person | 2.15 | |
Agreement | Preamble | |
Articles of Merger | 1.9(a) | |
Book Entry Shares | 1.7(a) | |
CBCA | 1.9(a) | |
CERCLA | 2.12(h) | |
Certificate of Merger | 1.3 | |
Closing | 1.2 | |
Closing Date | 1.2 | |
Code | Recitals | |
Common Shares Trust | 1.7(e)(ii) | |
Company | Preamble | |
Company Board | 1.6(a) | |
Company Cases | 2.6 | |
Company Common Stock | 1.5 | |
Company Disclosure Letter | 2 | |
Company Financial Statements | 2.4(b) | |
Company Material Adverse Effect | 2.1(a) | |
Company Reserve Report | 2.16 | |
Company SEC Reports | 2.4(a) | |
Company Stock Option | 1.6(a) | |
Company Stock Plan | 1.6(a) | |
Company Subsidiaries | 2.1(a) | |
Confidentiality Agreements | 5.8(c) | |
DGCL | 1.1(a) | |
Distribution Date | 2.15 | |
Effective Time | 1.3 | |
Employee Benefit Plan | 2.9(a) | |
Environmental Laws | 2.12(h) | |
ERISA | 2.9(a) | |
Excess Shares | 1.7(e)(i) | |
Exchange Agent | 1.7(a) | |
Exchange Fund | 1.7(a) | |
Exchange Ratio | 1.5(b) | |
GAAP | 2.4(b) | |
Hazardous Substances | 2.12(i) | |
Intellectual Property | 2.23 | |
Intended Tax Treatment | 5.14 | |
Law | 2.13 | |
Lehman | 3.7 | |
Liens | 2.1(b) |
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Term | Section | |
LLC Act | 1.1(a) | |
Merger | 1.1(a) | |
Merger Consideration | 1.5(b) | |
NASDAQ | 1.7(e)(i) | |
Order | 2.3(b) | |
Other Filings | 5.2(b) | |
Outside Date | 7.1(b) | |
Parent | Preamble | |
Parent Cases | 3.5 | |
Parent Colorado | Preamble | |
Parent Colorado Board | 1.9(d) | |
Parent Colorado Common Stock | 1.9(c) | |
Parent Colorado Shareholders’ Meeting | 5.1(b) | |
Parent Colorado Stock Option | 1.9(d) | |
Parent Colorado Stock Plans | 1.9(d) | |
Parent Common Stock | 1.9(c) | |
Parent Delaware | Preamble | |
Parent Delaware Common Stock | 1.9(c) | |
Parent Financial Statements | 3.4(b) | |
Parent Material Adverse Effect | 3.1(a) | |
Parent Reserve Reports | 3.10 | |
Parent SEC Reports | 3.4(a) | |
Parent Subsidiaries | 3.1(a) | |
person | 2.1(b) | |
Proxy Statement/ Prospectus | 2.7 | |
RCRA | 2.12(h) | |
Reincorporation Certificate of Merger | 1.9(a) | |
Reincorporation Effective Time | 1.9(a) | |
Reincorporation Merger | 1.9(a) | |
Rights | 2.15 | |
Rights Agreement | 2.15 | |
S-4 | 5.2(a) | |
SARs | 2.2(b) | |
SEC | 1.6(b) | |
Settlement Agreement | 2.26 | |
Shareholders’ Meeting | 5.1(a) | |
Snyder | 2.8 | |
Stock Acquisition Date | 2.15 | |
Stock Certificate | 1.5(d) | |
Subsidiary | Preamble | |
Subsidiary Material Adverse Effect | 5.4 | |
Superior Proposal | 5.9(c) | |
Surviving Company | 1.1(a) | |
Takeover Proposal | 5.9(c) | |
Voting Agreement | Recitals |
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(a) Cancellation Of Treasury Stock, Parent-Owned Stock and Certain Parent Common Stock. Each share of Company Common Stock that is owned by the Company, Parent or Subsidiary shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and no consideration shall be delivered or deliverable in exchange therefor. Parent Common Stock (as defined below) owned by the Company shall no longer be outstanding and shall automatically be canceled and shall cease to exist. | |
(b) Conversion Of Company Common Stock. Subject to Sections 1.5(a), 1.6 and 1.7(e), each issued and outstanding share of Company Common Stock shall be converted into the right to receive the number (the “Exchange Ratio”) of validly issued, fully paid and non-assessable shares of Parent Common Stock resulting by dividing 8,500,000 by the number of outstanding shares of Company Common Stock at the Effective Time (the “Merger Consideration”). | |
(c) Capital Stock Of Subsidiary. Each issued and outstanding membership unit of Subsidiary shall be converted into and become one fully paid and nonassessable membership unit of the Surviving Company. | |
(d) Effect Of Conversion. From and after the Effective Time, all of the shares of Company Common Stock converted into the Merger Consideration pursuant to this Section 1.5 shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate (each a “Stock Certificate”) representing any such shares of Company Common Stock shall thereafter cease to have any rights with respect thereto, except the right to receive (i) the Merger Consideration, (ii) any dividends and other distributions in accordance with Sections 1.7(d) and 1.7(f) and (iii) any cash to be paid in lieu of any fractional share of Parent Common Stock in accordance with Section 1.7(e). | |
(e) Changes To Stock. If at any time during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of Parent or the Company shall occur by reason of any reclassification, recapitalization, stock split or combination, split-up, exchange or readjustment of shares, rights issued in respect of Parent Common Stock or any stock dividend thereon with a record date during such period, the Merger Consideration and any other similarly dependent items, as the case may be, shall be appropriately adjusted to provide the holders of shares of Company Common Stock the same economic effect as contemplated by this Agreement prior to such event. |
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(a) To the knowledge of the Company, there is no condition existing on any real property or other asset previously or currently owned, leased or operated by the Company or any Company Subsidiary or resulting from operations conducted thereon that would reasonably be expected to be subject to remediation obligations under Environmental Laws or give rise to any liability to the Company or any Company Subsidiary under Environmental Laws or constitute a violation of any Environmental Laws, and the Company and all Company Subsidiaries are otherwise in compliance, in all material respects, with all applicable Environmental Laws. | |
(b) None of the Company and the Company Subsidiaries, no real property or other asset previously or currently owned, leased or operated by the Company or any Company Subsidiary, nor the operations previously or currently conducted thereon or in relation thereto by the Company or any Company Subsidiary, are, to the knowledge of the Company, subject to any pending or threatened action, suit, investigation, inquiry or proceeding relating to any Environmental Laws by or before any court or other governmental authority. | |
