---------------------------------------------
---------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
SUMMIT PETROLEUM CORPORATION
----------------------------------------------------
(Name of Subject Company)
SUMMIT PETROLEUM CORPORATION
----------------------------------------------------
(Name of Person(s) Filing Statement)
COMMON STOCK, $.01 PAR VALUE
--------------------------------------------
(TITLE OF CLASS OF SECURITIES)
866228 307
----------------------------------------
(CUSIP NUMBER OF COMMON STOCK)
DEAS H. WARLEY III, PRESIDENT
SUMMIT PETROLEUM CORPORATION
16701 GREENSPOINT PARK DRIVE, SUITE 200
HOUSTON, TEXAS 77060
713-873-4828
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY:
WAYNE M. WHITAKER
MICHENER, LARIMORE, SWINDLE, WHITAKER,
FLOWERS, REYNOLDS, SAWYER & CHALK, L.L.P.
301 COMMERCE STREET
3500 CITY CENTER TOWER II
FORT WORTH, TEXAS 76102
817-878-0530
------------------------
Index to Exhibits on page 18.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Summit Petroleum Corporation, Inc.
(The "Company"). The address of the principal executive offices of the Company
is 16701 Greenspoint Park Drive, Suite 200, Houston, Texas 77060. The title of
the class of equity securities to which this Statement relate is the Common
Stock, par value $0.01 per share of the Company (the "Common Stock" or "Shares")
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer by MRI Acquisition Corp., a
Texas corporation (the "Purchaser"), and a wholly owned subsidiary of Midland
Resources, Inc. (the "Parent"), disclosed in a Tender Offer Statement on
Schedule 14D-1 dated July 18, 1996 (the "Schedule 14D-1"), to purchase all of
the outstanding Shares and common stock options at $0.70 per share, net to the
seller in cash, upon the terms and subject to the condition set forth in the
Offer to Purchase, dated July 17, 1996 the "Offer to Purchase"), and the related
Letter of Transmittal (which together constitutes the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
July 17, 1996 (the "Merger Agreement"), among Parent, the Purchaser and the
Company. The Merger Agreement provides, among other things, for the making of
the Offer by the Purchaser and further provides that, upon the terms and subject
to the conditions contained in the Merger Agreement, the Purchaser will merger
with and into the Company (the "Merger") as soon as practicable after the
consummation of the Offer. Following consummation of the Merger (the "Effective
Time"), the Company will continue as the surviving corporation. In the Merger
each Share issued and outstanding immediately prior to the Effective Time (other
than Shares owned by the Purchaser or held in the Treasury of the Company, all
of which will be canceled, and other than Shares held by stockholders who
perfect appraisal rights under Colorado law) and outstanding options to acquire
Shares, will be canceled and he holder will receive the right to receive the per
Share consideration in the Offer, without interest (the "Merger Consideration"),
with the amount paid with respect to the options being the excess of the Merger
Consideration over the per Share exercise price of such option, without
interest. A copy of the Merger Agreement is attached hereto as Exhibit 1 and
incorporated herein by reference.
The principal executive office of Purchaser and Parent are 16701
Greenspoint Park Drive, Suite 200, Houston, Texas 77060.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
Statement, are set forth in Item 1 above.
(b)(1) Certain contracts, agreements, arrangements and understandings
between the Company or its affiliates and certain of its executive officers,
directors or affiliates are described
under the heading "Security Ownership of Certain Beneficial Owners and
Management", "Executive Compensation", "Certain Transactions", and "Proposal for
Adoption of the Summit Petroleum Corporation Directors' Stock Option Plan" at
pages 1,2,4,5,6 and 7 of the Company's Proxy Statement dated December 19, 1995
(the "1996 Proxy Statement"). Copies of such pages are filed as Exhibit 2 hereto
and are incorporated herein by reference.
(b)(2).THE MERGER AGREEMENT The following is a summary of the material
terms of the Merger Agreement. This summary is not a complete description of the
terms and conditions thereof and is qualified in its entirety by reference to
the full text thereof, which is incorporated herein by reference and a copy of
which has been filed with the Commission as an exhibit to the Schedule 14D-1.
The Merger Agreement may be examined, and copies thereof may be obtained, as set
forth in Section 8.
THE OFFER. The Merger Agreement provides for the commencement of the Offer, in
connection with which Parent and the Purchaser have expressly reserved the right
to waive certain conditions of the Offer, but without the prior written consent
of the Company, the Purchaser has agreed not to (i) waive the Minimum Condition,
(ii) reduce the number of Shares subject to the Offer, (iii) reduce the price
per Share to be paid pursuant to the Offer, (iv) extend the Offer if all of the
Offer conditions are satisfied or waived, (v) change the form of consideration
payable in the Offer, or (vi) amend or modify any term or condition of the Offer
(including the conditions described in Section 14) in any manner adverse to the
holders of Shares. Notwithstanding the foregoing, the Purchaser may, in its sole
discretion without the consent of the Company, extend the Offer at any time and
from time to time (A) if at the then scheduled expiration date of the Offer any
of the conditions to the Purchaser's obligation to accept for payment and pay
for Shares shall not have been satisfied or waived; (B) for any period required
by any rule, regulation, interpretation or position of the Commission or its
staff applicable to the Offer; (C) for any period required by applicable law in
connection with an increase in the consideration to be paid pursuant to the
Offer; and (D) if all Offer conditions are satisfied or waived but the number of
Shares tendered is 85% or more, but less than 90%, of the then outstanding
number of Shares, for an aggregate period of not more than 5 business days (for
all such extensions under this clause (D)) beyond the latest expiration date
that would be permitted under clause (A), (B) or (C) of this sentence. So long
as the Merger Agreement is in effect and the offer conditions have not been
satisfied or waived, at the request of the Company, the Purchaser will, and
Parent will cause the Purchaser to, extend the Offer for an aggregate period of
not more than 20 business days (for all such extensions) beyond the originally
scheduled expiration date of the Offer.
CONSIDERATION TO BE PAID IN THE MERGER. The Merger Agreement provides that upon
the terms (but subject to the conditions) set forth in the Merger Agreement, the
Purchaser will be merged with and into the Company and the separate existence of
the Purchaser will cease, and the Company shall be the Surviving Corporation and
shall be a wholly owned subsidiary of the Parent. In the Merger, each share of
common stock, $.01 par value per share, of the Purchaser outstanding immediately
prior to the time of filing of a certificate of merger relating to the Merger
with the Secretary of State of the State of Colorado, or such later time as is
agreed by the parties (the "Effective Time"),shall be converted into and
exchanged for one validly issued, fully
paid and non-assessable share of Common Stock, $.01 par value per share, of the
Surviving Corporation. In the Merger, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent or
the Purchaser or held by the Company, all of which shall be canceled, and Shares
held by stockholders who perfect appraisal rights under Colorado law) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive the Merger Consideration, without
interest. The Merger Agreement provides that (subject to the provisions of the
Merger Agreement) the closing of the Merger shall occur as soon as practicable
following the satisfaction or, to the extent permitted under the Merger
Agreement, waiver of, the conditions to the Merger set forth in Article 9 of the
Merger Agreement. The Merger Agreement permits Parent and Purchaser, in their
sole discretion, to defer the closing of the Merger for a period of 90 days
following consummation of the Offer if, in Parent's and Purchaser's sole
judgment, the deferral is necessary to enable the Company to meet a condition to
the Merger.
TREATMENT OF STOCK OPTIONS.
The Merger Agreement provides that all options (individually, an "Option" and
collectively, the "Options") outstanding immediately prior to the Effective Time
under any of the Stock Option Plans, whether or not then exercisable, shall be
canceled and each holder of an Option will be entitled to receive from the
Surviving Corporation, for each Share subject to an Option, an amount in cash
equal to the excess, if any, of the Merger Consideration over the per share
exercise price of such Option, without interest. The amounts payable pursuant to
the Merger Agreement shall be paid with respect to Shares subject to Options at
the Effective Time. All amounts payable in respect of Options shall be subject
to all applicable withholding of taxes.
BOARD REPRESENTATION.
The Merger Agreement provides that, promptly upon the purchase of Shares
pursuant to the Offer, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, as will give Parent
representation on the Board of Directors equal to the product of (i) the number
of directors on the Board of Directors and (ii) the percentage that the number
of Shares purchased by the Purchaser or Parent or any affiliate bears to the
number of Shares outstanding, and the Company will, upon request by Parent,
promptly increase the size of the Board of Directors and/or exercise its best
efforts to secure the resignations of such number of directors as is necessary
to enable Parent's designees to be elected to the Board of Directors and will
cause Parent's designees to be so elected. The Company's obligations to appoint
designees to the Board of Directors are subject to Section 14(f) of the Exchange
Act. The parties have agreed to use their respective best efforts to ensure that
at least two of the members of the Board of Directors shall at all times prior
to the Effective Time be Continuing Directors (as defined in the Merger
Agreement).
STOCKHOLDER MEETING.
The Merger Agreement provides that, if required by applicable law, the Company,
acting through
the Board of Directors, shall (i) call a meeting of its stockholders (the
"Stockholder Meeting") for the purpose of voting on the Merger, (ii) hold the
Stockholder Meeting as soon as practicable after the purchase of Shares pursuant
to the Offer and (iii) subject to its fiduciary duties under applicable law as
advised by outside counsel, recommend to its stockholders the approval of the
Merger. At the Stockholder Meeting, Parent shall cause all the Shares then owned
by Parent, the Purchaser and any of their subsidiaries or affiliates to be voted
in favor of the Merger. The Merger Agreement provides that, notwithstanding the
foregoing, if the Purchaser, or any other direct or indirect subsidiary of
Parent, shall acquire at least 90% of the outstanding Shares, the parties
thereto shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration of the Offer
without a meeting of stockholders of the Company, in accordance with Colorado
Law. However, the Merger Agreement permits Parent and Purchaser, in their sole
discretion, to defer the closing of the Merger for a period of 90 days following
consummation of the Offer if, in Parent's and Purchaser's sole judgment, the
deferral is necessary to enable the Company to comply with a covenant.
REPRESENTATIONS AND WARRANTIES.