(c) The Company has made available to Parent all material site assessments, compliance audits, and other similar studies in its possession, custody or control and prepared since October 1, 2000 relating to (i) the environmental conditions on, under or about the properties or assets previously or currently owned, leased or operated by the Company, or any predecessor in interest thereto and (ii) any Hazardous Substances used, managed, handled, transported, treated, generated, stored, discharged, emitted, or otherwise released by the Company or any other Person on, under, about or from any real property or other assets previously or currently owned, leased or operated by the Company; | |
(d) The Company has not received any communication, whether from a governmental authority, citizen’s group, employee or otherwise, alleging that it is liable under or not in compliance with any Environmental Law. | |
(e) All material permits, notices and authorizations, if any, required under any Environmental Law to be obtained or filed in connection with the operation or use of any real property or other asset owned, leased or operated by the Company or any Company Subsidiary, including without limitation past or present treatment, storage, disposal or release of a Hazardous Substance or solid waste into the environment, have been duly obtained or filed, and the Company is in compliance in all material respects with the terms and conditions of all such permits, notices and authorizations. | |
(f) Hazardous Substances have not been released, disposed of or arranged to be disposed of by the Company or any Company Subsidiary, in violation of, or in a manner or to a location that would reasonably be expected to give rise to a material liability under, or cause the Company to be subject to remediation obligations under, any Environmental Laws. | |
(g) None of the Company and the Company Subsidiaries has assumed, contractually or, to the knowledge of the Company, by operation of Law, any liabilities or obligations of third parties under |
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any Environmental Laws, except in connection with the acquisition of assets or entities associated therewith. | |
(h) “Environmental Laws” means any federal, state and local health, safety and environmental laws, regulations, orders, permits, licenses, approvals, ordinances, rule of common law, and directives including without limitation the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act (“RCRA”), the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), the Occupational Health and Safety Act, the Toxic Substances Control Act, the Endangered Species Act, the Oil Pollution Act and any similar foreign, state or local law, and including without limitation all Laws relating to or governing the use, management, treatment, transport, generation, storage, discharge or disposal of Hazardous Substances. | |
(i) “Hazardous Substance” means (i) any “hazardous substance,” as defined by CERCLA, (ii) any “hazardous waste,” as defined by RCRA, or (iii) any pollutant or contaminant or hazardous, dangerous or toxic chemical or material or any other substance including, but not limited to, asbestos, buried contaminants, regulated chemicals, flammable explosives, radioactive materials (including without limitation naturally occurring radioactive materials), polychlorinated biphenyls, natural gas, natural gas liquids, liquified natural gas, condensates, petroleum (including without limitation crude oil and petroleum products), including without limitation any Hazardous Substance regulated by, or that could result in the imposition of liability under, any Environmental Law or other applicable Law of any applicable governmental authority, all as amended. |
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(a) Except as set forth inSection 4.1 of the Company Disclosure Letter, the businesses of the Company and the Company Subsidiaries shall be conducted only in the ordinary and usual course of business and consistent with past practices, and the Company and the Company Subsidiaries shall use all reasonable efforts to maintain and preserve intact their respective business organizations, to maintain beneficial business relationships and good will with suppliers, contractors, distributors, customers, licensors, licensees and others having business relationships with it and keep available the services of its current key officers and employees; and | |
(b) Without limiting the generality of the foregoingSection 4.1(a), except as set forth inSection 4.1 of the Company Disclosure Letter, the Company shall not directly or indirectly, and shall not permit any of the Company Subsidiaries to, do any of the following: |
(i) acquire, sell, encumber, lease, transfer or dispose of any assets, rights or securities that are material to the Company and the Company Subsidiaries or terminate, cancel, materially modify or enter into any material commitment, transaction, line of business or other agreement, in each case other than in the ordinary course of business consistent with past practice or acquire by merging or consolidating with or by purchasing a substantial equity interest in or a substantial |
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portion of the assets of, or by any other manner, any business, corporation, partnership, association or other business organization or division thereof; | |
(ii) amend or propose to amend its certificate of incorporation or bylaws or, in the case of the Company Subsidiaries, their respective constituent documents; | |
(iii) split, combine or reclassify any outstanding shares of, or interests in, its capital stock; | |
(iv) declare, set aside or pay any dividend or distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; | |