The Merger Agreement contains various representations and warranties of the
parties thereto. These include representations and warranties by the Company
with respect to (i) the due incorporation, existence and, subject to certain
limitations, the qualification, good standing, corporate power and authority of
the Company and certain significant subsidiaries; (ii) the due authorization,
execution, and delivery of the Merger Agreement and certain ancillary documents
executed in connection therewith and the consummation of transactions
contemplated thereby, and the validity and enforceability thereof; (iii) subject
to certain exceptions and limitations, the compliance by the Company with all
applicable foreign, federal, state or local laws, statutes, ordinances, rules,
regulations, orders, judgments, rulings and decrees ("Laws") of any foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority, or any court, arbitration, board or tribunal
("Governmental Entity"); (iv) the capitalization of the Company, including the
number of shares of capital stock of the Company outstanding, the number of
shares reserved for issuance on the exercise of options and similar rights to
purchase shares; (v) the identity, ownership (subject to certain exceptions and
limitations) by the Company of interests or investments in entities other than
subsidiaries of the Company; (vi) subject to certain exceptions and limitations,
the absence of consents and approvals necessary for consummation by the Company
of the Merger and the absence of any violations, breaches or defaults which
would result from compliance by the Company with any provision of the Merger
Agreement; (vii) compliance with the Securities Act and the Exchange Act, in
connection with each registration statement, report, proxy statement or
information statement (as defined under the Exchange Act) prepared by it since
January 1, 1993, each in the form (including exhibits and any amendments
thereto) filed with the SEC (collectively, the "Company Reports") and the
financial statements included therein filed by the Company with the Commission,
the Schedule 14D-9 information statement, if any, filed by the Company in
connection with the Offer pursuant to Rule 14 f-1 under the Exchange Act; (viii)
subject to certain exceptions and limitations, the absence of pending or (to the
knowledge of the Company through receipt of written notice) threatened claims,
actions, suits, proceedings, arbitrations,
investigations or audits (collectively, "Litigation") or violation of any law by
the Company which would have a material adverse effect on the business, results
of operations, assets, or financial condition of the Company ("Material Adverse
Effect"); (ix) the absence of certain changes or effects; (x) certain tax
matters; (xi) certain employee benefit and ERISA matters; (xii) certain labor
and employment matters; (xiii) certain fees in connection with the transactions
contemplated by the Merger Agreement; (xiv) subject to certain exceptions and
limitations, the possession by the Company; (xv) subject to certain exceptions
and limitations, title to assets; (xvi) material contracts of the Company; and
(xvii) the required vote of stockholders of the Company with respect to the
transactions contemplated by the Merger Agreement. Parent and the Purchaser and
have also made certain representations and warranties, including with respect to
(i) the due incorporation, existence, good standing and, subject to certain
limitations, corporate power and authority of Parent and the Purchaser; (ii) the
due authorization, execution and delivery of the Merger Agreement and certain
ancillary documents executed in connection therewith and the consummation of the
transactions contemplated thereby, and the validity and enforceability thereof;
(iii) the accuracy and the adequacy of the information contained in the Schedule
14D-1 and the documents therein pursuant to which the Offer is being made, any
Schedule required to be filed with the Commission, and any amendment or
supplement to any of the foregoing and the accuracy of the information provided
by Parent and the Purchaser for inclusion in the Schedule 14D-9; (iv) subject to
certain exceptions and limitations, the absence of consents and approvals
necessary for consummation by Parent and the Purchaser, and the absence of any
violations, breaches or defaults which would result from compliance by Parent
and the Purchaser with any provision of the Merger Agreement; and (v) the
sufficiency of funds available to Parent and the Purchaser for the consummation
of the Offer and the Merger.
CONDUCT OF BUSINESS PENDING MERGER.
The Company has agreed that from the date of the Merger Agreement to the
Effective Time, with certain exceptions, unless Parent has consented in writing
thereto, the Company will (i) conduct its operations according to its usual,
regular and ordinary course of business consistent with past practice; (ii) use
its reasonable best efforts to preserve intact its business organization and
goodwill, maintain in effect all existing qualifications, licenses, permits,
approvals and other authorizations, keep available the services of its officers
and employees and maintain satisfactory relationships with those persons having
business relationships with them; (iii) promptly upon the discovery thereof
notify Parent of the existence of any breach of any representation or warranty
contained in the Merger Agreement (or, in the case of any representation and
warranty that makes no reference to Material Adverse Effect, any breach of such
representation and warranty in any material respect) or the occurrence of any
event that would cause any representation or warranty contained in the Merger
Agreement no longer to be true and correct (or in the case of any representation
and warranty that makes no reference to Material Adverse Effect, to no longer be
true and correct in any material respect); and (iv) promptly deliver to the
Purchaser true and correct copies of any report, statement or schedule filed
with the Commission subsequent to the date of the Merger Agreement, any internal
monthly reports prepared for or delivered to the Board of Directors after the
date of the Merger Agreement and monthly financial statements for the Company
and its subsidiaries for and as of each month end subsequent to the date of the
Merger Agreement. The Company has agreed that
from the date of the Merger Agreement to the Effective Time, with certain
exceptions, unless the Parent has consented in writing thereto, the Company
shall not, and shall not permit any of its Subsidiaries to (i) amend its
Certificate of Incorporation or Bylaws or comparable governing instruments; (ii)
issue, sell or pledge any shares of its capital stock or other ownership
interest in the Company (other than issuances of shares of Common Stock in
respect of any exercise of Options outstanding on the date of the Merger
Agreement and disclosed to Parent) or any of the subsidiaries, or any securities
convertible into or exchangeable for any such shares or ownership interest, or
any rights, warrants or options to acquire or with respect to any such shares of
capital stock, ownership interest, or convertible or exchangeable securities; or
accelerate any right to convert or exchange or acquire any securities of the
Company or any of its subsidiaries for any such shares or ownership interest;
(iii) effect any stock split or otherwise change its capitalization as it exists
on the date of the Merger Agreement; (iv) grant, confer or award any option,
warrant, convertible security or other right to acquire any shares of its
capital stock or take any action to cause to be exercisable any otherwise
unexercisable option under any existing stock option plan; (v) declare, set
aside or pay any dividend or make any other distribution or payment with respect
to any shares of its capital stock or other ownership interests (other than such
payments by a wholly owned subsidiary); (vi) sell, lease or otherwise dispose
of any of its assets, except in the ordinary course of business, none of which
dispositions individually or in the aggregate will be material; (vii) settle or
compromise any pending or threatened litigation, other than settlements which
involve solely the payment of money (without admission of liability) not to
exceed $5,000 in any one case; (viii) acquire by merger, purchase or any other
manner, any business or entity or otherwise acquire any assets that are
material, individually or in the aggregate, to the Company except for purchases
of inventory, supplies or capital equipment in the ordinary course of business
consistent with past practice; (ix) incur or assume any long-term or short-term
debt, except for working capital purposes in the ordinary course of business
under the Company's existing credit agreement; (x) assume, guarantee or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person; (xi) with certain
exceptions, make or forgive any loans, advances or capital continuations to, or
investments in, any other person; (xii) make any tax election or settle any tax
liability other than settlements involving solely the payment of money which
would be permitted by clause (vii); (xiii) except in certain circumstances,
grant any stock related or performance awards; (xiv) enter into any new
employment, severance, consulting or salary continuation agreements with any
officers, directors or employees or grant any increases in compensation or
benefits to employees other than increases permitted under certain
circumstances; (xv) adopt, amend in any material respect or terminate any
employee benefit plan or arrangement; (xvi) amend, change or waive (or exempt
any person or entity from the effect of) the Rights Agreement, except in
connection with the exercise of its fiduciary duties by the Board of Directors
or as set forth in the Merger Agreement; (xvii) permit any insurance policy
naming the Company or a loss payee to be canceled or terminated other than in
the ordinary course of business, or (xiii) agree in writing or otherwise to take
any of the foregoing actions.
CONDITIONS TO THE MERGER.
The respective obligations of each party to effect the Merger are subject to
the satisfaction or waiver, where permissible, prior to the Effective Time,
of the following conditions: (i) if
approval of the Merger Agreement and the Merger by the holders of Shares is
required by applicable law, the Merger Agreement and the Merger shall have been
approved by the requisite vote of such holders; and (ii) there shall not have
been issued any injunction or issued or enacted any Law which prohibits or has
the effect of prohibiting the consummation of the Merger or making such
consummation illegal. The obligations of Parent and the Purchaser to effect the
Merger shall be further subject to the satisfaction or waiver on or prior to the
Effective Time of the condition that the Purchaser shall have accepted for
payment and paid for Shares tendered pursuant to the Offer, provided the
condition will be deemed satisfied if Purchaser's failure to accept for payment
and pay for such shares is a breach of the Merger Agreement or violates the
terms and conditions of the Offer.
ACCESS TO INFORMATION. Under the Merger Agreement, from the date of the Merger
Agreement to the Merger Closing Date, the Company shall (i) give the Parent and
its authorized representatives and lender banks full access to all books,
records, personnel, offices and other facilities and properties of the Company
and its accountants and accountants' work papers, (ii) permit the Parent to make
such copies and inspections thereof as the Parent may reasonably request and
(iii) furnish the Parent with such financial and operating data and other
information with respect to the business and properties of the Company as the
Parent may from time to time reasonably request; provided that no investigation
or information furnished pursuant to the Merger Agreement shall affect any
representations or warranties made by the Company therein or the conditions to
the obligations of the Parent to consummate the transactions contemplated
thereby.
NO SOLICITATION. The Company has agreed in the Merger Agreement that neither it
nor any of its subsidiaries, nor any of their respective officers, directors,
employees, representatives, agents or affiliates, shall, directly or indirectly,
encourage, solicit, initiate or, except as is required in the exercise of the
fiduciary duties of the Company's directors to the Company or its stockholders
after consultation with outside counsel to the Company, participate in any way
in any discussions or negotiations with, or provide any information to, or
afford any access to the properties, books or records of the Company or any of
its subsidiaries to, or otherwise assist, facilitate or encourage, any
corporation, partnership, person or other entity or group (other than the Parent
or any affiliate or associate of Parent) concerning any merger, consolidation,
business combination, liquidation, reorganization, sale of substantial assets,
sale of shares of capital stock or similar transactions involving the Company
(an"Alternative Proposal"), and shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted theretofore with respect to any of the foregoing; provided, however,
that nothing contained in the Merger Agreement shall prohibit the Company or the
Board of Directors from complying with Rule 14e-2(a) under the Exchange Act or
taking such action promulgated thereunder or from making such disclosure to the
Company's stockholders or taking such action which, in the judgment of the Board
of Directors with the advice of outside counsel, may be required under
applicable law. The Company has agreed promptly to notify Parent if any such
information is requested from it or any such negotiations or discussions are
sought to be initiated with the Company.