(v) redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire, any shares of its capital stock or any options, warrants or rights to acquire capital stock of the Company; | |
(vi) issue, sell, pledge, dispose of or encumber, or authorize, propose or agree to the issuance, sale, pledge or disposition or encumbrance by the Company or any of the Company Subsidiaries of, any shares of, or any options, warrants or rights of any kind to acquire any shares of, or any securities convertible into or exchangeable for any shares of, its capital stock of any class, or any other securities in respect of, in lieu of, or in substitution for any class of its capital stock outstanding on the date hereof, other than issuances of common stock upon exercise of any Company Stock Options outstanding on the date hereof; | |
(vii) modify the terms of any existing indebtedness for borrowed money or incur any indebtedness for borrowed money or issue any debt securities; | |
(viii) assume, guarantee, endorse or otherwise as an accommodation become responsible for, the obligations of any other person, or make any loans or advances; | |
(ix) authorize, recommend or propose any change in its capitalization; | |
(x) take any action with respect to the grant of or increase in any severance or termination pay involving a payment of more than $2,075,000 in the aggregate (when combined with any payments permitted by Section 4.1(b)(xi)); | |
(xi) adopt or establish any new employee benefit plan or amend in any material respect any employee benefit plan or, other than in the ordinary course of business consistent with past practice, increase the compensation or fringe benefits of any employee (except as required by any existing employee benefit plans or employment agreements or applicable Law) or pay any material benefit not required by any existing employee benefit plan involving a payment of more than $2,075,000 in the aggregate (when combined with any payments permitted by Section 4.1(b)(x)); | |
(xii) other than in the ordinary course of business consistent with past practice, enter into or amend in any material respect (other than as required by existing employee benefit plans or employment agreements or by applicable Law) any employment, consulting, severance or indemnification agreement entered into or made by the Company or any of the Company Subsidiaries with any of their respective directors, officers, agents, consultants or employees, or any collective bargaining agreement or other obligation to any labor organization or employee incurred or entered into by the Company or any of the Company Subsidiaries (other than as required by existing employee benefit plans or employment agreements or by applicable Law); | |
(xiii) settle or compromise any liability for taxes, other than in the ordinary course of business; | |
(xiv) make or commit to make capital expenditures in excess of $50,000, except for emergency action in the face of risk to life, property or the environment; | |
(xv) make any material changes in tax accounting methods except as required by GAAP or applicable Law; |
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(xvi) other than in the ordinary course of business, pay or discharge any claims, liens or liabilities involving more than $25,000 individually or $100,000 in the aggregate, which are not reserved for on the balance sheet included in the Company Financial Statements; | |
(xvii) write off any accounts or notes receivable in excess of $25,000 except in the ordinary course of business; | |
(xviii) knowingly take, or agree to commit to take, any action that would or is reasonably likely to result in any of the conditions to the Merger not being satisfied, or would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time, or that would materially impair the ability of the Company, Parent, Subsidiary or the holders of shares of Company Common Stock to consummate the Merger in accordance with the terms hereof or materially delay such consummation; or | |
(xix) take any action that would, or is reasonably likely to, prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; or | |
(xx) enter into or modify any contract, agreement, commitment or arrangement to do any of the foregoing. |
(a) adopt or propose to adopt any amendments to its constituent documents, other than relating to the Reincorporation Merger, and other than amendments which would not have a material adverse effect on the consummation of the transactions contemplated by this Agreement; | |
(b) take any action that would or is reasonably likely to prevent or impede the Merger and the Reincorporation Merger from each qualifying as a reorganization described in Section 368(a) of the Code; | |
(c) with respect to Parent only, split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, make any other actual, constructive or deemed distribution in respect of its capital stock or otherwise make any payments to stockholders in their capacity as such; | |
(d) adopt a plan of complete or partial liquidation or dissolution of Parent; | |
(e) knowingly take, or agree to commit to take, any action that would or is reasonably likely to result in any of the conditions to the Merger not being satisfied, or would make any representation or warranty of Parent or Subsidiary contained herein inaccurate in a manner that would be reasonably likely to have a Parent Material Adverse Effect at, or as of any time prior to, the Effective Time, or that would materially impair the ability of the Company, Parent, Subsidiary or the holders of shares of Parent Common Stock to consummate the Merger in accordance with the terms hereof or materially delay such consummation; or | |
(f) take or agree in writing or otherwise to take any of the actions precluded bySections 4.2(a) through4.2(e). |
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(a) this Agreement shall have been adopted by the requisite vote of the stockholders of the Company, as required by DGCL and its certificate of incorporation and bylaws; | |