FEES AND EXPENSES. Except as provided in the Merger Agreement, whether or not
the Offer
or the Merger is consummated, all costs and expenses incurred in connection with
the transactions contemplated by the Merger Agreement shall be paid by the party
incurring such expenses. The Merger Agreement provides that, under certain
circumstances, the Company will pay the costs and expenses related to the Offer
and the Merger and for their foregoing of the opportunity to invest in the
Company. The Company is obligated to pay the costs and expenses under the
following circumstances: (i) the Company terminates the Merger Agreement because
of an Alternative Proposal which the Board of Directors in good faith determines
is more favorable from a financial point of view to the stockholders of the
Company as compared to the Offer and the Merger and the Board of Directors
determines, after consultation with its counsel that failure to terminate the
Merger Agreement would be inconsistent with the compliance by the Board of
Directors with its fiduciary duties, subject to certain provisos that would
render such termination right unavailable; (ii) Parent terminates the Merger
Agreement (x) because the Board of Directors failed to recommend, or withdraws,
modifies or amends in any material respect, its approval or recommendation of
the Offer or the Merger, or recommended acceptance of any Alternative Proposal,
or resolved to do any of the foregoing (unless the foregoing occurred solely as
a result of the Parent's willful breach in any material respect of its
representations, warranties or obligations under the Merger Agreement) or (y)
after December 31,1996 if Purchaser has not purchased any Shares by that date
because of the Company's willful breach or willful failure to comply in any
material respect with any of its material obligations under the Merger
Agreement; (iii) Parent or the Company terminate the Merger Agreement after
December 31, 1996 because of the failure of any condition to the Offer (which
failure was not caused by Parent's failure to fulfill its obligations under the
Merger Agreement) at a time when the Minimum Condition shall not have been
satisfied and (x) during the term of the Merger Agreement or within 12 months
after the termination of the Merger Agreement, the Board of Directors recommends
an Alternative Proposal or the Company enters into an agreement providing for an
Alternative Proposal or a majority of the outstanding Shares is acquired by a
third party (including a "group" as defined in the Exchange Act) (a "Stock
Acquisition") which Alternative Proposal (or another Alternative Proposal by the
same or a related person or entity) was made prior to the termination of the
Merger Agreement or (y) during the term of the Merger Agreement or within two
months after the termination of the Merger Agreement, the Board of Directors
recommends an Alternative Proposal or the Company enters into an agreement
providing for an Alternative Proposal or a Stock Acquisition occurs.
OTHER AGREEMENTS.
The Merger Agreement provides that, subject to the terms and conditions provided
in the Merger Agreement, the Company, Parent, and the Purchaser shall: (a) use
their best efforts to cooperate with one another in (i) determining which
filings are required to be made prior to the Effective Time with, and which
consents, approvals, permits, authorizations or waivers are required to be
obtained prior to the Effective Time from, Governmental Entities or other third
parties in connection with the execution and delivery of the Merger Agreement
and certain other ancillary documents and the consummation of the transactions
contemplated thereby and (ii) timely making all such filings and timely seeking
all such consents, approvals, permits, authorizations and waivers; and (b) use
their best efforts to take, or cause to be taken, all other action and do, or
cause to be done, all other things necessary, proper or appropriate to
consummate and make
effective the transactions contemplated by the Merger Agreement. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purpose of the Merger Agreement, the proper officers and directors of
Parent and the Surviving Corporation shall take all such necessary action.
CONDITIONS TO THE MERGER.
The respective obligations of each party to effect the Merger are subject
to the satisfaction or waiver, where permissible, prior to the Effective Time,
of the following conditions: (a) if approval of the Merger Agreement and the
Merger by the holders of Shares is required by applicable law, the Merger
Agreement and the Merger shall have been approved by the requisite vote of such
holders; and (b) there shall not have been issued any injunction or issued or
enacted any Law which prohibits or has the effect of prohibiting the
consummation of the Merger or makes such consummation illegal. The obligations
of Parent and the Purchaser to effect the Merger shall be further subject to the
satisfaction or waiver on or prior to the Effective Time of the condition that
the Purchaser shall have accepted for payment and paid for Shares tendered
pursuant to the Offer.
TERMINATION.
The Merger Agreement may be terminated and the Merger contemplated thereby may
be abandoned at any time notwithstanding approval thereof by the stockholders of
the Company, but prior to the Effective Time:
(a) by mutual written consent of the Board of Directors of
Parent and the Company (which consent will require the
approval of a majority of the Continuing Directors if such
termination occurs following the election or appointment of
Parent's designees, if applicable);
(b) by the Parent or the Company:
(i) if the Effective Time shall not have occurred on or before
December 31, 1996 (provided that the right to terminate the
Merger Agreement pursuant to this clause shall not be
available to any party whose failure to fulfill any obligation
under the Merger Agreement has been the cause of or resulted
in the failure of the Effective Time to occur on or before
such date);
(ii) if there shall be any statute, law, rule or regulation that
makes consummation of the Offer or the Merger illegal or
prohibited or if any court of competent jurisdiction in the
United States or other Governmental Entity shall have issued
an order,
judgment, decree or ruling, or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and
such order, judgment, decree, ruling or other action shall
have become final and non-appealable;
(iii) after December 31, 1996 if, on account of the failure of any
condition specified in Section 14, the Purchaser has not
purchased any Shares thereunder by that date (provided that
the right to terminate the Merger Agreement pursuant to this
clause (iii) shall not be available to any party whose
failure to fulfill any obligation under the Merger Agreement
has been the cause of or resulted in the failure of any such
condition); or
(iv) upon a vote at a duly held meeting or upon any adjournment
thereof, the stockholders of the Company shall have failed to
give any approval required by applicable law;
(c) by the Company if there is an Alternative Proposal which the Board of
Directors in good faith determines is more favorable from a financial
point of view to the stockholders of the Company as compared
to the Offer and the Merger, and the Board of Directors determines,
after consultation with its counsel that failure to terminate the
Merger Agreement would be inconsistent with the compliance by the
Board of Directors with its fiduciary duties to stockholders imposed
by law; provided, however, that the right to terminate the Merger
Agreement in such event shall not be available
(i) if the Company has breached in any material respect its
obligations not to solicit Alternative Proposals, or
(ii) if the Alternative Proposal (x) is subject to a financing
condition or (y) involves consideration that is not
entirely cash or does not permit stockholders to receive
the payment of the offered consideration in respect of all
Shares at the same time, unless the Board of Directors has
been furnished with a written opinion of an investment
banking firm to the effect that (in the case of clause (x))
the Alternative Proposal is readily financeable and (in the
case of clause (y)) that such offer provides a higher value
per share than the consideration per share pursuant to the
Offer or the Merger, or
(iii) if, prior to or concurrently with any purported termination
pursuant to this clause (c), the Company shall not have
paid the Commitment Fee and the Expenses, if applicable, or
(iv) if the Company has not provided Parent and the Purchaser
with prior written notice of its intent to so terminate the
Merger Agreement and delivered to Parent and the Purchaser a
copy of the written agreement embodying the Alternative
Proposal in its then most definitive form concurrently with
the earlier of (x) the public announcement of, or (y) filing
with the Commission of any documents relating to, the
Alternative
Proposal; and
(d) by Parent if the Board of Directors shall have failed to recommend,
or shall have withdrawn, modified or amended in any material respect,
its approval or recommendation of the Offer or the Merger or shall
have recommended acceptance of any Alternative Proposal, or shall
have resolved to do any of the foregoing.
INDEMNIFICATION.
The Purchaser has agreed to cause the Surviving Corporation to keep in
effect in its By-Laws a provision for a period of not less than three years from
the Effective Time (or, in the case of matters occurring prior to the Effective
Time which have not been resolved prior to the third anniversary of the
Effective Time, until such matters are finally resolved) which provides for
indemnification of the past and present officers and directors of the Company to
the fullest extent permitted by the Colorado Law. The Merger Agreement
provides that from and after the Effective Time, Parent shall indemnify and hold
harmless, to the fullest extent permitted under applicable law, each person who
is, or has been at any time prior to the date of the Merger Agreement or who
becomes prior to the Effective Time, an officer or director of the Company or
any subsidiary against all losses, claims, damages, liabilities, costs or
expenses (including attorneys' fees), judgments, fines, penalties and amounts
paid in settlement (collectively, "Losses") in connection with any Litigation
arising out of or pertaining to acts or omissions, or alleged acts or omissions,
by them in their capacities as such, which acts or omissions existed or occurred
prior to the Effective Time, whether commenced, asserted or claimed before or
after the Effective Time, including, without limitation, liabilities arising
under the Securities Act, the Exchange Act and state corporation laws in
connection with the transactions contemplated hereby. The Company and, after the
Effective Time, the Parent shall periodically advance expenses as incurred with
respect to the foregoing to the fullest extent permitted under applicable law
provided that the person to whom the expenses are advanced provides an
undertaking to repay such advance if it is ultimately determined that such
person is not entitled to indemnification. If the Merger is consummated, the
Surviving Corporation shall, to the fullest extent permitted under applicable
law, indemnify and hold harmless Parent and any person or entity who was a
stockholder, officer, director or affiliate of Parent prior to the Effective
Time against any losses in connection with any Litigation arising out of or
pertaining to any of the transactions contemplated by the Merger Agreement or
certain ancillary documents relating thereto. Parent is required to periodically
advance expenses as incurred with respect to the foregoing to the fullest extent
permitted under applicable law provided that the person to whom the expenses are
advanced provides an undertaking to repay such advance if it is ultimately
determined that such person is not entitled to indemnification. The Surviving
Corporation will control the defense, through its counsel, of any action brought
against any person seeking indemnification pursuant to the preceding two
paragraphs (an "Indemnified Party"). Counsel for the Indemnified Party shall be
selected by the Indemnified Party and will be permitted to participate in the
defense of such action at the Surviving Corporation's expense.