(b) no preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, nor any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, shall be in effect that would make the Merger illegal or otherwise prevent the consummation of the Merger provided, however, that prior to invoking this condition, each party shall have complied fully with its obligations under Section 5.6 and, in addition, shall use commercially reasonable efforts to have any such decree, ruling, injunction or order vacated, except as otherwise contemplated by this Agreement; | |
(c) The Parent Common Stock to be issued in the Merger and to be issued upon exercise of any Company Stock Option shall have been approved for listing on the NASDAQ, subject to official notice of issuance; and | |
(d) The S-4 shall have been declared effective by the SEC under the ‘33 Act. No stop order suspending the effectiveness of the S-4 shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or threatened by the SEC. |
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(a) Each representation or warranty of the Company shall be true and correct except for circumstances which, when considered individually or in the aggregate, have not had or would not reasonably be expected to have a Company Material Adverse Effect, in each case as if such representations and warranties were made at the date of this Agreement and as of the Closing Date (other than to the extent such representations and warranties are made as of a specified date, in which case such representations and warranties shall be true and correct as of such date and provided that any representation or warranty that is qualified by materiality or Company Material Adverse Effect shall be true and correct in all respects). There shall not have been a breach in any respect by the Company of any covenant or agreement set forth in this Agreement which breach shall not have been remedied within 20 days (or by the Outside Date (as defined below), if sooner) of written notice specifying such breach in reasonable detail and demanding that same be remedied (except where such failure to be true and correct or such breach, taken together with all other such failures and breaches, would not have a Company Material Adverse Effect); | |
(b) There shall not be any pending suit, action, investigation or proceeding brought by any governmental authority before any court (domestic or foreign) or any action taken, or any statute, rule, regulation, decree, order or injunction promulgated, enacted, entered into or enforced by any state, federal or foreign government or governmental agency or authority or by any court (domestic or foreign) that would reasonably be expected to have the effect of: (i) making illegal or otherwise restraining or prohibiting the consummation of the Merger or materially delaying the Merger; or (ii) prohibiting or materially limiting the ownership or operation by the Company or any of its subsidiaries or Parent, Subsidiary or any of Parent’s affiliates of all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or Parent and any of its subsidiaries, taken as a whole, or compelling Parent, Subsidiary or any of Parent’s subsidiaries to dispose of or hold separate all or any material portion of the business or assets of the Company and any of its subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a whole, as a result of the transactions contemplated herein; | |
(c) Parent shall have received a legal opinion dated the Effective Time from Duane Morris LLP, counsel to the Company, or William Liedtke, general counsel to the Company, in a form previously reviewed and reasonably satisfactory to Parent. | |
(d) There shall not have occurred and continue to exist any event that individually or in the aggregate would reasonably be expected to have a Company Material Adverse Effect (other than matters set forth in the Company Disclosure Letter). | |
(e) The Company shall have provided an executed certificate of non-foreign status under Section 1445 of the Code. | |
(f) Parent Colorado shall have received the written opinion of Davis Graham & Stubbs LLP, dated as of the Effective Time, which shall be based on such written representations from Parent, the Company and others as such counsel shall reasonably request, to the effect that the Merger and the Reincorporation Merger will each constitute a reorganization within the meaning of Section 368(a) of the Code. |
(a) Each representation or warranty of Parent, Subsidiary and Parent Subsidiaries shall be true and correct except for circumstances which, when considered individually or in the aggregate, have not had or would not reasonably be expected to have a Parent Material Adverse Effect, in each case as if such representations and warranties were made at the date of this Agreement and as of the |
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Closing Date (other than to the extent such representations and warranties are made as of a specified date, in which case such representations and warranties shall be true and correct as of such date and provided that any representation or warranty that is qualified by materiality or Parent Material Adverse Effect shall be true and correct in all respects). There shall not have been a breach in any respect by Parent and Subsidiary of any covenant or agreement set forth herein which breach shall not have been remedied within 10 days (or by the Outside Date, if sooner) of written notice specifying such breach in reasonable detail and demanding that same be remedied (except where such failure to be true and correct or such breach, taken together with all other such failures and breaches, would not have a Parent Material Adverse Effect); or | |
(b) There shall not be any pending suit, action, investigation or proceeding brought by any governmental authority before any court (domestic or foreign) or any action taken, or any statute, rule, regulation, decree, order or injunction promulgated, enacted, entered into or enforced by any state, federal or foreign government or governmental agency or authority or by any court (domestic or foreign) that would reasonably be expected to have the effect of making illegal or otherwise restraining or prohibiting the consummation of the Merger or materially delaying the Merger. | |