CERTAIN EMPLOYEE MATTERS.
The Merger Agreement provides that, from and after the Effective Time, the
Surviving Corporation will honor and assume, and Parent will cause the Surviving
Corporation to honor and assume, in accordance with their terms all existing
employment and severance agreements between the Company or any of its
subsidiaries and any officer, director, or employee of the Company or any of its
subsidiaries and all benefits or other amounts earned or accrued to the extent
vested or which becomes vested in the ordinary course, through the Effective
Time under all employee benefit plans of the Company.
AMENDMENT.
To the extent permitted by applicable law, the Merger Agreement may be
amended by action taken by or on behalf of the Board of Directors of the Company
(by action of a majority of the Continuing Directors if such amendment occurs
following the election or appointment of Parent's designees, if applicable) and
the Purchaser at any time before or after adoption of the Merger Agreement by
the stockholders of the Company but, after any such stockholder approval, no
amendment shall be made which decreases the Merger Consideration or which
adversely affects the rights of the Company's stockholders hereunder without the
approval of such stockholders. The Merger Agreement may not be amended except by
an instrument in writing signed on behalf of all of the parties.
TIMING.
The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by the Purchaser pursuant to the Offer. Although Parent has agreed to
cause the Merger to be consummated on the terms contained in the Merger
Agreement, there can be no assurance as to the timing of the Merger.
OTHER MATTERS
APPRAISAL RIGHTS. No appraisal rights are available to holders of Shares in
connection with the Offer. However, if the Merger is consummated, holders of
Shares will have certain rights under Colorado Law to dissent and demand
appraisal of, and payment in cash for the fair value of, their Shares. Such
rights, if the statutory procedures are complied with, could lead to a judicial
determination of the fair value (excluding any element of value arising from
accomplishment or expectation of the Merger) required to be paid in cash to
such dissenting holders for their Shares. Any such judicial determination of
the fair value of Shares could be based upon considerations other than the Offer
Price and the market value of the Shares, including asset values and the
investment value of the Shares. The value so determined could be more or less
than the Offer Price or the Merger Consideration. If any holder of Shares
who demands appraisal under Colorado Law fails to perfect, or effectively
withdraws or losses his right to appraisal, as provided in the Colorado Law,
the shares of such holder will be converted into the Merger Consideration in
accordance with the Merger Agreement. A stockholder may withdraw his demand
for appraisal by delivery to Parent of a written withdrawal of his demand for
appraisal and acceptance of the Merger. Failure to follow the steps required
by Colorado
Law for perfecting appraisal rights may result in the loss of such rights.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) The Board of Directors of the Company have issued a press release
recommending the Company's shareholders accept the Offer and have authorized the
Purchaser to include that fact in its solicitation.
(b) Each of Messrs. Warley, Whitaker and Dillard are members of both the Board
of Directors of the Company and the Parent. At a Board of Directors meeting of
Parent held on May 31,1996 an agenda item was the discussion of an acquisition
of an unrelated publicly held oil and gas company. During this meeting, which
was attended by the full board of the Parent, Mr. Warley brought up for
discussion whether or not Parent should consider the acquisition of the Company
in light of the Parent's prior public announcement of its intention to consider
acquisitions of oil and gas companies. Mr. Warley indicated that acquiring the
Company would be beneficial to the Parent for several reasons. First, it would
remove a concern that had been expressed to him by members of the investment
community regarding the appearance of a conflict of interest and dealings among
related parties between the Parent and the Company. Second, given the nature of
the Parent's involvement in the Company's overall operations resulting from the
management contract, as well as the overlapping members on the boards of
directors, the Parent was familiar with the Company, its properties and
operations. After a general discussion among the board, the Parent's board
agreed that an acquisition of the Company might be beneficial. The Parent's
board acknowledged the fact that the members of the Company's entire board were
also members of the Parent's board and any potential offer to the Company would
require a fairness opinion that would independently arrive at a fair price.
Further at this meeting the Parent's board discussed whether or not to consider
an offer that included Parent's stock or cash or some combination of stock and
cash. After a discussion of the relative cost and length of time to pursue an
offer using Parent stock, the board concluded a cash offer was more appropriate.
The Parent's board then agreed to pursue the matter by authorizing the Parent to
engage an investment banking firm to arrive at a fair price to offer for the
Company. Messrs. Warley, Whitaker and Dillard
informed the Parent's board at that meeting that, given the fact of their being
the entire board of directors of the Company they would entertain a proposal for
the Parent to acquire the Company, provided Parent would share the fairness
opinion with the Company and make the investment banking firm available to meet
with them separately to discuss their opinion. The Parent's board agreed to
this request.