(c) The Company shall have received a legal opinion dated the Effective Time from Davis Graham & Stubbs LLP or Krys Boyle, PC, as counsel to Parent and Subsidiary, in a form previously reviewed and reasonably satisfactory to the Company. | |
(d) The Company shall have received the written opinion of Duane Morris LLP, dated as of the Effective Time, which shall be based on such written representations from Parent, the Company and others as such counsel shall reasonably request, to the effect that the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code. | |
(e) There shall not have occurred and continue to exist any event that individually or in the aggregate would reasonably be expected to have a Parent Material Adverse Effect. |
(a) by mutual written consent of Parent, Subsidiary and the Company; | |
(b) by any of Parent, Subsidiary or the Company if the consummation of the Merger shall not have occurred on or before April 1, 2006 (the “Outside Date”);provided,however, that the right to terminate this Agreement under thisSection 7.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before such date;providedfurther that such time periods shall be tolled for any period during which any party shall be subject to a nonfinal order, decree, ruling or action restraining, enjoining or otherwise prohibiting the consummation of the Merger; | |
(c) by any of Parent, Subsidiary or the Company if a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued an order, decree or ruling or taken any other action (which order, decree or ruling each of the parties hereto shall use all reasonable efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; | |
(d) by Parent if: |
(i) the Company Board (or any committee thereof) shall have withdrawn, modified or amended in any manner adverse to Parent its approval of or recommendation in favor of the |
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Merger or shall have recommended or approved a Takeover Proposal or shall have resolved to do any of the foregoing; | |
(ii) the Company shall have breachedSection 5.9 in any material respect; | |
(iii) the Company shall have exempted, for purposes of Section 203 of the DGCL, any acquisition of shares of Company Common Stock by any person or “group” (as defined in Section 13(d)(3) of the ‘34 Act), other than Parent, Subsidiary or their affiliates; | |
(iv) prior to the Effective Time there shall be a breach of any representation, warranty, covenant or agreement of the Company in this Agreement such that the conditions set forth in Section 6.2(a) are not capable of being satisfied on or before the Outside Date;provided that Parent or Subsidiary may not terminate this Agreement pursuant to thisclause (iv) if Parent or Subsidiary is in material breach of this Agreement; or | |
(v) prior to the Effective Time any governmental agency or third party shall have taken any action or commenced any inquiry related to or based upon matters associated with the Company’s representation in Section 2.25, and such matter has not been resolved prior to the Outside Date to the Parent’s satisfaction in its sole, unfettered discretion. |
(e) by the Company if, prior to the Effective Time there shall be a breach of any representation, warranty, covenant or agreement of Parent or Subsidiary in this Agreement such that the conditions set forth inSection 6.3(a) are not capable of being satisfied on or before the Outside Date;provided that the Company may not terminate this Agreement pursuant to thisclause (e) if the Company is in material breach of this Agreement; or | |
(f) by Parent or the Company if the vote of the Company’s stockholders taken at a duly convened stockholders meeting shall not have been sufficient to approve the Merger. |
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Castle Energy Corporation | |
357 South Gulph Road | |
Suite 260 | |
King of Prussia, PA 19406 | |
Attention: William C. Liedtke III | |
Fax: 610-992-9922 |
Duane Morris LLP | |
380 Lexington Avenue | |
New York, NY 10168 | |
Attention: Michael H. Margulis, Esq. | |
Fax: 212-692-1020 |
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Delta Petroleum Corporation | |
475 Seventeenth Street | |
Suite 1400 | |
Denver, CO 80202 | |
Attention: Roger A. Parker | |
Fax: 303-298-8251 |
Davis Graham & Stubbs LLP | |
1550 Seventeenth Street, Suite 500 | |
Denver, CO 80202 | |
Attention: Ronald R. Levine, II, Esq. | |
Fax: (303) 893-1379 | |
Notice so given shall (in the case of notice so given by mail) be deemed to be given when received and (in the case of notice so given by cable, telegram, telecopier, telex or personal delivery) on the date of actual transmission or (as the case may be) personal delivery. |
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DELTA PETROLEUM CORPORATION |
By: | /s/ Roger A. Parker |
Name: Roger A. Parker |
Title: | President/ CEO |
DELTA PETROLEUM CORPORATION |
By: | /s/ Roger A. Parker |
Name: Roger A. Parker |
Title: | President/ CEO |
DPCA LLC | |
By Delta Petroleum Corporation, its Sole Member |
By: | /s/ Roger A. Parker |
Name: Roger A. Parker |
Title: | President/ CEO |
CASTLE ENERGY CORPORATION |
By: | /s/ Richard E. Staedtler |
Name: Richard E. Staedtler |
Title: | Chief Executive Officer |
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1. Section 1.7(e) of the Merger Agreement is hereby amended and restated in its entirety as follows: |
“(e) Fractional Shares. |
(i) No fractional shares of Parent Common Stock shall be issued in the Merger, but in lieu thereof each holder of shares of Company Common Stock otherwise entitled to a fractional share of Parent Common Stock will be entitled to receive, from the Exchange Agent in accordance with the provisions of this Section 1.7(e), a cash payment of the fair value of such fractional shares of Parent Common Stock. The fair value of the fractional shares to be paid shall equal such holder’s proportionate interest, if any, in the proceeds from the sale by Parent or its designees in one or more transactions of shares of Parent Common Stock equal to the excess of (x) the aggregate number of shares of Parent Common Stock to be delivered to the Exchange Agent by Parent pursuant to Section 1.7(a) over (y) the aggregate number of whole shares of Parent Common Stock to be distributed to the holders of Stock Certificates pursuant to Section 1.7(b) (such excess being herein called the “Excess Shares”). As soon as practicable after the Effective Time, Parent or its designees, as agent for the holders of the Stock Certificates representing shares of Company Common Stock, shall sell the Excess Shares at then prevailing prices on the NASDAQ National Market System (“NASDAQ”) in round lots to the extent practicable. | |
(ii) Parent shall deposit the proceeds from the sale of the Excess Shares with the Exchange Agent. The Exchange Agent shall hold such proceeds in trust for the holders of shares of Company Common Stock (the “Common Shares Trust”). The Exchange Agent shall determine the portion of the Common Shares Trust to which each holder of shares of Company Common Stock shall be entitled, if any, by multiplying the amount of the aggregate proceeds comprising the Common Shares Trust by a fraction, the numerator of which is the amount of the fractional share interest to which such holder of shares of Company Common Stock would otherwise be entitled and the denominator of which is the aggregate amount of fractional share interests to which all holders of shares of Company Common Stock would otherwise be entitled. | |
(iii) As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of shares of Company Common Stock in lieu of any fractional shares of Parent Common Stock, the Exchange Agent shall make available such amounts to such holders of |
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shares of Company Common Stock without interest, subject to and in accordance with this Section 1.7.” |
2. Section 7.1(b) of the Merger Agreement shall be amended by deleting “April 1, 2006” and replacing it with “May 1, 2006”. | |
3. Except as modified by this Amendment, the Merger Agreement shall remain in full force and effect. | |
4. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. | |
5. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, and delivered by means of facsimile transmission or otherwise, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same agreement. If any party hereto elects to execute and deliver a counterpart signature page by means of facsimile transmission, it shall deliver an original of such counterpart to each of the other parties hereto within ten days of the date hereof, but in no event will the failure to do so affect in any way the validity of the facsimile signature or its delivery. |
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DELTA PETROLEUM CORPORATION, | |
a Delaware corporation |
By: | /s/ Roger A. Parker |
Name: Roger A. Parker |
Title: | CEO |
DPCA LLC |
By: | Delta Petroleum Corporation, its Sole Member | |
By: | /s/ Roger A. Parker |
Name: Roger A. Parker |
Title: | CEO |
CASTLE ENERGY CORPORATION |
By: | /s/ Richard E. Staedtler |
Name: Richard E. Staedtler |
Title: | Chief Executive Officer |
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1. Each Stockholder hereby represents and warrants to Holdings, DP Colorado and Acquisition that such Stockholder (a) is the registered and beneficial owner of and has the exclusive right to vote the shares of capital stock of Company set forth below his, her or its name on the signature page hereto(“Shares”), and (b) has not entered into and is not a party of any voting agreement or voting trust with respect to the Shares. | |
2. Each Stockholder agrees that, from and after the date hereof and until the date on which this Agreement is terminated pursuant to Section 6 hereof, at any Company stockholders meeting, or any adjournment thereof (a“Meeting”), such Stockholder shall: (a) appear at each such meeting or otherwise cause the Shares to be counted as present thereat for purposes of calculating a quorum; and (b) vote (or cause to be voted), in person or by proxy, or deliver a written consent (or cause a consent to be delivered) covering, all the Shares, and any other voting securities of the Company (whenever acquired), that are beneficially owned by such Stockholder or as to which such Stockholder has, directly or indirectly, the right to vote or direct the voting, in favor of approval of the Merger Agreement and the Merger. | |
3. Each Stockholder hereby revokes any previously executed proxies and hereby constitutes and appoints Roger Parker and Kevin Nanke (the“Proxy Holder”), each of them individually, with full power of substitution, as his, her or its true and lawful proxy andattorney-in-fact to vote at any Meeting all of such Stockholder’s Shares in favor of the authorization and approval of the Merger Agreement, the Merger and the other agreements and transactions contemplated thereby, with such modifications to the Merger Agreement and the other agreements and transactions contemplated thereby as the parties thereto may make. | |
4. Each Stockholder hereby covenants and agrees that, except as set forth onSchedule 1 hereto, until this Agreement is terminated in accordance with its terms, each Stockholder will not, and will not agree to, without the consent of DP Colorado: (a) directly or indirectly, sell, transfer, assign, pledge, hypothecate, cause to be redeemed, or otherwise dispose of any of the Shares; (b) grant any proxy or interest in or with respect to any such Shares; (c) deposit such shares into a voting trust; or (d) enter into another voting agreement or arrangement with respect to such Shares except as contemplated by this Agreement, unless the Stockholder causes the transferee of such Shares to |
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deliver to DP Colorado an amendment to this Agreement whereby such transferee or other holder becomes bound by the terms of this Agreement. | |