On June 3, 1996 Parent engaged Southwest Merchant Group to analyze the
Company and provide an opinion as to a fair price to offer. On July 3,1996, a
representative of Southwest Merchant Group met with the entire board of Parent
and presented their opinion that a cash price of $0.70 per share for all of the
Company's common stock, including outstanding options, was fair from a financial
point of view. The Parent's board inquired regarding the nature of certain of
the assumptions regarding oil and gas prices, oil and gas reserve estimates, as
well as the availability of comparable transactions involving entire companies,
and transactions that involved only the purchase of oil and gas properties both
with and without related well operations. The members of Parent's board, other
than Messrs. Warley, Whitaker and Dillard,
then discussed whether or not Parent should request certain lock up provisions
with the Company such as an option to acquire Company shares, a termination fee
if the Merger did not occur due to a competing offer, and reimbursement of
transaction costs. Messrs. Warley, Whitaker and Dillard, in their capacity as
Company board members indicated that the Company would only consider reimbursing
Parent for transaction costs in the event a competing offer resulted in the
proposed transaction not being consummated. Following this discussion the
Parent's board unanimously agreed to proceed to make the offer to the Company
acquire for cash all of the Company's outstanding common stock, including stock
options, at $0.70 per share pursuant to a merger agreement..
Also on July 3, 1996, and following the meeting of the Parent's board, the
board of the Company met. At this meeting Mr. Warley informed the board that he
has made prior attempts to locate potential purchasers for the Company, but that
he was unsuccessful in locating anyone who would agree to acquire the entire
Company. The Company' board then met with the representative of Southwest
Merchant Group and further inquired as to certain of their assumptions,
including the value of the Company's net operating loss carry forward for income
tax purposes. The Board further discussed that Parent's willingness to
continue to include the Company in future acquisitions might be restricted due
to the appearance of a conflict and Parent may not be willing in the future to
permit the Company to own amounts to Parent for well operations. The Board
concluded that the value of the Company's operations was more likely to be worth
more to Parent than anyone else and the price per share reached by Southwest
Merchant Group appeared to take this fact into account. After these
discussions, the Company's board agreed to recommend acceptance of the Parent's
offer and to proceed with the necessary documentation.
On July 3, 1996 the boards of Parent, Purchaser and the Company approved
the Merger Agreements and the immediate commencing of the Offer. Following the
meetings on July 3, 1996, the Parent began preparing the documentation to make
the offer, including the Merger Agreement.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED .
The Company has not retained, employed or agreed to compensate any person
on its behalf to make solicitations or recommendations to its shareholders with
respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transactions in the Shares have been effected during the past 60
days by the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director and affiliate of the Company currently intends to tender all Shares
over which he or she has dispositive power to the Purchaser.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in
(i) an extraordinary transaction such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company.
(b) There are presently no transactions, board resolutions, agreements in
principle or signed contracts in response to the Offer, other than as described
in or incorporated by referenced into Item 3(b), which relate to or would result
in one or more of the matters referred to in Item 7(a) (i), (ii), (iii) or (iv).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
No appraisal rights are available to holders of Shares in connection with
the Offer. However, if the Merger is consummated, holders of Shares will have
certain rights under Colorado Law to dissent and demand appraisal of, and
payment in cash for the fair value of, their Shares. Such rights, if the
statutory procedure are complied with, could lead to a judicial determination of
the fair value (excluding any element of value arising from accomplishment or
expectation of the Merger) required to be paid in cash to such dissenting
holders for their Shares. Any such judicial determination of the fair value of
Shares could be based upon considerations other than in addition to the Offer
Price and the market value of the Shares, including asset values and the
investment value of the Shares. The value so determined could be more or less
that the Offer Price or the Merger Consideration.
If any holder of Shares who demands appraisal under Colorado Law fails to
perfect, or effectively withdraws or losses his right to appraisal, as provided
in the Colorado Law, the Shares of such holder will be converted into the Merger
Consideration in accordance with the Merger Agreement. A stockholder may
withdraw his demand for appraisal by delivery to Parent of a written withdrawal
of his demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Colorado Law for perfecting
appraisal rights may result in the loss of such rights.
ITEM 9. MATERIAL TO BE FILED AS EXHIBIT.
Exhibit No. Description of Exhibit
- ----------- ----------------------------------------------------------------
Exhibit 1 Agreement and Plan of Merger, dated as of July 17, 1996, by and
among Parent, the Purchaser and the Company.
Exhibit 2 Pages 1,2,4,5,6 and 7 of the Company's Proxy Statement dated
December 19, 1995.
Exhibit 3 Press Release issued jointly by Parent and Company, dated July
18, 1996.
Exhibit 4 Letter to Stockholder of the Company, dated July 18, 1996.
SIGNATURE.
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
July 18, 1996 SUMMIT PETROLEUM CORPORATION
By: /s/ Deas H. Warley III
Name: Deas H. Warley III
Title: President
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit Page No.
- ----------- --------------------------------------------------
Exhibit 1 Agreement and Plan of Merger, dated as of July 17,
1996, by and among Parent, the Purchaser and the
Company.
Exhibit 2 Pages 1,2,4,5,6 and 7 of the Company's Proxy
Statement dated December 19, 1995.
Exhibit 3 Press Release issued jointly by Parent and
Company, dated July 18, 1996.
Exhibit 4 Letter to Stockholder of the Company, dated July
18, 1996.