5. The Stockholders acknowledge that Holdings, DP Colorado and Acquisition are relying on this Agreement in incurring expense in reviewing Company’s business, in preparing for the Merger and in undertaking other actions necessary for the consummation of the transactions contemplated in the Merger Agreement and that the proxy granted hereby is coupled with an interest and is irrevocable to the full extent permitted by applicable law, including Section 212 of the Delaware General Corporation Law. The Stockholders acknowledge that the performance of this Agreement is intended to benefit Holdings, DP Colorado and Acquisition. | |
6. The voting agreement and irrevocable proxy granted pursuant hereto shall continue in effect until the earlier to occur of (a) the termination of the Merger Agreement, as it may be amended or extended from time to time, or (b) the consummation of the Merger. | |
7. This Agreement may not be modified, amended, altered or supplemented in any respect except upon the execution and delivery of a written agreement executed by Holdings, DP Colorado, Acquisition, and the Stockholders. | |
8. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. | |
9. This Agreement, together with the Merger Agreement and the agreements contemplated thereby, embody the entire agreement and understanding of the parties hereto in respect to the subject matter contained herein. This Agreement supersedes all prior agreements and understandings among the parties with respect to the subject matter contained herein. | |
10. All notices, requests, demands, and other communications required or permitted hereby shall be in writing and shall be deemed to have been duly given if delivered by hand or by certified or registered mail (return receipt requested) with postage prepaid to the addresses of the parties hereto set forth on below their signature on the signature pages hereof or to such other address as any party may have furnished to the others in writing in accordance herewith. | |
11. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to specific performance of the terms hereof, this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties further agrees to waive any requirements for the securing or posting of any bond in connection with obtaining any such equitable relief. | |
12. This Agreement and the relations among the parties hereto arising from this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. |
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/s/ Roger A. Parker | |
Delta Petroleum Corporation | |
/s/ Roger A. Parker | |
Delta Petroleum Corporation | |
/s/ Roger A. Parker | |
DPCA LLC, by its Sole Member | |
/s/ Sally W. Castle | |
Estate of Joseph L. Castle II, by Sally W. Castle, Executor | |
1,434,699 Shares | |
/s/ Sally W. Castle | |
Sally W. Castle | |
55,925 Shares | |
/s/ Richard E. Staedtler | |
Richard E. Staedtler | |
74,600 Shares | |
/s/ Martin R. Hoffman | |
Martin R. Hoffman | |
36,000 Shares | |
/s/ Russell S. Lewis | |
Russell S. Lewis | |
62,000 Shares | |
/s/ John P. Keller | |
John P. Keller | |
111,000 Shares |
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/s/ Sidney F. Wentz | |
Sidney F. Wentz | |
78,000 Shares | |
/s/ Joseph L. Castle III | |
Joseph L. Castle III | |
218,784 Shares | |
/s/ Kathryn Van Blarcom | |
Kathryn Van Blarcom | |
61,385 Shares | |
/s/ Sallie B. Harder | |
Sallie B. Harder | |
189,885 Shares |
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1. Schedule 1 to the Voting Agreement is amended and restated as follows: |
Estate of Joseph L. Castle II and Sallie W. Castle may sell up to an aggregate of 150,000 Shares | |
Kathryn Van Blarcom, Sallie B. Harder and Joseph L. Castle III may each sell up to 33,333 Shares, subject to the right to reapportion such number among themselves as they shall determine” |
2. This First Amendment is effective as of November 28, 2005 (the “Effective Date”). | |
3. Except as modified by this First Amendment, the Voting Agreement shall remain in full force and effect. |
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/s/ Roger A. Parker | |
Delta Petroleum Corporation | |
/s/ Roger A. Parker | |
Delta Petroleum Corporation | |
/s/ Roger A. Parker | |
DPCA LLC, by its Sole Member | |
/s/ Sally W. Castle | |
Estate of Joseph L. Castle II, by Sally W. Castle, Executor | |
1,434,699 Shares | |
/s/ Sally W. Castle | |
Sally W. Castle | |
55,925 Shares | |
/s/ Richard E. Staedtler | |
Richard E. Staedtler | |
74,600 Shares | |
/s/ Martin R. Hoffman | |
Martin R. Hoffman | |
36,000 Shares | |
/s/ Russell S. Lewis | |
Russell S. Lewis | |
62,000 Shares | |
/s/ John P. Keller | |
John P. Keller | |
111,000 Shares |
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/s/ Sidney F. Wentz | |
Sidney F. Wentz | |
78,000 Shares | |
/s/ Joseph L. Castle III | |
Joseph L. Castle III | |
218,784 Shares | |
/s/ Kathryn Van Blarcom | |
Kathryn Van Blarcom | |
61,385 Shares | |
/s/ Sallie B. Harder | |
Sallie B. Harder | |
189,885 Shares |
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(i) reviewed certain publicly-available financial data relating to Castle including its (a) Annual Report, Proxy Statement and Form 10-K for the three years ended September 30, 2004; (b) Form 10-Q for the three quarters ended December 31, 2004, March 31, 2005 and June 30, 2005; | |
(ii) analyzed the financial implication of a liquidation alternative for Castle as compared to the proposed Merger with Delta; | |
(iii) reviewed certain-publicly-available financial data relating to Delta including (a) Annual Report, Proxy Statement and Form 10-K for the three years ended June 30, 2004; (b) Form 10-Q for the quarters ending September 30, 2004 and 2003, December 31, 2004 and 2003 and March 31, 2005 and 2004; (c) Form 10-K for the year ended June 30, 2005; and (d) such other information we deemed relevant; | |
(iv) reviewed certain other public and non-public information, primarily financial in nature, relating to the respective businesses, earnings, cash flow, assets and prospects of Castle and Delta provided to us or publicly available; | |
(v) participated in meetings and telephone conferences with members of senior management of Castle and Delta concerning the financial condition, business, assets, financial forecasts and prospects of the respective companies, as well as other matters we believe relevant to our inquiry; | |
(vi) reviewed stock market information for Castle and Delta and compared Delta’s results of operations and financial condition with similar information for certain companies which we deemed relevant for purposes of this opinion, the securities of which are publicly traded; |
![(SNYDER & COMPANY)](https://capedge.com/proxy/DEFM14A/0001035704-06-000234/d31029dd3102901.gif)
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(vii) reviewed the financial terms, to the extent publicly available, of certain acquisition transactions of oil and gas companies and properties, which we deemed to be relevant for purposes of this opinion; | |
(viii) reviewed reserve studies of (a) Castle for the year ended September 30, 2004 prepared by Ralph E. Davis Associates, Inc. and (b) Delta for the year ended June 30, 2005 prepared by Ralph E. Davis Associates, Inc. and Mannon Associates, Inc.; | |
(ix) Reviewed a draft of the proposed Agreement and certain related documents; | |
(x) Performed such other reviews and analyses as we have deemed appropriate. |
Very truly yours, | |
/s/ Snyder & Company | |
Snyder & Company |
![(SNYDER & COMPANY)](https://capedge.com/proxy/DEFM14A/0001035704-06-000234/d31029dd3102901.gif)
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1. I will not make any sale, transfer, or other disposition of such Purchaser Common Stock unless (a) such sale, transfer or other disposition has been registered under the Securities Act, (b) such sale, transfer or other disposition is made in conformity with the provisions of Rule 145 under the Securities Act, or (c) in the opinion of counsel in form and substance reasonably satisfactory to Purchaser, or under a “no-action” letter obtained by me from the staff of the Commission, such sale, transfer or other disposition will not violate or is otherwise exempt from registration under the Securities Act. | |
2. I understand that Purchaser is under no obligation to register the sale, transfer or other disposition of shares of Purchaser Common Stock by me or on my behalf under the Securities Act or to take any other action necessary in order to make compliance with an exemption from such registration available, except the obligation to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, as more fully described below. | |
3. I understand that stop transfer instructions will be given to Purchaser’s transfer agent with respect to the shares of Purchaser Common Stock issued to me as a result of the Merger and that there will be placed on the certificates for such shares, or any substitutions therefor, a legend stating in substance: |
“THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A LETTER |
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AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND DELTA PETROLEUM CORPORATION, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF DELTA PETROLEUM CORPORATION.” |
4. I understand that, unless transfer by me of the Purchaser Common Stock issued to me as a result of the Merger has been registered under the Securities Act or such transfer is made in conformity with the provisions of Rule 145(d) under the Securities Act, Purchaser reserves the right, in its sole discretion, to place the following legend on the certificates issued to my transferee: |
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933.” |
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Very truly yours, | |
Name: |
DELTA PETROLEUM CORPORATION |
By: |
Name: | |
Title: |
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CASTLE ENERGY CORPORATION
April 28, 2006
your proxy card in the
envelope provided as soon
as possible.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE, PLEASE MARK YOUR VOTE IN BLUE OR BLACK AS SHOWN HEREý
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | o | ||
FOR | AGAINST | ABSTAIN | ||||||
1. | To adopt the Agreement and Plan of Merger, | o | o | o | ||||
dated as of November 8, 2005, as amended, among Delta Petroleum Corporation, a Colorado corporation, Delta Petroleum Corporation, a Delaware corporation, DPCA LLC and Castle Energy Corporation, and the transactions contemplated thereby, including the merger, as more fully described in the accompanying proxy statement/prospectus. | ||||||||
If specific voting instructions are not given with respect to matters to be acted upon and the signed card is returned, the proxies will vote in accordance with the directors’ recommendations provided below and at their discretion on any matters that may properly come before the meeting. | ||||||||
The board of directors recommends a vote “FOR” Proposal 1 listed above. The board of directors knows of no other matters that are to be presented at the meeting. | ||||||||
Please sign below and mail this card in the envelope provided as soon as possible. If you do not sign and return a proxy, shares that you own directly cannot be voted. | ||||||||
The undersigned acknowledges receipt from Castle prior to the execution of this proxy of a Notice of Special Meeting of Stockholders and a proxy statement/prospectus dated March 28, 2006. | ||||||||
If you wish to vote by mail, just complete, sign and date this card below and use the enclosed envelope. IF YOU DO NOT SUBMIT YOUR PROXY OR PROPERLY INSTRUCT YOUR BROKER TO VOTE YOUR SHARES AND YOU DO NOT VOTE IN PERSON AT THE SPECIAL MEETING OF STOCKHOLDERS, THE EFFECT WILL BE THE SAME AS IF YOU VOTED “AGAINST” PROPOSAL 1. | ||||||||
VOTE BY MAIL Your vote is important! |
Signature of Stockholder | Date: | Signature of Stockholder | Date: | |||||||||||||||||||
Note: | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
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CASTLE ENERGY CORPORATION
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